Chapter 1 General Provisions

Article 1. The Regulations hereunder are formulated with a view to facilitating the implementation of the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment (hereinafter referred to as the Law on Chinese-Foreign Joint Ventures).

Article 2. Joint ventures using Chinese and foreign investment (hereinafter referred to as joint ventures) established within China's territory in accordance with the Law on Chinese-Foreign Joint Ventures are Chinese legal persons and are subject to the jurisdiction and protection of Chinese law.

Article 3. Joint ventures established within China's territory should be able to promote the development of China's economy and the raising of scientific and technological levels for the benefit of socialist modernization.

The industries in which the establishment of joint venture is encouraged, permitted, restricted or prohibited shall follow the provisions of the state on guiding the direction of foreign investment and the guiding catalog of foreign-funded industries.

Article 4. Applicants to establish joint ventures shall not be granted approval if the project involves any of the following conditions:

(1) Detriment to China's sovereignty;

(2) Violation of Chinese law;

(3) Nonconformity with the requirements of the development of China's national economy;

(4) Environmental pollution;

(5) Obvious inequity in the agreements, contracts and articles of association signed, impairing the rights and interests of one party.

Article 5. A joint venture has the right to do business independently within the scope of the provisions of Chinese laws, decrees, and the agreement, contract and articles of association of the joint venture. The departments concerned shall provide support and assistance.

Chapter 2 Establishment and Registration

Article 6 The establishment of a joint venture in China is subject to the examination and approval of the Ministry of Foreign Economic Relations and Trade of the People's Republic of China (hereinafter referred to as the Ministry of Foreign Economic Relations and Trade). Certificates of approval are to be issued by the Ministry of Foreign Economic Relations and Trade.

The State Council shall authorize the people's governments of the provinces, autonomous regions, and municipalities directly under the Central Government or the relevant departments under the State Council with the power to examine and approve the establishment of joint ventures that meet the following conditions:

(1) The total amount of investment is within the limit of power to examine and approve authorized by the State Council and the source of capital of the Chinese participants has been ascertained;

(2) No additional allocations of raw materials by the state will be needed and the national balance in the aspects of fuel, power, transportation and foreign trade export quotas will not be affected.

The joint venture established after being approved according to the preceding paragraph shall be reported to the Ministry of Foreign Trade and Economic Cooperation for record.

The Ministry of Foreign Trade and Economic Cooperation, and the people's governments of the provinces, autonomous regions, and municipalities directly under the Central Government or the relevant departments under the State Council authorized by the State Council will hereinafter be referred to as “the examination and approval authority.