Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation, the General Administration of Customs

Order of the Ministry of Foreign Trade and Economic Cooperation and the General Administration of Customs

No.23

The "Rules for the Implementation of the Administration of Import Quotas for Machinery and Electronic Products", which were, in accordance with the "Foreign Trade Law of the People's Republic of China", the "Regulations of the People's Republic of China on the Administration of Import and Export of Goods" and the "Measures on the Administration of Import of Machinery and Electronic Products", discussed and adopted at the 10th minister's working meeting of the Ministry of Foreign Trade and Economic Cooperation in 2001, and which have been consented by the General Administration of Customs with whom these Detailed Rules were negotiated, are hereby promulgated, and shall come into force on January 1, 2002. The "Import Quota Attestations" issued by the Ministry of Foreign Trade and Economic Cooperation before January 1, 2002 shall continue to be valid within the validity period, and shall be invalidated after the expiry as the validity period shall not be extended.

Minister of the Ministry of Foreign Trade and Economic Cooperation: Shi Guangsheng

December 20, 2001

Rules for the Implementation of the Administration of Import Quotas for Machinery and Electronic Products

Article 1

These Detailed Rules are enacted in accordance with the "Regulations of the People's Republic of China on the Administration of Import and Export of Goods" and the "Measures on the Administration of Import of Machinery and Electronic Products" in order to regulate the administration of the import quotas for machinery and electronic products.

Article 2

These Detailed Rules shall be applicable to the import by importing entities of machinery and electronic products under quotas inside the customs territory of the People's Republic of China.

Article 3

The Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China (hereinafter referred to as "the MOFTEC") shall be responsible for enacting, adjusting and promulgating jointly with the General Administration of Customs the catalogue of import quotas for machinery and electronic products, as well as working out the annual plans on national import quotas for machinery and electronic products and organizing the implementation.

Article 4

The MOFTEC shall, through electronic network system or by other means, carry out exchanges, checks and feedbacks of data with the customs and other relevant administrative departments, and shall be responsible for inspecting and supervising the implementation of the import quotas for the machinery and electronic products all over the country.

The institution in charge of foreign trade and economic cooperation of each province, autonomous region, municipality directly under the Central Government, municipality separately listed on the State plan, coastal city open to the world and special economic zone, as well as the office for the import and export of machinery and electronic products of each relevant department under the State Council (hereinafter respectively referred to as "the local institution in charge of foreign trade and economic cooperation" and "the departmental office of machinery and electronic products"), shall be responsible for inspecting and supervising the implementation of the import quotas for the machinery and electronic products in its own area or department, and shall report the situation to the MOFTEC.

Article 5

The MOFTEC shall, before July 31 of each year, promulgate the total quantity of the import quotas of the next year for the machinery and electronic products all over the country.

The MOFTEC may, on the basis of its needs, adjust the total quantity of the annual quotas for machinery and electronic products, and shall promulgate such adjustment 21 days before its enforcement.

Article 6

The qualifications and conditions for applying for import quotas for machinery and electronic products are as follows:

(1)

The entity applying for import shall have no such acts in violation of laws or regulations within the latest three years as evasion of exchange, arbitrage of exchange, fraudulently obtaining tax refund for exports, smuggling, etc.;

(2)

The entity applying for import shall be entitled to operate the products under the quotas in application;

(3)

The entity applying for import shall have the actual effective performance of importing and selling the products under the quotas in application for a consecutive period of three years;

(4)

The entity applying for import shall have the capabilities of manufacture, sale, maintenance, provision of services and supply of fittings, which are suitable for the quantity of the quotas in application;

(5)

The entity applying for import shall be in a good financial status;

(6)

Newly increased entities applying for import do not have to fulfill the conditions provided for in Item (3) of this Article;

(7)

An applicant who applies for import quotas for its own use does not have to fulfill the qualifications and conditions provided for in Items (2), (3), (4) and (5) of this Article, provided that it shall submit a justifiable reason for application and appropriate quantity of quotas in application.

Article 7

The time for applying for and distributing the import quotas is as follows:

(1)

The entity applying for import shall, during the period from August 1 to August 31 of each year, submit to the MOFTEC the application for import quotas of the next year for machinery and electronic products, which shall not be accepted after the expiry;

(2)

The MOFTEC shall, before October 31 of each year, distribute the quotas, and issue the "Attestations on Import Quotas for Machinery and Electronic Products" to the entities applying for import who have obtained the quotas.

Article 8

The time for re-distributing the import quotas is as follows:

(1)

The importing entities holding quotas shall, no later than September 1 of each year, return the quota licenses which cannot be used up in the present year to the MOFTEC;

(2)

The MOFTEC shall, within 10 working days as of September 1 of each year, re-distribute the quotas stated in the returned quota licenses.

Article 9

The principles for distributing the import quotas are as follows:

(1)

To guarantee the needs in scientific research, education, culture, hygiene and other commonweal careers if the goods are imported for the importer's own use;

(2)

To give priority to considering the applications of the importing entities with strong capability of manufacture, sale and provision of services;

(3)

To consider the actual effective performance of the entities applying for import in respect of the import of products under the quotas in the latest three years;

(4)

To consider distributing a certain proportion of the total quantity of annual quotas to the newly increased entities applying for import;

(5)

To properly increase the quantity of quotas of the next year upon request if the quotas of the last year have been used up; or

To deduct the quantity of quotas of the next year if the quotas of the last year have not been used up and the remaining quotas are not returned within the provided time limit;

(6)

Some certain import quotas shall be distributed in a method of bidding, and the specific measures for administration shall be enacted and promulgated by the MOFTEC.

Article 10

The procedures for applying for the "Attestation on Import Quotas for Machinery and Electronic Products" are as follows: An entity applying for import shall, when importing machinery and electronic products subject to quota administration, truthfully fill out the "Application Form for Import of Machinery and Electronic Products" in duplicate, and provide the application report and other relevant documents, as well as go through the verification formalities in the relevant local institution in charge of foreign trade and economic cooperation and the departmental office of machinery and electronic products. If no office of machinery and electronic products is established in the department, the entity applying for import shall go through the verification formalities in the institution in charge of foreign trade and economic cooperation located in the place of its industrial and commercial registration or legal person registration.

Upon verification by the relevant local institution in charge of foreign trade and economic cooperation and the departmental office of machinery and electronic products, an entity applying for import shall, within the provided time limit for applying for quotas, apply for and obtain the "Attestation on Import Quotas for Machinery and Electronic Products" from the MOFTEC with the relevant documents and the "Application Form for Import of Machinery and Electronic Products".

Article 11

The importing entity shall apply for and obtain the "Import Quota License" with the "Attestation on Import Quotas for Machinery and Electronic Products" issued by the MOFTEC. The validity period for the application and obtaining shall be the year when the "Attestation on Import Quotas for Machinery and Electronic Products" is issued. Where the "Import Quota License" is not applied for or obtained within the validity period, the "Attestation on Import Quotas for Machinery and Electronic Products" shall be invalidated.

Article 12

The "Attestation on Import Quotas for Machinery and Electronic Products" shall be in quintuplicate with five sheets. The first sheet (blue, with anti-counterfeiting shading) shall be the document for applying for and obtaining the "Import Quota License"; the second sheet (green, with white shading) shall be the document for order of goods; the third sheet (red, with anti-counterfeiting shading) shall be the document kept in the customs for record; the fourth sheet (red, with white shading) shall be the banking document for the purchase of and payment in foreign exchange; and the fifth sheet (black, with white shading) shall be kept in the quota administration organ for file.

Article 13

Where, after obtaining the "Attestation on Import Quotas for Machinery and Electronic Products", the importing entity needs to modify any content in such items in the "Attestation on Import Quotas for Machinery and Electronic Products" as the importing entity, mode of trade, uses of products, name, quantity or amount of products (with the range of change exceeding 10%) and performance of equipment, etc. within the validity period due to a particular reason, it shall go through the formalities of modifying or changing the attestation in the original organ which issued the attestation with the original "Attestation on Import Quotas for Machinery and Electronic Products"; the original organ which issued the attestation shall take back the old attestation, and shall print the characters of "(change of certificates)" in the remark column of the newly issued attestation. Where the amount of actually used exchange does not exceed 10 % of the planned amount, the "Attestation on Import Quotas for Machinery and Electronic Products" does not need to be modified, and the importing entity shall not, when applying for and obtaining the "Import Quotas License" with the "Attestation on Import Quotas for Machinery and Electronic Products", modify any content in such items in the "Attestation on Import Quotas for Machinery and Electronic Products" as the importing entity, mode of trade, uses of products, name, quantity or amount of products (with the range of change exceeding 10%) and performance of equipment, etc..

Article 14

Where the "Attestation on Import Quotas for Machinery and Electronic Products" is lost, the importing entity shall immediately report the loss to the original import quota administration organ, the original license administration organ and the customs at the port of declaration. If no bad consequence occurs, the importing entity may apply to the MOFTEC for re-issuance.

Article 15

For any entity who concludes contracts with foreign parties before applying for the "Attestation on Import Quotas for Machinery and Electronic Products" and the "Import Quotas License" in accordance with the provisions in these Detailed Rules, the MOFTEC shall not re-issue the import quota attestation, and the customs and other administrative department shall deal with the matter in accordance with the relevant laws and administrative regulations.

Article 16

These Detailed Rules shall also be applicable in any of the following circumstances:

(1)

The imported parts of the products under quotas constitute the feature of a whole machine;

(2)

The products under quotas are imported in processing trade for manufacturing products of domestic sale or for the importer's own use;

(3)

The products under quotas are imported by enterprises with foreign investment for manufacturing products of domestic sale or for their own use;

(4)

The products under quotas are imported in such modes of trade as leasing trade, compensation trade, etc.;

(5)

The products under quotas are imported in such manners as gratis aid, donation or present in economic exchanges, etc.;

(6)

The products under quotas, which are purchased outside the territory by Chinese institutions abroad or Chinese enterprises carrying out construction projects outside the territory, need to be moved back to China for their own use;

(7)

Other circumstances separately provided for in laws and administrative regulations.

Article 17

These Detailed Rules shall not be applicable in any of the following circumstances:

(1)

The products imported in processing trade are re-exported;

(2)

The products under quotas are imported into China's bonded zones or export processing zones for re-export;

(3)

The products under quotas are temporarily imported under the supervision and administration of the customs;

(4)

The products under quotas are imported by enterprises with foreign investment for investment or for their own use;

(5)

Other circumstances separately provided for in laws and administrative regulations.

Article 18

The power to interpret the present Detailed Rules shall remain with the MOFTEC. In case of any previous relevant provision inconsistent with these Detailed Rules, these Detailed Rules shall prevail.

Article 19

These Detailed Rules shall enter into force on January 1, 2002.