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PROVISIONAL REGULATIONS GOVERNING LAND USE TAX IN CITIES AND TOWNS

Provisional Regulations of the PRC Governing Land Use Tax in Cities and Towns

     (Effective Date 1988.11.01)

   Article 1. These Regulations are formulated to rationalize the use of land in cities and towns, to regulate the income differential
on land, to improve efficient use of land in use and to strengthen land management.

   Article 2. Units and individuals which use land within the boundaries of cities, county towns, towns/bases operated under an
organisational system and industrial and mining districts shall be the obligatory payers of tax (hereinafter referred
to as taxpayers) on land used within cities and towns (hereinafter referred to as land use tax) and shall pay land
use tax in accordance with provisions of these Regulations.

   Article 3. Calculation of land use tax shall be based on the actual area of land used by the taxpayer and shall be levied in
accordance with the stipulated tax rate.

The work of measuring the area of land in use as referred to above shall be determined by the respective provincial,
autonomous region or directly administered municipal people’s government in accordance with the actual circumstances.

   Article 4. The annual rates for land use tax per square metre of land shall be as follows:

(1) between 5 jiao* and 10 yuan in large cities;

(2) between 4 jiao and 8 yuan in medium cities;

(3) Between 3 jiao and 6 yuan in small cities;

(4) between 2 jiao and 4 yuan in county towns, towns/bases operated under an organisational system and industrial and mining
districts.

   Article 5. Based on factors such as the amount of municipal construction and the degree of economic prosperity, the various
provincial, autonomous region and directly administered municipal people’s governments shall determine appropriate
tax rate ranges for the districts under their jurisdiction from within the range of tax rates listed above.

Municipal and county people’s governments shall divide the land in their district into certain grades based on the actual
circumstances and, within the tax rate ranges determined by the provincial, autonomous region and directly administered
municipal people’s governments, shall formulate appropriate tax rate standards. Details of the rates shall be
submitted to the respective provincial, autonomous region or directly administered municipal people’s government for
approval and implementation.

Subject to approval by the provincial, autonomous region or directly administered municipal people’s government,
the land use tax rate levied in economically backward districts may be reduced appropriated, but shall not be
lowered to more than 30% below the minimum tax rate stipulated in Article 4 of these Regulations. The
land use tax rate levied in economically developed districts may be raised appropriately, but the amount
shall first be approved by the Ministry of Finance.

   Article 6. Land use tax shall be exempted on the following types of land:

(1) land used by State organs, people’s organisations and the armed forces;

(2) land used by units which have their operating expenses allocated by the State’s finance departments;

(3) land occupied by religious temples and shrines, parks and places of historic interest and scenic beauty;

(4) publicly used land, such as that for municipal streets, public squares and areas of greenery;

(5) land directly used in production in the agricultural, forestry, pastoral and fishery industries;

(6) in the case of land whose reclamation from the sea or transformation from wasteland was approved, land
use tax shall be exempted for between 5 and 10 years, to be calculated from the month in which usage commences;

(7) land which the Ministry of Finance has exempted from tax in other legislation, such as land containing energy
resources or land used for transport or water conservancy facilities and other uses.

   Article 7. In addition to cases provided for under the provisions of Article 6 of these Regulations, a taxpayer who has genuine
difficulty paying the prescribed land use tax may request a reduction of or exemption from the tax for a specific period.
After the provincial, autonomous region or directly administered municipal tax organ has examined and verified the circumstances
of the case, the details shall be submitted to the State Taxation Bureau for approval.

   Article 8. Land use tax shall be calculated annually and paid by instalments. The time limit for payments shall be determined
by the provincial, autonomous region or directly administered municipal people’s government.

   Article 9. Land use tax shall be paid on newly requisitioned land in accordance with the following provisions:

(1) if cultivated land is requisitioned, land use tax shall begin to be levied one year after the date on which approval
to expropriate the land is given.

(2) if non-cultivated land is requisitioned, land use tax shall begin to be levied the month after approval to expropriate the
land is given.

   Article 10. Land use tax shall be collected by the local tax organ in the area where the land is located. Land management organs shall
provide local tax organs with information on post_titles to land use rights.

   Article 11. Control of the levying of land use tax shall be handled in accordance with the provisions of the Provisional Regulations
of the People’s Republic of China governing Control of the Levying and Collection of Taxes.

   Article 12. Income from land use tax shall come under financial budget control.

   Article 13. The Ministry of Finance shall be responsible for interpreting these Regulations. Implementing measures
shall be formulated by the people’s governments of the various provinces, autonomous regions and directly administered
municipalities and the details shall be submitted to the Ministry of Finance for its records.

   Article 14. These Regulations shall take effect from 1 November 1988 and implementation of the land use fee measures formulated
by the various districts shall be suspended simultaneously.

    

Source:MOFTEC





DETAILED RULES AND REGULATIONS FOR THE IMPLEMENTATION OF THE REGULATIONS ON ADMINISTRATION OF TECHNOLOGY IMPORT CONTRACTS OF THE PEOPLE’S REPUBLIC OF CHINA

IMPLEMENTATION RULES FOR THE PROVISIONAL REGULATIONS OF BEIJING MUNICIPALITY CONCERNING NEW TECHNOLOGY INDUSTRY DEVELOPMENT ZONE

NOTICE CONCERNING THE ORGANIC ESTABLISHMENT OF THE STATE COUNCIL

INTERIM PROVISIONS CONCERNING COMPENSATION FOR BODILY INJURY OF PASSENGERS IN DOMESTIC AIR TRANSPORT

Category  CIVIL AVIATION Organ of Promulgation  The State Council Status of Effect  With An Amendment Existing
Date of Promulgation  1989-02-20 Effective Date  1989-05-01  


Interim Provisions Concerning Compensation for Bodily Injury of Passengers in Domestic Air Transport



(Adopted at the 31st Executive Meeting of the State Council on January 3,

1989, promulgated by Decree No. 28 of the State Council of the People’s
Republic of China on February 20, 1989 and become effective as of May 1, 1989)
(Editor’s Note: For the revised text, see Decision of the State Council on
Revising the Interim Provisions Concerning Compensation for Bodily Injury of
Passengers in Domestic Air Transport promulgated November 29, 1993)

    Article 1  These Provisions are formulated for the purpose of defining the
civil liability that domestic air carriers shall bear for the bodily injury of
passengers.

    Article 2  These Provisions shall apply to the compensation for the bodily
injury of passengers that occur in domestic air passenger transportation.

    The term “domestic air passenger transportation” referred to in the
preceding paragraph denotes any air passenger transportation in which,
according to the contract of carriage, the place of departure, the agreed
stops, and the destination are all within the territory of the People’s
Republic of China.

    Article 3  The carriers shall be liable for compensation for death and
injury sustained by passengers on board an aircraft or in the course of
embarkation or disembarkation.

    Article 4  The carriers shall not be liable for compensation provided they
can prove that death or injury of passengers is caused by force majeure or by
the passengers’ own health conditions.

    Article 5  The carriers’ liability to pay compensation may be reduced or
exempted provided they can prove that the death or injury of passengers is
caused by the negligence or wilful misconducts on the part of the passengers
themselves.

    Article 6  The maximum amount of compensation shall be 20,000 Renminbi
yuan for each individual passenger, for which the carriers are liable for
compensation as under these Provisions.

    Article 7  Passengers may at their own discretion to cover with an
insurance company an insurance against accidental bodily injury in air
transportation. The payment of the insurance indemnity, however, shall not
exempt or reduce the amount of compensation that the carriers shall be liable
for paying.

    Article 8  Compensation paid to foreigners, overseas Chinese, compatriots
from Hong Kong and Macao, and compatriots from Taiwan may be converted into
the currency of the country or region concerned and the rate of exchange shall
be decided as per the listed rate of exchange officially published by the
state administrative department for control of foreign exchange of the
People’s Republic of China on the day on which the compensation is paid.

    Article 9  In the event that a dispute with respect to the compensation
for injury arises between the passengers or their heir and the carrier, they
may file a suit with the people’s court.

    Article 10  The Civil Aviation Administration of China shall be
responsible for the interpretation of these Provisions.

    Article 11  These Provisions shall become effective as of May 1, 1989
and the Regulations Concerning Compulsory Insurance Against Accidental Injury
for Air Passengers promulgated by the Financial & Economic Commission of the
Administration Council of the People’s Republic of China on April 24, 1951
shall be nullified simultaneously.





CIRCULAR OF THE STATE COUNCIL ON STRENGTHENING THE ADMINISTRATION OF THE OBTAINING OF INTERNATIONAL COMMERCIAL LOANS

Category  BANKING Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1989-01-12 Effective Date  1989-01-12  


Circular of the State Council on Strengthening the Administration of the Obtaining of International Commercial Loans



(January 12, 1989)

    The following Circular is issued, in accordance with the requirements of
the Central Authorities concerning the improvement of the economic environment,
the straightening out of the economic order and the deepening of the reform,
for the purpose of strengthening the administration over the obtaining of
international commercial loans.

    1. It is imperative to control the scale of borrowing from abroad. The
various localities and departments shall act in strict accordance with the
State plan for the use of foreign funds. No departments or units may, without
authorization, obtain from abroad any kind of international commercial loans
or borrow money from the Chinese institutions and banks operating abroad, if
such obtaining or borrowing is not included in the State plan for the use of
foreign funds and is not approved by the head office of the People’s Bank of
China. Without the approval of the department for control of foreign exchange,
no loans may be deposited abroad. If any party contracts a loan without
authorization, the contract therefor shall not go into effect, the department
for control of foreign exchange, shall not handle the registration for the
foreign loan obtained, the bank shall not open a foreign exchange account for
the loan, and the principal of the loan and the interest thereon may not be
remitted abroad.

    2. It is imperative to exercise administration over the balance of
short-term international commercial loans obtained and, without the approval
of the State, no quota of balance that has been verified and approved may be
exceeded. Any part that exceeds the amount of the balance shall, within half a
year as of the date of the promulgation of this Circular, be readjusted so
that the balance shall be within the quota verified and approved, failing
which the local department for control of foreign exchange shall deduct a
corresponding amount from the foreign exchange the party concerned is
enpost_titled to retain or shall compulsorily make use of the party’s quota of
medium-term and long-term international commercial loans for the repayment
of the loan. A short-term loan obtained from abroad may only be used for the
turnover of the circulating funds and may not be used for investment projects
in fixed assets.

    3. The issuance abroad of bonds shall, within the framework of the State
plan for the use of foreign funds, be handled by a financial institution that
has been authorized by the People’s Bank of China to issue bonds. All
bond-issuing units must, prior to the issuance, apply to the People’s Bank of
China for approval in strict accordance with the Provisions Concerning the
Administration of the Issuance of Bonds Abroad by Domestic Chinese
Institutions promulgated by the People’s Bank of China. Any government
departments that are to issue bonds in the international market shall apply
to the State Council of the People’s Republic of China for approval. Without
the approval, no negotiations with the foreign parties concerned shall be
conducted. The People’s Bank of China shall do a good job of co-ordination
for the domestic bond-issuing institutions to enter the international market
for the issuance of bonds and examine carefully their credentials for issuing
bonds abroad.

    4.It is imperative to strengthen the administration of guarantee of
foreign exchange. Guarantee of foreign exchange not only concerns China’s
international prestige but also involves the commitments to repay foreign
debts. It is imperative to strictly implement the Interim Measures for the
Administration of Guarantee of Foreign Exchange Provided by Domestic
Institutions promulgated by the People’s Bank of China. An enterprise that
is to provide such guarantee shall have a sufficient amount of foreign
exchange of its own as a guarantee and the total amount guaranteed may not
exceed the amount of funds of its own in foreign exchange. The sum of the
total amount of the guarantee of foreign exchange provided by a non-financial
institution and its total amount of foreign liabilities may not exceed the
ceiling prescribed by the People’s Bank of China. Without the approval of the
State Administration of Foreign Exchange Control, no domestic institutions
may provide guarantee of foreign exchange for institutions abroad. No
government departments or institutions may provide guarantee of foreign
exchange for parties abroad.

    5. It is imperative to examine the projects of loans strictly. With
respect to a project which requires a medium or long-term international
commercial loan, the borrower unit shall, prior to the borrowing, conduct
careful feasibility studies as to the capability to repay and the economic
returns of the project and make sure that the obligations to repay are
undertaken and that the project is subject to strict evaluation by a
financial institution. No international commercial loans may be obtained
for a project which has not been established as an item for processing and
approved by the State planning department and for which the supporting funds
in Renminbi are not vet available and the conditions such as energy supply
and communication facilities are not yet present. No international commercial
loans may be obtained for projects of construction which are not included
in the State plan. With respect to a loan obtained from abroad by a domestic
unit, the foreign exchange thus obtained may in general not be used as
mortgage for loans in Renminbi and may not enter the market for regulating
foreign exchange. Where special need arises, the case shall be submitted to
the State Administration of Foreign Exchange Control for approval.

    6. It is imperative to place a strict control on the number of windows
for external borrowing. Apart from the ten existing windows designated by
the State, i.e. the Bank of China, the Communications Bank, China
International Trust and Investment Corporation, the Investment Bank of China,
the Guangdong International Trust and Investment Corporation, the Fujian
Investment Enterprise Corporation, the Hainan International Trust and
Investment Corporation, the Investment and Trust Corporation of the Shanghai
Municipality, the International Trust and Investment Corporation of the
Tianjin Municipality and the Dalian International Trust and Investment
Corporation, no other windows for borrowing from abroad shall be approved.
Other localities, departments or units that intend to obtain international
commercial loans shall apply to the People’s Bank of China on the basis of
one application for one loan or a special application for a special loan.
The People’s Bank of China shall conduct conscientiously the work of clearing
up and rectification in the units that have borrowed from abroad. The various
windows for borrowing from abroad and the units that have been permitted by
the People’s Bank of China to obtain international commercial loans shall
handle the borrowing procedures in accordance with the relevant provisions of
the People’s Bank of China.

    7. It is imperative to further improve the registration of foreign loans
and the statistical monitoring system. All foreign loans, whether procured
directly from abroad or obtained indirectly at home, shall be incorporated
into the statistical monitoring system of the State for foreign loans and
registered as such so as to ensure that the State maintains macro-supervision
and control over the scale and structure of foreign loans. The State
Administration of Foreign Exchange Control shall expedite the formulation
of procedures governing the registration and statistical momitoring with
respect to foreign loans obtained indirectly at home. Any parties that fail
to go through the procedures of registration or delay doing so shall be
penalized in strict accordance with the relevant provisions.

    8. It is imperative to arrange the structure of foreign loans rationally.
The State Administration of Foreign Exchange Control and other departments
concerned shall make a timely study of such problems involved in a loan as the
kind of currency, the interest rate, the term, the mode of borrowing, the
country of origin, and the market situation and submit proposals to the State
Council of the People’s Republic of China. The People’s Bank of China shall
expedite the formulation of Procedures for the Administration of International
Commercial Loans so as to strengthen the work of examination and approval
and the work of administration.

    People’s governments at various levels and the various departments shall
strictly implement the provisions of this Circular, earnestly place on their
agenda the work of administration in their own localities and departments
with respect to foreign loans, see to it that loans, obtained from abroad are
used properly and efficiently, and ensure that the loans are repaid within
the prescribed time so as to maintain the international prestige of our
country. Departments for control of foreign exchange at various levels shall
strengthen supervision, inspection and guidance with respect to the obtaining
of foreign loans and shall report on the situation in good time. The State
Council of the People’s Republic of China hereby authorizes the departments
for control of foreign exchange to deal severely with those that violate the
State provisions concerning the administration of foreign loans in accordance
with the relevant provisions and investigate the liability of persons directly
responsible and of the leaders concerned.

    This Circular shall not apply to enterprises with foreign investment.





INTERIM PROVISIONS CONCERNING ADMINISTRATION OF FOREIGN CHAMBERS OF COMMERCE

CUSTOMS REGULATIONS FOR THE SUPERVISION OF INBOUND AND OUTBOUND TRAINS AND THE GOODS AND COMMODITIES THEREON

Customs Regulations of the PRC for the Supervision of Inbound and Outbound Trains and the Goods and Commodities Thereon

     (Effective Date:1990.03.01–Ineffective Date:)

   Article 1 In order to promote foreign economic and trade scientific, technological and cultural exchanges, and strengthen customs supervision
and management, these Regulations are made in keeping with the Customs Law of the People’s Republic of China, and the relevant regulations
governing railways, and in the light of the actual situation of railway transportation.

   Article 2 The “inbound and outbound trains” in these Regulations refer to the locomotives, passenger trains, goods trains, mail trains, baggage
trains, electricity generating trains, guard’s trains, and track trains that pass through the Customs on the border.

The “goods and commodities” in these Regulations refer to the goods, baggage, packages, mail and other items carried on trains passing
through the Customs on the border.

The word “inter-customs transportation” in these Regulations refers to the fact that when goods and commodities have been transported
into the country they will be sent, under the supervision of the Customs, into another customs station for entry formalities, or
to the goods and commodities allowed through the Customs under the supervision of the Customs for which export formalities have been
complied with at the place of shipment, or to the goods and commodities that are transported from one customs station on another
in the country and that should be supervised by the Customs.

   Article 3 Outbound or inbound trains must stay at departure or entry stations for customs supervision and examination.

Form the time an inbound train arrives at an entry station to the time when the Customs has finished its examination, or from the
time the Customs begins examining an outbound train to the time Customs allows it to pass through, it cannot move, be disintegrated
(except for wheel replacement for passenger cars), or leave the entry or departure station without permission.

   Article 4 During the Custom’s examination of an inbound or outbound train, no personnel are allowed to board and alight it except for those
personnel from relevant port examination and quarantine departments or railway service personnel who carry out their duties.

   Article 5 The goods, commodities and passengers carried on an inbound or outbound train should be supervised by the Customs. When goods and
commodities have been loaded or unloaded, the railway station should hand documents and business records to the Customs, which attest
to the actual situation.

If the Customs finds inbound or outbound goods or commodities to have been smuggled or if it suspects them to have been smuggled,
it can inform the railway station by letter to unload them at a place designated by the Customs or transfer the relevant cars to
a designated place for further handling.

   Article 6 The goods and commodities under the supervision of the Customs should be supervised by the Customs whether they are stored in the
Customs supervision area or outside it.

The personnel sent by the Customs to a railway station, a warehouse of a freight supervision area, or a cargo transshipment area should
abide by relevant railway regulations and must produce their credentials when needed. All railway departments should play a supportive
role.

   Article 7 When an inbound or outbound train leaves a departure or entry station, the railway station should notify in advance the Customs of
the departure time, number, and the place where the train stays at and leaves from.

For each inbound and outbound goods train, a railway station should hand to the Customs a list of the orderly grouping of trains and
a goods hand-over note.

   Article 8 When the Customs finishes examining a train, it should immediately notify a departure or entry station. If it cannot finish the examination
during the stay of an inbound passenger train, it can continue the examination by sending its personnel onto the train, and the head
of the entry station must provide them round-trip tickets enabling them to come to a station nearest to the front station and provide
them working conditions.

   Article 9 For the goods and commodities carried on an inbound or outbound train, the departure or entry railway station must hand the following
documents to the Customs:

(1) a goods delivery note, or a baggage or package hand-over note and supplementary documents.

(2) a goods hand-over note, or a baggage or package hand-over note.

(3) other relevant documents as required by the Customs.

   Article 10 When proceeding with formalities for the import and export of goods, the recipient of imported goods (including packages) or the
sender of exported goods, or the agents should declare their goods by filling out goods declaration forms and handing in the following
as required:

(1) a goods delivery note (including package declaration) and supplementary documents;

(2) the license for imported or exported goods; and

(3) other documents as required by the Customs.

The owner of inbound reclaimed baggage and outbound checked baggage must complete relevant customs formalities.

   Article 11 When the Customs is examining goods, the departure and entry railway station should send its personnel to break the seals in the
cars, open car doors, or remove the tarpaulin in accordance with customs requirements. The recipient or sender of the goods, or their
agents should remove, load, or unload goods, and open or re-pack them. When the Customs deems necessary, it can, at its discretion,
open them for examination or re-examination, or take samples. The Customs should produce evidence for the name and amount of each
item taken as a sample.

   Article 12 For the goods and commodities that are returned by the Customs because they do not meet China’s entry control regulation, the railway
station should complete the formalities for their return upon production of a written notice of rejection issued by the Customs.
For those goods that are rejected as they contravene the international railway transportation regulation, the Customs must allow
the return upon production of the railway department’s record of rejection.

   Article 13 Only after the Customs has stamped a seal on the goods delivery note, or baggage or package declaration, can the railway station
deliver or transport the relevant goods and commodities out of the country.

   Article 14 Prior to the transportation of “inter-customs transportation” goods, the Customs should stamp a seal on the goods delivery note with
words Goods Under Customs Supervision after checking that the relevant documents, goods and commodities are correct. It then returns
the delivery note to the railway station together with the customs seal for their transportation. The customs seal must be handed
to the responsible person of a train by the railway station. It then will be sent together with a delivery note to the designated
place or to the customs of the departure station.

   Article 15 For the goods under customs supervision, if there is any change in the station of arrival in the country or a station of departure
in the country, the railway station that arranges for the change should notify the customs of such a change. The designated station
or departure station that has been changed must be a customs station. The relevant railway station should hand the customs seal to
the responsible person of a train together with the delivery note to the designated place or the customs of the departure station
that has been changed. In case there is no customs house at the designated place, the applicant for the change will have to obtain
the consent of the customs near the designated delivery station before the entry station will proceed with the change.

   Article 16 The goods carried by passengers that have gone through customs and approved by the customs at the station of arrival in the country
will be sealed by the Customs, and then the Customs seal will be handed to the responsible person of the train, which will then be
brought to the Customs at the place of arrival.

   Article 17 The materials, spare parts, tools, wheel, and bogies for the repair of an inbound or outbound train will be exempted from customs
duties and product taxes (or value-added taxes) when they are confirmed to be used for the repair of an inbound or outbound car under
the supervision of the Customs.

For the materials used for sealing cars and tools for railway transportation (including tarpaulin), the railway station should declare
in good faith to the Customs, and the Customs will inspect them and let them pass tax-free.

   Article 18 The goods for public use and the daily necessities for personal use within a reasonable amount carried by the personnel at the departure
and entry station and by stewards on trains (including food such as grain and vegetables), and the drink and food used by passengers
on an inbound and outboard train, will be inspected by the Customs and then allowed through tax-fee.

For the return of tarpaulin and empty containers, the recipient and sender or their agents should fill out the “tax-exemption certificate
for the returned of goods” for the tarpaulin and containers of recipients or senders. It then must be handed to Customs of the entry
or departure station in the country for signature and stamping before being returned to the railway station for the tax-free return
of these items.

    





DECISION OF THE NATIONAL PEOPLE’S CONGRESS APPROVING THE PROPOSAL BY THE DRAFTING COMMITTEE FOR THE HONG KONG SPECIAL ADMINISTRATIVE REGION ON THE ESTABLISHMENT OF THE COMMITTEE FOR THE BASIC LAW OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION UNDER THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS BASIC LAW

Category  SPECIAL ADMINISTRATIVE REGION Organ of Promulgation  The National People’s Congress Status of Effect  In Force
Date of Promulgation  1990-04-04 Effective Date  1990-04-04  


Decision of the National People’s Congress Approving the Proposal by the Drafting Committee for the Basic Law of the Hong Kong Special
Administrative Region on the Establishment of the Committee for the Basic Law of the Hong Kong Special Administrative Region under
the Standing Committee of the National People’s Congress

The Decision
Appendix

(Adopted at the Third Session of the Seventh National People’s Congress on

April 4, 1990)
The Decision

    The Third Session of the Seventh National People’s Congress decides:

    1. to approve the proposal by the Drafting Committee for the Basic Law of
the Hong Kong Special Administrative Region on the Establishment of the
Committee for the Basic Law of the Hong Kong Special Administrative Region
under the Standing Committee of the National People’s Congress; and

    2. to establish the Committee for the Basic Law of the Hong Kong Special
Administrative Region under the Standing Committee of the National People’s
Congress when the Basic Law of the Hong Kong Special Administrative Region of
the People’s Republic of China is put into effect.
Appendix

    Proposal by the Drafting Committee for the Basic Law of the Hong Kong
Special Administrative Region on the Establishment of the Committee for the
Basic Law of the Hong Kong Special Administrative Region Under the Standing
Committee of the National People’s Congress

    1. Name: The Committee for the Basic Law of the Hong Kong Special
administrative Region Under the Standing Committee of the National People’s
Congress.

    2.Affiliation: To be a working committee under the Standing Committee of
the National People’s Congress.

    3.Function: To study questions arising from the implementation of Articles
17, 18, 158 and 159 of the Basic Law of the Hong Kong Special Administrative
Region and submit its views thereon to the Standing Committee of the National
People’s Congress.

    4.composition: Twelve members, six from the mainland and six from Hong
Kong, including persons from the legal profession, appointed by the Standing
Committee of the National People’s Congress for a term of office of five
years. Hong Kong members shall be Chinese citizens who are permanent residents
of the Hong Kong Special Administrative Region with no right of abode in any
foreign country and shall be nominated jointly by the Chief Executive,
President of the Legislative Council and Chief Justice of the Court of Final
Appeal of the Region for appointment by the Standing Committee of the National
People’s Congress.





CIRCULAR OF THE MINISTRY OF FOREIGN ECONOMIC RELATIONS AND TRADE AND THE STATE ADMINISTRATION FOR INDUSTRY AND COMMERCE ON ISSUING THE PROVISIONS FOR CONTRACTED OPERATION OF CHINESE-FOREIGN EQUITY JOINT VENTURES

The Ministry of Foreign Economic Relations and Trade, the State Administration for Industry and Commerce

Circular of the Ministry of Foreign Economic Relations and Trade and the State Administration for Industry and Commerce on Issuing
the Provisions for Contracted Operation of Chinese-foreign Equity Joint Ventures

WaiJingMaoFaFa [1990] No.22

September 13, 1990

(Circular omitted) Attachment:Provisions for Contracted Operation of Chinese-foreign Equity Joint Ventures

The following regulations on contracted operation of Chinese-foreign equity joint ventures (hereinafter referred to as joint ventures)
are aimed at guaranteeing the normal development of these enterprises.

Article 1

Definition of contracted operation

The contracted operation mentioned in these regulations is meant for joint ventures which, by signing contracts, offer the whole or
part of their operational rights to contractors for a certain period of time while those joint ventures are managed by the contractors.
Such forms of contracted operation are but supplementary measures to help those poorly managed and loss-making joint ventures. During
the contracting term, the contractor takes on the risks of operation while gaining part of the joint venture’s profits.

Article 2

Requirements for contracted operation of joint ventures

A joint venture shall fulfill the following requirements to practice contracted operation:

1.

That it is a project in an industry encouraged or permitted by State policy. However, key state projects, those in energy or communications
in particular, shall not practice contracted operation.

2.

That the Chinese and foreign partners of the joint venture have fully provided the investment required by contract and the payment
has been verified-but the joint venture is hardly likely to survive because of poor management.

Article 3

Contractors’ qualifications

A contractor must have the following qualifications:

1.

That it is a Chinese or foreign corporation or enterprise with the qualification of a legal person, and has engaged in business operation
for at least 3 years;

2.

That is belongs to the same industry as the joint venture and can work out a concrete plan to effectively help the business make up
deficits and return to normal development; and

3.

That it is able to provide adequate risk deposit and a letter-of-guarantee for the risk-guaranty money.

Article 4

Basic requirements for contracted operation

1.

The contractor can be chosen through public bidding (i.e., the joint venture conducts public bidding in accordance with the conditions
worked out by the board of directors); alternatively, the joint venture can sign directly an agreement on contracted operation with
the contractor (either partner of the venture or a third party) in accordance with the decision made by the board of directors.

2.

The legal-person status, name and business scope of the joint venture shall not be changed because of contracted operation.

3.

As the operator and manager of the joint venture’s property, the contractor shall strictly carry out the contract and be under the
supervision of the venture’s board of directors. The contractor has no right to dispose of the joint venture’s property, such as
transfer, selling off, removing, mortgaging, leasing or giving out as a present. The contractor shall regularly submit factual financial
reports to the joint venture’s board of directors.

4.

The contracting term is usually set at 1 to 3 years. The maximum shall be no more than 5 years. The contractor shall see to it that
the joint venture becomes profitable or at least its performance is improved remarkably when the contracting term expires.

5.

Contracting shall only cover the joint venture’s after-tax profits. Both parties to such contracts shall decide on the annual profit
during the contracting term base in accordance with relevant targets defined in the feasibility study report worked out when the
joint venture was launched.

6.

During the contracting term the contractor shall, in the first quarter of each year, submit to the joint venture risk guaranty money,
letter of guarantee or risk deposit. No securities shall be made for the deposit, which shall not come from the investment by the
joint venture’s partners. The risk guaranty money and the letter of guarantee shall be irrevocable and unilaterally drawable to the
joint venture. Whatever the form the sum shall be not less than 50 percent of the contracted annual profit.

7.

During the contracting term the contractor shall get approval from the board of directors before applying for any loan in the name
of the joint venture. The debt of the joint venture during the contracting term shall not exceed the total amount of the contracted
profit for the year.

8.

During the contracting term, the joint venture shall continue to implement State laws, regulations and accounting rules.

In accordance with law, the contractor shall pay income tax on its earnings from contracting.

The financial, accounting and tax affairs related to the contracted operation shall be handled in accordance with relevant regulations
adopted by the financial and taxation departments.

9.

If the contractor fails, for two years in succession, to fulfill contracted-profit obligations, besides the joint venture shall, at
the end of a fiscal year, take over the contractor’s risk deposit or draw the risk guaranty money according to the bank’s letter
of guarantee, or the contractor shall pay for the loss according to contract, the examination and approval authority may annual the
approval. Consequently, the contract shall cease to be in force, the contractual relationship shall automatically be renounced, while
the administration for industry and commerce shall recall the certificate of registration for the contracted operation and register
the changed operational status of the joint venture.

The joint venture shall be dissolved according to the law and the joint venture contract if, after the contracted operation has ceased,
the venture still fails to change its loss-making situation.

10.

Before the contracted operation, and when the contracted operation is terminated during the contracting term or when the contracting
term expires, the joint venture shall make an inventory of property and capital and transfer management from one to another. The
inventory is valid only when it has been certified by accountants registered in China.

Article 5

Contract on contracted operation

1.

To contract the operation of a joint venture, the contractor shall sign a contract with the joint venture. Contracts on contracting
profit between partners of the venture are not permitted to sign.

2.

The contract shall be concluded in accordance with relevant Chinese laws, in keeping with the purposes and principles of the original
contract of the joint venture and without changing the items of the original contract that have nothing to do with the contracted
operation.

3.

The contract shall include the contracting term, the rights and restrictions on the rights, and duties and responsibilities of the
contractor, the form and content of the contracted operation, the distribution pattern of income, risk guaranty money, letter of
guarantee and risk deposit, liability for breach of contract, ways to settle disputes over contract, responsibilities on losses and/or
debt owed by the joint venture prior to the contracted operation, the principles of making an inventory of property and capital and
the transferring procedures as well as the method of evaluating, production targets and profit, target for technological upgrading,
the debt safety line, the arrangements for the workers of the joint venture, labour management, wages, welfare and insurance, and
the party which shall handle and be responsible for the disputes with other corporations, enterprises and individuals in the course
of implementing the contract on contracted operation.

4.

If the contractor severely violates the contract during the contracting term, the joint venture’s board of directors has the right
to terminate the contract and demand corresponding compensation for loss from the contractor.

5.

The revision, postponement, termination or expiration of the contract shall be approved by the original authorities that approved
the joint venture.

Article 6

Application, examination and approval and registration of contracted operation

1.

The joint venture shall apply for contracted operation and submit the following documents to the examination and approval authority:

(1)

an application on contracted operation of the joint venture;

(2)

the decision of the joint venture’s board of directors on contracted operation;

(3)

a report containing concrete measures to turn the joint venture from loss-making to profitable, measures worked out by the contractor
and approved by the joint venture’s board of directors:

(4)

the contractor’s legal business license, articles of association of the corporation, and a balance sheet covering the past 3 years
operations;

(5)

the contract on contracted operation;

(6)

the original contract of the joint venture and report on feasibility studies;

(7)

opinions of the government department in charge and financial and taxation departments on contracted operation of the joint venture;
and

(8)

other documents required by the examination and approval authority.

2.

The examination and approval authority, within 30 days of receiving all the above-mentioned documents, shall decide to approve or
not approve the contracted operation in accordance with these regulations. The authority shall, within a specified time, demand revision
of illegal or obviously unfair contents in the contract. Otherwise the application shall not be approved.

3.

Within 30 days from the date when the examination and approval authority issued documents of approval for the contracted operation,
the contractual parties shall, with the certificate on the delivery of risk deposit or letter of guarantee and risk guaranty money,
go through the formalities of registration with the administration for industry and commerce. The approval of the examination and
approval authority shall automatically cease to be effective if registration is not done in 30 days. The administration for industry
and commerce shall handle registration within 30 days of receiving the application.

The term of contracted operation begins from the date on which the administration for industry and commerce issues registration documents.

The registration of the opening and alteration of contracted operation and cancellation of registration shall be handled in accordance
with the regulations of the administration for industry and commerce.

Article 7

Supplementary rules

1.

Joint ventures which are already under contracted operation must, within 90 days from the date these regulations are published, retroactively
go through procedures of the examination and approval and registration for contractual operation. Contracts already concluded may
be revised by referring to these regulations. The joint ventures and contractors who fail to retroact formalities within the time,
may be ordered jointly by the examination and approval authority and the administration for industry and commerce to terminate their
contract, and even their business license of the joint venture may be taken over and the contractor’s profit may be frozen.

2.

The examination and approval authority and administration for industry and commerce may penalize joint ventures and contractors who
conceal their contracted operations without applying for approval and going through the registration formalities.

3.

The Circular on the Examination, Approval and Registration of Enterprises from Foreign Countries or Regions Entrusted to Manage Chinese-foreign
Joint Ventures, published on July 11, 1988 by the State Administration for Industry and Commerce and the Ministry of Foreign Economic
Relations and Trade is still valid for those joint ventures which entrust foreign enterprises with management and administration.

4.

Contracted operators of Chinese-foreign contractual joint ventures may refer to these regulations.

5.

These Provisions shall enter into force as of the day of promulgation.



 
The Ministry of Foreign Economic Relations and Trade, the State Administration for Industry and Commerce
1990-09-13

 






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CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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