Laws of the People's Republic of China

    Article 1  These Provisions are formulated to strengthen the administration
of the cooperation between Chinese designing institutions and foreign
designing institutions in the designing of engineering projects (hereinafter
referred to as "cooperative designing") and to promote the development of
cooperative designing activities.

    Article 2  As regards engineering projects to be financed by Chinese
investment or Chinese-foreign joint investment, or by foreign loans, when their
designing is to be entrusted to foreign designing institutions, cooperative
designing shall be carried out with the participation of Chinese designing
institutions.

    As regards engineering projects to be financed by Chinese investment, if
the designing can be undertaken by Chinese designing institutions, the task
shall not be entrusted to any foreign designing institution, but part of the
designing technology pertinent to the engineering project may be introduced or
foreign designing institutions may be approached for consultancy on
technological and economic matters.

    As regards engineering projects to be constructed within the territory of
China and financed by foreign investment, the designing shall, in principle, be
also undertaken by Chinese designing institutions; if the investors request
that the designing be done by foreign designing institutions, cooperative
designing shall be carried out with the participation of Chinese designing
institutions.

    Article 3  In cases where engineering projects call for cooperative
designing (including the foreign exchange needed for the cooperative
designing), the competent authorities or the units undertaking the construction
project shall, in accordance with the limits of authority for the
administration of construction projects, make an application while submitting a
written engineering project proposal or a written designing task report for
examination and approval; and only after obtaining approval can they begin to
peck for foreign cooperation. For small-scale engineering projects, the matter
shall be approved by the competent authorities or by the planning commissions
of the provinces, autonomous regions, or municipalities directly under the
Central Government in accordance with the respective subordinative
relationships. For large and medium-sized engineering projects, the matter
shall, in accordance with the respective subordinative relationships, be
examined by the competent authorities or by the provinces, autonomous regions,
or municipalities directly under the Central Government, which shall then
submit a report with their opinions to the State Planning Commission for
examination and approval.

    As to extra-large engineering projects, the State Planning Commission shall
organize preliminary examination and submit a report with its opinions
concerning the examination to the State Council for approval.

    The competent authorities or the units undertaking the construction
projects, while selecting the most qualified foreign designing institutions,
shall also select domestic designing institutions for the cooperative designing.

    Article 4  Only after passing an examination of designing qualifications
can a foreign designing institution be entrusted with the task of designing an
engineering project in China. The competent authorities for the engineering
project shall be responsible for examining the qualifications of the foreign
designing institution.

    The examination of designing qualifications covers the following main
items:

    (1) a certificate of registered designing qualifications issued by the
country or region where the foreign designing institution is located;

    (2) the technical level, technical force, and the state of its
technological equipment;

    (3) the record of its experiences in undertaking project designing and the
state of its operations and management;

    (4) its reputation in society.

    Article 5  A contract for cooperative designing shall be concluded between
the two parties in cooperation, stipulating explicitly the rights and
obligations of the two parties.

    The contract of cooperative designing shall include the following main
items:

    (1) the names of the two institutions in cooperation, their nationality,
their head offices, and the names, positions, nationality and addresses of
their respective legal representatives;

    (2) the purpose, scope and period of cooperation;

    (3) the form of cooperation, and the requirements for the contents, depth
and quality of designs, and for work progress;

    (4) the mix of currencies in which the two cooperating parties wish to be
paid for their designing fees, and the methods and the proportions of
distribution;

    (5) the ways of business communication between the two parties in
cooperation;

    (6) liabilities for the breach of contract;

    (7) the ways of settling disputes over the contract;

    (8) the conditions for the contract to be effective;

    (9) the date and place for signing the contract.

    Article 6  At the time when the contract for cooperative designing is
signed, the chief designing party selected shall sign a contract for project
designing with the entrusting party of the engineering project.

    Article 7  The cooperative designing may either cover the whole process of
an engineering project, i.e., from prospecting to the designing of the project,
or just involve a particular phase of the project.

    Article 8  With respect to the selection of the main types of equipment as
well as that of materials, the proposal in the matter shall, after consultation
between the two parties in cooperation, be put forward by the chief designing
party. Equipment and materials originating in China shall be given priority in
selection, on condition that they satisfy the requirements of production in
terms of technology and use.

    Article 9  Advanced and appropriate standards and norms shall be adopted in
cooperative designing and the two parties in cooperation shall provide each
other with the models they plan to adopt.

    Article 10  The two parties in cooperation shall have a joint check up on
the designing conditions, and both parties shall be jointly responsible for the
quality of the designs. As soon as the two parties have completed their
designing in accordance with the stipulations of the contract, they shall
submit the designs to the entrusting party for examination and approval.

    Article 11  In the course of cooperative designing, in case the foreign
designing institution requires basic data concerning the topography, geology,
hydrology, meteorology, and environment in the location of the project, the
entrusting party of the engineering project shall apply to the related
competent authorities for examination and approval in accordance with the
different categories of data, and the provision of such data is non-gratuitous.
The users of such data are not permitted to transfer the data to a third party.

    Article 12  In the course of cooperative designing, the two parties in
cooperation shall, in accordance with the stipulations of the contract, fulfil
their respective obligations to the letter; if one party fails to meet the
requirements of the contract, it shall take the liabilities stipulated in the
contract.

    Article 13  The two parties in cooperation shall, in accordance with the
provisions of the tax law of China, pay taxes on the income accruing to them
from the designing work.

    Article 14  Cooperative designing, undertaken by designing institutions in
Hong Kong and Macao with the designing institutions in the mainland, shall be
handled with reference to these Provisions.

    Article 15  The right to interpret these Provisions resides in the State
Planning Commission.

    Article 16  These Provisions shall go into effect as of July 1, 1986.?