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CIRCULAR OF THE STATE COUNCIL CONCERNING STRENGTHENING THE COLLECTION AND ADMINISTRATION OF INCOME FROM THE COMPENSATED ASSIGNMENT OF RIGHTS TO USE STATE-OWNED LAND

    In 1989, the State Council and the Ministry of Finance promulgated the
"Circular of the State Council Concerning Strengthening the Collection and
Administration of Income From the Compensated Assignment of Rights to Use
State-owned Land" and the "Interim Measures for the Administration of Income
From the Compensated Assignment of Rights to Use State-owned Land." The
documents stipulated contained detailed regulations concerning the collection
and administration of related income. Implementation of the regulations
indicates that the vast majority of areas throughout the country have carried
out the policy conscientiously, promoted the compensated use of land resources
and accelerated local economic construction. However, collection and
administration in a small number of areas has been rather weak, thereby
creating a serious drainage of potential income from the compensated
assignment and transfer of State-owned land. Various areas have violated the
regulations by proceeding without due permission to entrust non-financial
institutions with the responsibility for "temporary collections and
payments" of income and expenditures related the compensated use of said land.
The procedural violations in question have led to a substantial outflow of
related funds. In order to implement the policy of the Central Committee of
the Communist Party of China and the State Council, this Circular is hereby
issued concerning strengthening the collection and administration of income
from the compensated use of rights to use State-owned land.

    1. Income from compensated rights to use State-owned land received by
people's governments of provinces, autonomous regions and municipalities
directly under the Central Government shall be remitted directly to financial
budgetary administrations at related levels in accordance with the existing
financial system. Administration of income should be handled by relevant
financial departments, with all income being remitted to the State treasury.

    2. Related income from the compensated rights to use State-owned land
received at different levels prior to December 31, 1992, shall, in accordance
with related regulations adopted by the State Council and the Ministry of
Finance in 1989, be accurately settled and remitted to relevant financial
departments, with a retroactive date prior to the end of 1993. Failure to
remit payments prior to the prescribed date will be considered as concealment
of income, and the amount will be confiscated. Local financial departments
shall remit the income to the Central fiscal department in accordance with
the regulated rate. Those failing to remit income at the stipulated rate in
a timely manner will be ordered to pay the retroactive amount. In addition,
they will be subject to the imposition of a late fee of 0.2% of the amount
due for each day the amount is overdue, commencing from the first day on which
the amount of income is delinquent.

    3. Income for compensated rights to the use State-owned land received
after January 1 1993 shall be handled in strict accordance with the "Interim
Measures Concerning the Collection and Administration of Income From the
Compensated Assignment of Rights to Use State-owned Land" and the "Interim
Provisions Concerning Certain Financial Issues Related to Income From the
Compensated Assignment of Rights to Use State-owned Land." Those who fail to
remit income in accordance with the regulations will be subject to action
outlined in Article 2 of this Circular. Regions which have failed to adopt
required rules should do so at the earliest possible date and report related
action to the Ministry of Finance for the record.

    4. Income from compensated assignment of rights to use State-owned land
collected by the State shall be mainly used for municipal construction and
land development, as well as for special purpose funds.

    5. People's governments of provinces, autonomous regions and
municipalities directly under the Central Government should strengthen
leadership regarding the collection and administration of income from the
compensated assignment of right to use State-owned land, and should adopt
regularly scheduled special audits. No unit or department is permitted to
reduce, withhold remittances, or otherwise alter income from the compensated
assignment of rights to use State-owned land, nor can such funds be used for
any other purpose.