ORGANISATION MONDIALE
DU COMMERCES/C/N/213
24 décembre 2002
(02-7109)
Conseil du commerce des services Original:  anglais
NOTIFICATION AU TITRE DE L'ARTICLE III:3 DE L'ACCORD
GÉNÉRAL SUR LE COMMERCE DES SERVICES
La délégation de la République populaire de Chine a fait parvenir au Secrétariat la
notification ci-après.
____________
1. Membre adressant la notification:
République populaire de Chine
2. Notification au titre de:
Article III, paragraphe 3 de l'Accord général sur le commerce des services
3. Date d'entrée en vigueur/Durée:
12 avril 2001
4. Organisme responsable de la mise en œuvre et de l'application de la mesure:
Ministère du commerce extérieur et de la coopération économique
5. Description complète de la mesure* indiquant les modes de fourniture visés, l'effet sur le
commerce des services (par exemple, restrictions/mesures de libéralisation) et
l'incidence de la mesure sur les engagements  énoncés dans la liste du Membre et dans sa
liste d'exemptions de l'article II (NPF), le cas échéant:
Règlement d'application de la Loi de la République populaire de Chine sur les entreprises à
capital étranger
On trouvera ci-joint le texte intégral en anglais de ce règlement d'application.1  S e u l e  l a
version en chinois fait foi, la traduction en anglais n'étant fournie qu'à titre de référence.
6. Membres spécifiquement affectés, le cas échéant:
Tous les Membres
                                                     
* Y compris les accords internationaux, les mesures de reconnaissance ou d'autres types.
1 En anglais seulement.S/C/N/213
Page 2
7. Les textes peuvent être obtenus auprès de:
- Point d'information /g254
- Secrétariat de l'OMC /g254
- Autres sources (adresse, télécopie
et téléphone d'un autre organisme) /g168S/C/N/213
Page 3
Regulations for the Implementation of the Law of the People’s Republic of China
on Foreign-Capital Enterprise
(Approved by the State Council on October 28, 1990, promulgated by the Ministry of Foreign
Economic Relations and Trade on December 12, 1990, and revised in accordance with the Decision ofthe State Council on Amending the Rules for the Im plementation of the Law of the People’s Republic
of China on Foreign-capital Enterprises on April 12, 2001).
Chapter I General Provisions
Article 1 These Implementing Rules are formulated in accordance with the provisions of the
Law of the People’s Republic of China on Foreign-capital Enterprises.
Article 2 Foreign-capital enterprises are under the jurisdiction of and are protected by China’s
laws.
Foreign-capital enterprises, while engaged in business operational activities within the territory of
China, must abide by Chinese laws and regulations and shall not jeopardize the social and public
interests of China.
Article 3 A foreign-capital enterprise to be established must be conducive to the development
of China’s national economy and be capable of accomplishing remarkable economic results. The Stateencourages foreign-capital enterprises to adopt ad vanced technology and equipment, engage in the
development of new products, realize the upgrading  of products and the replacement of products with
ones of a higher grade, conserve energy and raw materials, and encourages the establishment of
foreign-capital enterprises oriented to exporting products.
Article 4 Trades in which the establishment of a foreign-capital enterprise is prohibited or
restricted shall be governed by the provisions of the State on guiding foreign investment and the
catalogue of industries for guiding foreign investment.
Article 5 The application for the establishment of a foreign-capital enterprise shall not be
approved if the proposed enterprise would involve one of the following circumstances:
(1) injury to China’s sovereignty or to social and public interests;
(2) impairment of China’s national security;
(3) violation of Chinese laws and regulations;
(4) incompatibility with the requirements of China’s national economic development; or
(5) possible creation of environmental pollution.
Article 6 Foreign-capital enterprises make their own operational and managerial decisions
within the approved scope of operations and are not subject to interference.
Chapter II Procedures for Establishment
Article 7 The application for the establishment of a foreign-capital enterprise shall be
submitted to the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of
China (hereinafter referred to as the Ministry of Foreign Trade and Economic Cooperation), and after
examination and approval, a certificate of approval shall be issued.
With respect to the application for the establishment of a foreign-capital enterprise that comes under
one of the following circumstances, the State Counci l shall authorize the people’s government of the
relevant province, autonomous region, municipality directly under the Central Government,S/C/N/213
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municipality separately listed on the State plan, or the special economic zone, to issue the certificate
of approval after examining and approving the application:
(1) the total amount of investment is within the limits of authority for the examination
and approval of investments provided by the State Council; or
(2) the proposed enterprise does not need raw and processed materials to be allocated by
the State, or does not influence unfavorably the national comprehensive balance of
energy resources, communications and transportation, as well as export quotas for
foreign trade, etc.
Where the people’s government of the province, autonomous region, municipality directly under the
Central Government, municipality separately listed on the State plan, or the special economic zone
has approved the establishment of a foreign-capital en terprise within its limits of authority granted by
the State Council, it shall, within 15 days after the approval, submit a report to the Ministry of Foreign
Trade and Economic Cooperation for the record (hereinafter the Ministry of Foreign Trade and
Economic Cooperation, and the people’s government of the province, autonomous region,
municipality directly under the Central Government, municipality separately listed on the State plan,
and the special economic zone shall be called generally as the examination and approval organ).
Article 8 With respect to a foreign-capital enterprise  applying for establishment, where its
products involve export licenses, export quotas, or import licenses, or belong to State restricted
imports, prior consent of the department of foreign economic relations and trade shall be obtained in
accordance with the relevant administrative limits of authority.
Article 9 A foreign investor shall, prior to the filing of an application for the establishment of a
foreign-capital enterprise, submit a report on the following particulars to the local people’s
government at or above the county level at the place where the proposed enterprise is to be
established. The report shall include: the aim of the establishment of the proposed foreign-capitalenterprise; the scope and scale of business operations; the products to be produced; the technology
and equipment to be adopted and used; the area of land to be used and the related requirements; the
conditions and quantities of water, electricity, coal, coal gas and other forms of energy resources
required; and the requirements for public facilities, etc.
The local people’s government at or above the county level shall, within 30 days after receiving the
report submitted by the foreign investor, give a reply in writing to the said foreign investor.
Article 10 Where a foreign investor wishes to establish a foreign-capital enterprise, an
application shall be submitted to the examination and approval organ through the local people’s
government at or above the county level at the place where the proposed foreign-capital enterprise is
to be established, together with the following documents:
(1) the application for the establishment of a foreign-capital enterprise;
(2) a feasibility study report;
(3) the articles of association of the foreign-capital enterprise;
(4) the name list of the legal representative (or the candidates for members of the board
of directors) of the foreign-capital enterprise;
(5) the legal certifications and the credit certifications of the foreign investor;
(6) the written reply given by the local people’s government at or above the county level
at the place where the proposed foreign-capital enterprise is to  be established;
(7) an inventory of goods and materials needed to be imported; and(8) other documents that are required to be submitted.
The documents mentioned in Items (1) and (3) in the preceding paragraph must be written in the
Chinese language; while the documents mentioned in Items (2),  (4) and (5) in the precedingS/C/N/213
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paragraph may be written in a foreign language, but a corresponding Chinese translation shall be
attached.
In the event that two or more foreign investors join tly file an application for the establishment of a
foreign-capital enterprise, they shall submit a duplicate of the contract concluded and signed betweenthem to the examination and approval organ for the record.
Article 11 The examination and approval organ shall, within 90 days after receiving all the
required documents with respect to an application for the establishment of a foreign-capital enterprise,
make a decision whether to approve or disapprove the application. In the event that the examination
and approval organ has found that the documents mentioned above are not complete, or that some of
them are inappropriate, it may call on the applicant to make a supplement or revisions within aprescribed time limit.
Article 12 After the approval of the application for the establishment of a foreign-capital
enterprise by the examination and approval organ, the foreign investor shall, within 30 days after
receiving the certificate of approval, file an application with the relevant administrative departmentfor industry and commerce for registration, and obtain a business license. The date on which the
business license is issued shall be the date of the establishment of the said enterprise.
In the event that the foreign investor fails to file an application with the administrative department for
industry and commerce for registration before the expiration of 30 days after receiving the certificateof approval, the certificate of approval for the establishment of the proposed enterprise shall become
invalid automatically.
A foreign-capital enterprise shall, within 30 days afte r its establishment, go through the procedures for
taxation registration with the tax authorities.
Article 13 Foreign investors may appoint a Chinese service agency for enterprises with foreign
investment or other economic organization to handle, on their behalf, the affairs provided in Article 8,
the first paragraph of Article 9 and Article 10 of these Rules, but a contract of entrustment shall be
concluded and signed between them.
Article 14 The application for the establishment of a foreign-capital enterprise shall include the
following contents:
(1) the name or name of the organization, domicile and the place of registration of the
foreign investor, and the name, nationality, and position of the legal representative;
(2) the name and domicile of the foreign-capital enterprise to be established;
(3) the scope of operations, varieties of products, and the scale of production;(4) the total amount of investment, the regi stered capital, the source of funds, and the
methods and time limit of making contribution to the foreign-capital enterprise to be
established;
(5) the organizational form and structure of the organization, and the legal representative
of the foreign-capital enterprise to be established;
(6) the principal production equipment to be used and the extent of its age, production
technology, technological level and their sources;
(7) the sales orientation and areas, the sales channels and methods;
(8) the arrangements for the revenues and expenditures in foreign exchange;
(9) the arrangements for the establishment of relevant departments and working
personnel, the recruitment of workers and staff members, their training, salaries and
wages, material benefits, insurance, and labour protection, etc.;
(10) the extent to which environmental pollution may be created and the measures for
resolution;S/C/N/213
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(11) the selection of sites and the area of land to be used;
(12) the funds, energy resources, raw and processed materials needed in capital
construction and in production and operations and the solutions thereof;
(13) the progress plan for the implementation of the project; and
(14) the period of operations of the foreign-capital enterprise to be established.
Article 15 The articles of association of a foreign-capital enterprise shall include the following
contents:
(1) the name and the domicile;
(2) the aim and the scope of operations;
(3) the total amount of investment, the registered capital, and the time limit for making 
the contribution;
(4) the form of organization;
(5) the internal organizational structures and their functions and powers as well as their
rules of procedure; the functions, duties and limits of authority of the legal
representative as well as of the general manager, chief engineer, chief accountant and
other staff members;
(6) the principles and system of financial affairs, accounting and auditing;
(7) labour administration;
(8) the term of operations, the termination, and the liquidation; and
(9) the procedures for the amendment of the articles of association.
Article 16 The articles of association of a foreign-capital enterprise shall become effective after
approval by the examination and approval organ. The same procedure shall apply when amendments
are made.
Article 17 The division or merges of foreign-capital enterprises, and significant changes in
capital resulting from other causes, shall be subject to approval by the examination and approval
organ; in addition, the said enterprises shall engage a Chinese certified public accountant to carry out
verification, and to submit a report on the capital verification; after approval by the examination and
approval organ, the enterprises concerned shall go through the procedures for the change of the
registration with the relevant administrative department for industry and commerce.
Chapter III Form of Organization and Registered Capital
Article 18 The organizational form of a foreign-capita l enterprise shall be a limited liability
company. With approval, the enterprise may also take other liability forms.
With respect to a foreign-capital enterprise that is  a limited liability company, the liability of the
foreign investor to the enterprise shall be lim ited to the amount of investment subscribed and
contributed to the enterprise by the foreign investor.
With respect to a foreign-capital enterprise that take s other liability forms, the liability of the foreign
investor to the enterprise shall be dealt with in accordance with the provisions of Chinese laws and
regulations.
Article 19 The total amount of investment of a foreign-capital enterprise refers to the total
amount of funds needed for the establishment of the enterprise, i.e. the sum total of the funds invested
in capital construction in accordance with the scope of production and circulating funds forproduction.
Article 20 The registered capital of a foreign capital enterprise refers to the total amount of
capital registered with the administrative department for industry and commerce for the purpose ofS/C/N/213
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establishing the foreign capital enterprise, i.e. th e total amount of investment the foreign investor
undertakes to contribute.
The registered capital of a foreign-capital enterprise shall fit in with the enterprises scale of
operations; and the proportion between the registered capital and the total amount of investment shall
conform to the relevant provisions of China.
Article 21 A foreign-capital enterprise shall not reduce its registered capital during the term of
operations. Where, however, a reduction is really needed due to a change in the total amount of
investment, the scale of production and operati on, etc., approval shall be obtained from the
examination and approval organ.
Article 22 The increase or assignment of the registered capital of a foreign-capital enterprise
shall be subject to the approval by the examination and approval organ, and the procedures for change
of registration shall be handled with the administrative department for industry and commerce.
Article 23 A foreign-capital enterprise mortgaging or assigning its assets or rights and interests
externally, shall undergo approval by the examination and approval organ, and submit it to the
administrative department for industry and commerce for the record.
Article 24 The legal representative of a foreign-capital enterprise shall be the person in charge
who, in accordance with the stipulations in the enterprise’s articles of association, exercises his/herfunctions and powers on behalf of the enterprise.
When the legal representative is unable to exercise  his/her functions and powers, he/she shall entrust
in writing an agent with the exercise of his/her functions and powers.
Chapter IV Methods of Making Contributions and Time Limits
Article 25 Foreign investors may use convertible foreign currencies for a contribution, and may
use machinery and equipment, industrial property rights, and proprietary technology that are assigned
a fixed price for a contribution.
Foreign investors may, after approval by the ex amination and approval organ, also use, as a
contribution, profits in Renminbi (RMB) earned from their other enterprises with foreign investment
established within the territory of China.
Article 26 Where foreign investors intend to use machinery and equipment that are assigned a
fixed price as a contribution, the said machinery and equipment shall be those that are indispensableto production in the foreign-capital enterprise.
The appraised price for the aforesaid machinery and equipment shall not be higher than the normal
price for similar machinery and equipment sold on the international market at the time.
With respect to the machinery and equipment, assigned a fixed price and used as a contribution, an
inventory listing in detail the assigned prices as  a contribution, including the names, categories,
quantities, and the assignment of prices, etc., shall be made and submitted to the examining and
approval organ as an appendix to the application for the establishment of the foreign-capital
enterprise.
Article 27 Where foreign investors intend to use industrial property rights and proprietary
technology, assigned a fixed price, as their contribution, the said industrial property rights and
proprietary technology shall be owned by the foreign investors themselves.S/C/N/213
Page 8
The assigning of a fixed price for the aforesaid industrial property rights and proprietary technology
shall be in conformity with the general pricing pr inciples of the international market, and the amount
assigned thereto shall not exceed 20% of the registered capital of the foreign-capital enterprise.
With respect to those industrial property rights and proprietary technology,  assigned a fixed price as a
contribution, a detailed inventory of relevant data, including a duplicate of the ownership certificate,
the circumstances of effectiveness, technological performance, the practical value and the basis and
standard for the calculation of pricing, shall be prepared and submitted to the examination and
approval organ as an appendix to the application for the establishment of the foreign-capital
enterprise.
Article 28 When the machinery and equipment, assigned a fixed price and used as a
contribution, have arrived at a Chinese port, the foreign-capital enterprise shall apply to China’s
commodity inspection authorities for inspection, which shall then issue an inspection report.
Where that the variety, quality and quantity of the machinery and equipment, assigned a fixed price
and used as a contribution, are not in conformity with the variety, quality and quantity of the
machinery and equipment, assigned a fixed price as a contribution and listed in the inventory
submitted to the examination and approval organ, the examination and approval organ has the power
to require the foreign investors to make corrections within a prescribed time limit.
Article 29 After the industrial property rights and proprietary technology priced as a
contribution have been put to use, the examination and approval organ has the right to carry out an
inspection.  Where the said industrial property rights and proprietary technology are not in conformity
with the data originally provided by the foreign in vestors, the examination and approval organ has the
right to require the foreign investors to make corrections within a prescribed time limit.
Article 30 The time limit for a foreign investor to make  the contribution shall be clearly stated in
the application for the establishment of the foreign-capital enterprise and the articles of association of
the enterprise. A foreign investor may make the cont ribution in installments, but the last installment of
the contribution shall be made within three years from the day when the business license is issued.
The first installment of the contribution shall not be less than 15% of the total amount of the
contribution that the foreign investor undertakes to make, and shall be made in full within a period of90 days beginning from the day when the business license is issued.
Where a foreign investor fails to make in full the first installment of the contribution within the time
limit provided in the preceding paragraph, the certif icate of approval for the establishment of the
proposed foreign-capital enterprise shall become in valid automatically. The foreign-capital enterprise
shall go through the procedure for registration cancellation with the administrative department for
industry and commerce, and hand in its business license for cancellation; in the event of the failure to
go through the procedure for registration cancellation and to hand in the business license for
cancellation, the administrative department for industry and commerce shall revoke the business
license and make a public announcement.
Article 31 After making the first installment of the contribution, the foreign investor shall make
the remaining installments of the contribution strictly  as scheduled. In the event that a foreign investor
is in arrears with the contribution for 30 days w ithout any justification, the case shall be handled in
accordance with the provisions of the second paragraph of Article 30 of these Rules.
Where a foreign investor has proper reasons for requesting the postponement of the contribution, prior
consent of the examination and approval organ shall be obtained, and the case shall also be reported to
the administrative department for industry and commerce for the record.S/C/N/213
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Article 32 After each installment of the foreign investor’s contribution, the foreign-capital
enterprise shall engage a Chinese certified public accountant to carry out verification, and to prepare a
report on the capital verification, which shall be submitted to the examination and approval organ and
the administrative department for industry and commerce for the record.
Chapter V Use of the Land and its Use Fees
Article 33 With respect to the land to be used by a foreign-capital enterprise, the local people’s
government at or above the county level in the place where the enterprise is to be located, shall make
arrangements after examination and verification in light of local conditions.
Article 34 A foreign-capital enterprise shall, within 30 days from the day the business license is
issued, go through the procedure for the use of land and obtain the land certificate by presenting the
certificate of approval and the business license to the land administration department of the local
people’s government at or above the county level in the place where the enterprise is located.
Article 35 The land certificate shall be the legal inst rument for the foreign-capital enterprise to
use land. The foreign-capital enterprise during its term of operations, shall not assign its land use right
without permission.
Article 36 A foreign-capital enterprise shall, when obtaining the land certificate, pay its land use
fee to the land administration department in the place where the enterprise is located.
Article 37 In using land that has already been developed, a foreign-capital enterprise shall pay
the land development fee.
The land development fee, as mentioned in the preceding paragraph, includes the cost of the
requisition of the land, of pulling down of houses and of resettlement, and the cost of the construction
of infrastructure necessary for the foreign-capital enterprise. The land development fee may be
calculated and collected by the land development unit in a lump sum, or by yearly instalments
Article 38 In using land that has not been developed, a foreign-capital enterprise may develop
the land by itself, or it may entrust a unit concerned in China to develop the land. The infrastructureconstruction shall be carried out under the unified arrangement of the local people’s government at or
above the county level in the place where the foreign-capital enterprise is located.
Article 39 The standard for the calculation and collection of land use fees and land development
fees of foreign-capital enterprises shall be handled in accordance with the pertinent provisions ofChina.
Article 40 The term for the use of land by a foreign-capital enterprise shall be the same as the
approved period of operation of the said enterprise.
Article 41 A foreign-capital enterprise, besides obtaining the land use right in accordance with
the provisions of this Chapter, may also obtain the same right in accordance with the provisions of
other Chinese laws and regulations.
Chapter VI Purchasing and Marketing
Article 42 A foreign-capital enterprise is entitled to make decisions for itself on the purchase,
for its own use, of machinery and equipment, raw and processed materials, fuels, parts andS/C/N/213
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components, fittings, primary parts, means of transport, and articles for office use (hereinafter
uniformly called “goods and materials”).
A foreign-capital enterprise shall, when purchasing goods and materials in China under the same
circumstances, enjoy the same treatment as enjoyed by Chinese enterprises.
Article 43 A foreign-capital enterprise may sell its products on the Chinese market. The State
encourages foreign-capital enterprises to export products made by themselves.
Article 44 A foreign-capital enterprise is entitled to export, of its own accord, products made by
itself; it may also appoint a Chinese-Foreign trade company or a company outside the territory of
China to sell its goods on a commission basis.
A foreign-capital enterprise may sell, of its own accord, the products made by itself on the Chinese
market, and may also appoint a commercial agency  to sell its products on a commission basis.
Article 45 Where machinery and equipment being contributed by a foreign investor as part of its
investment require, according to the relevant provis ions of China, import licenses, the foreign-capital
enterprise shall, on the strength of the approved inventory of equipment and goods and materials to be
imported by the enterprise, file an application directly, or through an agency entrusted by it, with the
license issuing organ for obtaining due import licenses.
Where a foreign-capital enterprise has to import, wi thin the approved scope of business, goods and
materials for its own use and needed by its production and if, according to the provisions of China, it
is necessary for the enterprise to obtain import licenses, it shall work out an annual plan for
importation, and apply, every six months, to the license issuing organ for the licenses.
With respect to products to be exported by a fore ign-capital enterprise, if, according to the provisions
of China, it is necessary for the said enterprise to obtain export licenses, it shall work out an annual
plan for exportation, and apply, every six months, to the license issuing organ for the licenses.
Article 46 The prices of the goods and materials and technological labour services imported by a
foreign-capital enterprise shall not be higher than the normal prices of similar goods and materials and
technological labour services on the international market at the time. The prices of export productsmade by a foreign-capital enterprise shall be fixed by the enterprise itself with reference to the
international market prices at the time, but the prices shall not be lower than reasonable export prices.
With respect to the evasion of tax by using such methods as importing at high prices while exporting
at low prices, the tax authorities shall have the right, in accordance with the provisions of the tax law,
to investigate for legal responsibility.
Article 47 A foreign-capital enterprise shall provide statistical data and submit statistical
statements to the departments concerned in accordance with the provisions of the Statistics Law of the
People’s Republic of China and the relevant provisions of China concerning the statistical system for
the utilization of foreign-capital.
Chapter VII Taxation
Article 48 A foreign-capital enterprise shall pay taxes and duties in accordance with the
provisions of Chinese laws and regulations.
Article 49 The workers and staff members of a foreign-capital enterprise shall pay individual
income tax in accordance with the provisions of Chinese laws and regulations.S/C/N/213
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Article 50 The following goods and materials imported by a foreign-capital enterprise shall be
granted a tax reduction or tax exemption in accordance with the relevant provisions of the tax law of
China:
(1) the machinery and equipment, parts and components, building materials as well as
other materials used as an investment by the foreign investor and needed forconstruction, as well as the installation and reinforcement of machinery;
(2)
ons and transportation for use in production, and equipment for use in production  and
management, imported, for their own use, by a foreign-capital enterprise with the
funds included in the total amount of investment; or
(3) the raw materials and processed materials, auxiliary materials, primary parts, parts
and components, and articles and materials for packaging imported by a foreign-capital enterprise for the production of export products.
The imported goods and materials as mentioned in the preceding paragraph, which, upon approval,
are resold within the territory of China, or are used in the production of products to be sold within the
territory of China, shall be subject to payment of  taxes or repayment of taxes in accordance with the
provisions of the tax law of China.
Article 51 The export commodities produced by a foreign-capital enterprise, except those whose
exportation is restricted by China, shall be granted a tax reduction, tax exemption or tax refund in
accordance with the relevant provisions of the tax law of China.
Chapter VIII Control of Foreign Exchange
Article 52 Foreign exchange affairs of a foreign-capital enterprise shall be handled in
accordance with the pertinent regulations of China on foreign exchange control.
Article 53 A foreign-capital enterprise shall, on the stre ngth of the business license issued by the
administrative department for industry and commerce, open an account at a bank which may handle
foreign exchange business within the territory of China, and its receipts and payments in foreign
exchange shall be subject to the supervision by the depository bank.
The foreign exchange revenues of a foreign-capita l enterprise shall be deposited in the foreign
exchange account of the bank where it has opened an account; and the foreign exchange expensesshall be paid from the foreign exchange account.
Article 54 Where a foreign-capital enterprise has th e necessity to open a foreign exchange
account at a bank outside the territory of China to meet the needs of production and business
operations, the case shall be submitted to the Chinese administrative department for foreign exchangefor approval and, in accordance with the provisions of the Chinese administrative department for
foreign exchange, regular reports on the conditions of revenues and expenditures in foreign exchange
and statements of account shall be submitted.
Article 55 The wages and salaries as well as other proper earnings in foreign exchange of
foreign workers and staff members and of those from Hong Kong, Macao and Taiwan working in a
foreign-capital enterprise may be remitted freely out  of the territory after taxes have been paid in
accordance with the provisions of the Chinese tax law.S/C/N/213
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Chapter IX Financial Affairs and Accounting
Article 56 A foreign-capital enterprise shall, in acco rdance with Chinese laws, regulations and
the provisions of finance organs, set up financial and accounting systems, which shall be reported, for
the record, to the finance departments and the tax authorities at the place where the enterprise islocated.
Article 57 The fiscal year of a foreign-capital enterprise shall begin from January 1 and end on
December 31 of Gregorian calendar.
Article 58 Reserve funds and bonus and welfare funds for workers and staff members shall be
withdrawn from the profits after a foreign-capital en terprise has paid income tax in accordance with
the provisions of the Chinese tax law. The proportion of reverse funds to be withdrawn shall not be
lower than 10% of the total amount of profits after payment of tax; the withdrawal of reserve funds
may be stopped when the total cumulative reserve has reached 50% of the registered capital. The
proportion of bonus and welfare funds for workers and staff members to be withdrawn shall be
determined by the foreign-capital enterprise of its own accord.
In the event that deficits of previous fiscal years of a foreign-capital enterprise have not been made
up, it shall not distribute the profits, while the undistributed profits of previous fiscal years may be
distributed together with the distributable profits of the current fiscal year.
Article 59 Accounting vouchers, account books and accounting statements made  by a foreign-
capital enterprise shall be written in the Chinese la nguage; if they are written in a foreign language,
notes in the Chinese language are required .
Article 60 Business accounting of a foreign-capital enterprise shall be conducted independently.
The annual accounting statements and liquidation accounting statements of a foreign-capital
enterprise shall be prepared in accordance with th e provisions of the Chinese competent departments
for finance and tax. If accounting statements are prepared in foreign currencies, accounting statements
in which the foreign currencies are converted into Renminbi (RMB) shall be prepared at the same
time.
The annual accounting statements and liquidation accounting statements of a foreign-capital
enterprise shall be verified by a Chinese certified public accountant who shall submit a verification
report.
The annual accounting statements and liquidation accounting statements of a foreign-capital
enterprise, as provided in the second and third paragraphs, together with the verification report
prepared by a Chinese certified public accountant, shall be submitted, within a prescribed time limit,
to the Chinese competent departments for finance and tax and also to the examination and approval
organ and the administrative department for industry and commerce for the record.
Article 61 The foreign investor may engage Chinese or foreign accounting personnel to consult
the account books of a foreign-capital enterprise, and the expenses thus entailed shall be borne by the
foreign investor.
Article 62 A foreign-capital enterprise shall submit its annual statement of assets and liabilities
and annual statement of profit and loss to the competent departments for finance and tax, and also to
the examination and approval organ as well as the administrative department for industry and
commerce for the record.S/C/N/213
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Article 63 A foreign-capital enterprise shall set up account books at the place where the said
enterprise is located, and shall receive supervision of the competent departments for finance and tax.
With respect to any foreign-capital enterprise which violates the provisions in the preceding
paragraph, the competent departments for financial and tax affairs may impose a fine, and theadministrative department for industry and commerce may order suspension of operations or
revocation of the business license.
Chapter X Workers and Staff Members
Article 64 Where a foreign capital enterprise employs workers and staff members within the
territory of China, both the enterprise and the workers and staff members shall, in accordance withChinese laws and regulations, conclude labour contracts. Matters as employment, dismissal, salaries
and wages, welfare, labour protection and labour insurance shall be clearly stipulated in the contracts.
Foreign-capital enterprises shall not hire child labourers.
Article 65 A foreign-capital enterprise shall be responsible for the professional and technical
training of its workers and staff members, and for establishing an assessment system, so that workers
and staff members are capable of meeting the needs of the enterprise’s production and development in
the area of production and management functions.
Chapter XI Trade Unions
Article 66 The workers and staff members of a foreign-capital enterprise shall have the right to
set up a grassroots trade union organization and carry out  trade union activities in accordance with
the provisions of the Trade Union Law of the People’s Republic of China.
Article 67 The trade union in a foreign-capital enterprise shall represent the interests of workers
and staff members, and have the right to conclude labour contracts with the enterprise on their behalf,
and to supervise the execution of the labour contracts.
Article 68 The basic tasks of the trade union in a foreign-capital enterprise shall be as follows: to
safeguard the lawful rights and interests of workers and staff members in accordance with the
provisions of Chinese laws and regulations, and to assist the enterprise in the rational arrangement anduse of welfare and bonus funds for the workers and staff members; to organize workers and staff
members in carrying out political study, in learning scientific, technical and professional knowledge,
in carrying out cultural, artistic and sports activities; to educate workers and staff members in
complying with labour discipline and in striving to  fulfil various economic tasks of the enterprise.
When a foreign-capital enterprise holds discussions on problems concerning the commendation andpunishment of workers and staff members, the wage system, welfare benefits, labour protection and
labour insurance, representatives of the trade union shall have the right to attend the meetings as
nonvoting delegates. A foreign-capital enterprise sha ll listen to the opinions of the trade union, and
win its cooperation.
Article 69 A foreign-capital enterprise shall give active support to the work of the trade union of
the enterprise, and, in accordance with the provisions of the Trade Union Law of the People’s
Republic of China, provide the trade union organization with the necessary building and equipment
for handling trade union work, holding meetings, and holding worker and staff collective welfare,
cultural and sports activities. Every month, the fore ign-capital enterprise shall allocate a sum equal to
2% of the actual total amount of wages and salaries of workers and staff as trade union funds, and the
trade union of the enterprise shall use this sum of money in accordance with the measures for the
administration of trade union funds, as formulat ed by the All China Federation of Trade Unions.S/C/N/213
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Chapter XII Term, Termination and Liquidation
Article 70 The term of operations of a foreign-capital enterprise shall be proposed by the foreign
investor in the application for the establishment of the enterprise in light of the specific circumstances
of different industries and enterprises, and shall be subjected to the approval by the examination andapproval organ.
Article 71 The term of operations of a foreign-capital enterprise shall be calculated from the day
when the business license is issued.
Where the term of operations of a foreign-capital enterprise has to be extended upon its expiration, the
enterprise shall, 180 days before the expiration of the term of operations, file an application for theextension of the term of operations with the examination and approval organ. The examination and
approval organ shall, within 30 days from the day of receiving the application, determine whether to
approve or disapprove the extension.  The foreign-capital enterprise shall, after obtaining the approval
for an extension of its term of operations and within 30 days from the day of receiving the approval
for the extension, go through the procedure for the change of registration with the administrativedepartment for industry and commerce.
Article 72 A foreign-capital enterprise that falls under one of the following circumstances shall
terminate its business operations:
(1) the term of operations expires;(2) the foreign investor decides to dissolve it because of poor operation and management
resulting in serious losses;
(3) operations cannot be continued because of heavy losses as a result of natural
disasters, wars or other force majeure;
(4) bankruptcy;(5) disbanded in accordance with the law because it has violated Chinese laws and
regulations or jeopardized social and public interests;
(6) other causes for dissolution, as stipulated in the enterprise’s articles of association,
have occurred.
If a foreign-capital enterprise falls under any of the circumstances as provided in Items (2), (3) and (4)
of the preceding paragraph, it shall submit, of its own accord, an application for the termination ofbusiness operations to the examining and approving organ for verification and approval. The date of
approval after verification by the examining and approving organ shall be the date of the said
enterprise’s termination.
Article 73 In case that a foreign-capital enterprise terminates its operations in accordance with
the provisions in Item (1), (2), (3) or (6) of Ar ticle 72 of these Rules, the enterprise shall, within
15 days from the date of termination, make a public announcement and notify the creditors and,
within 15 days from the date of the issuance of the public announcement of termination, put forward
the procedures and principles of liquidation and the candidates for the liquidation committee, to the
examining and approving organ for verification and approval before liquidation is carried out.
Article 74 The liquidation committee shall be comprised of the legal representative of the
foreign-capital enterprise, the representatives of the creditors and the representatives from the
competent authorities concerned and Chinese certified public accountants and lawyers shall be
engaged to participate.
Priority shall be given to the payment of expenses of liquidation from the existing property of the
foreign-capital enterprise.S/C/N/213
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Article 75 The liquidation committee shall exercise the following functions and powers:
(1) to convene a meeting of creditors;
(2) to take over and liquidate the property of the enterprise in question, and to prepare the
statement of assets and liabilities and the inventory of property;
(3) to propose a basis for the valuation and computation of the property;(4) to work out a liquidation plan;
(5) to recover creditors rights and to pay debts;
(6) to receive payments from shareholders which have not yet been made;
(7) to distribute the remaining property; and
(8) to represent the foreign-capital enterprise in bringing a suit or responding to a suit.
Article 76 Prior to the conclusion of the liquidation of the foreign-capital  enterprise, the foreign
investor shall not remit or carry the enterprise’s funds out of the territory of China, nor dispose of the
enterprises property privately.
If, upon the conclusion of the liquidation of a foreign-capital enterprise,  its net assets and remaining
property exceed its registered capital, the excess  portion shall be regarded as profit on which incometax shall be imposed in accordance with Chinese tax law.
Article 77 Upon the conclusion of the liquidation of a foreign-capital enterprise, it shall go
through the procedures for the cancellation of registration with the administrative department for
industry and commerce, and hand in the business license for cancellation.
Article 78 While disposing of the property of a foreign-capital enterprise, Chinese enterprises or
other economic organizations shall have the preferential right to purchase as an equal footing.
Article 79 Where a foreign-capital enterprise terminates  its operations in accordance with the
provisions in Item (4) of Article 72 of these Rules, liquidation shall be carried out with reference to
the pertinent laws and regulations of China.
Where a foreign-capital enterprise terminates its operations in accordance with the provisions in
Item (5) of Article 72 of these Rules, liquidation shall be carried out in accordance with the relevant
provisions of China.
Chapter XIII Supplementary Provisions
Article 80 A foreign-capital enterprise shall be covered against various categories of insurance
from insurance companies within the territory of China.
Article 81 If a foreign-capital enterprise concludes c ontracts with any other company, enterprise
or economic organization, or with an y individual, the Contract Law of the People’s Republic of China
shall be applied.
Article 82 Cases concerning the establishment, in China’s mainland, of enterprises, the capital
of which is owned solely by the companies, enterprises, and other economic organizations or
individuals in the regions of Hong Kong, Macao or Taiwan, or by Chinese citizens residing in foreign
countries, shall be handled with reference to these Rules.S/C/N/213
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Article 83 Foreign workers and staff members, and workers and staff members from Hong
Kong, Macao and Taiwan, who are working in a fore ign-capital enterprise, may carry into the country
means of transport and articles for daily use that are within reasonable quantities and for their own
use, and they shall go through the import procedures in accordance with the relevant Chinese
provisions.
Article 84 These Rules shall be effective as of the date of promulgation.
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