Laws and Regulations

Chinese Law

Interim Measures for the Administration of the Foreign-invested Development and Management of Tracts of Land

(Promulgated by Decree No. 56 of the State Council of the People’s Republic of China on May 19, 1990 and effective as of the date of promulgation)

Article 1 These Measures are formulated for the purpose of
attracting foreign investment for the development and
management of tracts of land (hereinafter referred to as
“tract development”) so as to intensify the construction
of public works, improve the environment for investment,
introduce foreign-invested technically advanced enterprises
and export-oriented enterprises and develop the
export-oriented economy.

Article 2 The term “tract development” as used in these
Measures means that after obtaining the right to the use of
state-owned land, the investors shall carry out, as planned,
comprehensive development and construction on the land,
including levelling the ground and constructing such public
works as water supply and drainage systems, power and heat
supply systems, roads and communications networks, and
communications facilities, so that conditions shall be
created for the land to be used for industrial or other
construction purposes. The investor shall then transfer the
right to the use of the land for operating public utilities,
or proceed to construct such above-ground buildings as
industrial houses and the supporting facilities for
production and everyday life services and engage in the
business activities of transferring or leasing these
above-ground buildings.

Definite development targets shall be specified for tract
development and there shall be definite construction
projects that are intended to make use of the developed
land.

Article 3 With respect to a project to attract foreign
investment for tract development, the municipal or county
people’s government shall organize the drawing up of a
tract development project proposal (or a feasibility study
report, the same hereinafter).

With respect to a tract development project which is to
make use of 1,000 mu or less of arable land or 2,000 mu or
less of other land and whose amount of investment for
comprehensive development falls within the limits of powers
for examination and approval of the people’s government of
the province, autonomous region or municipality directly
under the Central Government (including the people’s
government or administrative committee of a special economic
zone, the same hereinafter), the project proposal shall be
submitted to the people’s government of the province,
autonomous region or municipality directly under the Central
Government for examination and approval.

With respect to a tract development project which is to
make use of more than 1.000 mu of arable land or more than
2,000 mu of other land and whose amount of investment for
comprehensive development exceeds the limits of powers for
examination and approval of the people’s government of the
province, autonomous region or municipality directly under
the Central Government, the project proposal shall be
submitted, through the people’s government of the province,
autonomous region or municipality directly under the Central
Government, to the State Planning Commission for
examination, verification and overall balancing and then to
the State Council of the People’s Republic of China for
examination and approval.

Article 4 Foreign investors who intend to invest for tract
development shall, in accordance with the respective
provisions of the Law of the People’s Republic of China on
Chinese-Foreign Equity Joint Ventures, the Law of the
People’s Republic of China on Chinese-Foreign Contractual
Joint Ventures and the Law of the People’s Republic of
China on Foreign-Capital Enterprises, form a Chinese-foreign
equity joint venture, or a Chinese-foreign contractual joint
venture or a foreign-capital enterprise (hereinafter
referred to as a “development enterprise”) to engage in
the development and management of the tract of land.

Development enterprises shall be governed and protected by
the law of China and all their activities shall abide by the
laws and regulations of the People’s Republic of China.

Development enterprises shall have the right to act on
their own in business operations and management in
accordance with the law, but they shall have no
administrative power in their development areas. The
relationship between a development enterprise and other
enterprises shall be of a commercial nature.

The State encourages the state-owned enterprises to form
development enterprises with foreign investors by using the
right to the use of state-owned land as investment or
condition of co-operation.

Article 5 Development enterprises shall obtain the right to
the use of the state-owned land in their development areas
in accordance with the law.

In assigning the right to the use of State-owned land to a
development enterprise, the people’s government of the
municipality or county where the development area is located
shall, in accordance with the laws and administrative rules
and regulations of the State on the administration of land,
rationally specify the bounds of the tract of land, the
purpose of its use, the term of the right, the assignment
fee and other conditions, sign a contract for assigning the
State-owned land and submit it for approval in accordance
with the limits of powers for examination and approval with
respect to the assignment of the right to the use of
State-owned land.

Article 6 After the right to the use of State-owned land
has been assigned, the resources and objects buried
thereunder shall continue to be owned by the State. If it is
necessary to exploit and utilize them, the exploitation and
utilization shall be administered in accordance with the
pertinent laws and administrative rules and regulations of
the State.

Article 7 A development enterprise shall draw up a tract
development plan or a feasibility study report which shall
specify the overall targets and respective targets for
different stages, the specific details and requirements in
the actual development, and the plan to utilize the
developed land.

The tract development plan or feasibility study report
shall, after examination and verification by the municipal
or county people’s government, be submitted to the
people’s government of the province, autonomous region or
municipality directly under the Central Government for
examination and approval. The examining and approving
authorities shall organize the competent authorities
concerned to provide co-ordination concerning the
construction and management of the relevant public works.

Article 8 If the development area is within the limits of a
planned urban area, the various items of development and
construction shall be in conformity with the requirements of
city planning and be submitted to the administration of the
planning.

The various items of construction in a development area
shall be in conformity with the laws, administrative rules
and regulations and standards of the State concerning
environmental protection.

Article 9 A development enterprise may transfer the right
to the use of the state-owned land only after it has carried
out the plan of tract development and satisfied all the
conditions prescribed in the contract for assigning the
right to the use of the state-owned land. No development
enterprise that fails to invest for the development of the
land in accordance with the conditions prescribed in the
contract for assigning the right to the use of the
state-owned land and the requirements of the plan for tract
development may transfer the right to the use of the
state-owned land.

The transfer or mortgage of the right to the use of
state-owned land by development enterprises and other
enterprises, and the termination of the right to the use of
state-owned land shall be handled in accordance with the
laws and administrative rules and regulations of the State
on the administration of land.

Article 10 A development enterprise may attract investors
to the development area to make investment, accept the
transferred right to the use of state-owned land and launch
enterprises. Enterprises with foreign investment shall be
established in accordance with the respective provisions of
the Law of the People’s Republic of China on
Chinese-Foreign Equity Joint Ventures, the Law of the
People’s Republic of China on Chinese-Foreign Contractual
Joint Ventures and the Law of the People’s Republic of
China on Foreign-Capital Enterprises.

The launching of enterprises in the development areas shall
be in conformity with the State policy concerning the
investment in industries. The State encourages the launching
of technically advanced enterprises and export-oriented
enterprises.

Article 11 The postal and communication undertakings in the
development areas shall be placed under the unified
planning, construction and management of the postal
department. Or they may, with the approval of the province,
autonomous region or municipality directly under the Central
Government, be constructed with investment by a development
enterprise; or the development enterprise and the postal
department may pool their investment for the construction of
communications facilities, which, in either case, shall be
transferred, after completion, to the postal department for
operation, with financial compensation to be given to the
development enterprise in accordance with the contract
signed between the two parties.

Article 12 Development enterprises that invest in public
utilities of their own such as power stations, heat stations
and water plants within the development area may operate the
business of power, water and heat supplies within the
development area or hand them over to the local enterprises
of public utilities for operation. If the capacity of the
public utilities is in surplus, which renders it necessary
to be supplied to places outside the development area or to
be connected to a network outside the development area for
operation, the development enterprise shall sign a contract
with the local enterprises of public utilities in accordance
with the pertinent provisions of the State and operate in
accordance with the conditions prescribed in the contract.

If it is necessary for a development area to use water and
power resources from outside, the business thereof shall be
operated by the local enterprises of public utilities.

Article 13 If a development area covers a coastal port or
bay, or a river port sector, the coastline or riverside line
shall be placed under the unified planning and
administration of the State. The development enterprise may
construct and operate a special port area and wharf in
accordance with the unified planning of the competent state
communication authorities.

Article 14 No business activities or social activities that
are banned by the laws and administrative rules and
regulations of the State may be engaged within the
development areas.

Article 15 If special administrative measures are required
in respect of import and export administration and Customs
administration for a development area which is mainly
intended for the operation of export processing enterprises,
these shall be submitted to the State Council of the
People’s Republic of China for approval and specific
measures of administration shall be formulated by the
competent authorities of the State.

Article 16 The general administration, judicial
administration, port administration and Customs
administration in a development area shall be organized and
exercised respectively by the competent authorities of the
State, the people’s government of the 1ocality where the
development area is situated, and the judicial organs that
have jurisdiction.

Article 17 Tract development with investment by firms,
enterprises and other economic organizations or individuals
from the regions of Hong Kong, Macao and Taiwan shall be
governed with reference to these Measures.

Article 18 These Measures shall be put into effect within
the limits of the specific economic zones, the open coastal
cities and the open coastal economic zones as of the date of
promulgation.