Laws of the People's Republic of China

The State Economic Commission

Measures on Administration of the Substitution of Machinery and Electrical Appliances Manufactured by Chinese-foreign Equity Joint Ventures and Chinese-foreign Contractual Joint Ventures for Similar Imported Products

the State Economic Commission

October 7, 1987

Article 1

These Measures are formulated in accordance with the pertinent provisions in Measures for the Substitution of Products Manufactured by Chinese-foreign Equity Joint Ventures and Chinese-foreign Contractual Joint Ventures for Similar Imported Products, approved by the State Council and promulgated by the State Planning Commission.

Article 2

Enterprises which satisfy the following conditions may make an application for the inclusion of their products in the Catalogue of the Substitution of Home-made Machinery and Electrical Appliances for Similar Imported Products (hereinafter referred to as the "Catalogue"):

(1)

Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures (hereinafter referred to as "the enterprises"), which are capable of providing advanced technology that satisfies domestic needs, and are engaged in the development of new products, thereby realizing the upgrading of products and the replacement of old products with new ones, but which are at present confronted with the temporary difficulties of an imbalance in foreign exchange and are badly in need of support;

(2)

the machinery and electrical appliances manufactured by the enterprises are the same in performance and quality as similar products produced in foreign countries, they can satisfy the needs of domestic users, and their prices (the prices after taxation) are no higher than the prices of similar imported products produced abroad;

(3)

the machinery and electrical appliances manufactured by the enterprises are in the categories that the domestic users want to import;

(4)

the enterprises execute their obligations to export products in accordance with the approved contracts.

Article 3

Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures, which apply for the substitution of their products for similar imported foreign goods, shall prove by an ample demonstration and appraise the feasibility of substituting their products for similar imported ones at the time when they submit their feasibility studies report for examination and approval.

Article 4

After the enterprises have gone into production, if their products are in conformity with the stipulations of Article 2 mentioned above and they request to have their products included in the State catalogue of the substitution of home-made products for similar imported ones, the enterprises shall make an application to the department concerned, and submit duplicates of the application separately to the State Economic Commission, the Ministry of Foreign Economic Relations and Trade, and the local economic commission. The application shall be accompanied with an application form for the substitution of home-made machinery and electrical appliances for similar imported products, a certification document testifying to the quality of the products, and report on market demand projection for the said products; and the application shall be examined and verified by the department concerned which shall, after affixing its comments and seal to the application, transmit the application to the State Economic Commission and the State Administration of Foreign Exchange Control for examination and approval. Generally, the period of time for the examination and approval shall not exceed two months, and the approved items shall be promulgated by the State Economic Commission for execution.

Article 5

The users who need the products listed in the Catalogue may place an order directly with the enterprises, or the China Bidding Center for Machinery and Electrical Equipment (or other bidding agencies authorized by the State Economic Commission) shall, in accordance with the pertinent provisions promulgated by the State, organize bidding, thus providing advice to users for purchasing home-made products to substitute for similar imported ones.

Article 6

Enterprises which sell machinery and electrical appliances listed in the State catalogue of the substitution of home-made products for similar imported goods may, with the approval of the administration of foreign exchange control, collect part of the payment for goods in foreign exchange, and the amount shall decrease progressively in accordance with the rate of progress for the replacement of imported products with home-made ones, specified in the contract or feasibility studies report.

Article 7

The bulk parts, spare parts, components, fittings and raw materials, which the enterprises need for the production of machinery and electrical appliances listed in the State catalogue of the substitution of home-made products for similar imported goods, may be considered as bonded goods and be placed under the surveillance of the Customs. Where the users enjoy the preferential treatment of reduction of or exemption from duties when they import the aforesaid machinery and electrical appliances directly from abroad, the enterprises shall enjoy the same preferential treatment of reduction of or exemption from duties when they import the said raw materials, spare parts and components to produce similar machinery and electrical appliances and sell them to the said users.

Article 8

The right to interpret these Measures shall reside in the State Economic Commission.

Article 9

These Measures shall enter into force as of the date of promulgation.

Attachment:The Catalogues of the First Lot of Machinery and Electrical Appliances Used in Substituting for Similar Imported Products and Promulgated Simultaneously by the State Economic Commission

The first is SPECTRUM - the control system of the centralized/decentralized type (including field input/output installations, each station 1024 BIT data collecting set, sequence control, programming control set, CRT operating station, industrial controller), the enterprise that produces these products is the Shanghai Fawkes-Polo Co. Ltd.;

The second is MICONIC - B elevator (rated speed 1.6 M/S, carrying capacity 1,000 KG), the enterprise that produces this product is the Shanghai Elevators Factory of the China Schindler Elevators Company.