Laws of the People's Republic of China

RULES FOR THE IMPLEMENTATION OF EXCHANGE CONTROL
REGULATIONS RELATING TO ENTERPRISES WITH OVERSEAS
CHINESE CAPITAL, ENTERPRISES WITH FOREIGN CAPITAL
AND SINO-FOREIGN EQUITY JOINT VENTURES

  (Approved July 19, 1983 by the State Council and Promulgated August 1, 1983
by the State Administration of Exchange Control)

 

 

SUBJECT: FOREIGN EXCHANGE

ISSUING-DEPT: STATE ADMINISTRATION OF EXCHANGE CONTROL

ISSUE-DATE: 07/19/1983

IMPLEMENT-DATE: 08/01/1983

LENGTH: 2102 words

TEXT:

[Article 1] These rules are formulated for implementing the provisions of Chapter V of the "Provisional Regulations for Exchange Control of the People's Republic of China".

[Article 2] In Chapter V of the "Provisional Regulations for Exchange Control of the People's Republic of China", the term "enterprises with overseas Chinese capital" refers to corporations, enterprises or other economic entities registered in China with overseas Chinese capital or capital of compatriots in Hong Kong and Macao areas, and managed independently or jointly with Chinese enterprises; the term "enterprises with foreign capital" refers to corporations, enterprises or other economic entities registered in China with foreign capital, and managed independently or jointly with Chinese enterprises; the term "Sino-foreign equity joint ventures" refers to enterprises jointly established, owned and run in China by corporations, enterprises, other economic entities or individuals with overseas Chinese capital, capital of compatriots in Hong Kong and Macao areas or foreign capital and Chinese corporations, enterprises or other economic entities.

[Article 3] For all business involving foreign exchange receipts and payments, enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign equity joint ventures must act in accordance with the stipulations in the "Provisional Regulations for Foreign Exchange Control of the People's Republic of China" as well as those of the rules hereby stipulated.

[Article 4] Enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign equity joint ventures should open renminbi deposit accounts and foreign exchange deposit accounts in China with the Bank of China or any other banks approved by the State Administration of Foreign Exchange Control (SAFEC) or its branch offices, payments and receipts in these accounts being subject to the supervision of the bank with which the enterprises have established accounts. When applying for the opening of the accounts, the enterprises shall submit for verification their operating licenses issued by the State Administration for Industry and Commerce of the People's Republic of China.

[Article 5] The solely borne exploration fund and its co-operative development fund and co-operative production fund provided by the enterprises engaged in co-operative exploitation of offshore petroleum resources in China are permitted to be deposited in banks situated in foreign countries or in Hong Kong and Macao areas agreed upon by their Chinese partners.

[Article 6] Should they find it necessary to open foreign exchange deposit accounts with banks abroad or in Hong Kong and Macao areas other than the accounts opened in accordance with Article 5 of these rules, enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign equity joint ventures should apply to the SAFEC or its branch offices for approval. The enterprises concerned shall submit to the SAFEC or its branch offices quarterly statements of payments into and withdrawal from such accounts within 30 days after the end of each and every quarter.

[Article 7] All foreign exchange receipts of enterprises maintaining foreign exchange accounts with banks in China in accordance with Article 4 of these rules, must be deposited in the said accounts and all their foreign exchange disbursements incurred in normal business operations can be paid from these accounts.

[Article 8] For the implementation of the petroleum operations specified in their contracts, the enterprises with foreign capital engaged in co-operative exploitation of offshore petroleum resources may pay directly outside of China wages, salaries, cost of procurements, various labor costs and service charges to foreign workers and staff members, foreign subcontractors and suppliers. The foreign workers and staff members and foreign subcontractors shall pay taxes on the income earned in China in accordance with the provisions of the tax laws of the People's Republic of China.

[Article 9] Enterprises with overseas Chinese capital, enterprises with foreign capital, and Sino-foreign equity joint ventures shall submit on or before the scheduled date to the SAFEC or its branch offices the following statements with explanatory notes in detail:

(1) Balance sheet as of December 31 of the previous year, profit and loss statement and statement of receipts and payments on foreign exchange for the previous calendar year, to be submitted before March 31 of each year, along with audit reports by auditors registered in the People's Republic of China.

(2) Budget of foreign exchange receipts and payments for the coming year, which should be submitted before December 1 of each year (subsequent amendments, if any, must be reported immediately).

The SAFEC and its branch offices are authorized to request the enterprises to provide information about their business activities involving foreign exchange, and to inspect their foreign exchange income and expenditure.

[Article 10] Enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign joint equity ventures dealing in exchange between renminbi and foreign currencies must make the currency conversion according to the official rates of exchange published by the SAFEC; their foreign exchange receipts from exports may be converted into renminbi in conformity with the Chinese government regulations governing foreign trade exchange conversions.

[Article 11] Except where otherwise approved by the SAFEC or its branch offices, foreign exchange receipts realized from exports by the enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign equity joint ventures should be transferred back and credited to their foreign exchange deposit accounts with banks in China and the enterprises should also go through the procedure of cancelling their commitments for foreign exchange receipts from these exports.

[Article 12] Except in the following cases, renminbi should be used in the settlement of accounts between enterprises with overseas Chinese capital, enterprises with foreign capital, Sino-foreign joint equity ventures themselves on the one hand and Chinese entities, enterprises, individuals residing in the People's Republic of China on the other.

(1) For products manufactured by these enterprises and sold to Chinese entities or enterprises engaged in foreign trade which would otherwise have to import, foreign currencies may be used in pricing and in settlement of accounts, provided that prior approval by Chinese foreign trade authorities has been obtained and that agreement on this arrangement has been reached between the seller and buyer; the prices of the products may be such as to be commensurate with those current in world markets.

(2) If enterprises with overseas Chinese capital, enterprises with foreign capital, and Sino-foreign equity joint ventures purchase, for the sake of production, the commodities exported or imported by Chinese entities engaged in foreign trade, foreign currencies may be used in pricing the said commodities commensurate with those current in world markets and in settlement of accounts, with the prior approval of Chinese foreign trade authorities and the arrangement between the seller and buyer.

(3) Foreign currencies may be used in payment for, and in the settlement of accounts related to, construction work performed by Chinese construction entities according to contracts, provided that prior approval from the SAFEC or its branch offices has been obtained.

(4) For other items eligible according to the State Council regulations or approved by the SAFEC or its branch offices, foreign exchange may be used in pricing and in settlement of accounts.

For the foreign exchange transactions thus approved, receipts and payments may be entered into the foreign exchange deposit accounts of these enterprises.

[Article 13] Overseas Chinese investors and foreign investors of enterprises with overseas Chinese capital, or enterprises with foreign capital, or of Sino-foreign equity joint ventures may apply to the banks with which they have opened accounts for remitting abroad their net profits after tax deductions as well as other legitimate earnings, by debiting the foreign exchange deposit accounts of the enterprises concerned. At the time of application, the investors concerned should submit for examination a report on profit distribution passed by the board of directors or by other authorities with power similar to the board of directors, documentary evidence showing that all taxes have been duly paid, and the contracts containing stipulations in regard to the distribution of profits or earnings.

Overseas Chinese investors and foreign investors of enterprises with overseas Chinese capital, of enterprises with foreign capital, or of Sino-foreign equity joint ventures should apply to the SAFEC or its branch offices in transferring their foreign exchange capital abroad by debiting the foreign exchange deposit accounts of the enterprises concerned.

[Article 14] Enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign equity joint ventures engaged in co-operative exploitation of such resources as offshore petroleum, coal, etc., and other co-operative and joint ventures, whose costs are recovered and profits are taken in kind in accordance with the stipulations provided in their contracts, may send the products thus taken out of China but such enterprises should remit the amount of tax due to the government of the People's Republic of China as well as other required payments. Should the products be sold within China, then it shall be handled in accordance with stipulations of Article 12 hereof, and the foreign exchange derived from these sales may be remitted out after tax and other payments are made.

[Article 15] Staff members and workers of foreign nationality and those from Hong Kong and Macao areas employed by enterprises with overseas Chinese capital, enterprises with foreign capital, and Sino-foreign equity joint ventures may remit abroad their wages and other legitimate earnings after tax deductions, but when the amount to be remitted exceeds 50% of their wages and other earnings, they may apply to the SAFEC or its branch offices. The remitted amount is to be debited to the foreign exchange deposit accounts of the enterprises concerned.

[Article 16] Foreign exchange expenses incurred in the normal business operations of the branches or offices abroad or in Hong Kong and Macao areas set up with the approval of competent authorities by enterprises with overseas Chinese capital, enterprises with foreign capital and Sino-foreign equity joint ventures may be remitted to these branches or offices, debiting to the foreign exchange deposit accounts of the enterprises concerned, with the approval of the SAFEC or its branch offices.

[Article 17] Enterprises with overseas Chinese capital, enterprises with foreign capital, and Sino-foreign equity joint ventures may borrow foreign exchange from banks or enterprises located in foreign countries or in Hong Kong and Macao areas, but must report such borrowings to the SAFEC or its branch offices for the record.

[Article 18] Enterprises with overseas Chinese capital, enterprises with foreign capital, and Sino-foreign equity joint ventures winding up operations in accordance with legal procedure, should carry out liquidation within the scheduled period, under the joint supervision of the Chinese finance, taxation and foreign exchange control authorities. Overseas Chinese investors or foreign investors should be responsible for their outstanding liabilities and their taxes due in China. After completion of the liquidation, overseas Chinese investors and foreign investors may apply to the SAFEC or its branch offices for remitting abroad from the foreign exchange deposit accounts of the closing enterprises the funds they own or receive as their share of apportionment.

[Article 19] The rules to control foreign exchange receipts and payments of banks with overseas Chinese capital, banks with foreign capital, joint Chinese-foreign banks and other financial institutions shall be further regulated by the SAFEC.

[Article 20] Approved by the State Council, these rules are promulgated and put into effect by the SAFEC.