The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions and municipalities directly under the Central Government; the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo:

For the purpose of carrying out the go-global strategy of development, promoting the healthy development of overseas direct investment of domestic institutions, implementing the balanced management of cross-border capital flows, and safeguarding the basic equilibrium in the balance of payments of China, the SAFE has formulated the Regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions (hereinafter referred to as the Regulations) in line with the Regulations of the Peoples Republic of China on Foreign Exchange Administration and other relevant regulations. The Regulations are herein promulgated and shall take effect as of August 1, 2009. Please comply with the Regulations in handling the relevant businesses.

On receiving this Circular, all SAFE branches and foreign exchange administrative departments shall transmit this Circular in a timely manner to all sub-branches, urban commercial banks, rural commercial banks, and foreign-funded banks under their administration. All Chinese-funded designated foreign exchange banks shall transmit this Circular in a timely manner to the branches under their administration.

July 13, 2009

Regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions

Chapter ` General Provisions

Article 1 In order to promote and facilitate the overseas direct investment activities of domestic institutions, standardize the foreign exchange administration of overseas direct investment, and promote a basic equilibrium in the balance of payments of China, these Regulations are hereby formulated in line with the Regulations of the Peoples Republic of China on Foreign Exchange Administration and other relevant regulations.

Article 2  Overseas direct investment as stated in these Regulations refers to acts by domestic institutions wherein the domestic institutions establish or acquire rights or interests outside the territory of China, such as ownership, rights of control or business management rights of existing enterprises or projects by means of establishment (sole proprietorships, joint ventures, cooperative business operations), mergers and acquisitions, equity participation, and so forth after undergoing examination and receiving approval from the overseas direct investment authorities.

Article 3 The State Administration of Foreign Exchange and its branches (hereinafter referred to as the Foreign Exchange Administrations) are responsible for implementing supervision and management over the foreign exchange receipts and payments and the foreign exchange registration arising from the overseas direct investment of domestic institutions.

Article 4  Domestic institutions can make overseas direct investments with self-owned foreign exchange funds, domestic foreign exchange loans in conformity with the regulations, and foreign exchange purchased with RMB or tangible assets, intangible assets, and other foreign exchange assets examined and approved by the Foreign Exchange Administrations. Profits generated from the overseas direct investment of domestic institutions may also be retained overseas for the purpose of overseas direct investment.

Self-owned foreign exchange funds referred to in the preceding paragraph include: foreign exchange funds in foreign exchange accounts under the current account, capital accounts of foreign-invested enterprises, and so forth.

Article 5 The State Administration of Foreign Exchange can make adjustments to the relevant policies concerning the scope of the sources and management modes of the foreign exchange funds for the overseas direct investment of domestic institutions and the overseas retention of profits generated from their overseas direct investment according to the situation in Chinas balance of payments and the situation in Chinas overseas direct investment.

Chapter a Foreign Exchange Registration and Outward Remittances of Funds for Overseas Direct Investment

Article 6 The Foreign Exchange Administrations shall carry out a foreign exchange registration and recording system for overseas direct investments of domestic institutions and for assets and relevant rights and interests generated from such investments.

Domestic institutions shall demonstrate the sources of the foreign exchange funds for their overseas investment when registering foreign exchange for overseas direct investment at the Foreign Exchange Administrations in their localities.

Article 7 After undergoing examination and obtaining approval from the overseas direct investment authorities, domestic institutions shall register the foreign exchange for their overseas direct investment at the Foreign Exchange Administrations in their localities with the following materials:

1. Filing a written application and filling out the Application Form for Foreign Exchange Registration of Overseas Direct Investment (for the format of the form, please refer to Attachment 1);

2. Materials demonstrating the sources of the foreign exchange funds;

3. A valid business license or evidence of registration and the organizational code certificate of the domestic institution;

4. Approval documents or certificates that have been issued by the overseas direct investment authorities concerning the investments.

5. In cases where preceding expenses are remitted outward, the relevant documents explaining such remittances as well as evidence of such remittances shall be provided;

6. Other materials required by the Foreign Exchange Administrations.

The Foreign Exchange Administrations shall register the relevant situations in the corresponding business systems after examining and verifying the said materials, and shall grant the domestic institutions a foreign exchange registration certificate for overseas direct investment. The domestic institutions shall handle the foreign exchange receipt and payment business under overseas direct investment through the use of the said registration certificate.

Where one case of overseas direct investment is made collaboratively by a number of domestic institutions, the Foreign Exchange Administrations in the localities of the domestic institutions shall separately grant the relevant domestic institutions a foreign exchange registration certificate for overseas direct investment, and shall register the corresponding situations in the relevant business systems.

Article 8 Domestic institutions shall complete the procedures for outward remittances of overseas direct investment funds at the designated foreign exchange banks by presenting to the banks the approval document and the foreign exchange registration certificate for overseas direct investment issued by the overseas direct investment authorities. The designated foreign exchange banks shall handle the procedures after examining the authenticity of the documents.

The cumulative amount of money remitted outward by the designated foreign exchange banks for handling remittances for overseas direct investment funds for domestic institutions shall not exceed the total amount of foreign exchange funds for overseas direct investment registered in advance by these domestic institutions in the relevant business systems of the Foreign Exchange Administrations.

Article 9  The domestic institutions shall, within 60 days after the occurrence of the following circumstances, handle the foreign exchange registration, the modification or recording procedures for overseas direct investment with a foreign exchange registration certificate for overseas direct investment, the approval document or recording document issued by the overseas direct investment authorities, as well as the relevant materials demonstrating the authenticity of such documents at the Foreign Exchange Administration in their localities:

1. When the domestic institution retains the profits generated from their overseas direct investment outside the territory of China and foreign exchange revenue under the capital account generated from capital reduction, equity conversion, liquidation, and so forth of overseas enterprises for the purpose of establishing, acquiring, or participating in the equity of unregistered overseas enterprises, shall complete the foreign exchange registration procedures for the said direct investment activities;

2. In case of any changes in the basic information of the registered overseas enterprises, such as an modification of the corporate name, terms of operation, JV and cooperative partners, and manner of cooperation and so forth, or the occurrence of a capital increase, capital reduction, equity transfer or swap, merger or split, and so forth, the domestic institutions shall go through the foreign exchange registration modification procedures for overseas direct investment in light of the said change in circumstances;

3. In the case of the occurrence of significant matters such as long-term equity or debt investment, external guarantees, and so forth of registered overseas enterprises which do not involve a change in capital, the domestic institutions concerned shall complete the foreign exchange recording procedures for overseas direct investment for the said significant matters.

Article 10  In cases where the equity of overseas enterprises held by domestic institutions is cancelled due to causes such as equity transfers, bankruptcy, dissolution, liquidation, expiry of operations, and so forth, the domestic institutions shall, within 60 days after obtaining relevant the documentary evidence issued by the overseas direct investment authorities, complete the foreign exchange registration procedures for the cancellation of the overseas direct investment by presenting the relevant materials to the Foreign Exchange Administrations in their localities.

Article 11 The domestic institutions may provide commercial loans or external financial guarantees for the enterprises in which its overseas direct investment is made in line with the Regulations of the Peoples Republic of China on Foreign Exchange Administration and other relevant regulations.

Article 12 Where a domestic institution makes an investment in a country or region with foreign exchange controls, such institution can open a special foreign exchange account for payments and receipts of foreign exchange funds related to the investment in a country or region not subject to foreign exchange controls in line with the regulations.

Chapter b Outward Remittances of Preceding Expenses for Overseas Direct Investment

Article 13 The preceding expenses for overseas direct investmentrefer to expenses payable overseas by domestic institutions related to their overseas direct investment prior to the establishment of projects or enterprises by the domestic institutions through overseas investment, which include but are not limited to:

1. Guarantee funds payable by the domestic institutions for the purchase of equity or overseas asset interests and rights of overseas enterprises according to the provisions as stipulated by the laws in the localities of the projects or the requirements of the transferor;

2. Bidding deposits payable by the domestic institutions in the process of bidding and tendering of overseas projects;

3. Expenses needed for conducting a market survey, leasing an office site and equipment, recruiting staff, and inviting overseas intermediary institutions to provide services prior to the initiation of the overseas direct investment.

Article 14 The preceding expenses remitted by the domestic institutions overseas normally shall not be more than 15% of the total amount of overseas direct investment which the domestic institutions have already applied for with the direct investment authorities (hereinafter referred to as the total amount of overseas direct investment). The domestic institutions shall apply for the remittances of such expenses at the Foreign Exchange Administrations in their localities with the following materials:

1. A written application (including the total amount of overseas direct investment, the amount of contributions by each party, the form of contributions, and demonstration of the amount, use, fund sources, and so forth of the preceding expenses);

2. A valid business license or evidence of registration and the organizational code certificate of the domestic institutions;

3. Relevant documents demonstrating the participation of the domestic institutions in tendering, acquisition, or JV and cooperative projects (including a letter of intent signed by the Chinese and foreign parties, a memorandum or framework agreement, and so forth);

4. The written application submitted by the domestic institutions to the overseas direct investment authorities;

5. A Letter of Commitment in written form issued by the domestic institutions on the use of the preceding expenses;

6. Other relevant materials as required by the Foreign Exchange Administrations.

Where the preceding expenses remitted outward by the domestic institutions for overseas direct investment exceed 15% of the total amount of overseas direct investment, the domestic institutions shall file an application for such remittances with the said materials to the SAFE branches in their localities (including the foreign exchange administrative departments).

The designated foreign exchange banks shall handle the foreign exchange purchase and payment procedures for the domestic institutions on the basis of the approval documents issued by the Foreign Exchange Administrations, and shall provide feedback on relevant information to the Foreign Exchange Administrations in a timely manner.

Article 15 The preceding expenses remitted by domestic institutions overseas shall be listed in the total amount of overseas direct investment of the domestic institutions. The designated foreign exchange banks shall deduct the amount of the outward remitted preceding expenses from the total amount of overseas direct investment when handling the outward remittance of overseas direct investment funds of domestic institutions.

Article 16 Where domestic institutions fail to complete the examination and approval procedures for overseas direct investment within 6 months after the date of the outward remittance of the preceding expenses, the domestic institutions shall transfer the remaining funds in their overseas accounts to the original domestic foreign exchange accounts from which the funds have been remitted. In cases where the remitted foreign exchange funds are identified as foreign exchange purchased with RMB, the domestic institutions can complete the procedures for exchange settlement at the designated foreign exchange banks with the original foreign exchange purchase vouchers.

The Foreign Exchange Administrations in the localities of the domestic institutions shall be responsible for supervising the inward transfer of the remaining preceding expenses by domestic institutions. If an extension of the 6-month period is required for this work, the said 6-month period can be properly extended after the extension is examined and approved by the Foreign Exchange Administrations that have conducted the examination and approval procedures for the remittance of the preceding expenses; however, the period of extension shall not exceed a maximum of 12 months.

Chapter c Inward Remittances of Funds and Foreign Exchange Settlement under Overseas Direct Investment

Article 17 Where the domestic institutions remit profits generated from their overseas direct investment to within China, such profits can be deposited in foreign change accounts under the current account of the said domestic institutions or can handle the foreign exchange settlement formalities.

The designated foreign exchange banks shall handle the procedures for account entering or exchange settlement of profits generated from the overseas direct investment of domestic institutions after ensuring the authenticity of the relevant materials of the domestic institutions, such as the foreign exchange registration certificate for overseas direct investment, the relevant financial statement and decision on the disposal of the profits of the overseas enterprises, the annual examination and verification inspection report for the previous year and so forth.

Article 18 The foreign exchange revenue under the capital account of the domestic institutions that  is generated from capital reductions, equity transfers, liquidation, and so forth of overseas enterprises established by such institutions shall be put into an account via the special foreign exchange accounts for asset realization, or shall be retained outside of China with the approval from the Foreign Exchange Administrations. The opening and account entering of the special foreign exchange accounts for asset realization shall be subject to examination and approval of the Foreign Exchange Administrations in the localities of the domestic institutions according to the relevant regulations. Foreign exchange settlement of funds in such accounts shall be subject to applications handled at the designated foreign exchange banks according to the relevant regulations.

Article 19 Where domestic institutions transfer in full or in part the equity of enterprises under their overseas direct investment to other domestic institutions, the relevant funds shall be paid in RMB within the territory of China. The transferors of such equity shall complete the change or cancellation procedures for foreign exchange registration for their overseas direct investment at the Foreign Exchange Administrations in their localities. The transferees of such equity shall complete the foreign exchange registration procedures for overseas direct investment for transferred equity at the Foreign Exchange Administrations in their localities.

Chapter d Supplementary Provisions

Article 20 Domestic institutions (excluding financial institutions) shall participate in the annual inspections in line with the relevant regulations on joint annual inspections for overseas investment. Where one case of overseas direct investment is jointly implemented by a number of domestic institutions, such institutions shall separately participate in the foreign exchange annual inspection at the Foreign Exchange Administrations in their localities.

Article 21 Direct investment made by domestic institutions in Hong Kong SAR, Macao SAR, and Taiwan Province shall be subject to administration in line with these Regulations.

Article 22  Unless otherwise stipulated by the relevant supervisory departments on fund use of overseas direct investment of domestic financial institutions, the foreign exchange administration on overseas direct investment of domestic financial institutions shall be implemented in line with these Regulations.

Article 23 Such businesses as foreign exchange receipts and payments and foreign exchange registration under overseas direct investment by domestic institutions shall be handled via the corresponding business systems according to the relevant regulations.

The designated foreign exchange banks shall provide feedback to the Foreign Exchange Administrations on information about the foreign exchange receipts and payments under overseas direct investment via the relevant business systems.

Article 24 Any domestic institution in breach of these Regulations shall be penalized by the Foreign Exchange Administrations in line with the Regulations of the Peoples Republic of China on Foreign Exchange Administration. Where the acts of a domestic institution constitute a crime, such institution shall assume criminal responsibility in accordance with the relevant laws.

Article 25 These Regulations shall be interpreted by the State Administration of Foreign Exchange.

Article 26 These Regulations shall take effect as of August 1, 2009. Other regulatory documents listed in Annex a shall be annulled as of the date of implementation of these Regulations. Where previous regulations are inconsistent with these Regulations, these Regulations shall prevail.

Annex (omitted)