Laws of the People's Republic of China

   Article 1. The present regulations are formulated to control the size of the country's foreign debts and to enable a timely and accurate way of collecting information and statistics on such debts. They are also drafted to raise the country's efficiency in utilizing foreign funds and expedite the growth of the national economy.

   Article 2. A foreign debt registration system is implemented for such purpose.

The State Administration of Exchange Control (SAEC) is in charge of establishing and prefecting a system on collecting the statistics on and the supervision of the country's foreign debts, and of publishing statistic reports thereof.

   Article 3. Foreign debts herein mentioned refer to all debts which are guaranteed by repayment contracts to be repaid in foreign currency and which are borrowed from international financial organizations, foreign governments, financial institutions or other institutions located outside the People's Republic of China by State enterprises, government departments, financial institutions or other institutions (hereinafter referred to as borrowing units) in the People's Republic of China. They include the following:

(1) Loans from international financial institutions;

(2) Foreign government loans;

(3) Loans from foreign banks and financial organizations;

(4) Buyer's credits;

(5) Loans from foreign enterprises;

(6) Securities in foreign currency;

(7) International financial leases;

(8) Deferred payments;

(9) Debts incurred under compensation trade arrangements and are to be repaid in the form of cash of a currency other than Renminbi, and

(10) Other forms of foreign debts.

Foreign exchange funds obtained by borrowing units from foreign banks and Sino-foreign joint venture banks registered in the People's Republic of China are regarded as foreign debts.

Foreign exchange funds borrowed and transferred into the country by foreign banks and Sino-foreign joint venture banks registered in the People's Republic of China are not regarded as foreign debts.

   Article 4. Registration of foreign debts is conducted on a case-by-case basis or a specified dates basis.

The "Foreign Debts Registration Certificate" shall be formulated and issued by the SAEC in a unified way.

   Article 5. Sino-foreign equity or non-equity joint venture enterprises and wholly foreign-owned enterprises are required to register at and obtain from a SAEC office their respective foreign debt registration certificates every time such a loan is obtained from a foreign source by submitting a copy of the loan contract within 15 days of the signing of the contract.

In the case of loans from international financial organizations, foreign governments, and borrowing by the Bank of China or other authorized banks and financial institutions, the borrowing units are required to register at and obtain from a SAEC office their respective foreign debt registration certificates at the specified date for such registration. The registration methods mentioned in this article do not apply to relending.

Apart from the borrowing units mentioned above in this article, other borrowing units are required to register at and obtain their respective foreign debt registration certificates from a SAEC office by submitting their borrowing approval certificates and copies of their loan contracts within 15 days of the signing of the contracts.

   Article 6. Borrowing units are required, while transferring their credits from other countries to the People's Republic of China, to open a special forex account (foreign debt) with the Bank of China or other banks authorized by the SAEC (hereinafter referred to as bank/banks) for which their foreign debt registration certificates must be submitted. Borrowing units that have obtained the necessary approval to keep their credits abroad and borrowing units whose credits are in the form of funds that are not to be transferred into the country are required to open a debt servicing forex account at banks for which their foreign debt registration certificates must be submitted.

Banks are not allowed to open special forex accounts or debt servicing forex accounts for borrowing units, which have not obtained their foreign debt registration certificates as prescribed in these regulations, for the purpose of remitting repayments of principal and interest out of the country.

   Article 7. Under the case-by-case registration method, a bank shall credit or debit the special forex account or the debt servicing forex account of a borrowing unit when the latter makes repayments of the principal and interest of its outstanding foreign debts. The bank can request the borrowing unit to submit its borrowing approval certificate and its foreign debt registration certificate issued by a SAEC office for such transaction. The bank shall issue the borrowing unit a receipt on the transaction. The borrowing unit shall then record the transaction according to the bank receipt by filling in a "Statement on Changes of Foreign Debt" and send a copy of the statement of the SAEC office that has issued its foreign debt registration certificate.

Under the method of registration at specified dates, a borrowing unit is required to submit a monthly report on the the signing of agreements, withdrawals, loan application and its repayment of principal and interest of its outstanding foreign debts to the SAEC office which has issued its foreign debt registration certificate.

Borrowing units that have been approved to keep their credits abroad are required to the SAEC office which has approved their borrowing.

   Article 8. Once a borrowing unit has fully cleared its foreign debts as recorded in its foreign debt registration certificate, the bank concerned shall cancel its special forex account or the debt servicing forex account. The said borrowing unit shall submit its foreign debt registration certificate for cancellation to the SAEC office that has issued the said certificate within 15 days.

   Article 9. SAEC offices are authorized to impose a fine, according to the seriousness of the case, on any unit that is found to have violated these regulations in any of the following ways, of an amount not exceeding 3% of the amount of the foreign debt concerned.

(1) Wilful non-registration or delay in registration of foreign debts;

(2) Refusal to submit, conceal or submit in a fraudulent way or repeated delays without any special reason in the submission of copies of the "Statement of Changes of Foreign Debt" to the SAEC office;

(3) Foreign or altering the registration certificate, and

(4) Opening or keeping a special forex account or a debt servicing forex account without prior approval.

The party concerned is permitted to lodge an appeal against the penalty handed down with higher SAEC authorities.

   Article 10. The right to interpret these regulations is vested with the SAEC.

   Article 11. These regulations shall come into force from the day of promulgation.

Borrowing units which still have not cleared their foreign debts are required to register at their local SAEC office within 30 days of the promulgation of these regulations.