Chapter I General Principles
Article 1 This set of measures, formulated in line with the Administrative Licensing Law of the People's Republic of China and the Decision of the State Council on Reforming the Investment Regime, aims to standardize the verification and regulation over foreign invested projects.
Article 2 This set of measures is applicable to the verification of various foreign invested projects ranging from the establishment of Chinese-foreign joint equity, Chinese-foreign co-operative, solely foreign funded enterprises, to purchase of domestic enterprises by foreigners, and increase in capital by foreign funded enterprises.
Chapter II Verification Authority and Powers
Article 3 In accordance with the categorization of the Catalogue of Industries for Foreign Investment, projects falling within the scope of encouraged or permitted types with total investment amounting to US$100 million or more (including the increased capital, same as below) and restricted projects with total investment of US$50 million or more are subject to the verification by the State Development and Reform Commission (SDRC). For projects falling within the scope of encouraged or permitted types with total investment amounting to US$500 million or more (including the increased capital, same as below) and restricted projects with total investment of US$100 million or more, the SDRC shall submit the projects and its verification of the projects to the State Council for verification.
Article 4 Encouraged and permitted type projects with total investment of less than US$100 million and restricted projects with total investment of less than US$50 million are verified by the local development and reform department. The verification right of restricted projects mentioned above shall be exercised by the provincial authority in charge of development and reform and not be delegated to a lower authority.
In cases where local governments have other specific provisions on the verification of the above mentioned projects as per related laws and regulations, these provisions shall prevail.
Chapter III Project Application Report
Article 5 The project application report to be submitted to the SDRC shall include the following item.
1. Name of projects, operational term, basic information of the investors;
2. Scale of project construction, major content and products of the construction, major technology and crafts used, target market o the products, number of employees to be recruited;
3. Location of project, need for land, water, energy and other resources, consumption of major raw materials;
4. Evaluation of impact on the environment;
5. Price of public goods or services involved;
6. Total investment of the project, registered capital and amount of capital to be contributed by parties involved, methods of capital contribution and financing plans, equipment to be imported and the value involves.
Article 6 The following documents shall accompany the project application report submitted to the SDRC:
1. Certificate of registration(business license) of enterprises of various parties to the project, commercial registration certificates and latest financial statements having been audited(including balance sheet, statement of losses and profits, and cash flow statement), proof of capital and credit issued by the account opening bank;
2. Letter of investment intention, resolution of the board of directors of companies for capital increase and projects involving purchase of other companies;
3. Letter of opinion for financing issued by banks;
4. Letter of opinion for impact on the environment issues by the provincial level or state environmental protection authority;
5. Letter of opinion for choice of location issued by the provincial level planning authority;
6. Letter of opinion for pre-examination of land for the project issued by the provincial level or state land resources authority;
7. In the case of contributing in the form of state owned assets or land use right, the confirmation document issued by the related competent authority.
Chapter IV Verification Procedures
Article 7 For projects in which the right of verification is reserved for the SDRC and the State Council, the applicant of the project shall submit a project application report to the provincial level authority in charge of development and reform at the place where the project is to be launched, and the provincial level authority shall report that to the SDRC after examination and verification. Enterprise groups listed separately under the State Council and enterprises under the direct administration of the Central government may directly submit project application report to the SDRC.
Article 8 When verifying the project application report, the SDRC shall issue a letter of opinion solicitation accompanied with relevant documents to the related industrial authority under the State Council in cases where it is required to do so. The relevant industrial authorities shall give their opinions in writing to the SDRC within 7working days upon receipt of the letter and documents.
Article 9 The SDRC shall, within 5 working days upon accepting the project application report, appoint a qualified consulting agency to conduct evaluation over key issues requiring evaluation and assessment. The consulting agency accepting the appointment shall issue its evaluation and assessment report to the SDRC within the specified period of time.
Article 10 The SDRC shall complete its verification over the project application report within 20 working days upon accepting the project application report or submit its examination and verification to the State Council. In cases where it is unable to do so, the person responsible in the SDRC shall approve an extension of 10 working days and notify the applicant its reason for the extension.
The period for verification as mentioned in the previous paragraph does not include the period for appointing the consulting agency to do the assessment and evaluation.
Article 11 The SDRC shall issue a verification document in writing to the applicants for the project being verified, and for those projects being refused, the applicants shall be notified in writing, with reasons and explanations that the applicants have the right to appeal for administrative reconsideration or administrative lawsuits according to laws.
Chapter V Tern and Validity of Verification
Article 12 The terms governing the verification of a project application report by the SDRC include:
1. Whether it conforms to the provisions of the Catalogue of Industries for Foreign Investment, Catalogue of Priority Industries for Foreign Investment in Central and Western China, and related laws and regulations of the State;
2. Conforms to the requirements of the middle and long term plan of the national economy and social development, industrial planning and policies on industrial restructuring;
3. Conforms to the related provisions on public benefits and anti-monopoly by the State;
4. Conforms to the requirements of land use planning, overall urban planning, and environmental protection policies;
5. Conforms to the requirements of techniques and crafts standards as specified by the State
6. Conforms to the related provisions of the State on capital account management and foreign debt administration.
Article 13 The project applicant shall, on the strength of the verification document issued by the SDRC, proceed with the formalities of land use, with planning, quality monitoring, safe production, utilization of resources, enterprise setup(change),capital account management, import of equipment, applicable taxation policies.
Article 14 The verification document issued by the SDRC shall specify the validity period of the document. Within the validity period, the verification document is the basis on which the related formalities mentioned in the article 13 are handled. Upon the expiration of the validity period, the applicant in the course of handling the related formalities shall produce the document for extending the validity period issued by the SDCR.
Article 15 For a foreign invested project having not been verified, the related authorities of land, city planning, quality monitoring, safety production monitoring, industry and commerce, customs, taxation, foreign exchange administration and others shall not handle the related formalities for it.
Article 16 In cases where the project applicant obtains a project approval document by means of dividing the project or providing false documents and materials and other unfair means, the SDRC may withdraw the verification document for that project.
Article 17 The SDRC may conduct inspection and supervision over the implementation of the project by the project by the project applicant and the verification of foreign invested projects by the local authority in change of development and reform, and deal with problems thus identified according to laws.
Chapter VI Modification and Verification Thereof
Article 18 Under any of the following circumstances a project, verified by SDRC, shall apply to the SDRC for modification:
1. Changes being made to the construction location;
2. Changes being made to the investors or share rights;
3. Changes being made to the major construction content and main products;
4. Total investment exceeding the originally verified amount by 20% or more;
5. Other circumstances as requested by related laws and regulations and industrial policies for changes being made.
Article 19 Procedures governing the modification verification shall be in reference to the provisions of chapter IV of this set of measures.
Chapter VII Supplementary Articles
Article 20 To have information of the verified projects without delay, foreign invested projects with total investment of over US$30 million, as verified by the local authority, shall be reported to the SDRC via the provincial level authority in charge of development and reform within 20 working days starting from the day of verification of the projects.
Article 21 Various provincial level authorities in charge of development and reform shall formulate administrative measures accordingly in line with the provisions of the Regulations On the Directions of Foreign Investment(Decree No.346 of the State Council), and this set of measures.
Article 22 This set of measures shall be referred to when handling investment projects launched by investors form Hong Kong SAR Macao SAR and Taiwan region in the Mainland.
Article 23 The SDRC shall have the interpretation right of this set of measures.
Article 24 This set of measures shall enter into force as of 9th October 2004. This set of measures shall prevail in the case of conflicts arising between this set of measures and regulations on the examination and approval of foreign invested projects released previously.
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