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The Ministry of Science and Technology
People's Republic of China

N0.282  January 10,2002

              * 1150 Chinese By-laws Revised

    * China’s Major Priorities for Foreign Capital Utilization  

    * Regulations on Managing Foreign Law Firms in China

    * Chinese Accounting System for Foreign Businesses

    * Chinese Medical Achievements

    * China's Proprietary Optic-fiber Preparation Bar

    * Rats’ Nerve Reproduction 


1150 Chinese By-laws Revised

Starting from January 1st, 2002, a number of newly formulated or revised administrative by-laws related to trade activities such as Regulations on Technology Import & Export Management, Regulations on Anti-dumping, Regulations on Anti-Subsidizing and etc. will come into effect. These new or revised by-laws will constitute part of China’s promise on its accession to WTO.

Other administrative by-laws that will also come into force on the same day include Regulations on Veterinarian Drugs, Regulations on Pesticides Management, Regulations on Feeds and Feed Additives, Regulations on Goods Import & Export Management, Regulations on Foreign Investment in Telecommunication Enterprises, Regulations on Travel Agency Management, Regulations on International Ocean-going Shipping, Regulations on Foreign Invested Insurance Company Management, Regulations on Management of Representative Offices of Foreign Law Firms in China, Regulations on Protection Measures, and Regulations on By-laws and Regulations Archival.

Since the end of 1999, China has been doing house-keeping job on its old laws, administrative by-laws, regulations and other policy oriented measures related to trade activities. As shown by the house keeping result, there are 1,150 laws, administrative by-laws, regulation and other policies calling for formulation, revision or revocation.  Up to date, the Chinese People’s Congress and its Standing Committee have worked out or revised 9 laws including Law on Chinese-Foreign Joint Equity Ventures, Law on Chinese-Foreign Cooperation Ventures, Law on Foreign Invested Enterprises, Patent Law, Trademark Law and Copyright Law. The Chinese State Council has formulated or revised 25 administrative by-laws such as Details for Implementing Law on Foreign Invested Enterprises, Regulations on Technology Import & Export Management and Regulations on Protection Measures, revoked 12 administrative by-laws such as Methods on Chinese Bank Providing Loans to Foreign Invested Enterprises, Interim Regulations on Management of Major Productive Means and Transportation Pricing and etc., and suspended the enforcement of 34 other policy oriented measures. The State Council has now kept working on formulation, revision and revocation of its by-laws and the Chinese Ministry of Foreign Trade and Economic Co-operation has announced the revocation of the first 249 regulations and is expected to announce the second revocation of about 100 regulations in the near future.

The newly revised laws and administrative by-laws have changed the provisions not in line either with WTO’s requirements or with China’s promise thus made such as in Law on Chinese-Foreign Joint Equity Ventures, Law on Chinese-Foreign Cooperation Ventures, Law on Foreign Invested Enterprises and Regulations on Chinese-Foreign Cooperative Land-based Oil Resources Exploitation and Regulations on Chinese-Foreign Cooperative Marine Oil Resources Exploitation, deleted the original requirements for trade balance, foreign exchange balance and local proportion imposed on foreign investors. China’s accession to WTO implies China’s further opening of its service market. However, such an opening will be made and implemented under proper regulations. In this context, the State Council has formulated and revised a number of management oriented by-laws regulating foreign investment into Chinese service market such as Regulations on Foreign Invested Insurance Company Management and Regulations on Foreign Invested Telecommunication Enterprises. In the course of the said efforts, the State Council also revised its Regulations on Anti-Dumping and Regulations on Anti-Subsidizing and worked out Regulations on Protection Measures so as to develop China itself while observing the principle of rights and obligations and fulfilling its obligations to WTO.

 China’s Major Priorities for Foreign Capital Utilization

The State Development Planning Commission has on December 24, 2001, published its outlines for foreign capital utilization and overseas investment in the 10th Five-Year Plan period(2001-2005), for the purposes of active and rational utilization of foreign capital, promoting China’s sustainable economic growth and full fledged social progress and further stimulating its opening to the outside world.

The Outlines provides that China shall see five changes in its foreign capital utilization pattern, namely changes from import of foreign capital to import of foreign advanced technologies, modernized management and special expertise; the fields of foreign capital utilization will be further extended from processing to service industries; the modes of foreign capital utilization will direct in multiple channel based capital absorption surrounding direct foreign investment; and governmental management of foreign capital utilization will change from administrative approval to law and regulation based guiding, steering and supervision.

The official of the State Development Planning Commission points out that China will focus its attention on the following seven major priorities for attracting more foreign capital:

1. While absorbing direct foreign investment, due attention shall be paid to the promotion of further development of foreign capital utilization;

2. Guide foreign investment in a positive direction of promoting domestic industrial restructuring and associated optimization and upgrading. Revise and publish the Regulations on Foreign Investment Guidance and Guiding Catalog for Foreign Invested Industries in due time;

3. Meet new challenges of China’s accession to WTO, promoting the opening of service industries on a phased basis, including scheduled opening of services industries such as banking, insurance, stock exchanges, commerce, telecommunication and tourism;

4. Relentlessly introduce transnationals’investment modes and other foreign capital attraction modes, promoting the strategic transformation of state-owned enterprises;

5. Vigorously expand foreign capital utilization in the middle and the west regions, promoting the coordinate regional development;

6. Utilize foreign loans in a rational manner, improving quality and benefits;

7. Strengthen full caliber foreign debts control, improving foreign debts servicing mechanism.

The official of the State Development Planning Commission expresses that during the 10th Five- Year Plan period, China will perfect its policies and by-laws on foreign capital utilization and overseas investment, further promoting all-round, multiple-leveled and broader opening to the outside world.

Regulations on Managing Foreign Law Firms in China

The Regulations on Management of Representative Offices of Foreign Law Firms publicized by the Chinese State Council will see the enforcement from January 1st, 2002. The Regulations are made up of 35 articles in 6 chapters including general objectives, the establishment of representative office, changes and cancellation, business scope and regulations, supervision and management, legal liabilities and appendixes.

The Regulations provide that when establishing a representative office or dispatching its permanent representative, the foreign law firm shall apply for the approval of legal authorities under the State Council. Foreign law firms or other overseas organizations or individual shall not engage in legal service and activities on China’s territories in the name of consultation firm or other possible names. The name of the foreign representative office shall be titled as  “ Representative Office of ××× Law Firm (the Chinese version of the law firm applying for the establishment of its representative office) in ××× City (the name of the Chinese city).

As provided, such representative offices and their representatives are only allowed to engage in activities in the following five areas that are not related to the Chinese legal affairs: providing consultations on state laws and international treaties or norms by qualified attorneys of foreign law firms; entrusted by the parties or Chinese law firms, handling legal affairs in the country where the foreign law firm is physically located; entrusting Chinese law firms to handle Chinese legal affairs entrusted by foreign parties; establishing long-term consignment relationship for handling legal affairs with Chinese law firms through contracts, providing information related to Chinese legal environment and associated implications.

The Regulations also provide that foreign representative offices shall not recruit Chinese attorney in practice and local assistants thus hired shall not provide any legal service to the parties.  When providing their legal services according to the Chinese laws, foreign representative offices and their representatives shall be under the protection of the Chinese law.

Chinese Accounting System for Foreign Businesses

The Chinese Ministry of Finance recently issued a circular to the effect that from January 1st, 2002, foreign invested businesses in China shall observe the Enterprises' Accounting System published by the Ministry in 2000.

Experts pointed out that the said requirement would be good for increasing the transparency of foreign invested businesses' accounting information, regulating their accounting system and disclosing their procedures so as to protect the legal interests of the parties.

Since 1992, foreign businesses in China have long been working under Foreign Invested Businesses' Accounting System regulated by China. China's strong economic growth has made the system outdated in a number of aspects such as assets appraisal, income determination and etc., calling for necessary changes.

Foreign Investment in China's Travel Industry

Sun Gang, Deputy Administrator of China National Travel Agency recently expressed that China's schedule for absorbing foreign investment in its tourist industry will be advanced by allowing foreign investors to take the majority equity in joint ventures for tourism and to open their branches in 2002.

According to China's promises on its accession to WTO, China's tourist industry will gradually loosen its restrictions on equity proportions between Chinese and foreign partners in joint ventures by allowing foreign investors' dominant equity in joint ventures before the end of 2003 and allowing the establishment of solely foreign funded travel agency in China before the end of 2005. Sun Gang added that China would accelerate the progress for opening its tourist industry through jointly establishing joint venture tourist businesses with renowned multinational travel services in the U.S., Europe and Japan and advancing its schedule for allowing foreign investors' majority equity to 2002.

It is reported that there have currently been 9 joint venture natured travel agencies in China with 4 in Beijing, 2 in Guangdong and 1 in Yunnan, Tianjin and Gansu respectively. The Express Travel Agency, a joint venture between China National Travel Agency and US Express Travel Agency recently approved for its establishment is the first of China’s cooperation with an internationally renowned travel business, marking a new phase for foreign investment in China’s tourist industry. 


Chinese Medical Achievements

China has witnessed the major breakthroughs in key technologies R&D in the field of biotechnology and medicine and health during the 9th Five-Year Plan period, and over 500 achievements during the said 5 years. Of them nearly a hundred were granted with awards at national or ministerial level. These results have led to a thousand and odd domestic patent applications and a hundred and more international patent application, the birth of a large number of R&D oriented enterprises with RMB 10 billion and more for their output volume, which promotes the fast growth of China’s modernization process of traditional medicine and biomedicine, and biomedical engineering industry. In addition, human genome project has seen series progresses.

Human genome charts and preliminary analysis have been publicized with China’s “1% Program”due completed two years in advance.  Chinese scientists have for the first time in the world completed full gene based accurate sequencing of a number of microbes such as Leptospira, staphylococcus epidermidis, thermophilic bacteria, shigella flexneri, which are important for improving the understanding of diseases triggering mechanism and development of medical vaccines.

R&D of new drugs also witnessed significant progress. For example, China’s first proprietary national class-one new drug bycycloheptanol developed by Drugs Institute under the Chinese Academy of Medical Sciences has been applied to treating chronic viruses hepatitis and granted with invention patent in 15 countries and regions including US.

China’s discovery of new diseases has drawn the world’s attention. Shanghai Life Research Center under the Chinese Academy of Sciences, Southern Research Center of National Human Genome and Shanghai Jiaotong University have jointly for the first time in the world discovered class-one permanent tooth deficiency. The said genetic disease named after the Chinese surnames as “He-Zhao Deficiency”was collected by the Catalog on Human Mendal Genetic Diseases and commonly used internationally. Another example is the deadly skin disease firstly reported by Jingxi Hospital under No. 4 Military Medical School. This skin disease has been proved related to a special actionmyces, and it has been temporarily named as bacteria based deadly granuloma on external wounds.

New medical breakthroughs are of great significance. The experiments and studies of surgical treatment of liver and gall stones and their complications have led to the improvement of long-term treatment result from 10% to 87.1% with applications of different surgical treatment means tailored to different causes. The said achievement has been granted with the first prize of National S&T Progress Award. Prof. Shu Siyun with the Neurology Institute of No. 1 Military Medical School discovered a new section related to learning and memory functions in human brain which made him the first person in the world discovering marginal area in corpus striatum.  Scientists of the Chinese Military 304 Hospital published their papers in the internationally renowned medical journal Blades, reporting for the first time in the world the discovery of the existence of inverse division of skin cells when applying cuticular growth element to treating skin ulcer.

China's Proprietary Optic-fiber Preparation Bar

On December 27, 2001, Hangzhou based Futong Group declared that they had mastered the core technology of today's optic-fiber industry and successfully turned out China's proprietary optic-fiber preparation bar with the latest FSVD technology.

On the basis of advanced techniques and facilities introduced from abroad, Futong Group integrated different techniques for manufacturing optic-fiber preparation bar and worked out its own proprietary FSVD.  The said latest technology in the world can directly make large optic-fiber preparation bar from raw materials and is of numerous merits such as high efficiency and fast manufacturing, stable technical process and low cost.

Rats’ Nerve Reproduction

It is reported that not long ago researchers of No. 9 People’s Hospital under Shanghai No. 2 Medical University successfully planted Schwann cells that grew in a large quantity on the body of animals onto special biological absorbent fibers and reproduced artificial open nerves containing  Schwann cells in non-tube shape. The said artificial nerves were successfully used to repair the 15mm sciatic nerve deficiency, landing a breakthrough against the traditional concept that nerve bridging materials should be in tube forms. The results have shown that the artificial nerves are of high simulation, reasonable 3-D structures and tissue compatibility.  The successful reproduction of rat’s nerves is of important theoretical significance and clinic application values to further studies of nerve bridging materials.

China’s Remote Sensing Archaeology Lab

A so-called remote sensing archaeology lab was recently founded by the Institute of Remote Sensing under the Chinese Academy of Sciences, the East China Normal University and the Chinese History Museum. The said development has marked a new phase for China’s S&T based archaeological activities as well as a new era for studying China’s civilization history with modern technologies.

Remote sensing based archaeology is a comprehensive research approach viewing the discipline through different angles such as remote sensing data acquisition, image processing, remote sensing archaeology, underground no-injury sounding, submarine archaeology and analysis of paleogeographic environment and GIS based relics management.

The Lab will undertake major remote sensing based archaeological projects assigned by both the central government and local authorities while it will gradually turn itself into an influential national base for such studies, and a base for international exchanges and high caliber personnel training. The Lab will, according to different natural conditions and cultural relics, set up its working stations in Henan, Zhejiang, Anhui, Hubei and Sichuan along with its assigned scientific activities.

       Comments or inquiries on editorial matters or Newsletter content should be directed to:Mr. Cheng Jiayi, Department of International Cooperation, MOST 15B, Fuxing Road Beijing 100862, PR China  Tel: (8610)68512650 Fax: (8610) 68512594