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CIRCULAR OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THESUGGESTIONS CONCERNING FURTHER STRENGTHENING PROJECT MANAGEMENT OF THE AUTOMOTIVE INDUSTRY OF THE STATE PLANNING COMMISSION AND OTHER DEPARTMENTS

    People's Governments of All Provinces, Autonomous Regions and
Municipalities Directly Under the Central Government, All Ministries and
Commissions under the State Council and All Agencies Directly Under the
State Council:

    The State Council has approved the Strengthening Project Management of the Automotive Industry> of the State
Planning Commission, the State Economic and Trade Commission, the Ministry
of Machinery, the Ministry of Public Security, the Ministry of Foreign
Trade and Economic Cooperation, the General Administration of Customs
and the State Industry and Commerce Administration, which is hereby
transmitted to you for earnest implementation.

    All regions and departments must strictly carry out the < >>(Guo Fa [1994] No. 17), and seriously conduct
an inspection on the status of its implementation. Examination and approval
of projects of automobiles, motorcycles and engines without authorization
in violation of state provisions must be seriously dealt with once uncovered
and the leading personnel involved shall be investigated of their
responsibilites. The State Planning Commission shall, in conjunction with
the departments concerned, conduct the inspection in accordance with the
spirit of this Circular, deal with the problems discovered in time and
submit a report to the State Council.

APPENDIX;SUGGESTIONS CONCERNING FURTHER STRENGTHENING PROJECT MANAGEMENT
OF THE AUTOMOTIVE INDUSTRY

    Since the issuance of the <Issuance of the >>(Guo Fa
[1994] No. 17) in 1994, the momentum of dispersed, blind and repetitious
development of the automotive industry in our country has been somewhat
curbed. However, of late, a number of regions and departments have, proceeding
from local interests, taken up new automotive projects without state approval
outside the designated sites under state planning. A number of units have
conducted talks with foreign businesses without authorization on the
construction of joint-venture automotive projects, and gone through the
formalities of examination and approval on their own by breaking the
whole project into parts or "acting first and reporting afterwards",
forcing the state to approve after making the fait accompli. A number
of automobile manufacturing enterprises have, in violation of the provisions
of the relevant ministries and commissions of the state on the administration
of automobile, converted civilian vehicle and motorcycle manufacturing
enterprises and their product catalogs nationwide, illegally assembled
automobiles, speculated on selling certificates of quality, transferred
product catalogs and even embarked on whole-vehicle manufacture projects
in the name of vehicle conversion. These problems, if not corrected in
time, will lead to new, blind and repetitious construction, seriously
affecting the sound development of the sutomotive industry in China.
For the purpose of further implementation of the , realization of tasks prescribed in the Five-year Plan for National Socio-economic Development and the Program
for Perspective Goals in 2010> and promotion of the sound development of the automotive industry in China, the following suggestions are hereby
put forth:

    1.Further enhancing the macro-control over investment projects in the
automotive industry. All fixed-asset investment projects involving automobiles
(including buses and all types of converted vehicles, the same hereinafter),
whole motorcyles and engines(including motorcycle engines, the same herein-
after), regardless of the nature of construction(including capital
construction, technological transformation, technological induction as
well as assembly projects for export with import auto and motorcycle
components and complete-set manufactured parts under processing trade,
etc.), irrespective of the source of capital(domestic capital or utilization
of foreign capital) and whether it is above ceiling or below ceiling, shall
be submitted to the State Planning Commission, the State Economic and
Trade Commission for examination and approval in conjunction with the
departments concerned, among which the major projects shall be submitted
to the State Council for examination and approval. Upon remarks in preliminary
examination put forth by the Ministry of Machinery with respect to the
aforesaid projects, projects involving capital construction and processing
trade shall be subject to the examination and approval of the State Planning
Commission and projects of technological transformation shall be subject to
the examination and approval of the State Economic and Trade Commission;
major projects shall be submitted to the State Council for examination and
approval upon examination and verification by the State Planning Commission
or the State Economic and Trade Commission according to the nature of construction. The State Economic and Trade Commission shall, before the
examination and approval of above-ceiling projects of technological
transformation utilizing foreign capital and submitting the projects of
technological transformation to the State Council for examination and
approval, first despatch the papers of the said projects to the State
Planning Commission for countersignature.

    2.With respect to projects of whole-vehicle automobiles and motorcycles
as well as import components and complete-set manufactured parts under
processing trade, customs formalities for the record shall be completed
on the strength of project approval documents of the State Planning Commission
or the State Economic and Trade Commission.

    3.For requests for increase in investment in Sino-Foreign joint venture
projects of whole-vehicle automobiles and motorcycles and engines,
irrespective of whether they are projects above the ceiling or below the
ceiling, their feasibility studies shall be submitted to the State Planning
Commission or the State Economic and Trade Commission according to the
nature of construction while listing the projects under the state plan
for examination and approval in conjuction with the departments concerned,
revision of joint venture enterprise contracts shall be submitted to the
Ministry of Foreign Trade and Economic Cooperation for examination and
approval.

    4.For enterprise business scope involving projects of manufacture,
assembly and processing trade of whole-vehicle automobiles and motorcycles
and engines, applications for the completion of formalities of registration
shall be filed at organs of industry and commerce administration on the
strength of the project approval documents of the State Planning Commission
or the State Economic and Trade Commission and the Ministry of Machinery.
Organs of industry and commerce administration shall not process the
registration of those enterprises without going through the formalities of examination and approval in accordance with the aforesaid provisions, and
the products manufactured by them shall be prohibited from distribution
in the market. Enterprises that commit violations of the provisions shall
be investigated and dealt with by organs of industry and commerce
administration. Specific measures for implementation shall be worked out
by the State Administration of Industry and Commerce.

    5.A sorting-out and consolidation of the existing automobile and
motorcycle manufacturing enterprises shall be carried out in 1997 which
shall be headed by the Ministry of Machinery in conjunction with the
Ministry of Public Security and other departments concerned. Enterprises
that do not have the basic required conditions for manufacture and
enterprises that have committed acts of manufacturing vehicle types
inconsistent with the product catalog or tranferring the catalog and
selling product quality certificates shall all be revoked of their
corresponding product catalogs. Double quality certificate system(whole-
vehicle quality certificate and chassis quality certificate) shall be
practised with respect to the products manufactured by vehicle conversion
plants. Specific measures shall be worked out by the Ministry of Machinery
in conjunction with the departments concerned.

    It is requested that the above suggestions, if not inappropriate, be
approved and transmitted to all regions and departments for implementation.