WORLD TRADE
ORGANIZATIONS/C/N/210
17 December 2002
(02-6956)
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  Sino-Foreign Contractual Joint Venture
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 onlyS/C/N/210
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Law of the People’s Republic of China on Sino-Foreign Contractual Joint Ventures
(Adopted at the First Session of the Seventh National People’s Congress on April 13, 1988, amended
according to the Decision on Revision of the Law of the People’s Republic of China on Chinese-
Foreign Contractual Joint Ventures adopted at the 18th Meeting of the Standing Committee of the
Ninth National People’s Congress on October 31, 2000)
Article 1 This Law is formulated to expand economic cooperation and technological exchange
with foreign countries and to promote the joint esta blishment, on the principles of equality and mutual
benefit, by foreign enterprises and other economic organizations or individuals (hereinafter referred to
as the foreign party) and Chinese enterprises or other economic organizations (hereinafter referred to
as the Chinese party) of Chinese-Foreign contractual joint ventures (hereinafter referred to as
contractual joint ventures) within the territory of the People’s Republic of China.
Article 2 In establishing a contractual joint venture, the Chinese and foreign parties shall, in
accordance with the provisions of this Law, prescribe in their contractual joint venture contract such
matters as the investment or conditions for cooperation, the distribution of earnings or products, the
sharing of risks and losses, the manners of operation and management and the ownership of theproperty at the time of the termination of the contractual joint venture.
A contractual joint venture 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 3 The State shall, according to law, protect the lawful rights and interests of the
contractual joint ventures and of the Chinese and foreign parties.
A contractual joint venture shall abide by Chinese laws and regulations and may not injure the public
interests of China.
The relevant State authority shall exercise supervision over the contractual joint ventures according to
law.
Article 4 The State shall encourage the establishment of productive contractual joint ventures
that are export oriented or technologically advanced.
Article 5 For the purpose of applying for the establishment of a contractual joint venture, such
documents as the agreement, the contract and the articles of association signed by the Chinese and
foreign parties shall be submitted for examination and approval to the department in charge of foreign
economic relations and trade under the State Council or to the department or local government
authorized by the State Council (hereinafter referred to as the examination and approval authority).
The examination and approval authority shall, wi thin 45 days from the date of receiving the
application, decide whether or not to grant approval.
Article 6 When the application for the establishment of  a contractual joint venture is approved,
the parties shall, within 30 days from the date of receiving the certificate of approval, apply to the
administrative department for industry and commer ce for registration in order to obtain a business
license. The date of issue of the business license of contractual joint venture shall be the date of its
establishment.
A contractual joint venture shall, within 30 days of its establishment, carry out tax registration with
the tax authorities.S/C/N/210
Page 3
Article 7 If the Chinese and foreign parties, during the period of operation of their contractual
joint venture, agree through consultation to make major modifications to the contractual joint venture
contract, they shall report to the examination and approval authority for approval; if the modifications
include items involving statutory industry and co mmerce registration or tax registration, they shall
register the modifications with the administrative department for industry and commerce and with the
tax authorities.
Article 8 The investment or conditions for cooperation contributed by the Chinese and foreign
parties may be provided in cash or in kind, or may include the right to the use of land, industrial
property rights, non-patent technology or other property rights.
Article 9 The Chinese and foreign parties shall, in accordance with the provisions of the laws
and regulations and the agreements in the contractual joint venture contract, duly fulfil theirobligations of contributing full investment and providing the conditions for cooperation. In case of
failure to do so within the prescribed time, the administrative department for industry and commerce
shall set another time limit for the fulfilment of such obligations; if such obligations are still not
fulfilled by the new time limit, the matter shall be handled by the examination and approval authority
and the administrative department for industry and commerce according to relevant State regulations.
The investments or conditions for cooperation provided by the Chinese and foreign parties shall be
verified by an accountant registered in China or the relevant authorities, who shall provide a
certificate after verification.
Article 10 If a Chinese or foreign party wishes to make an assignment of all or part of its rights
and obligations prescribed in the contractual joint vent ure contract, it shall be subject to consent of the
other party or parties and report to the examination and approval authority for approval.
Article 11 A contractual joint venture shall conduct its operational and managerial activities in
accordance with the approved contract and articles of association for the contractual joint venture. The
right of a contractual joint venture to make its own operational and managerial decisions shall not be
free from any interference.
Article 12 A contractual joint venture shall establish a board of directors or a joint managerial
institution which shall, according to the contract or the articles of association for the contractual joint
venture, decide on the major issues concerning the venture. If the Chinese or foreign party assumes
the chairmanship of the board of directors or the di rectorship of the joint managerial institution, the
other party shall assume the vice chairmanship of th e board or the deputy directorship of the joint
managerial institution. The board of directors or the joint managerial institution may decide on the
appointment or employment of a general manager, who shall take charge of the daily operation and
management of the contractual joint venture. The general manager shall be accountable to the boardof directors or the joint managerial institution.
If a contractual joint venture, after its establishment, chooses to entrust a third party with its operation
and management, it shall be subject to the unanimous consent of the board of directors or the joint
managerial institution, report to the examination and approval authority for approval, and register the
change with the administrative department for industry and commerce.
Article 13 The employment, dismissal, remuneration, welfare benefits, occupational protection,
labour insurance, etc. of the staff members and workers of a contractual joint venture shall be
specified in contracts concluded in accordance with law.S/C/N/210
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Article 14 The staff and workers of a contractual joint venture shall, in accordance with law,
establish their trade union organization to carry out trade union activities and protect their lawful
rights and interests.
A contractual joint venture shall provide the necessary conditions for the venture’s trade union to
carry out its activities.
Article 15 A contractual joint venture shall establish its account books within the territory of
China, file its accounting statements according to relevant regulations and accept supervision by the
financial and tax authorities.
If a contractual joint venture, in violation of the provisions prescribed in the preceding paragraph,
does not establish its account books within the territory of China, the financial and tax authorities mayimpose a fine on it, and the administrative department for industry and commerce may order it to
suspend its business operation or may revoke its business license.
Article 16 A contractual joint venture shall, by presenting its business license, open a foreign
exchange account with a bank or any other financial institution which is permitted by the exchangecontrol authorities of the State to conduct transactions in foreign exchange.
A contractual joint venture shall handle its foreign exchange transactions in accordance with the State
regulations on foreign exchange control.
Article 17 A contractual joint venture may obtain loans from financial institutions within the
territory of China and may also obtain loans outside the territory of China.
Loans to be used by the Chinese and foreign parties as investment or conditions for cooperation, and
their guarantees shall be provided by each party on its own.
Article 18 The various kinds of insurance coverage of a contractual joint venture shall be
furnished by insurance institutions within the territory of China.
Article 19 A contractual joint venture may, within its scope of operation approved, import
materials it needs and export products it produces. A contractual joint venture 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 20 A contractual joint venture shall, in accordance with State regulations on tax, pay
taxes and may enjoy the preferential treatment of tax reduction or exemption.
Article 21 The Chinese and foreign parties shall share earnings or products, undertake risks and
losses in accordance with the agreements prescribed in the contractual joint venture contract.
If, upon the expiration of the period of a venture’s operation, all the fixed assets of the contractual
joint venture, as agreed upon by the Chinese and foreign parties in the contractual joint venture
contract, are to belong to the Chinese party, the Chinese and foreign parties may prescribe in the
contractual joint venture contract the ways for the foreign party to recover its investment a head of
time during the period of the venture’s operation. If the foreign party, as agreed upon in the
contractual joint venture contract, is to recover its investment prior to the payment of income tax, itshall apply to the financial and tax authorities, which shall examine and approve the application in
accordance with State regulations concerning taxes.S/C/N/210
Page 5
If, according to the provisions of the preceding paragraph, the foreign party is to recover its
investment ahead of time during the period of the venture’s operation, the Chinese and foreign parties
shall, as stipulated by the relevant laws and agreed  in the contractual joint venture contract, be liable
for the debts of the venture.
Article 22 After the foreign party has fulfilled its obligations under the law and the contractual
joint venture contract, the profits it receives as its share, its other legitimate income and the funds it
receives as its share upon the termination of the venture, may be remitted abroad according to law.
The wages, salaries or other legitimate income earned by the foreign staff and workers of contractual
joint ventures, after the payment of the individual  income tax according to law, may be remitted
abroad.
Article 23 Upon the expiration or termination in adva nce of the term of a contractual joint
venture, its assets, claims and debts shall be liquidated according to legal procedures. The Chinese
and foreign parties shall, in accordance with the agreement specified in the contractual joint venture
contract, determine the ownership of the venture’s property.
A contractual joint venture shall, upon the expiration or termination in advance of its term, cancel its
registration with the administrative department for industry and commerce and the tax authorities.
Article 24 The period of operation of a contractual joint venture shall be determined through
consultation by the Chinese and foreign parties and shall be clearly specified in the contractual jointventure contract. If the Chinese and foreign parties agree to extend the period of operation, they shall
apply to the examination and approval authority 180 days prior to the expiration of the venture’s term.
The examination and approval authority shall decide whether or not to grant approval within 30 days
from the date of receiving the application.
Article 25 Any dispute between the Chinese and foreign parties arising from the execution of the
contract or the articles of association for a contractual joint venture shall be settled through
consultation or mediation. In case of a dispute which the Chinese or foreign parties is unwilling to
settle through consultation or mediation, or of a dispute which they have failed to settle through
consultation or mediation, the Chinese and foreign parties may submit it to a Chinese arbitrationagency or any other arbitration agency for arbitration in accordance with the arbitration clause in the
contractual joint venture contract or a written agreement on arbitration concluded afterwards.
The Chinese or foreign party may bring a suit in a Chinese court, if no arbitration clause is provided
in the contractual joint venture contract and if no written agreement is concluded afterwards.
Article 26 The detailed rules for the implementation of this Law shall be formulated by the
department in charge of foreign economic relations and trade  under the State Council and reported to
the State Council for approval before implementation.
Article 27 This Law shall come in to force as of the date of its promulgation.
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