Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation

The Decree of the Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China

No. 1

In order to open wider to the outside world and to promote the development of foreign trade of our country, the Interim Measures Governing the Establishment of Chinese-foreign Equity Joint Foreign Trade Corporations adopted at the 2nd minister¡¯s executive meeting, and is hereby promulgated and shall be come into force after 30 days as of its promulgation. Beginning from its implementation, the Interim Measures Governing the Establishment of Chinese-foreign Equity Joint Foreign Trade Corporations on a trail basis, which was ratified on September 2, 1996 by the State Council, and promulgated on September 30, 1996 by the Ministry of Foreign Trade and Economic Cooperation, will be abolished at the same time.

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

January 31, 2003

Interim Measures Governing the Establishment of Chinese-foreign Equity Joint Foreign Trade Corporations

Article 1

For the purpose of opening wider to the outside world and promoting the developments of foreign trade of our country, these measures are formulated in accordance with the Foreign Trade Law of the People's Republic of China and the Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, and other related laws and regulations.

Article 2

The measures are applicable to the Chinese-foreign equity joint foreign trade corporations (hereinafter referred to as "equity joint foreign trade corporation") specializing in the import and export trade business, jointly established by foreign corporations and enterprises (hereinafter referred to as "Foreign investor") and Chinese enterprises and companies (hereinafter referred to as "Chinese investor") within the Chinese territory.

Article 3

An equity joint foreign trade corporation is a company with limited liabilities. The foreign investor shall provide at least 25 per cent of the total registered capital.

Article 4

The following conditions shall be met when establishing a equity joint foreign trade corporation:

1.

The foreign investor's average annual foreign trade value with China shall reach US$30 million or more in the three years before application; If the equity joint foreign trade corporation is to be registered in the Midwest of China, the foreign investor's average annual foreign trade value with China shall reach US$20 million or more in the three years before application.

2.

The Chinese investor shall have the right to do foreign trade business and its average import & export value shall be more than US$30 million in the three years before application; If the equity joint foreign trade corporation is to be registered in the Midwest of China, its average import & export value shall be more than US$20 million in the three years before application.

3.

A Chinese-foreign equity joint foreign trade corporation shall meet the following conditions:

a.

Its registered capital shall be no less than 50 million Yuan; If registered in the Midwest, the registered capital shall be no less than 30 million Yuan;

b.

It has its own name and organizations;

c.

It has operation area suitable for foreign trade business, specialized professionals and other necessary conditions.

Article 5

When applying for the establishment of an equity joint foreign trade corporation, the Chinese investor shall submit the following documents to the Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as the MFTEC) through the local foreign trade supervisory department:

1.

Project proposal, feasibility study report signed by all parties involved, contracts, and articles of incorporation;

2.

The proof documents for company registration (copy version), company credit, and legal representatives from all parties involved;

3.

The catalogue of the import & export commodities of the proposed equity joint foreign trade corporation;

4.

The recent three years' annual account report forms audited by an accountant office from all parties involved;

5.

Other documents requested by the MFTEC The MFTEC shall review the documents it received from various places and it shall give an official reply to and issue Certificates of Approval for Foreign-invested Enterprises to the qualified corporations within 90 days as of the acceptance of the whole set of documents.

Article 6

After obtaining state approval for establishing an equity joint foreign trade corporation, the applicant shall file an application for registration at the State Administration of Industry and Commerce or at local bureaus with its authorization within one month from the date of the approval, and it shall, in accordance with the law, file an application for tax registration at tax authorities.

Article 7

Both of the foreign investor and the Chinese investor can provide funds for the registered capital in currency, physical objects, intangible assets (including industrial properties, special technologies and a right to use a site). All the parties to the equity joint foreign trade corporation shall pay up the investment to the prescribed volume within the time limit as provided for in relevant provisions of the state.

Article 8

The equity joint foreign trade corporation shall, in accordance with the state's pertinent regulations, deal in or serve as agent for the import and export of cargo and technology and relevant services, and deal in the whole business for the commodities imported by itself within the approved business scope.

Article 9

For the import and export commodities under the state quota and permit control, the equity joint foreign trade corporation cannot handle them unless they have applied to the related state supervisory department in accordance with related laws and regulations and obtained approval. As for the import and export commodities under the state control of quota bidding, the equity joint foreign trade corporation shall tender for bids in accordance with the bidding regulations set down by the supervisory department.

Article 10

The foreign exchange revenue and expenditure of an equity joint foreign trade corporation shall be in conformity with the relevant provisions of the state concerning foreign exchange.

Article 11

An equity joint foreign trade corporation shall pay taxes according to relevant laws and regulations and rules on taxation. Its shall be entitled to enjoy tax rebates or tax exemption on export cargoes in accordance with relevant laws, regulations and rules of the state.

Article 12

An equity joint foreign trade corporation shall submit statements of finance, accounting, and statistics on a regular basis to the local supervisory departments in accordance with the related laws and regulations on finance, accounting and statistics.

Article 13

An equity joint foreign trade corporation shall apply to join the Import and Export Chamber or the Association for Foreign-funded Enterprises and shall obey the coordination of the Chamber or the Association.

Article 14

An equity joint foreign trade corporation shall comply with the Chinese laws and regulations, and is under the jurisdiction of Chinese laws and regulations. Its legal rights and interests shall be subject to the protection of Chinese laws and regulations. If the equity joint foreign trade corporation violates Chinese laws and regulations, it shall be subject to punishment accordingly.

Article 15

The present measures shall apply to the equity joint foreign trade corporations jointly established by companies or enterprises from Hong Kong, Macao, and Taiwan with counterparts from the Chinese mainland.

Article 16

Before December 11, 2003, the application for the establishment of an equity joint foreign trade corporation, in which the registered capital provided by the Chinese investor is less than 51%, shall not be accepted for the time being.

Article 17

The power to interpret the present Measures shall remain with the Ministry of Foreign Trade and Economic Cooperation.