Provisions on Guiding Foreign Investment Direction
(Approved and promulgated by the State Council on Feb. 21,
2002.)
Article 1 These provisions are formulated
according to the related legal provisions on foreign investment and
requirements of industrial policies of the State in order to guide
the direction of foreign investment, to make foreign investment in
accordance with the plan of the national economy and social
development of our country, and to serve the purpose of protecting
legitimate rights and interests of investors.
Article 2 These provisions shall apply to the
projects of Sino-foreign equity joint ventures, Sino-foreign
contractual joint ventures, wholly foreign owned
enterprises(hereafter referred to as "foreign investment
enterprises"), as well as to other forms of foreign investment
(hereafter referred to as "foreign investment projects") within the
territory of the People's Republic of China.
Article 3 The State Development Planning
Commission (SDPC), the State Economy and Trade Commission (SETC)
and the Ministry of Foreign Trade and Economic Cooperation
(MOFTEC), in conjunction with the concerned ministries of the State
Council, shall formulate Catalogue for the Guidance of Foreign
Investment Industries and Catalogue of Advantaged Industries for
Foreign Investment in Mid-west China, and promulgate these
Catalogues after approval of the State Council. According to
practical circumstance that partial adjustment need to be made to
these Catalogues, SETC, SDPC and MOFTEC, in conjunction with the
concerned ministries of the State Council shall make revision and
promulgation in time.
Catalogue for the Guidance of Foreign Investment Industries and
Catalogue of Advantaged Industries for Foreign Investment in
Mid-west China shall be the basis for the guidance of examination
and approval of foreign investment projects and for the policy
application of foreign investment enterprises.
Article 4 Foreign investment projects shall be
classified into four categories: encouraged, permitted, restricted
and prohibited projects.
Foreign investment projects belonging to encouraged, restricted
and prohibited categories are listed in Catalogue for the Guidance
of Foreign Investment Industries. Those permitted foreign
investment projects which do not belong to the above three
categories are not to be listed in Catalogue for the Guidance of
Foreign Investment Industries.
Article 5 Those foreign investment projects
under one of the following circumstances shall be listed as
encouraged foreign investment projects:
1. Projects for new agricultural technology, comprehensive
agricultural development and for energy, transportation and key raw
materials industries;
2. Projects for new and high technology, advanced applicable
technology which can improve performance of products and increase
tech-economic efficiency of enterprises or produce new equipment
and new material that domestic capacity is deficient.
3. Projects that meet market demands, and can promote the
quality of products, enter into new markets or strengthen the
competing capability of products in intentional markets.
4. Projects adopting new technology and new equipment for saving
energy and raw materials, for comprehensive utilization of
resources and renewable resources, and for prevention environment
pollution;
5. Projects that can make full use of man power and resource
advantage in mid-west region and are in accordance with the State's
industrial policies;
6. Other cases that are regulated by laws and administrative
regulations of the State.
Article 6 Those foreign investment projects
under one of the following circumstances shall be listed as
restricted foreign investment projects:
1. Projects adopting out-of-date technologies;
2. Projects unfavorable to resource-saving and ecological
environment improvement;
3. Projects for resources protected by laws and regulations of
the State;
4. Projects in those industries that shall be opened
gradually;
5. Other cases that are regulated by laws and administrative
regulations of the State.
Article 7 Those foreign investment projects
under one of the following circumstances shall be listed as
prohibited foreign investment projects:
1. Projects that endanger the safety of the State or damage
social and public interests;
2. Projects that pollute environment, destroy natural resources
or impair the health of human beings;
3. Projects that occupy large amounts of arable land,
unfavorable to protection and development of land resources;
4. Projects that endanger the safety of military facility and
its performance;
5. Projects that adopt the unique craftsmanship or technology of
our country to make products;
6. Other cases that are regulated by laws and administrative
regulations of the State.
Article 8 "Equity joint venture and contractual
joint venture only" or"Chinese partners shall hold the majority of
shares" or "Chinese partners shall hold relative majority of shares
" may be regulated for certain foreign investment projects in
Catalogue for the Guidance of Foreign Investment Industries.
" Equity joint venture and contractual joint venture only "
means that such projects shall be conducted in forms of
Chinese-foreign equity joint venture and Chinese-foreign
contractual joint venture only; Chinese partner shall hold the
majority of shares" means that the sum of shares held by Chinese
investor(s) of such a project shall be 51 percent of the total or
up; "Chinese partner shall hold the relative majority of shares"
means that the Sum of shares held by Chinese investor(s) of such a
project shall greater than the shares held by any single foreign
investor in the project.
Article 9 Encouraged foreign investment
projects apart from the preferential terms stipulated in the
relevant laws or administrative regulations of the State, may
enlarge their scope of business with approval, if they are engaged
in the construction and operation of infrastructure facilities
related to energy, transportation and urban utility sectors(coal,
oil, natural gas, power, railway, highway, port, airport, urban
road, sewerage treatment and garbage disposal, etc.), which need a
large amount of investment and a long payoff period.
Article 10 Those permitted projects that export
all their products directly shall be deemed as encouraged projects.
Restricted foreign investments may be deemed as permitted foreign
investment projects with approval from the government of provinces,
autonomous regions, municipalities directly under the Central
Government or cities of direct planning by the State, if the export
sales of products amount to over 70 percent of the total sales of
the product.
Article 11 Restrictions can be properly eased
for those permitted and restricted foreign investment projects that
can really make full use of the advantages of mid-west regions.
Those projects which listed in Catalogue of Advantaged Industries
for Foreign Investment in Mid-west China can enjoy preferential
treatments for encouraged foreign investment projects.
Article 12 With existing project approval
authorization, foreign investment projects shall be examined and
approved or be filed for record by development economy and trade
departments respectively according to the construction nature of
the projects. Contracts and articles of associations of foreign
investment enterprises shall be examined and approved or be filed
for record by the departments in charge of foreign trade and
economic cooperation. Those restricted foreign investment projects
whose investment is lower than the competence limit shall be
examined and approved by corresponding competent departments of
provinces, autonomous regions, municipalities directly under the
Central Government or cities of direct planning by the State and
shall be filed for record to higher-up responsible ministries and
corresponding line ministries simultaneously. The approval
authorization for restricted foreign investment projects shall not
be allowed to be delegated to the lower levels. Foreign investment
projects in service sector that shall be opened gradually should be
examined and approved according to relevant regulations of the
State.
Foreign investment projects that involve issues of quota or
license shall apply to the competent departments of foreign economy
and trade for quota or license. If laws or administrative
regulations have otherwise stipulations concerning the procedures
and measures of examination and approval of foreign investment
projects, stipulations of those laws or administrative regulations
shall be followed.
Article 13 Examination and approval organs of
higher levels shall cancel the foreign investment projects that are
examined and approved in violation of these Provisions within 30
working days after receiving the recorded files of the concerned
projects. The contracts and articles of association shall be
invalid. The enterprise registration organs shall not register
these projects. And the Customs shall not handle import or export
formalities for these projects.
Article 14 The relevant parties of foreign
investment projects who have obtained approval of the project
through swindle or other illicit means shall be investment for
legal responsibility in the light of the seriousness of cases
according to law. The examination and approval organs shall cancel
the approval of the project, and relevant competent units should
deal with these projects correspondingly according to the law.
Article 15 Staff of examination and approval
organs who abuse their authority, neglect their duties, shall be
investigated for criminal responsibility as the crime of authority
abusing or the crime of duty neglecting according to the criminal
law. In cases that offenses are not serious enough to trigger
criminal punishments, disciplinary sanctions harsher than special
demerit for record shall be applied according to laws.
Article 16 Investment projects sponsored by
overseas Chinese and investors from Hong Kong Special
Administrative Region, Macao Special Administrative Region and
Taiwan region shall be handled by reference of these
provisions.
Article 17 These provisions shall enter into
force on Apr. 1, 2002. And Interim Provisions on Guiding Foreign
Investment Direction promulgated by the State Planning Commission,
SETC and MOFTEC on Jun. 20, 1995 shall be abrogated
simultaneously.
Note: State Development Planning
Commission?has?been?renamed as State Development and
Reform Commission; SETC, MOFTEC now has merged as the Ministry of
Commerce. The English information is provide for reference only,
please check the Chinese version.
(Source: China Association of Development Zones)
