Laws of the People's Republic of China

    Article 1  These Provisions are formulated with a view to promoting the
economic development of our country and to encouraging overseas Chinese and
compatriots from Hong Kong and Macao (hereinafter referred to as "overseas
Chinese investors and those from Hong Kong and Macao") to make investments in
China's inland areas.

    Article 2  Overseas Chinese investors and those from Hong Kong and Macao
can make investments in the various provinces, autonomous regions,
municipalities directly under the Central Government, and special economic
zones in China's inland areas.

    Overseas Chinese investors and those from Hong Kong and Macao are
encouraged to engage themselves in business operations of land development in
accordance with the pertinent regulations of the state.

    Article 3  The investments made by the overseas Chinese investors and
those from Hong Kong and Macao may take the following forms:

    (1) to establish enterprises with the capital wholly owned by the overseas
Chinese investors and those from Hong Kong and Macao;

    (2) to establish equity joint ventures and contractual joint ventures;

    (3) to carry out compensation trade, to process supplied materials, to
assemble supplied parts, and to carry out contractual production;

    (4) to purchase shares and various bonds and debentures of existing
enterprises;

    (5) to purchase real estate;

    (6) to obtain land use right according to law and to engage in land
development operation;

    (7) to use other forms of investment permitted under the laws and
regulations.

    Article 4  Overseas Chinese investors and those from Hong Kong and Macao
can make investments in various trades in China's inland areas: in industries,
in agriculture, in service trades, and in other trades that are in conformity
with the orientation of social and economic development. Overseas Chinese
investors and those from Hong Kong and Macao may select their investment
projects from the lists of projects made public by the departments concerned
under various local people's governments; they may also put forward, of their
own accord, proposals as to their investment intent and file their
applications to the departments of foreign economic relations and trade or to
the examining and approving organs designated by various local people's
governments located in areas where they intend to make their investments.

    The State encourages overseas Chinese investors and those from Hong Kong
and Macao to make investments in the establishment of export oriented
enterprises and of technologically advanced enterprises, and gives
corresponding preferential treatment to such enterprises.

    Article 5  With respect to the various types of enterprises established
with investments by overseas Chinese investors and those from Hong Kong and
Macao - enterprises with the capital wholly owned by such investors, equity
joint ventures, and contractual joint ventures (hereinafter referred to as
"enterprises with investments by overseas Chinese and compatriots from Hong
Kong and Macao"), they shall all be operated in accordance with these
Provisions; in addition, they may also enjoy the corresponding preferential
treatment as enjoyed by enterprises with foreign investments, in the light of
the relevant provisions in the state laws, decrees and regulations on external
economic relations. Cases concerning other forms of investment made by such
investors in China's inland areas, and concerning their dividends, interest,
rental, royalties and other incomes that come from China's inland areas
without establishing business offices here, shall be handled in accordance
with these Provisions, and, if need be, with reference to foreign-related
economic laws, decrees and regulations of the State.

    Article 6  Overseas Chinese investors and those from Hong Kong and Macao
may make their investments by using convertible currencies, machinery and
equipment or other physical goods, industrial property rights, and proprietary
technology.

    Article 7  The investment made in China's inland areas by overseas Chinese
investors and those from Hong Kong and Macao, the assets they have purchased,
their industrial property rights, the profits from their investments, and
other lawful rights and interests shall be protected by State laws, and may be
transferred or inherited according to law.

    Overseas Chinese investors and those from Hong Kong and Macao shall abide
by State laws and regulations in their activities in inland areas.

    Article 8  The State shall not nationalize the investment made by overseas
Chinese investors and compatriots from Hong Kong and Macao or other assets
belonging to them.

    Article 9  Where the state, in accordance with the needs of social and
public interest, has to requisition the enterprises with investments by
overseas Chinese investors and those from Hong Kong and Macao, the state shall
handle the case according to the legal procedures and the investors concerned
shall be duly compensated.

    Article 10  The lawful profits gained by overseas Chinese investors and
those from Hong Kong and Macao from their investments, their other lawful
incomes and the funds after liquidation may be remitted out of China's inland
areas according to law.

    Article 11  Machinery and equipment imported to meet the needs of
enterprises with investments by overseas Chinese and compatriots from Hong
Kong and Macao and, included in the total amount of investment, motor vehicles
for use in production, office equipment, as well as articles and means of
communications for personal use and within reasonable quantities, imported by
overseas Chinese and compatriots from Hong Kong and Macao during the period
when they work in the aforesaid enterprises shall be exempted from Customs
duties and consolidated industrial and commercial tax, and also from the
application for import licences.

    The raw and processed materials, fuels, bulk parts, spare and component
parts, primary parts, and fittings, which are imported by enterprises with
investments by overseas Chinese and compatriots from Hong Kong and Macao for
the production of export commodities, shall all be exempt from Customs duties
and consolidated industrial and commercial tax and also from the application
for import licences and placed under the supervision of the Customs. In case
that the aforesaid imported materials and parts are used for the production
of commodities to be sold on China's inland markets, it is imperative to make
up the procedures for importation and to pay taxes and duties according to the
regulations.

    The export commodities produced by the enterprises with investments by
overseas Chinese and compatriots from Hong Kong and Macao shall, with the
exception of those commodities the exportation of which is under restriction
by the State, be exempt from Customs duties on export goods and consolidated
industrial and commercial tax.

    Article 12  Enterprises with investments by overseas Chinese and
compatriots from Hong Kong and Macao may obtain loans from financial
institutions in China's inland areas; they may also obtain loans from
financial institutions outside China's inland areas, and may use their assets
as well as their rights and interests as mortgage or security.

    Article 13  With respect to enterprises with the capital wholly owned by
overseas Chinese investors and compatriots from Hong Kong and Macao, their
period of operation shall be determined by the investors themselves; as to
equity joint ventures and contractual joint ventures, their period of
operation shall be determined, through consultation, by the various parties to
the above-said joint ventures; they may also set no limit to the period of
operation.

    Article 14  The composition of the board of directors of equity joint
ventures and the appointment of the chairman of the board of directors, the
composition of the board of directors or of the joint management organs of
contractual joint ventures and the appointment of the chairman or the
appointment of the director of the joint management organs, shall be
determined, through consultation, by the various parties to the equity joint
ventures or to the contractual joint ventures in the light of the proportion
of investments or the terms of contract.

    Article 15  Enterprises with investments by overseas Chinese and
compatriots from Hong Kong and Macao shall conduct their operational and
management activities in accordance with the approved contract or articles of
association. The enterprises' decision-making power for business operations
and management shall not be interfered with.

    Article 16  Overseas Chinese and compatriots from Hong Kong and Macao who
have made investments in China's inland areas, and the technical and
managerial personel engaged from outside the boundaries of China's inland
areas by enterprises with investments by overseas Chinese and compatriots from
Hong Kong and Macao, may apply for multi-journey travel documents.

    Article 17  Overseas Chinese investors and those from Hong Kong and Macao
who make investments in China's inland areas may appoint their relatives or
friends residing in the inland areas as their agents. The agents should hold
legally effective letters of authority.

    Article 18  In areas where enterprises with investments by overseas
Chinese and compatriots from Hong Kong and Macao are concentrated, overseas
Chinese investors and those from Hong Kong and Macao may apply to the local
people's government for the establishment of the association of overseas
Chinese investors and investors from Hong Kong and Macao.

    Article 19  With respect to equity joint ventures and contractual joint
ventures to be established in China's inland areas, with the investments by
overseas Chinese investors and those from Hong Kong and Macao, the application
for the establishment of the aforesaid enterprises shall be filed by the
inland party; as to the enterprises to be established with capital wholly
owned by overseas Chinese investors and those from Hong Kong and Macao, the
application shall be filed directly by such investors themselves, or they may
entrust their relatives or friends residing in China's inland areas, or
entrust the institution providing consultancy services, with the application.
Applications for the establishment of enterprises with investments by overseas
Chinese and compatriots from Hong Kong and Macao shall be accepted and handled
exclusively by the local department for foreign economic relations and trade,
or by the examining and approving organs designated by the local people's
government.

    The examination and approval of the applications for the establishment of
enterprises with investments from overseas Chinese and compatriots from Hong
Kong and Macao shall be handled in accordance with the authorization by the
State Council. Departments for foreign economic relations and trade at the
various levels or the examining and approving organs designated by the local
people's government shall, within forty-five days of receipt of complete
application documents, make the decision on whether the said application is
approved or disapproved.

    The applicant shall, within thirty days of receipt of the written
approval, file an application to the department for the administration of
industry and commerce, and, in accordance with the relevant procedures for
registration and administration, go through the registration and obtain the
business licence.

    Article 20  With respect to overseas Chinese investors and those from
Hong Kong and Macao who have made investments in China's inland areas, in case
that a dispute arises during the execution of or in relation to a contract,
the parties concerned shall try their best to settle the dispute through
consultation or mediation.

    In case that the parties concerned are unwilling to settle the dispute
through consultation or mediation, or the dispute cannot be settled through
consultation or mediation, the parties concerned may, in accordance with the
stipulations of the arbitration articles in the contract, or in accordance
with the written arbitration agreement reached by the parties concerned after
the dispute has arisen, submit their dispute to the arbitration authorities in
China's inland areas or elsewhere for settlement.

    In the event that the parties concerned did not specify an arbitration
article in their contract, and no written arbitration agreement has been
reached after the dispute occurs, then the dispute may be brought before the
people's court.

    Article 21  The right to interpret these Provisions rests with the
Ministry of Foreign Economic Relations and Trade.

    Article 22  These Provisions shall go into effect as of the date of
promulgation.