Laws of the People's Republic of China

    Article 1  These Procedures are formulated for the purpose of promoting
economic and technological co-operation with foreign countries, strengthening
the administration of the foreign exchange involved in investment abroad and
facilitating the achievement of a balance of international payments.

    Article 2  The terms "investment abroad" referred to in these Procedures
means the establishment of various kinds of enterprises abroad or the purchase
of and holding shares abroad (hereinafter collectively referred to as
"Chinese-invested enterprises abroad") by corporations, enterprises and other
economic organizations registered inside China (not including enterprises
with foreign investment) to engage in production and business activities.
Matters related to the foreign exchange involved in investment abroad shall
be governed by these Procedures.

    Article 3  Corporations, enterprises or other economic organizations that
intend to make investment abroad shall, prior to going through the procedures
of application, examination and approval of investment abroad with the
competent State authorities, provide the department for control of foreign
exchange with the information on the administration exercised by the countries
(or regions) where their investment is to be over the foreign exchange
involved in investigated by foreign countries and the relevant data, and
submit to the department the certifying documents on the source(s) of the
funds in foreign exchange earmarked for investment abroad. The department for
control of foreign exchange shall be responsible for the risk examination of
the foreign exchange earmarked for investment abroad and for the examination
of the source(s) of the funds in foreign exchange and shall present within 30
days the conclusions in writing drawn from the examinations.

    Article 4  Corporations, enterprises or other economic organizations
(hereinafter referred to as "domestic investors") that have been permitted to
make investment abroad shall handle with the department for control of
foreign exchange the procedures of registration and of remitting abroad the
funds in foreign exchange earmarked for investment abroad by presenting the
following materials:

    1. the documents of approval issued by the competent State authorities;

    2. the conclusions in writing drawn by the department for control of
foreign exchange from the risk examination of the foreign exchange earmarked
for investment abroad and the examination of the source(s) of the funds in
foreign exchange; and

    3. the contract of the investment project or other document(s)that may
serve to certify the amount of the funds in foreign exchange that the domestic
investors shall remit abroad.

    In handling the procedures of registration and of remitting abroad the
funds in foreign exchange earmarked for investment abroad as prescribed in
the first paragraph of this Article, the department for control of foreign
exchange shall re-examine the source(s) of the funds in foreign exchange of
the domestic investors.

    Article 5  In going through the procedures of registration, the domestic
investors shall place a deposit as a guarantee that they shall remit the profit
back to China (hereinafter referred to as "guarantee deposit") which is equal
to 5 percent of the amount of funds in foreign exchange to be sent abroad.
The guarantee deposit shall be placed in a special account in a bank
designated by the department for control of foreign exchange. The guarantee
deposit shall be refunded when the total amount of profit remitted back to
China is equal to the amount of funds in foreign exchange sent abroad. The
interest on the guarantee deposit shall be paid to the domestic investors in
accordance with the standard rate prescribed by the State.

    If the domestic investors experience real difficulty in placing the
guarantee deposit, they may give a written commitment to the department for
control of foreign exchange that the enterprise abroad in which they invest
shall remit regularly the profit or other incomes in foreign exchange back to
China.

    Article 6  The profit or other incomes in foreign exchange derived by
domestic investors from their investment abroad shall be repatriated within
6 months as of the end of the local accounting year and settled as foreign
exchange or retained as spot exchange in accordance with the pertinent
provisions of the State. Without the approval by the department for control of
foreign exchange, they may not be diverted to other uses or kept abroad.

    Article 7  The share of profit or other incomes in foreign exchange that
domestic investors receive from the enterprise abroad in which they invest
shall be retained in full in the first five years as of the date of the
establishment of the enterprise and shall be retained at a percentage
calculated in accordance with the pertinent provisions of the State as of the
end of the first five years.

    Article 8  A Chinese-invested enterprise abroad may, on the basis of the
need of its business operations, raise funds on its own. But without approval
by the State Administration of Foreign Exchange Control, its domestic investors
may not provide guarantee for it by any means.

    Article 9  The annual accounting statements of a Chinese-invested
enterprise abroad, including the statement of assets and liabilities and the
statement of loss and profit, shall, within 6 months as of the end of the
local accounting year, be submitted by its domestic investors to the
department for control of foreign exchange.

    Article 10  If a Chinese-invested enterprise abroad is to make changes in
its capital, its domestic investors shall apply in advance to the original
examining and approving authorities for approval and the changes shall be
reported to the department for control of foreign exchange for the record.

    Article 11  If domestic investors are to transfer the shares of stock
of the enterprise abroad in which they invest, they shall submit to the local
department for control of foreign exchange, a report for the transfer thereof
and shall repatriate the incomes in foreign exchange thus obtained within 30
days after the completion of the transfer.

    Article 12  If a Chinese-invested enterprise abroad terminates its
business operations or is dissolved in accordance with the laws of the country
(or region) in which it is located, its domestic investors shall repatriate
the assets in foreign exchange that they are entitled to obtain and may not
divert them to other uses or keep them abroad without authorization.

    Article 13  If a Chinese-invested enterprise abroad fails to remit back
to China their profit or other incomes in foreign exchange in accordance with
their profit plan, its domestic investors shall submit to the department for
control of foreign exchange a report on their failure to fulfil their profit
plan on schedule or on the losses sustained in business operations. If they
fail to offer sufficient justification, the department for control of foreign
exchange may deduct from their guarantee deposit a corresponding proportion
of foreign exchange and sell it to the State. If the domestic investors have
not opened a guarantee deposit account, the department for control of foreign
exchange shall deduct from their retained foreign exchange a corresponding
amount and turn it over to the State, but the total amount deducted shall not
exceed 20 percent of the amount of the funds in foreign exchange that has
been remitted abroad.

    Article 14  If domestic investors violate the provisions in Articles 6,11
and 12, the department for control of foreign exchange shall order them to
repatriate the foreign exchange involved within a prescribed period of time
and may impose a fine amounting from 10 percent up to 20 percent of the amount
that should be repatriated.

    If domestic investors violate the provisions in Articles 9 and 10 to a
serious extent, the department for control of foreign exchange may impose
on them a fine of Renminbi 100,000 yuan or less.

    Violators of the other provisions of these Procedures shall be dealt with
in accordance with the provisions of the Rules for the Implementation of
Penalties on Violations of Foreign Exchange Control.

    Article 15  The domestic investors of the Chinese-invested enterprise
abroad established before these Procedures go into effect shall, within 60
days starting from the day on which these Procedures go into effect and in
accordance with the relevant provisions of these Procedures, approach the
department for control of foreign exchange to make up for the submission of
the relevant materials and go through the procedures of registration and
shall repatriate their incomes in foreign exchange in accordance with the
relevant provisions.

    Article 16  The State Administration of Foreign Exchange Control shall be
responsible for the interpretation of these Procedures.

    Article 17  These Procedures shall go into effect as of the date of
promulgation.