Laws of the People's Republic of China

    Article 1  These Provisions are formulated in accordance with the
provisions of Article 12 of the Law of the People's Republic of China on
Chinese-Foreign Equity Joint Ventures (Amended at the Third Session of the
Seventh National People's Congress on April 4, 1990).

    Article 2  As regards the establishment of Chinese-foreign equity joint
ventures (hereinafter referred to as joint ventures), the parties to a joint
venture which is engaged in investment projects encouraged and permitted by the
Chinese government, except as stipulated in Article 3 of these Provisions, may
decide, through consultation, to or not to prescribe a contract period in the
contract.

    Article 3  As regards the establishment of joint ventures, the parties to a
joint venture, which falls under one of the following lines of business or one
of the following circumstances, shall prescribe in their contract, through
consultation, a contract period in accordance with the provisions of the
relevant laws and regulations of the state:

    (1) service trades, such as hotels, apartments, office buildings,
recreation and entertainment, catering trade, taxi service, development and
printing of colour films and photos, maintenance, business consultancy, etc.;

    (2) joint ventures engaged in land development and real estate;

    (3) joint ventures engaged in the prospecting and development of natural
resources;

    (4) joint ventures engaged in projects subject to investment restriction as
stipulated by the state;

    (5) joint ventures for which a contract period shall be decided, through
consultation, as prescribed by other laws and regulations of the state.

    Article 4  Joint ventures, the parties to which decide, through
consultation, not to prescribe a contract period in their contract, shall be
examined and approved in accordance with the state regulations concerning the
limits of powers and procedures for examination and approval. With the
exception of those joint ventures to be directly examined and approved by the
Ministry of Foreign Economic Relations and Trade, other examining and approving
authorities shall, report within 30 days, any such applications they have
examined and approved to the Mimistry of Foreign Economic Relations and Trade
for the record.

    Article 5  Joint ventures, the parties to which decide, through
consultation, not to prescribe a contract period in their contract, may enjoy
the preferential treatment of reduction of or exemption from taxes in
accordance with the state provisions concerning taxation and with the approval
of the tax authorities. In cases where the actual term of operation of these
joint ventures fails to reach the number of years set by the state for enjoying
the preferential treatment of taxation, the joint ventures concerned shall,
according to law, pay the taxes which have been exempted or reduced.

    Article 6  Joint ventures, whose establishment was approved before these
provisions become effective, shall operate in accordance with the approved
contract period stipulated in the contract. However, as regards a joint venture
which does not come under one of the circumstances specified in Article 3 of
these Provisions, in the event that the parties to the joint venture agree
unanimously to modify the stipulation in the contract concerning the contract
period, and to re-stipulate the joint venture as one without contract period,
the parties to the joint venture shall submit a report to justify such a
modification, sign an agreement on the modification of the contract, and apply
to the original examining and approving authorities for examination and
approval.

    The original examining and approving authorities shall, within 90 days as
of the date of receipt of the said application, decide to approve or disapprove
it. After obtaining the approval, the joint venture shall, in accordance with
the stipulations of Article 4 of these Provisions, go through the procedures
for the record.

    Article 7  These Provisions shall go into effect as of the date of
promulgation.?