Laws of the People's Republic of China

No. 12

The Decision of the Standing Committee of the National People's Congress on Revising the Law of the People's Republic of China on the People's Bank of China, which has been adopted by the sixth session of the Standing Committee of the Tenth National People's Congress of the People's Republic of China on December 27, 2003, is hereby promulgated, and shall enter into force as of February 1, 2004. President of the People's Republic of China Hu Jintao

December 27, 2003

Decision of the Standing Committee of the National People's Congress on Revising the Law of the People's Republic of China on the People's Bank of China

(Adopted at the Sixth Session of Standing Committee of the Tenth National People's Congress on December 27, 2003)

It has been decided at the sixth session of the Standing Committee of the Tenth National People's Congress to make alterations on the Law of the People's Republic of China on the People's Bank of China as follows:

1.

Article 1 shall be revised as "This Law is hereby constituted in order to establish the status of the People's Bank of China (PBC), clarify its functions, ensure the correct enactment and implementation of the state monetary policies, and set up and improve a macro-control system through the central bank, as well as safeguard the stability of the banking industry."

2.

Paragraph 2 of Article 2 shall be revised as "The People's Bank of China shall constitute and implement monetary policies, prevent and dissolve financial risks, and safeguard the stability of the banking industry in the country, upon the guidance of the State Council."

3.

Paragraph 1 of Article 4 shall be revised as "The People's Bank of China shall implement the following responsibilities:

(1)

.Releasing and performing orders and regulations regarding its functions;

(2)

Constituting and carrying out monetary policies according to related laws;

(3)

Issuing Renminbi (RMB) and being in charge of its circulation;

(4)

Surveilling the inter-bank borrowing or lending markets and inter-bank bonds markets;

(5)

Performing administration on foreign exchange, and surveilling inter-bank foreign exchange market;

(6)

Surveilling gold market;

(7)

Holding, supervising and managing the state foreign exchange reserve and gold reserve;

(8)

Managing the state treasury;

(9)

Maintaining the regular operation of the systems for payments and settlements of accounts;

(10)

Guiding and arranging the anti-money-laundering work of the financial industry, taking charge in capital surveillance and measurement over anti-money-laundering;

(11)

Being in charge of the statistics, investigation, analysis, and forecasting of the financial industry;

(12)

Engaging in related international banking operations as the central bank of the state; and

(13)

Other functions as prescribed by the State Council. "

4.

Article 6 shall be revised as "The People's Bank of China shall submit a working report regarding monetary policies and operation of the financial industry to the Standing Committee of the National People's Congress".

5.

One Article shall be added as Article 9 , that is, "The State Council shall set up a financial surveillance and administration coordination mechanism, and the specific measures shall be constituted accordingly."

6.

Article 11 shall be changed as Article 12 , and one Paragraph shall be added as Paragraph 2, that is, "the monetary policy committee of the PBC shall play its part in the state macro-control, and in the constitution and adjustment of monetary policies."

7.

Article 12 shall be changed as Article 13 , and it shall be revised as "The PBC shall set up branches as its representative organs as required in performing its functions, and practice uniformly leading and control over these branches."

"The branches of the PBC shall maintain the stability of financial industry and handle related business operations in the areas under their respective jurisdictions under the authorization of the PBC."

8.

Article 14 shall be changed as Article 15 , and it shall be revised as "The governor, deputy governors and other staff of the PBC shall keep state secrets in accordance with related laws and be responsible for keeping secrets of the banking institutions and the clients regarding their performance of functions."

9.

Article 22 shall be changed as Article 23 , of which Subparagraph (1) of Paragraph one shall be revised as demanding that the banking institutions deposit the reserve fund at a prescribed ratio; and Subparagraph (3) thereof shall be revised as handling rediscounting for the banking institutions, which have opened accounts in the PBC; and Subparagraph (5) thereof shall be revised as dealing in treasury bonds, other government bonds, financial bonds and foreign exchange on the open market.

10.

Article 25 shall be changed as Article 26 , and it shall be revised as "The PBC may open accounts for banking institutions as required, but may not overdraw the accounts of the banking institutions."

11.

Article 26 shall be changed as Article 27 , and shall be revised as "The PBC shall perform in organizing or assisting in setting up banking institutions in settling inter-institutional accounts, coordinating the activities and providing services thereof. The specific procedures for such operation shall be constituted by the PBC.

The PBC shall, in collaboration with the banking regulatory organ of the State Council, constitute rules for settlement of payment."

12.

Article 30 shall be changed as Article 31 , and shall be revised as "The PBC shall make surveillance and inspection over the operation of financial market, and perform macro-control on financial market in order to advance its harmonious progress."

13.

Article 31 shall be deleted.

14.

Article 32 shall be revised as "The PBC shall reserve the right to conduct inspection and surveillance over the acts of the financial institutions, other entities or individuals as follows:

(1)

Acts of implementing related provisions regarding the management of reserve against deposit;

(2)

Acts relating to the special loans of the PBC;

(3)

Acts of performing the provisions regarding Renminbi control;

(4)

Acts of performing related provisions regarding the management of the inter-bank borrowing or lending markets and the inter-bank bonds markets;

(5)

Acts of performing related provisions regarding foreign exchange control;

(6)

Acts of performing related provisions regarding gold management;

(7)

Acts on behalf of the PBC of managing the state treasury;

(8)

Acts of performing related provisions regarding settlement management; and

(9)

Acts of performing related provisions regarding anti-money-laundering.

The special loans hereof referred to in the preceding Paragraph are the loans used exclusively, which are decided by the State Council and issued to financial institutions by the PBC".

15.

One Article shall be added as Article 33 , that is, "The PBC may make suggestion that the banking regulatory organ of the State Council conduct inspection and surveillance over banking institutions according to the needs of implementing the monetary policy and maintaining the stability of the finance. And the banking regulatory organ of the State Council shall issue a reply within 30 days as of the receipt of the suggestion."

16.

One Article shall be added as Article 34 , that is, "The PBC may, upon the approval of the State Council, reserve the right to conduct inspection and surveillance over the banking institution for the purpose of maintaining financial stability when a banking institution has difficulty in payment which may lead to financial risks."

17.

Article 33 shall be changed as Article 35 , and shall be revised as "The PBC may reserve the right to require the banking institutions to submit the necessary balance sheet, statements of profits and other financial and statistical reports and materials as required by its functions.

The PBC shall, in collaboration with the banking regulatory organ of the State Council and other financial surveillance and administration organs of the State Council, set up the surveillance and administration information sharing mechanism."

18.

Article 35 shall be deleted.

19.

Article 39 shall be altered as Article 40 , and shall be revised as "The PBC shall manage its revenues and expenditures and accounting affairs according to related laws, administrative regulations, and the uniform financial and accounting systems of the state, and shall be subject to the auditing and surveillance of the audit organs and the financial departments of the State Council separately according to related laws."

20.

Article 41 shall be changed as Article 42 , and it shall be revised as "Where anyone who illicitly prints or mints Renminbi, sells counterfeit or illicitly printed or minted Renminbi, or knowingly transports counterfeit money or illicitly printed or minted money, if a crime is constituted, it/he shall be investigated for criminal liabilities in accordance with related laws; if no crime is constituted, a detention of no more than 15 days and a fine of no more than RMB 10,000 shall be imposed upon it/him by the public security organs."

21.

Article 42 shall be changed as Article 43 , and shall be revised as "Where anyone who buys counterfeit or altered Renminbi or knowingly holds or uses counterfeit or altered or illegally printed or minted Renminbi, if a crime is constituted, criminal liabilities shall be investigated; if no crime is constituted, a detention of no more than 15 days and a fine of no more than RMB 10,000 shall be imposed by the public security organs."

22.

Article 45 shall be changed as Article 46 , and shall be revised as "In case any act listed in Article 32 of this Law violates related provisions, punishment shall be imposed in accordance with the provisions regarding punishment in the related laws and administrative regulations if any. In case of no provisions regarding punishment, the PBC shall give warnings, confiscate illegal gains if any subject to different circumstances, and a fine of one time up to five times of the illegal gains in case the illegal gains are more than RMB 500,000 shall be imposed; and a fine of RMB 500,000 up to RMB 2 million shall be imposed, if there are no illegal gains or the illegal gains are no more than RMB 500,000. A warning, or a fine of RMB 50,000 Yuan up to RMB 500,000 Yuan shall be imposed upon the directors and senior management personnel directly responsible and other persons directly liable. If it constitutes a crime, the criminal liability shall be investigated in accordance with related laws."

23.

Article 49 shall be changed as Article 50 , and shall be revised as "Where any functionary of the PBC divulges any state or commercial secret he acquires, if a crime is constituted, criminal liabilities shall be investigated in accordance with related laws. If no crime is constituted, he shall be subject to administrative sanctions in accordance with related laws."

24.

Article 50 shall be changed as Article 51 , and it shall be revised as "Where any functionary of the PBC commits embezzlement, accepts bribery, commits irregularities for personal interests, abuse their official capacities, or neglect their duties, if a crime is constituted, criminal liabilities shall be investigated in accordance with law; if no crime is constituted, he shall be subject to administrative sanctions in accordance with law".

25.

One Article shall be added as Article 52 , that is, "The banking institutions as mentioned in this Law mean the commercial banks, urban credit cooperatives, rural credit cooperatives, and other financial institutions and policy banks that absorb public deposits.

The provisions of this Law on banking institutions apply to the financial capital management companies, trust and investment companies, finance companies, and financial leasing companies, which are set up within the territory of China, and other financial institutions set up upon the approval of the banking regulatory organ of the State Council".

The present Decision shall enter into force as of February 1, 2004.

The Law of the People's Republic of China on the People's Bank of China shall be revised pursuant to the present Decision, and the order of the clauses thereof shall be adjusted accordingly, and this revised Law shall be publicized again.