CERTAIN REGULATIONS FOR ENCOURAGING THE UTILIZATION OF FOREIGN INVESTMENT IN BEIJING
(Promulgated 14 June, 1988 by the Beijing Municipal People's Government)

I. TO LIBERALIZE EXAMINATION AND APPROVAL PROCEDURES FOR PROJECTS WITH FOREIGN INVESTMENT
The project proposals and feasibility study reports prepared by Sino-foreign equity or contractual joint ventures and wholly Foreign-owned enterprises (hereinafter referred to as "enterprises with foreign investment") shall be examined and approved by the governments at district or county level, the competent municipal authorities and the parent corporations, if enterprises with foreign investments conform to the investment orientation, urban development plans and environmental regulations; and can obtain capital, energy and materials needed in production and business; and can balance their own foreign exchange; the capital construction plans are within the limits of examination and approval authority of the above-mentioned governments; and export of products does not require quotas and licences; and finally the total amount of investment is less than 3,000,000 U.S. dollars. After examination and approval, the project proposals and feasibility study reports, shall be submitted to the competent commissions or offices under the Municipal Government, Municipal Planning Commission and Municipal Foreign Economic Relations and Trade Commission for the record. The above-mentioned documents shall be deemed as approved if the above commissions or offices do not object within 10 days after receipt of these documents.
Projects like processing with supplied materials and parts, compensation trade, and introduction of technology and equipment shall be examined and approved by the governments at district or county level, the competent municipal authorities and the parent corporations, if the total amount of investment including necessary domestic investment is less than 3,000,000 U.S. dollars. The production-oriented enterprises with foreign investment may negotiate directly with foreign investors, or select foreign trade corporations as their representatives to contact potential foreign investors for proposed projects.

II. TO ENCOURAGE RENOVATION OF OLD ENTERPRISES THROUGH ABSORPTION OF FOREIGN INVESTMENT
To establish Sino-foreign equity and contractual joint ventures in Beijing, the Chinese parties will use the funds allocated by the State or the Municipal Government for technical innovation including foreign exchange and Renminbi as capital contribution to the ventures, besides the right to use of the land, premises, machinery, equipment, industrial property and the funds owned by the Chinese parties themselves.
When Chinese enterprises formed equity or contractual joint ventures with foreign corporations, the surplus of workers and staff members should be properly arranged by the original employment enterprises according to the labor laws and regulations. The Chinese enterprises may still retain their independent legal personality and may use profits and other income obtained from joint ventures to provide financial support for production undertaken by workers and staff members who are not employed joint ventures. When enterprises with foreign investment have financial difficulties at the beginning of their operation, reduction of income tax and business tax may be allowed, and increase of profits retained for their own use may also be allowed after examination and approval by financial and tax authorities.

III. TO STRENGTHEN THE CUSTOMS ADMINISTRATION AND SIMPLIFY THE SUPERVISION PROCEDURES
The Customs will check and release the goods after the presentation of the contracts and the approval certificates issued by the Municipal Foreign Economic Relations and Trade Commission. The goods include raw materials, parts and components which are needed by the enterprises for processing with supplied materials and parts for exports.
The Customs will provide special service for and arrange full-time staff to inspect and release goods supplied by foreign companies for processing.

IV. TO SIMPLIFY THE PROCEDURES FOR LOANS AND SHORTEN THE EXAMINATION AND APPROVAL PERIOD FOR LOANS
When enterprises with foreign investment apply for loans with the amount of money within the examination and approval authority of the banks, the banks shall make a reply within 10 working days after receipt of the application forms and other required documents from the enterprises.
When applications for loans made by enterprises with foreign investment with good management and economic results, and good financial standing, guarantee may be waived after the evaluation of their financial standing by the banks. The banks will offer services for current deposit and overdraft loans so as to provide more convenience to enterprises with foreign investment in the utilization of loans.
Export-oriented and technologically advanced enterprises with foreign investment which do not reach the expected economic results, during the initial operational time, may still enjoy certain preferential treatment as to interest rates of loans according to the regulations concerning foreign exchange loans.
When enterprises with foreign investment processing imported materials or supplied materials and parts for producing export products need quarterly or temporary loans (the time-limit of this kind of loan is less than three months), the banks should provide the loans for these enterprises with preferential terms.
Upon approval by the Municipal Financial Bureau, enterprises with foreign investment may issue bonds internally in order to increase their capital; and may also issue bonds publicly subject to the approval by the Beijing Branch of the People's Bank of China.

V. TO ENSURE THE DECISION MAKING POWER OF ENTERPRISES WITH FOREIGN INVESTMENT CONCERNING EMPLOYMENT AND PERSONNEL
When enterprises with foreign investment employ the necessary personnel from the current labor market, the relevant departments or units should support this employment and allow the employed workers and staff members to transfer to the enterprises with foreign investment. If the relevant departments or units prevent the recruited workers and staff members from transfer without a good reason, the resignation is allowed. If any disputes arising between the relevant departments or units and the recruited personnel, the Municipal Personnel and Labor Exchange Center shall solve the disputes through arbitration. The arbitral awards must be enforced by the parties concerned. The Municipal Personnel and Labor Exchange Center may arrange the transfers for the recruited workers and staff members, if necessary.
No government departments, units or individuals may interfere with the dismissal of workers and staff members by enterprises with foreign investment according to the employment contract and relevant regulations. The dismissed workers and staff members may get jobs through recommendations of government departments or other channels.

VI. TO REDUCE THE LOCAL INCOME TAX AND EXEMPT LAND-USE FEES WITHIN THE PREPARATORY PERIOD FOR PRODUCTION ENTERPRISES WITH FOREIGN INVESTMENT
Upon approval by the Municipal Financial and Tax Departments, enterprises with foreign investment whose annual income is less than 1,000,000 Yuan Renminbi and profits rate is less than 30% may be exempted from or allowed reduction in the local income tax. For instance, the enterprise whose profits rate is less than 20% may be exempted from the local income tax; whose profits rate is between 20% and 30% may be exempted 50% reduction in the local income tax.
Upon approval by the Municipal Financial Departments, Production enterprises with foreign investment may be exempted from the land-use fees during the preparatory period for the enterprises specified in the contract.

VII. TO SIMPLIFY THE PROCEDURES FOR BUSINESSMEN WORKING FOR ENTERPRISES WITH FOREIGN INVESTMENT TO GO ABROAD
The Chinese employees working for enterprises with foreign investment who need to go abroad for business negotiations, procurement, marketing, following-up services, technological development and other business activities should be approved by the Municipal Economic Commission. When they need to go abroad again in the same year, examination and approval may be carried out by the enterprises themselves.

VIII.These Regulations shall come into force from the date of the promulgation.