Laws of the People's Republic of China

   Article 1. These procedures are formulated for the purpose of attracting foreign investment in the development and management of whole area of land (hereafter referred to as "area development"), so as to step up the construction of public utilities, improve the investment environment, bring in foreign-funded, technologically advanced and export-oriented enterprises, and develop and export-oriented economy.

   Article 2. "Area development", as used in these Procedures, means the comprehensive development of State-owned land as planned. This is carried out after acquisition of the right to use that land, including leveling the ground, building the drainage and waterpower and heat-supply systems, and road transport, communications and other public facilities to lay down appropriate conditions for industrial and other construction purpose. Then land developers can proceed with the transfer of land-use right and the operation of public utilities, or building general-purpose factory buildings, supporting facilities in the service of production and people's livelihood, and other buildings erected on the ground; and transfering or leasing these buildings to others.

Development of whole areas of land shall have explicit goals and there shall be construction projects that are explicitly intended to make use of the developed land.

   Article 3. In attracting foreign investment for area development, a written project proposal (or a preliminary feasibility study report, the same below) shall be prepared under the auspices of a municipal or county people's government.

For area development projects each using less than 1,000 mu (1/ 15 of a hectare) of farm land or less than 2,000 mu of other land and the comprehensive development investment confined within the stipulated limits that the People's governments of provinces, autonomous regions and municipalities directly under the jurisdiction of the central authorities (here and below, including the people's governments or administrative committees of special economic zones) are authorized to examine and approve, the written project proposals shall be submitted to these governments for examination and approval.

For area development projects each using more than 1,000 mu of farm land or 2,000 mu of other land, or the comprehensive development investment in which exceeds the aforesaid limits, the written project proposals shall be submitted through these respective governments to the State Planning Commission for examining overall balance; and then to the State Council for examination and approval.

   Article 4. Foreign investors in area development shall set up Chinese-foreign joint ventures, Chinese-foreign cooperative ventures or solely foreign-owned enterprises for development operations (hereafter referred to as "development enterprises") respectively in accordance with the Law of the People's Republic of China on Chinese-Foreign Joint Ventures, the Law of the People's Republic of China on Chinese-Foreign Cooperative Ventures and the Law of the People's Republic of China on Foreign Enterprises.

Development enterprises are governed and protected by Chinese laws and all their activities should comply with the laws and regulations of the People's Republic of China.

In their business operations and management, development enterprises make their own decisions in accordance with law, but they have no administrative power over their development areas. The relations between development enterprises and other enterprises are business relations.

The State encourages State-owned enterprises to use their right to make use of State-owned land as investment or terms of cooperation to form development enterprises with foreign firms.

   Article 5. Development enterprises shall obtain the right to use State-owned land in development areas in accordance with law.

In leasing the right to use State-owned land to development enterprises, the municipal and county people's governments of the places where the development areas are located should, in accordance with the laws and decrees on the administration of State-owned land, rationally determine the limits, usage and terms of use of the areas, the rent-charges and other terms, sign the contracts on leasing that right, and submit them to the related authorities for approval.

   Article 6. After the right to use State-owned land in an area is leased out, the natural resources and other objects buried underground in the area are still owned by the State. If there is need to develop and use them, the development and utilization shall be governed in accordance with the pertinent laws and decrees of the State.

   Article 7. Development enterprises shall draw up area development programs or feasibility study reports, clearly defining the overall goals and the goals for each phase of development and overall goals and the goals for each phase of development and construction, the specific tasks and requirements attaching on carrying out the development, the developed-land utilization schemes, etc.

The area development programs or feasibility study reports shall be examined by the municipal or county people's governments and then submitted to the people's governments of provinces, autonomous regions or municipalities directly under the jurisdiction of the central authorities for examination and approval. The examination and approval agencies shall organize the relevant departments to coordinate the work relating to the construction and operation of public facilities.

   Article 8. If a development area is located in a zone governed by urban planning, the work of development and construction there must conform to the requirements of urban planning and submit its control.

All construction projects in development areas must conform to the State environmental protection laws, decrees and standards.

   Article 9. Development enterprises may transfer their right to use State-owned land to others only after they have implemented their area development programs and carried out the terms prescribed in the contracts on leasing the right to use State-owned land. Those development enterprises that have failed to make investment in land development in accordance with the terms of the aforesaid contracts or the requirements of the area development programs may not transfer their right to use State-owned land to others.

The transfer and mortgage of the right to use State-owned land by development enterprises and other enterprises and the termination of that right shall be effected in accordance with the laws and decrees governing the administration of State-owned land.

   Article 10. Development enterprises may attract investors to the development areas to make investment, accept the transfer of the right to use State-owned land and set up enterprises there. The establishment of foreign-funded enterprises shall conform to the respective provisions of the Law of the People's Republic of China on Chinese-Foreign Joint Ventures, the Law of the People's Republic of China on Chinese-Foreign Cooperative Ventures and the Law of the People's Republic of China on Foreign Enterprises.

The establishment of enterprises in development areas shall conform to the requirements of the State investment and industrial policies. The State encourages the setting up of technologically advanced and export-oriented enterprises.

   Article 11. The posts and telecommunications projects in development areas shall be planned, built and operated by the posts and telecommunications departments. With the approval of the provincial posts and telecommunications authorities, autonomous regions or municipalities directly under the jurisdiction of the central authorities, development enterprises, too, may invest in and build communications facilities either independently or in cooperation with the posts and telecommunications departments; after completion, these facilities shall be transferred to the posts and telecommunications departments for management and economic compensations shall be made to the development enterprises in accordance with the contracts signed between the two sides.

   Article 12. Development enterprises investing in the construction of their own power and heat plants, water works and other productive public facilities in development areas may engage in such business as the supply of electricity, water and heat within these areas and may also turn these facilities over to local public utilities enterprises for operation. If there is a surplus in the capacity of the facilities, it is necessary for enterprises to supply the surplus to users outside the development areas or to connect these utilities with networks there. The development enterprises shall sign contracts with the local public utilities enterprises pursuant to the relevant regulations enacted by the State and engage in operation according to the terms prescribed in the contracts.

If development areas bring in water, electricity and other resources from outside, the business shall be operated by local public utilities enterprises.

   Article 13. If development area are situated at sea shore and river bank and involve harbour construction works, the water front shall be planned and controlled by the State on a unified basis. Development enterprises may build and operate port areas and wharves for their own use in accordance with the unified plans of the State communications authorities.

   Article 14. No one in development areas may engage in business or social activities that are prohibited by the State laws and decrees.

   Article 15. If those development areas that are designed mainly for export-oriented processing enterprises need to endorse special measures on import and export control and the work of customhouses, the matter shall be reported to the State Council for approval. The specific control procedures shall be formulated by the State authorities.

   Article 16. The administration of justice, ports and customhouses in development areas shall be organized and enforced respectively by the State authorities, the local people's governments and judicial organs with jurisdiction over the areas.

   Article 17. Cooperations, enterprises and other economic institutions as well as individuals from Hongkong, Macau and Taiwan that invest and engage in area development may do so with reference to these Procedures.

   Article 18. These Procedures shall take effect on the day they are promulgated within the special economic zones, coastal open cities and coastal economic open areas.