Decree [1999] No.274 of the State Council

Premier of the State Council: Zhu Rongji

December 5,1999

Article 1 These Rules are formulated in order to implement the Law of the People's Republic of China on Protection of Investments by Taiwan compatriots, protect and encourage investments by Taiwan compatriots and promote the economic development on both sides of the Straits.

Article 2 Investments by Taiwan compatriots as referred to in these Implementing Rules mean investments made by companies, enterprises, other economic organizations or individuals from the region of Taiwan as investors in other provinces, autonomous regions or municipalities directly under the Central Government (hereinafter referred to as the Mainland).

Article 3 The State protects the investments by Taiwan compatriots in accordance with the law.

Investments made by Taiwan compatriots, their profits from investments, as well as their other lawful rights and interests shall be protected by State laws, and no organs, units or individuals may encroach on or damage them.

Article 4 The State encourages the investments by Taiwan compatriots in accordance with the law.

Investments by Taiwan compatriots shall enjoy preferential treatment according to the provisions of relevant laws, administrative regulations of the State and these Implementing Rules.

Article 5 Investments by Taiwan compatriots shall be governed by the Law of the People's Republic of China on Protection of Investments by Taiwan Compatriots and these Rules; in case of whatever is not stipulated in the Law of the People's Republic of China on Protection of Investments by Taiwan Compatriots and these Implementing Rules, reference shall be made to relevant foreign-related economic laws and administrative regulations of the State.

Article 6 Investments by Taiwan compatriots shall fit in with the plan of the State for national economy and social development, be in conformity with the State's industrial policies and guidelines for investments and be governed with reference to the provisions of the State on guiding the direction of foreign investments.

Article 7 Investors who are Taiwan compatriots may use freely convertible currencies, machinery and equipment or other physical goods, industrial property rights and non-patent technologies as investments.

Investors who are Taiwan compatriots may use their profits from investments for re-investment.

Article 8 Investments by Taiwan compatriots may take any of the following forms according to law:

 (1) to establish equity or contractual joint ventures, or enterprises with the capital wholly invested by Taiwan compatriots (hereinafter referred to as enterprises with investment by Taiwan compatriots);

 (2) to cooperate in exploration and exploitation of natural resources;

 (3) to carry out compensation trade, processing and assembling, or cooperative production;

 (4) to purchase shares or bonds of enterprises;

 (5) to purchase real estate;

 (6) to obtain a land use right for development operations;

 (7) to purchase small-sized State-owned enterprises, or collectively-owned enterprises, or private enterprises; or

 (8) other forms of investment permitted by laws and administrative regulations.

Article 9 Investors who are Taiwan compatriots making investments, if examination and approval are required, shall undergo formalities for examination and approval according to the procedures stipulated by relevant laws and administrative regulations of the State.

Article 10 For establishment of an enterprise with investment by a Taiwan compatriot, an application shall be filed to the Ministry of Foreign Trade and Economic Cooperation or a department authorized by the State Council and the local people's government. The examining and approving agencies shall decide on whether or not to grant approval within 45 days of the date of receiving complete application documents.

Upon approval of an application to establish an enterprise with investment by a Taiwan compatriot, the applicant shall register with the enterprise registration agency according to law and obtain a business license within 30 days of the date of receiving the certificate of approval.

Article 11 For establishment of an enterprise with investment by a Taiwan compatriot, an investor who is the Taiwan compatriot shall submit application documents to the examining and approving agencies according to law; when necessary, shall attach thereto relevant proving documents issued by the Taiwan Affairs Office of the State Council or a Taiwan affairs office of the local people's government.

Article 12 In examining and approving investments by Taiwan compatriots, the examining and approving agencies shall improve their working efficiency, reduce the number of administrative levels, and simplify the examining and approving procedures so as to realize a uniform, open and transparent administrative system.

Article 13 Enterprises with investment by Taiwan compatriots shall enjoy preferential treatment in taxation in accordance with the provisions of relevant laws and administrative regulations of the State.

Article 14 Investment projects of Taiwan compatriots for investing in the mid-west regions of the Mainland may be granted encouragement or have restrictions relaxed in accordance with the relevant provisions of the State.

Article 15 Enterprises with investment by Taiwan compatriots that conform to the principle for taking loans may be given necessary credit support in accordance with the relevant provisions of the State.

Article 16 Taiwan compatriot investors themselves and their accompanying family members, as well as Taiwan compatriot employees in enterprises with investment of Taiwan compatriots, and their accompanying family members, may apply to the public security organ for multi-journey travel formalities of certain duration and corresponding formalities for temporary residence in accordance with the provisions of relevant laws and administrative regulations of the State. Foreign employees of enterprises with investment by Taiwan compatriots shall undergo their travel formalities and their formalities for temporary residence in accordance with the provisions of relevant laws and administrative regulations of the State.

Article 17 Children of Taiwan compatriot investors themselves and children of Taiwan compatriot employees in enterprises with investment by Taiwan compatriots may enter primary schools, middle schools or higher-learning institutions on the Mainland to receive education in accordance with the relevant provisions of the State.

In areas of concentrated investments by Taiwan compatriots, investors who are Taiwan compatriots or associations of enterprises with investment by Taiwan compatriots may apply to establish schools for children of Taiwan compatriots in accordance with the relevant provisions of the State. Schools for children of Taiwan compatriots established with approval shall be subject to supervision by the education administrative department.

Article 18 Enterprises with investment by Taiwan compatriots enjoy a decision-making power in their operations and management in accordance with relevant laws and administrative regulations of the State and the contracts and articles of association as approved by the examining and approving agencies.

The decision-making power of the enterprises with investment by Taiwan compatriots in their operations and management shall be protected by laws of the State and shall not be subject to any illegal interference and encroachment from any organs, units or individuals.

Article 19 Enterprises with investment by Taiwan compatriots enjoy equal treatment with Mainland's other enterprises of the same trades in respects of the purchase of machinery and equipment, raw materials, auxiliaries and other materials, as well as the acquisition of services such as water, electricity, heat, goods transportation, labor, advertisement and telecommunication.

Investors themselves who are Taiwan compatriots, and employees who are Taiwan compatriots working in enterprises with investment by Taiwan compatriots, enjoy equal treatment with Mainland compatriots in terms of traffic, telecommunication, tourism, hotel services, etc..

Article 20 Property, industrial property rights invested by Taiwan compatriots, profits from their investments, and other lawful rights and interests may be transferred or inherited according to law.

Article 21 Profits legally gained by Taiwan compatriot investors from their investments, their other lawful income and funds after liquidation may be remitted back to Taiwan or out of the territory according to law.

Lawful income of employees who are Taiwan compatriots working in enterprises with investment by Taiwan compatriots may be remitted back to Taiwan or out of the territory according to law.

Article 22 Investors who are Taiwan compatriots may authorize their relatives or friends, or other persons as their investment agents, and the agents shall possess powers of attorney with a legal effect.

Article 23 State organs shall have the same items and standards for charging enterprises with investment by Taiwan compatriots as those for charging Mainland's other enterprises of the same trades. Any organs or units shall not establish any other items or raise standards for charging enterprises with investment by Taiwan compatriots.

Any organs or units shall not impose levies of manpower, materials or money upon enterprises with investment by Taiwan compatriots, nor impose upon enterprises with investment by Taiwan compatriots any inspections or fines other than those specified by laws and regulations, nor force, or force in disguised form, enterprises with investment by Taiwan compatriots to participate in such activities as training, evaluations, appraisals or examinations in violation of the provisions of the State.

Enterprises with investment by Taiwan compatriots are entitled to reject any of the actions in violation of the above-mentioned provisions and report them to the relevant government departments. The government departments receiving the reports shall deal with the reported matters according to law and preserve the secrets for the reporters.

Article 24 The State shall not nationalize or requisition the investments from investors who are Taiwan compatriots; in special cases, in light of the needs of social and public interest, the State may requisition the investments from investors who are Taiwan compatriots in accordance with legal procedures and pay corresponding compensations. The compensations shall be equivalent to the value of the investments at the moment just prior to the decision of requisition, including interest as calculated at a reasonable interest rate beginning on the day of requisition and ending on the day of payment, and may be converted into foreign exchange, or remitted back to Taiwan or out of the territory according to law.

Article 25 The State shall protect, according to law, personal freedom and personal safety of investors themselves who are Taiwan compatriots and their accompanying family members, as well as employees who are Taiwan compatriots working in enterprises with investment by Taiwan compatriots and their accompanying family members. Except for those dealt with in accordance with the provisions of relevant laws of the State, no compulsory measures shall be adopted to restrict personal freedom of Taiwan compatriots.

Article 26 In areas where enterprises with investment by Taiwan compatriots are concentrated, associations of enterprises with investment by Taiwan compatriots may be established according to law.

Lawful rights and interests of associations of enterprises with investment by Taiwan compatriots as well as legal activities conducted in accordance with their articles of association shall be protected by law.

Article 27 The people's governments at various levels shall provide superb, regular and convenient services for investments by Taiwan compatriots. The Taiwan affairs offices of the people's governments at various levels shall effectively accomplish the work in legal public awareness and consulting services, handling complaints, settling disputes, and etc., for investments by Taiwan compatriots.

Article 28 Investors who are Taiwan compatriots, enterprises with investment by Taiwan compatriots, or associations of enterprises with investment by Taiwan compatriots, if believing that any specific administrative behavior of an administrative agency or work staff of an administrative agency has infringed upon their lawful rights and interests, may apply for administrative reconsideration or institute administrative procedure in accordance with the provisions of relevant laws and administrative regulations of the State.

Article 29 In case a dispute in connection with investment arises between an investor who is a Taiwan compatriot and a company, an enterprise, any other economic organization or an individual from the Mainland, the parties concerned may settle the dispute through consultation or mediation.

Where the parties concerned are unwilling to go through consultation or mediation, or the consultation or mediation has failed, they may refer to an arbitration organ of China for arbitration in accordance with an arbitration clauses in the contract, or a written arbitration agreement reached after the dispute has arisen. An arbitration organ on the Mainland may engage a Taiwan compatriot as the arbitrator in accordance with the relevant provisions of the State.

In the event the parties concerned does not stipulate any arbitration clause in their contract, nor has a written arbitration agreement been reached after a dispute has arisen, they may bring a lawsuit before the people's court.

Article 30 Where a Taiwan compatriot make an investment in the Mainland with his company, enterprise or any other economic organization established in any other country or region as an investor, these Rules may apply mutatis mutandis.

Article 31 These Rules shall enter into force as of the date of promulgation.

      Promulgated by the State Council on 1999-12-5