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CIRCULAR OF THE STATE COUNCIL CONCERNING THE AUTHORIZATION OF THE PEOPLE'S GOVERNMENTS OF THE PROVINCES, AUTONOMOUS REGIONS, MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT, SPECIAL ECONOMIC ZONES, AND MUNICIPALITIES SEPARATELY LISTED ON THE STATE PLAN TO EXAMINE AND APPROVE APPLICATIONS FOR THE ESTABLISHMENT OF ENTERPRISES WITH FOREIGN CAPITAL

    In accordance with the provisions of Article 6 of The Law of the People's
Republic of China on Foreign-Capital Enterprises, the State Council hereby
decides to authorize the people's governments of the provinces, autonomous
regions, municipalities directly under the Central Government, special
economic zones, and municipalities separately listed on the State plan to
examine and approve, in accordance with the following provisions,
applications for the establishment of enterprises with foreign capital.

    1. With respect to enterprises to be established with foreign capital,
whose investment volume is below the norm prescribed by the State Council,
and which do not require comprehensive balance to be carried out by the State
concerning construction conditions and production/operation conditions, the
application for the establishment of the aforesaid enterprises shall be
examined and approved by the people's governments of the provinces,
autonomous regions, municipalities directly under the Central Government, the
special economic zones, or municipalities separately listed on the State
plan, and approval certificates shall be issued to the aforesaid enterprises.
However, if the products for domestic sales, manufactured by the enterprises
with foreign capital to be established, belong in the categories of products
the import of which is restricted by the State, or if their products for
export sales belong in the categories of products for which export licences
shall be issued by the Ministry of Foreign Economic Relations and Trade or by
the office of its accredited representative, or in the categories of products
subject to quota control by the State; or lines of business and projects in
which the utilization of foreign capital is restricted by the State, the
local authorities should obtain the consent of the Ministry of Foreign
Economic Relations and Trade or the competent authorities concerned before
they approve the application.

    2. With respect to enterprises to be established with foreign capital,
whose investment volume is above the norm prescribed by the State Council, or
whose investment volume is below the norm but their construction and
production/operation conditions require comprehensive balance to be carried
out by the State, the peole's governments of the provinces, autonomous
regions, municipalities directly under the Central Government, special
economic zones, or municipalities separately listed on the State plan shall
comment on the applications before they forward the same to the Ministry of
Econornic Relations and Trade for examination and approval and for the
issuance of approval certificates.

    3. With respect to the enterprises with foreign capital to be established
which have been approved in accordance with the provisions of Article 1 of
this Circular, the examining and approving department shall, within thirty
days as of the date of approval, submit the applications for the
establishment of the said enterprises, together with the feasibility study
reports, the articles of association and the approval documents issued by the
examining and approving departments to the Ministry of Foreign Economic
Relations and Trade for the record. In the event that the Ministry of Foreign
Economic Relations and Trade, after receiving the said documents submitted
for the record, discovers that the enterprises whose establishment has
already been approved is not in conformity with the provisions of Article 1
of this Circular, the Ministry of Foreign Economic Relations and Trade shall
exercise its veto power. However, the local authorities concerned should be
notified of this veto within thirty days, beyond which the said veto shall
be invalidated.?