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CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF A REPORT SUBMITTED BY THE NATIONAL TOURISM ADMINISTRATION CONCERNING THE STRENGTHENING OF TOURIST WORK

    The Report, "Suggestions Concerning the Strengthening of Tourist Work",
submitted by the National Tourism Administration, has been approved by the
State Council and is hereby transmitted to you for implementation in the light
of the actual conditions of the respective localities and departments.

    The tourist industry is a comprehensive undertaking which involves
departments such as aviation, communications, culture, construction, light
industry, textile industry, and commerce. All the departments concerned shall
coordinate and support each other and make joint efforts to promote the sound
and coordinated development of tourism in our country.
SUGGESTIONS CONCERNING THE STRENGTHENING OF TOURIST WORK

    Since the conclusion of the Third Plenary Session of the Eleventh Central
Committee of the Communist Party of China, under the guidance of the policy of
reform and opening to the outside world, tourism has been developing very
rapidly in our country; and it has played an active part in increasing our
country's non-trade foreign exchange earnings, in boosting international trade
and cultural exchange, and in promoting the mutual understanding and
friendship between peoples throughout the world. At present, our country
possesses a fairly good foundation for the development of tourism and the
necessary conditions for speeding up such development. The general trend of
continuous and steady development of the international tourism is also
favourable to us for promoting our tourist industry. In order to further
strengthen the coordinated administration of tourist work and strive for a
greater development of our tourist industry, we hereby advance the following
suggestions:

    1. Strengthening the administration of the tourist industry and doing a
good job in the reform of tourism administration organs at various levels. The
people's governments of various provinces, autonomous regions, and
municipalities directly under the Central Government, as well as tourist
cities, especially those favourite haunts with relatively rich tourist
resources, shall, in accordance with the principles of "separating Party
organs from government organs", "separating government organs from
enterprises", and "simplified and unified administration", and in the light of
local conditions and needs of the development of international and domestic
tourism, set up and improve the tourism administration organs by combining
them with the reform of local setups and making overall arrangements. The
tourism administration departments at various levels shall make timely and
specific adjustments to their responsibilities, clearly define their scope of
duties, and rationally deploy their organizations. In order to effect the
separation of government organs from enterprises, it is imperative to lay
stress on the following measures: (1) The persons in charge of the tourism
administration departments shall not assume concurrently posts of manager of
local tourist companies, tourist agencies, or hotels; (2) The tourism bureaus
shall be completely separated from the enterprises directly under them in the
administration of such aspects as personnel, finance, and materials, so that
the tourist enterprises shall carry on their business operations
independently, and assume sole responsibility for their profits and losses;
(3) The expenses for the tourism administration departments at various levels
to conduct tourist business operations shall be appropriated by the finance
departments at various levels. In order to strengthen the connections between
tourism administration departments and tourist operating units, the National
Tourism Administration shall, in accordance with the requirements of work,
make necessary adjustments with regard to the "China Association of Tourism"
and the "China Association of Tourist Hotels", and establish thereby the
"China Association of Domestic Tourism", which shall assist the competent
authorities for tourism in coordinating relations with other departments
concerned and in studying and providing guidance to the development of
domestic tourism.

    2. Further clarifying the scope of responsibility and the limits of powers
of the tourist administration bureaus, and establishing a system of graded
administration. The subordinative relationship of all the tourist enterprises
and tourist institutions throughout the country - including institutes and
schools of tourism, research institutes of tourism, tourist agencies that are
engaged in the international and domestic tourist industries; various
categories of tourist hotels, guest houses, restaurants, and tourist
automobile and vessels companies for the reception of foreign tourists; key
tourist scenic spots, tourist attractions, and shops selling tourist goods
that are open to foreigners; tourist representative offices abroad, as well as
the tourist representative offices established in China by foreign tourist
agencies - to the competent administrative authorities directly over them
shall remain unchanged; but the tourist bureau shall, in accordance with the
provisions of the State, implement the system of trade administration,
inspection, and supervision. The tourism administration departments at various
levels shall treat tourist enterprises of various categories equally without
discrimination. The National Tourism Administration shall, in accordance with
the aforesaid principle, and working in coordination with other departments
concerned, make a study of, and work out , ways to implement the system of
graded administration and effect a stricter procedure in examining and
approving the establishment of tourist enterprises. All the tourist
enterprises and tourist institutions shall, without exception, subject
themselves to trade administration and supervision.

    3. Deepening the reform in a comprehensive way and implementing the
responsibility system of contracted business operations. The tourism
administration departments at various levels and the departments that run
tourist enterprises shall, taking into consideration the actual conditions of
the local areas and of their own departments, and in accordance with the
pertinent provisions of the State, make a study of, and submit a report on,
a specific plan and practicable procedures for the implementation of the
responsibility system of contracted business operations in state-run and
collectively-run tourist enterprises and, at the same time, formulate other
provisions to perfect such a system. In the course of implementing the
aforesaid responsibility system of contracted business operations, different
forms of contracted business operations may be adopted, in accordance with the
differences in the nature of business operations (tourists agencies, tourist
hotels specialized in receiving foreign guests, fleets of tourist automobiles
and vessels) and business operations of different conditions (enterprises with
profits, enterprises that have to repay loans, enterprises suffering losses
and with a deficit). All those enterprises that have foreign exchange earnings
shall carry out a contracted target for earning foreign exchange, and work out
a corresponding method for the administration of the settlement of the
exchange. Enterprises, which possess the necessary conditions, may gradually
set up risk funds for themselves. The contractor shall be finally determined,
through various kinds of competition, such as by inviting tenders, or by
advertising for employment. The contract period shall, in principle, be no
shorter than 3 years. Once a contract is confirmed and signed, the two
parties, the contractor and the party awarding the contract, shall execute the
contract strictly, and under no circumstances shall it be violated. The
implementation of the responsibility system of contracted business operations
calls for a close integration of the improvement of enterprise management and
the promotion of reform in the internal administration system of enterprises,
and for further efforts in reforming and improving the labour wage system and
the policy of reward and punishment, in accordance with the principle of
combining responsibility, power, and profit.

    4. Reforming the administration system of tourist agencies. The three
backbone travel services - China International Travel Service, China Travel
Service, and China Youth Travel Service - shall be encouraged and supported to
develop towards the establishment of an integrated complex or enterprise
group. With respect to those tourist agencies of various categories that have
already been set up, the National Tourism Administration and local tourism
administration departments shall carry out assessment and rectification in
accordance with the provisions in Interim Regulations on the Administration of
Tourist Agencies and Rules of Implementation for Interim Regulations on the
Administration of Tourist Agencies. Tourist agencies of various categories
shall all carry out effectively the reform in the internal work of their
respective tourist agencies, further tap their potentials, so as to raise
standard of their operation and administration, and to improve the quality of
their services.

    5. Strengthening overseas tourist publicity and the endeavouring for
soliciting tourists, and striving to expand the international market for
foreign tourists. The National Tourism Administration shall make further
efforts in investigating and analysing the market for international tourists,
work out specific plans for the expansion of the said international market,
and take measures to put it into practice. Our resident representative
tourist offices abroad shall try their best to investigate into the market for
international tourists and carry out publicity work for soliciting visiting
tourists, take the responsibility to supervise the publicity and soliciting
endeavour carried out abroad by units in charge of liaison work with foreign
countries, actively make contacts with the institutions concerned, tourist
agencies and tourist wholesalers in countries where our representative tourist
offices are resident, and pay attention to collecting and feeding back
relevant information. Various resident representative tourist offices abroad
may, within the scope of law of the respective countries where they are
resident, and at their discretion, undertake some paid services or other
business operational activities.

    Various units in charge of liaison work with foreign countries, while
canvassing among foreigners for tourists itineraries, shall work in close
coordination and take the interests of the whole country into account. They
may not play down the others and compete against them by offering prices lower
than the protective price. Various units in charge of liaison work with
foreign countries shall be encouraged to collaborate on a voluntary basis to
canvass jointly among foreigners. With respect to those who have violated
external liaison disciplines, the National Tourism Administration and the
local tourism administration departments shall, depending on the seriousness
of the cases, impose disciplinary sanctions, or economic penalty, on the
violators. In order to meet the needs of the development of the tourist
industry in our country, the outlay for conducting tourist publicity and
canvassing abroad may be increased with each passing year. From now on,
various units in charge of liaison work with foreign countries, when
canvassing jointly among foreigners may collect service charges; all units
that take part in the canvassing activities and derive benefits there from
shall pay the charges.

    6. Strengthening the macro-administration of those newly-built tourist
hotels that specialize in receiving foreign guests and promoting the reform of
hotel administration system. The tourism administration departments at various
levels shall conscientiously implement Interim Regulations on the Construction
and Administration of Storied Buildings, Halls, Hotels and Guest Houses,
promulgated by the State Council on September 22, 1988, and, working in
coordination with the local planning departments, carry out a checking-up on
the projects of local tourist hotels that specialize in receiving foreign
guests. From now on, in principle, no more high-grade tourist hotels that
specialize in receiving foreign guests shall be built in any place. In areas
less frequented than favourite tourist haunts, medium- and low-grade
hotels may be built, in accordance with the tourist market's demand, and
depending on the actual circumstances, (a number of high-grade rooms may be
provided in a medium-grade hotel, if necessary). In such highly frequented
tourist cities as Beijing, Shanghai, Guangzhou, Guilin, Xi'an, and Hangzhou,
no new hotel construction projects with Chinese-foreign joint investment or
by Chinese-foreign cooperation shall, in principle, be approved. In accordance
with the guideline of Document No. 17 (1988) issued by the General Office of
the State Council, it shall be imperative to speed up the establishment of the
hotel administration company of our own country. In cases where necessity
arises for the building of new hotels in form of Chinese-foreign joint
venture or Chinese-foreign contractual joint venture, the cases shall be
handled in accordance with the provisions in Document No. 101 (1986) and
Document No. 32 (1988), issued by the General Office of the State Council.
As regards the tourist scenic spots and tourist attraction, built and
faciliated with, or partly with the investment of the National Tourism
Administration, the local tourism administration departments shall take part
in the leadership and administration of the aforesaid tourist places.

    Promoting the reform in the hotel administration system. There are now
specific standards for the "star-rating" of the country's tourist hotels that
specialize in receiving foreign guests; the rating process shall be speeded up
and strive to complete the task by the end of next year. The system for
issuing and revoking business licence for tourist hotels that specialize in
receiving foreign guests (including various categories of tourist agencies and
tourist automobiles and vessels companies) shall be gradually set up. With
respect to those tourist enterprises that have committed serious illegal acts,
the competent authorities for tourism may suggest to the relevant
administrative departments for industry and commerce that the business
licences of the aforesaid enterprises be revoked.

    7. Carrying out, with caution, the reform in tourist prices, and
strengthening the administration of the receipts and expenditures in foreign
exchange as well as the settlement of exchange relating to tourist
enterprises. The problem of tourist prices has a direct bearing on the
interests and reputation of the State; therefore it is imperative to conduct
careful investigation and studies before taking cautious steps in the reform,
and submit the reform plan to higher authorities for approval. It is necessary
to reform the price structure so as to fix the tourist prices more
scientifically and reasonably by taking into full consideration the necessity
to meet the challenge of international competition, and in accordance with the
special features of different tourist itineraries and different seasons (from
now on, the National Tourism Administration and the State Administration for
Commodity Prices shall chiefly fix the ceiling price and the floor price - the
protective price). Once the price principles are determined, the tourist
enterprises at various levels and of various categories shall execute them
strictly. Those who have violated the price discipline shall be dealt with
seriously.

    The National Tourism Administration shall, working in coordination with
such departments as the State Statistical Bureau, the State Administration of
Foreign Exchange Control, the Ministry of Finance, and the Bank of China,
strengthen the statistical work on the tourist enterprises' receipts and
expenditures, and tighten the control of the foreign exchange receipts and
expenditures of the tourist enterprises, establish the system for the
settlement of tourist foreign exchange, and bring this work into line with the
State plan. It is imperative to formulate, through studies, the Measures for
Foreign Exchange Control in Tourism and the Measures for the Financial
Administration of Foreign Exchange in Tourism, and submit these two documents
to the State Council for approval before implementation so as to reverse as
early as possible the present situation of serious drain on foreign exchange
earnings from tourism.

    8. Developing vigorously the manufacture and marketing of tourist goods
and tourist souvenirs, increasing the volume of the foreign exchange earning
from tourism in our country and improving its economic results. The
manufacture and marketing of tourist goods and tourist souvenirs constitute an
important component part of the tourist industry, and is also an important
channel for earning foreign exchange for the State. It is imperative to
establish gradually a nationwide network for the production and marketing of
tourist goods and tourist souvenirs. For the aforesaid purpose, the "China
Tourist Services Company" under the National Tourism Administration, the
"China Tourist Products Production and Supply Company" under the Ministry of
Light Industry, and the "China Friendship Services Company" under the Ministry
of Commerce shall be taken as the foundation; their leading role shall be
brought into full play, and their businesses shall be further expanded so that
they shall grow into complexes of enterprises specialized in different lines
of business, handling different assortments of tourist goods and tourist
souvenirs. These complexes of enterprises may establish, in a planned way, a
number of production bases for the production of tourist souvenirs, and a
number of research institutes for carrying on studies in the marketing
quotations of international tourist goods and tourist souvenirs and for
developing new products, so that scientific research and product development
will be combined in the integrated process of production-supply-marketing. It
is necessary to encourage various places, especially the key tourist areas, to
vigorously develop the production of tourist goods and tourist souvenirs that
are of national style with various local colours, to increase designs and
varieties, to expand channels for sources of goods, to improve sales service,
and to strengthen market administration. It is imperative to implement
conscientiously the provisions approved long ago by the State Council: "the
foreign exchange earned through the sales of tourist goods shall be deemed as
the foreign exchange earned by foreign trade" and to formulate, through
studies, specific measures for carrying out the said provisions; with respect
to those export goods which do not come under the licence control, it is
important to expand their sales to foreign tourists; the selling prices of
tourist goods and tourist souvenirs shall be handled flexibly in accordance
with the different conditions of goods supply, the international market
quotations, and the specific marketing policy pursued by the economic and
trade departments. The special raw and processed materials which are needed
for the development of the production of tourist goods and tourist souvenirs
and are in short supply in the country, shall be brought into the goods supply
channels handled by the departments of goods and materials at various levels;
those raw and processed materials that are imported solely by the State shall
be brought into the plan for importation executed by the State; the special
imported raw and processed materials needed shall be handled in accordance
with the pertinent provisions in Document No. 16 (1987) issued by the General
Office of the State Council. As Beijing, Shanghai, and Guangzhou are the three
main ports of entry and exit for overseas tourists, they shall be turned into
cities with sizable tourist shopping centres and good reputation in Asia.

    At present, some tourist hotels that specialize in receiving foreign
guests spend a large amount of foreign exchange in importing fitting-up
materials, sanitary utensils, machinery and electrical equipment, and spare
and component parts. In order to change this situation without delay, from now
on, all similar products which can already be manufactured in our country and
reasonably priced and whose quality and delivery time can be guaranteed shall
cease to be imported. We suggest that a catalogue of products to be restricted
in importation be put forward by the departments concerned and the importation
of the aforesaid products shall be examined and approved by the administrative
departments of the trades concerned.

    9. Strengthening the building of a contingent of tourist personnel and
paying close attention to the education in professional ethics and
professional discipline. It is imperative to improve the educational work in
schools and institutes of tourism and the professional training of tourist
personnel, especially, the training of qualified specialized personnel at
various levels and of different categories. It is also imperative to intensify
the education in professional ethics and professional discipline, so as to
improve the political and professional quality of tourist personnel, to foster
a sense of honour and responsibility, to oppose all kinds of unhealthy
tendencies, to improve the quality of tourist services and offer high-quality
services, thus enabling our tourist industry to establish good international
reputation and image.

    10. Strengthening the coordination between different departments
concerned. The tourist industry is a comprehensive undertaking, the
development of which relies not only on its own work, but also on the close
coordination with such organizations as the departments of aviation,
communications, city construction, gardens and parks, historical relics,
culture, light industry, textile industry, commerce, and religious affairs.
The tourist industry is also a trans-regional trade, and a large amount of
organizational work shall be done by the local departments; a harmonious
coordination is thus indispensable. Tourist departments at various levels
shall strengthen their coordination with other departments concerned and make
joint efforts in promoting a sound and co-ordinated development of the tourist
industry in our country.