Approved by the Fourth Session of the Sixth National People's
Congress on April 12, 1986, revised in accordance with the Decision to
Revise the Foreign Capital Enterprises Law of the People's Republic
of China made at the 18th meeting of the Standing Committee of the Ninth
National People's Congress on October 31, 2000, promulgated by
Order No.41 of the President of the People's Republic of China
to go into effect on the day it is promulgated
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
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
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
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
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
The salary and other lawful income of foreign employees of foreign capital
enterprises may be remitted abroad after income tax is paid, according
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.