Laws of the People's Republic of China

For the purpose of strengthening supervision and administration of automobile trading activities, protecting legal business, preventing illegal profiteering and assuring that the reform of the system of circulation of goods and materials proceeds smoothly, the following provisions are made.

1. Automobile trading centres (which in these regulations includes marketing outlets) established by departments in charge of goods and materials and automobile industry trading companies set up by the China Automobile Industry Sales Service Corporation may engage in automobile marketing and organise automobile trading activities. When the above-mentioned centres and companies start business, they must be approved and registered by a department administering industry and commerce and obtain a business licence.

2. All automobiles put on the market with State Council approval by departments or organs of a People's Government of a province, autonomous region or municipality under the direct control of the Central Government and those automobiles sold by those production enterprises producing for the State quota which have exceeded their quota (including those automobiles manufactured by the military which are sold for civilian use) must be traded through an automobile trading centre under a department in charge of goods and materials or through an automobile industry trading company under the China Automobile Industry Sales Service Corporation. Those automobiles produced by factories not producing for the State quota shall also be traded through the above-mentioned centres or companies.

In relation to automobiles subject to a "production co-operation exchange" or a "production adjustment exchange", the two sides may decide through discussion to put them on the market. It is forbidden to profiteer in the name of co-operative exchange.

3. Automobile trading may take a variety of forms. Production enterprises may themselves establish sales outlets in the market, or may appoint someone on a commission basis, or buy and sell by mail. They may be traded as merchandise on hand and may also be traded as future merchandise. In all cases where they are traded as future merchandise, a contract must be signed by both buyer and seller.

4. As from 1 November 1985, where an automobile is the subject of a transaction in an automobile trading centre under a department in charge of goods and materials or in an automobile industry trading company under the China Automobile Industry Sales Service Corporation, the invoice shall be verified and sealed by a body administering industry and commerce. Without the seal of a body administering industry and commerce, licence plates may not be issued by the public security or traffic supervision authorities, nor shall registration be granted.

5. In the case of all automobiles sold through the automobile trading centres of the departments in charge of goods and materials or through the automobile industry trading companies under the China Automobile Industry Sales Service Corporation, where the State has set a price or a price range, they must be sold in accordance with that price or for a price within that price range. If the State has not set a price or price range, the production enterprises may trade by fixing a price themselves and labelling them with the price or may negotiate a price according to the market.

6. Used vehicles (except those used automobiles imported under the State plan) must be traded in the markets designated by the People's Governments of provinces, autonomous regions and municipalities under the direct control of the Central Government; in order to complete the formalities of transfer of registration a market trading certificate must be shown. It is forbidden to sell used vehicles which, under the regulations, must be scrapped.

7. In relation to automobile trading markets, departments in charge of goods and materials and automobile industry sales service companies shall provide information and shall offer good service. Industrial enterprises shall improve the quality of their products and sell their products to meet the needs of the market. Administrative bodies in charge of industry and commerce shall strengthen supervision and administration and co-ordinate the economic relations of all parties.

8. In automobile trading, State policies and regulations must be conformed to, taxes must be paid in accordance with the regulations and administration and supervision must be accepted. It is not permitted to operate without a licence; it is not permitted to sell products produced for a plan at a negotiated price; it is not permitted to resell production quotas, sales or purchase contracts, invoices or bills of lading; it is not permitted to pass off second-class items as good. Offenders shall be dealt with by the industry and commerce, tax and other authorities in accordance with the relevant regulations. Where the criminal code is breached, the judicial authorities will, in accordance with the law, investigate and determine criminal liability.