WORLD TRADE
ORGANIZATIONS/C/N/212
17 December 2002
(02-6961)
Council for Trade in Services Original:  English
NOTIFICATION PURSUANT TO ARTICLE III:3 OF THE
GENERAL AGREEMENT ON TRADE IN SERVICES
The following notification has been received from the delegation of the People's Republic of
China.
____________
1. Member notifying:
The People's Republic of China
2. Notification under:
Article III, paragraph 3 of the General Agreement on Trade in Services
3. Date of entry into force/duration:
2000/10/31
4. Agency responsible for implementati on and enforcement of the measure:
Ministry of Foreign Trade and Economic Co-operation
5. Complete description of the measure* indicating the modes of supply covered, the effect
on trade in services (e.g., restrictions/liberalization measures) and the impact of the
measure on commitments in the Member's schedule and Article II (MFN) exemption
list, if relevant:
Law of the People's Republic of China on Foreign Capital Enterprise
Full text English translation of the law is attached.1  The English translation is for reference
only and the Chinese version shall be authentic.
6. Members specifically affected, if any:
All Members
7. The texts are available from:
- Enquiry point /g254
- WTO Secretariat /g254
- Other sources (address, fax
and telephone of other body)  /g168
                                                     
* Including international agreements, recognition measures or other types.
1 In English only.S/C/N/212
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Law of the People’s Republic of China on Foreign Capital Enterprise
(Adopted at the Fourth Session of the Sixth National People’s Congress on April 12, 1986, amended
according to the Decision on Revision of the Law of the People’s Republic of China on Foreign
Capital Enterprises adopted at the 18th Meeting of the Standing Committee of the Ninth National
People’s Congress on October 31, 2000).
Article 1 With a view to expanding economic coop eration and technological exchange with
foreign countries and promoting the development of China’s national economy, the People’s Republic
of China permits foreign enterprises, other foreign economic organizations and individuals
(hereinafter collectively referred to as “foreign inve stors”) to set up enterprises with foreign capital in
China and protects the lawful rights and interests of such enterprises.
Article 2 As mentioned in this Law, “enterprises with foreign capital” refers to those
enterprises established in China by foreign investors, exclusively with their own capital, in accordance
with relevant Chinese laws. The term does not include branches set up in China by foreign enterprises
and other foreign economic organizations.
Article 3 Enterprises with foreign capital shall be established in such a manner as to help the
development of China’s national economy. The State may encourage the establishment of foreign
capital enterprises that are export oriented or technologically advanced.
Regulations shall be formulated by the State Council regarding the lines of business which the State
forbids enterprises with foreign capital to engage in or on which it places certain restrictions.
Article 4 The investments of a foreign investor in China, the profits it earns and its other lawful
rights and interests are protected by Chinese law.
Enterprises with foreign capital shall abide by Chinese laws and regulations and may not engage in
any activities detrimental to China’s public interests.
Article 5 The State does not nationalize or requisition any enterprise with foreign capital.
However, under special circumstances when public interests require, enterprises with foreign capitalmay be requisitioned through legal procedures and appropriate compensation shall be made.
Article 6 The application to establish an enterprise with foreign capital shall be submitted for
examination and approval to the department under the State Council which is in charge of foreign
economic relations and trade, or to an institution authorized by the State Council. The authorities in
charge of examination and approval shall, within 90 days from the date they receives such application,
decide whether or not to grant approval.
Article 7 When the application for the establishment of an enterprise with foreign capital is
approved, the foreign investor shall, within 30 da ys from the date of receiving the certificate of
approval, apply to the administrative department for industry and commerce for registration in order
to obtain a business licence. The date of issue of the business licence of foreign capital enterprise shallbe the date of its establishment.
Article 8 An enterprise with foreign capital which meets the conditions for being considered a
legal person under Chinese law shall acquire the status of a Chinese legal person in accordance with
law.
Article 9 An enterprise with foreign capital shall ma ke investments in China within the period
approved by the authorities in charge of examination and approval. If it fails to do so, theS/C/N/212
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administrative departments for industry and commer ce shall have the power to cancel its business
licence.
The administrative department for industry and commerce shall inspect and supervise the investment
situation of an enterprise with foreign capital.
Article 10 In the event of separation, merger or other major change, an enterprise with foreign
capital shall report the matter to and seek approval from the authorities in charge of examination and
approval, and register the change with the administrative department for industry and commerce.
Article 11 Enterprises with foreign capital shall conduct their operation and management in
accordance with the approved articles of association and shall be free from any interference.
Article 12 When employing Chinese workers and staff, an enterprise with foreign capital shall
conclude contracts with them according to law, in which matters concerning employment, dismissal,
remuneration, welfare benefits, occupational protection and labour insurance shall be clearly
prescribed.
Article 13 Workers and staff of enterprises with foreign capital may organize trade unions in
accordance with law, in order to conduct trade union activities and protect their lawful rights and
interests.
The said enterprises shall provide the necessary conditions for the activities of the trade unions in
their respective enterprises.
Article 14 An enterprise with foreign capital shall set up account books in China, conduct
independent accounting, submit the fiscal reports and statements as required and accept supervision
by the financial and tax authorities.
If an enterprise with foreign capital refuses to ma intain account books in China, the financial and tax
authorities may impose a fine on it, and the administrative department for industry and commerce
may order it to suspend operation or may revoke its business licence.
Article 15 A foreign capital enterprise may, in adherence to the principles of fairness and
rationality, purchase on both the Chinese and the world market the raw and semi-processed materials,
fuels and other materials it needs within the approved scope of operation.
Article 16 Enterprises with foreign capital shall apply to insurance companies in China for such
kinds of insurance coverage as are needed.
Article 17 Enterprises with foreign capital shall pay taxes in accordance with relevant State
regulations for tax payment, and may enjoy preferential treatment for reduction of or exemption from
taxes.
An enterprise with foreign capital that reinvests its profits in China after paying the income tax may,
in accordance with relevant State regulations, apply for refund of a part of the income tax already paid
on the reinvested amount.
Article 18 An enterprise with foreign capital shall handle its foreign exchange transactions in
accordance with the State regulations on foreign exchange control.
An enterprise with foreign capital shall open an account with the Bank of China or with a bank
designated by the State authority exercising foreign exchange control.S/C/N/212
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Article 19 The foreign investor may remit abroad the profits that are lawfully earned from an
enterprise with its investment, as well as other lawful earnings and any funds remaining after the
enterprise is liquidated.
Wages, salaries and other legitimate income earned by foreign employees in an enterprise with
foreign capital may be remitted abroad after the pa yment of individual income tax in accordance with
law.
Article 20 With respect to the period of operation of an enterprise with foreign capital, the
foreign investor shall report to and secure approval  from the authorities in charge of examination and
approval. For an extension of the period of operation, an application shall be submitted to the said
authorities 180 days before the expiration of the period. The authorities in charge of examination and
approval shall, within 30 days from the date of receiving such application, decide whether or not to
grant the extension.
Article 21 When terminating its operation, an enterprise with foreign capital shall promptly
issue a public notice and proceed with liquidation in accordance with legal procedure.
Pending the completion of liquidation, a foreign investor may not dispose of the assets of the
enterprise except for the purpose of liquidation.
Article 22 At the termination of operation, the enterprise with foreign capital shall cancel its
registration with the administrative department for industry and commerce and hand in its businesslicence for cancellation.
Article 23 The department under the State Council which is in charge of foreign economic
relations and trade shall, in accordance with this  Law, formulate rules for its implementation, which
shall go into effect after being submitted to and approved by the State Council.
Article 24 This Law shall go into effect as of the date of its promulgation.
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