Article 1 In order to expand economic cooperation and technical
exchanges with foreign countries and promote the development of
China’s national economy, the People’s Republic of China permits
foreign enterprises, other economic organizations and individuals
(hereinafter referred as foreign investors) to establish foreign
capital enterprises in the territory of the People’s Republic of
China and protects the lawful rights and interests of foreign
capital enterprises.

Article 2 The foreign capital enterprises mentioned in this Law
refers to enterprises established in the territory of China with
all their capital exclusively invested by foreign investors in
accordance with relevant Chinese laws, not including branches of
foreign enterprises and other economic organizations which are
located in the territory of China.

Article 3 The establishment of foreign capital enterprises must
be conducive to the development of the national economy of China.
China encourages the establishment of foreign capital enterprises
which produce to export trade or which are equipped with advanced
technology.

The industries in which the establishment of foreign capital
enterprises is forbidden or restricted are to be stipulated by the
State Council.

Article 4 The investment in China, the benefits obtained and
other lawful rights and interests of foreign investors are
protected by Chinese laws.

Foreign capital enterprises must obey the laws and regulations
of China, and shall not harm the social and public interests of
China.

Article 5 The state shall not implement nationalization or
requisition of foreign capital enterprises. Under special
circumstances, when public interest requires, enterprises with
foreign capital may be requisitioned by legal procedures and
appropriate compensation shall be made.

Article 6 The application for establishing a foreign capital
enterprise shall be approved by the department under the State
Council in charge of foreign economic relations and trade, or by
other agencies authorized by the State Council. The examination and
approval organ shall make a decision to approve or reject the
application within 90 days after receiving it.

Article 7 After the application for establishing a foreign
capital enterprise is approved, the foreign investor(s) shall apply
for registration and receive the business license with the
industrial and commercial administrative organ within 30 days after
receiving the approval certificate. The date on which the business
license is issued is the date the enterprise is established.

Article 8 Foreign capital enterprises which accord with the
regulations of Chinese laws on the qualification of legal persons
shall acquire the status of Chinese legal persons.

Article 9 Foreign capital enterprises shall invest in Chinese
territory within the time limit set by the examination and approval
organs; the industrial and commercial administrative organs have
the right to revoke the business license if no investment is made
within the time limit.

The industrial and commercial administration management organs
will check and supervise the investment data of foreign capital
enterprises.

Article 10 The liquidation or merger of foreign capital
enterprises and other important changes shall be reported to the
examination and approval organs for approval beforehand, and the
enterprises shall register any such changes with the industrial and
commercial administrative organs.

Article 11 Foreign enterprises may carry out their business
management activities in accordance with the approved articles of
association without any interference.

Article 12 When employing Chinese workers and staff, foreign
capital enterprises shall sign contracts with them and specify the
conditions of employment, dismissal, remuneration, welfare, labor
protection, labor insurance and other issues in accordance with
law.

Article 13 Employees of foreign capital enterprises may set up
trade union organizations, carry out union activities and protect
their lawful rights and interests in accordance with law.

The foreign capital enterprises shall provide necessary
conditions for the activities of trade unions in the
enterprises.

Article 14 Foreign capital enterprises must set up account books
in China, conduct independent accounting, submit financial reports
and statements in accordance with regulations and accept the
supervision of financial and taxation authorities.

If a foreign capital enterprise fails to set up an account book
in China, financial and taxation authorities have the right to
impose a fine, and the industrial and commercial administrative
organs may order it to cease operation or even revoke its business
license.

Article 15 A foreign capital enterprise may purchase the
necessary raw materials, fuels and other materials within the
approved business range in the domestic or international markets,
in accordance with the principles of being fair and reasonable.

Article 16 The various kinds of insurance coverage of foreign
capital enterprises shall be furnished by insurance organs in
China.

Article 17 Foreign capital enterprises must pay taxes and enjoy
preferential treatment such as tax reduction or exemption in
accordance with relevant regulations.

If a foreign capital enterprise invests its after-tax profits in
China, it may apply, according to state regulations, for an income
tax refund of a part of the income tax already paid on the
reinvestment amount.

Article 18 Foreign exchange transactions of foreign capital
enterprises shall be governed by state regulations on foreign
exchange control.

Foreign capital enterprises shall open accounts with the Bank of
China or other banks designated by the State Administration of
Foreign Exchange.

Article 19 The foreign investor may remit abroad profits that
are lawfully earned and other lawful earnings and any fund
remaining after the enterprise is liquidated.

The salary and other lawful income of foreign employees of
foreign capital enterprises may be remitted abroad after income tax
is paid, according to law.

Article 20 The business operation time limit of a foreign
capital enterprise shall be applied by the foreign investor and
approved by the examination and approval organ. If an extension is
needed when the time limit expires, the investor may apply to the
examination and approval organs for the extension 180 days before
the expiration of the time limit. The examination and approval
organs shall make a decision to approve or reject the application
within 30 days after receiving it.

Article 21 When terminating its operation, a foreign capital
enterprise shall promptly issue a public notice and proceed with
liquidation, in accordance with relevant legal procedures.

Before the liquidation is finished, foreign investor may not
dispose of the enterprise’s assets, except for the purpose of
carrying out the liquidation.

Article 22 When a foreign capital enterprise is to be
terminated, the enterprise shall nullify its registration with the
relevant industrial and commercial administrative organ and
surrender the business license.

Article 23 The department of economic relations and trade of the
State Council shall draw up the rules for the implementation of
this Law, which shall come into effect after being approved by the
State Council.

Article 24 This Law shall go into effect on the day it is
promulgated.

(Legislative Affairs Commission of the Standing
Committee of the National People’s Congress)

Chapter I General Provisions

Article 1 This Law is enacted for the purpose of preventing and restraining monopolistic conducts, protecting fair competition in the market, enhancing economic efficiency, safeguarding the interests of consumers and social public interest, promoting the healthy development of the socialist market economy.

Article 2 This Law shall be applicable to monopolistic conducts in economic activities within the People’’s Republic of China.

This Law shall apply to the conducts outside the territory of the People’’s Republic of China if they eliminate or have restrictive effect on competition on the domestic market of the PRC.

Article 3 For the purposes of this Law, “monopolistic conducts” are defined as the following:

(1) monopolistic agreements among business operators;

(2) abuse of dominant market positions by business operators; and

(3) concentration of business operators that eliminates or restricts competition or might be eliminating or restricting competition.

Article 4 The State constitutes and carries out competition rules which accord with the socialist market economy, perfects macro-control, and advances a unified, open, competitive and orderly market system.

Article 5 Business operators may, through fair competition, voluntary alliance，concentrate themselves according to law, expand the scope of business operations, and enhance competitiveness.

Article 6 Any business with a dominant position may not abuse that dominant position to eliminate, or restrict competition.

Article 7 With respect to the industries controlled by the State-owned economy and concerning the lifeline of national economy and national security or the industries implementing exclusive operation and sales according to law, the state protects the lawful business operations conducted by the business operators therein. The state also lawfully regulates and controls their business operations and the prices of their commodities and services so as to safeguard the interests of consumers and promote technical progresses.

The business operators as mentioned above shall lawfully operate, be honest and faithful, be strictly self-disciplined, accept social supervision, shall not damage the interests of consumers by virtue of their dominant or exclusive positions.

Article 8 No administrative organ or organization empowered by a law or administrative regulation to administer public affairs may abuse its administrative powers to eliminate or restrict competition.

Article 9 The State Council shall establish the Anti-monopoly Commission, which is in charge of organizing, coordinating, guiding anti-monopoly work, performs the following functions:

(1) studying and drafting related competition policies;

(2) organizing the investigation and assessment of overall competition situations in the market, and issuing assessment reports;

(3) constituting and issuing anti-monopoly guidelines;

(4) coordinating anti-monopoly administrative law enforcement; and

(5) other functions as assigned by the State Council.

The State Council shall stipulate composition and working rules of the Anti-monopoly Commission.

Article 10 The anti-monopoly authority designated by the State Council (hereinafter referred to as the Anti-monopoly Authority under the State Council) shall be in charge of anti-monopoly law enforcement in accordance with this Law.

The Anti-monopoly Authority under the State Council) may, when needed, authorize the corresponding authorities in the people’’s governments of the provinces, autonomous regions and municipalities directly under the Central Government to take charge of anti-monopoly law enforcement in accordance with this Law.

Article 11 A trade association shall intensify industrial self-discipline, guide business operators to lawfully compete, safeguard the competition order in the market.

Article 12 For the purposes of this Law,

“business operator” refers to a natural person, legal person, or any other organization that is in the engagement of commodities production or operation or service provision, and

“relevant market” refers to the commodity scope or territorial scope within which the business operators compete against each other during a certain period of time for specific commodities or services (hereinafter generally referred to as “commodities”).

Chapter II Monopoly Agreement

Article 13 Any of the following monopoly agreements among the competing business operators shall be prohibited:

(1) fixing or changing prices of commodities;

(2) limiting the output or sales of commodities;

(3) dividing the sales market or the raw material procurement market;

(4) restricting the purchase of new technology or new facilities or the development of new technology or new products;

(5) making boycott transactions; or

(6) other monopoly agreements as determined by the Anti-monopoly Authority under the State Council.

For the purposes of this Law, “monopoly agreements” refer to agreements, decisions or other concerted actions which eliminate or restrict competition.

Article 14 Any of the following agreements among business operators and their trading parties are prohibited:

(1) fixing the price of commodities for resale to a third party;

(2) restricting the minimum price of commodities for resale to a third party; or

(3) other monopoly agreements as determined by the Anti-monopoly Authority under the State Council.

Article 15 An agreement among business operators shall be exempted from application of articles 13 and 14 if it can be proven to be in any of the following circumstances:

(1) for the purpose of improving technologies, researching and developing new products;

(2) for the purpose of upgrading product quality, reducing cost, improving efficiency, unifying product specifications or standards, or carrying out professional labor division;

(3) for the purpose of enhancing operational efficiency and reinforcing the competitiveness of small and medium-sized business operators;

(4) for the purpose of achieving public interests such as conserving energy, protecting the environment and relieving the victims of a disaster and so on;

(5) for the purpose of mitigating serious decrease in sales volume or obviously excessive production during economic recessions;

(6) for the purpose of safeguarding the justifiable interests in the foreign trade or foreign economic cooperation; or

(7) other circumstances as stipulated by laws and the State Council.

Where a monopoly agreement is in any of the circumstances stipulated in Items 1 through 5 and is exempt from Articles 13 and 14 of this Law, the business operators must additionally prove that the agreement can enable consumers to share the interests derived from the agreement, and will not severely restrict the competition in relevant market.

Article 16 Any trade association may not organize the business operators in its own industry to implement the monopolistic conduct as prohibited by this Chapter.

Chapter III Abuse of Market Dominance

Article 17 A business operator with a dominant market position shall not abuse its dominant market position to conduct following acts:

(1) selling commodities at unfairly high prices or buying commodities at unfairly low prices;

(2) selling products at prices below cost without any justifiable cause;

(3) refusing to trade with a trading party without any justifiable cause;

(4) requiring a trading party to trade exclusively with itself or trade exclusively with a designated business operator(s) without any justifiable cause;

(5) tying products or imposing unreasonable trading conditions at the time of trading without any justifiable cause;

(6) applying dissimilar prices or other transaction terms to counterparties with equal standing;

(7) other conducts determined as abuse of a dominant position by the Anti-monopoly Authority under the State Council

For the purposes of this Law, “dominant market position” refers to a market position held by a business operator having the capacity to control the price, quantity or other trading conditions of commodities in relevant market, or to hinder or affect any other business operator to enter the relevant market.

Article 18 The dominant market status shall be determined according to the following factors:

(1) the market share of a business operator in relevant market, and the competition situation of the relevant market;

(2) the capacity of a business operator to control the sales markets or the raw material procurement market;

(3) the financial and technical conditions of the business operator;

(4) the degree of dependence of other business operators upon of the business operator in transactions;

(5) the degree of difficulty for other business operators to enter the relevant market; and

(6) other factors related to determine a dominant market position of the said business operator.

Article 19 Where a business operator is under any of the following circumstances, it may be assumed to be have a dominant market position:

(1) the relevant market share of a business operator accounts for1/2 or above in the relevant market;

(2) the joint relevant market share of two business operators accounts for 2/3 or above; or

(3) the joint relevant market share of three business operators accounts for 3/4 or above.

A business operator with a market share of less than 1/10 shall not be presumed as having a dominant market position even if they fall within the scope of second or third item.

Where a business operator who has been presumed to have a dominant market position can otherwise prove that they do not have a dominant market, it shall not be determined as having a dominant market position.

Chapter IV Concentration of Business operators

Article 20 A concentration refers to the following circumstances:

(1) the merger of business operators;

(2) acquiring control over other business operators by virtue of acquiring their equities or assets; or

(3) acquiring control over other business operators or possibility of exercising decisive influence on other business operators by virtue of contact or any other means.

Article 21 Where a concentration reaches the threshold of declaration stipulated by the State Council, a declaration must be lodged in advance with the Anti-monopoly Authority under the State Council, or otherwise the concentration shall not be implemented.

Article 22 Where a concentration is under any of the following circumstances, it may not be declared to the Anti-monopoly Authority under the State Council:

(1) one business operator who is a party to the concentration has the power to exercise more than half the voting rights of every other business operator, whether of the equity or the assets; or

(2) one business operator who is not a party to the concentration has the power to exercise more than half the voting rights of every business operator concerned, whether of the equity or the assets.

Article 23 A business operator shall, when lodge a concentration declaration with the Anti-monopoly Authority under the State Council, submit the following documents and materials:

(1) a declaration paper;

(2) explanations on the effect of the concentration on the relevant market competition;

(3) the agreement of concentration;

(4) the financial reports and accounting reports of the proceeding accounting year of the business operator; and

(5) other documents and materials as stipulated by the Anti-monopoly Authority under the State Council.

Such items shall be embodied in the declaration paper as the name, domicile and business scopes of the business operators involved in the concentration as well as the date of the scheduled concentration and other items as stipulated by the Anti-monopoly Authority under the State Council.

Article 24 Where the documents or materials submitted by a business operator are incomplete, it shall submit the rest of the documents and materials within the time limit stipulated by the Anti-monopoly Authority under the State Council; otherwise, the declaration shall be deemed as not filed.

Article 25 The Anti-monopoly Authority under the State Council shall conduct a preliminary review of the declared concentration of business operators, make a decision whether to conduct further review and notify the business operators in written form within 30 days upon receipt of the documents and materials submitted by the business operators pursuant to Article 23 of this Law. Before such a decision made by the Anti-monopoly Authority under the State Council, the concentration may be not implemented.

Where the Anti-monopoly Authority under the State Council decides not to conduct further review or fails to make a decision at expiry of the stipulated period, the concentration may be implemented.

Article 26 Where the Anti-monopoly Authority under the State Council decides to conduct further review, they shall, within 90 days from the date of decision, complete the review, make a decision on whether to prohibit the concentration, and notify the business operators concerned of the decision in written form. A decision of prohibition shall be attached with reasons therefor. Within the review period the concentration may not be implemented.

Under any of the following circumstances, the Anti-monopoly Authority under the State Council may notify the business operators in written form that the time limit as stipulated in the preceding paragraph may be extended to no more than 60 days:

(1) the business operators concerned agree to extend the time limit;

(2) the documents or materials submitted are inaccurate and need further verification;

(3) things have significantly changed after declaration.

If the Anti-monopoly Authority under the State Council fails to make a decision at expiry of the period, the concentration may be implemented.

Article 27 In the case of the examination on the concentration of business operators, it shall consider the relevant elements as follows:

(1) the market share of the business operators involved in the relevant market and the controlling power thereof over that market,

(2) the degree of market concentration in the relevant market,

(3) the influence of the concentration of business operators on the market access and technological progress,

(4) the influence of the concentration of business operators on the consumers and other business operators,

(5) the influence of the concentration of business operators on the national economic development, and

(6) other elements that may have an effect on the market competition and shall be taken into account as regarded by the Anti-monopoly Authority under the State Council.

Article 28 Where a concentration has or may have effect of eliminating or restricting competition, the Anti-monopoly Authority under the State Council shall make a decision to prohibit the concentration. However, if the business operators concerned can prove that the concentration will bring more positive impact than negative impact on competition, or the concentration is pursuant to public interests, the Anti-monopoly Authority under the State Council may decide not to prohibit the concentration.

Article 29 Where the concentration is not prohibited, the Anti-monopoly Authority under the State Council may decide to attach restrictive conditions for reducing the negative impact of such concentration on competition.

Article 30 Where the Anti-monopoly Authority under the State Council decides to prohibit a concentration or attaches restrictive conditions on concentration, it shall publicize such decisions to the general public in a timely manner.

Article 31 Where a foreign investor merges and acquires a domestic enterprise or participate in concentration by other means, if state security is involved, besides the examination on the concentration in accordance with this Law, the examination on national security shall also be conducted in accordance with the relevant State provisions.

Chapter V Abuse of Administrative Power to Eliminate or Restrict Competition

Article 32 Any administrative organ or organization empowered by a law or administrative regulation to administer public affairs may not abuse its administrative power, restrict or restrict in a disguised form entities and individuals to operate, purchase or use the commodities provided by business operators designated by it.

Article 33 Any administrative organ or organization empowered by a law or an administrative regulation to administer public affairs may not have any of the following conducts by abusing its administrative power to block free circulation of commodities between regions:

(1) imposing discriminative charge items, discriminative charge standards or discriminative prices upon commodities from outside the locality,

(2) imposing such technical requirements and inspection standards upon commodities from outside the locality as different from those upon local commodities of the same classification, or taking such discriminative technical measures as repeated inspections or repeated certifications to commodities from outside the locality, so as to restrict them to enter local market,

(3) exerting administrative licensing specially on commodities from outside the locality so as to restrict them to enter local market,

(4) setting barriers or taking other measures so as to hamper commodities from outside the locality from entering the local market or local commodities from moving outside the local region, or

(5) other conducts for the purpose of hampering commodities from free circulation between regions.

Article 34 Any administrative organ or organization empowered by a law or administrative regulation to administer public affairs may not abuse its administrative power to reject or restrict business operators from outside the locality to participate in local tendering and bidding activities by such means as imposing discriminative qualification requirements or assessment standards or releasing information in an unlawful manner.

Article 35 Any administrative organ or organization empowered by a law or administrative regulation to administer public affairs may not abuse its administrative power to reject or restrict business operators from outside the locality to invest or set up branches in the locality by imposing unequal treatment thereupon compared to that upon local business operators.

Article 36 Any administrative organ or organization empowered by a law or administrative regulation to administer public affairs may not abuse its administrative power to force business operators to engage in the monopolistic conducts as prescribed in this Law.

Article 37 Any administrative organ may not abuse its administrative power to set down such provisions in respect of eliminating or restricting competition.

Chapter VI Investigation into the Suspicious Monopolistic Conducts

Article 38 The anti-monopoly authority shall make investigations into suspicious monopolistic conducts in accordance with law.

Any entity or individual may report suspicious monopolistic conducts to the anti-monopoly authority. The anti-monopoly authority shall keep the informer confidential.

Where an informer makes the reporting in written form and provides relevant facts and evidences, the anti-monopoly authority shall make necessary investigation.

Article 39 The anti-monopoly authority may take any of the following measures in investigating suspicious monopolistic conducts:

(1) conducting the inspection by getting into the business premises of business operators under investigation or by getting into any other relevant place,

(2) inquiring of the business operators under investigation, interested parties, or other relevant entities or individuals, and requiring them to explain the relevant conditions,

(3) consulting and duplicating the relevant documents, agreements, account books, business correspondences and electronic data, etc. of the business operators under investigation, interested parties and other relevant entities or individuals,

(4) seizing and detaining relevant evidence, and

(5) inquiring about the business operators” bank accounts under investigation.

Before the measures as prescribed in the preceding paragraph are approved, a written report shall be submitted to the chief person(s)-in-charge of the anti-monopoly authority.

Article 40 When inspecting suspicious monopolistic conducts, there shall be at least two law enforcers, and they shall show their law enforcement certificates.

When inquiring about and investigating suspicious monopolistic conducts, law enforcers shall make notes thereon, which shall bear the signatures of the persons under inquiry or investigation.

Article 41 The anti-monopoly authority and functionaries thereof shall be obliged to keep confidential the trade secrets they have access to during the course of the law enforcement.

Article 42 Business operators, interested parties and other relevant entities and individuals under investigation shall show cooperation with the anti-monopoly authority in performing its functions, and may not reject or hamper the investigation by the anti-monopoly authority.

Article 43 Business operators, interested parties under investigation have the right to voice their opinions. The anti-monopoly authority shall verify the facts, reasons and evidences provided by the business operators, interested parties under investigation.

Article 44 Where the anti-monopoly authority deems that a monopolistic conduct is constituted after investigating and verifying a suspicious monopolistic conduct, it shall make a decision on how to deal with the monopolistic conduct, and publicize it.

Article 45 As regards a suspicious monopolistic conduct that the anti-monopoly authority is investigating, if the business operators under investigation promise to eliminate the impact of the conduct by taking specific measures within the time limit prescribed by the anti-monopoly authority, the anti-monopoly authority may decide to suspend the investigation. The decision on suspending the investigation shall specify the specific measures as promised by the business operators under investigation.

Where the anti-monopoly authority decides to suspend the investigation, it shall supervise the implementation of the promise by the relevant business operators. If the business operators keep their promise, the anti-monopoly authority may decide to terminate the investigation.

However, the anti-monopoly authority shall resume the investigation, where

(1) the business operators fail to implement the promise,

(2) significant changes have taken place to the facts based on which the decision on suspending the investigation was made; or

(3) the decision on suspending the investigation was made based on incomplete or inaccurate information provided by the business operators.

Chapter VII Legal Liabilities

Article 46 Where business operators reach an monopoly agreement and perform it in violation of this Law, the anti-monopoly authority shall order them to cease doing so, and shall confiscate the illegal gains and impose a fine of 1% up to 10% of the sales revenue in the previous year. Where the reached monopoly agreement has not been performed, a fine of less than 500,000 yuan shall be imposed.

Where any business operator voluntarily reports the conditions on reaching the monopoly agreement and provides important evidences to the anti-monopoly authority, it may be imposed a mitigated punishment or exemption from punishment as the case may be.

Where a guild help the achievement of a monopoly agreement by business operators in its own industry in violation of this Law, a fine of less than 500,000 yuan shall be imposed thereupon by the anti-monopoly authority; in case of serious circumstances, the social group registration authority may deregister the guild.

Article 47 Where any business operator abuses its dominant market status in violation of this Law, it shall be ordered to cease doing so. The anti-monopoly authority shall confiscate its illegal gains and impose thereupon a fine of 1% up to 10% of the sales revenue in the previous year.

Article 48 Where any business operator implements concentration in violation of this Law, the anti-monopoly authority shall order it to cease doing so, to dispose of shares or assets, transfer the business or take other necessary measures to restore the market situation before the concentration within a time limit, and may impose a fine of less than 500,000 yuan.

Article 49 The specific amount of the fines as prescribed in Articles 46 through 48 shall be determined in consideration of such factors as the nature, extent and duration of the violations.

Article 50 Where any loss was caused by a business operator’’s monopolistic conducts to other entities and individuals, the business operator shall assume the civil liabilities.

Article 51 Where any administrative organ or an organization empowered by a law or administrative regulation to administer public affairs abuses its administrative power to eliminate or restrict competition, the superior authority thereof shall order it to make correction and impose punishments on the directly liable person(s)-in-charge and other directly liable persons. The anti-monopoly authority may put forward suggestions on handling according to law to the relevant superior authority.

Where it is otherwise provided in a law or administrative regulation for the handling the organization empowered by a law or administrative regulation to administer public affairs who abuses its administrative power to eliminate or restrict competition, such provisions shall prevail.

Article 52 As regards the inspection and investigation by the anti-monopoly authority, if business operators refuse to provide related materials and information, provide fraudulent materials or information, conceal, destroy or remove evidence, or refuse or obstruct investigation in other ways, the anti-monopoly authority shall order them to make rectification, impose a fine of less than 20,000 yuan on individuals, and a fine of less than 200,000 yuan on entities; and in case of serious circumstances, the anti-monopoly authority may impose a fine of 20,000 yuan up to 100,000 yuan on individuals, and a fine of 200,000 yuan up to one million yuan on entities; where a crime is constituted, the relevant business operators shall assume criminal liabilities.

Article 53 Where any party concerned objects to the decision made by the anti-monopoly authority in accordance with Articles 28 and 29 of this Law, it may first apply for an administrative reconsideration; if it objects to the reconsideration decision, it may lodge an administrative lawsuit in accordance with law.

Where any party concerned is dissatisfied with any decision made by the anti-monopoly authority other than the decisions prescribed in the preceding paragraph, it may lodge an application for administrative reconsideration or initiate an administrative lawsuit in accordance with law.

Article 54 Where any functionary of the anti-monopoly authority abuses his/her power, neglects his/her duty, seeks private benefits, or discloses trade secrets he/she has access to during the process of law enforcement, and a crime is constituted, he/she shall be subject to the criminal liability; where no crime is constituted, he/she shall be imposed upon a disciplinary sanction.

Chapter VIII Supplementary Provisions

Article 55 This Law does not govern the conduct of business operators to exercise their intellectual property rights under laws and relevant administrative regulations on intellectual property rights; however, business operators” conduct to eliminate or restrict market competition by abusing their intellectual property rights shall be governed by this Law.

Article 56 This Law does not govern the ally or concerted actions of agricultural producers and rural economic organizations in the economic activities such as production, processing, sales, transportation and storage of agricultural products.

Article 57 This Law shall enter into force as of August 1, 2008.

(Source:www.fdi.gov.cn)

Article 1 In order to expand economic cooperation and technical
exchanges with foreign countries and promote the development of
China’s national economy, the People’s Republic of China permits
foreign enterprises, other economic organizations and individuals
(hereinafter referred as foreign investors) to establish foreign
capital enterprises in the territory of the People’s Republic of
China and protects the lawful rights and interests of foreign
capital enterprises.

Article 2 The foreign capital enterprises mentioned in this Law
refers to enterprises established in the territory of China with
all their capital exclusively invested by foreign investors in
accordance with relevant Chinese laws, not including branches of
foreign enterprises and other economic organizations which are
located in the territory of China.

Article 3 The establishment of foreign capital enterprises must
be conducive to the development of the national economy of China.
China encourages the establishment of foreign capital enterprises
which produce to export trade or which are equipped with advanced
technology.

The industries in which the establishment of foreign capital
enterprises is forbidden or restricted are to be stipulated by the
State Council.

Article 4 The investment in China, the benefits obtained and
other lawful rights and interests of foreign investors are
protected by Chinese laws.

Foreign capital enterprises must obey the laws and regulations
of China, and shall not harm the social and public interests of
China.

Article 5 The state shall not implement nationalization or
requisition of foreign capital enterprises. Under special
circumstances, when public interest requires, enterprises with
foreign capital may be requisitioned by legal procedures and
appropriate compensation shall be made.

Article 6 The application for establishing a foreign capital
enterprise shall be approved by the department under the State
Council in charge of foreign economic relations and trade, or by
other agencies authorized by the State Council. The examination and
approval organ shall make a decision to approve or reject the
application within 90 days after receiving it.

Article 7 After the application for establishing a foreign
capital enterprise is approved, the foreign investor(s) shall apply
for registration and receive the business license with the
industrial and commercial administrative organ within 30 days after
receiving the approval certificate. The date on which the business
license is issued is the date the enterprise is established.

Article 8 Foreign capital enterprises which accord with the
regulations of Chinese laws on the qualification of legal persons
shall acquire the status of Chinese legal persons.

Article 9 Foreign capital enterprises shall invest in Chinese
territory within the time limit set by the examination and approval
organs; the industrial and commercial administrative organs have
the right to revoke the business license if no investment is made
within the time limit.

The industrial and commercial administration management organs
will check and supervise the investment data of foreign capital
enterprises.

Article 10 The liquidation or merger of foreign capital
enterprises and other important changes shall be reported to the
examination and approval organs for approval beforehand, and the
enterprises shall register any such changes with the industrial and
commercial administrative organs.

Article 11 Foreign enterprises may carry out their business
management activities in accordance with the approved articles of
association without any interference.

Article 12 When employing Chinese workers and staff, foreign
capital enterprises shall sign contracts with them and specify the
conditions of employment, dismissal, remuneration, welfare, labor
protection, labor insurance and other issues in accordance with
law.

Article 13 Employees of foreign capital enterprises may set up
trade union organizations, carry out union activities and protect
their lawful rights and interests in accordance with law.

The foreign capital enterprises shall provide necessary
conditions for the activities of trade unions in the
enterprises.

Article 14 Foreign capital enterprises must set up account books
in China, conduct independent accounting, submit financial reports
and statements in accordance with regulations and accept the
supervision of financial and taxation authorities.

If a foreign capital enterprise fails to set up an account book
in China, financial and taxation authorities have the right to
impose a fine, and the industrial and commercial administrative
organs may order it to cease operation or even revoke its business
license.

Article 15 A foreign capital enterprise may purchase the
necessary raw materials, fuels and other materials within the
approved business range in the domestic or international markets,
in accordance with the principles of being fair and reasonable.

Article 16 The various kinds of insurance coverage of foreign
capital enterprises shall be furnished by insurance organs in
China.

Article 17 Foreign capital enterprises must pay taxes and enjoy
preferential treatment such as tax reduction or exemption in
accordance with relevant regulations.

If a foreign capital enterprise invests its after-tax profits in
China, it may apply, according to state regulations, for an income
tax refund of a part of the income tax already paid on the
reinvestment amount.

Article 18 Foreign exchange transactions of foreign capital
enterprises shall be governed by state regulations on foreign
exchange control.

Foreign capital enterprises shall open accounts with the Bank of
China or other banks designated by the State Administration of
Foreign Exchange.

Article 19 The foreign investor may remit abroad profits that
are lawfully earned and other lawful earnings and any fund
remaining after the enterprise is liquidated.

The salary and other lawful income of foreign employees of
foreign capital enterprises may be remitted abroad after income tax
is paid, according to law.

Article 20 The business operation time limit of a foreign
capital enterprise shall be applied by the foreign investor and
approved by the examination and approval organ. If an extension is
needed when the time limit expires, the investor may apply to the
examination and approval organs for the extension 180 days before
the expiration of the time limit. The examination and approval
organs shall make a decision to approve or reject the application
within 30 days after receiving it.

Article 21 When terminating its operation, a foreign capital
enterprise shall promptly issue a public notice and proceed with
liquidation, in accordance with relevant legal procedures.

Before the liquidation is finished, foreign investor may not
dispose of the enterprise’s assets, except for the purpose of
carrying out the liquidation.

Article 22 When a foreign capital enterprise is to be
terminated, the enterprise shall nullify its registration with the
relevant industrial and commercial administrative organ and
surrender the business license.

Article 23 The department of economic relations and trade of the
State Council shall draw up the rules for the implementation of
this Law, which shall come into effect after being approved by the
State Council.

Article 24 This Law shall go into effect on the day it is
promulgated.

(Legislative Affairs Commission of the Standing
Committee of the National People’s Congress)

Contents 

Chapter I     General Provisions 

Chapter II    Organization Structure  

Chapter III   The Renminbi 

Chapter IV    Business Operations  

Chapter V     Financial Supervision and
Control 

Chapter VI    Financial Affairs and
Accounting 

Chapter VII   Legal Responsibility 

Chapter VIII  Supplement Provisions 

Chapter I 

General Provisions 

Article 1   This Law is enacted in order to define the
status and make clear the functions and responsibilities of the
People’s Bank of China, ensure the correct formulation and
implementation of the monetary policies of the State, establish and
perfect a macro-control system through a central bank and maintain
financial stability. 

Article 2   The People’s Bank of China is the central
bank of the People’s Republic of China. 

The People’s Bank of China shall, under the leadership of the
State Council, formulate and implement monetary policies, guard
against and eliminate financial risks, and maintain financial
stability. 

Article 3   The aim of monetary policies shall be to
maintain the stability of the value of the currency and thereby
promote economic growth. 

Article 4 The People’s Bank of China shall perform the following
functions and responsibilities: 

(1) to promulgate and carry out the orders and regulations
related to its functions and responsibilities; 

(2) to formulate and implement monetary policies in accordance
with law; 

(3) to issue Renminbi ( RMB ) and control its
circulation; 

(4) to supervise and administer the inter-bank lending market
and the inter-bank  bond market; 

(5) to exercise control of foreign exchange and  supervise
and administer the inter-bank foreign exchange market; 

(6) to supervise and administer the gold market; 

(7) to hold, administer and manage the State foreign exchange
reserve and gold reserve; 

(8)to manage the State Treasury; 

(9) to maintain the normal operation of the system for making
payments and settling accounts; 

(10) to guide and make plans for  the fight against money
laundering in the banking industry, and to be responsible for
monitoring the use of the funds earmarked for the fight against
money laundering; 

(11) to be responsible for statistics, investigation, analysis
and forecasting concerning the banking industry; 

(12) to engage in relevant international banking operations in
its capacity as the central bank of the State; and 

(13) other functions and responsibilities prescribed by the
State Council. 

To implement monetary policies, the People’s Bank of China may
carry out financial operations in accordance with the relevant
provisions of Chapter IV of this Law. 

Article 5 The People’s Bank of China shall report its
decisions to the State Council for approval concerning the annual
money supply, interest rate, foreign exchange rates and other
important matters specified by the State Council before they are
implemented. 

The People’s Bank of China shall immediately implement decisions
on monetary policies for matters other than those specified by the
State Council for the record. 

Article 6 The People’s Bank of China shall submit to the
Standing Committee of the National People’s Congress work reports
concerning matters of monetary policies and the operations of the
banking industry. 

Article 7 The People’s Bank of China shall, under the leadership
of the State Council, implement monetary policies, perform its
functions and carry out its business operations independently
according to law and be free from intervention by local
governments, government departments at various levels, public
organizations or individuals. 

Article 8 All capital of the People’s Bank of China is invested
by the State and owned by the State. 

Article 9 The State Council shall establish a coordinating
mechanism for financial supervision and administration. The
specific measures therefor shall be formulated by the State
Council. 

ChapterII 

Organizational Structure 

Article 10 The People’s Bank of China shall have a Governor and
a certain number of Deputy Governors. 

The candidate for the Governor of the People’s Bank of China
shall be nominated by the Premier of the State Council and decided
by the National People’s Congress; when the National People
Congress is not in session, the Governor shall be decided by the
Standing Committee of the National People’s Congress and appointed
or removed by the President of the People’s Republic of China. The
Deputy Governors of the People’s Bank of China shall be appointed
or removed by the Premier of the State Council. 

Article11 The People’s Bank of China shall practice a system
wherein the Governor shall assume overall responsibility. The
Governor shall direct the work of the People’s Bank of China, the
Deputy Governors shall assist the Governor in his or her
work. 

Article12 The People’s Bank of China shall establish a monetary
policy committee, whose functions, composition and working
procedures shall be prescribed by the State Council and reported to
the Standing Committee of the National People’s Congress for the
record. 

The monetary policy committee of the People’s Bank of China
shall play an important role in the State macro-control and the
formulation and adjustment of monetary policies. 

Article13 The People’s Bank of China shall establish branches as
its representative organs in light of the need of performing its
functions and responsibilities and exercise unified leadership and
administration with respect to its branches. 

The branches of the People’s Bank of China shall, as authorized
by the People’s Bank of China, maintain financial stability in
their respective districts and handle relevant business
operations. 

Article 14 The Governor, Deputy Governors and other staff
members of the People’s Bank of China shall scrupulously abide by
their duties; they may not abuse their power or conduct malpractice
for private ends and they may not assume concurrent positions in
any other banking institutions, enterprises or
foundations. 

Article 15 The Governor, Deputy Governors and other staff
members of the People’s Bank of China shall safeguard State Secrets
according to law and be obligated to safeguard the secrets of the
banking institutions and parties concerned with their
implementation of their functions and responsibilities. 

Chapter III 

The Renminbi 

Article 16 The legal tender of the People’s Republic of China is
the Renminbi (RMB). When Renminbi is used to repay all public or
private debts within the territory of the People’s Republic of
China, no units or individuals may refuse to accept it. 

Article 17The unit of the Renminbi is the yuan and the units of
the fractional currency of the Renminbi are the jiao and the
fen. 

Article 18 The Renminbi shall be printed and issued solely ny
the People’s Bank of China. 

When putting forth a new Renminbi issue, the People’s Bank of
China shall make known to the public the issuing date, face values,
designs, patterns and specifications. 

Article 19 It is prohibited to counterfeit or alter Renminbi. It
is prohibited to sell or purchase counterfeit or altered Renminbi.
It is prohibited to transport, hold or use counterfeit or altered
Renminbi. It is prohibited to deliberately destroy or damage the
Renminbi. It is prohibited to illegally use the parttens of
Renminbi in propaganda materials, publications or other
commodities. 

Article 20 No units or individuals may print or sell promissory
notes as substitutes for Renminbi to circulate on the
market. 

Article 21The damaged or soiled Renminbi shall be exchanged in
accordance with the regulations of the People’s Bank of China,
which shall also be responsible to recall and destroy such
Renminbi. 

Article 22 The People’s Bank of China shall establish a Renminbi
issue treasuries at its branches. The subsidiary issue treasuries
shall, in allocating Renminbi issue fund, act on the order of
allocation from their superior treasury. No units or individuals
may use the issue fund in violation of regulations. 

Chapter IV 

Business Operations 

Article 23 To implement monetary policies, the People’s Bank of
China may apply the following monetary policy
instruments: 

(1) to require a financial institution of the banking industry
to place a deposit reserve at a prescribed ratio; 

(2) to fix the base interest rates for the central
bank; 

(3) to handle rediscount for financial institutions of the
banking industry that have opened accounts in the People’s Bank of
China; 

(4) to provide loans for commercial banks; 

(5) to deal in State bonds, other government bonds, and
financial bonds and foreign exchange on the open market;
and 

(6) other monetary policy instruments decided by the State
Council. 

When applying the monetary policy instruments listed in the
preceding paragraph to implement monetary policies, the People’s
Bank of China may work out specific requirements and
procedures. 

Article 24The People’s Bank of China shall manage he State
treasury in accordance with laws and administrative rules and
regulations. 

Article 25 The People’s Bank of China may, on behalf of the
financial department under the State Council, issue to financial
institutions, and honour State bonds and other government
bonds. 

Article 26 The People’s Bank of China may open accounts for
financial institutions of the banking industry as needed, but may
not allow them to overdraw. 

Article 27 The People’s Bank of China shall organize or assist
in organizing a clearing system among financial institutions of the
banking industry, coordinate the efforts of such institutions in
matters of clearing and provide services in this regard. The
specific measures therefor shall be formulated by the People’s Bank
of China. 

The People’s Bank of China shall, in conjunction with the
banking regulatory authority under the State Council, formulate
regulations on payment and clearing. 

Article 28  The People’s Bank of China may, as required by
the implementation of monetary policies, determine the amounts,
term, interest rates and forms of loans extended to commercial
banks, however, the maximum term of loans shall not exceed one
year. 

Article 29 The People’s Bank of China may not make an overdraft
for the government, and may not directly subscribe or underwrite
State bonds or other government bonds. 

Article 30 The People’s Bank of China may not provide loans to
the local governments or government departments at various levels,
to non-banking institutions, other units or individuals, with the
exception of the specific non-banking institutions as decided by
the State Council. 

The People’s Bank of China may not provide guaranty for any unit
or individual. 

Chapter V 

Financial Supervision and Control 

Article 31 The People’s Bank of China shall, in accordance with
law, monitor the operation of the financial markets, conduct
macro-control of such markets and promote their coordinated
development. 

Article 32 The People’s Bank of China shall have the power to
inspect and supervise the following activities of the financial
institutions and other units and individuals: 

(1) implementation of the regulations for control of deposit
reserve; 

(2)activities related to the special loans of the People’s Bank
of China; 

(3)implementation of the regulations for control of
Renminbi; 

(4)implementation of the regulations for control of the
inter-bank lending market and the inter-bank  bond
market; 

(5)implementation of the regulations for control of foreign
exchange; 

(6)implementation of the regulations for control of
gold; 

(7)management of the State Treasury on behalf of the People’s
Bank of China; 

(8)implementation of the regulations for control of clearing;
and 

(9)implementation of the regulations against money
laundering. 

The special loan mentioned in the preceding paragraph are
loans granted, upon decision by the State Council, by the
People’s Bank of China for special purposes. 

Article 33 The People’s Bank of China may, according to the need
to implement monetary policies and maintain financial stability,
propose that the banking regulatory authority under the State
Council inspect and supervise the financial institutions of the
banking industry. The said authority shall, within thirty days from
the date it receives the proposal, make a reply. 

Article 34 When financial institutions of the banking industry
have difficulties in making payment that may trigger off financial
risks, the People’s Bank of China shall, with a view to maintaining
financial stability, have the power to inspect and supervise the
financial institutions of the banking industry with the approval of
the State Council. 

Article 35 The People’s Bank of China shall, according to the
need to fulfill its functions and responsibilities, have the power
to demand the financial institutions of the banking industry to
submit the necessary balance sheets, statements of profit and other
financial and accounting reports, statistical reports and
information. 

The People’s Bank of China, the banking regulatory authority
under the State Council and the other financial regulatory
institutions under the State Council shall establish a mechanism to
share supervisory information. 

Article 36 The People’s Bank of China shall be responsible for
compiling unified statistics and accounting statements from the
national banking system and shall publish them in accordance with
relevant regulations of the State. 

Article 37 The People’s Bank of China shall establish and
perfect system for its own examination and inspection and
strengthen its own supervision and administration. 

Chapter VI 

Financial Affairs and Accounting 

Article 38 The People’s Bank of China shall exercise independent
control over its financial budget. 

The budget of the People’s Bank of China shall be incorporated
in the central budget after it has been examined and verified by
the financial department under the State Council and the
implementation thereof shall be subject to supervision of the
financial department under the State Council. 

Article 39 The People’s Bank of China shall, after withdrawing
funds for its general reserve at a proportion determined by the
financial department under the State Council, turn over to the
State treasury the entire net profit remaining from its income in
an accounting year minus its expenditures in the same
period. 

Losses sustained by the People’s Bank of China shall be made up
by appropriations from the State treasury. 

Article 40 The financial receipts and payments and accounting
affairs of the People’s Bank of China shall be governed by laws,
administrative regulations and unified State financial and
accounting systems and be subject to the auditing and supervision
conducted, in accordance with law, separately by the audit
institution and the financial department under the State
Council. 

Article 41The People’s Bank of China shall, within three months
after the end of every accounting year, compile balance sheets of
its assets, statements of profit and loss and relevant financial
and accounting reports, prepare its annual report and publish them
in accordance with relevant regulations of the State. 

The fiscal year of the People’s Bank of China begins on the
first day of January and ends on the thirty-first day of December
of the Gregorian calendar. 

Chapter VII 

Legal Responsibility 

Article 42 Anyone who counterfeits or alters Renminbi, sells
counterfeit or altered Renminbi or knowingly transports counterfeit
or altered Renminbi, which is serious enough to constitute a crime,
shall be investigated for criminal responsibility in accordance
with law; if the case is not serious enough to constitute a crime,
he shall be put in detention for not more than 15 days and fined
not more than 10,000 yuan by a public security organ. 

Article 43 Anyone who buys counterfeit or altered Renminbi or
knowingly holds or uses counterfeit or altered Renminbi, which is
serious enough to constitute a crime, shall be investigated for
criminal responsibility in accordance with law; if the case is not
serious enough to constitute a crime, he shall be put in detention
for not more than 15 days and fined not more than 10,000 yuan by a
public security organ. 

Article 44 If anyone illegally uses the patterns of Renminbi in
propaganda materials, publications or other commodities, the
People’s Bank of China shall order him to set it right and shall
destroy the illegally used patterns of Renminbi, confiscate the
illegal gains and impose a fine of not more than 50,000
yuan. 

Article 45 If anyone prints or sells promissory notes as
substitutes for Renminbi to circulate on the market, the People’s
Bank of China shall order him to cease his illegal act and impose a
fine of not more than 200,000 yuan. 

Article 46 Where in relevant laws and administrative regulations
there are provisions governing punishment for violations in respect
of the activities as are listed in Article 32 of this Law,
punishment shall be meted out in accordance with those provisions;
where in such laws and administrative regulations there are no
provisions governing such punishment, the People’s Bank of China
shall, on the merits of each case, give a disciplinary warning,
confiscate the unlawful gains, or if the unlawful gains exceed
500,000 yuan, shall, in addition, impose a fine of not less than
the amount of such gains but not more than five times that amount;
if there are no unlawful gains or if such gains are less than
500,000 yuan, it shall impose a fine of not less than 500,000 yuan
but not more than 2,000, 000 yuan. The director or senior manager
who is directly in charge or any other person who is directly
responsible shall be given a disciplinary warning and be fined not
less than 50,000 yuan but not more than 500,000 yuan. If a crime is
constituted, criminal responsibility shall be investigated in
accordance with law. 

Article 47 If any party refuses to accept the administrative
punishment, he may institute an administrative lawsuit in
accordance with the Administrative Procedure Law of the People’s
Republic of China. 

Article 48 If the People’s Bank of China commits any of the
following acts, the persons directly in charge and other persons
directly responsible for the offense shall be subject to
administrative sanctions according to law; if the case constitutes
a crime, the offenders shall be investigated for criminal
responsibility according to law: 

(1) to provide a loan in violation of the provisions in the
first paragraph of Article 30; 

(2) to provide guaranty for a unit or individual; or 

(3) to use the issue fund without authorization. 

If any of the acts specified in the preceding paragraph results
in losses, the persons directly in charge and other persons
directly responsible for the offense shall be partially or wholly
liable for the losses. 

Article 49 If a local government or a government department at
any level, a public organization or an individual forcibly demands
the People’s Bank of China or its staff member to provide a loan or
a guaranty in violation of the provisions in Article 30, the
persons directly in charge and other persons who are directly
responsible for the offense shall be subject to administrative
sanctions in accordance with the law; if the case constitutes a
crime, the offenders shall be investigated for criminal
responsibility according to law; if losses are caused, the
offenders shall be partially or wholly liable for the
losses.    

Article 50 If any staff member of the People’s Bank of China
divulges State secrets or the business secrets he knows, which is
serious enough to constitute a crime, he shall be investigated for
criminal responsibility according to law; if the case is not
serious enough to constitute a crime, he shall be subject to
administrative sanction according to law. 

Article 51  If any staff member of the People’s Bank of
China commits embezzlement, accepts bribes, conducts malpractices
for personal ends, abuses his power or neglects his duty, which is
serious enough to constitute a crime, he shall be investigated for
criminal responsibility according to law; if the case is not
serious enough to constitute a crime, he shall be subject to
administrative sanction according to law. 

Chapter VIII 

Supplementary Provisions 

Article 52  For purposes of this law, the financial
institutions of the banking industry are financial institutions
established within the territory of the People’s Republic of China
that take in deposits from the general public, including, among
others, commercial banks, urban credit cooperatives and rural
credit cooperatives, and policy banks. 

The provisions of this Law pertaining to financial institutions
of the banking industry are applicable to the assets management
companies, trust and investment companies, financial companies and
financial leasing companies established within the territory of the
People’s Republic of China and other financial institutions
established with the approval of the banking regulatory authority
under the State Council. 

Article 53 This Law shall be effective on the date of
promulgation.

(Legislative Affairs Commission of the Standing Committee of the
National People’s Congress)

Contents 

Chapter I     General Provisions 

Chapter II    Establishment and Organizational
Structure of Commercial Banks 

Chapter III   Protection of depositors 

Chapter IV    Basic Rules for Loans and Other Business
Operations 

Chapter V     Financial Affairs and
Accounting 

Chapter VI    Supervision and Control 

Chapter VII   Assumption of Control and
Termination 

Chapter VIII  Legal Responsibility 

Chapter IX    Supplementary Provisions 

Chapter I 

General Provisions 

Article 1 This Law is enacted in order to protect the lawful
rights and interests of commercial banks, depositors and other
clients, to standardize the behavior of commercial banks, to raise
the quality of credit assets, to strengthen supervision and
control, to ensure the stable and sound operation of commercial
banks, to maintain financial order and to promote the development
of the socialist market economy. 

Article 2 For the purposes of this Law, the term “commercial
banks” means enterprise legal persons that are established in
conformity with this Law and the Company Law of the People’s
Republic of China and that take in deposits from the general
public, grant loans, handle settlements, etc. 

Article 3 Commercial banks may engage in some or all of the
following business operations: 

(1) taking in deposits from the general public; 

(2) granting short-term, medium-term and long-term
loans; 

(3) handling domestic and foreign settlements; 

(4) handling the acceptance and discounting of negotiable
instruments; 

(5) issuing financial bonds; 

(6) acting as an agent for the issue, honoring and underwriting
of government bonds; 

(7) buying and selling government bonds and financial
bonds; 

(8) engaging in interbank lending; 

(9) buying and selling foreign exchange and acting as an agent
for the purchase and sale of foreign exchange; 

(10) engaging in the business of bank cards; 

(11) providing letter of credit services and guaranty; 

(12) acting as an agent for the receipt and payment of money and
acting as an insurance agent; 

(13) providing safe deposit box services; and 

(14) other business operations as approved by the banking
regulatory authority under the State Council. 

The scope of business shall be specified in the articles of
association of the commercial bank, and submitted to the banking
regulatory authority under the State Council for
approval. 



Upon approval of the People’s Bank of China, commercial banks may
engage in the business of the settlement and sale of foreign
exchange.

Article 4 The business operations of commercial banks shall be
governed by the principles of safety, liquidity and
efficiency.  Commercial banks shall make their own decisions
regarding their business operations, take responsibility for their
own risks, assume sole responsibility for their profits and losses
and exercise self-restriction. 

Commercial banks shall, pursuant to law, conduct business
operations without interference from any unit or
individual. 

Commercial banks shall independently assume civil liability with
their entire legal person property. 

Article 5 Commercial banks shall adhere to the principles of
equality, voluntariness, fairness and good faith in business
dealings with their clients. 

Article 6 Commercial banks shall safeguard the lawful rights and
interests of depositors against infringement by any unit or
individual. 

Article 7 In credit transactions, commercial banks shall
strictly examine the credit-worthiness of a borrower and implement
the system of guaranty in order to ensure that the loan is
recovered on schedule. 

Commercial banks shall be protected by law when they recover the
principal of loans that have become due and the interest thereon
from the borrowers in accordance with legal provisions. 

Article 8 In business transactions, commercial banks shall abide
by the relevant provisions of laws and administrative rules and
regulations and may not harm the interests of the State or of the
public. 

Article 9 In business transactions, commercial banks shall abide
by the principle of fair competition and may not engage in
illegitimate competition.  

Article 10 Commercial banks shall, in accordance with law,
accept supervision and control of the banking regulatory authority
under the State Council, but where laws provide that their relevant
business operations shall be subject to supervision and control of
other regulatory departments or bodies, such provisions shall
prevail. 

Chapter II 

Establishment and Organizational Structure of Commercial
Banks 

Article 11 The establishment of commercial banks shall be
subject to examination and approval by the banking regulatory
authority under the State Council. 

No unit or individual may engage in commercial banking business
such as taking in deposits from the general public, and no unit may
use the word “bank” in its name, without approval of the banking
regulatory authority under the State Council. 

Article 12 A commercial bank shall meet the following
requirements for establishment: 

(1) having articles of association that conform to this Law and
the Company Law of the People’s Republic of China; 

(2) having the minimum amount of registered capital as specified
in this Law; 

(3) having directors and other senior administrators with the
expertise and experience in work commensurate with the positions
they are holding; 

(4) having a sound organizational structure and management
system; and 

(5) having the required place of business, security and
precautionary measures and other facilities relevant to it business
operations. 

The establishment of a commercial bank shall, in addition, meet
other requirements of prudence. 

Article 13 The minimum amount of registered capital required for
the establishment of a national commercial bank shall be RMB one
billion yuan. The minimum amount of registered capital required for
the establishment of an urban commercial bank shall be 100 million
yuan, and the minimum amount of registered capital required for the
establishment of a rural commercial bank shall be 50 million yuan.
Registered capital shall be paid-up capital. 

The banking regulatory authority under the State Council may
readjust the minimum amount of registered capital on the basis of
the requirements of prudent supervision and control, however, the
readjusted amount may not be lower than the amount specified in the
preceding paragraph. 

Article 14 To establish a commercial bank, the applicant shall
provide the following documents and information to the banking
regulatory authority under the State Council: 

(1) a written application, in which the name, location,
registered capital, scope of business, etc. of the proposed
commercial bank are clearly stated ; 

(2) a feasibility study; and 

(3) other documents and information to be provided as specified
by the banking regulatory authority under the State
Council. 

Article 15 If an application for establishing a commercial bank
is found, after examination, to be in conformity with the
provisions of Article 14 of this Law, the applicant shall complete
an official application form and provide the following documents
and information: 

(1) a draft of the articles of association; 

(2) the qualification certificates of the director or other
senior administrator who is to hold office; 

(3) an investment verification certificate issued by a statutory
investment verification organization; 

(4) a list of the names, capital contributions and shares of
shareholders; 

(5) credit-worthiness certificates and relevant information
concerning the shareholders that hold five percent or more of the
registered capital each; 

(6) business policies and plans; 

(7) information concerning the place of business, security and
precautionary measures and other facilities relevant to business
operations; and 

(8) other documents and information as specified by the banking
regulatory authority under the State Council. 

Article 16 A commercial bank the establishment of which has been
approved shall be issued a permit for operation by the banking
regulatory authority under the State Council and, on the strength
of such permit, register with the administrative department of
industry and commerce and obtain a business license from
it. 

Article 17 The organizational form and structure of commercial
banks shall be governed by the Company Law of the People’s Republic
of China. 

Commercial banks, established prior to the implementation of
this Law, that do not entirely conform to the provisions of the
Company Law of the People’s Republic of China in organizational
form and structure   may continue to be governed by
previous regulations. The date on which the preceding paragraph
shall apply to such commercial banks shall be specified by the
State Council. 

Article 18 A board of supervisors shall be established in a
wholly State-owned commercial bank. Measures for forming the board
of supervisors shall be formulated by the State Council. 

The board of supervisors shall exercise supervision over the
quality of credit assets of the wholly State-owned commercial bank,
its assets-liabilities ratios and maintenance of and increase in
the value of State-owned assets, and over the senior administrators
of the commercial bank to see whether they violate any laws,
administrative rules and regulations or the articles of association
or commit any acts which harm the interests of the bank. 

Article 19 Commercial banks may establish branches within and
outside the People’s Republic of China, in light of their needs in
business operations. The establishment of such a branch shall be
subject to examination and approval by the banking regulatory
authority under the State Council. The establishment of branches
within the People’s Republic of China shall not be restricted by
the administrative division of regions. 

When a commercial bank establishes a branch within the People’s
Republic of China, it shall allocate operating funds in keeping
with the scale of its business, in accordance with regulations. The
sum total of operating funds allocated to all the branches may not
exceed 60 percent of the total amount of the capital of the head
office. 

Article 20 To establish a branch of a commercial bank, the
applicant shall submit the following documents and information to
the banking regulatory authority under the State Council: 

(1) a written application, in which the name, amount of
operating funds and scope of business of the proposed branch, the
location of the head office and the branch, etc. are clearly
stated; 

(2) the applicant’s financial and accounting reports of the
preceding two years; 

(3) the qualification certificates of the senior administrators
who are to hold office; 

(4) business policies and plans; 

(5) information concerning the place of business, security and
precautionary measures and other facilities relevant to business
operations; and 

(6) other documents and information as specified by the banking
regulatory authority under the State Council. 

Article 21 A commercial bank’s branch the establishment of which
has been approved shall be issued a permit for operation by the
banking regulatory authority under the State Council and, on the
strength of such permit, register with the administrative
department of industry and commerce and obtain a business license
from it. 

Article 22 With respect to their branches, commercial banks
shall apply across the board a financial system of centralized
accounting and centralized movement of funds, and of management at
different levels. 

Branches of commercial banks shall not have the status of a
legal person and shall lawfully conduct their business operations
within the scope authorized by their head offices, and their civil
liability shall be assumed by their head offices. 

Article 23 The banking regulatory authority under the State
Council shall announce its approval of the establishment of
commercial banks and their branches. 

If a commercial bank or branch thereof fails, without good
reason, to commence business more than six months after the date of
obtaining its business license or, after commencing business,
suspends business without authorization for six months or more in
succession, the banking regulatory authority under the State
Council shall revoke its permit for operation and make it known to
the public. 

Article 24 A commercial bank shall obtain the approval of the
banking regulatory authority under the State Council for making any
of the following changes: 

(1) change of name; 

(2) change in the registered capital; 

(3) change of location of the head office or a branch; 

(4) adjustment of the scope of business; 

(5) change of shareholders that hold five percent or more of the
total amount of capital or shares each; 

(6) revision of the articles of association; or 

(7) changes in other matters as are governed by the regulations
of the banking regulatory authority under the State
Council. 

When a director or a senior administrator is to be replaced, the
qualifications of the substitute for the position shall be
submitted to the banking regulatory authority under the State
Council for examination.           
    



Article 25 Division and merger of commercial banks shall be
governed by the provisions of the Company Law of the People’s
Republic of China. 

Division and merger of commercial banks shall be subject to
examination and approval by the banking regulatory authority under
the State Council. 

Article 26 Commercial banks shall use their permits for
operation  in accordance with the provisions of laws and
administrative rules and regulations. Forging, alteration,
assigning, leasing out or lending of such permits is
prohibited. 

Article 27 None of the following persons may serve as a director
or a senior administrator of a commercial bank: 

(1) persons who have been sentenced to criminal punishment for
the crime of embezzlement, bribery, seizure or misappropriation of
property  or disruption of  the public and economic
order, or persons who have been deprived of their political rights
for committing a crime; 

(2) directors of companies or enterprises, or factory directors
or managers who have been  subjected to bankruptcy liquidation
due to mismanagement, and who bear personal liability for the
bankruptcy; 

(3)  legal representatives of companies or enterprises that
had their business licenses revoked for breaking law, who bear
personal liability therefor; and 

(4) persons with comparatively large amounts of overdue personal
debts . 

Article 28 Purchase by any unit or individual of five percent or
more of the total amount of the shares of a commercial bank shall
be subject to prior approval by the People’s Bank of
China. 

Chapter III 



Protection of Depositors 

Article 29 In handling savings deposits for individuals,
commercial banks shall adhere to the principles of voluntary
deposit, unimpeded withdrawal, interest payment on deposits and
confidentiality for the depositors. 

Commercial banks shall have the right to refuse to answer the
inquiries into and to refuse to freeze, deduct or transfer an
individual’s savings deposits– as made or requested by any unit or
individual, except where otherwise provided for by law. 

Article 30 Commercial banks shall have the right to refuse to
answer the inquiries into a unit’s deposits by any other unit or
individual, except where otherwise provided for by laws and
administrative rules and regulations, and shall have the right to
refuse to freeze, deduct  or transfer  a unit’s deposits
as  requested by any other unit or individual, except where
otherwise provided for by law. 

Article 31 Commercial banks shall determine the interest rates
on deposits in accordance with the upper and lower limits interest
rates on deposits specified by the People’s Bank of China and make
them known  to the public. 

Article 32 Commercial banks shall place a deposit reserve with
the People’s Bank of China and maintain sufficient provision for
payment, in accordance with the regulations of the People’s Bank of
China. 

Article 33 Commercial banks shall guaranty, and may not delay or
refuse, payment of the principal of deposits and the interest
thereon. 

Chapter IV 

Basic Rules for Loans and Other Business
Operations 

Article 34 Commercial banks shall conduct their business of
lending in accordance with the needs of the national economic and
social development and under the guidance of the industrial
policies of the State. 

Article 35 Before granting a loan, commercial banks shall
strictly examine the borrower’s purpose for the loan, ability to
repay the loan, method of repayment, etc. 

When granting a loan, commercial banks shall implement the
system of separating the examination of a loan from the actual
provision of the loan and the system of examination and approval at
different levels. 

Article 36 To obtain a loan from a commercial bank, a borrower
shall provide a guaranty. The commercial bank shall strictly
examine the surety’s ability to repay the loan, the ownership and
value of the mortgage or the collateral and the feasibility of
realizing the right of mortgage or  right of pledge. 

If, after examination and appraisal by a commercial bank, a
borrower’s credit is found to be good, and the borrower is deemed
truly able to repay the loan, the borrower need not provide a
guaranty . 

Article 37 For granting a loan, the commercial bank shall
conclude a written contract with the borrower. The contract shall
stipulate the type, purpose, amount and interest rate of the loan,
the time limit for repayment, the method of repayment, liability
for breach of contract and other matters deemed necessary by the
parties. 

Article 38 Commercial banks shall determine loan interest rate
in accordance with the upper and lower limits for loan interest
rates prescribed by the People’s Bank of China. 

Article 39 When granting a loan, commercial banks shall abide by
the following provisions on the control of assets-liabilities
ratios: 

(1) the capital adequacy ratio may not be lower than 8
percent; 

(2) the ratio of the outstanding of loans to the outstanding of
deposits may not exceed 75 percent; 

(3) the ratio of the balance of floating assets to the balance
of floating liabilities may not be lower than 25 percent; 

(4) the ratio of the outstanding of loans granted to the same
borrower to the balance of the capital of the commercial bank may
not exceed 10 percent; and 

(5) other provisions of the banking regulatory authority under
the State Council concerning the control of assets-liabilities
ratios. 

If, after the implementation of this Law, the assets-liabilities
ratios of a commercial bank established prior to the implementation
of this Law are found not in conformity with the provisions of the
preceding paragraph, the bank shall make it conform to the
provisions of the preceding paragraph within a certain time limit.
The specific measures therefor shall be formulated by the State
Council. 

Article 40 Commercial banks may not grant fiduciary loans to
their connections. The conditions for granting secured loans to
their connections may not be more preferential than those for
granting  the same type of loans to other borrowers. 

For the purposes of the preceding paragraph, the term
“connections” means: 

(1) directors, supervisors, administrators and loan officers of
the commercial bank and close relatives of such persons; 

(2) companies, enterprises and other economic organizations in
which the persons mentioned in the preceding paragraph have
invested or in which they hold senior administrative
positions. 

Article 41 No unit or individual may forcibly demand a
commercial bank to grant a loan or to provide a guaranty.
Commercial banks shall have the right to refuse to grant a loan or
to provide a guaranty forcibly demanded by any unit or
individual. 

Article 42 Borrowers shall repay the loan principal and the
interest thereon on schedule. 

If a borrower fails to repay a secured loan upon maturity, the
commercial bank shall lawfully have the right to require the surety
to repay the loan principal and the interest thereon or the right
to preferential compensation in respect of the collateral.
Immovable property or stock rights obtained by a commercial bank
through the exercise of the right of mortgage or the right of
pledge shall be disposed of by it within two years from the date it
obtains the same. 

If a borrower fails to repay a fiduciary loan upon maturity, he
shall bear liability in accordance with the provisions of the
contract. 

Article 43 No commercial banks may, within the territory of the
People’s Republic of China, engage in trust investment or
securities business, or invest in immovable property which is not
for private use, in non-banking financial institutions or in
enterprises, except where otherwise provided for in the regulations
of the State. 

Article 44 When handling matters of settlement such as
acceptance or remittance of negotiable instruments or entrusted
receipt of payment, etc., commercial banks shall encash the
instruments and enter receipts and expenditures in their accounts
within the specified time limits, and may not deliberately delay or
withhold payment of bills and negotiable instruments or reject
negotiable instruments in violation of regulations. Regulations
relating to the time limits for encashing of
instruments and entering of receipts and expenditures in
the accounts shall be  announced. 

Article 45  To issue financial bonds or to raise loans from
outside the People’s Republic of China, commercial banks shall
first submit applications  for approval in accordance with the
provisions of laws and administrative rules and
regulations. 

Article 46 Inter-bank lending shall be carried out in adherence
to the regulations of the People’s Bank of China. It is forbidden
to use such loans for granting fixed assets loans or making
investment. 

Funds lent under such loans shall be limited to idle funds that
remain after a sufficient reserve against deposit has been
retained, sufficient provision for payment has been made and
matured loans from the People’s Bank of China have been repaid.
Funds borrowed under such loans shall be used to make up
deficiencies in the settlement of negotiable instruments and in the
funds available for covering remittance differences with
correspondent banks and to meet the temporary need for working
capital. 

Article 47 Commercial banks may not raise or lower interest
rates in violation of regulations or use other improper means to
take in deposits or grant loans. 

Article 48 Enterprises and institutions may select for
themselves the place of business of a commercial bank where to open
a basic account for the day-to-day settlement of account transfers
and for cash receipts and payments. They may not open more than one
basic account. 

No unit or individual may open an account in the name of an
individual to deposit the funds of a unit therein. 

Article 49 The business hours of commercial banks shall be such
as to be convenient to clients and shall be announced. Commercial
banks shall carry out business during announced business hours;
they may not suspend business or shorten their business hours
without authorization. 

Article 50 In carrying out business operations and providing
services, commercial banks shall charge commissions in accordance
with relevant regulations. The items and rates for such commissions
shall be specified by the banking regulatory authority under the
State Council and the People’s Bank of China based on their
division of responsibilities, in conjunction with the department of
pricing under the State Council respectively.

Article 51 Commercial banks shall preserve their financial and
accounting statements, business contracts and other materials in
accordance with relevant regulations of the State. 

Article 52 Employees of commercial banks shall abide by laws and
administrative rules and regulations and all other regulations for
the control of business operations; they may not: 

(1) use their positions to demand, receive or accept bribes, or
receive or accept rebates or commissions of any description in
violation of State regulations; 

(2) use their positions to embezzle, misappropriate or seize
money belonging to the bank or any client; 

(3) practise favoritism towards relatives or friends in granting
loans or providing guaranty in violation of regulations; 

(4) hold a concurrent position in another economic organization;
or 

(5) commit other acts in violation of laws, administrative rules
and regulations or other regulations for the control of business
operations. 

Article 53 No employees of commercial banks may disclose State
or business secrets that they come to know during their
employment. 

Chapter V 



Financial Affairs and Accounting 



Article 54 Commercial banks shall establish and perfect their own
financial and accounting systems in accordance with laws, the
uniform accounting system of the State and the relevant regulations
of the banking regulatory authority under the State
Council. 

Article 55 Commercial banks shall, in accordance with relevant
State regulations, truthfully record and give a complete account of
their business activities and financial position, draw up annual
financial and accounting reports and, without delay, submit them to
the banking regulatory authority under the State Council, the
People’s Bank of China and the department of finance under the
State Council. Commercial banks may not establish any account books
in addition to statutory account books. 

Article 56 Within three months after the end of every fiscal
year, commercial banks shall announce their business results and
audit reports for that year in accordance with the regulations of
the banking regulatory authority under the State Council.

Article 57 Commercial banks shall, in accordance with relevant
State regulations make allocations to a doubtful account reserve,
in order to set off doubtful accounts. 

Article 58 The fiscal year of commercial banks shall commence on
January 1 and end on December 31 of the Gregorian
calendar. 

Chapter VI 

Supervision and Control 

Article 59 Commercial banks shall, in accordance with relevant
regulations, formulate their own operating rules, and establish and
perfect their systems for risk management and internal
control. 

Article 60 Commercial banks shall establish and perfect their
own systems for examination and inspection of deposits, loans,
settlements, doubtful accounts, etc. 

Commercial banks shall conduct routine examination, inspection
and supervision with respect to their branches. 

Article 61 Commercial banks shall, in accordance with relevant
regulations, submit to the banking regulatory authority under the
State Council and the People’s Bank of China their balance sheets,
profit accounts and other financial, accounting and statistical
statements and information. 

Article 62 The banking regulatory authority under the State
Council shall have the right at any time to carry out inspection of
and exercise supervision over the deposits, loans, settlements,
doubtful accounts, etc. of commercial banks, in accordance with the
provisions of Chapters III, IV and V of this Law. When carrying out
inspection and supervision, the inspectors and supervisors shall
produce their lawful identification papers. Commercial banks shall
provide financial and accounting information, business contracts
and other information concerning operation and management in
compliance with the requirements of the banking regulatory
authority under the State Council. 

The People’s Bank of China shall have the power to inspect and
supervise the commercial banks in accordance with the provisions of
Articles 32 and 34 of the Law of the People’s Republic of China on
People’s Bank of China. 

Article 63 Commercial banks shall, according to law, accept
supervision by audit institutions through auditing. 

Chapter VII 

Assumption of Control and Termination 

Article 64 When a commercial bank has suffered or will possibly
suffer, credit crisis, thereby seriously affecting the interests of
the depositors, the banking regulatory authority under the State
Council may assume control over the bank. 

The purposes of assumption of control are, through taking such
measures as are necessary in respect of the commercial bank over
which control is assumed, to protect the interests of the
depositors and to enable the commercial bank to resume normal
business. The debtor-creditor relationship with regard to a
commercial bank over which control is assumed shall not change as a
result of the assumption of control. 

Article 65 The assumption of control shall be decided upon, and
its implementation shall be arranged, by the banking regulatory
authority under the State Council. In the decision made by the
banking regulatory authority under the State Council to assume
control shall be clearly stated the following
particulars: 

(1) the name of the commercial bank over which control is to be
assumed; 

(2) the reason for the assumption of control; 

(3) the organization that shall assume control; and 

(4) the period or time for the control. 

The decision for the assumption of control shall be announced by
the banking regulatory authority under the State Council. 

Article 66 Control shall be assumed on the date of
implementation of the decision to assume control. 

Beginning on the date of assumption of control, the organization
assuming control shall exercise the powers of operation and
management of the commercial bank. 

Article 67 The banking regulatory authority under the State
Council may decide to extend the period of time for control
upon  expiration of the time specified. However, the maximum
period of time for control shall be two years. 

Article 68 The  control shall be terminated under one of
the following conditions: 

(1) when the period of time  specified in the decision for
control has expired or the extended period of time for control
decided upon by the banking regulatory authority under the State
Council has expired; 

(2) the commercial bank has already become able to resume 
normal business before expiration of the period of control;
or 

(3) the commercial bank is merged or is lawfully declared
bankrupt before expiration of the period of control. 

Article 69 If a commercial bank has to be dissolved as a result
of division, merger or the occurrence of a cause for dissolution as
specified in the company’s articles of association, it shall submit
to the banking regulatory authority under the State Council an
application for dissolution, which is to be accompanied with a
statement of the reasons for dissolution and a plan for settlement
of debts such as repaying of the principal of the deposits together
with the interest thereon. The commercial bank shall be dissolved
upon approval by the banking regulatory authority under the State
Council. 

If a commercial bank is to be dissolved, a liquidation team
shall be established pursuant to law. The team shall, in accordance
with the plan for settlement of debts, carry out liquidation and
without delay pay debts such as the principal of the deposits and
the interest thereon. The banking regulatory authority under the
State Council shall supervise the process of liquidation. 

Article 70 If a commercial bank is to be dissolved because its
permit for operation is revoked, the banking regulatory authority
under the State Council shall without delay arrange to establish a
liquidation team pursuant to law, which shall, in accordance with
the plan for settlement of debts, carry out liquidation and without
delay pay debts such as the principal of the deposits and the
interest thereon . 

Article 71 If a commercial bank is unable to pay its debts as
they fall due, a People’s Court shall, after obtaining consent of
the banking regulatory authority under the State Council, lawfully
declare it bankrupt. If a commercial bank is declared bankrupt, the
People’s Court shall arrange for relevant authorities, such as the
banking regulatory authority under the State Council, and relevant
persons to establish a liquidation team, which shall carry out
liquidation. 

When liquidation is carried out after a commercial bank is
declared bankrupt, payment of the principal of savings deposits of
individuals and the interest thereon shall be given priority after
the liquidation expenses, the wages owed to the employees and labor
insurance premiums have been paid. 

Article 72 Commercial banks shall terminate if dissolved, closed
down or declared bankrupt. 

Chapter VIII 

Legal Responsibility 

Article 73 A commercial bank shall assume liability for payment
of default interest and other civil liability if the property of
depositors or other clients is damaged as a result of the
commercial bank’s: 

(1) delay in or refusal of payment of the principal of a deposit
and the interest thereon without good reason; 

(2) violation of regulations concerning matters of settlement
such as acceptance of negotiable instruments, etc. by refusing to
encash the instruments, refusing to enter receipts and expenditures
in its accounts, deliberately delaying or withholding payment under
bills or negotiable instruments, or rejecting negotiable
instruments in violation of regulations; 

(3) illegal inquiries into, freezing, withholding or transfer of
the savings deposits of individuals or the deposits of units;
or 

(4) other acts in violation of this Law that cause damage to
depositors or other clients. 

If a commercial bank commits one of the acts specified in the
preceding paragraph, it shall be instructed by the banking
regulatory authority under the State Council to rectify and its
unlawful gains shall be confiscated; if the unlawful gains exceed
50,000 yuan, it shall, in addition, be fined not less than the
amount of such gains but not more than five times that amount; and
if there are no unlawful gains or such gains are less than 50,000
yuan, it shall be fined not less than 50,000 yuan but not more than
500,000 yuan. 

Article 74 If a commercial bank commits one of the following
acts, it shall be instructed by the banking regulatory authority
under the State Council to rectify; if there are unlawful gains,
such gains shall be confiscated; if the unlawful gains exceed 500,
000 yuan, it shall, in addition, be fined not less than the amount
of such gains but not more than five times that amount; if there
are no unlawful gains or such gains are less than 500,000 yuan, it
shall be fined not less than 500,000 yuan but not more than
2,000,000 yuan; if the circumstances are particularly serious, or
if the bank fails to rectify at the expiration of the time
limit，the banking regulatory authority under the State Council may
instruct it to suspend business for rectification or may revoke its
business license; and if a crime is constituted, criminal
responsibility shall be investigated according to law: 

(1) establishing a branch without approval; 

(2) dividing or merging without approval or, in violation of
relevant regulations, failing to report for approval changes to be
made; 

(3) raising or lowering interest rates in violation of relevant
regulations or taking in deposits or granting loans by other
illegitimate means; 

(4) leasing out or lending its business license; 

(5) buying and selling, or acting as an agent for the purchase
and sale of, foreign exchange without approval; 

(6) buying or selling government bonds or issuing, buying or
selling financial bonds without approval; 

(7) in violation of relevant State regulations, engaging in
trust investment and the business of securities, investing in
immovable property which in not for private use, or investing in
non-banking financial institutions or enterprises ; and 

(8) granting fiduciary loans to its connections or granting
guaranteed loans to its connections on conditions that are more
preferential than those for granting the same to other
borrowers. 

Article 75 If a commercial bank commits one of the following
acts, it shall be instructed by the banking regulatory authority
under the State Council to rectify and, in addition, be fined not
less than 200, 000 yuan but not more than 500,000 yuan; if the
circumstances are particularly serious, or if the bank fails to
rectify at the expiration of the time limit，the banking regulatory
authority under the State Council may instruct it to suspend
business for rectification or revoke its business license; and if a
crime is constituted, criminal responsibility shall be investigated
according to law: 

(1) refusing to accept, or hindering, inspection and supervision
by the banking regulatory authority under the State
Council; 

(2) providing financial and accounting reports, statements and
statistical statements which are false or in which important facts
are concealed; or 

(3) failing to observe the regulations governing the capital
adequacy ratio, the ratio of deposits to loans, the asset liquidity
ratio, the ratio concerning loans granted to the same borrower, or
other regulations of the banking regulatory authority under the
State Council relating to control of assets-liabilities
ratio. 

Article 76 If a commercial bank commits one of the following
acts, it shall be instructed by the People’s Bank of China to
rectify; if there are unlawful gains, such gains shall be
confiscated; if the unlawful gains exceed 500,000 yuan, it shall,
in addition, be fined not less than the amount of such gains but
not more than five times that amount; if there are no unlawful
gains or such gains are less than 500,000 yuan, it shall be fined
not less than 500,000 yuan but not more than 2,000,000 yuan; if the
circumstances are particularly serious, or if the bank fails to
rectify at the expiration of the time limit，the People’s Bank of
China may put forward a proposal that the banking regulatory
authority under the State Council instruct it to suspend business
for rectification or revoke its business license; and if a crime is
constituted, criminal responsibility shall be investigated
according to law: 

(1) engaging in the settlement and sale of foreign exchange
without approval; 

(2) without approval, issuing, buying or selling financial bonds
at inter-bank bond markets, or borrowing loans from abroad;
or (3) in violation of relevant regulations, engaging in
inter-bank lending. 

Article 77 If a commercial bank commits one of the following
acts, it shall be instructed by the People’s Bank of China to
rectify and, in addition, be fined not less than 200, 000 yuan but
not more than 500,000 yuan; if the circumstances are particularly
serious, or if the bank fails to rectify at the expiration of the
time limit，the People’s Bank of China may put forward a proposal
that the banking regulatory authority under the State Council
instruct it to suspend business for rectification or revoke its
business license; and if a crime is constituted, criminal
responsibility shall be investigated according to law:  

(1) refusing to accept, or hindering, inspection and supervision
by the People’s Bank of China; 

(2) providing financial and accounting reports, statements and
statistical statements which are false or in which important facts
are concealed; or 

(3) failing to place a deposit reserve in the proportion
specified by the People’s Bank of China. 

Article 78 If a commercial bank commits one of the acts
specified from Article 73 through Article 77 of this Law, the
directors and senior administrators who are directly in charge and
the other persons who are directly responsible shall be given
disciplinary sanctions; and if a crime is constituted, criminal
responsibility shall be investigated according to law. 

Article 79 Any unit or individual that commits one of the
following acts shall be instructed by the banking regulatory
authority under the State Council to rectify, if there are unlawful
gains, such gains shall be confiscated; if the unlawful gains
exceed 50, 000 yuan, it shall, in addition, be fined not less than
the amount of such gains but not more than five times that amount;
and if there are no unlawful gains or such gains are less than
50,000 yuan, it shall be fined not less than 50,000 yuan but not
more than 500,000 yuan: 

(1) using the word “bank” in its name without
approval; 

(2) purchasing 5 percent or more of the total amount of the
shares of a commercial bank without approval; or 

(3) opening an account in the name of an individual to deposit
the funds of the unit. 

Article 80 If a commercial bank fails to submit the relevant
documents and information to the banking regulatory authority under
the State Council in accordance with relevant regulations, it shall
be instructed by the said authority to rectify; and if it fails to
rectify at the expiration of the time limit, it shall be fined not
less than 100, 000 yuan but not more than 300, 000 yuan. 

If a commercial bank fails to submit the relevant documents and
information to the People’s Bank of China in accordance with
relevant regulations, it shall be instructed by the People’s Bank
of China to rectify; and if it fails to rectify at the expiration
of the time limit, it shall be fined not less than 100, 000 yuan
but not more than 300, 000 yuan. 

Article 81 Any unit or individual, without approval of the
banking regulatory authority under the State Council, establishes a
commercial bank, or illegally takes in deposits from the general
public or does so in disguised form, which is serious enough to
constitute a crime, criminal responsibility shall be investigated
according to law, and such a commercial bank shall be closed down
by the banking regulatory authority under the State
Council. 

Any unit or individual that fabricates, counterfeits or
transfers the business license of a commercial bank, which is
serious enough to constitute a crime, criminal responsibility shall
be investigated according to law. 

Article 82 If a borrower uses fraudulent means to obtain a loan
and a crime is constituted thereby, criminal responsibility shall
be pursued according to law. 

Article 83 Any unit or individual commits one of the acts
specified in Articles 81 and 82 of this Law, which is not serious
enough to constitute a crime, its/ his unlawful gains shall be
confiscated by the banking regulatory authority under the State
Council; if the unlawful gains exceed 500, 000 yuan, it / he shall,
in addition, be fined not less than the amount of such gains but
not more than five times that amount and; if there are no unlawful
gains or such gains are less than 500,000 yuan, it / he shall be
fined not less than 500,000 yuan but not more than 2,000,000
yuan. 

Article 84 If an employee of a commercial bank, taking advantage
of his duties, demands, receives or accepts bribes or, in violation
of State regulations, receives or accepts rebates or commissions of
any description, which is serious enough to constitute, criminal
responsibility shall be investigated according to law; and if it is
not serious enough to constitute a crime, a disciplinary sanction
shall be imposed on him.     

If anyone commits an act specified in the preceding paragraph
and causes losses in granting a loan or providing a guaranty, the
person shall be fully or partially liable for
compensation. 

Article 85 If an employee of a commercial bank, taking advantage
of his duties, embezzles, misappropriates or takes into his
possession money belonging to the bank or any client, which is
serious enough to constitute a crime, criminal responsibility shall
be investigated according to law; and if it is not serious enough
to constitute a crime, a disciplinary sanction shall be imposed on
him.      

Article 86 If employees of a commercial bank cause losses by
neglecting their duties in violation of the provisions of this Law,
disciplinary measures shall be taken against them. If a crime is
constituted, criminal responsibility shall be pursued according to
law. 

If anyone causes losses by practicing favoritism towards his
relatives or friends in granting loans or providing guaranty in
violation of regulations, the person shall be fully or partially
liable for compensation. 

Article 87 If employees of a commercial bank disclose State or
business secrets that they  come  to know during their
employment, disciplinary measures shall be taken against them. If a
crime is constituted, criminal responsibility shall be pursued
according to law. 

Article 88 If any unit or individual forcibly demands a
commercial bank to grant a loan or to provide a guaranty,
disciplinary measures shall be taken against the leading members
of  the  unit who are directly in charge and other
persons of the unit who are directly responsible for the
offense  or the individual and, if losses are caused thereby,
these persons shall be fully or partially liable for
compensation. 

If employees of a commercial bank fail to refuse to grant a loan
or to provide a guaranty forcibly demanded by a unit or individual,
disciplinary measures shall be taken against them and, if losses
are caused thereby, they shall assume appropriate liability for
compensation. 

Article 89 If commercial banks violate the provisions of this
Law, the banking regulatory authority under the State Council may,
on the merits of each case, disqualify, for the positions for a
certain period of time or even for the rest of their lives, the
directors or senior administrators who are directly in charge, or
prohibit the directors or senior administrators who are directly in
charge and the other persons who are directly responsible from
working in the banking industry for a certain period of time or
even for the rest of their lives. 

If the act committed by a commercial bank is not serious enough
to constitute a crime, disciplinary warning shall be given to the
director or senior administrator directly in charge or the other
person directly responsible, and a fine of not less than 50, 000
yuan but not more than 500, 000 yuan shall be imposed. 

Article 90 If a commercial bank or its employees disagree with a
decision on a punishment made by the banking regulatory authority
under the State Council, or the People’s Bank of China, they may
institute proceedings with a People’s Court in accordance with the
provisions of the Administrative Procedure Law of the People’s
Republic of China.  

Chapter IX 



Supplementary Provisions 

Article 91 Commercial banks established prior to the
implementation of this Law, with approval granted in accordance
with the regulations of the State Council, shall not be required to
undergo examination and approval procedures again. 

Article 92 The provisions of this Law shall be applicable to
foreign-invested commercial banks, commercial banks of
Chinese-foreign equity joint venture and branches of foreign
commercial banks; and where other laws and administrative
regulations provide otherwise, the provisions of those laws and
administrative regulations shall prevail. 

Article 93 In handling their business such as deposits, loans
and settlements, urban credit cooperatives and rural credit
cooperatives shall apply the relevant provisions of this
Law. 

Article 94 The relevant provisions of this Law shall be
applicable to postal enterprises in handling relevant business of
commercial banks. 

Article 95 This Law shall go into effect as of July 1, 1995.

(Legislative Affairs Commission of the Standing Committee of the
National People’s Congress.)

No. 11

The Law of the People’s Republic of China on Regulation of and
Supervision over the Banking Industry, adopted at the 6th Meeting
of the Standing Committee of the Tenth National People’s Congress
of the People’s Republic of China on December 27, 2003, is hereby
promulgated and shall go into effect as of February 1, 2004.

 　Hu Jintao  

President of the
People’s Republic of China

　　December 27,
2003

Contents

Chapter I  General Provisions

Chapter II The Regulatory Authority

Chapter III Regulatory and Supervisory Responsibilities

Chapter IV  Supervisory Measures

Chapter V   Legal Responsibility

Chapter VI Supplementary Provisions

Chapter I

General Provisions

Article 1 This law is enacted with a view to improving
regulation of and supervision over the banking industry,
standardizing such regulation and supervision, preventing and
mitigating risks in the banking industry, protecting the lawful
rights and interests of depositors and other customers, and
promoting the sound development of the banking industry.

Article 2 The banking regulatory authority under the State
Council shall be responsible for the regulation of and supervision
over the financial institutions of the banking industry and their
business operations throughout the country.

For purposes of this law, the “financial institutions of the
banking industry” refer to the financial institutions established
in the People’s Republic of China that receive deposits from the
general public, including, among others, commercial banks, urban
credit cooperatives and rural credit cooperatives, and policy
banks.

The provisions of this Law pertaining to the regulation of and
supervision over the financial institutions of the banking industry
are applicable to the regulation and supervision of the financial
asset management companies, trust and investment corporations,
finance companies and financial leasing companies established in
the territory of the People’s Republic of China and other financial
institutions established with the approval of the banking
regulatory authority under the State Council.

The banking regulatory authority under the State Council shall,
in accordance with the relevant provisions of this Law, regulate
and supervise the financial institutions that, upon its approval,
are established outside the People’s Republic of China, as well as
the business operations conducted abroad by the financial
institutions mentioned in the preceding two paragraphs.

Article 3 The objectives of regulation of and supervision over
the banking industry are to promote the lawful, sound and steady
operation of the banking industry and preserve public trust in the
industry.

The banking industry shall be regulated and supervised in such a
way as to protect fair competition in the industry and increase the
competitiveness of the industry.

Article 4 When exercising regulation and supervision, the
banking regulatory authority shall follow the principles of
law-abiding openness, impartiality and efficiency.

Article 5 Performance of the duties of supervision in accordance
with law by banking regulatory authority and its staff members
engaged in supervision shall be protected by law. Local
governments, government departments at various levels, public
organizations and individuals shall not interfere.

Article 6 The banking regulatory authority under the State
Council shall establish a mechanism with the People’s Bank of China
and other financial regulatory authorities under the State Council
for sharing supervisory information.

Article 7 The banking regulatory authority under the State
Council may establish a cooperative mechanism of supervision with
the banking regulatory authorities in other countries or regions
for cross-border supervision.

Chapter II

The Regulatory Authority

Article 8 In light of the need to perform its duties, the
banking regulatory authority under the State Council may set up
local offices. It shall exercise unified leadership and
administration of such offices.　　

The local offices of the banking regulatory authority under the
State Council shall perform their supervisory duties within the
scope authorized by the said authority.　　

Article 9 The staff members of the banking regulatory authority
who are engaged in supervision shall have the professional
knowledge and work experience commensurate with the positions they
are holding.　　

Article 10 Staff members of the banking regulatory authority
shall be devoted to their duties, act in accordance with law and be
impartial and honest; they shall not take advantage of their
positions to seek illegitimate benefits, or concurrently hold
positions in enterprises such as financial institutions.

Article 11 Staff members of the banking regulatory authority
shall, in accordance with law, guard State secrets, and it is
incumbent upon them to guard the secrets of the financial
institutions of the banking industry and of the parties subject to
their supervision.　　

For exchanging supervisory information with the banking
regulatory authorities of other countries and regions, the banking
regulatory authority under the State Council shall make
arrangements for preserving the confidentiality of information.

Article 12 The banking regulatory authority under the State
Council shall make public its supervisory procedures, and establish
a supervisory responsibility system and an internal supervisory
system.

Article 13 Local governments and the relevant government
departments at various levels shall cooperate with and provide
assistance to the banking regulatory authority when the latter
deals with risks confronted by financial institutions of the
banking industry, investigates and handles violations of law in
finance, and exercises supervision in other manners.

Article 14 The auditing, supervisory and other departments under
the State Council shall, in accordance with the provisions of
relevant laws, oversee the activities of the banking regulatory
authority under the State Council.

Chapter III

Regulatory and Supervisory Responsibilities

Article 15 The banking regulatory authority under the State
Council shall, in accordance with laws and administrative
regulations, formulate and promulgate supervisory rules and
regulations governing the financial institutions of the banking
industry and their business activities.

Article 16 The banking regulatory authority under the State
Council shall, in accordance with the requirements and procedures
provided for in laws and administrative regulations, examine,
before giving approval, the establishment, change, termination and
business scope of financial institutions of the banking
industry.

Article 17 Where an application is submitted for the
establishment of a financial institution of the banking industry
and where such an institution intends to replace a shareholder that
holds more than the specified percentage of the total amount of
capital or shares, the banking regulatory authority under the State
Council shall examine the source of capital, financial strength,
ability to replenish capital and integrity of the shareholders.

Article 18 The types of services offered by a financial
institution of the banking industry within its business scope
shall, in accordance with relevant regulations, be subject to
examination and approval by the banking regulatory authority under
the State Council or be submitted to the authority for the record.
With regard to the types of services that are subject to
examination and approval or to being put on record, the banking
regulatory authority under the State Council shall, in accordance
with relevant laws and administrative regulations, formulate
regulations and make them known to the public.

Article 19 Without approval by the banking regulatory authority
under the State Council, no institution or individual may establish
a financial institution of the banking industry or engage in
business activities of such an institution.

Article 20 The banking regulatory authority under the State
Council shall exercise control of the qualifications for the
positions of the directors and senior managers of the financial
institutions of the banking industry. Specific measures in this
regard shall be formulated by the banking regulatory authority
under the State Council.

Article 21 The rules of prudent operation of the financial
institutions of the banking industry shall be stipulated in laws or
administrative regulations, and they may also be formulated by the
banking regulatory authority under the State Council in accordance
with relevant laws and administrative regulations.

The rules of prudent operation mentioned in the preceding
paragraph shall cover, among other things, risk management,
internal control, capital adequacy, asset quality, loan loss
provisioning, risk concentration, connected transactions, and
liquidity management of assets.

The financial institutions of the banking industry shall
strictly observe the rules of prudent operation.

Article 22 The banking regulatory authority under the State
Council shall, within a prescribed period of time, make a decision
of approval or disapproval in writing in response to the following
applications; if it makes a decision of disapproval, it shall
explain the reasons why:

(1) for the establishment of a financial institution of the
banking industry, it is six months from the date it receives the
application documents;

(2) for the change or termination of a financial institution of
the banking industry, for the business scope or for offering more
types of services within the business scope, it is three months
from the date it receives the application documents; and

(3) for examination of the qualifications of a director or
senior manager, it is 30 days from the date it receives the
application documents.

Article 23 The banking regulatory authority shall conduct
off-site supervision of the business operations and risk profile of
the financial institutions of the banking industry, for which it
shall establish an information system to analyse and assess the
risk profile of such institutions.

Article 24 The banking regulatory authority shall conduct
on-site inspection of the business operations and risk profile of
the financial institutions of the banking industry.

The banking regulatory authority under the State Council shall
formulate procedures for on-site inspection to standardize such
inspection.

Article 25 The banking regulatory authority under the State
Council shall supervise the financial institutions of the banking
industry on a consolidated basis.

Article 26 With respect to the proposal made by the People’s
Bank of China for inspection of a financial institution of the
banking industry, the banking regulatory authority under the State
Council shall respond within 30 days from the date it receives the
proposal.

Article 27 The banking regulatory authority under the State
Council shall establish a rating system and an early-warning
mechanism for supervision over the financial institutions of the
banking industry, in order to determine, on the basis of the rating
and risk profile of such institutions, the frequency and scope of
on-site inspection of the institutions, as well as other
supervisory measures that need to be taken.

Article 28 The banking regulatory authority under the State
Council shall establish a system of post responsibility for
identifying and reporting emergencies in the banking industry.

When it identifies any emergency that may lead to systemic risks
in the banking industry and thus seriously jeopardize social
stability, the banking regulatory authority shall immediately
report the matter to the leading member of the banking regulatory
authority under the State Council; the leading member shall, when
deeming it necessary, immediately report to the State Council while
informing the People’s Bank of China, the finance department and
other relevant departments under the State Council of the
matter.

Article 29 The banking regulatory authority under the State
Council shall, in conjunction with the People’s Bank of China, the
finance department and other relevant departments under the State
Council, establish a system for coping with emergencies in the
banking industry, including formulating contingency plans,
designating institutions and staff members, specifying their
responsibilities and the measures and procedures, in order to
ensure that emergencies in the banking industry are handled in a
timely and effective manner.

Article 30 The banking regulatory authority under the State
Council shall be responsible for compiling, in a unified manner,
statistics and reports of the financial institutions of the banking
industry throughout the country and, in accordance with the
relevant regulations of the State, publish the statistics and
reports.

Article 31 The banking regulatory authority under the State
Council shall guide and oversee the activities of the
self-regulated organizations of the banking industry.

The self-regulated organizations of the banking industry shall
submit their articles of association to the banking regulatory
authority under the State Council for the record.

Article 32 The banking regulatory authority under the State
Council may engage in international exchange and cooperation
related to regulation of and supervision over the banking
industry.

Chapter IV

Supervisory Measures

Article 33 The banking regulatory authority shall, in light of
the need for performing its duties, have the power to require the
financial institutions of the banking industry to submit, in
accordance with relevant regulations, their balance sheets, profit
statements, other financial accounting statements, statistical
reports and information concerning business operations and
management, as well as the audit reports prepared by certified
public accountants.

Article 34 The banking regulatory authority may take the
following measures to conduct on-site inspection, as required by
prudent supervision:

(1) to enter a financial institution of the banking industry for
on-site inspection;

(2) to interview staff members of a financial institution and
require them to provide explanations on the matters under
inspection;

(3) to check and make copies of the financial institution’s
documents and materials related to the matters under inspection,
and to seal up the documents and materials that are likely to be
removed, concealed or destroyed; and

(4) to examine the computer system with which the financial
institution controls its business data.

On-site inspection shall be subject to approval by the leading
member of the banking regulatory authority. For on-site inspection,
there shall be no less than two inspectors, who shall produce their
legal certificates and the written notification of inspection.
Where there are less than two inspectors, or no legal certificates
and written notification of inspection are produced, the financial
institution shall have the right to refuse to accept
inspection.

Article 35 The banking regulatory authority may, in light of the
need for performing its duties, hold supervisory consultations with
the directors and senior managers of a financial institution of the
banking industry, asking them to explain the important matters
concerning business operations and risk management.

Article 36 The banking regulatory authority shall instruct
financial institutions of the banking industry to disclose,
truthfully and in accordance with relevant regulations, to the
public information, including, among other things, their financial
and accounting reports, statements of risk management, changes in
the directors and senior managers and other important matters.

Article 37 Where a financial institution of the banking industry
violates the rules of prudent operation, the banking regulatory
authority under the State Council or its office at the provincial
level shall instruct it to rectify within a time limit; if it fails
to comply at the expiration of the time limit, or the violation
seriously threatens the sound and steady operation of the
institution, jeopardizes the lawful rights and interests of the
depositors and other customers, the banking regulatory authority
under the State Council or its office at the provincial level may,
with the approval of the leading member, take the following
measures, depending on the seriousness of the circumstances:

(1) instructing it to suspend part of its business or ceasing to
give approval to its starting of new businesses;

(2) restricting the distribution of dividends and other
returns;

(3) restricting asset transfers;

(4) instructing the holding shareholders to transfer their
rights or restricting the rights of the shareholders concerned;

(5) instructing the institution to replace the directors or
senior managers or restricting their rights; and

(6) ceasing to give approval to its establishment of new
branches.　

After rectification, the financial institution shall submit a
report to the banking regulatory authority under the State Council
or its office at the provincial level. After the said authority or
office inspects the institution and accepts it as conforming to the
rules of prudent operation, it shall, within three days after the
date of acceptance, discontinue the measures prescribed in the
preceding paragraph.

Article 38 Where a financial institution of the banking industry
is experiencing or is likely to experience a credit crisis, thereby
seriously jeopardizing the lawful rights and interests of
depositors and other customers, the banking regulatory authority
under the State Council may, in accordance with law, take over the
institution or facilitate its restructuring. The take-over and
restructuring shall be carried out in accordance with relevant laws
and the regulations of the State Council.

Article 39 Where a financial institution of the banking industry
operates in violation of laws or is not operated or managed
properly, thereby seriously threatening financial order and
undermining public interests unless it is closed, the banking
regulatory authority under the State Council shall have the power
to close it.

Article 40 Where a financial institution of banking industry is
taken over, restructured, or closed, the banking regulatory
authority under the State Council shall have the power to require
the directors, senior managers and other staff members of the
institution to perform their duties according to the requirements
of the authority.

In the course of the take-over, restructuring or liquidation
after the closure of the institution, the banking regulatory
authority under the State Council may, with the approval of the
leading member of the authority, take the following measures
against the directors and senior managers who are directly in
charge and the other staff members who are directly
responsible:

(1) where their departure from the People’s Republic of China
will cause heavy losses to the interests of the State, notifying
the exit control authority of the need to prevent them, in
accordance with law, from leaving the country; and

(2) submitting an application to the judicial authority for
prohibiting their moving to other places or their transferring of
their property, or for establishing other rights on their
property.

Article 41 A banking regulatory authority shall, with the
approval of the leading member of the banking regulatory authority
under the State Council or of its office at the provincial level,
have the power to inquire about the bank accounts of the financial
institution of the banking industry suspected of violating laws in
financial affairs, and the bank accounts of its staff members and
connected parties; and may, with the approval of the said leading
member, submit an application to the judicial authority for
freezing the illegally obtained funds that are suspected of being
about to be moved to other places or concealed.

Chapter V

Legal Responsibility

Article 42 Any staff member of the banking regulatory authority
engaged in supervision commits any of the following acts shall be
given administrative sanctions according to law; and if a crime is
constituted, he shall be investigated for criminal responsibility
in accordance with law:

(1) in violation of relevant regulations, examining and giving
approval to the establishment, change or termination of a financial
institution of the banking industry, or its business scope or the
services it offers within its business scope;

(2) in violation of relevant regulations, conducting on-site
inspection of a financial institution of the banking industry;

(3) failing to report an emergency in accordance with the
provisions in Article 28 of this Law;

(4) in violation of relevant regulations, inquiring about bank
accounts or submitting an application for freezing funds;

(5) in violation of relevant regulations, taking measures
against or penalizing a financial institution of the banking
industry; and

(6) other acts such as abuse of power and neglect of duties.

Any staff member of the banking regulatory authority engaged in
supervision who commits embezzlement, bribery or divulgence of
State secrets or the business secrets he knows, which constitutes a
crime, shall be investigated for criminal responsibility according
to law; and if it is not serious enough to constitute a crime, he
shall be given administrative sanctions according to law.

Article 43 Where a financial institution of the banking industry
is established without authorization, or the business activities of
financial institutions are illegally engaged in, the banking
regulatory authority under the State Council shall outlaw such an
institution and such business activities. If a crime is
constituted, criminal responsibility shall be investigated
according to law; if the case is not serious enough to constitute a
crime, the unlawful gains shall be confiscated by the banking
regulatory authority under the State Council; if the unlawful gains
exceed RMB 500,000 yuan, a fine of not less than the amount of the
unlawful gains but not more than five times that amount shall, in
addition, be imposed; and if there are no unlawful gains or the
amount of such gains is less than 500,000 yuan, a fine of not less
than 500,000 yuan but not more than 2,000,000 yuan shall be
imposed.

Article 44 Where a financial institution of the banking industry
commits one of the following acts, it shall be instructed by the
banking regulatory authority under the State Council to rectify; if
there are unlawful gains, such gains shall be confiscated; if the
unlawful gains exceed 500,000 yuan, it shall, in addition, be fined
not less than the amount of such gains but not more than five times
that amount ; if there are no unlawful gains, or such gains are
less than 500,000 yuan, it shall be fined not less than 500,000
yuan but not more than 2,000,000 yuan; if the circumstances are
particularly serious, or if the institution fails to rectify within
the prescribed period of time, the banking regulatory authority
under the State Council may instruct it to suspend business for
rectification or revoke its business license; if a crime is
constituted, the institution shall be investigated for criminal
responsibility according to law:

(1) establishing a branch without approval;

(2) making changes or terminating business operations without
approval;

(3) in violation of relevant regulations, engaging in business
activities for which no approval is obtained or which are not put
on record; and

(4) in violation of relevant regulations, raising or lowering
interest rates on deposits or loans.

Article 45 Where a financial institution of the banking industry
commits one of the following acts, the banking regulatory authority
under the State Council shall instruct it to rectify and shall, in
addition, impose on it a fine of not less than 200,000 yuan but not
more than 500,000 yuan; if the circumstances are particularly
serious, or if the institution fails to rectify within the
prescribed period of time, the said authority may instruct it to
suspend business for rectification or revoke its business license;
if a crime is constituted, the institution shall be investigated
for criminal responsibility according to law:

(1) appointing directors or senior managers without subjecting
their qualifications for the positions to examination;

(2) refusing to accept or obstructing the off-site supervision
or on-site inspection;

(3) providing statements, reports, documents or materials that
are false or conceal important facts;

(4) failing to disclose information to the public in accordance
with relevant regulations;

(5) violating the rules of prudent operation to a serious
extent; and

(6) refusing to enforce the measures as provided for in Article
37 of this Law.

Article 46 Where a financial institution of the banking industry
fails to provide statements, reports, documents or materials in
accordance with relevant regulations, the banking regulatory
authority shall instruct it to rectify. If it fails to comply
within the prescribed period of time, it shall be fined not less
than 100,000 yuan but not more than 300,000 yuan.

Article 47 Where a financial institution of the banking industry
violates laws, administrative regulations or regulations of the
State governing regulation and supervision of the banking industry,
the banking regulatory authority may, in addition to the penalties
specified in Articles 43, 44, 45 and 46 of this Law, take the
following measures, depending on the seriousness of the
circumstances:

(1) to instruct the financial institution to impose disciplinary
sanctions on the directors and senior mangers who are directly in
charge and the other persons who are directly responsible;

(2) if the case is not serious enough to constitute a crime, to
give disciplinary warnings to the directors and senior managers who
are directly in charge and the other persons who are directly
responsible and impose on them each a fine of not less than 50,000
yuan but not more than 500,000 yuan; and

(3) to disqualify the directors and senior mangers who are
directly in charge for a specified period of time or for life, or
to prohibit them and the other persons who are directly responsible
from working in the banking industry for a specified period of time
or for life.

Chapter VI

Supplementary Provisions

Article 48 Where with regard to the regulation of and
supervision over the policy banks and asset management companies
established in the territory of the People’s Republic of China,
laws and administrative regulations provide otherwise, the
provisions there shall prevail.

Article 49 Where with regard to the regulation of and
supervision over the wholly foreign-funded financial institutions,
Chinese-foreign joint venture financial institutions and branches
of foreign financial institutions of the banking industry that are
established in the territory of the People’s Republic of China,
laws and administrative regulations provide otherwise, the
provisions there shall prevail.

Article 50 This Law shall go into effect as of February 1,
2004.

Notice: All copyrights of the English version of the Orders
of the President of the People’s Republic of China released on
gov.cn belong to the Legislative Affairs Commission of the Standing
Committee of the National People’s Congress of the People’s
Republic of China.

(Source: Legislative Affairs Commission of the Standing
Committee of the National People’s Congress)

(Promulgated by Decree No. 368 of the State Council of the
People’s Republic of China on December 28, 2002, and effective as
of February 1, 2003)

The State Council has decided to amend as follows the Rules for
the Implementation of the Patent Law of the People’s Republic of
China promulgated on June 15, 2001:

1. Article 101 is amended as: “Any applicant
for an international application entering the Chinese national
phase shall, within 30 months from the priority date as referred to
in Article 2 of the Patent Cooperation Treaty (referred to in this
chapter as “the priority date”), go through the following
formalities with the patent administration department under the
State Council:

(1) submitting a written statement concerning the entry of his
or its international application into the Chinese national phase.
The statement shall indicate the international application number,
and also indicate in Chinese the kind of patent protection sought,
the title of the invention-creation, the name or title of the
applicant, the address of the applicant and the name of the
inventor. Such indications shall be the same as those recorded by
the International Bureau;

(2) paying the filing fee, the additional fee for patent
application and the printing fee for publicizing the application as
provided in Article 90, paragraph one of these Rules;

(3) where an international application is filed in a language
other than Chinese, the Chinese translation of the description, the
claims, the text matter of the drawings, and the abstract of the
initial international application shall be furnished; where an
international application is filed in Chinese, a copy of the
abstract published in the international publication shall be
furnished;

(4) where an international application contains drawings, a copy
of the drawings shall be furnished. Where an international
application is filed in Chinese, a copy of the figure of the
drawings in the abstract as published in the international
publication shall be furnished.

If the applicant fails to go through the relevant formalities
for entering the Chinese national phase within the time limit
prescribed in the preceding paragraph, he or it may, after paying a
surcharge for the late entry, go through these formalities before
the expiration of the time limit of 32 months from the priority
date.”

2. Article 108 is amended as: “Where, before
the expiration of 30 months from the priority date, the applicant
files a request with the patent administration department under the
State Council for early processing and examination of his or its
international application, he or it shall, in addition to going
through the formalities for entering the Chinese national phase,
submit a request in accordance with the provisions in Article 23,
paragraph two of the Patent Cooperation Treaty. Where the
international application has not been transmitted by the
International Bureau to the patent administration department under
the State Council, the applicant shall submit a confirmed copy of
the international application.”

This Decision shall be effective as of February 1, 2003.

The Rules for the Implementation of the Patent Law of the
People’s Republic of China shall be revised correspondingly
according to this Decision and promulgated anew.

Rules for the Implementation of the Patent Law of the
People’s Republic of China

(Promulgated by Decree No. 306 of the State Council of the
People’s Republic of China on June 15, 2001, and revised according
to the Decision of the State Council on Amending the Rules for the
Implementation of the Patent Law of the People’s Republic of China
promulgated on December 28, 2002)

Chapter I General Provisions

Article 1 These Rules are formulated in
accordance with the Patent Law of the People’s Republic of China
(hereinafter referred to as the Patent Law).

Article 2 “Invention” in the Patent Law means
any new technical solution relating to a product, a process or
improvement thereof.

“Utility model” in the Patent Law means any new technical
solution relating to the shape, the structure, or their
combination, of a product, which is fit for practical use.

“Design” in the Patent Law means any new design of the shape,
pattern or their combination, or the combination of the color with
shape or pattern, of a product, which creates an aesthetic feeling
and is fit for industrial application.

Article 3 Any formalities prescribed by the
Patent Law and these Rules shall be gone through in a written form
or in any other form prescribed by the patent administration
department under the State Council.

Article 4 Any document submitted in accordance
with the provisions of the Patent Law and these Rules shall be in
Chinese; the standard scientific and technical terms shall be used
if there is a prescribed one set forth by the State; where no
generally accepted translation in Chinese can be found for a
foreign name or scientific or technical term, the one in the
original language shall be also indicated.

Where any certificate(s) or certifying document(s) submitted in
accordance with the provisions of the Patent Law and these Rules is
in a foreign language, the patent administration department under
the State Council may, when it deems necessary, request a Chinese
translation of the certificate(s) or the certifying document(s) be
submitted within a specified time limit; where the translation is
not submitted within the specified time limit, the certificate(s)
or certifying document(s) shall be deemed not to have been
submitted.

Article 5 Where any document is sent by mail to
the patent administration department under the State Council, the
date of mailing indicated by the postmark on the envelope shall be
deemed to be the date of filing; where the date of mailing
indicated by the postmark on the envelope is illegible, the date on
which the patent administration department under the State Council
receives the document shall be the date of filing, except where the
date of mailing is proved by the party concerned.

Any document of the patent administration department under the
State Council may be served by mail, by personal delivery or by
other forms. Where any party concerned appoints a patent agency,
the document shall be sent to the patent agency; where no patent
agency is appointed, the document shall be sent to the liaison
person named in the request.

Where any document is sent by mail by the patent administration
department under the State Council, the 16th day from the date of
mailing shall be presumed to be the date on which the party
concerned receives the document(s).

Where any document is delivered personally in accordance with
the provisions of the patent administration department under the
State Council, the date of delivery is the date on which the party
concerned receives the document(s).

Where the address of any document is not clear and it cannot be
sent by mail, the document may be served by making an announcement.
At the expiration of one month from the date of the announcement,
the document shall be deemed to be served.

Article 6 The first day of any time limit
prescribed in the Patent Law and these Rules shall not be counted
in the time limit. Where the time limit is counted by year or by
month, it shall expire on the corresponding day of the last month;
if there is no corresponding day in that month, the time limit
shall expire on the last day of that month; if a time limit expires
on an official holiday, it shall expire on the first working day
following that official holiday.

Article 7 Where a time limit prescribed in the
Patent Law or these Rules or specified by the patent administration
department under the State Council is not observed by a party
concerned because of force majeure, resulting in loss of his or its
rights, he or it may, within two months from the date on which the
impediment is removed, at the latest within two years immediately
following the expiration of that time limit, state the reasons,
together with relevant supporting documents, and request the patent
administration department under the State Council to restore his or
its rights.

Where a time limit prescribed in the Patent Law or these Rules
or specified by the patent administration department under the
State Council is not observed by a party concerned because of any
justified reason, resulting in loss of his or its rights, he or it
may, within two months from the date of receipt of a notification
from the patent administration department under the State Council,
state the reasons and request the patent administration department
under the State Council to restore his or its rights.

Where the party concerned makes a request for an extension of a
time limit specified by the patent administration department under
the State Council, he or it shall, before the time limit expires,
state the reasons to the patent administration department under the
State Council and go through the relevant formalities.

The provisions of paragraphs one and two of this Article shall
not be applicable to the time limit referred to in Articles 24, 29,
42 and 62 of the Patent Law.

Article 8 Where an application for a patent for
invention relates to the secrets of the State concerning national
defense and requires to be kept secret, the application for patent
shall be filed with the patent department of national defense.
Where any application for patent for invention relating to the
secrets of the State concerning national defense and requiring to
be kept secret is received by the patent administration department
under the State Council, the application shall be forwarded to the
patent department of national defense for examination, and the
patent administration department under the State Council shall make
a decision on the basis of the observations of the examination made
by the patent department of national defense.

Subject to the provisions of the preceding paragraph, the patent
administration department under the State Council shall, after
receipt of an application for patent for invention which is
required to be examined for the purpose of security, send it to the
relevant competent department under the State Council for
examination. The relevant competent department shall, within four
months from the date of receipt of the application, notify the
patent administration department under the State Council of the
results of the examination. Where the invention for which a patent
is applied for is required to be kept secret, the patent
administration department under the State Council shall handle it
as an application for secret patent and notify the applicant
accordingly.

Article 9 Any invention-creation that is
contrary to the laws of the State referred to in Article 5 of the
Patent Law shall not include the invention-creation merely the
exploitation of which is prohibited by the laws of the State.

Article 10 The date of filing referred to in
the Patent Law, except for those referred to in Articles 28 and 42,
means the priority date where a priority is claimed.

The date of filing referred to in these Rules, except as
otherwise prescribed, means the date of filing prescribed in
Article 28 of the Patent Law.

Article l1 “A service invention-creation made
by a person in execution of the tasks of the entity to which he
belongs” referred to in Article 6 of the Patent Law means any
invention-creation made:

(1) in the course of performing his own duty;

(2) in execution of any task, other than his own duty, which was
entrusted to him by the entity to which he belongs;

(3) within one year from his resignation, retirement or change
of work, where the invention-creation relates to his own duty or
the other task entrusted to him by the entity to which he
previously belonged.

“The entity to which he belongs” referred to in Article 6 of the
Patent Law includes the entity in which the person concerned is a
temporary staff member. “Material and technical means of the
entity” referred to in Article 6 mean the entity’s money,
equipment, spare parts, raw materials or technical materials which
are not disclosed to the public.

Article 12 “Inventor” or “creator” referred to
in the Patent Law means any person who makes creative contributions
to the substantive features of an invention-creation. Any person
who, during the course of accomplishing the invention-creation, is
responsible only for organizational work, or who offers facilities
for making use of material and technical means, or who takes part
in other auxiliary functions, shall not be considered as inventor
or creator.

Article l3 For any identical
invention-creation, only one patent right shall be granted.

Two or more applicants who respectively file, on the same day,
applications for patent for the identical invention-creation, as
provided for in Article 9 of the Patent Law, shall, after receipt
of a notification from the patent administration department under
the State Council, hold consultations among themselves to decide
the person or persons who shall be entitled to file the
application.

Article 14 Any assignment of the right to apply
for a patent or of the patent right, by a Chinese entity or
individual, to a foreigner shall be approved by the competent
department for foreign trade and economic affairs of the State
Council in conjunction with the science and technology
administration department of the State Council.

Article 15 Except for the assignment of the
patent right in accordance with the provisions of Article 10 of the
Patent Law, where the patent right is transferred because of any
other reason, the person or persons concerned shall, on the
strength of relevant certifying documents or legal papers, request
the patent administration department under the State Council to
make a registration of change in the owner of the patent right.

Any license contract for exploitation of the patent which has
been concluded by the patentee with an entity or individual shall,
within three months from the date of entry into force of the
contract, be submitted to the patent administration department
under the State Council for the record.

Chapter II Application for Patent

Article l6 Anyone who applies for a patent in
written form shall file with the patent administration department
under the State Council application documents in two copies.

Anyone who applies for a patent in other forms as provided by
the patent administration department under the State Council shall
comply with the relevant provisions.

Any applicant who appoints a patent agency for applying for a
patent, or for having other patent matters to attend to before the
patent administration department under the State Council, shall
submit at the same time a power of attorney indicating the scope of
the power entrusted.

Where there are two or more applicants and no patent agency is
appointed, unless otherwise stated in the request, the applicant
named first in the request shall be the representative.

Article l7 “Other related matters” in the
request referred to in Article 26, paragraph two of the Patent Law
mean:

(1) the nationality of the applicant;

(2) where the applicant is an enterprise or other organization,
the name of the country in which the applicant has the principal
business office;

(3) where the applicant has appointed a patent agency, the
relevant matters which shall be indicated; where no patent agency
is appointed, the name, address, postcode and telephone number of
the liaison person;

(4) where the priority of an earlier application is claimed, the
relevant matters which shall be indicated;

(5) the signature or seal of the applicant or the patent
agency;

(6) a list of the documents constituting the application;

(7) a list of the documents appended to the application; and

(8) any other related matter which needs to be indicated.

Article l8 The description of an application
for a patent for invention or utility model shall state the title
of the invention or utility model, which shall be the same as it
appears in the request. The description shall include the
following:

(1) technical field: specifying the technical field to which the
technical solution to be protected pertains;

(2) background art: indicating the background art which can be
regarded as useful for the understanding, searching and examination
of the invention or utility model, and when possible, citing the
documents reflecting such art;

(3) contents of the invention: disclosing the technical problem
the invention or utility model aims to settle and the technical
solution adopted to resolve the problem; and stating, with
reference to the prior art, the advantageous effects of the
invention or utility model;

(4) description of figures: briefly describing each figure in
the drawings, if any;

(5) mode of carrying out the invention or utility model:
describing in detail the optimally selected mode contemplated by
the applicant for carrying out the invention or utility model;
where appropriate, this shall be done in terms of examples, and
with reference to the drawings, if any;

The manner and order referred to in the preceding paragraph
shall be followed by the applicant for a patent for invention or
for utility model, and each of the parts shall be preceded by a
heading, unless, because of the nature of the invention or utility
model, a different manner or order would result in a better
understanding and a more economical presentation.

The description of the invention or utility model shall use
standard terms and be in clear wording, and shall not contain such
references to the claims as: “as described in claim …”, nor shall
it contain commercial advertising.

Where an application for a patent for invention contains
disclosure of one or more nucleotide and/or amino acid sequences,
the description shall contain a sequence listing in compliance with
the standard prescribed by the patent administration department
under the State Council. The sequence listing shall be submitted as
a separate part of the description, and a copy of the said sequence
listing in machine-readable form shall also be submitted in
accordance with the provisions of the patent administration
department under the State Council.

Article l9 The same sheet of drawings may
contain several figures of the invention or utility model, and the
figures shall be numbered and arranged in numerical order
consecutively as “Figure l, Figure 2, …”.

The scale and the distinctness of the drawings shall be as such
that a reproduction with a linear reduction in size to two-thirds
would still enable all details to be clearly distinguished.

Reference signs not mentioned in the text of the description of
the invention or utility model shall not appear in the drawings.
Reference signs not appearing in the drawings shall not appear in
the text of the description. Reference signs for the same composite
part shall be used consistently throughout the application
document.

The drawings shall not contain any other explanatory notes,
except words which are indispensable.

Article 20 The claims shall define clearly and
concisely the matter for which protection is sought in terms of the
technical features of the invention or utility model.

If there are several claims, they shall be numbered
consecutively in Arabic numerals.

The technical terminology used in the claims shall be consistent
with that used in the description. The claims may contain chemical
or mathematical formulae but no drawings. They shall not, except
where absolutely necessary, contain such references to the
description or drawings as: “as described in part …of the
description”, or “as illustrated in Figure …of the drawings”.

The technical features mentioned in the claims may, in order to
facilitate quicker understanding of the claim, make reference to
the corresponding reference signs in the drawings of the
description. Such reference signs shall follow the corresponding
technical features and be placed in parentheses. They shall not be
construed as limiting the claims.

Article 2l The claims shall have an independent
claim, and may also contain dependent claims.

The independent claim shall outline the technical solution of an
invention or utility model and state the essential technical
features necessary for the solution of its technical problem.

The dependent claim shall, by additional technical features,
further define the claim that it refers to.

Article 22 An independent claim of an invention
or utility model shall contain a preamble portion and a
characterizing portion, and be presented in the following form:

(1) a preamble portion: indicating the title of the claimed
subject matter of the technical solution of the invention or
utility model, and those technical features which are necessary for
the definition of the claimed subject matter but which, in
combination, are part of the most related prior art;

(2) a characterizing portion: stating, in such words as
“characterized in that… “or in similar expressions, the technical
features of the invention or utility model, which distinguish it
from the most related prior art. Those features, in combination
with the features stated in the preamble portion, serve to define
the scope of protection of the invention or utility model.

Where the manner specified in the preceding paragraphs is not
appropriate to be followed because of the nature of the invention
or utility model, an independent claim may be presented in a
different manner.

An invention or utility model shall have only one independent
claim, which shall precede all the dependent claims relating to the
same invention or utility model.

Article 23 Any dependent claim of an invention
or utility model shall contain a reference portion and a
characterizing portion, and be presented in the following
manner:

(l) a reference portion: indicating the serial number(s) of the
claim(s) referred to, and the title of the subject matter;

(2) a characterizing portion: stating the additional technical
features of the invention or utility model.

Any dependent claim shall only refer to the preceding claim or
claims. Any multiple dependent claims, which refer to two or more
claims, shall refer to the preceding one in the alternative only,
and shall not serve as a basis for any other multiple dependent
claims.

Article 24 The abstract shall consist of a
summary of the disclosure as contained in the application for
patent for invention or utility model. The summary shall indicate
the title of the invention or utility model, and the technical
field to which the invention or utility model pertains, and shall
be drafted in a way which allows the clear understanding of the
technical problem, the gist of the technical solution of that
problem, and the principal use or uses of the invention or utility
model.

The abstract may contain the chemical formula which best
characterizes the invention. In an application for a patent which
contains drawings, the applicant shall provide a figure which best
characterizes the technical features of the invention or utility
model. The scale and the distinctness of the figure shall be as
such that a reproduction with a linear reduction in size to 4cm x
6cm would still enable all details to be clearly distinguished. The
whole text of the abstract shall contain not more than 300 words.
There shall be no commercial advertising in the abstract.

Article 25 Where an invention for which a
patent is applied concerns a new biological material which is not
available to the public and which cannot be described in the
application in such a manner as to enable the invention to be
carried out by a person skilled in the art, the applicant shall, in
addition to the other requirements provided for in the Patent Law
and these Rules, go through the following formalities:

(1) depositing a sample of the biological material with a
depositary institution designated by the patent administration
department under the State Council before, or at the latest, on the
date of filing (or the priority date where priority is claimed),
and submit at the time of filing or at the latest, within four
months from the filing date, a receipt of deposit and the viability
proof from the depository institution; where they are not submitted
within the specified time limit, the sample of the biological
material shall be deemed not to have been deposited;

(2) giving in the application document relevant information on
the characteristics of the biological material;

(3) indicating, where the application relates to the deposit of
the biological material, in the request and the description the
scientific name (with its Latin name) and the name and address of
the depositary institution, the date on which the sample of the
biological material was deposited and the accession number of the
deposit; where, at the time of filing, they are not indicated, they
shall be supplied within four months from the date of filing; where
after the expiration of the time limit they are not supplied, the
sample of the biological material shall be deemed not to have been
deposited.

Article 26 Where the applicant for a patent for
invention has deposited a sample of the biological material in
accordance with the provisions of Article 25 of these Rules, and
after the application for patent for invention is published, any
entity or individual that intends to make use of the biological
material, to which the application relates, for the purpose of
experiment shall make a request to the patent administration
department under the State Council, containing the following
items:

(1) the name or title and address of the claimant;

(2) an undertaking not to make the biological material available
to any other person;

(3) an undertaking to use the biological material for
experimental purpose only before the grant of the patent right.

Article 27 The size of drawings or photographs
of a design submitted in accordance with the provisions of Article
27 of the Patent Law shall not be smaller than 3cm x 8cm, nor
larger than l5cm x 22cm.

Where an application for a patent for design seeking concurrent
protection of colors is filed, a drawing or photograph in color
shall be submitted in two copies.

The applicant shall, in respect of the subject matter of the
product incorporating the design which is in need of protection,
submit the relevant views and stereoscopic drawings or photographs,
so as to clearly show the subject matter for which protection is
sought.

Article 28 Where an application for a patent
for design is filed, a brief explanation of the design shall, when
necessary, be made.

The brief explanation of the design shall include the essential
portion of the design, the colors for which protection is sought
and the omission of the view of the product incorporating the
design. The brief explanation shall not contain any commercial
advertising and shall not be used to indicate the function of the
product.

Article 29 Where the patent administration
department under the State Council deems it necessary, it may
require the applicant for a patent for design to submit a sample or
model of the product incorporating the design. The volume of the
sample or model submitted shall not exceed 30cm x 30cm x 30cm, and
its weight shall not surpass l5 kilograms. Articles that are easy
to get rotten or broken or articles that are dangerous shall not be
submitted as sample or model.

Article 30 The existing technology referred to
in Article 22, paragraph three of the Patent Law means any
technology which has been publicly disclosed in domestic or foreign
publications, or has been publicly and domestically used or made
known to the public by any other means, before the date of filing
(or the priority date where priority is claimed), that is, prior
art.

Article 3l The academic or technological
meeting referred to in Article 24, subparagraph (2) of the Patent
Law means any academic or technological meeting organized by a
relevant competent department of the State Council or by a national
academic or technological association.

Where any invention-creation for which a patent is applied for
falls under the provisions of Article 24, subparagraph (l) or (2)
of the Patent Law, the applicant shall, when filing the
application, make a declaration and, within a time limit of two
months from the date of filing, submit certifying documents issued
by the entity which organized the international exhibition or
academic or technological meeting, stating the fact that the
invention-creation was exhibited or published on the date of its
exhibition or publication.

Where any invention-creation for which a patent is applied for
falls under the provisions of Article 24, subparagraph (3) of the
Patent Law, the patent administration department under the State
Council may, when it deems necessary, require the applicant to
submit the relevant certifying documents within the specified time
limit.

Where the applicant fails to make a declaration and submit
certifying documents as required in paragraph two of this Article,
or fails to submit certifying documents within the specified time
limit as required in paragraph three of this Article, the
provisions of Article 24 of the Patent Law shall not apply to the
application.

Article 32 Where any applicant claims priority
in accordance with the provisions of Article 30 of the Patent Law,
he or it shall, in his or its written declaration, indicate the
date and the number of the application which is first filed
(hereinafter referred to as the earlier application) and the
country in which the application is filed. If the written
declaration does not contain the filing date of the earlier
application and the name of the country in which the application is
filed, the declaration shall be deemed not to have been made.

Where the foreign priority is claimed, the copy of the earlier
application documents submitted by the applicant shall be certified
by the competent authority of the foreign country in which the
application is filed. Where in the certifying material submitted,
the name or title of the later applicant is not the same as that of
the earlier one, the applicant shall submit document certifying the
assignment of priority. Where the domestic priority is claimed, the
copy of the earlier application document shall be prepared by the
patent administration department under the State Council.

Article 33 An applicant may claim one or
more priorities for an application for one patent; where multiple
priorities are claimed, the priority period for the application
shall be calculated from the earliest priority date.

Where an applicant claims the right of domestic priority, if the
earlier application is one for a patent for invention, he or it may
file an application for a patent for invention or utility model for
the same subject matter; if the earlier application is one for a
patent for utility model, he or it may file an application for a
patent for utility model or invention for the same subject matter.
However, when the later application is filed, if the subject matter
of the earlier application falls under any of the following
circumstances, it may not be taken as the basis for claiming
domestic priority:

(1) where it has claimed foreign or domestic priority;

(2) where it has been granted a patent right;

(3) where it is a divisional application filed as
prescribed.

Where the domestic priority is claimed, the earlier application
shall be deemed to be withdrawn from the date on which the later
application is filed.

Article 34 Where an application for a patent is
filed or the right of foreign priority is claimed by an applicant
having no habitual residence or business office in China, the
patent administration department under the State Council may, when
it deems necessary, require the applicant to submit the following
documents:

(1) a certificate of nationality :

(2) a document certifying the seat of the business office or the
headquarters, if the applicant is an enterprise or other
organization;

(3) a document certifying that the country, to which the
foreigner, foreign enterprise or other foreign organization
belongs, recognizes that Chinese entities and individuals are,
under the same conditions as those applied to its nationals,
entitled to the patent right, the priority and other related rights
in that country.

Article 35 Two or more inventions or utility
models belonging to a single general inventive concept which may be
filed as one application in accordance with the provisions in
Article 3l, paragraph one of the Patent Law shall be technically
inter-related and contain one or more of the same or corresponding
special technical features. The expression “special technical
features” shall mean those technical features that define a
contribution which each of those inventions or utility models,
considered as a whole, makes over the prior art.

Article 36 The expression “the same class”
referred to in Article 3l, paragraph two of the Patent Law means
that the products incorporating the designs belong to the same
subclass in the classification of products for designs. The
expression “be sold or used in sets” means that the products
incorporating the designs have the same designing concept and are
customarily sold and used at the same time.

Where two or more designs are filed as one application in
accordance with the provisions in Article 3l, paragraph two of the
Patent Law, they shall be numbered consecutively and the numbers
shall precede the titles of the view of the product incorporating
the design.

Article 37 When withdrawing an application for
a patent, the applicant shall submit to the patent administration
department under the State Council a declaration stating the title
of the invention-creation, the filing number and the date of
filing.

Where a declaration to withdraw an application for a patent is
submitted after the patent administration department under the
State Council has completed the preparations for the publication of
the application document, the application document shall be
published as scheduled. However, the declaration withdrawing the
application for patent shall be publicized in the Patent Gazette
published later.

Chapter III Examination and Approval of Application for
Patent

Article 38 Where any of the following events
occurs, a person who makes examination or hears a case in the
procedures of preliminary examination, examination as to substance,
reexamination or invalidation shall, on his own initiative or upon
the request of the parties concerned or any other interested
person, be excluded from exercising his functions:

(1) where he is a near relative of the party concerned or of the
latter’s agent;

(2) where he has an interest in the application for patent or
the patent right;

(3) where he has any other kind of relations with the party
concerned or with the latter’s agent that may influence impartial
examination and hearing.

(4) where he is a member of the Patent Reexamination Board who
has ever taken part in the examination of the same initial
application.

Article 39 Upon the receipt of an application
for a patent for invention or utility model consisting of a
request, a description (drawings must be included in an application
for utility model) and one or more claims, or an application for a
patent for design consisting of a request and one or more drawings
or photographs showing the design, the patent administration
department under the State Council shall accord the date of filing,
issue a filing number, and notify the applicant.

Article 40 In any of
the following circumstances, the patent administration department
under the State Council shall refuse to accept the application
document and notify the applicant accordingly:

(1) where the application for a patent for invention or utility
model does not contain a request, a description (the description of
utility model does not contain drawings) or claims, or the
application for a patent for design does not contain a request,
drawings or photographs;

(2) where the application document is not written in
Chinese;

(3) where the application document is not in conformity with the
provisions of Article 120, paragraph one of these Rules;

(4) where the request does not contain the name or title and
address of the applicant;

(5) where the application document is obviously not in
conformity with the provisions of Article 18, or of Article l9,
paragraph one of the Patent Law;

(6) where the category of the application for a patent (patent
for invention, utility model or design)is not clear and definite or
cannot be ascertained.

Article 41 Where the description states that it
contains explanatory notes to the drawings but the drawings or part
of them are missing, the applicant shall, within the time limit
specified by the patent administration department under the State
Council, either furnish the drawings or make a declaration for the
deletion of the explanatory notes to the drawings. If the drawings
are submitted later, the date of their delivery at, or mailing to,
the patent administration department under the State Council shall
be the date of filing of the application; if the explanatory notes
to the drawings are to be deleted, the initial date of filing shall
be retained.

Article 42 Where an application for a patent
contains two or more inventions, utility models or designs, the
applicant may, before the expiration of the time limit provided for
in Article 54, paragraph one of these Rules, submit to the patent
administration department under the State Council a divisional
application. However, where an application for patent has been
rejected or withdrawn or is deemed to have been withdrawn, no
divisional application may be filed.

If the patent administration department under the State Council
finds that an application for a patent is not in conformity with
the provisions of Article 3l of the Patent Law or of Article 35 or
36 of these Rules, it shall invite the applicant to amend the
application within a specified time limit; if the applicant fails
to make any response after the expiration of the specified time
limit, the application shall be deemed to have been withdrawn.

The divisional application may not change the category of the
initial application.

Article 43 For a divisional application which
is filed in accordance with the provisions of Article 42 of these
Rules, the initial date of filing may be retained; if the priority
is claimed, the priority date of the initial application may be
retained, provided that the divisional application does not go
beyond the scope of disclosure contained in the initial
application.

The divisional application shall go through all the formalities
in accordance with the provisions of the Patent Law and these
Rules.

The filing number and the date of filing of the initial
application shall be indicated in the request of the divisional
application. When a divisional application is filed, it shall be
accompanied by a copy of the initial application document; if
priority is claimed for the initial application, a copy of the
priority document of the initial application shall also be
submitted.

Article 44 “Preliminary examination” referred
to in Articles 34 and 40 of the Patent Law means the examination of
an application for a patent to see whether or not it contains the
documents provided for in Article 26 or 27 of the Patent Law and
other necessary documents, and whether or not those documents are
in the prescribed form; such examination shall also include the
following:

(1) whether or not any application for a patent for invention
obviously falls under Article 5 or 25 of the Patent Law, or is not
in conformity with the provisions of Article l8 or of Article l9,
paragraph one, or is obviously not in conformity with the
provisions of Article 3l, paragraph one, or Article 33 of the
Patent Law or of Article 2, paragraph one, or Article 18, or
Article 20 of these Rules;

(2) whether or not any application for a patent for utility
model obviously falls under Article 5 or 25 of the Patent Law, or
is not in conformity with the provisions of Article l8 or of
Article l9, paragraph one of the Patent Law, or is obviously not in
conformity with the provisions of Article 26, paragraph three or
four, or of Article 3l, paragraph one, or Article 33 of the Patent
Law or of Article 2, paragraph two, or of Article l3, paragraph
one, or of Articles l8 to 23, or of Article 43, paragraph one of
these Rules, or is not entitled to a patent right in accordance
with the provisions of Article 9 of the Patent Law;

(3) whether or not any application for a patent for design
obviously falls under Article 5 of the Patent Law, or is not in
conformity with the provisions of Article l8 or of Article l9,
paragraph one of the Patent Law, or is obviously not in conformity
with the provisions of Article 3l, paragraph two, or of Article 33
of the Patent Law, or of Article 2, paragraph three, or of Article
l3, paragraph one, or of Article 43, paragraph one of these Rules,
or is not entitled to a patent right in accordance with the
provisions of Article 9 of the Patent Law.

The patent administration department under the State Council
shall notify the applicant of its opinions after examining his or
its application and invite him or it to state his or its
observations or to correct his or its application within the
specified time limit. If the applicant fails to make any response
within the specified time limit, the application shall be deemed to
have been withdrawn. Where, after the applicant has made his or its
observations or the corrections, the patent administration
department under the State Council still finds that the application
is not in conformity with the provisions in the preceding
paragraph, the application shall be rejected.

Article 45 Apart from the application for
patent, any document relating to the patent application, which the
applicant has submitted to the patent administration department
under the State Council, shall be deemed not to have been submitted
in any of the following circumstances:

(1) where the document is not presented in the prescribed form
or the indications therein are not in conformity with the
provisions;

(2) where no certifying document is submitted as prescribed.

The patent administration department under the State Council
shall notify the applicant of its examination opinion that the
document is deemed not to have been submitted.

Article 46 Where the applicant requests an
earlier publication of its or his application for a patent for
invention, a statement shall be made to the patent administration
department under the State Council. The patent administration
department under the State Council shall, after preliminary
examination of the application, publicize it immediately, unless it
is to be rejected.

Article 47 The applicant shall, when indicating
in accordance with the provisions of Article 27 of the Patent Law
the product incorporating the design and the class to which that
product belongs, refer to the classification of products for
designs publicized by the patent administration department under
the State Council. Where no indication, or an incorrect indication,
of the class to which the product incorporating the design belongs
is made, the patent administration department under the State
Council shall supply the indication or correct it.

Article 48 Any person may, from the date of
publication of an application for a patent for invention till the
date of announcing the grant of the patent right, submit to the
patent administration department under the State Council his
observations, with the reasons therefor, on the application which
is not in conformity with the provisions of the Patent Law.

Article 49 Where the applicant for a patent for
invention cannot furnish, for justified reasons, the documents
concerning any search or result of any examination specified in
Article 36 of the Patent Law, it or he shall make a statement to
the patent administration department under the State Council and
submit them when the said documents are available.

Article 50 The patent administration department
under the State Council shall, when proceeding on its own
initiative to examine an application for a patent in accordance
with the provisions of Article 35, paragraph two of the Patent Law,
notify the applicant accordingly.

Article 5l When requesting for examination as
to substance or within three months after the receipt of the
notification of the patent administration department under the
State Council that the application has entered into examination as
to substance, the applicant for a patent for invention may amend
the application for a patent for invention on its or his own
initiative.

Within two months from the date of filing, the applicant for a
patent for utility model or design may amend the application for a
patent for utility model or design on its or his own
initiative.

Where the applicant amends the application after receiving the
notification of opinions of the examination as to substance of the
patent administration department under the State Council, he or it
shall make the amendment as required by the notification.

The patent administration department under the State Council
may, on its own initiative, correct the obvious clerical mistakes
and symbol mistakes in the documents of application for a patent.
Where the patent administration department under the State Council
corrects mistakes on its own initiative, it shall notify the
applicant.

Article 52 When an amendment to the description
or the claims in an application for a patent for invention or
utility model is made, a replacement sheet in prescribed form shall
be submitted, unless the amendment concerns only the alteration,
insertion or deletion of a few words. Where an amendment to the
drawings or photographs of an application for a patent for design
is made, a replacement sheet shall be submitted as prescribed.

Article 53 In
accordance with the provisions of Article 38 of the Patent Law, the
circumstances in which an application for patent for invention
shall be rejected by the patent administration department under the
State Council after examination as to substance are as
follows:

(1) where the application does not comply with the provisions of
Article 2, paragraph one of these Rules;

(2) where the application falls under the provisions of Article
5 or 25 of the Patent Law, or it does not comply with the
provisions of Article 22 of the Patent Law or of Article l3,
paragraph one, or of Article 20, paragraph one, or of Article 21,
paragraph two of these Rules, or the applicant is not entitled to a
patent right in accordance with the provisions of Article 9 of the
Patent Law;

(3) where the application does not comply with the provisions of
Article 26, paragraph three or four, or of Article 3l, paragraph
one of the Patent Law;

(4) where the amendment to the application does not comply with
the provisions of Article 33 of the Patent Law, or the divisional
application does not comply with the provisions of Article 43,
paragraph one of these Rules.

Article 54 After the patent administration
department under the State Council issues the notification to grant
the patent right, the applicant shall go through the formalities of
registration within two months from the date of receipt of the
notification. If the applicant completes the formalities of
registration within the said time limit, the patent administration
department under the State Council shall grant the patent right,
issue the patent certificate and make an announcement.

If the applicant does not go through the formalities of
registration within the time limit, he or it shall be deemed to
have abandoned its or his right to obtain the patent right.

Article 55 After the announcement of the
decision to grant a patent for utility model, the patentee of the
said patent for utility model may request the patent administration
department under the State Council to make a search report on the
utility model patent.

Where such person requests for a search report on a utility
model patent, he shall submit a request, indicating the patent
number of the said patent for utility model. Each request shall be
limited for one patent for utility model.

After receiving a request for a search report on a utility model
patent, the patent administration department under the State
Council shall proceed to make an examination of the request. Where
the request does not comply with the requirements as prescribed,
the said department shall notify the person making the request to
amend the request within a specified time limit.

Article 56 Where, after examination, the
request for a search report on a utility model patent complies with
the provisions, the patent administration department under the
State Council shall promptly make a search report on the utility
model patent.

Where, after search, the patent administration department under
the State Council finds that the patent for utility model concerned
does not comply with the provisions of Article 22 of the Patent Law
concerning novelty or inventiveness, it shall cite the documents
considered to be relevant, state the reasons therefor and have the
copies of the cited relevant documents attached.

Article 57 The patent administration department
under the State Council shall promptly correct the mistakes in
patent announcements and documents once they are discovered, and
the corrections shall be announced.

Chapter IV Reexamination of Patent Application and
Invalidation of Patent Right

Article 58 The Patent Reexamination Board shall
consist of technical and legal experts appointed by the patent
administration department under the State Council. The responsible
person of the patent administration department under the State
Council shall be the Director General of the Board.

Article 59 Where the applicant requests the
Patent Reexamination Board to make a reexamination in accordance
with the provisions of Article 41 of the Patent Law, it or he shall
file a request for reexamination, state the reasons and, when
necessary, attach the relevant supporting documents.

Where the request for reexamination does not comply with the
prescribed form, the person making the request shall rectify it
within the time limit specified by the Patent Reexamination Board.
If the person making the request fails to meet the time limit for
making rectification, the request for reexamination shall be deemed
not to have been filed.

Article 60 The person making the request may
amend its or his application at the time when it or he requests
reexamination or makes responses to the reexamination notification
of the Patent Reexamination Board. However, the amendments shall be
limited only to remove the defects pointed out in the decision of
rejection of the application, or in the reexamination
notification.

The amendments to the application for patent shall be in two
copies.

Article 61 The Patent Reexamination Board shall
send the request for reexamination that the Board has received to
the original examination department of the patent administration
department under the State Council for examination. Where the
original examination department agrees to revoke its original
decision upon the request of the person requesting reexamination,
the Patent Reexamination Board shall make a decision accordingly
and notify the person making the request.

Article 62 Where, after reexamination, the
Patent Reexamination Board finds that the request does not comply
with the provisions of the Patent Law and these Rules, it shall
notify the person requesting reexamination to submit his
observations within a specified time limit. If the time limit for
making response is not met, the request for reexamination shall be
deemed to have been withdrawn. Where, after the person requesting
reexamination has made its observations and amendments, the Patent
Reexamination Board still finds that the request does not comply
with the provisions of the Patent Law and these Rules, it shall
make a decision of reexamination to maintain the earlier decision
rejecting the application for patent.

Where, after reexamination, the Patent Reexamination Board finds
that the decision rejecting the application for patent does not
comply with the provisions of the Patent Law and these Rules, or
that the amended application has removed the defects as pointed out
by the decision rejecting the application, it shall make a decision
to revoke the decision rejecting the application for patent, and
ask the original examination department to continue the examination
procedure.

Article 63 At any time before the Patent
Reexamination Board makes its decision on the request for
reexamination, the person making the request may withdraw his
request for reexamination.

Where the person making the request withdraws his request for
reexamination before the Patent Reexamination Board makes its
decision, the procedure of reexamination is terminated.

Article 64 Anyone requesting invalidation or
part invalidation of a patent right in accordance with the
provisions of Article 45 of the Patent Law shall submit a request
and necessary evidence in two copies. The request for invalidation
shall state in detail the grounds for filing the request for
invalidation, making reference to all the evidence as submitted,
and indicate the piece of evidence on which each ground is
based.

The grounds on which the request for invalidation is based,
referred to in the preceding paragraph, mean that the
invention-creation for which the patent right is granted does not
comply with the provisions of Article 22 or 23, or of Article 26,
paragraph three or four, or of Article 33 of the Patent Law, or of
Article 2, or of Article l3, paragraph one, or of Article 20,
paragraph one, or of Article 21, paragraph two of these Rules; or
it falls under the provisions of Article 5 or 25 of the Patent Law;
or the person is not entitled to be granted the patent right in
accordance with the provisions of Article 9 of the Patent Law.

Article 65 Where the request for invalidation
does not comply with the provisions of Article 64 of these Rules,
the Patent Reexamination Board shall not accept it.

Where, after a decision on any request for invalidation of the
patent right is made, invalidation based on the same facts and
evidence is requested once again, the Patent Reexamination Board
shall not accept it.

Where a request for invalidation of a patent for design is based
on the ground that the patent for design is in conflict with a
prior right of another person, if, however, no decision of
settlement or no judgment of any court which has entered into force
to prove such conflict of rights has been submitted, the Patent
Reexamination Board shall not accept it.

Where the request for invalidation of the patent right does not
comply with the prescribed form, the person making the request
shall rectify it within the time limit specified by the Patent
Reexamination Board. If the rectification fails to be made within
the time limit, the request for invalidation shall be deemed not to
have been filed.

Article 66 After the Patent Reexamination Board
has accepted a request for invalidation, the person making the
request may add reasons or supplement proofs within one month from
the date when the request for invalidation is filed. The Patent
Reexamination Board may not take into account any additional
reasons or supplementary proofs that are submitted after the
specified time limit.

Article 67 The Patent Reexamination Board shall
send a copy of the request for invalidation of the patent right and
copies of the relevant documents to the patentee and refuse it or
him to present its or his observations within a specified time
limit.

The patentee and the person making the request for invalidation
shall, within the specified time limit, make responses to the
notification concerning transmitted documents or the notification
concerning the examination of the request for invalidation sent by
the Patent Reexamination Board. Where no response is made within
the specified time limit, the examination of the Patent
Reexamination Board will not be affected.

Article 68 In the
course of the examination of the request for invalidation, the
patentee for patent for invention or utility model may amend its or
his claims, but may not broaden the scope of patent
protection.

The patentee for patent for invention or utility model may not
amend its or his description or drawings. The patentee for patent
for design may not amend its or his drawings, photographs or the
brief explanation of the design.

Article 69 The Patent Reexamination Board may,
at the request of the parties concerned or in accordance with the
need of the case, decide to conduct oral proceedings in respect of
a request for invalidation.

Where the Patent Reexamination Board decides to conduct oral
proceedings in respect of a request for invalidation, it shall send
notification of oral proceedings to the parties concerned,
indicating the date and place of the oral proceedings to be held.
The parties concerned shall make response to the notification
within the specified time limit.

Where the person requesting invalidation fails to make response
to the notification of oral proceedings sent by the Patent
Reexamination Board within the specified time limit, and fails to
take part in the oral proceedings, the request for invalidation
shall be deemed to have been withdrawn. Where the patentee fails to
take part in the oral proceedings, the Patent Reexamination Board
may proceed to examine by default.

Article 70 In the
course of the examination in respect of a request for invalidation,
the time limit specified by the Patent Reexamination Board shall
not be extended.

Article 71 The person requesting invalidation
may withdraw his request before the Patent Reexamination Board
makes a decision on it.

Where the person requesting invalidation withdraws his request
before the Patent Reexamination Board makes a decision on it, the
examination of the request for invalidation is terminated.

Chapter V Compulsory License for Exploitation of
Patent

Article 72 After the expiration of three years
from the date of the grant of the patent right, any entity may, in
accordance with the provisions of Article 48 of the Patent Law,
request the patent administration department under the State
Council to grant a compulsory license.

Any entity requesting a compulsory license shall submit to the
patent administration department under the State Council a request
for compulsory license, state the reasons therefor, and attach
relevant certifying documents each in two copies.

The patent administration department under the State Council
shall send a copy of the request for compulsory license to the
patentee, who shall make his or its observations within the time
limit specified by the patent administration department under the
State Council. Where no response is made within the time limit, the
patent administration department under the State Council will not
be affected in making a decision concerning a compulsory
license.

The decision of the patent administration department under the
State Council granting a compulsory license for exploitation shall
limit the exploitation of the compulsory license to be
predominately for the supply of the domestic market. Where the
invention-creation involved in the compulsory license relates to
the semi-conductor technology, the exploitation of the compulsory
license shall be limited only for public non-commercial use or to
remedy a practice determined after judicial or administrative
process to be anti-competitive.

Article 73 Where any entity or individual
requests, in accordance with the provisions of Article 54 of the
Patent Law, the patent administration department under the State
Council to adjudicate the fees for exploitation, it or he shall
submit a request for adjudication and furnish documents showing
that the parties concerned have not been able to conclude an
agreement in respect of the amount of the exploitation fee. The
patent administration department under the State Council shall make
an adjudication within three months from the date of receipt of the
request and notify the parties concerned accordingly.

Chapter VI Reward and Remuneration of Inventors or
Creators of Service Inventions-Creations

Article 74 The State-owned enterprise or
institution to which a patent right is granted shall, within three
months from the date of the announcement of the grant of the patent
right, offer a reward to the inventor or creator of a service
invention-creation. The reward for a patent for invention shall not
be less than 2000 yuan; the reward for a patent for utility model
or design shall not be less than 500 yuan.

Where an invention-creation is made on the basis of an
inventor’s or creator’s proposal adopted by the entity to which he
belongs, the State-owned enterprise or institution to which a
patent right is granted shall offer a reward to him on favorable
terms.

For the reward to the inventor or creator, the enterprise may
have it included into its production cost, and the institution may
have it disbursed out of its operating expenses.

Article 75 The State-owned enterprise or
institution to which a patent right is granted shall, after
exploiting the patent for invention-creation within the duration of
the patent right, draw each year from the profits after taxation
earned from exploitation of the invention or utility model a
percentage of not less than 2%, or from the profits after taxation
earned from exploitation of the design a percentage of not less
than 0.2%, and award it to the inventor or creator as remuneration.
The entity may, as an alternative, by making reference to the said
percentage, award a lump sum of money to the inventor or creator as
remuneration once and for all.

Article 76 Where any State-owned enterprise or
institution to which a patent right is granted authorizes any other
entity or individual to exploit its patent, it shall draw from the
fees it receives for exploitation of the said patent after taxation
a percentage of not less than 10% and award it to the inventor or
creator as remuneration.

Article 77 The provisions of this Chapter may
be implemented by any other Chinese entity by making reference
thereto.

Chapter VII Protection of Patent Right

Article 78 The administrative authority for
patent affairs referred to in the Patent Law and these Rules means
the department responsible for the administrative work concerning
patent affairs set up by the people’s government of any province,
autonomous region, or municipality directly under the Central
Government or by the people’s government of any city divided into
districts which has a large amount of patent administration work to
attend to and has the ability to deal with the matter.

Article 79 In addition
to the provisions of Article 57 of the Patent Law, the
administrative authority for patent affairs may also mediate in the
following patent disputes at the request of the parties
concerned:

(1) any dispute over the ownership of the right to apply for
patent and the patent right;

(2) any dispute over the qualification of the inventor or
creator;

(3) any dispute over the reward and remuneration of the inventor
or creator of a service invention-creation;

(4) any dispute over the appropriate fee to be paid for the
exploitation of an invention after the publication of the
application for patent but before the grant of patent right.

In respect of the dispute referred to in subparagraph (4), where
the patentee requests the administrative authority for patent
affairs to mediate, the request shall be made after the grant of
the patent right.

Article 80 The patent administration department
under the State Council shall provide professional guidance to the
administrative authorities for patent affairs in handling and
mediating patent disputes.

Article 81 Where any party concerned requests
for handling or mediation of a patent dispute, it shall fall under
the jurisdiction of the administrative authority for patent affairs
of the place where the requested party has his location or where
the act of infringement takes place.

Where two or more administrative authorities for patent affairs
all have jurisdiction over a patent dispute, the party concerned
may file his or its request with one of them. Where requests are
filed with two or more administrative authorities for patent
affairs, the administrative authority for patent affairs that first
accepts the request shall have jurisdiction.

Where administrative authorities for patent affairs have a
dispute over their jurisdiction, the administrative authority for
patent affairs of their common higher level people’s government
shall designate the administrative authority for patent affairs to
exercise the jurisdiction; if there is no such administrative
authority for patent affairs of their common higher level people’s
government, the patent administration department under the State
Council shall designate the administrative authority for patent
affairs to exercise the jurisdiction.

Article 82 Where, in the course of handling a
patent infringement dispute, the defendant requests invalidation of
the patent right and his request is accepted by the Patent
Reexamination Board, he may request the administrative authority
for patent affairs to suspend from handling the matter.

If the administrative authority for patent affairs considers
that the reasons set forth by the defendant for the suspension are
obviously untenable, it may not suspend from handling the
matter.

Article 83 Where any patentee affixes a patent
marking on the patented product or on the package of that product
in accordance with the provisions of Article 15 of the Patent Law,
he or it shall make the affixation in the manner as prescribed by
the patent administration department under the State Council.

Article 84 Any of the following acts is an act
of passing off the patent of another person as one’s own:

(1) without authorization, indicating the patent number of
another person on the product made or sold by oneself or on the
package of the said product;

(2) without authorization, using the patent number of another
person in the advertisement or in any other promotional materials,
so as to mislead other persons to regard the technology concerned
as the patented technology of another person;

(3) without authorization, using the patent number of another
person in the contract, so as to mislead other persons to regard
the technology referred to in the contract as the patented
technology of another person;

(4) counterfeiting or transforming any patent certificate,
patent document or patent application document of another
person.

Article 85 Any of the following acts is an act
of passing a non-patented product off as patented product or
passing a non-patented process off as patented process:

(1) making or selling non-patented products which are affixed
with patent marking;

(2) continuing to affix patent marking on the products that are
made or sold after the patent right concerned has been declared
invalid;

(3) addressing any non-patented technology as patented
technology in the advertisements or in any other promotional
materials;

(4) stating any non-patented technology as patented technology
in any contract;

(5) counterfeiting or transforming any patent certificate,
patent document or patent application document.

Article 86 Any party concerned to a dispute
over the ownership of the right to apply for a patent or the patent
right which is pending before the administrative authority for
patent affairs or the people’s court, may request the patent
administration department under the State Council to suspend the
relevant procedures.

The party requesting the suspension of the relevant procedures
in accordance with the preceding paragraph, shall submit a written
request to the patent administration department under the State
Council, and attach a copy of the document acknowledging the
receipt of the relevant request by the administrative authority for
patent affairs or the people’s court.

After the decision made by the administrative authority for
patent affairs or the judgment rendered by the people’s court has
entered into force, the parties concerned shall request the patent
administration department under the State Council to resume the
suspended procedure. If, within one year from the date when the
request for suspension is filed, no decision is made on the dispute
relating to the ownership of the right to apply for a patent or the
patent right, and it is necessary to continue the suspension, the
party making the request shall, within the said time limit, request
to extend the suspension. If, at the expiration of the said time
limit, no such request for extension is filed, the patent
administration department under the State Council shall resume the
procedure on its own initiative.

Article 87 Where, in hearing civil cases, the
people’s court has ordered the adoption of measures for a patent
right preservation, the patent administration department under the
State Council, for the purpose of assisting the execution of the
order, shall suspend the relevant procedure concerning the
preserved patent right. At the expiration of the time limit for
preservation, if there is no order of the people’s court to
continue the preservation, the patent administration department
under the State Council shall resume the relevant procedure on its
own initiative.

Chapter VIII Patent Registration and Patent
Gazette

Article 88 The patent administration department
under the State Council shall keep a Patent Register in which the
registration of the following matters relating to patent
application or patent right shall be made:

(1) any grant of the patent right;

(2) any transfer of the patent application right or the patent
right;

(3) any pledge and preservation of the patent right and their
discharge;

(4) any patent license contract for exploitation submitted for
the record;

(5) any invalidation of the patent right;

(6) any cessation of the patent right;

(7) any restoration of the patent right;

(8) any compulsory license for exploitation of the patent;

(9) any change in the name, nationality and address of the
patentee.

Article 89 The patent administration department
under the State Council shall publish the Patent Gazette at regular
intervals, publicizing or announcing the following:

(1) the bibliographic data contained in patent applications;

(2) the abstract of the description of an invention or utility
model, the drawings or photographs of a design and its brief
explanation;

(3) any request for examination as to substance of an
application for a patent for invention and any decision made by the
patent administration department under the State Council to proceed
on its own initiative to examine as to substance an application for
a patent for invention;

(4) any declassification of secret patents;

(5) any rejection, withdrawal and deemed withdrawal of an
application for a patent for invention after its publication;

(6) any grant of the patent right;

(7) any invalidation of the patent right;

(8) any cessation of the patent right;

(9) any transfer of the patent application right or the patent
right;

(10) any patent license contract for exploitation submitted for
the record;

(11) any pledge and preservation of the patent right and their
discharge;

(12) any grant of compulsory license for exploitation of the
patent;

(13) any restoration of a patent application or patent
right;

(14) any change in the name or address of the patentee;

(15) any notification to a party whose address is not known;

(16) any correction made by the patent administration department
under the State Council; and

(17) any other related matters.

The description and its drawings, and the claims of an
application for a patent for invention or utility model shall be
separately published in full text by the patent administration
department under the State Council.

Chapter IX Fees

Article 90 When any person files an application
for a patent with, or goes through other formalities at, the patent
administration department under the State Council, he or it shall
pay the following fees:

(1) filing fee, additional fee for patent application, and
printing fee for publicizing the application;

(2) substantive examination fee for an application for patent
for invention, and reexamination fee;

(3) registration fee for the grant of patent right, printing fee
for the announcement of grant of patent right, maintenance fee for
application, and annual fee;

(4) fee for a change in the bibliographic data, fee for claiming
priority, fee for requesting restoration of rights, fee for
requesting extension of a time limit, and fee for establishing a
search report on a utility model patent;

(5) fee for requesting invalidation, fee for requesting
suspension of the patent procedure, fee for requesting a compulsory
license, fee for requesting adjudication on exploitation fee of a
compulsory license.

The amount of the fees referred to in the preceding paragraph
shall be prescribed by the price administration department under
the State Council in conjunction with the patent administration
department under the State Council.

Article 91 The fees provided for in the Patent
Law and in these Rules may be paid directly to the patent
administration department under the State Council or paid by way of
bank or postal remittance, or by way of any other means as
prescribed by the patent administration department under the State
Council.

Where any fee is paid by way of bank or postal remittance, the
applicant or the patentee shall indicate on the money order at
least the correct filing number or the patent number and the name
of the fee paid. If the requirements as prescribed in this
paragraph are not complied with, the payment of the fee shall be
deemed not to have been made.

Where any fee is paid directly to the patent administration
department under the State Council, the date on which the fee is
paid shall be the date of payment; where any fee is paid by way of
postal remittance, the date of remittance indicated by the postmark
shall be the date of payment; where any fee is paid by way of bank
transfer, the date on which the transfer of the fee is done shall
be the date of payment. Where the time between such a date and the
date of receipt of the order by the patent administration
department under the State Council lasts more than fifteen days,
unless the date of remittance or transfer is proved by the bank or
the post office, the date of receipt by the patent administration
department under the State Council shall be the date of
payment.

Where any patent fee is paid in excess of the amount as
prescribed, paid repeatedly or wrongly, the party concerned may,
within one year from the date of payment, request a refund from the
patent administration department under the State Council.

Article 92 The applicant shall, after receipt
of the notification of acceptance of the application from the
patent administration department under the State Council, pay the
filing fee, the printing fee for publicizing the application and
the necessary additional fees at the latest within two months from
the filing date. If the fees are not paid or not paid in full
within the time limit, the application shall be deemed to be
withdrawn.

Where the applicant claims priority, he or it shall pay the fee
for claiming priority at the same time with the payment of the
filing fee. If the fee is not paid or not paid in full within the
time limit, the claim for the priority shall be deemed not to have
been made.

Article 93 Where the party concerned makes a
request for an examination as to substance, a restoration of right
or a reexamination, the relevant fee shall be paid within the time
limit as prescribed respectively for such requests by the Patent
Law. If the fee is not paid or not paid in full within the time
limit, the request is deemed not to have been made.

Article 94 Where the applicant for a patent for
invention has not been granted a patent right within two years from
the date of filing, it or he shall pay a fee for the maintenance of
the application from the third year.

Article 95 When the applicant goes through the
formalities of registration of the grant of patent right, it or he
shall pay a registration fee for the grant of patent right,
printing fee for the announcement of grant of patent right and the
annual fee of the year in which the patent right is granted. The
applicant for a patent for invention shall, in the lump, pay the
application maintenance fee for all the years, not including the
year in which the patent right is granted. If such fees are not
paid within the prescribed time limit, the registration of the
grant of patent right shall be deemed not to have been made. The
subsequent annual fees shall be paid in advance within the month
before the expiration of the preceding year.

Article 96 Where the annual fee of the patent
right after the year in which the patent is granted is not paid in
due time by the patentee, or the fee is not paid in full, the
patent administration department under the State Council shall
notify the patentee to pay the fee or to make up the insufficiency
within six months from the expiration of the time limit within
which the annual fee is due to be paid, and at the same time pay a
surcharge. The amount of the surcharge shall be, for each month of
late payment, 5% of the whole amount of the annual fee of the year
within which the annual fee is due to be paid. Where the fee and
the surcharge are not paid within the time limit, the patent right
shall lapse from the expiration of the time limit within which the
annual fee should be paid.

Article 97 The fee for a change in the
bibliographic data, fee for establishing a search report on a
utility model patent, fee for requesting suspension of the patent
procedure, fee for requesting a compulsory license, fee for
requesting adjudication on exploitation fee of a compulsory license
and fee for requesting invalidation shall be paid as prescribed
within one month from the date on which such request is filed. The
fee for requesting extension of a time limit shall be paid before
the expiration of the said time limit. If the fee is not paid or
not paid in full within the time limit, the request shall be deemed
not to have been made.

Article 98 Where any applicant or patentee has
difficulties in paying the various fees prescribed in these Rules,
he may, in accordance with the prescriptions, submit a request to
the patent administration department under the State Council, for a
reduction or postponement of the payment. Measures for the
reduction and postponement of the payment shall be prescribed by
the patent administration department under the State Council in
consultation with the finance administration department and the
price administration department under the State Council.

Chapter X Special Provisions Concerning International
Application

Article 99 The patent administration department
under the State Council receives international patent applications
filed under the Patent Cooperation Treaty in accordance with the
provisions of Article 20 of the Patent Law.

Where any international application filed under the Patent
Cooperation Treaty designating China enters the Chinese national
phase (hereinafter referred to as the international application),
the requirements and procedures prescribed in this Chapter shall
apply. Where no provisions are made in this Chapter, the relevant
provisions in the Patent Law and in any other chapters of these
Rules shall apply.

Article 100 Any international application which
has been accorded an international filing date and which has
designated China shall, in accordance with the Patent Cooperation
Treaty, be deemed as an application for patent filed with the
patent administration department under the State Council, and the
said filing date shall be deemed as the filing date referred to in
Article 28 of the Patent Law.

Where, in the international phase, an international application
or its designation of China is withdrawn or deemed to be withdrawn,
the effect of the said international application in China shall
cease.

Article 101 Any applicant for an international
application entering the Chinese national phase shall, within 30
months from the priority date as referred to in Article 2 of the
Patent Cooperation Treaty (referred to in this chapter as “the
priority date”), go through the following formalities with the
patent administration department under the State Council:

(1) submitting a written statement concerning the entry of his
or its international application into the Chinese national phase.
The statement shall indicate the international application number,
and also indicate in Chinese the kind of patent protection sought,
the title of the invention-creation, the name or title of the
applicant, the address of the applicant and the name of the
inventor. Such indications shall be the same as those recorded by
the International Bureau;

(2) paying the filing fee, the additional fee for patent
application and the printing fee for publicizing the application as
provided in Article 90, paragraph one of these Rules;

(3) where an international application is filed in a language
other than Chinese, the Chinese translation of the description, the
claims, the text matter of the drawings, and the abstract of the
initial international application shall be furnished; where an
international application is filed in Chinese, a copy of the
abstract published in the international publication shall be
furnished;

(4) where an international application contains drawings, a copy
of the drawings shall be furnished. Where an international
application is filed in Chinese, a copy of the figure of the
drawings in the abstract as published in the international
publication shall be furnished.

If the applicant fails to go through the relevant formalities
for entering the Chinese national phase within the time limit
prescribed in the preceding paragraph, he or it may, after paying a
surcharge for the late entry, go through these formalities before
the expiration of the time limit of 32 months from the priority
date.

Article 102 Where the applicant fails to go
through the formalities for entering the Chinese national phase,
within the time limit prescribed in Article 101, paragraph two of
these Rules or any of the following circumstance occurs at the
expiration of the said time limit, the effect of his or its
international application shall cease in China:

(1) where the international application number is not indicated
in the statement concerning entry into the Chinese national
phase;

(2) where the filing fee, the printing fee for publicizing the
application prescribed in Article 90, paragraph one of these Rules,
or the surcharge for the late entry as prescribed in Article 101,
paragraph two of these Rules is not paid;

(3) where the international application is filed in a language
other than Chinese, the Chinese translation of the description and
the claims of the initial international application are not
furnished.

Where the effect of an international application has ceased in
China, the provisions of Article 7, paragraph two of these Rules
shall not apply.

Article 103 Where any of the following
circumstance occurs at the time when the applicant goes through the
formalities for entering the Chinese national phase, the patent
administration department under the State Council shall notify the
applicant to make corrections within the specified time limit:

(1) where the Chinese translation of the abstract or a copy of
the abstract is not furnished;

(2) where a copy of the drawings or a copy of a figure of the
drawings in the abstract is not furnished;

(3) where the title of the invention-creation, the name or title
of the applicant, the address of the applicant and the name of the
inventor are not indicated in Chinese in the statement concerning
entry into the Chinese national phase;

(4) where the content or the form of the statement concerning
entry into the Chinese national phase is not in conformity with the
provisions.

If, at the expiration of the time limit, the applicant fails to
make up the corrections, his or its application shall be deemed to
be withdrawn.

Article 104 Where an international application
is amended in the international phase and the applicant requests
that the examination be based on the amended application, the
Chinese translation of the amendments shall be furnished by the
applicant before completion of the technical preparations for
national publication of the application by the patent
administration department under the State Council. Where the
Chinese translation is not furnished within the time limit, the
amendments made in the international phase shall not be taken into
consideration by the patent administration department under the
State Council.

Article 105 When the applicant goes through the
formalities for entering the Chinese national phase, he or it shall
also fulfill the following requirements:

(1) where the inventor is not indicated in the international
application, the name of the inventor shall be indicated in the
statement concerning entry into the Chinese national phase;

(2) where any change in the applicant is made before the
International Bureau in the international phase, the document
certifying the right of the new applicant to the international
application shall be furnished;

(3) where the applicant is not the same person as the applicant
having filed the earlier application which is the basis of the
priority claimed, or where the applicant has changed his or its
name after filing the earlier application, the document certifying
the right of the applicant to claim priority shall be furnished
when necessary;

(4) Where any invention-creation to which the international
application relates has one of the events referred to in Article
24, subparagraph (1) or (2) of the Patent Law and where statements
have been made in this respect when the international application
was filed, the applicant shall indicate it in the statement
concerning entry into the Chinese national phase, and furnish the
relevant certificates prescribed in Article 31, paragraph two of
these Rules within two months from the date of going through the
formalities for entering the Chinese national phase.

Where the applicant fails to satisfy the requirements provided
for in subparagraph (1), (2) or (3) of the preceding paragraph, the
patent administration department under the State Council shall
notify the applicant to make corrections within the specified time
limit. Where, within the time limit, no correction is made in
respect of the requirement provided for in subparagraph (1) or (2),
the application shall be deemed to be withdrawn; Where, within the
time limit, no correction is made in respect of the requirement
provided for in subparagraph (3), the claim for priority shall be
deemed not to have been made.

Where the applicant fails to fulfill the requirement provided
for in subparagraph (4) of paragraph one of this Article, the
provisions of Article 24 of the Patent Law shall not apply to his
or its international application.

Article 106 Where the applicant has made
indications concerning deposited biological materials in accordance
with the provisions of the Patent Cooperation Treaty, the
requirements provided for in Article 25, subparagraph (3) of these
Rules shall be deemed to have been fulfilled. In the statement
concerning entry into the Chinese national phase, the applicant
shall indicate the documents recording the particulars of the
deposit of the biological materials, and the exact location of the
record in the documents.

Where particulars concerning the deposit of biological materials
are contained in the description of the international application
as initially filed, but there is no such indication in the
statement concerning the entry into the Chinese national phase, the
applicant shall make correction within four months from the date of
going through the formalities for entering the Chinese national
phase. If the correction is not made at the expiration of the time
limit, the biological materials shall be deemed not to have been
deposited.

Where the applicant submits the certificates of the deposit and
the viability of the biological materials to the patent
administration department under the State Council within four
months from the date of going through the formalities for entering
the Chinese national phase, the deposit of biological materials
shall be deemed to have been made within the time limit as provided
for in Article 25, subparagraph (1) of these Rules.

Article 107 Where the applicant claims one or
multiple priorities in the international phase and such claims
remain valid at the time when the application enters the Chinese
national phase, the applicant shall be deemed to have submitted the
written declaration in accordance with the provisions of Article 30
of the Patent Law.

Where there are clerical mistakes or the application number of
the earlier application is missing in the written declaration
claiming the priority made in the international phase, the
applicant may request to make corrections or to fill in the missing
application number of the earlier application at the time of going
through the formalities for entering the Chinese national phase.
Where a request for making corrections is made, the applicant shall
pay the fee for correcting the claim for priority.

Where the applicant has submitted a copy of the earlier
application in the international phase in accordance with the
provisions of the Patent Cooperation Treaty, he or it shall be
exempted form submitting a copy of the earlier application to the
patent administration department under the State Council at the
time of going through the formalities for entering the Chinese
national phase. Where the applicant has not submitted a copy of the
earlier application in the international phase, and if the patent
administration department under the State Council deems it
necessary, it may notify the applicant to submit a copy of the
earlier application within the specified time limit. If no copy is
submitted at the expiration of the time limit, his or its claim for
the priority shall be deemed not to have been made.

Where the claim for the priority is deemed not to have been made
in the international phase and the information is already published
by the International Bureau, the applicant may, if he has justified
reasons, request the patent administration department under the
State Council to restore his or its claim for the priority at the
time of going through the formalities for entering the Chinese
national phase.

Article 108 Where, before the expiration of 30
months from the priority date, the applicant files a request with
the patent administration department under the State Council for
early processing and examination of his or its international
application, he or it shall, in addition to going through the
formalities for entering the Chinese national phase, submit a
request in accordance with the provisions in Article 23, paragraph
two of the Patent Cooperation Treaty. Where the international
application has not been transmitted by the International Bureau to
the patent administration department under the State Council, the
applicant shall submit a confirmed copy of the international
application.

Article 109 With regard to an international
application for a patent for utility model, the applicant may file
a request with the patent administration department under the State
Council to amend the description, the drawings and the claims
within one month from the date of going through the formalities for
entering the Chinese national phase.

With regard to an international application for a patent for
invention, the provisions of Article 51, paragraph one of these
Rules shall apply.

Article 110 Where the applicant finds that
there are mistakes in the Chinese translation of the description,
the claims or the words of the drawings submitted, he or it may
correct the translation in accordance with the initial
international application as filed within the following time
limits:

(1) before the completion of technical preparations of the
patent administration department under the State Council for
national publication;

(2) within three months from the date of receipt of the
notification sent by the patent administration department under the
State Council notifying that the application for a patent for
invention has entered into the substantive examination phase.

Where the applicant intends to correct the mistakes in the
translation, he shall file a written request, furnish a replace
sheet of the translation and pay the prescribed fee for correction
of the translation.

Where the applicant makes correction of the translation in
accordance with the notification of the patent administration
department under the State Council, he or it shall, within the
specified time limit, go through the formalities prescribed in
paragraph two of this Article. If the prescribed formalities are
not gone through at the expiration of the time limit, the
international application shall be deemed to be withdrawn.

Article 111 With regard to any international
application for a patent for invention, if the patent
administration department under the State Council, after
preliminary examination, considers it is in compliance with the
provisions of the Patent Law and these Rules, it shall publish it
in the Patent Gazette; where the international application is filed
in a language other than Chinese, the Chinese translation of the
international application shall be published.

Where the international publication of an international
application for a patent for invention by the International Bureau
is in Chinese, the provisions of Article 13 of the Patent Law shall
apply from the date of the international publication. If the
international publication by the International Bureau is in a
language other than Chinese, the provisions of Article 13 of the
Patent Law shall apply from the date of the publication of the
Chinese translation by the patent administration department under
the State Council.

With regard to an international application, the publication
referred to in Articles 21 and 22 of the Patent Law means the
publication referred to in paragraph one of this Article.

Article 112 Where two or more inventions or
utility models are contained in an international application, the
applicant may, after going through the formalities for entering the
Chinese national phase, submit a divisional application in
accordance with the provisions in Article 42, paragraph one of
these Rules.

Where, in the international phase, some parts of the
international application are not the subject of international
search or international preliminary examination because the
International Searching Authority or the International Preliminary
Examination Authority considers that the international application
does not comply with the requirement of unity of invention
prescribed in the Patent Cooperation Treaty, or because the
applicant fails to pay the additional fee, and at the time of going
through the formalities for entering the Chinese national phase,
the applicant requests that the said parts be the basis of
examination, the patent administration department under the State
Council, finding that the decision concerning unity of invention
made by the International Searching Authority or the International
Preliminary Examination Authority is justified, shall notify the
applicant to pay the restoration fee for unity of invention within
the specified time limit. Where the fee is not paid or not paid in
full at the expiration of the prescribed time limit, those parts of
the international application which have not been searched or have
not been the subject of international preliminary examination shall
be deemed to be withdrawn.

Article 113 Where the applicant furnishes the
documents and pays the fees in accordance with the provisions of
Article 101 of these Rules, the date on which the patent
administration department under the State Council receives the
documents shall be the date of submitting, and the date on which it
receives the fees shall be the date of payment.

Where there is delay in the mailing of the documents and the
applicant proves, within one month from the date on which he finds
the delay, that the documents have been mailed five days prior to
the expiration of the time limit prescribed in Article 101 of these
Rules, the documents shall be deemed to have been received on the
date on which the time limit expires. However, the time period for
the applicant to furnish evidence may not be later than six months
after the expiration of the time limit prescribed in Article 101 of
these Rules.

Where documents are to be submitted to the patent administration
department under the State Council in accordance with the
provisions of Article 101 of these Rules, the applicant may send
them by fax. Where the applicant submits the documents by fax, the
date on which the patent administration department under the State
Council receives the fax shall be the date of submitting. The
applicant shall submit to the patent administration department
under the State Council the original copy within 14 days from the
date of the transmission by fax. Where the original copy is not
submitted within the time limit, the documents shall be deemed not
to have been submitted.

Article 114 Where an international application
claims the priority, the applicant shall, at the time of going
through the formalities for entering the Chinese national phase,
pay the fee for claiming the priority; if the fee is not paid or
not paid in full, the patent administration department under the
State Council shall notify the applicant to pay it within the
specified time limit; if the fee is still not paid or not paid in
full at the expiration of the time limit, the claim for priority
shall be deemed not to have been made.

Article 115 Where an international application
in the international phase has been refused to be accorded an
international filing date or has been declared to be deemed
withdrawn by an international authority concerned, the applicant
may, within two months from the date on which he or it receives the
notification, request the International Bureau to send the copy of
any document in the file of the international application to the
patent administration department under the State Council, and shall
go through the formalities prescribed in Article 101 of these Rules
within the said time limit with the patent administration
department under the State Council. After receiving the documents
sent by the International Bureau, the patent administration
department under the State Council shall review the decision made
by the international authority concerned to find whether it is
correct.

Article 116 With regard to a patent right
granted on the basis of an international application, if the scope
of protection determined in accordance with the provisions of
Article 56 of the Patent Law exceeds the scope of the international
application in its original language because of incorrect
translation, the scope of protection granted on the international
application shall be limited according to the original language of
the application; if the scope of protection granted on the
international application is narrower than the scope of the
application in its original language, the scope of protection shall
be determined according to the patent in the language when it is
granted.

Chapter X Supplementary Provisions

Article 117 Any person may, after approval by
the patent administration department under the State Council,
consult or copy the files of the publicized or announced patent
applications and the Patent Register, and may request the patent
administration department under the State Council to issue a copy
of extracts from the Patent Register.

The files of the patent applications which have been withdrawn
or deemed to be withdrawn or which have been rejected, shall not be
preserved after expiration of two years from the date on which the
applications cease to be valid.

Where the patent right has been abandoned, wholly invalidated or
ceased, the files shall not be preserved after expiration of three
years from the date on which the patent right ceases to be
valid.

Article 118 Any patent application which is
filed with, or any formality which is gone through at, the patent
administration department under the State Council, shall be in the
prescribed form of the patent administration department under the
State Council, and signed or sealed by the applicant, the patentee,
any other interested person or his or its representative. Where any
patent agency is appointed, it shall be sealed by such agency.

Where a change in the name of the inventor, or in the name,
nationality and address of the applicant or the patentee, or in the
name or address of the patent agency or the name of patent agent is
requested, a request for a change in the bibliographic data shall
be made to the patent administration department under the State
Council, together with the relevant certifying documents.

Article 119 The document relating to a patent
application or patent right which is mailed to the patent
administration department under the State Council shall be mailed
by registered letter, not by parcel.

Except for any patent application filed for the first time, any
document which is submitted to and any formality which is gone
through with the patent administration department under the State
Council, the filing number or the patent number, the title of the
invention-creation and the name of the applicant or the patentee
shall be indicated.

Only documents relating to the same application shall be
included in one letter.

Article 120 Various kinds of application
documents shall be typed or printed. All the characters shall be in
black ink, neat and clear. They shall be free from any alterations.
The drawings shall be made in black ink with the aid of drafting
instruments. The lines shall be uniformly thick and well defined,
and free from alterations.

The request, description, claims, drawings and abstract shall be
numbered separately in Arabic numerals and arranged in numerical
order.

The written language of the application shall run from left to
right. Only one side of each sheet shall be used.

Article 121 The patent administration
department under the State Council shall formulate Guidelines for
Examination in accordance with the Patent Law and these Rules.

Article 122 These Rules shall be effective as
of July 1, 2001. The Rules for the Implementation of the Patent Law
of the People’s Republic of China approved by the State Council on
December 12, 1992 and promulgated by the Patent Office of the
People’s Republic of China on December 21, 1992 shall be repealed
simultaneously.

(State Council)

Chapter I General Provisions

Article 1 These Rules are hereby formulated in
accordance with the provisions of the Law of the People’s Republic
of China on the Administration of Tax Collection (hereinafter
referred to as the Law on the Administration of Tax
Collection).

Article 2 The Law on the Administration of Tax
Collection and these Rules apply to the collection of various taxes
by tax authorities according to law. In case where there is no
provision in the Law on the Administration of Tax Collection and
these Rules, the provisions of other tax laws, tax administrative
rules or regulations shall be implemented.

Article 3 Decisions made by any department,
unit or individual that contravene the tax laws, tax administrative
rules or regulations shall be null and void. Relevant tax
authorities shall not implement these decisions and shall report to
tax authorities at a higher level.

Taxpayers shall fulfill their obligation of tax payment in
accordance with the provisions of tax laws, tax administrative
rules or regulations. Contracts, agreements and other documents
signed by taxpayers that contravene tax laws, tax administrative
rules or regulations shall be null and void.

Article 4 The State Administration of Taxation
shall be responsible for formulating overall plans, technical
standards, technical designs and implementing measures in the
construction of national taxation information system. According to
the overall plans, technical standards, technical designs and
implementing measures formulated by the State Administration of
Taxation, tax authorities at various levels shall work effectively
in the construction of taxation information system in their
respective regions.

The local people’s governments at various levels shall give
positive support to the construction of the taxation information
system and organize the related departments to have the relevant
information shared.

Article 5 Information to be kept confidential
for taxpayers and tax withholding agents, as stipulated in Article
8 of the Law on the Administration of Tax Collection, refers to the
commercial secret and individual privacy of taxpayers and tax
withholding agents. Any violation of tax law by taxpayers and
withholding agents does not fall within the scope of
confidentiality.

Article 6 The State Administration of Taxation
shall formulate the norm of conduct and standard of service for tax
officials.

Tax authorities at a higher level shall promptly rectify any
violation of tax law by tax authorities at a lower level upon
discovery. Tax authorities at a lower level shall promptly correct
their violation of tax law according to the decision of tax
authorities at a higher level.

Tax authorities at a lower level shall report to tax authorities
at a higher level or relevant department upon discovering any
violation of tax law by tax authorities at a higher level.

Article 7 Tax authorities shall grant awards to
offence reporters on the basis of their contributions. Funds needed
to pay these awards shall be included in the annual budget of the
taxation department and approved separately. The specific measures
and standard for the use of award-funds shall be formulated by the
State Administration of Taxation jointly with the Ministry of
Finance.

Article 8 When assessing the amount of tax
payable, adjusting the amount of fixed tax payment, conducting tax
inspection, imposing tax administrative penalties, or conducting
tax administrative reconsideration, tax officials shall recuse
themselves if they have any of the following relationships with the
taxpayer, or tax withholding agent, or its legal representative, or
the direct responsible person:

(1) spouse relationship;

(2) lineal blood relationship;

(3) collateral blood relationship within three generations;

(4) close relative by marriage; or

(5) any other interests relationship that may influence
impartial law enforcement.

Article 9 Taxation organs established according
to provisions of the State Council and made known to the public, as
stipulated in Article 14 of the Law on the Administration of Tax
Collection, refer to the investigation bureaus of the tax bureaus
or offices below the provincial level. The investigation bureaus
are specifically responsible for the investigation and handling of
cases involving tax evasion, avoidance of pursuance of tax in
arrears, tax fraudulence, and refusal to pay tax.

The State Administration of Taxation shall clearly define the
respective functions of the tax bureau or office and the
investigation bureau to avoid any overlap between them.

Chapter II Tax Registration

Article 10 Local offices of the State
Administration of Taxation and local tax bureaus shall use the same
code for tax registration of the same taxpayer and share
information.

The specific measures for tax registration shall be formulated
by the State Administration of Taxation.

Article 11 The administrative departments for
industry and commerce at every level shall periodically notify the
local offices of the State Administration of Taxation and local tax
bureaus at the same level of the situations of issuance,
alteration, cancellation and revocation of business licenses.

The specific measures for notification shall be formulated by
the State Administration of Taxation jointly with the State
Administration for Industry and Commerce.

Article 12 Taxpayers engaged in production or
business operation shall, within 30 days from the date of obtaining
their business licenses, file written applications for tax
registration with the competent tax authorities in the localities
where the production or business operation is conducted or where
the tax obligation occurs. They shall truthfully complete the tax
registration form and submit the relevant certificate, documents
and information as required by tax authorities.

Taxpayers other than those mentioned in the preceding paragraph,
except State organs and individuals, shall, by presenting relevant
documents, go through the procedure for tax registration with the
competent tax authorities in their localities within 30 days from
the date of occurrence of tax obligation.

Measures for tax registration of individual income tax by
taxpayers shall be separately formulated by the State Council.

The sample of tax registration certificate shall be determined
by the State Administration of Taxation.

Article 13 Tax withholding agents shall, within
30 days from the date of occurrence of tax withholding obligation,
apply to local tax authorities for tax withholding registration and
obtaining the tax withholding registration certificate. In case a
tax withholding agent already has completed a tax registration
procedure, tax authorities may only record the tax withholding
obligation on its tax registration certificate and will not issue a
separate tax withholding registration certificate to the agent.

Article 14 When any change occurs in the
contents of tax registration, the taxpayer shall, within 30 days
from the date of completing the procedure for changing its business
license with the administrative department for industry and
commerce or any other department, apply to the original tax
registration authorities for changing its tax registration by
presenting the relevant certificates.

When any change occurs in the content of tax registration and
there is no need to make any change in the registration with the
administrative department for industry and commerce or any other
department, the taxpayer shall, within 30 days from the date of
such a change, apply to the original tax registration authorities
for changing its tax registration by presenting the relevant
certificates.

Article 15 Where, according to law, a
taxpayer’s obligation to pay tax terminates because of dissolution,
bankruptcy, cancellation or other reasons, the taxpayer shall,
before going through the procedure for cancellation of its
registration with the administrative department for industry and
commerce or any other department, apply to the original tax
authorities for cancellation of its tax registration by presenting
the relevant certificates and documents; where there is no need for
registration with the administrative department for industry and
commerce or any other department according to relevant provisions,
the taxpayer shall, within 15 days from the date of approval by
relevant department or declaration of the termination, apply to the
original tax authorities for cancellation of its tax registration
by presenting the relevant certificates.

Where any change in the taxpayer’s domicile or business site
involves the change of tax registration authorities, the taxpayer
shall, before going through the alteration or cancellation
procedure of registration with the administrative department for
industry and commerce or any other department, or before changing
the domicile or business site, apply to the original tax
registration authorities for cancellation of its tax registration,
and, within 30 days, apply for tax registration with the tax
authorities of the locality to which its domicile or business site
is transferred.

The taxpayer whose business license is revoked by the
administrative department for industry and commerce or whose
registration is cancelled by any other department shall, within 15
days from the date of its business license revocation or
registration cancellation, apply to the original tax registration
authorities for cancellation of its tax registration.

Article 16 Before going through the procedure
for cancellation of tax registration, the taxpayer shall settle all
taxes payable, surcharge on tax in arrears and penalties, and shall
hand over the invoices, tax registration certificate and other
taxation documents to tax authorities.

Article 17 The taxpayer engaged in production
or business operation shall, within 15 days from the date of
opening a basic deposit account or other deposit accounts, report
in writing all the account numbers to competent tax authorities, or
shall submit a written report to competent tax authorities within
15 days from the date of a change, if any.

Article 18 The taxpayer, except one who does
not need to obtain a tax registration certificate according to the
provisions, must present its tax registration certificate when
handling the following matters:

(1) opening bank accounts;

(2) applying for tax reduction, exemption or refund;

(3) applying for extension of tax declaration or deferral of tax
payment;

(4) purchasing of invoices;

(5) applying for a taxation certificate for business operation
outside of the locality;

(6) going through the procedure for termination or suspension of
business operation; or

(7) other matters regarding taxation.

Article 19 Tax authorities shall adopt a system
of periodic inspection and replacement of tax registration
certificate. The taxpayer shall go through certificate inspection
or replacement procedures with competent tax authorities within the
prescribed time limit by presenting the relevant certificates.

Article 20 The taxpayer shall hang up the
original tax registration certificate openly in the site of
production or business operation or in the office for inspection by
tax authorities.

In case the tax registration certificate is lost, the taxpayer
shall report within 15 days in writing to competent tax authorities
and make an announcement in the newspaper declaring the lost
certificate invalid.

Article 21 Where a taxpayer engaged in
production or business operation conducts production or business
operation activities temporarily in another county (city), it shall
present a copy of its tax registration certificate and the taxation
certificate for business operation outside of the locality issued
by the tax authorities in its locality to the tax authorities of
the intended county (city) for inspection and shall accept the tax
administration.

Where a taxpayer engaged in production or business operation
conducts business in a place outside of its locality, it shall go
through the tax registration procedure with local tax authorities
if the time of its production or business operation in the same
place exceeds 180 days in the aggregate.

Chapter III Administration of Accounting Books and
Vouchers

Article 22 Taxpayers engaged in production or
business operation shall, within 15 days from the date of receipt
of their business license or occurrence of tax obligation, set up
accounting books in accordance with the relevant provisions by the
State.

The accounting books as mentioned in the preceding paragraph
refer to general ledgers, detailed accounts, journal accounts and
other auxiliary accounting books. General ledgers and journal
accounts shall be bound into a book form.

Article 23 Taxpayers who are engaged in small
scale production or business operation and truly unable to set up
their accounting books may entrust any registered accountant office
or accounting personnel approved by tax authorities with account
establishment and book keeping. Taxpayers with real difficulty in
retaining such office or personnel may, upon approval by tax
authorities above the county level, set up a pasting book for
receipt and payment vouchers, a record book for purchase and sales
of goods, or use a tax control device, in accordance with the
provisions of tax authorities.

Article 24 Taxpayers engaged in production or
business operation shall, within 15 days from obtaining the tax
registration certificates, submit a report on the financial and
accounting systems or methods of financial and accounting
settlement to competent tax authorities for the record.

Taxpayers keeping book accounts with computers shall submit a
report on the accounting software applied to their computer
systems, the users’ manual and related documents, before using
them, to competent tax authorities for the record.

The computerized accounting systems set up by taxpayers shall be
in conformity with the relevant provisions of the State and shall
be able to correctly and completely calculate the receipts or
income of the taxpayer.

Article 25 Tax withholding agents shall, within
ten days from the date of occurrence of the withholding obligation
in accordance with the provisions of the tax laws, tax
administrative rules or regulations, set up separate accounting
books regarding the tax withheld and paid or the tax collected and
paid, pursuant to the categories of tax withheld or collected.

Article 26 If a taxpayer or tax withholding
agent has a sound accounting system and can use computers to
accurately and completely calculate the receipts and income, or the
tax withheld and paid or collected and paid, the complete written
record of accounts put out by the computer system may be regarded
as accounting books.

If the accounting system is not well-established, and the
computer system can not accurately and completely calculate the
receipts and income, or the tax withheld and paid or collected and
paid, the taxpayer or tax withholding agent shall set up a general
ledger and other accounting books related to tax payment or tax
withheld and paid or collected and paid.

Article 27 Accounting books, vouchers and
financial statements shall be made in Chinese. In national
autonomous areas, a nationality language in common use in the
locality may be used simultaneously. Foreign-funded enterprises and
foreign enterprises may use a foreign language simultaneously.

Article 28 Taxpayers shall install and use tax
control devices as required by tax authorities, and submit the
relevant data and information according to the provisions of tax
authorities.

The administrative measures for promoting the extensive use of
tax control devices shall be separately formulated by the State
Administration of Taxation and subjected to the State Council for
approval before the implementation.

Article 29 Accounting books, accounting
vouchers, financial statements, tax payment vouchers, invoices,
exportation vouchers and other tax-related documents should be
legal, authentic and complete.

Accounting books, accounting vouchers, financial statements, tax
payment vouchers, invoices, exportation vouchers and other
tax-related documents shall be maintained for 10 years, except as
otherwise stipulated in laws or administrative rules or
regulations.

Chapter IV Tax Filing

Article 30 Tax authorities shall establish and
improve a self-assessment system for taxpayers. Upon approval of
tax authorities, taxpayers or tax withholding agents may file tax
returns or submit statements on tax withheld and paid or collected
and paid to tax authorities by mail or by means of electronic data
transmission.

Electronic data transmission refers to such electronic means as
telephone, electronic data exchange, and network transmission
approved by tax authorities.

Article 31 Taxpayers filing tax returns by mail
shall use the special uniformed envelope for tax returns and keep
the receipt issued by the post office as evidence for return
filing. The date carried by the postmark for the posting day shall
be the actual date of returns filing.

Taxpayers filing tax returns electronically shall maintain the
relevant documents within the prescribed time limit according to
the requirement of tax authorities, and periodically submit them in
writing to competent tax authorities.

Article 32 Taxpayers with no due tax payment
during any taxation period shall also file tax returns according to
the relevant provisions.

Taxpayers enjoying a tax reduction or exemption shall file tax
returns in accordance with the relevant provisions during the
period of tax reduction or exemption.

Article 33 Tax returns by taxpayers or
statements on tax withheld and paid or collected and paid by tax
withholding agents shall include the main contents: tax categories
and items, taxable items or items on which tax is withheld and paid
or collected and paid, base of taxation, deduction items and
standard, applicable tax rate or fixed tax payment for each unit,
items and amount for tax refund, items and amount for tax reduction
or exemption, amount of tax payment or of tax to be withheld and
paid or collected and paid, period to which tax payment belongs,
deferred tax payment, tax in arrears and surcharge on tax in
arrears, etc.

Article 34 Taxpayers shall, at the time of
filing tax returns, fill in the tax returns truthfully and submit
to tax authorities the following relevant documents and materials
in the light of the requirements of different situations:

(1) financial and accounting statements and related explanatory
materials;

(2) contracts, agreements and vouchers related to tax
payment;

(3) electronic tax filing information generated by tax control
devices;

(4) taxation certificates for business operation outside of the
localities and corresponding tax payment vouchers;

(5) relevant certifying documents issued by public notaries
within or outside the Chinese territory; and

(6) other necessary documents or materials required by tax
authorities.

Article 35 Tax withholding agents making
statements on tax withheld and paid or collected and paid shall
complete the statements truthfully, and submit to tax authorities
the eligible vouchers for tax withheld and paid or collected and
paid and other relevant documents and materials required by tax
authorities.

Article 36 Taxpayers paying tax periodically at
a fixed amount may file tax returns in a simpler way and by
combining tax payment periods.

Article 37 Taxpayers or tax withholding agents
with real difficulty in filing tax returns or submitting statements
on tax withheld and paid or collected and paid within the
prescribed time limit and requiring an extension shall, within the
prescribed time limit, apply in writing to tax authorities for an
extension, which shall be handled within the time limit approved by
tax authorities.

In case taxpayers or tax withholding agents are unable, due to
force majeure, to file tax returns or submit statements on tax
withheld and paid or collected and paid within the prescribed time
limit, an extension is available. However, a report must be
submitted to tax authorities immediately after the force majeure
has vanished. The tax authorities will grant an approval after
ascertaining the facts.

Chapter V Tax Levying

Article 38 Tax authorities shall strengthen the
administration of tax levying and establish and improve a
responsibility system.

Tax authorities shall determine the mode of tax levying pursuant
to the principles of ensuring a timely and full remittance of tax
revenue to the state treasury, making it as easy as possible for
taxpayers to pay tax and reducing taxation cost.

Tax authorities shall strengthen the administration of tax
refund for export. The specific administrative method shall be
formulated by the State Administration of Taxation with the
relevant departments of the State Council.

Article 39 Tax authorities shall, pursuant to
the budget accounts and budget levels prescribed by the State,
remit in time to the state treasury all types of taxes, surcharge
on tax in arrears and penalties, and shall not occupy, embezzle, or
retain them, or remit them to any accounts other than the state
treasury or the tax revenue accounts prescribed by the State.

Any organization or individual shall not alter the budget
accounts or budget levels of tax, surcharge on tax in arrears and
penalties that have already been remitted to the State
treasury.

Article 40 Tax authorities shall, in accordance
with the principles of convenience, expeditiousness and safety,
actively popularize the use of check, bankcard and electronic
settlement for tax payment.

Article 41 Special difficulties mentioned in
Article 31 of the Law on the Administration of Tax Collection
include either of the following situations that a taxpayer is
confronted with:

(1) where force majeure has caused a great loss to the taxpayer
and significantly affected its normal production or business
operation; or

(2) where the taxpayer’s cash fund for the current period is not
enough to settle tax payment after deducting payment to employees
and social insurance premium.

The municipal offices of the State Administration of Taxation
and municipal local tax bureaus of the cities separately listed in
the State plan may approve the taxpayer’s application for a
deferral of tax payment with reference to the limit of power as
specified in paragraph 2 of Article 31 of the Law on the
Administration of Tax Collection.

Article 42 Taxpayers who are unable to pay tax
within the set time limit shall, before the expiration of that
limit, apply for a deferral and submit the following documents: the
written application for tax deferral, balance of currency funds for
the current period and statements of all deposit accounts in banks,
balance sheet, expenditure budget for salaries of employees, social
insurance premiums and so on, as requested by tax authorities.

Tax authorities shall, within 20 days from the date of receipt
of the application for tax deferral, decide whether or not to grant
approval. A surcharge shall be imposed upon the taxpayer from the
expiry date of the time limit for tax payment in case the deferral
is not approved.

Article 43 Taxpayers eligible for tax reduction
or exemption, as specified by laws or administrative rules or
regulations or as approved by statutory examining and approving
authorities, shall, by presenting the relevant documents, go
through the procedures for tax reduction or exemption with the
competent tax authorities. Taxpayers shall resume tax payment from
the date following the expiry date of the tax reduction or
exemption.

Taxpayers eligible for tax reduction or exemption shall report
to tax authorities within 15 days from the date of occurrence of
any change to the terms for tax reduction or exemption. Taxpayers
shall fulfill tax payment liabilities according to law when they no
longer meet the requirements for tax reduction or exemption; if
they fail to pay the tax according to law, tax authorities shall
pursue tax payment.

Article 44 Tax authorities may, in line with
the principles of being conducive to taxation control and making it
as easy as possible for taxpayers to pay tax and according to
relevant provisions of the State, entrust related units or
individuals with collection of small, scattered, or
outside-of-the-locality tax payment and shall issue to such units
or individuals a certificate for tax collection. The entrusted
units or individuals shall collect tax lawfully in the name of the
tax authorities pursuant to the requirement as stipulated in the
certificate, and taxpayers shall on no account refuse to pay tax.
In case of refusal by any taxpayer, the entrusted unit or
individual shall report without delay to the tax authorities.

Article 45 Tax payment vouchers mentioned in
Article 34 of the Law on the Administration of Tax Collection
refers to various types of tax payment receipts, letters of tax
remittance, duty stamps, tax withholding (collection) receipts and
other vouchers of tax payment.

Unless appointed by tax authorities, no unit or individual is
allowed to print any kind of tax payment voucher. Tax payment
vouchers shall not be lent, resold, altered or forged.

The sample of tax payment vouchers and the relevant
administrative measures shall be determined by the State
Administration of Taxation.

Article 46 Tax authorities shall, upon receipt
of tax, issue a tax payment voucher to the taxpayer. If the
taxpayer pays tax through banks, tax authorities may entrust the
bank with the issuance of the tax payment voucher.

Article 47 Where the taxpayer falls into any of
the circumstances listed in Article 35 or 37 of the Law on the
Administration of Tax Collection, tax authorities shall be entitled
to the right of assessing its amount of tax payable in any of the
following methods:

(1) referring to the tax burden of other local taxpayers engaged
in the same or similar business on a similar scale and with a
similar income;

(2) according to the method of business income or cost plus
rational expenses and profit;

(3) calculating or reckoning on the basis of raw materials,
fuels, power and others consumed; or

(4) by adopting any other reasonable method.

In case it is not adequate to correctly assess the amount of tax
payable by adopting one of the above-mentioned methods, two or more
methods may be adopted simultaneously.

In case the taxpayer objects to the amount of tax payable
assessed by tax authorities by adopting the methods as prescribed
in this Article, it shall provide relevant evidence to tax
authorities for recognition, upon which adjustment shall be made to
the amount of tax payable.

Article 48 Tax authorities are responsible for
grading taxpayers’ compliance credit. The method for grading
compliance credit shall be formulated by the State Administration
of Taxation.

Article 49 Any contractor or lessee who is
independent in both production or business operation and financial
accounting and who regularly pays contracting fees or rental to the
contract issuer or the lessor shall pay tax on its receipts and
income from production or business operation and accept the tax
administration, except as otherwise provided by laws or
administrative rules or regulations.

The contract issuer or lessor shall, within 30 days from the
date of issuance of contract or leasing, report the information
about the contractor or lessee to the competent tax authorities.
Otherwise, the contract issuer or the lessor shall assume the joint
and several tax liabilities with the contractor or lessee.

Article 50 Taxpayers shall report to the
competent tax authorities before liquidation in case of
dissolution, cancellation or bankruptcy. The competent tax
authorities shall participate in the liquidation in case the tax
payment is not settled.

Article 51 The associated enterprises mentioned
in Article 36 of the Law on the Administration of Tax Collection
refer to companies, enterprises or other economic entities that
have one of the following relationships:

(1) direct or indirect ownership or control of each other in
relation to capital, business operation, purchase, sale, etc;

(2) direct or indirect ownership or control of both or all by a
third party; or

(3) other associated relationships in terms of interest.

Taxpayers have an obligation to provide the local tax
authorities with information on prices, expenditure standard and
others concerning business transactions with their associated
enterprises. The specific measures shall be formulated by the State
Administration of Taxation.

Article 52 Business transactions between
independent enterprises as mentioned in Article 36 of the Law on
the Administration of Tax Collection refer to business transactions
between enterprises with no associated relationship at fair market
prices and following normal business practice.

Article 53 The taxpayer may propose to the
competent tax authorities a pricing principle and calculation
method for business transactions with its associated enterprises.
The competent tax authorities may, after examination and approval,
agree upon the items of pricing with the taxpayer in advance and
supervise over the implementation.

Article 54 Tax authorities may adjust the
taxpayer’s amount of tax payable in one of the following situations
in business transactions between the taxpayer and its associated
enterprises:

(1) purchases and sales are not priced according to business
transactions between independent enterprises;

(2) the interest paid to or charged by the financing enterprise
is over or below the amount acceptable for enterprises with no
associated relationships, or the interest rate adopted is higher or
lower than the normal rate for the same type of business;

(3) charge for service is not collected or paid as it normally
occurs between independent enterprises;

(4) business transactions such as transfer of property or
provision of right to use property are not priced or charges are
not collected or paid as they should be in business transactions
between independent enterprises; or

(5) other circumstances where business transactions are not
priced in accordance with the normal practice between independent
enterprises.

Article 55 In case any
taxpayer falls into one of the circumstances listed in Article 54
of these Rules, tax authorities may adjust the taxpayer’s taxable
receipts or income according to the following
methods:

(1) according to the price for the same or similar business
transactions between independent enterprises;

(2) according to the level of income and profit obtainable on
the basis of the resale price to a non-associated third party;

(3) according to the method of cost plus reasonable expenses and
profit; or

(4) according to other appropriate methods.

Article 56 When payment or receipt of prices or
charges in business transactions between a taxpayer and its
associated enterprise is not made as it should be with business
transactions between independent enterprises, the tax authorities
shall make adjustment, within three years after the first tax year
for such transactions, or under special circumstances within ten
years after the first tax year for such transactions.

Article 57 Taxpayers engaged in production or
business operation without completing formalities for tax
registration as mentioned in Article 37 of the Law on the
Administration of Tax Collection include those conducting
production or business operation in another county (city) without
reporting to local tax authorities for registration.

Article 58 The taxpayer shall pay tax within 15
days from the date when the tax authorities impound its commodities
or goods in accordance with Article 37 of the Law on the
Administration of Tax Collection.

As for the impounded commodities or goods which are live and
fresh, apt-decaying or easy-deactivating, the tax authorities may
shorten the impounding time set forth in the preceding
paragraph.

Article 59 Other property mentioned in Articles
38 and 40 of the Law on the Administration of Tax Collection
include immovables and movables such as real estate, cash and
marketable securities.

Motor vehicles, gold and silver ornaments, curios calligraphies
and paintings, luxurious residential buildings or houses other than
the one necessary for living do not fall into the scope of articles
and dwelling houses necessary to support the individual and its
dependent family members as mentioned in Articles 38, 40 and 42 of
the Law on the Administration of Tax Collection.

Tax authorities shall not adopt tax preservative measures and
compulsory enforcement measures on other household goods with the
unit price below 5,000 yuan.

 Article 60 Family members supported by a
taxpayer as stated in Articles 38, 40 and 42 of the Tax
Administration and Collection Law shall refer to the taxpayer’s
living-together spouse, lineal relatives and other relatives
without living sources and supported by the taxpayer.

Article 61 The guaranty mentioned in Articles
38 and 88 of the Law on the Administration of Tax Collection
includes the suretyship for tax payment provided for a taxpayer by
a surety approved by tax authorities, and the guaranty provided
with the taxpayer’s or a third party’s property which has not been
provided or entirely provided as guaranty.

The tax payment surety refers to any natural person, legal
person or other economic entity within the Chinese territory that
is able to provide guaranty for tax payment.

Any unit or individual without guaranty qualifications
prescribed by laws or administrative rules or regulations is not
allowed to serve as a tax payment guarantor.

Article 62 A tax
payment guarantor who is willing to provide guaranty for a taxpayer
shall fill in a letter of guaranty for tax payment stating clearly
the target, scope, duration and liabilities of guaranty and other
relevant issues. A letter of guaranty shall be deemed to be valid
only after it is signed and stamped by the taxpayer and the tax
payment guarantor and approved by tax
authorities.

In case a taxpayer or a third party provides a guaranty for tax
payment with its property, a detailed list of property shall be
filled in, indicating the value of the property and other relevant
issues. The detailed list of property provided as guaranty for tax
payment shall be valid only after it is signed and stamped by the
taxpayer or the third party and confirmed by tax authorities.

Article 63 When impounding or sealing up
commodities, goods or other property, tax authorities shall have
two or more officials present on the site and notify the person
subject to enforcement. In case the person subject to enforcement
is a natural person, he or an adult member of his family shall be
notified to be present; in case the person subject to enforcement
is a legal person or other organization, its legal representative
or principal responsible officer shall be notified to be present.
Any refusal of presence shall not affect the enforcement.

Article 64 When impounding or sealing up
commodities, goods or other property with an equivalent value to
the amount of tax payable, in accordance with the provisions of
Article 37, 38 or 40 of the Law on the Administration of Tax
Collection, tax authorities shall estimate the value with reference
to the market price, ex-factory price or evaluated price of the
like commodities.

Tax authorities, when defining the value of the commodities,
goods or other property according to the preceding paragraph, shall
have the surcharge on tax in arrears and expenses for impounding,
sealing up, keeping, auctioning and selling off them included.

Article 65 Tax authorities may impound, seal up
or auction as a whole the inseparable commodities, goods or other
property with a value exceeding the amount of tax payable in case
the taxpayer, tax withholding agent or tax payment guarantor has no
other property available for compulsory enforcement, and use the
proceeds from the auction to offset the tax, surcharge on tax in
arrears, penalties and expenses of impounding, sealing up, keeping
and auction and so on.

Article 66 In
impounding or sealing up the movables or immovables with a property
right certificate in line with the provisions of Article 37, 38 or
40 of the Law on the Administration of Tax Collection, tax
authorities may order the party involved to turn in the certificate
for safekeeping and at the same time issue a notice of assistance
for enforcement to the relevant department, which shall not handle
ownership transfer formalities of the movables or immovables in the
course of its being impounded or sealed up.

Article 67 Tax authorities may instruct the
person subject to enforcement to take care of the sealed-up
commodities, goods or other property, and the safekeeping
responsibility shall be borne by the person subject to
enforcement.

In case the continuous use of the sealed-up property does not
cause reduction of its value, tax authorities may allow the person
subject to enforcement to continuously use it; the person subject
to enforcement shall bear any loss to the property resulting from
its fault in the course of safekeeping or use.

Article 68 In case the
taxpayer settles the tax payment within the deadline set by tax
authorities after the tax preservative measures are adopted by tax
authorities, tax authorities shall terminate the tax preservative
measures within one day after receiving the tax payment or tax
payment receipt from the bank.

Article 69 In case of
settling tax payment with impounded or sealed-up commodities, goods
or other property, tax authorities shall entrust the auction to the
auction agencies lawfully set up; in case there is no way for
entrusted auction or it is not appropriate for auction, the local
commercial enterprises may be commissioned to sell them or the
taxpayer may be ordered to dispose of them within a specified time
limit; in case there is no way to commission local commercial
enterprises for sale and it is beyond the taxpayer’s ability to
dispose, tax authorities may conduct sales upon appraisal by
themselves. The specific measures for such sales upon appraisal
shall be formulated by the State Administration of Taxation.
Commodities prohibited by the State from free purchases or sales
shall be purchased by the relevant organization at the price set by
the State.

The remaining part of the income from auction or sales after
deducting the tax payable, surcharge on tax in arrears, penalties
and expenses for the impounding, sealing up, keeping, auction,
sales and so on shall be returned to the taxpayer within three
days.

Article 70 The loss as mentioned in Articles 39
and 43 of the Law on the Administration of Tax Collection refers to
the direct loss incurred to the legitimate rights and interests of
the taxpayer, tax withholding agent or tax payment guarantor as a
result of liability of tax authorities.

Article 71 Other financial institutions as
mentioned in the Law on the Administration of Tax Collection refer
to trust and investment companies, credit cooperatives, post
savings offices and other financial institutions approved by the
People’s Bank of China, the China Securities Regulatory Commission
or other authorities.

Article 72 Deposit as mentioned in the Law on
the Administration of Tax Collection includes savings deposits by
investors of individual proprietorship enterprises, partners of
partnership enterprises and individual businesses, funds in the
shareholder’s capital account, etc.

Article 73 In case the
taxpayer engaged in production or business operation or the tax
withholding agent fails to pay or remit tax within the prescribed
time limit, or the tax payment guarantor fails to pay the tax
guaranteed within the prescribed time limit, tax authorities shall
issue a notice of tax settlement ordering the payment or remission
of tax within a time limit not exceeding 15
days.

Article 74 In case the
taxpayer or its legal representative fails to settle the tax
payment due or surcharge on tax in arrears, or provide guaranty for
tax payment as required before leaving the territory of the
People’s Republic of China, tax authorities may notify the
administrative department of exit and entry to prevent its exit.
The specific measures for preventing exit shall be formulated by
the State Administration of Taxation jointly with the Ministry of
Public Security.

Article 75 The time period for imposing
surcharge on tax in arrears as prescribed in Article 32 of the Law
on the Administration of Tax Collection starts with the second day
from the expiration date for tax payment specified by laws or
administrative rules or regulations, or determined by tax
authorities pursuant to provisions of laws or administrative rules
or regulations, and ends with the day on which the taxpayer or tax
withholding agent actually pays or remits the tax.

Article 76 Tax authorities at or above the
county level shall regularly make proclamations concerning the
overdue tax unpaid by taxpayers at the site of tax collection or
through media such as radio, television, newspapers, periodicals or
computer network, etc.

Specific measures for such regular proclamation shall be
formulated by the State Administration of Taxation.

Article 77 The relatively large amount of
overdue tax mentioned in Article 49 of the Law on the
Administration of Tax Collection refers to an amount of overdue tax
of not less than 50,000 yuan.

Article 78 Tax authorities shall refund the
overpaid tax to the taxpayer within ten days from the date of their
discovery, or verify and refund the overpaid tax within 30 days
from the date of receiving the taxpayer’s application for refund in
case of the taxpayer’s discovery.

The tax refund with interest at the deposit interest rate of the
corresponding period of the bank as prescribed in Article 51 of the
Law on the Administration of Tax Collection does not include the
refund at final tax settlement upon the tax prepaid according to
law, or for exportation or tax reductions and exemptions.

Interest of the tax refund shall be calculated at the current
deposit interest rate set by the People’s Bank of China on the day
when tax authorities undertake the procedure for tax refund.

Article 79 In case the
taxpayer has both refundable tax and overdue tax, tax authorities
may use the refundable tax and the interest thereon to offset the
overdue tax and refund the remainder, if any, to the
taxpayer.

Article 80 The liability of tax authorities as
mentioned in Article 52 of the Law on the Administration of Tax
Collection refers to the improper application of tax laws or
administrative rules or regulations or illegal activity in law
enforcement by tax authorities.

Article 81 The miscalculation or other errors
by the taxpayer or tax withholding agent as mentioned in Article 52
of the Law on the Administration of Tax Collection refers to the
unintentional misapplication of calculation formula or apparent
clerical errors.

Article 82 The special circumstances mentioned
in Article 52 of the Law on the Administration of Tax Collection
refer to the cases where the due tax unpaid or underpaid, not
withheld or less withheld, not collected or less collected
accumulates to an amount of not less than 100,000 yuan on account
of the miscalculation or other errors by the taxpayer or tax
withholding agent.

Article 83 The time limit for making up the
shortage in tax payment or pursuing tax payment or surcharge on tax
in arrears as prescribed in Article 52 of the Law on the
Administration of Tax Collection starts from the day when the
taxpayer or tax withholding agent fails to pay the due tax or
underpays tax, or fails to remit the due tax or remits less
tax.

Article 84 In case the
auditing or fiscal authorities make any decision, in undertaking
the audit or examination according to law, on any violation of tax
law by tax authorities, tax authorities shall follow such
decisions. In case the auditing or fiscal authorities discover any
violation of tax law by the unit under audit or examination, they
shall issue a letter of decision or opinion instructing the unit to
pay tax or surcharge on tax in arrears that should be paid to tax
authorities. Tax authorities shall, according to the letter of
decision or opinion by relevant authorities and the provisions of
tax laws or administrative rules or regulations, collect the tax or
surcharge on tax in arrears according to the scope of tax
administration and remit it to the state treasury according to the
budget levels as prescribed by the State.

Tax authorities shall, within 30 days from the date of receiving
the letter of decision or opinion, give a written reply concerning
the implementation to the auditing or fiscal authorities.

The relevant authorities shall not at their own discretion
collect or remit to the state treasury, or dispose or occupy in any
other name any tax or surcharge on tax in arrears discovered in the
process of their duty execution.

Chapter VI Tax Inspection

Article 85 Tax authorities shall establish a
scientific inspection system, make overall plans and arrangements
for tax inspections, and impose strict controls on the frequency of
tax inspections to taxpayers or withholding agents.

Tax authorities shall work out a reasonable guideline for tax
inspections, in which the functions and duties of officials
respectively in charge of case selection, inspection, hearing or
execution shall be clearly defined and separated for mutual check
in order to standardize the case selection procedures and tax
inspection.

Specific measures for tax inspections shall be formulated by the
State Administration of Taxation.

Article 86 Tax authorities may exercise their
duties and powers set forth in Item 1 of Article 54 of the Law on
the Administration of Tax Collection at the business site of the
taxpayer or withholding agent. If necessary, tax authorities may,
upon approval of the commissioner of the tax bureau (sub-bureau
thereof) or office at or above the county level, take back for
inspection the taxpayer’s or withholding agent’s accounting books,
accounting vouchers, financial statements and other relevant
materials of previous accounting years. Tax authorities shall,
however, provide the taxpayer or withholding agent with a list of
the documents taken back and return them sound and complete within
three months. In case of special circumstances, tax authorities
may, upon approval of the commissioner of the tax bureau or office
at or above the city with districts or autonomous prefecture level,
take back for inspection the taxpayer’s or withholding agent’s
accounting books, accounting vouchers, financial statements and
other relevant materials of the current accounting year, but shall
return them within 30 days.

Article 87 Tax authorities shall, when
exercising their duties and powers set forth in Item 6 of Article
54 of the Law on the Administration of Tax Collection, designate
specific persons for the responsibility, carry out the inspection
on the strength of the nationally unified permit for deposit
account inspection, and shall have the obligation of keeping
confidential the information about the person under inspection.

The permit for deposit account inspection shall be formulated by
the State Administration of Taxation.

Items to be inspected by tax authorities include balance of the
taxpayer’s deposit account and capital flow.

Article 88 In
accordance with the provisions of Article 55 of the Law on the
Administration of Tax Collection, the duration of tax preservative
measures adopted by tax authorities shall not exceed six months
normally. In case an extension is necessary for serious cases, it
shall be reported to the State Administration of Taxation for
approval.

Article 89 Tax authorities and tax officials
shall exercise their duties and powers for tax inspection in
accordance with the provisions of the Law on the Administration of
Tax Collection and these Rules.

Tax officials shall present the tax inspection identity card and
notice of tax inspection when conducting tax inspections.
Taxpayers, withholding agents or other persons involved have the
right to reject inspection in case tax officials intend to conduct
tax inspection without such card and notice. In case of tax
inspection to markets and fairs and concentrated businesses, tax
authorities may use the unified notice of tax inspection.

The State Administration of Taxation shall determine the format
of the tax inspection identity card and the notice of tax
inspection and formulate the specific measures for the use and
administration of them.

Chapter VII Legal Liabilities

Article 90 Where a taxpayer fails to go through
the formalities for inspection or replacement of the tax
registration certificate according to the provisions, the tax
authorities shall order the taxpayer to make corrections within a
time limit, and may impose a penalty of not more than 2,000 yuan;
where the circumstances are serious, a penalty of not less than
2,000 yuan but not more than 10,000 yuan shall be imposed.

Article 91 Where anyone illegally prints,
lends, resells, alters or forges tax payment vouchers, the tax
authorities shall order it to make corrections and impose a penalty
of not less than 2,000 yuan but not more than 10,000 yuan, or,
where the circumstances are serious, not less than 10,000 yuan but
not more than 50,000 yuan. In case a crime is constituted, criminal
liability shall be investigated.

Article 92 Where banks or other financial
institutions fail to record the number of the tax registration
certificate in the bank accounts of the taxpayer engaged in
production or business operation, or fail to record the bank
account numbers in the tax registration certificate of the taxpayer
engaged in production or business operation in accordance with the
provisions of the Law on the Administration of Tax Collection, the
tax authorities shall order them to make corrections within a time
limit and impose a penalty of not less than 2,000 yuan but not more
than 20,000 yuan, or, where the circumstances are serious, not less
than 20,000 yuan but not more than 50,000 yuan.

Article 93 Where anyone illegally provides bank
accounts, invoices, certificates or other convenience to taxpayers
or tax withholding agents with a result of non-payment or
underpayment of tax or fraudulently obtaining tax refund for
exportation, the tax authorities may, apart from confiscating the
illegal income, impose a penalty of not more than one time the
amount of tax unpaid or underpaid, or of tax refund fraudulently
obtained.

Article 94 Where a taxpayer refuses to have its
tax withheld or collected by the tax withholding agent, the tax
withholding agent shall report to the tax authorities, which shall
be responsible for collecting the tax payable and surcharge on tax
in arrears directly from the taxpayer. In case the taxpayer rejects
such payment, the provisions of Article 68 of the Law on the
Administration of Tax Collection shall apply.

Article 95 Where tax authorities inspect
taxpayers at stations, docks, airports, postal enterprises or
branches thereof in accordance with the provisions of Item 5 of
Article 54 of the Law on the Administration of Tax Collection, if
such inspection is rejected by relevant units, the tax authorities
shall order them to make corrections, and may impose a penalty of
not more than 10,000 yuan; where the circumstances are serious, a
penalty of not less than 10,000 yuan but not more than 50,000 yuan
shall be imposed.

Article 96 A taxpayer
or tax withholding agent shall be punished according to the
provisions of Article 70 of the Law on the Administration of Tax
Collection, where it falls into one of the following
circumstances:

(1) providing false information, not reporting according to
facts, or refusing to provide relevant information;

(2) rejecting or preventing tax authorities from taking notes,
tape-recording, video-recording, photographing or copying the
situations or materials related to the case under
investigation;

(3) transferring, concealing or destroying the relevant
information by the taxpayer or tax withholding agent during the
period of inspection; or

(4) other circumstances of not accepting tax inspection
according to law.

Article 97 Where tax officials divide privately
the impounded or sealed-up commodities, goods or other property,
and the circumstances are so serious as to constitute a crime, they
shall be investigated for criminal liability according to law. If
the circumstances are not serious enough to constitute a crime,
administrative penalties shall be imposed upon them according to
law.

Article 98 Where a tax withholding agent
violates tax laws or administrative rules or regulations, which
results in a non-payment or underpayment of tax by the taxpayer,
the taxpayer shall pay or make up the shortage in payment of tax or
surcharge on tax in arrears and a penalty of not less than 50
percent but not more than 3 times of the amount unpaid or underpaid
by the taxpayer shall be imposed upon the tax withholding
agent.

Article 99 Tax authorities shall issue receipts
when imposing a penalty upon or confiscating the illegal income of
the taxpayer, tax withholding agent or other persons involved.
Otherwise, the taxpayer, tax withholding agent or other persons
involved shall have the right to refuse.

Article 100 The dispute over tax payment as
mentioned in Article 88 of the Law on the Administration of Tax
Collection refers to the dispute arising from the taxpayer, tax
withholding agent or tax payment guarantor over such specific
administrative acts by tax authorities as determining the subject
of tax payment, target of tax collection, scope of tax collection,
tax reduction and exemption, tax refund, applicable tax rate, base
of tax assessment, stages of tax payment, period and place of tax
payment, means of tax levying, etc.

Chapter VIII Service of Documents

Article 101 Tax authorities shall serve
taxation documents directly on recipients.

Where the recipient is a citizen, the document shall be
delivered to his own reception against his signature. Where the
recipient is absent, the document shall be delivered against
signature to the reception of his adult family member living
together.

Where the recipient is a legal person or an other organization,
the document shall be delivered against signature to the reception
of the legal representative of the legal person, the principal
responsible person of the organization, or the responsible person
of finance or the person specifically responsible for reception of
documents or letters of the legal person or the organization. In
case the recipient has an agent, the document may be delivered to
the agent’s reception against signature.

Article 102 There shall be a return of service
for the taxation documents served. The return of service shall bear
the date of reception and the signature or stamp by the recipient
or other persons as specified in these Rules for reception against
signature, upon which service shall be deemed completed.

Article 103 Where the recipient or any of the
other persons as specified in these Rules for reception against
signature refuses to sign for reception of the taxation document,
the person who delivers the document shall, on the return of
service, specify the reason for refusal and state the date, affix
the signature or stamp of himself and the witness to the return of
service, and leave the taxation document with the recipient, upon
which service shall be deemed completed.

Article 104 Where there is difficulty in a
direct service of taxation documents, tax authorities may entrust
other relevant authorities or units with the service, or send them
by mail.

Article 105 Where taxation documents are served
directly or through entrustment, the date of service shall be the
date when the recipient or witness signs or specifies for reception
on the return of service. In case the documents are served by mail,
the date of service shall be the date of reception specified on the
receipt of the registered mail, with the service being deemed
completed.

Article 106 Tax authorities may serve taxation
documents by a public notice under any of the following
circumstances and the service shall be deemed completed after 30
days of the public notice:

(1) the document is to be served on numerous recipients; or

(2) the document cannot be served through other means of service
specified in this chapter.

Article 107 The format of taxation documents
shall be determined by the State Administration of Taxation. The
taxation documents mentioned in these Rules include:

(1) letter of notification of taxation issues;

(2) letter of notification of rectification within a prescribed
time limit;

(3) letter of decision for tax preservative measures;

(4) letter of decision for compulsory taxation enforcement;

(5) letter of notification of tax inspection;

(6) letter of decision for tax disposition;

(7) letter of decision of tax administrative penalty;

(8) letter of decision of administrative reconsideration;
and

(9) other taxation documents.

Chapter IX Supplementary Provisions

Article 108 The terms “not less than”, “not
more than”, “within …days” and “expires” as mentioned in the Law on
the Administration of Tax Collection and these Rules shall all
include the given figure.

Article 109 In case
the last day of the prescribed time limit set forth in the Law on
the Administration of Tax Collection and these Rules is an official
holiday, the day following the end of the holiday period shall be
deemed as the last day of the time limit. In case not less than
three consecutive days in the prescribed time limit are official
holidays, the prescribed time limit shall be extended by the number
of holidays.

Article 110 The commissions for withholding or
entrusted collection of tax as prescribed in Paragraph 3 of Article
30 of the Law on the Administration of Tax Collection shall be
included in the budget and paid by tax authorities to the
withholding agent in accordance with the provisions of laws and
administrative rules or regulations.

Article 111 The measures for taxpayers or tax
withholding agents to entrust tax agents with taxation matters
shall be formulated by the State Administration of Taxation.

Article 112 The collection and administration
of Cultivated Land Occupation Tax, Deed Tax, Agriculture Tax and
Animal Husbandry Tax shall be subject to the relevant provisions of
the State Council.

Article 113 These Rules shall be effective as
of October 15, 2002. The Rules for the Implementation of the Law of
the People’s Republic of China on the Administration of Tax
Collection promulgated by the State Council on August 4, 1993 shall
be repealed simultaneously.

(State Council)

Chapter I General Provisions

Article 1 These Regulations are formulated for
the purposes of strengthening the administration of business
premises for Internet access services, standardizing business
conducts of operators, protecting the lawful rights and interests
of the general public and operators, maintaining a healthy
development of business activities providing Internet access
services, and promoting socialistic ideological and ethical
progress.

Article 2 As used in these Regulations, the
term “business premises for Internet access services” refers to
business premises such as Internet bars or computer lounges where
Internet access services are provided to the general public by
means of computers or other devices.

Premises affiliated to schools, libraries or other units where
Internet access services are provided to particular persons for
acquiring information and data shall comply with the relevant laws
and regulations, and these Regulations are not applicable
thereto.

Article 3 Units operating business premises for
Internet access services shall comply with the relevant provisions
of laws and regulations, strengthen industry self-discipline,
self-consciously accept the inspection and administration by
government departments concerned in accordance with the law, and
provide consumers of Internet access services with desirable
services.

Consumers of Internet access services in business premises for
Internet access services shall comply with the relevant provisions
of laws and regulations as well as social ethics, and conduct
Internet-surfing activities in a civilized and healthy way.

Article 4 The culture administration
departments of the people’s governments at or above the county
level shall be responsible for examining and approving the
establishment of units operating business premises for Internet
access services, and be responsible for supervising and
administering the business activities of the legally established
units operating business premises for Internet access services; the
public security organs shall be responsible for supervising and
administering the security of information networks, public security
and fire control; the administrative departments for industry and
commerce shall be responsible for the registration of the units
operating business premises for Internet access services, and the
administration of their business licenses, and for investigating
and punishing unlicensed business activities; the
telecommunications administration departments and other departments
concerned shall conduct supervision and administration of the units
operating business premises for Internet access services within
their respective responsibilities and duties according to the
relevant provisions of these Regulations, laws and administrative
regulations.

Article 5 The culture administration
departments, the public security organs, the administrative
departments for industry and commerce, as well as other relevant
departments and their staff shall not engage in, or engage in in a
disguised form, any business activities providing Internet access
services, nor participate in, or participate in in a disguised
form, any business activities conducted by the units operating
business premises for Internet access services.

Article 6 The State encourages citizens, legal
persons and other organizations to supervise the business
activities conducted by the units operating business premises for
Internet access services, and rewards those who have made
outstanding contributions.

Chapter II Establishment

Article 7 The State adopts the license system
for the business activities conducted by the units operating
business premises for Internet access services. Without being
licensed, no organization or individual may set up any business
premises for Internet access services, or engage in any business
activities providing Internet access services.

Article 8 A unit
operating business premises for Internet access services shall be
incorporated as an enterprise, and shall satisfy the following
conditions:

(1) possessing a title, domicile, organizational structure and
articles of association;

(2) possessing appropriate capital for business activities;

(3) possessing business premises that are commensurate with its
business activities and meet the requirements set by the State for
fire control;

(4) possessing sound and complete management systems for the
security of information networks as well as technological security
measures;

(5) possessing a permanent website address and such equipment as
computers and their attached devices that are commensurate with the
business activities;

(6) possessing security administration staff, managerial staff
and technical professionals who are commensurate with its business
activities and obtain the qualifications for practicing the
business; and

(7) other conditions set forth by laws and administrative
regulations as well as by the relevant departments of the State
Council.

The minimum business area of the business premises for Internet
access services, the number of such equipment as computers and
their attached devices, and the standard of the area for each
computer shall be determined by the culture administration
department of the State Council.

In addition to the conditions provided in paragraphs (1) and (2)
of this Article, the examination and approval of the units
operating business premises for Internet access services shall also
be subject to the requirements set forth by the culture
administration department of the State Council and the culture
administration departments of the people’s governments of
provinces, autonomous regions and municipalities directly under the
Central Government for the total number and layout of the units
operating business premises for Internet access services.

Article 9 No business premises for Internet
access services may be established at a distance not more than 200
meters from high schools and primary schools or within residential
buildings (compounds).

Article 10 To establish a unit operating
business premises for Internet access services, an application
therefor shall, accompanied by the following documents, be
submitted to the culture administration department of the local
people’s government at or above the country level:

(1) a notice of advance approval of its title and its articles
of association;

(2) materials certifying the identity of its legal
representative or its principal responsible person;

(3) certification of capital and creditworthiness;

(4) property right certification, or a letter of intent on lease
of, the business premises; and

(5) other documents needed to be submitted according to law.

Article 11 The culture administration
department shall make a decision within 20 workdays from the date
of receipt of the establishment application, and issue the approval
document that permits the preparations for the establishment to
those proved to be in conformity to the conditions after
examination.

After the completion of preparations for the establishment, the
applicant shall apply for the examination of information network
security and fire control security to the public security organ at
the same level on the basis of the approval document that permits
the preparations for the establishment. The public security organ
shall make a decision thereon within 20 workdays from the date of
receipt of the application, and issue an approval document to those
passing the examination after field inspection.

The applicant shall apply to the culture administration
department for final examination on the basis of the approval
document issued by the public security organ. The culture
administration department shall make a decision within 15 workdays
from the date of receipt of the application according to the
provisions of Article 8 of these Regulations, and issue a Permit
for Cyber-Culture Business to those passing the examination after
field inspection.

Where the culture administration department believes upon
examination that an application does not meet the conditions, or
where the public security organ believes that an application does
not comply with the requirements, it shall give the reasons
therefor to the applicant in writing.

Before putting into operation, the applicant shall apply to the
administrative department for industry and commerce for
registration on the basis of the Permit for Cyber-Culture Business
and draw the business license according to law.

Article 12 A unit
operating business premises for Internet access services shall not
alter, lease or lend its Permit for Cyber-Culture Business or
transfer it in any other forms.

Article 13 Where a unit operating business
premises for Internet access services changes the address of its
premises, or rebuilds or expands its premises, or changes the
number of computers or other important items, it shall obtain
approval from the original examining departments.

Where a unit operating business premises for Internet access
services changes its title, domicile, legal representative or
principal responsible person, registered capital, or website
address, or terminates its business activities, it shall go through
alteration registration or cancellation registration according to
law with the administrative department for industry and commerce,
and undertake the relevant procedures or put on a record with the
culture administration department and the public security
organ.

Chapter III Operations

Article 14 All units operating business
premises for Internet access services and consumers of Internet
access services shall not make use of the business premises for
Internet access services to create, download, reproduce, search,
release, spread or employ in other means the information involving
the following contents:

(1) opposing the basic principles set forth by the
Constitution;

(2) harming the unity, sovereignty or territorial integrity of
the State;

(3) divulging State secrets, harming State security or harming
State honor and interests;

(4) inciting national enmity or discrimination, undermining the
unity of the nationalities, or infringing upon national customs and
habits;

(5) undermining the State’s policy on religion, or advocating a
heresy or superstition;

(6) spreading rumors, disturbing the social order or undermining
social stability;

(7) advocating obscenity, gambling, violence or instigating a
crime;

(8) insulting or slandering another person, or infringing upon
another person’s lawful rights and interests;

(9) harming social ethics or excellent national cultural
traditions; or

(10) involving other contents prohibited by laws or
administrative regulations.

Article 15 All units operating business
premises for Internet access services and consumers of Internet
access services shall not conduct any of the following activities
that harm the security of information networks:

(1) intentionally creating or spreading computer viruses or
other destructive programs;

(2) illegally invading a computer information system or
destroying the functions, data or application programs of a
computer information system; or

(3) conducting other activities prohibited by laws or
administrative regulations.

Article 16 A unit
operating business premises for Internet access services shall be
connected to the Internet through an Internet access service
provider who has obtained an operation permit according to law, and
shall not be connected to the Internet by other
means.

The computers provided to consumers of Internet access services
by a unit operating business premises for Internet access services
shall be linked to the Internet through LAN, and shall not be
directly linked to the Internet.

Article 17 No unit operating business premises
for Internet access services may operate non-network games.

Article 18 All units operating business
premises for Internet access services and consumers of Internet
access services shall not make use of online games or take other
means to gamble or conduct any gambling activities in a disguised
form.

Article 19 A unit
operating business premises for Internet access services shall
implement technical management measures, establish an onsite
inspection system for the premises, and upon discovery of any
activities listed in Article 14, 15 or 18 of these Regulations or
any other illegal activities conducted by consumers of Internet
access services, stop them right away and report the case to the
culture administration department and the public security
organ.

Article 20 A unit
operating business premises for Internet access services shall hang
its Permit for Cyber-Culture Business and business license in a
prominent position in the premises.

Article 21 A unit
operating business premises for Internet access services shall not
admit minors to its premises.

A unit operating business premises for Internet access services
shall hang a no-minors-in sign in a prominent position at the
entrance to the premises.

Article 22 The business hours of each day for
the business premises for Internet access services shall be limited
between 0800 hours and 2400 hours.

Article 23 A unit
operating business premises for Internet access services shall
check and register the identity cards or other valid credentials of
consumers of Internet access services, and make a record on
relevant log-on information. The registered contents and copies of
the record shall be kept for a period not less than 60 days, and
shall be provided to the culture administration department and the
public security organ when they conduct inquiry according to law.
All the registered contents and copies of the record shall not be
modified or deleted within the save period.

Article 24 A unit
operating business premises for Internet access services shall
fulfill the responsibilities of maintaining the security of
information networks, public security and fire control security
according to law, and comply with the following
provisions:

(1) prohibiting lighting by flaming and smoking, and hanging the
no-smoking sign;

(2) prohibiting bringing in or storing any inflammable or
explosive goods;

(3) not allowing fitting any fixed bars sealing up doors or
windows;

(4) prohibiting blocking or locking up doors, windows, the safe
evacuation passage or emergency exit during business hours; and

(5) not allowing stopping the implementation of technical safety
measures without authorization.

Chapter IV Penalty Provisions

Article 25 Where the culture administration
department, the public security organ, the administrative
department for industry and commerce or other relevant departments
and their staff members take advantage of their office to accept
other persons’ money, property or other benefits, or illegally
approve the establishment of a unit operating business premises for
Internet access services that does not meet the statutory
requirements for establishment, or fail to fulfill the duty of
supervision according to law, or fail to investigate and deal with
the illegal acts that they discover according to law, thereby
violating the criminal law, the person directly in charge and other
directly responsible persons shall be investigated for criminal
liability in accordance with the provisions of the criminal law on
the crime of acceptance of bribes, the crime of power abuse, the
crime of neglect of duty or other crimes; those whose acts are not
serious enough for criminal punishment shall be given an
administrative sanction of demotion, dismissal from the post or
discharge from public employment according to law.

Article 26 Where any staff member of the
culture administration department, the public security organ, the
administrative department for industry and commerce or other
relevant departments is engaged in business activities providing
Internet access services or does so in a disguised form, or
participates in business activities of a unit operating business
premises for Internet access services or does so in a disguised
form, he shall be given an administrative sanction of demotion,
dismissal from the post or discharge from public employment
according to law.

Where the culture administration department, the public security
organ, the administrative department for industry and commerce or
other relevant department commits any of the acts specified in the
preceding paragraph, the person directly in charge and other
directly responsible persons shall be given administrative
sanctions in accordance with the provisions of the preceding
paragraph.

Article 27 Where anyone, in violation of the
provisions of these Regulations, establishes business premises for
Internet access services without authorization or engages in
business activities providing Internet access services without
authorization, the administrative department for industry and
commerce shall, solely or jointly with the public security organ,
ban such acts according to law, seal up the premises for the
illegal business activities, and impound the special instruments
and equipment for the illegal business activities; if the acts
violate the criminal law, he shall be investigated for criminal
liability in accordance with the provisions of the criminal law on
the crime of illegal operation; if the acts are not serious enough
for criminal punishment, the administrative department for industry
and commerce shall confiscate his illegal income and the special
instruments and equipment for illegal business activities; if the
illegal turnover is not less than 10,000 yuan, a fine of not less
than five times but not more than ten times of the illegal turnover
shall be imposed concurrently; if the illegal turnover is less than
10,000 yuan, a fine of not less than 10,000 yuan but not more than
50,000 yuan shall be imposed concurrently.

Article 28 Where a unit operating business
premises for Internet access services , in violation of the
provisions of these Regulations, alters, rents out, lends or
transfers in any other form its Permit for Cyber-Culture Business,
thereby violating the criminal law, it shall be investigated for
criminal liability in accordance with the provisions of the
criminal law on the crime of forging, altering, buying or selling
official documents, certificates or seals of a State organ; if its
acts are not serious enough for criminal punishment, the culture
administration department shall revoke its Permit for Cyber-Culture
Business and confiscate the illegal income; if the illegal turnover
is not less than 5,000 yuan, a fine of not less than two times but
not more than five times of the illegal turnover shall be imposed
concurrently; if the illegal turnover is less than 5,000 yuan, a
fine of not less than 5,000 yuan but not more than 10,000 yuan
shall be imposed concurrently.

Article 29 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, takes advantage of its premises to
create, download, reproduce, search, release, spread or use in any
other form any information involving the contents prohibited by the
provisions of Article 14 of these Regulations, thereby violating
the criminal law, it shall be investigated for criminal liability
according to law; if its acts are not serious enough for criminal
punishment, the public security organ shall give it a warning and
confiscate the illegal income; if the illegal turnover is not less
than 10,000 yuan, a fine of not less than two times but not more
than five times of the illegal turnover shall be imposed
concurrently; if the illegal turnover is less than 10,000 yuan, a
fine of not less than 10,000 yuan but not more than 20,000 yuan
shall be imposed concurrently; if the circumstances are serious, it
shall be ordered to suspend its business for rectification, or even
have its Permit for Cyber-Culture Business revoked by the culture
administration department.

An consumer of Internet access services who commits any of the
illegal acts specified in the preceding paragraph and thereby
violates the criminal law shall be investigated for criminal
liability according to law; if his acts are not serious enough for
criminal punishment, he shall be punished by the public security
organ in accordance with the provisions of the Regulations on
Administrative Penalties for Public Security.

Article 30 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, commits any of the following acts,
the culture administration department shall give it a warning, and
may concurrently impose a fine of not more than 15,000 yuan; if the
circumstances are serious, it shall be ordered to suspend its
business for rectification, or even have its Permit for
Cyber-Culture Business revoked by the culture administration
department:

(1) operating beyond the business hours;

(2) admitting minors to its premises;

(3) operating non-network games;

(4) stopping the implementation of technical management measures
without authorization; or

(5) failing to hang its Permit for Cyber-Culture Business or a
no-minors-in sign.

Article 31 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, commits any of the following acts,
the culture administration department or the public security organ
shall, in accordance with their respective functions and powers,
give it a warning, and may concurrently impose a fine of not more
than 15,000 yuan; if the circumstances are serious, it shall be
ordered to suspend its business for rectification, or even have its
Permit for Cyber-Culture Business revoked by the culture
administration department:

(1) failing to link the computers provided to consumers of
Internet access services to Internet through LAN;

(2) failing to establish an onsite inspection system for the
premises, or failing to stop illegal acts committed by consumers of
Internet access services upon discovery and report such acts to the
culture administration department or the public security organ;

(3) failing to verify and record the valid credentials of
consumers of Internet access services as required or failing to
record relevant log-on information;

(4) failing to keep the registered contents or copies of the
record within the required period, or modifying or deleting the
registered contents or copies of the record within the save period;
or

(5) failing to go through the relevant procedures or put on a
record with the culture administration department and the public
security organ when changing its title, domicile, legal
representative or principal responsible person, registered capital,
or website address, or terminating business activities.

Article 32 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, commits any of the following acts,
the public security organ shall give it a warning, and may
concurrently impose a fine of not more than 15,000 yuan; if the
circumstances are serious, it shall be ordered to suspend its
business for rectification, or even have its Permit for
Cyber-Culture Business revoked by the culture administration
department:

(1) lighting by flaming or failing to stop smoking upon
discovery, or failing to hang the no-smoking sign;

(2) allowing bringing in or storing any inflammable or explosive
goods;

(3) fitting fixed bars sealing up doors or windows on the
premises;

(4) blocking or locking up doors, windows, the safe evacuation
passage or emergency exit during business hours; or

(5) stopping the implementation of technical safety measures
without authorization.

Article 33 Where anyone violates the provisions
of the State on security of information networks, public security
administration, fire control administration, administration for
industry and commerce or telecommunication administration, and
thereby violating the criminal law, he shall be investigated for
criminal liability according to law; if his acts are not serious
enough for criminal punishment, he shall be punished by the public
security organ, the administrative department for industry and
commerce or the telecommunication administration department
according to law; if the circumstances are serious, his permit or
license shall be revoked by the original certificate-issuing
department.

Article 34 Where a unit operating business
premises for Internet access services has its Permit for
Cyber-Culture Business revoked as an administrative penalty for
violation of the provisions of these Regulations, it shall register
the alteration or cancellation with the administrative department
for industry and commerce according to law; if it fails to do so
after the time limit expires, the administrative department for
industry and commerce shall revoke its business license.

Article 35 Where a unit operating business premises for
Internet access services violates the provisions of these
Regulations and thereby has its Permit for Cyber-Culture Business
revoked, its legal representative or principal responsible person
shall not take the post of the legal representative or principal
responsible person of any unit operating business premises for
Internet access services within five years from the day when the
Permit for Cyber-Culture Business is revoked.

Where a unit operating business premises for Internet access
services established without authorization is banned according to
law, its principal responsible person shall not take the post of
the legal representative or principal responsible person of any
unit operating business premises for Internet access services
within five years from the day when it is banned.

Article 36 Where a fine is imposed as an administrative
penalty according to the provisions of these Regulations, the
separation of fine decisions from fine collections shall be
implemented in accordance with the relevant provisions of laws and
administrative regulations; all fines collected and illegal income
confiscated shall be turned over to the State Treasury.

Chapter V Supplementary Provisions

Article 37 These Regulations shall be effective as of November
15, 2002. The Measures for Administration of Business Premises for
Internet Access Services promulgated on April 3, 2001 by the
Ministry of Information Industry, the Ministry of Public Security,
the Ministry of Culture and the State Administration for Industry
and Commerce shall be repealed simultaneously.

(State Council)

Chapter I General Provisions

Article 1 These Regulations are formulated in
accordance with the Trademark Law of the People’s Republic of China
(hereinafter referred to as the Trademark Law).

Article 2 Provisions regarding the goods
trademarks in these Regulations shall apply to service marks.

Article 3 The use of a trademark, as referred
to in the Trademark Law and these Regulations, shall include the
use of the trademark on goods, packages or containers of the goods
or in trading documents, and the use of the trademark in
advertising, exhibition or any other business activities.

Article 4 Goods on which the State requires the
use of a registered trademark, as mentioned in Article 6 of the
Trademark Law, refer to those on which a registered trademark must
be used as required by laws or administrative regulations.

Article 5 Where a dispute arises in the
procedures of trademark registration or trademark review and
adjudication and the party concerned believes that its trademark
constitutes a well-known trademark, it may, in accordance with the
provisions of the Trademark Law and these Regulations, request the
Trademark Office or the Trademark Review and Adjudication Board to
determine whether its trademark constitutes a well-known trademark
or not and to refuse the application for trademark registration
which is in violation of the provisions of Article 13 of the
Trademark Law or to cancel the trademark registration which is in
violation of the provisions of Article 13 of the Trademark Law.
When an application for this purpose is filed, the party concerned
shall submit evidence to prove that its trademark constitutes a
well-known trademark.

At the request of the party, the Trademark Office or the
Trademark Review and Adjudication Board shall, on the basis of
ascertaining the facts, determine whether its trademark is a
well-known one or not in accordance with the provisions of Article
14 of the Trademark Law.

Article 6 For geographical indications referred
to in Article 16 of the Trademark Law, applications may be filed to
register them as certification marks or collective marks under the
provisions of the Trademark Law and these Regulations.

Where a geographical indication is registered as a certification
mark, any natural person, legal person or other organization whose
goods satisfy the conditions under which the geographical
indication is used may request the use of the certification mark,
and the organization in control of such certification mark shall
permit the use. Where a geographical indication is registered as a
collective mark, any natural person, legal person or other
organization whose goods satisfy the conditions under which the
geographical indication is used may request the membership of the
society, association or any other organization that has the
geographical indication registered as a collective mark, and the
society, association or any other organization shall accept the
membership in accordance with its articles of association; those
who do not request the membership of the society, association or
any other organization that has the geographical indication
registered as a collective mark may legitimately use the
geographical indication, and the society, association or any other
organization is not entitled to prohibit such use.

Article 7 Where a party entrusts a trademark
agency with the application for registration of a trademark or with
the handling of other trademark matters, a Power of Attorney shall
be submitted. The Power of Attorney shall state the contents and
the scope of powers; the Power of Attorney of a foreigner or
foreign enterprise shall also state the nationality of the
principal.

Procedures for notarizing and authenticating the Power of
Attorney and certifying documents relating thereto of a foreigner
or foreign enterprise shall be undertaken based on the principle of
reciprocity.

As mentioned in Article 18 of the Trademark Law, a foreigner or
foreign enterprise refers to a foreigner or foreign enterprise
having no habitual residence or place of business in China.

Article 8 The Chinese language shall be used in
applying for trademark registration or handling other trademark
matters.

Where any certificate, certifying document or evidence submitted
in accordance with the provisions of the Trademark Law and these
Regulations is written in a foreign language, a Chinese translation
shall be attached thereto; if no Chinese translation is attached,
it shall be deemed that the certificate, certifying document or
evidence has never been submitted.

Article 9 In any of
the following situations, a staff member of the Trademark Office or
the Trademark Review and Adjudication Board shall voluntarily
recuse himself, and a party or an interested person may demand his
recusal:

(1) if he is a party, or a close relative of a party or an
agent;

(2) if he has any other relation with a party or an agent that
may affect impartiality; or

(3) if he has an interest with the application for trademark
registration or the handling of other trademark matters.

Article 10 Except as otherwise provided in
these Regulations, the date on which a party submits documents or
papers to the Trademark Office or the Trademark Review and
Adjudication Board shall be the date of delivery if the documents
or papers are submitted in person, or be the mailing date indicated
by the postmark if they are sent by mail, or, if the mailing date
indicated by the postmark is illegible or there is no postmark, be
the date on which all of the papers or documents are received in
the Trademark Office or the Trademark Review and Adjudication
Board, except if the party can provide evidence of the exact date
indicated by the postmark.

Article 11 The documents of the Trademark
Office or the Trademark Review and Adjudication Board may be sent
to a party by mail, in person or by other means. Where the party
entrusts a trademark agency, the documents shall be considered
served on the party once they are delivered to the trademark
agency.

The date of service of any document on a party by the Trademark
Office or the Trademark Review and Adjudication Board shall, if the
document is sent by mail, be the receiving date indicated by the
postmark on which the document is received; if the receiving date
indicated by the postmark is illegible or there is no postmark, the
document shall be considered served on the party 15 days after the
date on which the document is sent. If the document is delivered in
person, the date of service shall be the date on which the document
is delivered. If the document cannot be sent by mail or delivered
in person, it may be served on the party by means of public notice,
and the service of the document shall be considered completed 30
days after the date on which the public notice is issued.

Article 12 Applications for international
registration of trademarks shall be dealt with in accordance with
the relevant international treaties to which China has acceded. The
specific measures therefor shall be formulated by the authority of
administration for industry and commerce under the State
Council.

Chapter II Application for Trademark
Registration

Article 13 Anyone who applies for registration
of a trademark shall file an application based on the categories in
the published Classification of Goods and Services. For each
application for registration of a trademark, the applicant shall
submit to the Trademark Office one copy of the Application for
Trademark Registration and five copies of reproductions of the
trademark; if color or colors is or are designated, five copies of
colored reproductions of the trademark and one copy of the black
and white design shall be submitted.

The reproductions of a trademark must be clear, easy to be
pasted up, printed on smooth and clear durable paper or use
photographs as a substitute, and the length and breadth of which
shall be not more than ten centimeters and not less than five
centimeters each.

If applying for the registration of a three-dimensional sign as
a trademark, the applicant shall make a statement in the
application, and submit a reproduction thereof by which the
three-dimensional shape can be determined.

If applying for the registration of the combination of colors as
a trademark, the applicant shall make a statement in the
application, and submit the descriptions thereof.

If applying for the registration of a collective mark or a
certification mark, the applicant shall make a statement in the
application, and submit the documents certifying the qualifications
of the subjects and the rules on the administration of the use of
the mark.

Where a trademark is, or consists of, foreign words, their
Chinese meanings shall be indicated.

Article 14 When applying for the registration
of a trademark, the applicant shall submit a duplicated copy of the
valid credentials that can certify its identity. The name in which
the applicant has filed the application for trademark registration
shall be consistent with that shown in the credentials
submitted.

Article 15 The goods or services shall be
listed as specified in the Classification of Goods and Services;
where any goods or services are not included in the Classification
of Goods and Services, a description of the goods or services in
question shall be attached to the application.

Applications for trademark registration and other related
documents shall be typewritten or printed.

Article 16 Where an application is jointly
filed for the registration of a trademark, a representative shall
be designated in the application; if no representative is
designated, the first person in order in the application shall be
the representative.

Article 17 Where an applicant modifies its
name, address, agent, or deletes the goods designated, it may go
through the formalities of modification with the Trademark
Office.

Where an applicant assigns an application for trademark
registration, it shall go through the formalities of assignment
with the Trademark Office.

Article 18 The filing date of an application
for trademark registration shall be the date on which the
application documents are received by the Trademark Office. Where
the application formalities are complete and the application
documents are filled in as required, the Trademark Office shall
accept the application and notify the applicant in writing. Where
the application formalities are not complete and the application
documents are not filled in as required, the Trademark Office shall
not accept the application and shall notify the applicant in
writing and give the reasons therefor.

Where the application formalities are basically complete or the
application documents are basically in compliance with the
provisions, but there is a need for supplements or amendments, the
Trademark Office shall notify the applicant to make supplements or
amendments, requesting it to make supplements or amendments to the
specified parts and deliver them back to the Trademark Office
within 30 days from the date of receipt of the notification. Where
the supplements or amendments are made and delivered back to the
Trademark Office within the specified time limit, the filing date
shall be retained; where no supplements or amendments are made at
the expiration of the specified time limit, the application shall
be considered abandoned and the Trademark Office shall notify the
applicant in writing.

Article 19 Where two or more applicants apply
respectively on the same day for the registration of identical or
similar trademarks in respect of the same or similar goods, both or
all of the applicants shall, within 30 days from the date of
receipt of the notification of the Trademark Office, submit the
evidence of prior use of such trademarks before applying for
registration. Where the use started on the same day or none is yet
in use, both or all of the applicants may, within 30 days from the
date of receipt of the notification of the Trademark Office,
conduct consultations on their own and submit a written agreement
to the Trademark Office; if they are not willing to conduct
consultations or they fail to reach an agreement through
consultations, the Trademark Office shall notify both or all of the
applicants to determine one of them by drawing lots and refuse the
applications for registration filed by others. Where an applicant
has been notified by the Trademark Office but fails to participate
in the drawing of lots, the application filed by such an applicant
shall be considered abandoned, and the Trademark Office shall
notify the applicant in writing who does not participate in the
drawing of lots.

Article 20 Where a priority is claimed in
accordance with the provisions of Article 24 of the Trademark Law,
the copies of the application documents submitted by the applicant
for the first time for registering the trademark in question shall
be certified by the competent trademark authority which accepts the
said application, and the filing date and serial number of the
application shall be indicated.

Where a priority is claimed in accordance with the provisions of
Article 25 of the Trademark Law, the certifying documents submitted
by the applicant shall be authenticated by the institution
specified by the authority of administration for industry and
commerce under the State Council, except that the international
exhibition on which the applicant’s goods are displayed is held
within Chinese territory.

Chapter III Examination of Applications for Trademark
Registration

Article 21 The Trademark Office shall, in
accordance with the relevant provisions of the Trademark Law and
these Regulations, examine the applications for trademark
registration it has accepted, granting preliminary approval to
those that are in compliance with the provisions and to the
applications for the registration of trademarks used on some of the
designated goods that are in compliance with the provisions, and
publishing them; the application that is not in compliance with the
provisions and the application for the registration of a trademark
used on some of the designated goods that is not in compliance with
the provisions shall be refused, the applicant shall be notified in
writing and the reasons therefor shall be given.

Where the Trademark Office grants preliminary approval to an
application for the registration of a trademark used on some of the
designated goods, the applicant may, before the date on which the
opposition period expires, apply to abandon the application for the
registration of the trademark used on some of the designated goods;
where the applicant abandons the application for the registration
of a trademark used on some of the designated goods, the Trademark
Office shall withdraw the previous preliminary approval, terminate
the examination proceedings and republish it.