Laws of the People's Republic of China

No.11

The Interim Measures for Administration of Chinese-foreign Joint Venture and Cooperative Medical Institutions are hereby promulgated and shall come into force as of July 1, 2000. Minister of the Ministry of Health: Zhang Wenkang

Minister of the Ministry of Foreign Trade and Economic Cooperation: Shi Guangsheng

May 15,2000

Interim Measures for Administration of Chinese-foreign Joint Venture and Cooperative Medical Institutions Chapter I General Provisions

Article 1

These Measures are formulated in accordance with the pertinent state laws and administrative regulations such as the Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, the Law of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures, the Regulations for the Administration of Medical Institutions for the purpose of further catering to the needs of reforms and opening up to the outside world, enhancing the administration of Chinese-foreign joint equity venture and cooperative medical institutions and promoting the healthy development of the medical and health undertakings of the country.

Article 2

The term "Chinese-foreign joint venture medical institutions and Chinese-foreign cooperative medical institutions" as used for the purpose of these Measures refers to the medical institutions established in the forms of joint venture or cooperation by foreign medical institutions, companies, enterprises or other economic organizations (hereinafter referred to as foreign joint venturers or foreign cooperators) with Chinese medical institutions, companies, enterprises or other economic organizations (hereinafter referred to as Chinese joint venturers or cooperators) within the territory of China (Hong Kong, Macao and Taiwan are excluded, same below) on the basis of the principle of equality and mutual benefit and on approval by the Chinese government.

Article 3

These Measures shall apply to applications for the establishment within the territory of China of Chinese-foreign joint venture or cooperative medical institutions.

Article 4

Chinese-foreign joint venture medical institutions and Chinese-foreign cooperative medical institutions shall abide by the pertinent laws, administrative regulations and rules of the state. The legitimate operational activities of Chinese-foreign joint venture and cooperative medical institutions and the lawful rights and interests of parties thereto shall be protected by the laws of the land.

Article 5

The Ministry of Health and the Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as the MOFTEC) shall be responsible for the administration of Chinese-foreign joint venture and cooperative medical institutions in accordance with the division of functions between the two ministries.

The administrative departments of health (including the competent departments in charge of Chinese traditional medicine/treatment) and the administrative departments of foreign trade and economic cooperation at and above the county level shall be responsible for the administration of Chinese-foreign joint venture and cooperative medical institutions in their respective regions of jurisdiction according to their respective spheres of responsibility.

Chapter II Conditions for Establishment

Article 6

Chinese-foreign joint venture and cooperative medical institutions shall be established and developed in line with the local regional health programs and the local regional plan for the establishment of medical institutions, and be governed by the Basic Standards for Medical Institutions formulated by the Ministry of Health.

Article 7

The Chinese and foreign parties that apply for the establishment of a Chinese-foreign joint venture medical institution or a Chinese-foreign cooperative medical institution shall be legal persons who can independently bear their civil liabilities. The Chinese and foreign parties to a joint venture medical institution or a cooperative medical institution shall have direct or indirect experience in medical and health investment and management, and shall answer to one of the following requirements:

1.

They are in a position to provide internationally advanced managerial experience in managing medical institutions, modes of management and modes of services;

2.

They are able to provide international cutting-edge medical technologies and equipment, and

3.

They can complement or make up for the inadequacy of local medical service capacity, medical treatment technologies, funding and medical facilities.

Article 8

A Chinese-foreign joint venture or cooperative medical institution which has already been established shall satisfy the following conditions:

1.

It has to be an independent legal person;

2.

The total amount of investment must not fall below RMB20 million yuan;

3.

The equity proportion or interest the Chinese party to a Chinese-foreign joint venture medical institution or a cooperative medical institution hold therein shall not be less than 30%;

4.

The period of the joint venture or the cooperative medical institution shall not be longer than 20 years; and

5.

Other conditions laid down by the administrative departments of health at or above the provincial level.

Article 9

The Chinese party to a joint venture of cooperative medical institution shall obtain the approval from the corresponding competent department of its investment therein with state-owned assets (including priced investment or as a condition for cooperation).The assets shall, in accordance with the pertinent provisions on the administration of asset valuation, be appraised by an asset appraisal agency recognized by the department of administration of state-owned assets before they are used as investment therein. The appraisal result of state-owned assets which are confirmed by an administrative department of state-owned assets at or above the provincial level may be taken as the basis of pricing the state-assets to be invested in a joint venture or cooperative medical institution.

Chapter III Examination, Approval and Registration of Establishment

Article 10

Application for the establishment of a Chinese-foreign joint venture or cooperative medical institution shall first be submitted to an administrative department of health at the municipal level (cities at the prefecture level) and the following documentary information shall be provided:

1.

A written application for the establishment of a medical institution;

2.

Project proposals signed by the legal representatives of the Chinese and foreign parties to the joint venture or cooperative medical institution, and the feasibility study report on the establishment of the Chinese-foreign joint venture or cooperative medical institution;

3.

The registration certificates (photocopies) of the Chinese and foreign legal representatives, the identity certificates (photocopies) of the Chinese and foreign legal representatives and the creditworthiness certificates from their bankers and

4.

The document of confirmation from the administrative department of state-owned assets of the appraisal report on the state-owned assets to be used as investment therein.

The administrative department of health at the municipal level (cities at the prefecture level) shall conduct a preliminary examination of the documents the applicants have provided, and come up with preliminary opinions in light of the regional health program and the regional plan for the establishment of medical institutions. It shall submit its preliminary opinions together with the application documents and the regional health program and the regional plan for the establishment of medical institutions to the administrative department of health of the province where it is located for examination.

Article 11

The administrative department at the provincial level shall, upon completion of the examination thereof, submit the application documents and the preliminary opinions of the municipal (city at the prefecture level) health administration department to the Ministry of Health for examination and approval.

The administrative department of health at the provincial level shall, in submitting the above listed documents for approval, provide the following documentary information to the Ministry of Health:

1.

the applicants' documents of application for the establishment;

2.

the Plan for the Establishment of Medical Institutions promulgated upon approval by the people's government at the municipal level in the locality of the establishment of the medical institution, and the examination opinions of the administrative departments of health at the provincial and municipal levels about whether the proposed establishment of the Chinese-foreign joint venture or cooperative medical institution conforms to the local regional health program and the plan for the establishment of medical institutions;

3.

the examination opinions of the administrative department of health at the provincial level about the establishment of the Chinese-foreign joint venture or cooperative medical institution, which include its opinions on the name, sitting, size (number of hospital beds and dentist chairs), subjects and items of consultation and period of operation, etc. of the proposed Chinese-foreign joint venture or cooperative medical institution; and

4.

other documentary information the submission of which is prescribed by the pertinent laws, administrative regulations and the Ministry of Health.

The Ministry of Health shall, within 43 working days as of the date of acceptance, make a written decision on whether to approve or disapprove the application.

Article 12

Applications for the establishment of Chinese-foreign joint venture or cooperative medical institutions of Chinese traditional medicine (including Chinese-foreign joint venture or cooperative medical institutions that combine Western medicine with traditional Chinese medicine and Chinese-foreign joint venture or cooperative medical institutions for ethnic medicine) shall be preliminarily examined by the municipal administrative departments of health in the localities where the medical institutions are to be established and be re-examined by the provincial administrative departments of health in the localities where they are to be established in accordance with the requirements in Articles 10 and 11 of these Measures, and be submitted to the State Administration of Traditional Chinese Medicine, which shall, upon completion of examination, refer same to the Ministry of Health for approval.

Article 13

The applicant shall, upon acquisition of the approval of establishment from the Ministry of Health, apply to the MOFTEC in accordance with the relevant laws and administrative regulations, and provide the following documentary information thereto:

1.

documents submitted on the application for the establishment of the medical institution and approval documents;

2.

the contract and articles of association of the Chinese-foreign joint venture or cooperative medical institution signed by the legal representatives or their authorized representatives of the Chinese and foreign parties thereto;

3.

a name list of the members of the board of directors of the proposed Chinese-foreign joint venture or cooperative medical institution and the letters of appointment of the members of the board of directors from the Chinese and foreign parties thereto;

4.

the letter of notification on the advance approval of the name of the medical institution issued by the relevant department of administration for industry and commerce; and

5.

other documentary information which is prescribed by the relevant laws, administrative regulations and the MOFTEC.

The MOFTEC shall, within 45 working days as of the date of acceptance of the application, make a written decision on whether to approve or disapprove the application. Once an application is approved, the applicant shall be issued with the Approval Certificate for Enterprises with Foreign Investment.

A Chinese-foreign joint venture or cooperative medical institution the establishment of which has been approved shall, within one month as of the date of receipt of the Approval Certificate for Enterprises with Foreign Investment issued by the MOFTEC, approach, by dint of the approval certificate, the relevant state administrative department for industry and commerce for the execution of the registration formalities.

Article 14

The conditions on the establishment of Chinese-foreign joint venture or cooperative medical institutions as contained in Articles 7 and 8 of these Measures may be appropriately eased with regard to the establishment of Chinese-foreign joint venture or cooperative medical institutions in the central and western regions of China or in the areas that were liberated every early during the Chinese revolution, areas inhabited by ethnic minorities, border areas and poor areas of the country, if the scope and contents of the medical services to be provided by the proposed Chinese-foreign joint venture or cooperative medical institutions belong with the areas of medical services the state encourages.

Article 15

A Chinese-foreign joint venture or cooperative medical institution the establishment of which has been approved shall, in accordance with the provisions on the procedures and requirements concerning the practice registration of medical institutions as contained in the Regulations on the Administration of Medical Institutions and the Implementation Rules for the Regulations on the Administration of Medical Institutions, apply for practice registration at the administrative department of health designated by the administrative department of health at the provincial level and for the obtainment of the Practice Permit for Medical Institutions.

The administrative departments of health at the provincial level shall, on the basis of the category and size of Chinese-foreign joint venture or cooperative medical institutions, determine whether the applications for practice registration of Chinese-foreign joint venture or cooperative medical institutions shall be accepted by the administrative departments of health at the provincial level or by municipal (cities at the prefecture level) administrative departments of health.

Article 16

The naming of Chinese-foreign joint venture or cooperative medical institutions shall be guided by the provisions of the Rules of Implementation for the Regulations on the Administration of Medical Institutions. The name of a Chinese-foreign joint venture or cooperative medical institution shall consist of the name of the place where it is located, its title for identification and its general name in that order.

Article 17

No Chinese-foreign joint venture or cooperative medical institution shall be allowed to set up subsidiaries or branches.

Chapter IV Changes, Extension and Termination

Article 18

The change of the size (number of hospital beds and dentist chairs), subjects and items of consultation, the period of joint venture or cooperation of the Chinese-foreign medical institution already established shall, in accordance with the procedures of examination and approval as prescribed in the provisions of Chapter III of these Measures, go through the corresponding formalities for the registration thereof at the original registration department upon examination and approval by the original examining and approving authorities.

Changes in Chinese-foreign joint venture or cooperative medical institutions and in certain clauses of their contracts and articles of association shall be referred by the local departments of foreign trade and economic cooperation to the MOFTEC for approval.

Article 19

Where the 20-year period of joint venture or cooperation of a Chinese-foreign joint venture or cooperative medical institution has run out and there has arisen the need for an extension of the period of joint venture or cooperation due to extraordinary circumstances, the parties to the Chinese-foreign joint venture or cooperative medical institution may apply for an extension thereof and they shall submit an application for extending the period of joint venture or cooperation 90 days before the end of the period of joint venture or cooperation. The application for an extension of the period of joint venture or cooperation shall, upon the consent through examination by the provincial administrative department of health and the provincial department of foreign trade and economic cooperation, be submitted to the Ministry of Health and the MOFTEC for examination and approval. The examining and approving department shall, within 45 working days as of the date of receipt of the application, make a written decision on whether to approve or disapprove the application for extension.

Article 20

The Chinese-foreign joint venture or cooperative medical institutions whose establishment has been approved shall go through all the procedures relating to the registration thereof within the given time limit prescribed by the examining and approving departments; the joint venture project shall, upon approval by the examining and approving department, be cancelled if a Chinese-foreign joint venture or cooperative medical institution has failed to complete the registration procedures within the given time limit.

Chapter V Practice

Article 21

A Chinese-foreign joint venture or cooperative medical institution shall, as an independent legal person entity, be responsible for its own profits and losses, and exercise independent accounting and independently bear its own civil liabilities.

Article 22

A Chinese-foreign joint venture or cooperative medical institution shall implement the provisions pertaining to the practice of medical institutions as contained in the Regulations on the Administration of Medical Institutions and the Rules of Implementation for the Regulations on the Administration of Medical Institutions.

Article 23

Chinese-foreign joint venture or cooperative medical institutions shall abide by the norms for access to medical technologies and norms for clinical diagnostic and medical treatment, and implement the provisions on the clinical application of new technologies, new equipment and huge-sized medical equipment.

Article 24

Medical accidents that occur in Chinese-foreign joint venture or cooperative medical institutions shall be dealt with according to the pertinent state laws and administrative regulations.

Article 25

The employment of foreign doctors and nurses by Chinese-foreign joint venture or cooperative medical institutions shall be handled in accordance with the relevant provisions in the Law of the People's Republic of China on Medical Practitioners and the Measures of the People's Republic of China for the Administration of Nurses.

Article 26

The Chinese-foreign joint venture or cooperative medical institutions and their medical and technical personnel shall obey the assignments from the administrative departments of health when major disasters, accidents, the eruption of epidemics or other unexpected circumstances have taken place in China.

Article 27

Advertisements to be released by Chinese-foreign joint venture or cooperative medical institutions shall be handled in accordance with the Advertisement Law of the People's Republic of China and the Measures for the Administration of Medical Advertisements.

Article 28

The rates for the charges on the medical services provided by Chinese-foreign joint venture or cooperative medical institutions shall be governed by the relevant state provisions.

Article 29

The tax policy towards Chinese-foreign joint venture or cooperative medical institutions shall be based on the relevant state provisions.

Chapter VI Supervision

Article 30

The local administrative departments of health at or above the county level shall be responsible for the day-to-day supervision of the Chinese-foreign joint venture or cooperative medical institutions in their respective administrative areas.

The Practice Permit of Medical Institutions of Chinese-foreign joint venture or cooperative medical institutions shall be subjected to annual inspections and be verified by the registration departments of the Chinese-foreign joint venture or cooperative medical institutions.

Article 31

Chinese-foreign joint venture or cooperative medical institutions shall readily submit themselves to the supervision by the relevant departments of the state in accordance with the pertinent state provisions on enterprises with foreign investment.

Article 32

Violations of the pertinent laws, administrative regulations and rules by Chinese-foreign joint venture or cooperative medical institutions shall be investigated and dealt with by the competent departments according to law. Chinese-foreign joint venture or cooperative medical institutions that have violated these Measures may be punished by the administrative departments of health and departments of foreign trade and economic cooperation at or above the county level in accordance with the relevant laws, administrative regulations and rules.

Article 33

Where local administrative departments of health and local administrative departments of foreign trade and economic cooperation have, in contravention of the provisions of these Measures, approved, without authorization, the establishment of, and changes in Chinese-foreign joint venture or cooperative medical institutions, responsibilities shall be pursued against those are in charge thereof.

Where parties to a Chinese-foreign joint venture or cooperative medical institution which has, in the absence of approval from the Ministry of Health and the MOFTEC, established the institution and has conducted medical activities or has operated subjects and items of consultation in the form of a contract, it shall be regarded as unlawful medical practice and be penalized in accordance with the pertinent provisions as contained in the Regulations on the Administration of Medical Institutions and the Rules of Implementation for the Regulations on the Administration of Medical Institutions.

Chapter VII Supplementary Provisions

Article 34

The joint venture or cooperative medical institutions set up in the mainland by investors from the Hong Kong Special Administrative Region, the Macao Special Administrative Region and the Taiwan region shall be governed with reference to these Measures.

Article 35

Applications for the establishment of wholly medical institutions with foreign investment within the territory of China shall not be approved.

Article 36

The administrative departments of health and the administrative departments of foreign trade and economic cooperation of the various provinces, autonomous regions and municipalities directly under the Central Government may draw up specific provisions in accordance with these Measures and in light of the actual local conditions of their respective administrative regions.

Article 37

These Measures shall be interpreted by the Ministry of Health and the Ministry of Foreign Trade and Economic Cooperation.

Article 38

These Measure shall come into in force as of July 1, 2000. Document WeiYi Zi (89) No. 3 released on February 10, 1989 and Document Wei Jing Mao Fa (1997) No. 292 released on April 30, 1997 shall fall null and void simultaneously.