Laws of the People's Republic of China

    Article 1  These Rules are formulated for implementing the provisions of
Chapter V of the Interim Regulations on Foreign Exchange Control of the
People's Republic of China.

    Article 2  In Chapter V of The Interim Regulations on Foreign 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 the Hong Kong and Macao regions, and managed independently or
jointly with Chinese enterprises; the term "foreign-capital enterprises"
refers to corporations, enterprises or other economic entities registered in
China with foreign capital, and managed independently or jointly with Chinese
enterprises; the term "Chinese-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 the Hong Kong and Macao regions or foreign
capital and Chinese corporations, enterprises or other economic entities.

    Article 3  For all foreign exchange receipts and payments, enterprises
with overseas Chinese capital, foreign-capital enterprises and Chinese-foreign
equity joint ventures must act in accordance with the provisions in the
Interim Regulations on Foreign Exchange Control of the People's Republic of
China as well as these Rules.

    Article 4  Enterprises with overseas Chinese capital, foreign-capital
enterprises and Chinese-foreign equity joint ventures shall open Renminbi
deposit accounts and foreign exchange deposit accounts in China with the Bank
of China or its branch banks 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 business licenses issued by the State Administration for Industry and
Commerce of the People's Republic of China.

    Article 5  The exploration fund and the fund for cooperative development
and cooperative production provided unilaterally by a foreign-capital
enterprise engaged in cooperative exploitation of offshore petroleum resources
in China are permitted to be deposited with the agreement of the Chinese side
in a bank, of a foreign country or of the Hong Kong or Macao region.

    Article 6  Should they find it necessary to open foreign exchange deposit
accounts with banks abroad or in the Hong Kong and Macao regions other than
the accounts opened in accordance with Article 5 of these Rules, enterprises
with overseas Chinese capital, foreign-capital enterprises and Chinese-foreign
equity joint ventures shall apply to SAFEC or its branch offices for approval.
The enterprises concerned shall submit to SAFEC or its branch offices
quarterly statements of payments into and withdrawal from such accounts within
30 days as of 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 effected
through these accounts.

    Article 8  For the implementation of the petroleum operations specified in
their contracts, the foreign-capital enterprises engaged in cooperative
exploitation of offshore petroleum resources may pay directly outside China
wages, salaries, cost of procurements, various labour 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 their income derived from China in accordance with the
provisions of the tax law of the People's Republic of China.

    Article 9  Enterprises with overseas Chinese capital, foreign-capital
enterprises and Chinese-foreign equity joint ventures shall submit within the
prescribed time limit 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 of foreign exchange for the
previous year shall be submitted before March 31 of each year, along with
audit reports by accountants registered in the People's Republic of China.

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

    The SAFEC and its branch offices are authorized to request the enterprises
with overseas Chinese capital, foreign-capital enterprises and Chinese-foreign
equity joint ventures to provide information about their business activities
involving foreign exchange, and to check on their foreign exchange incomes and
expenditures.

    Article 10  Any currency conversion of enterprises with overseas Chinese
capital, foreign-capital enterprises and Chinese-foreign equity joint ventures
must be conducted according to the official rates of foreign exchange quoted
by the SAFEC; the export of the products of these enterprises may be dealt
with in accordance with the relevant provisions governing China's foreign
trade exchange conversions.

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

    Article 12  Renminbi shall be used in the settlement of accounts between
enterprises with overseas Chinese capital, foreign-capital enterprises or
Chinese-foreign equity joint ventures on the one hand, and agencies,
enterprises (including enterprises with overseas Chinese capital,
foreign-capital enterprises, Chinese-foreign equity joint ventures), or
individuals in China on the other, except in the following cases:

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

    (3) Foreign currencies may be used in pricing 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) Other items which can be priced and settled in foreign currencies
are prescribed by the State Council or approved by the SAFEC or its branch
offices.

    For all transactions which can be priced and settled in foreign currencies
as approved, the receipts and payments may be made through foreign exchange
deposit accounts.

    Article 13  Overseas Chinese investors of enterprises with overseas
Chinese capital or foreign investors of foreign-capital enterprises or of
Chinese-foreign equity joint ventures may apply to the banks with which they
have opened accounts for remitting abroad their profits as well as other
justified earnings after taxation, by debiting the foreign exchange deposit
accounts of the enterprise concerned. At the time of application, the
investors concerned shall submit for examination the written decision on
profit distribution adopted by the board of directors or by another organ of
power equivalent to the board of directors, documentary evidence showing that
all taxes have been duly paid as well as the contracts containing stipulations
with regard to the distribution of profits or earnings.

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

    Article 14  Enterprises with overseas Chinese capital, foreign-capital
enterprises and Chinese-foreign equity joint ventures engaged in cooperative
exploitation of such resources as offshore petroleum and coal, and in other
contractual or equity joint ventures, whose capital is to be recovered and
profits to be realized in kind as stipulated in their contracts, may transport
out of China the products as their shares of recovered capital and realized
profits, but such enterprises shall remit back the amount of tax to be paid in
the People's Republic of China as well as other required payments. If the
products are to be sold within China, the case shall be handled in accordance
with provisions of Article 12 of these Rules, and the foreign exchange
proceeds derived from these sales may be remitted out after taxation and other
required payments.

    Article 15  Staff members and workers of foreign nationality and those
from the Hong Kong and Macao regions employed by enterprises with overseas
Chinese capital, foreign-capital enterprises and Chinese-foreign equity joint
ventures may remit abroad their wages and other justified earnings, after
taxation according to law, and if the remittance exceeds 50% of their wages
and other earnings, they may apply to the SAFEC or its branch offices. The
amounts remitted shall all be debited to the foreign exchange deposit accounts
of the enterprises concerned.

    Article 16  Foreign exchange expenses required in the normal business
operations of the branches or offices abroad or in the Hong Kong and Macao
regions set up with the approval of competent authorities by enterprises with
overseas Chinese capital, foreign-capital enterprises and Chinese-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, foreign-capital
enterprises and Chinese-foreign equity joint ventures may borrow foreign
exchange directly from banks or enterprises of foreign countries or of the
Hong Kong and Macao regions, but they must report such borrowing to the SAFEC
or its branch offices for the record.

    Article 18  Enterprises with overseas Chinese capital, foreign-capital
enterprises and Chinese-foreign equity joint ventures winding up operations
in accordance with legal procedures, shall carry out liquidation within the
scheduled period, under the joint supervision of China's finance, taxation
and foreign exchange control authorities. Overseas Chinese investors or
foreign investors shall be responsible for their taxes due and their
outstanding liabilities within China. After completion of the liquidation,
overseas Chinese investors and foreign investors may apply to the SAFEC or its
branch offices for remitting out the funds owned by or distributed to them.
And the remittance shall be debited to the foreign exchange accounts
of the liquidated enterprises.

    Article 19  The measures to control foreign exchange receipts and payments
of banks with overseas Chinese capital, banks with foreign capital,
Chinese-foreign equity joint banks and other financial institutions shall be
formulated by the SAFEC separately.

    Article 20  These Rules shall be promulgated and put into effect by the
SAFEC upon approval of the State Council.