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PROVISIONS OF THE STATE COUNCIL ON SEVERAL ISSUES CONCERNING THE IMPORT AND EXPORT OF TEXTILES

    The following provisions are formulated, in accordance with the spirit of
the economic restructuring of the country, in respect of several issues
concerning the import and export of textiles.

    1. In the exportation of textiles, it is advisable to combine industry with
trade; the combination may take various forms, of which the "Qingdao Textile
Unico.Ltd" is one; and enterprises may freely adopt other combinative forms.
From now on, case concerning the establishment of various forms of textile
industry and trade combination companies and other combination complexes or
production enterprises having direct links with foreign businesses in the open
coastal cities and municipalities under separate planning shall all be handled
and examined jointly by the departments of foreign economic relations and trade
and the departments of textile industry in the cities or municipalities where
the companies or enterprises are located; the cases shall, then, be submitted
to the municipal people's government for examination and approval; and the
cases shall be further submitted to the people's government of the province or
autonomous region and to the Ministry of Foreign Economic Relations and Trade
and the Ministry of Textile Industry for record.

    2. Issues concerning the export planning for textiles, foreign exchange,
earnings from exports, and the distribution of export quotas and the issuance
of import and export licences:

    (1) it is necessary to implement the principle of taking into consideration
the historical conditions as well as the importance of encouraging the
advanced, facilitating competition, selecting quality products for export, and
promoting combination; a specific distribution plan shall be worked out jointly
by the Ministry of Foreign Economic Relations and Trade and the Ministry of
Textile Industry, and shall be transmitted directly by the Ministry of Foreign
Economic Relations and Trade to the people's governments of various provinces
(and/or autonomous regions, municipalities directly under the Central
Government), municipalities under separate planning, and the national
corporations undertaking export tasks; the distribution plan shall no longer,
be transmitted according to the subordinating relationship by the National
Textile Import and Export Corporation.

    (2) the departments of foreign economic relations and trade in various
regions shall, jointly with the departments of textile industry, work out the
local specific distribution plan in accordance with the aforesaid principle,
and then submit it to the people's government at the same level for approval,
which shall then be transmitted through the office (or commission, bureau) of
foreign economic relations and trade to various branch offices of the textile
import and export corporations, the industry and trade combination companies,
textile industry companies that undertake export tasks assigned by the state,
and combination complexes and production enterprises vested with the external
operating rights.

    (3) in the course of implementation, the department of foreign economic
relations and trade shall strengthen administration. The racketeering in export
quotas and import and export licences shall be strictly banned; and the
offender shall be dealt with seriously.

    (4) trade conducted between countries at the state level in accordance with
relevant agreements shall be carried out by the national import and export
corporations by organizing the relevant branch offices of foreign trade
corporations, industry and trade combination companies, and production
enterprises in holding business negotiations with foreign businesses and
concluding relevant transactions.

    3. The key to expanding the export of textiles and bettering the quality of products lies in bringing into play the initiative of production enterprises
and in actually devolving the power to them, so that the production enterprises
may sharpen their sensitivity towards and clarity about the international
market, thereby heightening their competitiveness. At the same time, it is
essential to bring into full play the role of various branch offices of foreign
trade corporations, of various companies situated at ports, and of various
industry and trade combination companies. From now on, the National Textile
Import and Export Corporation shall devote its attention to doing a better job
in providing information and consultancy services; it may also handle directly
a portion of the import and export business operations.

    The industry and trade combination companies and production enterprises,
which have obtained, with approval, the right to operate in foreign trade,
shall enjoy the same treatment as the textile import and export corporations in
such aspects as export quota, import and export licence, and the right to
handle import and export business; and shall also have the right to export all
commodities within the scope of business operations of their own companies
(including the right to export the two kinds of yarns and the two kinds of
cloth, but they must carry on the unified provisions formulated by the State
Council), and the right to import various kinds of raw materials required by
their companies in production (not including such kinds of raw materials as
terylene and poly acrylonitrile fibre; however, in order to develop new
varieties of commodities, to guarantee the quality of products, and to meet the
urgent needs of production, they may, with the approval of the Ministry of
Textile Industry and the Ministry of Foreign Economic Relations and Trade,
import a small quantity of such raw materials), as well as dyestuffs, chemical
and auxiliary materials, and the right to act as an agent for the exportation
of the commodities within their scope of business operations. Those companies
and enterprises with the necessary qualifications may, after obtaining the
approval in accordance with the provisions of the state, accredit
representatives abroad or establish business offices there to conduct studies
and investigations and to promote the sale of their products.

    With respect to textiles under the scheme of agency in foreign trade, the
export quota and the export licence shall be issued, along with the production
task, to the production enterprises. The production enterprises shall have the
right to select their agents by themselves and may take part in business
negotiations with foreign firms. The agents shall be responsible for concluding
contract, and, at the same time, offer satisfactory services and consultancy,
and collect service charges according to the stipulations.

    From now on, with respect to those industry and trade combination companies
and production enterprises that are vested with the right to operate in
foreign trade, the state will mainly evaluate their fulfilment of the task of
foreign exchange earnings from exports, and make statistics concerning the
level of foreign exchange earnings and the costs in terms of foreign exchange,
in order to select from among them the more successful companies and
enterprises for future arrangement.

    4. With a view to changing the existing financial structure, that is
"everybody eating from the common pot", under which the state takes the sole
responsibility for gains and losses, various types of industry and trade
combination companies and enterprises that manufacture textile goods for export
shall follow the principle of settling the accounts for imported raw materials
in accordance with the international price level, and pay the Customs duties
and the product tax according to the regulations when they are imported; then,
after the products are exported, the portion of import Customs duties and the
product tax already paid shall be refunded annually on the basis of the actual
quantity of raw materials used in the exported products, and, at the same time,
the product tax or the value added tax in the process of production shall also
be refunded; by so doing they shall take the sole responsibility for gains and
losses themselves.

    5. After liberalizing the business operations in the export of textiles,
the Ministry of Foreign Economic Relations and Trade shall play the role of
overall administration of foreign economic relations and trade of the country:
strengthening the administration at home in accordance with its competence and
duty prescribed by the State Council, setting ceiling prices for the imported
raw materials used in the production of textiles and floor prices for the
export textiles, and providing promptly information concerning the
international market. All the textile import and export corporations, industry
and trade combination companies, combination complexes and production
enterprises vested with the external operating rights, shall conduct their
business operations in accordance with the unified policies governing China's
foreign economic relations and trade.?