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DECISION OF THE STATE COUNCIL ON REFORMING THE INVESTMENT SYSTEM

State Council

Decision of the State Council on Reforming the Investment System

No.20 [2004] of the State Council

July 16th,2004

Since the reform and opening up to the outside world, the State has made a series of reforms on the original investment system, which have broken the highly centralized mode of investment administration under the traditional planned economic system, and have formed into a new structure of multi-investors, multi-channels of capital resources, and diversification of ways of investment, as well as market-oriented project construction. However, some deep-level inconsistencies and problems of the existing investment system have not been radically solved. In particular, the investment decision-making right of enterprises has not been fully put to effect; the fundamental role of the market in allocating resource has not been brought into full play; the scientific level and democratization level of government investment decisions need to be further improved; and the efficiency of investment macro-control and supervision needs to be enhanced. Therefore, the State Council decides to further deepen the reform of investment system.

I.

Guidelines and Target for Deepening the Reform of the Investment System

1.

The guidelines for deepening the reform of investment system are: in accordance with the requirements for improving the socialist market economic mechanism, the fundamental role of the market in allocating resources shall be brought into full play under the macro-control of the State, the enterprises' status as the major subject of investment shall be established, and the government's investment acts shall be regulated, the legal rights and interests of the investors shall be protected, so as to create a market environment conducive to the fair and orderly competition of all investors, promote the rational flow and effective allocation of elements of production, optimize the investment structure, and raise investment returns, as well as push forward the coordinated development of economy and overall progress of society.

2.

The target for deepening the reform of investment system are: we should reform the system of government oversight of corporate investment and put into effect the right of enterprises to make their own investment decisions in line with the principle that "the investor makes their own investment decisions, reaps the profits and bears the risks"; the government's investment functions shall be rationally defined, more scientific investment decisions shall be made in a more democratic way, and an accountability mechanism shall be established to hold decision makers responsible for their improper decisions; financing channels shall be further expanded to have enterprises fund their projects through diversified means; standardized investment intermediary service organizations shall be nurtured with the reinforcement of industry self-discipline so as to promote fair competition; a perfect investment macro-control system shall be established, the macro-control mode shall be improved, and macro-control means shall be perfected; legislation progress in the investment field shall be speeded up; investment supervision shall be reinforced to protect standardized investment and build the market order. A new type of investment system shall be finally established through deepening reform and expanding the opening up, in which investments are guided by the market, the enterprises shall make their own investment decisions, the banks shall make examination and approval on loans independently, and diversified ways of financing, standardized intermediary services, and effective macro-control are available.

II.

Transforming the Administrative Functions of the Government and Establishing the Status of Enterprises as the Main Subject of Investment

1.

The system of examination and approval for projects shall be reformed to put into effect the right of the enterprises to make their own investment decisions. The existing measures for the administration of enterprise investments, which are subject to the examination and approval of the governments at various levels and the relevant departments respectively without exception according to the scale of investment without differentiating the subjects of investment, resources of capital, and nature of projects, shall be reformed out and out. From now on, nongovernmental-funded corporate projects shall no longer stick to the examination and approval system, and shall adopt an approval and registration and recording system through differentiating different circumstances. The government will only conduct ratification on the major projects and projects of restricted kinds from the standpoint of maintaining public interests, and other projects will follow the registration and recording system whatever the scale is. The enterprises shall make decisions by themselves according to the market prospects, economic benefits, capital resources and product technical plans of their projects, shoulder the risk of losses, and go through such formalities as the environmental protection, land use, resource utilization, work safety, and city planning, as well as the formalities for confirmation of deduction and exemption of taxes according to law. The government may only make examination on and approval for capital application report of enterprises on projects invested and constructed by using the government subsidies, allocated loan proceeds, and discount interests. All the regions and departments shall improve the measures for the administration accordingly, regulate administrative acts, and no one may keep the rights for making decision on investment of enterprises in any name.

2.

Standardizing the ratification system of the government. The scope of ratification system shall be strictly restricted, and shall be adjusted on time according to the circumstances. The Catalogue of Investment Projects Approved by the Government (hereinafter referred to as the Catalogue) shall be brought forward by the competent investment department of the State Council together with the relevant department after making research, and shall be implemented after being reported to and approved by the State Council. No region or department may add or reduce without authorization the scope as prescribed by the Catalogue without the approval of the State Council.

An enterprise may only submit project application reports to the government for its investment and construction of any project, which is subject to ratification system, and such procedures as the approval of project proposals, feasibility study report and report for starting construction shall not be stuck to any longer. The government shall make examination on the project application reports submitted by enterprises mainly from such aspects as maintaining economic security, rationally exploiting and utilizing resources, preserving bio-environment, optimizing major arrangement, protecting public interests and preventing monopolies. For foreign investment projects, the government shall also make approval from such aspects as the market access and capital project management. The relevant departments of the government shall formulate strict and standardized ratification system, clarify the scope and contents of ratification and the application procedures thereof, as well as the handling time limit, and publicize them to the general public, so as to improve the efficiency for handling affairs and boost up the transparency.

3.

Perfecting the registration and recording system. The registration and recording system shall be followed for the corporate investment projects outside the Catalogue. Unless specified differently by the State, an enterprise shall put such projects on archives with the competent investment department of the local government in light of the principle of territory. The detailed implementation measures for registration and recording system shall be formulated by the people's governments at the provincial level. The competent investment department of the State Council shall strengthen guidance to and supervision over the recording work to prevent the disguised examination and approval in the name of registration and recording.

4.

Enlarging large enterprise groups' right of making decision on investment. Where a super enterprise group which follows a basic modern enterprise system invests in any of the projects within the Catalogue, it may file an application for ratification on the per project basis, or compile medium and long-term development and construction programs and, after the construction program has been approved by the State Council or the competent investment department of the State Council, no application shall be filed for approval for the projects in the program falling within the Catalogue any more, and only archival filing formalities are handled. The enterprise group shall report to the relevant departments of the State Council in time the conditions for the implementation of the program and the construction of the project.

5.

Encouraging social investments. The government shall broaden the investment fields of social capital, and allow the social capital enter into the fields of utilities and infrastructure projects and other industries and fields not prohibited by any law or regulation. The price of public products shall be regulated step by step, and such measures as the injection of capital money, discount interests of loans and tax preferences shall be taken to encourage and guide the social capital to participate in the construction of for-profit public welfare and infrastructure projects by ways of individual proprietorship, joint ventures, cooperation, joint management, project financing, etc.. As for those projects involving the development and utilization of state monopoly resources and requiring unified planning and arrangement, the government may make public invitation to the society to select the realtors of the projects after the construction program has been determined. Enterprises of various ownerships whose conditions are mature shall be encouraged and supported to make investment overseas.

6.

Further broadening the financing channel of corporate investment projects. Enterprises of various kinds shall be permitted to raise investment capital by way of stock right financing to establish multi-level capital market with the mutual supplementary of various ways of collection. Experiments shall be conducted on some infrastructure projects with stable returns, which are selected upon the approval of the competent investment departments and securities regulatory organs of the State Council, to raise construction funds by ways of public issuance of stocks and transferable bonds. The bond issuance management system of enterprises shall be reformed under the prerequisite of strict prevention of risks to enlarge the scale of issuance of enterprise bonds and increase the types of enterprise bonds. The system of examination and approval for loans on fixed assets and the corresponding risk management system shall be ameliorated and perfected in accordance with the market principle to support the project construction by using loans of banking groups, financial leasing, project financing and financial counselor, and other various business ways. Enterprises of various ownerships shall be permitted to apply for foreign loans in accordance with the relevant provisions. The relevant laws and regulations shall be formulated, and the system of financing of small and medium sized enterprises and credit guarantee shall be established to encourage banks and various qualified guarantee institutions to make research and innovation on ways of guaranty for project financing, and various forms shall be adopted to enhance the capital strength of guarantee organs and promote the establishment of investment companies for small and medium sized enterprises, and establish and perfect a business-starting investment mechanism. Investment funds of various kinds shall be regulated for their development. Insurance capital shall be encouraged and promoted to invest in the infrastructures and major construction projects indirectly.

7.

Regulating the corporate investment acts. Enterprises of various kinds shall strictly abide by the laws and regulations on state land and resources, environmental protection, work safety, and city planning, etc., strictly implement the industrial policies and vocational access standards, and shall not invest to construct the projects restricted from development by the state; they shall also keep good faith and abide by law, maintain the public interests, ensure the quality of projects and improve the investment benefits. The state-owned enterprises and state-owned share holding enterprises shall, in accordance with the requirements for reform of state-owned assets management system and modern enterprise systems, establish and perfect the system of contributors of state-owned assets, investment risk restriction mechanism, scientific and democratic investment decision-making system and major investment accountability system. They shall also strictly implement the legal person accountability system for investment projects, capital money system, bid invitation and tendering system, project supervision system and contract management system.

III.

Improving the government investment mechanism and regulating the government investment acts

1.

Properly defining the scope of government investment. The government investment is mainly used in fields concerning national security and the economic and social fields where the resources cannot be allocated effectively through market, including strengthening the construction of public welfare and public infrastructure, protecting and improving the environment, promoting the economic and social development of underdeveloped regions, and pushing forward scientific and technological progress and industrialization of high and new technology. Items that can be constructed through social investment shall be constructed through utilizing social capital as is possible. The rights of the central government and the local governments in the investment affairs shall be divided properly. The investment of the central government shall, in addition to arranging the building of regime of itself, mainly arrange for the trans-regional and trans-basin projects and projects that have major influence on the overall arrangement of economic and social development.

2.

Perfecting decision-making mechanism for government investment projects. Scientific decision-making rules and procedures shall be further improved and adhered to have the decision of government on investment projects made scientifically and democratically; government investment projects shall be subject to the evaluation and reasoning of intermediary consulting institutions meeting the qualification requirements in general, and competition mechanism shall be brought into the consulting and evaluation, and reasonable competition rules shall be formulated; for projects of special importance, the system of expert appraisal shall be implemented; public notice system of government investment projects shall be implemented step by step, and opinions and suggestions of all parties concerned shall be widely solicited.

3.

Regulating the management on government investment funds. Medium and long-term program and annual plan for government investment shall be worked out, and various government investment funds shall be arranged as a whole and used properly, including investment within the budgets, various special construction funds, foreign loans borrowed uniformly, etc.. The government investment fund may take such ways as the direct investment, injection of capital money, investment subsidy, re-loan, discount interests for loans, etc, according to the project arrangements, and upon the need of capital resources, project nature and adjustments. In case the government investment fund is invested by way of injection of capital money, the representatives of contributors shall be determined. Management measures shall be determined accordingly in light of the different type of capital and ways for the use of the capital to realize the decision-making procedures for government investment and capital management regulated scientifically, systematically and conforming to the standard.

4.

Simplifying and regulating the procedures for the examination and approval of government investment projects, and properly dividing the power of examination and approval. The power of examination and approval of projects between the central government and local government, between the competent investment department of the State Council and the relevant departments shall be distributed properly according to the nature of the projects, capital resources and division of rights to handle affairs. For government investment projects, if the ways of direct investment and capital injection have been adopted, only the project proposal and feasibility study report may be subject to the examination and approval from the point of view of investment decision-making, and the report for starting the construction shall no longer be examined and approved except in special circumstances; meanwhile, the work for the examination and approval of preliminary design and budgetary estimate on government investment projects shall be strictly conducted; where such ways as investment subsidy, re-loan and discount interests for loans are adopted, only the capital application report shall be subject to examination and approval. The concrete division of power and procedures for examination and approval shall be formulated by the competent investment department of the State Council together with the relevant parties concerned after research, and shall be promulgated and implemented after being reported to and approved by the State Council.

5.

Strengthening management on government investment projects and improving the ways for the implementation of construction. The construction standards for government investment projects shall be standardized and revised and improved in pace with the change of reality. Investment capital plans shall be made known according to the progress of project construction. Administration on intermediary services for government investment projects shall be strengthened to implement qualification management on such intermediary institutions of consultation and evaluation, tendering agency, etc. to improve the quality of intermediary services. As for non-operating government investment projects, the implementation of contractor system for construction shall be accelerated, e.g., a professional project management entity shall be selected by way of bid invitation to take charge of the carrying out of construction, strictly control the project investment, quality and time limit of the project, and to be responsible for transferring the project to the entity using the project after completion and checking and acceptance. The consciousness of investment risk shall be boosted up, and risk control mechanism for government investment projects shall be established and perfected.

6.

Introducing the market mechanism, and bringing into full play the benefits of government investment. The governments at various levels shall create conditions, and make use of franchising, investment subsidies, and various ways to attract social capital to participate in the construction of projects of public welfares and public infrastructures, which have reasonable returns and certain investment proceeds. Projects that are of monopoly or franchising nature shall be tried. Fair competition shall be carried out to protect public interests through the realtor bid invitation system. The established government investment projects which has competent conditions may be transferred with the property right or business property right according to law upon approval, the capital returned shall be invested in the public welfares and construction of various infrastructures continuously.

IV.

Strengthening and improving macro-control on investment

1.

Improving the system of macro-control on investment. The National Development and Reform Commission shall, under the guidance of the State Council and together with other relevant departments, control the investment activities of the whole society according to the division of functions, with close cooperation, mutual collaboration, effective operation and supervision according to law, keep rational investment scale, optimize investment structure, improve investment benefit, and promote the sustained, coordinated and healthy development of national economy and overall progress of society.

2.

Improving the ways of macro-control on investment. Economic, legal and necessary administrative measures shall be combined comprehensively to ensure effective control on the investment of the whole society with the indirect control as the main way of control. The relevant departments of the State Council shall, on the basis of medium and long term program for national economic and social development, compile development and construction programs in such major fields as education, science and technology, health, communications, energy sources, agriculture, forestry, water conservancy, zoology construction, environmental protection, and development of strategic resources, etc., including necessary special development and construction program, clarify the guidelines, strategic target of development, and overall arrangements and major construction projects, etc.. The development and construction program approved according to the prescribed procedures shall be an important basis for investment decision-making. The governments at all levels and the relevant departments shall make efforts to improve government investment benefits and guide social investment, formulate and adjust in time the Catalogue for Guiding Fixed Assets Investment and the Catalogue of Industries for Guiding Foreign Investment, and clarify the investment projects encouraged, restricted and prohibited by the state. They shall also establish a system of release of investment information, releasing in time such information as the control target of the government to the investment, major control policies, investment status of major industries, and development trend, etc., to guide the investment activities of the whole society. A scientific system of industry access shall be established to regulate the standards of environmental protection, safety standards, energy cost and water cost standards, and product technology, quality standard of major industries, so as to prevent repeated low level construction.

3.

Coordinating means of macro-control on investment. The government investment scale shall be determined properly according to the requirements of national economic and social development and the need of macro-control to have the state positively guide and effectively control the investment of the whole society. Social investment shall be guided through flexible application of investment subsidy, discount interest, price, interests rate, and taxation, etc. to optimize the industrial structure and regional structure of investment. Credit policies shall be formulated and adjusted according to the circumstances to guide the total amount and direction of the medium and long term loans. Land use system shall be rigorously enforced and regulated to bring into full play the role of land supply to the control and guidance of private investment.

4.

Strengthening and improving investment information statistics work. The work of investment statistics shall be strengthened to reform and improve the system of investment statistics, and further accurately and completely reflect the stock of fixed assets of the whole society and the situation of investment operation in time, and establish various information sharing mechanisms to provide scientific basic information for macro-control on investment. System of early warning and prevention of investment risk shall be established to strengthen monitoring and analysis on macro economic and investment operation.

V.

Strengthening and improving supervision over investment

1.

Establishing and improving the supervision system on government investment. The accountability system of government investment shall be established to ensure that the departments and entities of project consultation, investment project decision-making, design, construction, and supervision bear corresponding responsibilities. In case any department or entity which fails to abide by the laws and regulations and causes damages to the state, the relevant responsible person shall be subject to administrative and legal liabilities according to law. The government investment balance mechanism shall be improved, the competent investment department, finance department and other relevant departments concerned shall make mutual supervision over the administration of government investment according to their own division of work. The auditing department shall perform duties entirely according to law, and further strengthen auditing and supervision over the projects with the government investment, so as to improve the level of government investment administration and investment benefits. The system of audit on major projects shall be improved, and the system of afterward appraisal on government investment projects shall be established to make supervision over government investment projects all through the process. A social supervision mechanism shall be established for the government investment projects to encourage the general public and news media to conduct supervision over the government investment projects.

2.

Establishing and improving an enterprise investment supervision system with coordination and cooperation. The departments of state land and resources, environmental protection, urban planning, quality supervision, bank regulation, securities regulation, foreign exchange administration, industry and commerce administration, and work safety supervision, etc. shall strengthen supervision over the investment activities of enterprises, and shall not handle relevant license formalities for those not in conformity with the laws and regulations and the provisions of state policy. In case anyone does not abide by the relevant laws and regulations during the process of construction, the relevant departments concerned shall order it to correct in time and severely punish it according to law. The competent investment department of the government at various levels shall strengthen supervision over and inspection on the enterprise investment projects during the course and after the construction, for those projects not complying with the industrial policy and standards for industrial access and the projects being constructed without authorization and without going through corresponding approval or permission formalities, the relevant departments shall order it to stop construction, and affix liabilities to the relevant enterprises and personnel. The auditing departments shall make audit supervision over the investment of state-owned enterprises according to law to promote the inflation-proof and increment of the state-owned assets. The system of good faith on enterprise investment shall be established to punish and expose to the open air the provision of false information and in violation of laws and regulations in the declaration and construction of any project, and restrict the investment construction activities within a certain period of time.

3.

Strengthening supervision over the investment intermediary service institutions. The various investment intermediary service institutions shall be severed from the departments of government and follow the principle of good faith, strengthen self-discipline, so as to provide intermediary services with high quality and diversity. The various investment intermediary institutions shall be encouraged to take the form of partnership, stock-limited enterprises and other various forms to make reorganization and restructuring. Trade associations of investment intermediary institutions shall be improved and perfected to set up an industry management system with legal regulation, government supervision and industry self-discipline. Regional blocks and industrial monopoly shall be broken to establish an open, fair and just investment intermediary service market, and intensify the legal liabilities of intermediary service institutions.

4.

Improving laws and regulations and making supervision and administration according to law. The relevant laws and regulations relating to investment shall be formulated and perfected to protect the legal rights and interests of investors, and maintain such a market environment in which investment subjects compete against each other in a fair and orderly way, investment elements flow rationally and the market plays a fundamental role in allocating resources, and regulate the investment acts of various investment subjects and investment management activities of the government. The relevant laws and regulations shall be earnestly implemented, and the finance and economic disciplines shall be enforced strictly to block up the loopholes in management, reduce construction costs, and improve investment benefits. Inspections on law enforcement shall be strengthened to cultivate and maintain a standardized construction market order.

Annex: Catalogue of Investment Projects Approved by the Government (Text 2004)

Annex:Catalogue of Investment Projects Approved by the Government (Text 2004)

Brief Introduction:

1.

The projects listed in this Catalogue shall refer to the major and restricted fixed assets investment projects invested and constructed by enterprises without using government capital.

2.

Except for investment projects that are prohibited by the state laws and regulations and the special provisions of the State Council, if any enterprise invests to construct the projects outside this Catalogue without using the government capital, it shall be subject to recording.

3.

The relevant provisions shall be applied by analogy to the examination and approval of projects as specified by the state laws and regulations and the State Council.

4.

The Catalogue has made prescription on the power of approval of the government, of which:

(1)

The projects "approved by the competent investment department of the State Council" as specified in the Catalogue shall be subject to approval by the competent investment department of the State Council together with the competent trade department, of which the major projects shall be subject to the approval of the State Council.

(2)

The projects "approved by the competent investment department of local government" as prescribed by the Catalogue shall be subject to approval by the competent investment department of local government together with the competent trade departments at the corresponding level. The provincial government may divide the power of approval of the competent investment department of local governments at various level according to the circumstances of the locality and nature of projects, but the power of approval shall not be transferred to the lower level competent department in case the Catalogue unambiguously provides that the projects shall be subject to approval by the competent investment department of provincial government.

(3)

Special authorization shall be made to the decision-making right for investment to the large enterprise according to the need of economic development and actual circumstances of different industry.

5.

This Catalogue is the 2004 text, which may be adjusted to keep in pace with the change of circumstances.

I.

Agriculture, Forestry and Water Conservancy

Agriculture: The projects concerning the opening up of wasteland shall be subject to the approval of the competent investment departments of the provincial governments.

Reservoir: The reservoir projects in the international rivers and trans-province (district, city) rivers shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment department of local governments.

Other Projects of Water Affairs: The international rivers and projects concerning the allocation and adjustments of trans-province (district, or city) water resources, which need to be coordinated by the Central Government shall be subject to the approval of the competent investment department of the State Council, and other projects shall be subject to the approval of the competent investment department of local government.

II.

Energy Sources

1.

Electric Power

Hydropower stations: Projects constructed on the major rivers and projects with the total installed capacity of 250,000 kilowatt or more shall be subject to the approval of the competent investment departments of the State Council, and other projects shall be subject to the approval of the competent investment departments of local governments.

Pumped-storage power stations: shall be subject to the approval of the competent investment department of the State Council.

Thermal power stations: shall be subject to the approval of the competent investment department of the State Council.

Steam Power Plants: among which fire coal projects shall be subject to the approval of the competent investment department of the State Council, and other projects shall be subject to the approval of the competent investment department of local governments.

Wind power stations: The projects with the total installed capacity of 50,000 kilowatt or more shall be subject to the approval of the competent investment department of the State Council, and other projects shall be subject to the approval of the competent investment department of local governments.

Nuclear power stations: shall be subject to the approval of the State Council.

Power grid projects: Power grid projects with the grade of voltage of 330 kv. or more shall be subject to the approval of the competent investment departments of the State Council; other projects shall be approved by the competent investment departments of the local government.

2.

Coal.

Coal Mines: The coal development projects within the state planned mining areas shall be subject to the approval of the competent investment department of the State Council, other general coal development projects shall be subject to the approval of the competent investment department of local governments.

Coal liquefactions: Projects with the annual production of 500,000 tons or more shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment department of local governments.

3.

Petroleum and Natural Gas

Crude oil: Projects of new oil field development with the annual production of 100 million tons or more shall be subject to the approval of the competent investment department of the State Council, other projects shall be determined by the enterprises which have the right to prospect oil on their own initiatives, and shall be put on archives at the competent investment department of the State Council.

Natural Gas: The projects with the annual production of 2 billion cubic meters or more shall be subject to the approval of the competent investment department of the State Council, other projects shall be determined by the enterprises which have the right to prospect the natural gas on their own initiatives, and shall be put on archives at the competent investment department of the State Council.

Facilities for Receiving and Storage of Liquefied Petroleum Gas (Excluding the Projects Matching with the Oil and Gas Fields and Refineries): shall be subject to the approval of the competent investment department of provincial governments.

Facilities for Receiving and Storage of Imported Liquefied Natural Gas (LNG): shall be subject to the approval of the competent investment department of the State Council.

State Crude Oil Storage Facilities: shall be subject to the approval of the competent investment department of the State Council.

Petroleum Pipelines Network (Excluding Oil Field Gathering and Transportation Pipeline Networks): projects of trans-province (district or city) trunk pipe network shall be subject to the approval of the competent investment department of the State Council.

Gas Pipelines Network (Excluding Oil Field Gathering and Transportation Pipeline Network): Trans-province (district or city) projects or projects with the annual gas transportation capacity of 0.5 billion cubic meters or more shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment department of provincial governments.

III.

Transportation

1.

Railway.

Newly-built (including Additionally Built) Railways: Trans-province (district and city) projects or projects of 100 kilometers or more shall be subject to the approval of the competent investment department of the State Council, other projects shall be approved separately by the competent trade department of the State Council or the competent investment department of the provincial governments according to the subordinated relations.

2.

Highways.

Highways: Projects of trunk lines of national highways, trunk lines of highways for the development of western areas, national speedway networks, and trans-province (district or city) projects shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment departments of local governments.

Independent Highway Bridges and Tunnels: Trans-boundary, trans-gulf, and trans-big river projects (areas open to navigation) shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment department of local governments.

3.

Water Carriage.

Special Berths Used for Coal, Ore, and Oil and Gas: Newly-built harbors and projects with annual loading and unloading capacity of 2 million tons or more shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment department of the provincial governments.

Special Wharfs for Container Use: shall be subject to the approval of the competent investment department of the State Council.

Inland River Shipping: Projects of buildings open to navigation with more than one thousand tons shall be subject to the approval of the competent investment department of the State Council, other projects shall be subject to the approval of the competent investment department of the local government.

4.

Civil Aviation

Newly-built Airports: shall be subject to the approval of the State Council.

Airports Expanded: Projects with the total investment of 1 billion or more shall be subject to the approval of the competent investment department of the State Council; other projects shall be subject to the approval of the competent trade departments of the State Council or the competent investment departments of local governments according to the subordinate relations.

Expanded Airports Used Jointly by the civilians and armies: shall be subject to the approval of the competent investment department of the State Council together with the relevant departments of the army troops.

IV.

Information Industry

Telecommunications: Domestic trunk transmission networks (including broadcast and television network), international telecommunications transmission circuits, international pass, international communications facilities for special telecommunication networks, and other projects of telecommunication infrastructure involving information safety shall be subject to the approval of the competent investment department of the State Council.

Post: Projects of international pass and other projects of post infrastructure facilities involving information safety shall be subject to the approval of the competent investment department of the State Council.

Electronic Information Product Manufacturing: Satellite television receiver and critical components, and product projects of mobile communication system and terminal devices as prescribed specially by the state shall be subject to the approval of the competent investment department of the State Council.

V.

Raw Materials

Steal: Iron ore exploitation projects with the proved industry reserve of 50 million tons or more and the projects of iron-smelting, steel-making and steel rolling with newly added production capacity shall be subject to the approval of the competent investment department of the State Council, other iron ore development projects shall be subject to the approval of the competent investment department of the provincial government.

Non-ferrous: Projects of electrolytic aluminum with newly added productive capacity, and project of newly added aluminum, as well as the mine exploitation projects with the total investment of RMB 500 million Yuan or more shall be subject to the approval of the competent investment department of the State Council, other mine exploitation projects shall be subject to the approval of the competent investment department of the provincial government.

Petrochemical: Projects of newly built oil refining and expanded one-time oil refining project, newly built ethylene projects of and ethylene projects rebuilt and expanded with the newly added annual production capacity of 200 thousand tons shall be subject to the approval of the competent investment department of the State Council.

Chemical Materials: Newly built PTA, PX, MDI, TDI projects and projects with the PTA and PX reconstruction capacity exceeding 100 thousand tons for annual production, shall be subject to the approval of the competent investment department of the State Council.

Fertilizer: Project of kalium fertilizer with the annual production of 500 thousand tons or more shall be subject to the approval of the competent investment department of the State Council, other phosphor and kalium projects shall be subject to the approval of the competent investment department of the local government.

Cement: Except for prohibited projects, shall be subject to the approval of the competent investment department of the provincial government.

Rare Earth: projects of mine exploitation, separation of smelting and projects of deep processing of rare earth with the total investment of RMB 0.1 billion Yuan or more shall be subject to the approval of the competent investment department of the State Council, other rare earth deep processing projects shall be subject to the approval of the competent investment department of the provincial governments.

Gold: Projects with the daily mining and selection of gold mines of 500 tons or more shall be subject to the approval of the competent investment department of the State Council, other projects of mining and selection shall be subject to the approval of the competent investment department of the provincial government.

VI.

Machinery Manufacture

Automobiles: shall be subject to the special provisions approved by the State Council.

Ship: Projects for the production of newly-built shipbuilding facilities (slipway, boatyard) over 100 thousand tons or more and projects of low speed diesel engine in civil ships shall be subject to the approval of the competent investment department of the State Council.

Urban Rapid Rail Transit: Projects for the building of urban rail vehicles, beaconages, traction and transmission control system shall be subject to the approval of the competent investment department of the State Council.

VII.

Light Industry and Tobacco

Paper Pulp: Paper pulp projects with the annual production of 100 thousand tons shall be subject to the approval of the competent investment department of the State Council, paper pulp projects with the annual production of 34 thousand tons up to 100 thousand tons (not including 100 thousand tons) shall be subject to the approval of the competent investment department of the provincial government, the construction of other paper pulp projects shall be prohibited.

Denaturalized Fuel - ethanol: shall be subject to the approval of the competent investment department of the State Council.

Polyester: Projects with the daily production of 300 tons or more shall be subject to the approval of the competent investment department of the State Council.

Salt Manufacturing: shall be subject to the approval of the competent investment department of the State Council.

Sugar: Projects with the daily disposal of sugar materials of 1500 tons or more shall be subject to the approval of the competent investment department of the provincial government, other sugar projects shall be prohibited to construct.

Tobacco: Projects of cigarettes, cellulose acetate for the cigarette use shall be subject to the approval of the competent investment department of the State Council.

VIII.

High and New Technology

Civil Aviation and Aerospace: Projects for the manufacture of civil airplane (including helicopters), civil satellite manufacture, construction of ground stations of civil remote sensing satellites shall be subject to the approval of the competent investment department of the State Council.

IX.

City Construction

Urban Rapid Trail Transit: shall be subject to the approval of the State Council.

Urban Water Supply: Trans-province (district, city) projects of water diversion with the daily water diverted of 500 thousand tons or more shall be subject to the approval of the competent investment department of the State Council, other urban water supply projects shall be subject to the approval of the competent investment department of the local government.

Urban Road and Bridges: Projects of trans-large river (at the place open to navigation), bridge of major gulfs, and tunnels shall be subject to the approval of the competent investment department of the State Council.

Other Urban Construction Projects: shall be subject to the approval of the competent investment department of the State Council.

X.

Public Welfares

Education, Health, Culture, and Radio, Film and Television: Projects for the construction of university city, medical city, and other garden and district construction shall be subject to the approval of the competent investment department of the State Council.

Tourism: Projects of tourism development and resource protection facilities within the areas of major state places of interest, state natural protection areas, and the major cultural relic protection entities of the state with the total investment of RMB 500 million Yuan or more, projects within the world natural and cultural heritage protection areas shall be subject to the approval of the competent investment department of the State Council.

Physical Culture: Projects of F1 racing field shall be subject to the approval of the competent investment department of the State Council.

Entertainment: Project of large theme parks shall be subject to the approval of the State Council.

Other Public Welfare Projects: shall be subject to the approval of the competent trade department of the State Council or the competent investment department of the local government.

XI.

Finance

Projects of printing bank notes, coinage and papers for paper money shall be subject to the approval of the competent investment department of the State Council.

XII.

Foreign Investment

The projects in the class of encouragement and permission with the total investment (including capital increase) of 0.1 billion Dollars or more as prescribed in the Catalogue of Industries for Guiding Foreign Investment shall be subject to the approval of the National Development and Reform Commission.

The projects in the restricted class with the total investment (including capital increase) of 50 million Dollars or more as prescribed in the Catalogue of Industries for Guiding Foreign Investment shall be subject to the approval of the National Development and Reform Commission.

The items for the establishment and alteration of foreign funded enterprises, whose investment is above the state prescribed quotas and to whom the investment is restricted and which concerns the quota and license administration; the major matters being altered (including increase and decrease of capital, transfer of shares and incorporation) as prescribed by the contract, articles of association of the large foreign-funded projects and laws, shall be subject to the approval of the Ministry of Commerce. Other foreign-funded projects apart from the aforesaid projects shall be approved by the local governments in light of the relevant laws and regulations.

XIII.

Overseas Investment

Chinese party's overseas investment projects of resource development with the total investment of 30 million Dollars or more shall be subject to the approval of the National Development and Reform Commission. The Chinese party's overseas investment projects of non-resource category with the amount of foreign exchange used 10 million Dollars or more shall be subject to the approval of the National Development and Reform Commission. Other overseas investment projects apart from the aforesaid projects, and the projects invested by the enterprises under the Central Government shall be put on archives at the National Development and Reform Commission and the Ministry of Commerce; and the approval for the projects invested by other enterprises shall be handled by the local governments according to the relevant laws and regulations. In case that a domestic enterprise opens enterprise (excluding the finance enterprise) in a foreign country, it shall be subject to the approval of the Ministry of Commerce.

  State Council 2004-07-16  


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