Laws of the People's Republic of China

Circular of the Ministry of Commerce Concerning Matters about Reinforcing the Administration of Processing Trade

Shang Chan Fa [2007] No.133

In order to further perfect the administration of processing trade, encourage processing trade enterprises to optimize structure, improve economic performance, independently innovate and actively perform social responsibilities, restrict and decrease activities of processing trade enterprises conducting the processing trade with high consumption of energy, serious pollution of environment and low added value, effectively accelerate the transformation and upgrading of processing trade and promote the sound development of processing trade, the competent departments of commerce at various levels shall ceaselessly reinforce system construction in the administration of processing trade business, check the business qualification and processing production capacity of processing trade enterprises as well as do well in access administration. The related matters are hereby notified as follows:

1.

Reinforcing the system construction of the processing trade administrative departments at each level

(1)

Rigorously administering the power of examination and approval. The competent commerce departments at each level shall, strictly according to the provisions on examining and approving organ and graded examination and approval in the Interim Measures for Administrating Examination and Approval of Processing Trade, exercise the power of examination and approval over processing trade business. When delegating the power of examination and approval to lower levels, the provincial competent commerce departments shall observe the related provisions and file the related situation with the Ministry of Commerce for record. The examining and approving organs at each level shall issue the Certificate on Operation Situation and Production Capacity of Processing Trade Enterprises and the Approval Certificate for Processing Trade Business to enterprises by using the e-networked approval/administration system for processing trade. The related data on such certificates shall be put into the database of the Ministry of Commerce for unified administration. Any examining and approving organ may not issue any certificate by any other means.

(2)

Attention shall be paid to daily statistical analysis. The competent commerce departments at each level shall pay attention to gathering the statistical data regarding the production, operation, taxation, environmental protection, energy consumption, number of workers, wage level, payment of staff's social insurances, etc., of the local processing trade enterprises, summarize the situation and experience in using advanced technical equipment, obtaining patents and building self-owned brands by them, and file the related information with the higher competent commerce departments for statistical summary.

2.

Perfecting the access management for processing trade enterprises

(1)

Inspection on the operation situation and production capacity of processing trade enterprises shall be reinforced. For determining an enterprise's qualification for engaging in processing trade business as well as examining and approving processing trade business by the examining and approving organ, the Certificate on Operation Situation and Production Capacity of Processing Trade Enterprises (hereinafter referred to as the Production Capacity Certificate) shall be deemed as an important basis. When applying for engaging in processing trade business, an enterprise shall truthfully report each item listed in the Production Capacity Certificate, and the competent commerce departments at each level shall make on-the-spot investigation and make examination and approval in accordance with the actual situation. The enterprise shall provide the evidentiary documents or materials in relation to the reported contents when necessary. The competent commerce department may not approve any enterprise failing to pass the check on operation situation and production capacity to engage in processing trade business.

(2)

Incorporating the indices about environmental protection, energy consumption, employment and equipment level, etc., into the scope of check on operation situation and production capacity.

(a)

Processing trade enterprises shall be urged to strictly carry out environmental protection standards and encouraged to save energy and reduce energy consumption. A processing trade enterprise's major discharge indices such as sulfur dioxide (SO2) index, chemical oxygen demand (COD) index, etc., shall reach the requirements of the environmental protection departments, and its comprehensive energy consumption for gross unit output value may not be higher than the local average level. If any enterprise fails to reach the standards for environmental protection and energy consumption or commits any environment responsible accident, it shall be prohibited from engaging in processing trade business.

(b)

Processing trade enterprises shall be urged to improve the employment system. A processing trade enterprise shall go through employment registration formalities as required at the local labor security department, care for workers' welfare and respect the related local provisions on minimum wage level and social insurances payment. Where any enterprise fails to go through employment registration formalities as required, fails to reach the minimum wage level at its locality or violates the related provisions at its locality on social insurance payment, engagement in trade business may not be approved; as for any such enterprise approved prior to the issuance of the present Circular, the competent commerce department shall urge it to correct within a fixed time limit, where it fails to do so, the competent commerce department shall cancel its qualification for engaging in processing trade business.

(c)

The elimination of outdated production capacity shall be accelerated. The competent commerce departments at each level shall effectively implement the Decision of the State Council Concerning the Promulgation of the "Interim Provisions on Promoting Industrial Structure Adjustment" for Implementation (Guo Fa [2005] No.40), and in light of the Catalogue for the Guidance of Industrial Structure Adjustment, forbid the enterprises using outdated production technical equipment as listed in the eliminated category from operating processing trade business, and may not approve any enterprise to undertake processing trade business for the purpose of producing any outdated product as listed in the eliminated category. They shall urge the processing trade enterprises, which use technologies and equipment as listed in the restricted category or produce products listed in the restricted category, to accelerate transformation and upgrading, and may not approve any new enterprise to undertake processing trade business by using technologies and equipment as listed in the restricted category any more.

3.

Delegating the power of examination and approval on the domestic sale of processing trade to the lower levels

For the purpose of adapting to the development situation of processing trade and strengthening the administration of processing trade, from July 1st, 2007, when any processing trade enterprise applies for selling bonded import materials in domestic market, the application shall be accepted, examined and approved by the original competent commerce department issuing the Approval Certificate for Processing Trade Business according to the Interim Measures for Examining and Approving the Domestic Sales of Bonded Import Materials of Processing Trade. In case any commodity to be sold in domestic market involves quota, license or any other special administrative measure, it shall still be submitted to the provincial competent commerce department or the Ministry of Commerce for approval as required.

The competent commerce departments at each level shall, by considering the requirements mentioned above and the actual situation of the locality, perfect each control measure, do well in self-inspection and rectification, find out the real situation of all the processing trade enterprises within your respective jurisdiction and timely report the problems and situation found out. The provincial competent commerce departments shall supervise the examination and approval organs at lower levels, handle and report behaviors of examining and approving by exceeding power or issuing certificate not through the e-networked approval/administration system for processing trade once found out, work hard in statistical analysis and summarize the experiences of outstanding entities, timely report them to the higher authorities as well.

The Ministry of Commerce

April 12, 2007