Provisions on Administration of Foreign-Invested Telecommunications Enterprises

(Adopted at the 49th Executive Meeting of the State Council
on December 5, 2001, promulgated by Decree No. 333 of the State
Council of the People’s Republic of China on December 11, 2001 and
effective as of January 1, 2002)

Article 1 These Provisions are formulated in
accordance with laws and administrative regulations on foreign
investment and the Regulations of the People’s Republic of China on
Telecommunications (hereinafter referred to as the Regulations on
Telecommunications) to meet the needs for the opening up to the
outside world of the telecommunications industry and promote the
development of telecommunications industry.

Article 2 Foreign-invested telecommunications
enterprises mean the enterprises providing telecommunications
services which are established according to law with joint
investment and in the form of Chinese-foreign joint ventures by
foreign and Chinese investors within the territory of the People’s
Republic of China.

Article 3 In addition
to abiding by these Provisions, foreign-invested telecommunications
enterprises providing telecommunications services shall abide by
the Regulations on Telecommunications and other relevant laws and
administrative regulations.

Article 4 Foreign-invested telecommunications
enterprises may operate the basic telecommunications services and
value-added telecommunications services. The service categorization
shall be governed by the Regulations on Telecommunications.

The business geographical coverage for the foreign-invested
telecommunications enterprises shall be determined by the competent
information industry department of the State Council in accordance
with the relevant provisions.

Article 5 The registered capital of a
foreign-invested telecommunications enterprise shall comply with
the following provisions:

(1) The minimum registered capital shall be RMB 2 billion yuan
for providing basic telecommunications services throughout the
country or across different provinces, autonomous regions and
municipalities directly under the Central Government, or shall be
RMB 10 million yuan for providing value-added telecommunications
services;

(2) The minimum registered capital shall be RMB 200 million yuan
for providing basic telecommunications services within a province,
an autonomous region or a municipality directly under the Central
Government, or shall be RMB 1 million yuan for providing
value-added telecommunications services.

Article 6 The proportion of foreign investment
in a foreign-invested telecommunications enterprise providing basic
telecommunications services (excluding radio paging) shall not
exceed 49% in the end.

The proportion of foreign investment in a foreign invested
telecommunications enterprise providing value-added
telecommunications services (including radio paging in basic
telecommunications services) shall not exceed 50% in the end.

The proportion of the investment made by Chinese and foreign
investors to a foreign-invested telecommunications enterprise in
different phases shall be determined by the competent information
industry department of the State Council in accordance with the
relevant provisions.

Article 7 In addition
to the conditions specified in Articles 4, 5 and 6 of these
Provisions, a foreign-invested telecommunications enterprise
providing telecommunications services shall also comply with the
conditions specified in the Regulations on Telecommunications on
the provision of basic or value-added telecommunications
services.

Article 8 The major Chinese investor of a
foreign-invested telecommunications enterprise providing basic
telecommunications services shall meet the following
conditions:

(1) being a legally established company;

(2) having the funds and professionals commensurate with its
business operation; and

(3) complying with due diligence and the requirements for
special industry provided for by the competent information industry
department of the State Council.

The major Chinese investor of a foreign-invested
telecommunications enterprise referred to in the preceding
paragraph means the largest investor whose investment amount is the
largest among all the Chinese investors and constitutes 30% or more
of the total Chinese investment.

Article 9 The major foreign investor of a
foreign-invested telecommunications enterprise providing basic
telecommunications services shall meet the following
conditions:

(1) being qualified as an enterprise legal person;

(2) having obtained the license for providing basic
telecommunications services from the registration country or
region;

(3) having the funds and professionals commensurate with its
business operation; and

(4) having a good performance record and experiences in
providing basic telecommunications services.

The major foreign investor of a foreign-invested
telecommunications enterprise referred to in the preceding
paragraph means the largest investor whose investment amount is the
largest among all the foreign investors and constitutes 30% or more
of the total investment made by all the foreign investors.

Article 10 The major foreign investor in a
foreign-invested telecommunications enterprise providing
value-added telecommunications services shall have a good
performance record and experiences in providing value-added
telecommunications services.

Article 11 To establish a foreign-invested
telecommunications enterprise providing basic telecommunications
services or providing value-added telecommunications services
across different provinces, autonomous regions and municipalities
directly under the Central Government, the major Chinese investor
shall make an application to the competent information industry
department of the State Council and submit the following
documents:

(1) the project proposal;

(2) the feasibility study report;

(3) the certificates or relevant confirmation documents
certifying the qualifications of the investors from each party to
the joint venture as provided for in Articles 8, 9 and 10 of these
Provisions; and

(4) the certificates or confirmation documents certifying the
satisfaction of other conditions provided for in the Regulations on
Telecommunications on the provision of basic telecommunications and
value-added telecommunications services.

The competent information industry department of the State
Council shall examine the documents provided for in the preceding
paragraph from the date of receipt of the application. The
examination of the application for the provision of basic
telecommunications services shall be completed within 180 days and
a decision of approval or disapproval be made; the examination of
the application for the provision of value-added telecommunication
services shall be completed within 90 days and a decision of
approval or disapproval be made; if it is approved, the Examination
Opinions on Foreign Investment in Telecommunications Services
Provision shall be issued; if it is not approved, the applicant
shall be notified in writing with the reasons therefor stated.

Article 12 To establish a foreign-invested
telecommunications enterprise providing basic telecommunications
services or value-added telecommunications services across
different provinces, autonomous regions and municipalities directly
under the Central Government, the major Chinese investor, in making
an application according to Article 11 of these Provisions, may, in
light of the actual situations, first submit the documents other
than the feasibility study report, upon the examination,
confirmation and being notified in writing by the competent
information industry department of the State Council, then submit
the feasibility study report. However, the period from the date of
notice to the submission of the feasibility study report shall not
exceed one year, and such period shall not be included in the
examination period specified.

Article 13 To establish a foreign-invested
telecommunications enterprise providing value-added
telecommunications services within a province, autonomous region
and municipality directly under the Central Government, the major
Chinese investor shall make an application to the local
telecommunications administration department of the province,
autonomous region or municipality directly under the Central
Government and submit the following documents:

(1) the feasibility study report;

(2) the certificates or relevant confirmation documents
certifying qualifications as provided for in Article 10 of these
Provisions; and

(3) the certificates or confirmation documents certifying the
satisfaction of other conditions provided for in the Regulations on
Telecommunications on the provision of value-added
telecommunications services.

The telecommunications administration department of the
province, autonomous region or municipality directly under the
Central Government shall give its comments within 60 days from the
date of receipt of the application. If it is assented to, the
application shall be forwarded to the competent information
industry department of the State Council; if it is not assented to,
the applicant shall be notified in writing with the reasons
therefor stated.

The competent information industry department of the State
Council shall complete examination within 30 days from the date of
receipt of application documents with comments signed by the
telecommunications administration department of the province,
autonomous region or municipality directly under the Central
Government and make a decision of approval or disapproval; if it is
approved, the Examination Opinions on Foreign Investment in
Telecommunications Services Provision shall be issued; if it is not
approved, the applicant shall be notified in writing with the
reasons therefor stated.

Article 14 The main contents of the project
proposal for a foreign-invested telecommunications enterprise shall
include: the names and basic situations of the parties to the joint
venture, the total volume of investment to the enterprise to be
established, the registered capital, the proportions of investment
contributions by the parties, the types of services to be applied
for and the period for the joint venture.

The main contents of the feasibility study report for a
foreign-invested telecommunications enterprise shall include: the
basic situations of the enterprise to be established, service
items, business forecast and development planning, analysis on the
return of investment and the expected time for the commencement of
operation.

Article 15 Where the investment project of the
establishment of a foreign-invested telecommunications enterprise
requires the examination and approval by the competent planning
department or the comprehensive economy administration department
of the State Council according to the relevant provisions of the
State, the competent information industry department of the State
Council shall transfer the application materials for examination
and approval to the competent planning department or the
comprehensive economy administration department of the State
Council before issuing the Examination Opinions on Foreign
Investment in Telecommunications Services Provision. Where the
application is transferred for examination and approval to the
competent planning department or the comprehensive economy
administration department of the State Council, the examination
period specified in Articles 11 and 13 may be extended for 30
days.

Article 16 To establish a foreign-invested
telecommunications enterprise providing basic telecommunications
services or providing value-added telecommunications services
across different provinces, autonomous regions and municipalities
directly under the Central Government, the major Chinese investor
shall submit the contract and articles of association of the
enterprise to be established to the competent foreign trade and
economic cooperation department of the State Council on the
strength of the Examination Opinions on the Foreign Investment in
Telecommunications Services Provision; to establish a
foreign-invested telecommunications enterprise providing
value-added telecommunications services within a province,
autonomous region or municipality directly under the Central
Government, the major Chinese investor shall submit the contract
and articles of association of the enterprise to be established to
the competent foreign trade and economic cooperation department of
the relevant province, autonomous region or municipality directly
under the Central Government on the strength of Examination
Opinions on Foreign Investment Telecommunications Services
Provision.

The competent foreign trade and economic cooperation department
of the State Council or the competent foreign trade and economic
cooperation department of the province, autonomous region or
municipality directly under the Central Government shall complete
examination within 90 days from the date of receipt of the contract
and articles of association of the foreign-invested
telecommunications enterprise to be established and make a decision
of approval or disapproval. If it is approved, an Approval
Certificate for Foreign-invested Enterprise shall be issued; if it
is not approved, the applicant shall be notified in writing with
the reasons therefor stated.

Article 17 The major Chinese investor shall
undertake the formalities with regard to License for the
Telecommunications Services Provision at the competent information
industry department of the State Council on the strength of the
Approval Certificate for Foreign-invested Enterprise.

The major Chinese investor of the foreign-invested
telecommunications enterprise shall, on the strength of the
Approval Certificate for Foreign-invested Enterprise and the
License for Telecommunications Services Provision, undertake the
formalities for registration at the department for industry and
commerce administration.

Article 18 To provide trans-boundary
telecommunications services, the foreign-invested
telecommunications enterprise must obtain approval from the
competent information industry department of the State Council and
provide the services through the international entry and exit
gateway agency the establishment of which has been approved by the
competent information industry department of the State Council.

Article 19 In case of
violation of Article 6 of these Provisions, the competent
information industry department of the State Council shall order to
make corrections within the specified time limit and concurrently
impose a fine of not less than 100,000 yuan but not more than
500,000 yuan; if no corrections are made within the specified time
limit, the License for Telecommunications Services Provision shall
be revoked by the competent information industry department of the
State Council and the Approval Certificate for Foreign-invested
Enterprise shall be withdrawn by the competent foreign trade and
economic cooperation department which has issued the
Certificate.

Article 20 In case of
violation of Article 18 of these Provisions, the competent
information industry department of the State Council shall order to
make corrections within the specified time limit and concurrently
impose a fine of not less than 200,000 yuan but not more than
1,000,000 yuan; if no corrections are made within the specified
time limit, the License for Telecommunications Services Provision
shall be revoked by the competent information industry department
of the State Council and the Approval Certificate for
Foreign-invested Enterprise shall be withdrawn by the competent
foreign trade and economic cooperation department which has issued
the Certificate.

Article 21 Where false or forged certificates
or confirmation documents certifying qualification are provided to
obtain approval in applying for the establishment a
foreign-invested telecommunications enterprise, the approval shall
be invalid, and the competent information industry department of
the State Council shall impose a fine of not less than 200,000 yuan
but not more than 1,000,000 yuan, revoke the License for
Telecommunications Services Provision and the competent foreign
trade and economic cooperation department which has issued the
Approval Certificate for Foreign-invested Enterprise shall withdraw
the Certificate.

Article 22 Where a foreign-invested
telecommunications enterprise violates the Regulations on
Telecommunications or other laws and regulations in providing
telecommunication services, it shall be punished by the relevant
organs according to law.

Article 23 Listings overseas by domestic
telecommunications enterprises must be subject to examination of
and consent from the competent information industry department of
the State Council and be approved in accordance with the relevant
provisions of the State.

Article 24 These Provisions shall apply mutatis
mutandis to the investment into and provision of telecommunications
services in Chinese mainland by the companies and enterprises from
the Hong Kong Special Administrative Region, the Macao Special
Administrative Region and Taiwan region.

Article 25 These Provisions shall be effective
as of January 1, 2002.

(State Council)