Provisions Related to the Approval of Overseas Investment by Chinese Companies

Ministry of Commerce [2004] No. 16

Article 1:  To promote investment abroad, present provisions are formulated pursuant to PRC Administrative License Law, State Council statements establishing Administrative License for Administrative Examination/Approval and other pertinent provisions/polices.

Article 2:  The state should assist and encourage competitive enterprises with varying ownership structures to invest and operate enterprises abroad.

Article 3:  The term of "to invest and operate enterprises" refers to a Chinese entity establishing operations overseas or acquiring the equity, managerial decision authority or any other right/interest of the existing enterprises by way full ownership, equity joint venture, contractual joint ventures, purchase, merger, share investment, injecting capital, adjustment in stock rights, etc.

Article 4:  Chinese enterprises intending to invest overseas are subject to the examination and approval of the Ministry of Commerce (not including financial institutions).

Ø         The Ministry of Commerce is the authorization body for government commerce administration departments for all provinces, autonomous regions, municipalities (reporting directly to the Central Government) and cities with separate state planning (hereinafter referred to as "the Provincial Commerce Administrative Departments"). 

The Provincial Commerce Administrative Departments will process the matters related to the examination and approval of enterprises (other than the enterprises directly under the Central Government) to run enterprises in the countries as listed in the appendix.  The Ministry of Commerce may adjust the countries listed in the appendix in accordance with relevant circumstances and will announce such changes. [The US is not listed as a country which can receive approval from Provincial Commerce Administrative Departments.  This means companies intending to invest in the US will need State level Ministry of Commerce approval.]

Article 5:  In relation to Chinese enterprises that intend to invest and operate enterprises overseas, the Ministry of Commerce and the Provincial Commerce Administrative Departments will examine and approve based on the following factors:

(1) The investment environment of various countries or regions;

(2) The risk profile of different countries or regions;

(3) The political and economic relationship between China and the intended country/region for investment;

(4) Other policies related to investing overseas;

(5) A reasonable distribution of investment in various countries or regions;

(6) Obligations in applicable international treaties;

(7) Protection of the legitimate rights and interests of enterprises.

A Chinese enterprise alone shall be responsible for determining the economical or technical feasibility to invest and operate enterprises overseas.

 For a full copy of the Provisions Related to the Approval of Overseas

Investment by Chinese Companies, please contact Info@ChinaFIG.com.