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TRIAL MEASURES CONCERNING THE PROMOTION OF EXPORTS BY IMPORTATION

    In order to carry out the general task of the new period and to shift the
focus of the work on to the track of socialist modernization, foreign trade
should be greatly expanded and developed. Exports must be greatly increased
for the purpose of introducing new technology and importing equipment in
complete sets. All departments concerned and all regions should try their
best and use every possible means to develop the production of export
commodities; while tapping fully the domestic potentials for increasing the
sources of export commodities, raw materials and technology from abroad
should be utilized fully so as to bring into full play the domestic
production capacity, to devote major efforts to the promotion of exports
by importation and to expand export trade extensively and in a flexible way,
thus increasing foreign exchange earnings, and strengthening the country's
paying capability in foreign exchange.

    1. The scope of promoting exports through importation:

    (1) to import materials for processing, including the importation of all
raw and semifinished materials or key raw and semifinished materials, and to
process them into finished products for export;

    (2) to import main component parts or fittings, and to process and
assemble them into finished products for export; for example, to import
ships' main engines or instruments for assembling vessels for export;

    (3) to mainly use home-produced raw and semifinished materials, and import
auxiliary materials, then to process them into finished products for export;
and

    (4) to import animal feeds, fertilizers, seeds, and breeding stocks, and
to use them in growing and breeding occupations, then to use the animal,
farm, and side-line products and local specialties for export; or to exchage
imported commodities for home-produced farm and side-line products and local
specialties, and to use them for export.

    2. With respect to the raw, semifinished and auxiliary materials now
supplied domestically for the production of export commodities, such supplies
shall be guaranteed through the current supplying channel of materials and
shall not be reduced or cut; the materials which can be supplied domestically
shall not be imported or their importation shall be reduced. After the
implementation of the policy of promoting exports by imports, various
departments and areas, which are at present supplying commodities for export,
shall maintain a normal increase in export with the development of production.

    3. The commodities manufactured under the policy of promoting exports by
importation, shall be marketable on the international market; profitable in
earning foreign exchange; up to the quality standards for export; and can be
manufactured domestically with a guarantee for the supply of fuels and power.

    4. The amount of foreign exchange needed for carrying out the policy of
promoting exports by importation shall be included in the state plan for the
allocation of foreign exchange for imports, which shall be executed solely by
the Ministry of Foreign Trade. The specific business operations shall be
organized by the head offices of various national import and export
corporations. The bureaus of foreign trade of various provinces, autonomous
regions and municipalities directly under the Central Government shall be
responsible for supervising and examining the use of foreign exchange for
promoting exports by importation and the situation of business operations.
Where bank loans in foreign exchange are needed for commodities for promoting
exports by importation, the case shall be handled in accordance with the
measures for granting short-term foreign exchange loans. With respect to the
raw and semifinished materials, auxiliary materials and other materials
supplied by businessmen abroad for processing on the basis of materials
supplied, no matter letters of credit are mutually opened or not, so long as
the payment is not actually effected in foreign exchange, the aforesaid
materials shall not be counted as the materials used for promoting exports by
importation.

    5. The commodities for promoting exports by importation shall, after
consultation made by the foreign trade departments with the relevant regions
or departments, be included in the state plans for production and for foreign
trade, and the following principles shall be implemented step by step;
separate plans; direct allocation of materials; production at designated
units and production quota fixed according to sales conditions. On the
condition that the fulfilment of the state plan is guaranteed, if there still
exist production potentials and products marketable on the international
market can be timely exported, then arrangements may be made for extra
exports for promoting exports by importation beyond the plans, and the
foreign trade bureaus of provinces, autonomous regions, or municipalities
directly under the Central Government shall be responsible for organizing
this matter; the foreign exchange needed for the production shall be alloted
specially by the Ministry of Foreign Trade.

    6. The materials imported, and the products exported for promoting
exports by importation, shall not be included in the domestic scheme for
balanced distribution; imported materials shall, step by step, be allocated
directly by foreign trade companies to production units, and the products
shall be supplied directly by the production units to foreign trade companies
which shall purchase the products for export.

    7. The production of products for promoting exports by importation shall
be arranged on the basis of good quality. For the manufacture of industrial
commodities, only factories with better production conditions shall be
designated specially for the said purpose. With respect to farm and side-line
products and local specialities, the production shall be developed in the
light of local conditions with tracts of land assigned for the purpose. The
aforesaid designation of factories and division of arable land shall remain
relatively stable.

    8. In accordance with the principle of "integration of military production
and civil production" and "integration of production in peacetime and that in
wartime". it is imperative to tap the productive potentials of the military
industrial enterprises, and to made full use of these military industrial
enterprises in promoting the production of export commodities for promoting
exports by importation. The prices of export commodities manufactured by the
military industrial enterprises shall be fixed according to the principle of
"same quality, same price" as the export commodities manufactured by civil
enterprises.

    9. With respect to industrial commodities for promoting exports by
importation, the foreign trade company and the production or supplying unit
shall conclude and sign an economic contract or agreement, in which are
stipulated their respective obligations. In the event that either of the two
parties fails to execute the said contract or agreement, which consequently
has given rise to economic losses, the violator shall be liable for
compensating for the economic losses.

    10. With respect to the farm and side-line products, livestock products
and local specialties for promoting exports by importation, while arrangements
are being made for the importation of animal feeds, fertilizers, seeds and
breeding stocks, the foreign trade company and the production or supplying
unit shall reach an agreement through consultation concerning the increase
of varieties and quantity, the specifications and quality of the commodities
they supply for export, as well as the time for delivery.

    11. With respect to the industrial products for promoting exports by
importation, the foreign trade company and the production or supplying unit
shall reach an agreement through consultation concerning the rate of quality
products for export, the rating for the consumption of raw, semifinished, and
auxiliary materials, and the time for delivery. Those production enterprises,
whose rate of quality products for export is low, thus unable to guarantee the
quality of their products, and whose consumption of raw and semifinished
materials and production costs are high, are not eligible to be engaged in
"promoting exports by importation".

    12. With respect to the earnings of foreign exchange from commodities for
promoting exports by importation, business accounting shall be carried out
item by item, and the rate of foreign exchange earnings from exporting
finished goods should generally be controlled at the rate from 30% to 50% or
higher. The rate of foreign exchange earnings from products that call for more
sophisticated production technology shall be higher, while the rate of foreign
exchange earnings from products that are turned out with simpler production
technology shall be lower, but it shall not be lower than 30%.

    13. Production enterprises (including state-run farms) that engage in
promoting exports by importation shall try their best to fulfil their
production tasks on time with the required quality and quantity and deliver
their goods on schedule. In the event that a Production enterprise undertakes
the task of manufacturing a particular item of export product in small
quantity, with complicated designs and varieties and a very short time limit
for delivery, and consequently suffers a loss in its normal profit earnings,
the foreign trade company shall make compensation for this by giving the
production enterprise a necessary subsidy not included in the calculated
purchasing prices after the foreign trade department and the relevant
departments have reached an agreement through consultation.

    14. The making of prices in Renminbi within the country for the imported
goods and materials needed for promoting exports by importation shall, in
principle, be handled in accordance with the current measures for making
prices for imported goods. With respect to a few varieties of export goods
included in promoting exports by importation, which, as a consequence of the
high domestic appropriation prices of imported raw and auxiliary materials or
the high profit and tax rates, give rise to great losses in exporting such
finished goods, so long as the aforesaid varieties of goods sell well on the
international market and the rate of earnings in foreign exchange is
acceptable, they may, with approval, be imported through agency by the foreign
trade department and only service fees shall be charged or Customs
duty/consolidated industrial and commercial tax be exempted from. The products
supplied by production or supplying units for export shall calculate the
production costs in accordance with the actual appropriation price of the said
raw and auxiliary materials imported through the foreign trade channel.

    15. With respect to the retention quota of foreign exchange earnings from
the commodities for promoting exports by importation, the case shall be
handled in accordance with the retention measures prescribed uniformly by the
State.

    With respect to the business activities carried out for promoting exports
by importation, all regions and areas, all departments concerned, as well as
foreign trade companies and production enterprises, shall set up special
register and compile statistics for the said business activities, strengthen
the cost check-up and accounting, and guarantee the completeness of all
business vouchers and original records.

    16. With respect to those production or supplying units engaged in
promoting exports by importation, which maintain better business performance
and higher foreign exchange earnings, higher pay, more bonuses and welfare
allowances may be allowed. As to those production or supplying units which
turn out poor quality products, embezzle imported goods and materials, and
plot to share among themselves the products, an investigation shall be made
into their illegal acts, and their cases shall be dealt with seriously.

    17. To the production or supplying units engaged in promoting exports by
importation, the foreign trade companies should, at any time, provide the
aforesaid production or supplying units with specimens and samples of foreign
advanced products as well as relevant technical data, invite the personnel
from the production or supplying units to participate in business talks with
foreign companies or businessmen, organize, according to plan, study groups to
carry out investigations abroad, and invite foreign businessmen for technical
exchange.

    18. All regions and areas, and all departments concerned, should
strengthen the leadership of the work concerning the production of export
commodities for promoting exports by importation, enthusiastically organize
the implementation, and solve the problems arising in production and supply of
goods. The production and supplying units and foreign trade departments should
sum up, in good time, their experience so as to push forward the steady
development of this work.?