Laws of the People's Republic of China

General Office of the State Council

The Circular of the General Office of the State Council on Transmitting the Opinions of the Ministry of Finance on Strengthening and Standardizing the Administration of the Evaluation Industry

GuobanFa [2003] No. 101

All provincial people's governments, autonomous regions and municipalities directly under the central government, all ministries and commissions of the State Council, and all agencies directly under the State Council:

The Opinions of the Ministry of Finance on Strengthening and Standardizing the Administration of the Evaluation Industry has been approved by the State Council, and is hereby transmitted to you for serious enforcement.

General Office of the State Council

December 19, 2003

The Opinions on Strengthening and Standardizing the Administration of the Evaluation Industry

In accordance with the spirit of the Circular on Straightening Up and Rectifying Economic Verification Intermediary Agencies (GuobanFa No. 92), based on further investigation and research and extensive solicitation of opinions, the following opinions on strengthening and standardizing the administration of the evaluation industry are hereby adopted.

1.

Development Status and Major Problems of the Evaluation Industry

With the development of the socialist market economy, China's the evaluation industry has been developing with high speed in recent years. The number of practitioners is gradually increasing; various rules and administration mechanism governing the evaluation industry are being improved; its service scope and field are being enlarged; and exchanges and cooperation among evaluation industries worldwide are being further strengthened. By the end of 2002, the number of certified practitioners had reached nearly 80, 000.

Evaluation, an intermediary service, has become the basis of such major economic activities as enterprise reform, asset restructuring, Chinese-foreign joint investment and cooperation, property right transaction, leasing, mortgage and insurance, and plays a positive role in promoting the development of socialist market economy.

While, because socialist market economy is in the course of growth and improvement, the evaluation industry as a special and new service industry is still faced with many problems.

Firstly, relevant laws and regulations are incomplete, and a uniform legal base for the administration of various professional evaluations is still lacking. Because the state has not yet formulated relevant laws and regulations governing the administration of the evaluation industry, there are no laws to abide by for regulating and administering professional evaluation practices, nor necessary and uniform legal constraints over the functions and responsibilities of relevant governmental departments, associations of the evaluation industry, evaluation intermediary agencies and practitioners. In practice, competent authorities can only conduct administration over professional evaluation affairs within their mandate through the formulation of normative documents.

Secondly, governmental administrative supervision and industrial self-discipline are still lacking. Some departments fail to seriously fulfill the duty of administrative supervision; some sub-sectors of the evaluation industry haven't established organizations of industrial self-discipline. Effective supervision over evaluation agencies, and the qualification, practices and service quality of practitioners is still lacking.

Thirdly, the establishment of technical norms and professional ethics falls behind. At present, the establishment of technical norms and professional ethics in China's evaluation industry falls behind seriously, which fails to meet the objective needs of the development of the evaluation industry, and, to a certain extent, negatively affects the healthy development of this industry.

Fourthly, exchanges, coordination and cooperation between different sub-sectors of the evaluation industry are inadequate. There exist close connections between different sub-sectors of the evaluation industry, which necessitates exchanges, coordination and cooperation. While in practice, such necessary connections are lacking in the evaluation industry, which impedes the coordinated development of the establishment of relevant systems regarding practicing requirements, qualifications, technical norms, etc.

2.

Basic Principles of Standardizing the Administration of the Evaluation Industry

In accordance with the requirements of actively developing professional market intermediary service agencies that operate in an independent, fair and normative way, and of standardizing and developing various self-discipline organizations such as industrial associations following market rules, and the spirit of deepening the reform of the administrative examination and approval system of the third Plenary Session of the Sixteenth National Congress of the Communist Party of China, the following principles shall be followed in standardizing the administration of the evaluation industry:

(1)

To establish the qualification types of the evaluation profession scientifically so as to accommodate the characteristics of different business lines and their respective practicing requirements, and meet the objective demand of the market.

(2)

To define the duties of relevant government departments and industrial associations, establish a standardized administrative mechanism over the evaluation industry, and strengthen the administrative supervision and self-discipline of the evaluation industry.

(3)

To establish a mechanism of exchanges, coordination and cooperation between various industrial associations of the evaluation profession, and promote the sound and coordinated development of the entire evaluation industry.

3.

Specific Measures of Strengthening and Standardizing the Administration of the Evaluation Industry

(1)

To establish and administer the qualification setup of the evaluation profession. , Respective professional qualifications for six types of practitioners in the evaluation industry, namely certified asset appraisers, certificated real estate appraisers, land appraisers, mining property appraisers, insurance appraisers and automobile appraisers, shall be established in accordance with the objective needs of the development of China's socialist market economy.

(2)

To improve and strengthen the administration and self-discipline for the evaluation industry.

The administrative departments in charge of the evaluation industry shall, in accordance with their mandate provided for in the regulations of 'three settlements' approved by the State Council, and relevant governmental requirements of strengthening the administration of evaluation intermediary services, fulfill their duties conscientiously, and improve and strengthen administrative supervision over evaluation intermediary services. They shall formulate the rules and regulations governing the evaluation industry, supervise the practices of evaluation agencies and their practitioners, and steer and supervise the work of evaluation industrial associations, etc.

Evaluation industrial associations shall improve the self-discipline of evaluation agencies and their appraisers in a concrete manner, draft and organize the implementation of the code and professional ethics of the evaluation industry, strengthen the establishment of various self-discipline mechanisms, organize and launch supervision and inspection over the service quality of evaluation agencies and their practitioners, promote good faith, establish a complete and effective mechanism of industrial self-discipline, and exercise punishment on those agencies and individual practitioners violating the code and professional ethics of the evaluation industry. For those sub-sectors of the evaluation industry that have not established relevant appraisers' associations, government agencies in charge shall, following relevant procedures, establish such associations as soon as possible.

All kinds of evaluation agencies and professionals shall seriously implement relevant laws and regulations and rulings of the government, and engage in the business of evaluation in accordance with the law. They shall observe strictly the code of the evaluation industry as well as various administrative systems of self-discipline, practice in good faith, and provide evaluation services in an objective and fair way.

(3)

To establish a joint conference mechanism among evaluation industrial associations, and improve and strengthen exchanges, coordination and cooperation between the various evaluation associations.

In order to facilitate exchanges, coordination and cooperation between various sub-sectors of the evaluation industry, promote the coordinated development of China's evaluation industry, based on the voluntary principle, a joint conference system can be established through self-initiated consultations among relevant evaluation associations. The joint conference is mainly responsible for conducting research and putting forward opinions and proposals regarding the reform and development of China's evaluation industry, formulating professional code and ethics for regulating appraisers' practices, coordinating the professional codes and rules of different sub-sectors, presenting research-based opinions and suggestions for strengthening industrial self-discipline, participating in the research and drafting of evaluation related laws and regulations, etc.

(4)

To accelerate the research and formulation of the Regulations for the Administration of the Evaluation Industry.

For the purpose of enforcing law-based standardization of the administration of the evaluation industry, and promoting the sound development of China's evaluation industry, the Regulations for the Administration of the Evaluation Industry shall be formulated as soon as possible based on the development experience of the evaluation industries home and abroad. The Appraiser's rights, obligations and legal liabilities shall be clearly defined in the Regulations for the Administration of the Evaluation Industry, so shall the professional qualifications and management modes of evaluation intermediaries, and the administrative duties of competent government authorities, as well as evaluation industrial associations' requirements of self-discipline.

(5)

To organize and launch a comprehensive examination of the practicing qualifications of evaluation intermediaries and relevant practitioners.

By the end of June of 2004, competent government agencies shall have co-launched a comprehensive examination with relevant evaluation industrial associations. The focuses are on the practicing qualifications and service quality of evaluation agencies and their evaluation practitioners, and on whether relevant evaluation agencies have completed reform and become independent. Agencies and practitioners that either fail to meet the qualification or seriously violate relevant professional code and ethics shall be disqualified according to law.

4.

Organization and Implementation

All relevant government departments in charge shall, in accordance with the spirit of the third plenary session of the sixteenth National Congress of the Communist Party of China, and in compliance with the aforementioned opinions and requirements, conscientiously carry out and organize relevant work and activities. Before the end of August 2004, the Ministry of Finance shall report to the State Council the results of such rectification, standardization and examination.