Jenny Zhang, Attorney at Law, Lawyer, Law firm in Dalian, China

Recently,  a lot of my foreigner friends just consult how to get a “green card” in China. So here I just extract some details about Measures for Administration of Examination and Approval of Foreigners’ Permanent Residence in China.

 In accordance with Article 6 of the above Measures, those who want to apply Chinese green card shall abide by Chinese laws, be in good health and without criminal record, and also shall meet at leat one of the following requirements:

1. having made direct investment in China with stable operation and a good tax paying record for three successive years;

2. having been holding the post of deputy general manager, deputy factory director or above or of associate professor, associate research fellow and other associate senior titles of professional post or above or enjoying an equal treatment, for at least four successive years, with a minimum period of residence in China for three cumulative years within four years and with a good tax paying record;

3. having made a great deal and outstanding contribution to and being specially needed by China;

4. Being the spouse or unmarried child under 18 years old of a person with reference to the item (1),(2)or (3) of this paragraph.

5. Being the spouse of a Chinese citizen or of a foreigner with permanent residence status in China, in a marriage relationship for at least five years, with at least five successive years of  residence in China and at least nine months of stay in China each year, and having stable source of subsistence and a dwelling place.

6. Being unmarried minors who are dependent on their parents; or

7. Being over sixty years old, have no direct relations abroad, are dependent on direct relations inside China and they have lived in China for five years during which they have spent at least 9 months per year in China and they have a stable income and residence.

In order to qualif paragraph 1 above, the minimum investment requirements, which the investor must satisfy, are investment of:

• US$500,000 in the encouraged category of industries;

• US$500,000 in China’s western region or in poor counties that the state has singled out for development;

• US$1 million in China’s central region; or

• US$2 million in China;

 TRIAL in China.

There is just an oral contract between the parties. How does the local court have the jurisdiction over such an oral contract without choice of forum? In this situation,  we must adpot the rules of choice of law.

In accordance with basic principlies of choice of law with respect of contract dispute, the closest relationship is the standard to decide the forum. In contract dispute, the place of performance has  the closest relationship with choice of forum. The parties have not expressly agreed upon the place of  performance, therefore, under Chinese Contract Law Article 61, paragraph (c), the place of performance shall be at  where the obligator is located. The parties agreed to deliver the goods with the term of CIF,  according to “International Incoterms 2000″, the Seller shall complete delivery obligations in the port of shipment, DAlIAN.  THUS, Dalian is the actual place of performance.

Without express agreement of place of performance, where CIF is adpoted, the Seller can lodge a suit in Dalian. BUT where both parties choose D-terms, it is hard for local Chinese court to accept the case. 

 Because international enforcement is very difficult and time comsuming, for such a small order, the Seller wouldnot choose to enforce it overseas. Then WHY DO WE LODGE A SUIT? The answer is , under Law of the People’s Republic of China on Control of the Entry and Exit of Aliens, we could apply the Chinese court to issue an injunction restricting the default party to leave China since it involves in unsolved civil cases. I guess that is most of the  foreign businessmen are reluctant to accept.

Recently, I got a case, a payment dispute in  international sales of goods.

China is an typical exporting country, foreign importers and distributors just got enough proceeds from importing Chinese goods. As most foreigners are trustworthy, Chinese exporters get used to sell goods overseas just on open account. In the good time, there is no problem. But depression finally came,  a lot of credit also become “credit”. Many Chinese exporters can’t get the payment any longer.

When the importer established  an agency in China,  it is easy to lodge a lawsuit in China. But if the defaulting party has  no office and property in China, how would we do? Solution?

Step One  Arbitration  Here I don’t want to talk about the advantages of arbitration. Since almost all the countries around the world participated in New York Convention, it’s just SO easy to enforce the arbitual award. In oral contracts, generally the parties haven’t even mentioned the possible disputes let alone resolution. There is, therefore, no arbitration clause in the contracts. If any party intends to choose arbitration, it can only resort to the agreement from the other party. However, when both parties really begin their “fight”, I guess the defaulting party just don’t care what the aggrieving party will do as it has no porperty to be enforced in China. Moreover, the attorney fee is that dear in western countries, they just gamble that Chinses party would not sue in their countries.

Yeah, they were right. Espacially in such recession, it seems that Chinese exporters are more torlerant.

BUT to those who deliberately refuse to pay money even if they have the ability to pay, we must protect us from such loss.

And the solution is TRAIL in China. (continued)

股权出资登记管理办法

Measures for Registration of Capital Contributions Using Equity 

No 39 (2008) State administration for Industry and Commerce

     第一条 为规范股权出资登记根据《公司法》《公司登记管理条例》等法律法规的规定制定本办法。
    第二条 投资人以其持有的在中国境内设立的有限责任公司或者股份有限公司（以下统称股权公司）的股权作为出资投资于境内其他有限责任公司或者股份有限公司（以下统称被投资公司）的登记管理，适用本办法。
    第三条 用作出资的股权应当权属清楚、权能完整、依法可以转让。
    具有下列情形的股权不得用作出资：
    （一）股权公司的注册资本尚未缴足
    （二）已被设立质权；
    （三）已被依法冻结；
    （四）股权公司章程约定不得转让；
    （五）法律、行政法规或者国务院决定规定，股权公司股东转让股权应当报经批准而未经批准；
    （六）法律、行政法规或者国务院决定规定不得转让的其他情形。
    第四条 全体股东以股权作价出资金额和其他非货币财产作价出资金额之和不得高于被投资公司注册资本的百分之七十。
    第五条 用作出资的股权应当经依法设立的评估机构评估。
    第六条 公司设立时，投资人以股权出资的，自被投资公司成立之日起一年内投资人应当实际缴纳效投资公司应当办理实收资本变更登记。
    公司增加注册资本时，投资人以股权出资的 应当在被投资公司申请办理增加注册资本变更登记前实际缴纳。
    第七条 投资人以持有的有限责任公司股权实际缴纳出资的股权公司应当向公司登记机关申请办理将该股权的持有人变更为被投资公司的变更登记。
    投资人以持有的股份有限公司股权实际缴纳出资，出资股权在证券登记结算机构登记的，应当按照规定经证券交易所和证券登记结算机构办理股份转让和过户登记手续；其他股权依照法定方式转让给被投资公司。
    法律、行政法规或者国务院决定规定股权公司股东转让职权必须报经批准的，还应当依法经过批准。
    第八条 股权出资实际缴纳后，应当经依法设立的验资机构验资并出具验资证明。
    验资证明应当包括下列内容：
    （一）以有限责任公司股权出资的，相关股权依照本办法第七条规定办理股东变更登记良况；
    （二）以股份有限公司股权出资的相关股权依照本办法第七条规定转让给被投资公司情况；
    （三）股权的评估情况，包括评估机构的名称、评估报告的文号、评估基准日、评估值等；
    （四）股权出资依法项经批准的其批准情况。
    第九条 投资人在公司设立时依法以股权出资的被投资公司应当在申请办理设立登记时办理股权认缴出资的出资人姓名或者名称，以及出资额、出资方式和出资的间登记。投资人实际缴纳股权出资后，被投资公司应当申请办理实收资本变更登记，被投资公司属于有限责任公司或者以发起设立方式设立的股份有限公司的还应当申请办理有关投资人实际缴纳出资额，出资时间等的变更登记。
    投资人在公司增加注册资本时，以股权实际缴纳出资的，被投资公司应当申请办理注册资本和实收资本变更登记。被投资公司属于有限责任公司的还应当申请办理有关投资人姓名或者名称，以及认缴和实际缴纳的出资额、出资时间等的变更登记。
    第十条 股权公司依照本办法第七条规定申请办理有关登记提交的材料，按照《公司登记管理条例》和国家工商行政管理总局有关企业登记提交材料的规定执行。
    第十一条 被投资公司依照本办法第九条规定申请办理有关登记手续，除按照《公司登记管理条例》和国家工商行政管理总局有关企业登记提交材料的规定执行外还应当提交以下材料：
    （一）以股权出资的投资人签署的股权认缴出资承诺书。有关投资人应当对所认缴出资的股权符合本办法第三条第一款规定，且不具有核条第二款规定情形等作出承诺；
    （二）股权公司营业执照复印件（需加盖股权公司印章）
    第十二条 投资人、被投资公司的股权出资行为违反《公司法》、《公司登记管理条例》以及本办法规定的，验资机构、资产评估机构出具虚假证明文件或者因过失提供有重大遗漏的报告的公司登记机关依照《公司法》、《公司登记管理条例》等有关规定予以查处。
    第十三条 本办法规定事项法律、行政法规或者国务院决定另有规定的，从其规定。
    第十四条  本办法自2009年3月1日起实施。 

 

Main Points:

These measures apply to capital contributions in onshore companies limited by shares and onshore limited liability companies (“Investee Company”) made by means of equity of another company limited by shares or a limited liability company incorporated in China (“Investor Company”).

 

According to the Measures, equity that is to be contributed must have clear title and be legally transferable. An Investor Company may not use its equity as a capital contribution in an Investee Company if its own registered capital has not been fully paid up, if its equity has been pledged or frozen, if its equity is non-transferable by law or according to its articles of association, or if the contributor fails to obtain any statutorily required approval for the transfer of such equity.

 

Equity to be used as a capital contribution must be appraised by a qualified asset evaluation agency. The aggregate equity and other non-monetary capital contributions made by the shareholders may not exceed 70% of the registered capital of the Investee Company.

 

 

List of relevant laws and regulations:

 

(Passed in the 4th meeting of the Standing Committee of the 11th National People’s Congress on Aug. 29, 2008)

Content

Chapter 1 General Provisions

Chapter 2 Basic Administrative System

Chapter 3 Decrement

Chapter 4 Recycling and Resource Recovery

Chapter 5 Incentive Measures

Chapter 6 Legal Responsibilities

Chapter 7 Supplementary Provision

Chapter 1 General Provisions

 

Article 1 The Law is formulated for the purpose of facilitating circular economy, raising resources utilization rate, protecting and improving environment and realizing sustained development.

Article 2 The Circular Economy herein is the general term for the activities of decrement, recycling and resource recovery in production, circulation and consumption.

  Decrement herein means the reduction of the resource consumption and waste generation in production, circulation and consumption.

  Recycling herein means the direct use of wastes as products, or the use of wastes as products after repair, renovation or reproduction of them, or the use of wastes, wholly or partly, as parts of other products.

  Resource recovery herein means the direct use of wastes as raw material, or waste regeneration.

Article 3 The promotion of circular economy is an important strategy for the national economic and social development, thus, the following guidelines shall be adhered to: comprehensive planning, reasonable layout, taking measures according to local conditions, emphasis on actual effects, government promotion, market orientation, enterprise implementation and public participation.

Article 4 The promotion of circular economy shall be implemented on the basis of being feasible in technology, reasonable in economy and conductive to saving resources and protecting environment in accordance with the principle of the priority of decrement.

  In the process of waste recycling and resource recovery, efforts shall be made to guarantee production safety, ensure the quality of products meets standards provided by the State, and avoid re-pollution.

Article 5 The general administration for promoting circular economy under the State Council shall be responsible for organizing, coordinating and regulating national circular economy promotion works; relevant departments for environmental protection under the State Council shall be responsible for regulation works concerning circular economy according to their functions respectively.

  General administrations for promoting circular economy under local people’s governments above county level shall be responsible for organizing, coordinating and regulating works concerning circular economy promotion within their administrative jurisdictions; relevant departments for environmental protection under local people’s governments above county level shall be responsible for regulation works concerning circular economy according to their functions respectively.

Article 6 Industrial policies formulated by the State shall meet the requirements for promoting circular economy.

  Contents about the promotion of circular economy shall be included in any national economic and social development scheme and any annual planning formulated by any people’s government above county level, and any planning regarding environmental protection and sci-tech development etc. formulated by any relevant department under the people’s government above county level.

Article 7 The State encourages and supports the research, development and promotion of science and technology regarding circular economy, as well as the publicity, education and popularization of scientific knowledge of and international cooperation on circular economy.

Article 8 People’s governments above county level shall establish a goal-responsibility system for circular economy promotion and take measures with respect to planning, finance, investment and government procurement, etc. to promote circular economy.

Article 9 Enterprises and institutions shall establish a sound management system and take measures to reduce resource consumption and the generation and discharge of wastes, and improve their recycling and resource recovery level.

Article 10 Citizens shall have a better sense of resource saving and environmental protection, consume reasonably and save resources.

  The State encourages and guides citizens to use products and recycle products featured by energy saving, water saving, material saving and environmental protection, and reduce the generation and discharge of wastes.

  Citizens are entitled to reporting activities of wasting resources and destroying environment, to accessing official information on circular economy promotion, and to giving opinions and suggestions.

Article 11 The State encourages and supports trade associations to exert functions as technical guidance and services in promoting circular economy. The people’s government above county level may consign qualified trade associations or other social organizations to provide public services on the promotion of circular economy.

  The State encourages and supports intermediary institutions, academies and other social organizations to conduct the publicity, technical promotion and consulting services concerning circular economy, so as to facilitate circular economy.

Chapter 2 Basic Administrative System

Article 12 The general administration for promoting circular economy under the State Council shall formulate the national circular economy development plan with relevant departments for environmental protection under the State Council and promulgate and implement the plan after the approval of the State Council. General administrations for promoting circular economy under the people’s governments above the level of city divided into districts shall formulate the circular economy development plan of their administrative jurisdiction with relevant departments for environmental protection under the people’s governments at the same level, and promulgate and implement the plan after the approval of the people’s governments at the same level.

  The circular economy development plan shall include objectives, applicable scopes, main contents, major tasks and safeguard measures, as well as indexes for the rates of resource production, recycle and resource recovery, etc.

Article 13 The people’s governments above county level shall regulate and adjust the industrial structure in their administrative jurisdictions in accordance with control indexes of the discharge of main pollutants, construction land and total water supply volume for their administrative jurisdictions by the people’s government at a higher level to facilitate circular economy.

  New, reconstruction or expansion projects shall meet the requirements of the control indexes of the discharge of main pollutants, construction land and total water supply volume for the administrative jurisdiction where they locate.

Article 14 The general administration for promoting circular economy under the State Council shall establish and improve the assessment index system for circular economy with other relevant departments for statistics and environmental protection under the State Council.

  The people’s governments at a higher level shall regularly assess the works of the people’s government at a lower level on promoting circular economy in accordance with major assessment indexes provided in the preceding paragraph and take the said assessment results into the consideration of the evaluation of the people’s government assessed as well as its persons-in-charge.

Article 15 An enterprise which produces products or packing materials under the catalogue of mandatory recovery shall recover its waste products or packing materials, recycle those waste articles if possible, or make bio-safety disposals if those waste articles cannot be reused due to economic or technical restrictions.

  Where any producer consigns any seller or other organ to recover the waste products or packing materials provided in the preceding paragraph, or consigns any waste recycling or disposal enterprise to reuse or dispose the said waste articles, the consignee shall be responsible for the recovery, reuse or disposal in accordance with relevant laws, regulations and agreements.

  With respect to the products and packing materials under the catalogue of mandatory recovery, a consumer shall deliver the waste products or packing materials to the producer or seller or other organs consigned by the producer.

  The catalogue and administrative measures for products and packing materials that shall be recovered mandatorily shall be formulated by the general administration for promoting circular economy under the State Council.

Article 16 The State shall implement an administration and supervision system regarding energy and water consumptions concentrating on enterprises in industries including steel, non-ferrous metals, coal, power, oil processing, chemical, building materials, construction, paper-making, printing and dyeing etc., whose general energy and water consumption volumes exceed the total volumes provided by the State per year.

  The administration and supervision regarding energy saving over major energy-consumption entities shall comply with provisions of the Energy Conservation Law of the People’s Republic of China.

  The measures for the administration and supervision over major water-consumption entities shall be formulated by the general administration for promoting circular economy under the State Council and relevant departments under the State Council.

Article 17 The State shall establish a sound circular economy statistics system, strengthen statistical administration of resource consumption, comprehensive utilization and waste generation, and disclose major statistical indicators to the public regularly.

  The standardization department under the State Council shall establish a sound circular economy standard system together with the general administration for promoting circular economy and relevant departments for environmental protection under the State Council, and formulate and improve standards on energy-saving, water-saving, material-saving, wastes recycling and resource recovery.

  The State shall establish a product-resource-consumption mark system such as energy efficiency mark.

Chapter 3 Decrement

Article 18 The general administration for promoting circular economy under the State Council shall promulgate the catalogue of technologies, processes, equipment, materials and products that are encouraged or restricted or abandoned by the government.

  The Production, import and sale of equipment, materials and products under the catalogue of abandonment shall be prohibited; and the use of technologies, processes, equipment and materials under the catalogue of abandonment shall be prohibited.

Article 19 Any entity or individual engaging in the design of process, equipment, product and packing material shall, in accordance with the requirements for reducing resource consumption and waste generation, make a prior choose of materials that are easy to recovery, dismounting and degradation and nontoxic and harmless or with low toxic or harm and design plans using the said materials, and shall comply with the mandatory requirements of relevant national standards.

  With respect to electric and electronic products which may pollute environment in dismounting and disposal, toxic and harmful substances prohibited by the State shall not be used in design. The catalogue of toxic and harmful substances that are prohibited to be used in electric and electronic products etc. shall be formulated by the general administration for promoting circular economy under the State Council with relevant departments for environmental protection under the State Council.

  The design of product packing shall be subject to the product packing standard to avoid wasting resources and polluting environment due to over-packing.

Article 20 Industrial enterprises shall adopt advanced or proper water-saving technologies, processes and equipment, set forth and implement water-saving plan, enhance water-saving management and make complete control of water consumption in production.

  Industrial enterprises shall enhance their management of water consumption, equip with or use acceptable water volume measuring devices and establish a water consumption statistics system and a water use analysis system.

  A new, reconstruction or expansion project shall have water-saving facilities under construction. Such water-saving facilities shall be designed, built and used at the same time with the principal part of the project.

  The State encourages and supports coastal areas to conduct sea water desalination and direct use of sea water to save fresh water.

Article 21 The State encourages and supports enterprises to use high-efficient oil-saving products.

  Enterprises engaging in power, oil processing, chemical, steel, non-ferrous metals and building materials, etc. shall replace fuel oil by clean energies including clean coal, petroleum coke and natural gas, and stop using oil generating sets and oil-fired boilers which do not comply with provisions of the State within the scope and time limit provided by the State.

   Combustion engine and motor vehicle producers shall adopt oil-saving technologies in accordance with the economic standard for combustion engine and motor vehicle to reduce the consumption of oil products.

Article 22 Any entity exploiting mineral resources shall make a comprehensive plan, set forth a reasonable development and use scheme, and take proper exploiting sequence, methods and ore dressing processes. Exploitation license issuing agencies shall verify indicators concerning mining recovery rate, dilution rate, recovery of ore dressing, water cycle utilization rate of the mine and land reclamation rate etc in the development and use plan submitted by the applicant. For those which are unqualified, the agency shall not grand the exploitation license. The exploitation license issuing agencies shall strengthen administration and supervision over the exploitation of mineral resources by law.

  Mining enterprises shall, while exploiting main mineral species, conduct a comprehensive exploitation and a proper use of commercially valuable associated minerals; with respect to minerals that have to be exploited at the same time while cannot be used currently and tailings containing useful components, they shall take protection measures to avoid resource waste and ecological destruction.

Article 23 Entities engaging in architecture design, building and construction shall adopt technologies and processes that save energy, water, land and materials, and small, light and recycle products for the buildings and structures designed, built or constructed by them in accordance with relevant national provisions and standards. Areas shall, if possible, fully take advantage of renewable resources such as solar energy, geothermal energy and wind energy.

  The State encourages the use of waste nontoxic and harmless solid building materials and bulk cements, and promotes the use of ready-mixed concrete and mortar.

  The act of destroying cultivated land to make bricks is prohibited. The production, sale and use of clay bricks are prohibited within the time limit and areas provided by the State Council or the governments of provinces, autonomous regions and municipalities directly under the Central Government.

Article 24 The people’s governments above county level as well as their agricultural departments shall promote the intensive use of land, encourage and support agricultural producers to adopt advanced planting, breeding and irrigating technologies that reduce the use of water, fertilizer and pesticide, promote the energy saving of agricultural machinery, and give the priority to develop ecological agriculture.

  In areas where water is insufficient, efforts shall be made to adjust planting structure, give priority to develop water-saving agriculture, promote the collection and utilization of rain water and build and manage water-efficient irritating facilities to raise water use efficiency and reduce the vaporization and loss of water.

Article 25 National agencies and other organizations using fiscal capital shall conduct saving, stop wasting, use products, devices and facilities that may save energy, water, land and material and be conductive to protecting environment, and save official supplies. Organs responsible for government administrative affairs under the State Council and the people’s governments above county level shall formulate energy and water quota for government agencies at the same level; financial department shall make expenditure standard according to the quota.

  The people’s government of a city and owner or user of a building shall take measures to enhance the maintenance and management of the building to extend its service life. The people’s government of a city shall not demolish any building which meets the city planning and construction standards and is within its reasonable service life, unless for public interests.

Article 26 Service enterprises engaging in restaurant, entertainment and hotel shall adopt products which may save energy, water and material and be conductive to protecting environment, and reduce the use of or do not use products which may waste resources and pollute environment.

  New-built service enterprise engaging in restaurant, entertainment and hotel after the implementation of the Law shall adopt technologies, devices and facilities that may save energy, water and materials and be conductive to protecting environment.

Article 27 The State encourages and supports the use of reclaimed water. In areas where the use of reclaimed water is possible, the use of tap water for urban road cleaning, greening and landscaping is restricted or prohibited.

Article 28 The State shall restrict the production and sale of one-time products on the basis of safeguarding the product safety and sanitation. The catalogue of said products shall be formulated by the general administration for promoting circular economy under the State Council with relevant departments for finance and environmental protection under the State Council.

  With respect to the production and sale of the one-time products included in the catalogue provided in the preceding paragraph, departments for finance, tax and foreign trade under the State Council shall formulate restrictive tax and export measures.

Chapter 4 Recycling and Resource Recovery

Article 29 The people’s governments above the county level shall make a comprehensive plan of the regional economic layout, reasonably regulate the industrial structure, promote the cooperation of enterprises on the comprehensive use of resources, and realize the high efficient use and cycle use resources.

  Industrial parks of various types shall organize the enterprises inside to carry out exchange wastes for use, cascade utilization of energy, intensive use of land and classified and recycle use of water, and share infrastructure and other facilities.

  New and reconstructed industrial parks of various types shall make an environmental influence assessment in accordance with law and take ecological-protection and pollution-control measures to ensure their environment quality meets provided standards.

Article 30 Enterprises shall make a comprehensive utilization of fly ash, gangue, tailing, lean material, scrap material, exhaust gas and other industrial wastes generated in production.

Article 31 Enterprises shall develop a series water system and cycle water system to improve the water reuse rate.

  Enterprises shall use advanced technologies, processes and equipment to recycle waste water generated in production.

Article 32 Enterprises shall use advanced or proper reclaiming technologies, processes and equipment to make a comprehensive utilization of remaining heat and pressure etc. generated in production.

  Where any enterprise builds a grid-connected power generation project utilizing remaining heat and pressure, coalbed gas, and low-calorie fuels including gangue, slime and garbage etc., it shall obtain an administrative license or report for filing in accordance with laws and provisions of the State Council. Power grid enterprises shall, in accordance with provisions of the State, conclude grid connection agreements with enterprises engaging in generating power by using resources comprehensively, provide grid connection services, and purchase total on-grid electric quantity of the grid-connected power generation project at a full amount.

Article 33 Construction enterprises shall make a comprehensive utilization of construction wastes generated in construction. If they are able to do, they shall consign qualified producers and operators to make a comprehensive utilization or bio-safety disposal of such wastes.

Article 34 The State encourages and supports agricultural producers and relevant enterprises to employ advanced or applicable technologies to make a comprehensive utilization of straws of crops, excrements of poultry and livestock, by-products from the processing of agricultural products, and waste agricultural films, and develop and use marsh gas and other biomass energies.

Article 35 The people’s governments above county level and their departments of forestry shall develop ecological forestry actively, and encourage and support forestry producers and relevant enterprises to employ timber-saving and alternative technologies to make a comprehensive utilization of forestry wastes, inferior woods, short ends, fuel woods and sand shrubbery etc, and improve the comprehensive utilization rate of timbers.

Article 36 The State supports producers and operators to establish an industrial wastes exchange information system to promote enterprises to exchange information on industrial wastes.

  Where any enterprise is able to make a comprehensive use of wastes generated in production, it shall provide such wastes to qualified producers or operators for a comprehensive utilization.

Article 37 The State encourages and promotes the establishment of waste recovery system.

  Local people’s governments shall make a reasonable layout of waste recovery stands and trading markets according to their urban-rural planning, and support waste recovery enterprises and other organizations to conduct waste collection, warehousing, transport and information exchange.

  Waste recovery and trading markets shall comply with the provisions of the State on environmental protection, safety and fire-fighting etc.

Article 38 The dismantlement and recycle of special products, such as used electric and electronic products, used motor vehicles and ships, waste tires and waste lead-acid batteries, shall comply with the provisions of relevant laws and regulations.

Article 39 Recovered electric and electronic products that are used for sale after repair shall meet the recycle products standard and be labeled “recycle product” at a marked place.

  Recovered electric and electronic products that have to be dismantled and recycled shall be sold to qualified dismantling enterprises.

Article 40 The State supports enterprises to reproduce components and parts of motor vehicles, mechanical products and machine tools, and renovate tires.

  The quality of the reproduced and renovated products that are used for sale shall meet standards provided by the State and be labeled “reproduced product or renovated product” at a marked place.

Article 41 The people’s governments above county level shall make a comprehensive plan on building facilities for the classified collection and recycling use of urban and rural household garbage, establish and improve the system for classified collection and recycling use, and raise the recycling rate of household garbage.

  The people’s governments above county level shall support enterprises to build facilities for sludge resource recovery, utilization and disposal, improve the comprehensive utilization level of sludge, and avoid re-pollution.

Chapter 5 Incentive Measures

Article 42 The State Council and the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government shall set up relevant special funds for promoting circular economy to support the scientific and technical research and development regarding circular economy, the demonstration and promotion of technologies and products regarding circular economy, the implementation of major circular economic projects, and information services for promoting circular economy. Specific measures shall be formulated by the financial department under the State Council with the general administration for promoting circular economy under the State Council and other relevant departments.

Article 43 The State Council and the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government as well as their relevant departments shall incorporate the independent innovation research, application demonstration and industrialization of key sci-tech projects on circular economy in national or provincial sci-tech development plans and high-tech industrial development plans, and appropriate certain fiscal capital for support.

  Any entity using fiscal capital to introduce main technologies and equipment relevant to circular economy shall make a plan for digestion, absorption and innovation, submit the plan to competent departments for approval and implement it under the supervision of such departments. Competent departments shall establish a coordination system according to actual needs to make a comprehensive coordination of the introduction, digestion, absorption and innovation of such main technologies and equipment, and give a financial support.

Article 44 The State shall give tax preferences for industrial activities conductive to promoting circular economy, and make use of measures including tax to encourage the import of technologies, equipment and products that may save energy, water and materials, and restrict the export of products which have high energy consumption and heavy pollution in production. Specific measures shall be formulated by the financial and tax departments under the State Council.

  Where any enterprise uses or produce any technology, process, equipment or product under the catalogue in which the clean production and resource comprehensive utilization are encouraged by the State, it may share tax preferences in accordance with relevant provisions of the State.

Article 45 When formulating and implementing investment plans, general administrations for promoting circular economy under the people’s governments above county level shall rank the projects that may save energy, water, land and materials and use resources comprehensively as the major investment area.

  Where any project meets national industrial policies that may save energy, water, land and materials and use resources comprehensively, financial institutions shall give a priority to make loans and provide relevant financial services actively.

  Where any enterprise produce, import, sell or use any technology, process, equipment, material or product under the catalogue of abandonment, financial institutions shall not grant any credit to it in any form.

Article 46 The State shall implements a price policy conductive to resource conservation and reasonable use, guiding entities and individuals to save and reasonably use water, power, gas and other resource products.

  Pricing departments under the State Council and the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government shall carry out restrictive price policies for restrictive projects in high-resource-consumption industries in accordance with national industrial policies.

  Where any grid-connected power generation project uses remaining heat and pressure, coalbed gas, and low-calorie fuels including gangue, slime and garbage etc., pricing departments shall fix the on-grid electricity price for it in accordance with principles conductive to resource comprehensive utilization.

  The people’s governments of provinces, autonomous regions and municipalities directly under the Central Government may establish a waste discharge charge system according to local economic and social development situation. The charges collected shall not be used for any purposes other than garbage classification, collection, transport, warehouse, utilization and disposal.

  The State encourages reclaiming wastes by way of trade-in and cash pledge, etc.

Article 47 The State shall implement a government procurement policy conductive to promoting circular economy. Where any procurement uses fiscal capital, products and reproduced products that may save energy, water and materials and be conductive to environment protection shall be purchased preferentially.

Article 48 The people’s governments above county level and their relevant departments shall commend and reward entities and individuals that make large contributions to the circular economic management, sci-tech research, and product development, demonstration and promotion.

  Enterprises and institutions shall commend and reward teams and individuals that make outstanding contributions to promote circular economy.

Chapter 6 Legal Responsibilities

Article 49 Where any general administration for promoting circular economy or other competent department under the people’s governments above county level are found that it has any act in violation of the Law, or does not dispose any illegal act after having received reports or perform its responsibilities of administration and supervision according to law, the people’s government at the same level or a higher level shall order it to make corrections and punish the person-in-charge and others who have direct responsibilities.

Article 50 Where any entity or individual produces and sells any product or equipment under the catalogue of abandonment, it/he shall be punished according to the provisions of the Product Quality Law of the People’s Republic of China.

  Where any entity or individual use any technology, process, equipment or material under the catalogue of abandonment, the general administration for promoting circular economy under the people’s government above county level shall order it/him to stop using, confiscate the illegally-used equipment and material and impose a fine of RMB50, 000 up to RMB200, 000; under any serious circumstance, the general administration for promoting circular economy under the people’s government above county level shall submit an suggestion to the people’s government at the same level to order the entity or individual to stop or close its/his business in accordance with the government authorities provided by the State Council.

  Where any entity or individual violates the provisions herein to import any equipment, material or product under the catalogue of abandonment, the customs shall order it/him to return such articles and impose a fine of RMB100, 000 up to RMB1m on it/him. If the importer is unknown, the carrier shall bear the responsibility of return or relevant disposal expenses.

Article 51 Where any entity or individual violates the provisions herein to use any toxic and harmful substance under the catalogue in which the use is prohibited by the State in their electric and electronic products which may pollute environment in their dismantlement or disposal, the product quality supervision department under the people’s government above county level shall order it/him to make corrections within a time limit; if it/he does not make any correction within the time limit, a fine of RMB20, 000 up to RMB200, 000 shall be imposed; under any serious circumstance, the product quality supervision department under the people’s government above county level shall report the situation to the administration for industry and commence at the same level and the latter shall revoke its/his business license.

Article 52 Where any enterprise engaging in power, oil processing, chemical, steel, non-ferrous metals and building materials etc. violates provisions herein by failing to stop using any oil generating set and oil-fired boiler which does not comply with provisions of the State within the scope and time limit, the general administration for promoting circular economy under the people’s government above county level shall order it/him to make corrections; if it/he does not make any correction within the time limit, the said administration shall order it to dismantle the oil generating set or oil-fired boiler and impose a fine of RMB50, 000 up to RMB500, 000.

Article 53 Where any mining enterprise violates the provisions herein by failing to meet the indicators concerning mining recovery rate, dilution rate, recovery of ore dressing, water cycle utilization rate of the mine and land reclamation rate etc., the department of geology and mineral resources under the people’s government above county level shall order it/him to make corrections within a time limit and impose a fine of RMB50,000 up to RMB500,000; if it/he does not make any correction within the time limit, the exploitation license issuing agency shall revoke its/his exploitation license by law.

Article 54 Where any entity or individual violates the provisions herein to produce, sell or use clay bricks within the time limit or place when or where the production, sale and use of clay brick are prohibited by the State Council or people’s governments of provinces, autonomous regions and municipalities directly under the Central Government, the department designated by the people’s government above county level shall order it/him to make corrections and confiscate its/his illegal proceedings if any. If it/he continues to produce or sell clay bricks over the time limit, the administration for industry and commerce under the local government shall revoke it/his business license by law.

Article 55 Where any power grid enterprise violates provisions herein by refusing to purchase the power generated by any enterprise by utilizing remaining heat and pressure, coalbed gas, and low-calorie fuels including gangue, slime and garbage etc., the national power regulatory organ shall order it to make corrections within a time limit; if there is any loss to the latter enterprise arising from the refusal, the power grid enterprise shall bear compensation liabilities by law.

Article 56 Where any entity or individual has any of the following acts, the administrations for industry and commerce under the people’s governments above county level shall order it/him to make corrections within a time limit and may impose a fine of RMB5, 000 up to RMB50, 000; if it/he does not make any correction within the time limit, the said administration shall revoke its/his business license by law; if there is any loss due to such acts, it/he shall bear compensation liabilities:

(1)   Selling recycle electric and electronic products without label of “recycle product”; and

(2)   Selling reproduced or renovated products without label of “reproduced or renovated product”.

Article 57 Where any entity or individual violates provisions herein and constitutes any crime, it/his criminal responsibilities shall be investigated according to law.

 

Chapter 7 Supplementary Provision

Article 58 The Law shall enter into force as of Jan. 1, 2009.