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The Ministry of Foreign Trade and Economic Cooperation
Circular of MOFTEC on Printing and Distributing Provisional Regulations Concerning Administrative Penalties on Foreign Trade Enterprises
Evading Foreign Exchange and Engaging in Arbitrage
JiJingMaoJiCaiFa [1998] No.713
October 9, 1998
Foreign trade and economic commissions (departments, bureaus) of provinces, autonomous regions, municipalities directly under the
Central Government and municipalities separately listed on the State plan (including Foreign Trade Development Bureau of Shengzhen),
Foreign Trade Centers, Companies Directly under Commissions and Ministries:
In order to crack down on such illegal acts as evading foreign exchange and engaging in arbitrage and maintain a normal order of financial
and foreign exchange administration and import and export administration, Provisional Regulations of MOFTEC concerning Administrative
Penalty on Foreign Trade Enterprises Evading Foreign Exchange and Engaging in Arbitrage are laid down in accordance with the Circular
of the State Council on Strengthening Control of Foreign Exchange and Foreign Debt and Launching Inspection on Foreign Exchange and
Foreign Debt. Now it is printed and distributed to you. Please enforce them earnestly and do a good job of publicity. These provisional
regulations shall enter into force from October 1, 1998. Attachment:Provisional Regulations of MOFTEC Concerning Administrative Penalties on Foreign Trade Enterprises Evading Foreign Exchange and Engaging
in Arbitrage
Article 1
In order to crack down on such illegal acts as evading foreign exchange and engaging in arbitrage, these regulations are laid down
in accordance with the Administrative Law of P.R.C, the Foreign Trade Law of P.R.C and the Administrative Measure of Foreign Exchange
of P.R.C and other relevant laws.
Article 2
Evading foreign exchange and enganing in arbitrage acts in the regulations refer to those acts listed in the Administrative Measure
of Foreign Exchange of P.R.C and ratified by administrative authorities of foreign exchange.
(1)
Evading foreign exchange acts are the following:
Depositing foreign exchange abroad without authorization, violating the State stipulation; not selling foreign exchange to appointed
foreign exchange banks in accordance with the State stipulation; remitting foreign exchange abroad or carrying it abroad in violation
of the State stipulation; carrying or remitting foreign currency certificaties and securites abroad without authorization of administrative
authorities of foreign exchange and other acts of evading foreign exchange.
(2)
Arbitrage acts are the following:
Paying for goods by RMB or products instead of by foreign exchange in violation of the State stipulations; paying by RMB for expenses
of others who give foreign exchange in turn; investing with RMB or goods and materials purchased in China by overseas investors without
authorization of administrative authorities of foreign exchange; purchasing foreign exchange by cheating from appointed foreign exchange
banks with false or invalid certificates, contracts, documents and other illegal acts of arbitrage.
Article 3
Foreign trade enterprises in these regulations refer to foreign trade corporations (including joint ventures of foreign trade), import
and export producting enterprises and scientific research institutions, business and material supply enterprises with managerial
authority of import and export, enterprises with foreign investment, overseas projects contracting enterprises, processing trade
enterprises, border trade enterprises and tourism trade enterprises.
Article 4
Administrative penalties on foreign trade enterprises evading foreign exchange and engaging in arbitrage are the following:
Giving disciplinary warning, suspending or canceling managerial authority of foreign trade and so on.
Article 5
Foreign trade enterprises decided by administrative authorities of foreign exchange that they are involved in evading foreign exchange
or engaging in arbitrage, will be punished in accordance with these provisional regulations.
Article 6
MOFTEC or foreign trade administrative organizations authorized by MOFTEC at provincial level shall impose the following administrative
penalties in consideration of seriousness of the circumstances of the basis of administrative penalties imposed by administrative
authorities of foreign exchange in accordance with law.
(1)
suspending managerial authority of foreign trade for three months on enterprises involving arbitrage value below US $ 500 thousand,
to enterprises with foreign investment among them, notifying the Customs of suspending their import right for three months.
(2)
suspending managerial authority of foreign trade for six months on enterprises involving arbitrage value over US $ 500 thousand (including
US $ 500 thousand) and less than US $ 1 million, for enterprises with foreign investment among them, notifying the Customs of suspending
their import right for six months.
(3)
canceling managerial authority on enterprises involving arbitrage value over US $ 1 million (including US $ 1 million), for enterprises
with foreign investment among them, notifying the Customs of ceasing their business.
Article 7
For foreign trade enterprises which make loss for our country because their operations in agency import business are not in compliance
with normal trade procedures or their inattentive management lends to being cheated into arbitrage, MOFTEC and foreign trade administrative
organizations authorized by MOFTEC at provincial level shall impose the following administrative penalties on them:
(1)
warning and being put on a circular of criticism on enterprises involving loss value below US $ 1 million.
(2)
suspending managerial authority of foreign trade for three months on enterprises involving loss value over US $ 1 million (including
US $ 1 million) and less than US $ 3 million.
(3)
suspending managerial authority of foreign trade for six months on enterprises involving loss value over US $ 3 million (including
US $ 3 million) and less than US $ 5 million.
(4)
canceling managerial authority of foreign trade on enterprises involving loss value over US $ 5 million (including US $ 5 million)
Article 8
MOFTEC or foreign trade administrative organizations authorized by MOFTEC at provincial level shall impose the following administrative
penalties on enterprises evading foreign exchange in consideration of seriousness of the circumstances on the basis of administrative
penalties imposed by administration authorities of foreign exchange in accordance with law.
(1)
warning and being put on a circular of critcism on enterprises involving value of evasion of foreign exchange below US $ 1 million.
(2)
suspending managerial authority of foreign trade or of individual commodities, individual practices for three months on enterprises
involving value of evasion of foreign exchange over US $ 1 million (including US $ 1 million) and less than US $ 3 million. For enterprises
with foreign investment among them, notifying the Customs of suspending their export right or that of individual commodities, individual
business export right for three months.
(3)
suspending managerial authority of foreign trade or of individual commodities, individual practices for six months on enterprises
involving value of evasion of foreign exchange over US $ 3 million (including US $ 3 million) and less than US $ 5 million. To enterprises
with foreign investment among them, notifying the Customs of suspending their export right or that of individual commodities, individual
business export right for three months.
(4)
canceling managerial authority of foreign trade on enterprises involving value of evasion of foreign exchange over US $ 5 million,
to enterprises with foreign investment among them, notifying the Customs of ceasing their business. Before the Customs resume handling
their import and export, when enterprises export their products, they still shall carry out commitments in accordance with the ratio
stipulated by the contract and solution. They can export through foreign trade agency.
Article 9
MOFTEC or foreign trade administrative organizations authorized by MOFTEC at provincial level shall impose disciplinary warning on
enterprises whose cancellation after verification of import and export can not reach the ratio stipulated by administrative authorities
of foreign exchange and notify them. Penalty of suspending managerial authority of foreign trade or of individual commodities, individual
practices for three months shall be imposed on enterprises whose ratios of cancellation and verification of export income in terms
of foreign exchange do not reach 50%. To enterprises with foreign investment among them, the Customs shall be notified of suspending
their export right or that of individual commodities, individual practices for three months.
Article 10
To parties involving in evading foreign exchange and engaging in arbitrage and persons in charge of enterprises, administrative organizations
shall impose penalties on them from demerits to discharging them from public employment according to seriousness of the circumstances.
Any person who commits crime shall be prosecuted, according to law, by the judicial organs in respect of criminal responsibility.
Article 11
Before MOFTEC or foreign trade administrative organizations authorized by MOFTEC at provincial level decide upon penalty of suspending
or canceling managerial authority of foreign trade on enterprises evading foreign exchange and engaging in arbitrage, they shall
imform enterprises that enterprises have right to ask for hearing. MOFTEC or foreign trade administrative organizations authorized
by MOFTEC shall hold hearing for enterprises asking for hearing. After hearing is over, MOFTEC or foreign trade administrative organizations
authorized by MOFTEC shall resolve whether administrative penalty will be given or not in accordance with the relevant law, decree
and conditions of hearing.
Article 12
MOFTEC or foreign trade administrative organizations authorized by MOFTEC shall distribute resolve notice of penalty to enterprises
and send it to administrative authorities of foreign exchange within 3 workdays after the decision of administrative penalty is made;
if distribution is impossible, please distribute through announcement.
Article 13
If enterprises disagreement with administrative penalty decision, they can apply for administrative reconsideration to Administrative
Review Commission of MOFTEC in accordance with Administrative Review Measure, or take administrative proceedings in accordance with
Administrative Procedure.
Article 14
The right to interpret these Provisions resides in MOFTEC.
Article 15
These provisions shall go into effect on October 1, 1998.
Attachment: Interpretation of the Supreme People’s Court on Matters of Specific Application of Law for Cases of Purchasing Foreign
Exchange by Cheating and Trading Foreign Exchange Illegally (omitted)
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