Laws of the People's Republic of China

The General Office of the State Council

Urgent Circular of the General Office of the State Council Concerning Immediate Termination of Unauthorized Local Examination and Approval of Commercial Enterprises with Foreign Investment

GuoBanFaMingDian [1997] No.15

May 4, 1997

People's governments of all provinces, autonomous regions and municipalities directly under the Central Government, all ministries, commissions and directly subordinate institutions of the State Council:

Since the decision of the State Council in July 1992 to set up Chinese-foreign equity joint ventures and Chinese-foreign contractual commercial retailers on a pilot basis, the work has been progressing smoothly and has exerted positive effects on the reform and development of Chinese commercial enterprises. However, some local governments, disregarding the provisions of the State Council, approved and opened some commercial enterprises with foreign investment without authorization, which resulted in disorderly administration on the examination and approval of commercial projects foreign investment, disoriented development and mode of cooperation inconsistent with the state policies, etc. And it further brought confusion to and negative impact on the pilot work of foreign capital utilization in the commercial sector. As agreed upon by the State Council, to safeguard the uniformity and solemnity of the state policies and to ensure further and sounder development of the pilot work in Chinese commercial sector in an orderly manner, the urgent notification is hereby given as follows:

1.

Foreign capital utilization in the commercial sector is still at the pilot stage, the scope, number and the examination and approval of the pilot projects should still comply with the Reply of the State Council Concerning Foreign Capital Utilization in the Commercial Retailing Industry (GuoHan [1992] No.82). The State Council reiterates that the authority for the examination and approval of commercial enterprises with foreign investment belongs to the State council.

2.

As of the issuing date of this circular, local governments at all levels should immediately terminate the practice of negotiating with commercial enterprises with foreign investment and conducting unauthorized examination and approval. Those that are in the process of examination and approval should cancel all ongoing procedures immediately. Those that are currently negotiating with foreign inventors should terminate the negotiation immediately. Without the approval of the State council, no administration of industry and commerce at any levels should conduct registration procedures for commercial enterprises with foreign investment.

3.

The State Council has decided to conduct an overall review and rectification of commercial enterprises with foreign investment approved by local governments without authorization and those established locally in other ways. The specific measures hereof will be announced separately.

4.

Local governments at all levels should strengthen their guidance and administration on foreign capital utilization in the commercial sector. Any new commercial enterprise with foreign investment is found to be established without the approval the State Council will be shut down and the involved government officials will be affixed due legal liability.