Laws of the People's Republic of China

The State Administration of Foreign Exchange, the Ministry of Foreign Trade and Economic Cooperation

Circular of the State Administration of Foreign Exchange and the Ministry of Foregin Trade and Economic Cooperation Concerning Transmitting the Interim Measures on Examination of Export Receipts of Foreign Exchange

HuiFa [1999] No.103

March 23, 1999

(The Circular is omitted here) Attachment:Interim Measures on Examination of Export Receipts of Foreign Exchange

Chapter I General Provisions

Article 1

In order to perfect the Measures over export receipts of foreign exchange, to supervise and urge the full collection and timely verification of export receipts, to prevent the activities such as evasion and arbitrage of foreign exchange, and to maintain the balance of payments, theses Measures is set up based on relevant provisions stipulated in "Foreign Trade Law of the People's Republic of China", "Regulations on Foreign Exchange Administration of the People's Republic of China" and "Measures on Administration of Verification of Export Receipts Collection of Foreign Exchange".

Article 2

Theses Measures is applicable to every kind of enterprises entitled with exports and imports right (hereinafter referred to as exports and imports enterprises), which are including of foreign trade companies (including Chinese-foreign joint venture companies of foreign trade), production enterprises and science institutes entitled with self-exports and imports, commerce and commodity companies, external contract labor enterprises, enterprises for doing processing trade, enterprises for doing bordering trade, and enterprises for doing small amount of traveling goods.

Article 3

The examination of export receipts of foreign exchange will combine quarterly examination with annual assessment. The results of examination will implement the system of circulation and publication. The coverage of circulation is MOFTEC departments, banks and taxation departments.

Article 4

SAFE and its branches and sub-branches (including Beijing, Chongqing Foreign Exchange Department, hereinafter referred to as SAFE) are responsible for conducting the examination, and the arrangement and enforcement of the assessment as well.

Chapter II Indicators for Examination

Article 5

Ratio of export receipts of foreign exchange is the key indicator of examination.

Ratio of export receipts of foreign exchange is referred as the ratio between the collected and verified amount of export receipts of foreign exchange and the amount of export receipts of foreign exchange that should have been collected and verified in the examination duration. The equation is as follows: Ratio of export receipts of foreign exchange = {[the collected and verified amount of export receipts of foreign exchange (i.e., the summation of a) collected and verified amount of export receipts, b) verified amount of export receipts that is not in cash and c) the approved balanced amount for verification of export receipts)]/the amount of export receipts of foreign exchange that should have been verified in the examination duration} X 100%.

Article 6

The amount of export receipts that should have had been verified in previous examination duration will not be counted in the amount of export receipts that should have been verified in this examination duration.

Meanwhile, the hereby following verified amount of export receipts will not be counted in the verified amount of export receipts in this examination duration:

1.

the export receipts verified in this examination duration that should have had been verified in previous examination duration;

2.

the export receipts do not reach their anticipated date of collection of export receipts;

3.

the difference that the actual collection of exports exceeds the value of exports (i.e. the turnover of export).

Article 7

It is primary condition for rating the situation of export receipts of foreign exchange for export and import enterprises that ratio of surrendered verification forms of export receipts should not be below certain pre-announced criterion.

Ratio of surrendered verification forms of export receipts is referred as the ratio of the surrendered number of counterfoils of verification forms of export receipts that receive in the examination duration and the extraction of the number of verification forms of export receipts that receive in the examination duration and the cancelled number of verification forms of export receipts (excluding the number of reported lost forms). The equation is as follows:

Ratio of surrendered verification forms of export receipts = {the surrendered number of counterfoils of verification forms of export receipts that receive in the examination duration / [the number of verification forms of export receipts that receive in the examination duration - the cancelled number of verification forms of export receipts (excluding the amount of reported lost forms)]} X 100%.

Chapter III Measures of Examination

Article 8

The examination will be separated into quarterly examination and annually assessment. The examination duration for quarterly examination is for one quarter and will be conducted within the first ten days of May, August and November of each year. The examinations will be concentrated on the ratio of export receipts of foreign exchange in the first, second and third quarters of this year and the fourth quarter of last year, as well as the ratio of surrendering verification forms of export receipts in the first and the second quarters of this year. The examination duration for annual assessment is one year. The assessment will be conducted in February of each year and concentrated on the ratio of surrendered verification forms of export receipts in the fourth quarter of the year before last year and the first, second and third quarters of last year, as well as the ratio of export receipts of foreign exchange for the whole last year (see attachment 1).

Article 9

The criteria for examination are as follows:

1.

The criterion for examination of ratio of export receipts is at 70 per cent and is separated into four categories:

(1)

this ratio is at or above 95 per cent;

(2)

this ratio is between 70 per cent (including 70 per cent) and 95 per cent;

(3)

this ratio is between 50 per cent (including 50 per cent) and 70 per cent;

(4)

this ratio is below 50 per cent.

2.

The criterion for examination of ratio of surrendered verification forms of export receipts is at 80 per cent.

Article 10

In annual assessment, the grades of export receipts for export and import enterprises will be rated according to the results of examination.

1.

The enterprise will be rated as "honorable enterprise for collection of export receipts" if its ratio of export receipts is at or above 95 per cent.

2.

The enterprise will be rated as "ordinary enterprise for collection of export receipts" if its ratio of export receipts is between 70 per cent (including 70 per cent) and 95 per cent.

3.

The enterprise will be rated as "risky enterprise for collection of export receipts" if its ratio of export receipts is between 50 per cent (including 50 per cent) and 70 per cent.

4.

The enterprise will be rated as "high-risky enterprise for collection of export receipts" if its ratio of export receipts is below 50 per cent.

The primary condition for the above assessment is that ratio of surrendered verification forms of export receipts should be above 80 per cent. Otherwise, all the enterprises will be rated as "high-risky enterprise for collection of export receipts" if the ratio of surrendered verification forms of export receipts is below 80 per cent.

Article 11

The criteria for examining export receipts could be adjusted, complied with the change of situation at different moments, by SAFE and MOFTEC.

Article 12

The examination of export receipts will be conducted with the responsibilities taking by different levels.

Head offices of SAFE and MOFTEC are responsible for the quarterly examination and annual assessment of export receipts of central export and import enterprises.

Branches or sub-branches of SAFE and their same level MOFTEC departments are responsible for the quarterly examination and annual assessment of export receipts of their domiciled export and import enterprises.

Article 13

Within 15 days in the same month for conducting the examination, branches and sub-branches of SAFE are supposed to fill in the examination form of export receipts of export and import enterprises and regional statistics table of examination of export receipts, and to report them to higher level branches as well as to report the examination form of export receipts of export and import enterprises to the same level MOFTEC departments.

The provincial SAFE branches are supposed to summarize their and their domiciled sub-branches' examination forms of export receipts of export and import enterprises and regional statistics tables of examination of export receipts, and to report the summarized examination form of export receipts of export and import enterprises and regional statistics table of examination of export receipts to head office of SAFE within 20 days in the same month for conducting the examination. Meanwhile, they are supposed to transmit the electronic data of these two forms to head office of SAFE through the internal communication network of SAFE as well. Furthermore, they are supposed to report the forms to the same level MOFTEC departments.

Article 14

The circulation and publication of the results of examination and assessment are as follows:

Head offices of SAFE and MOFTEC are responsible for the circulation of the examination forms of export receipts of central export and import enterprises on quarterly basis. They are also responsible for the circulation of the names, which including regional and central enterprises, of "honorable enterprises for collection of export receipts" and "high-risky enterprises for collection of export receipts" based on annual assessment and make them public through media.

Provincial branches of SAFE and MOFTEC are responsible for circulating the examination forms of export receipts of domiciled export and import enterprises on quarterly basis. They are also responsible for circulating the names of domiciled "honorable enterprises for collection of export receipts" and "high- risky enterprises for collection of export receipts" based on annual assessment and making them public through media.

Chapter IV Rewarding and Punishment

Article 15

SAFE and MOFTEC are supposed to take the responsibility for conducting the rewarding or punishment on enterprises with different grades for collection of export receipts:

1.

"Honorable enterprises for collection of export receipts" will enjoy privilege treatment and simplified procedures in the course of administrative regulations;

2.

The banking credits to "risky enterprises for collection of export receipts" and "high-risky enterprise for collection of export receipts" should be subject to much more strict standards of banks;

3.

Giving the warning to "risky enterprises for collection of export receipts";

4.

MOFTEC or its authorized department in charge of foreign trade could suspend the entitlement of export and import if the enterprise is rated as "high-risky enterprise for collection of export receipts" for one year and rated as "risky enterprise for collection of export receipts" continuously for two years.

Article 16

SAFE and MOFTEC are supposed to track major investigations on "risky enterprises for collection of export receipts" and "high-risky enterprises for collection of export receipts". SAFE and MOFTEC will give the punishments to these enterprises according to relevant provisions if the enterprises are clarified as guilty.

Article 17

The Measures on enterprises with foreign investment are complied with the above mentioned provisions. SAFE and MOFTEC could punish the enterprises legislatively if the enterprises disobey "Regulations on Foreign Exchange Administration of the People's Republic of China" and its relevant regulations.

Article 18

The rewarding and punishments given by SAFE to the quarterly examination results could refer to 1, 2 and 3 in Article 15 and Article 16 and Article 17 .

Chapter V Supplementary Provisions

Article 19

It is SAFE and MOFTEC that are responsible for the interpretation of theses Measures.

Article 20

Theses Measures is prevailing one if previous provisions are not consistent with it.

Article 21

Theses Measures enter into force as of May 1, 1999.