境内机构借用国际商业贷款管理办法 Administration of Taking Out of International Commercial Loans by Organizations in

credit approved by the SAFE.

　　Usance letters of credit with terms of over 90 days and under 365 days opened by Chinese-funded financial institutions in favour of foreign entities shall not count towards their short-term loan quotas.

　　Article 23　Usance letters of credit with terms of over 90 days and under 365 days applied for by non-financial enterprise legal persons to foreign-funded financial institutions within the PRC shall count towards their short-term quotas.

　　Article 24　In applying to the SAFE for short-term quotas, organizations in China shall submit all or part of the following information:

　　1. a written application (including contents such as the amount of the demand for funds, credit standing, purposes of the loan, etc.);

　　2. balance sheets and statements of profit and loss of the previous year verified by an accountant firm;

　　3. letter of intent for loan commitment issued by a credit institution;

　　4. foreign exchange revenue and expenditures in the previous year;

　　5. other information that the SAFE considers necessary to be provided.

　　Article 25　Those short-term international commercial loans taken out by non-financial enterprise legal persons which are not subject to control of outstanding balance of short-term quota shall be reported to the SAFE for approval on a case-by-case basis, and shall count towards the local short-term loan quotas.

　　PART FOUR　PROJECT FINANCING

　　Article 26　The term "project financing" as used in the Procedures refers to the financing method pursuant to which foreign exchange funds are raised outside China in the name of a construction project in China, and where the debt payment liability to the foreign entity is limited to the expected revenue from and the assets of the project itself. Such financing method shall have the following characteristics:

　　1. The creditors have no recourse against assets or revenue other than those of the construction project;

　　2. It is not necessary for organizations in China to effect any mortgage, pledge or debt payment with assets, rights, interests an

d revenue other than those of or in the construction project;

　　3. It is not necessary for organizations in China to provide financing guarantees in any form.

　　Article 27　The foreign financing scale of project financing shall be included in the State's guiding plan for the taking out and use of international commercial loans.

　　Article 28　Conditions for project financing shall be competitive and subject to examination and approval or examination and verification by the SAFE. Conditions for project financing submitted by local authorities shall be subject to preliminary examination by the local branch of SAFE and subsequently be submitted to the SAFE for examination and approval or examination and verification.

　　Article 29　When submitting the project financing conditions to the foreign exchange administration authorities for examination and approval or examination and verification, the project company is required to present the following documents:

　　1. a written application, including method, amount and market of the project financing and financing conditions such as the term and interest rate of, and fees related to, the loan;

　　2. the feasibility study report or other document approved by the State Planning Commission;

　　3. a document to evidence that the project financing has been included in the State's guiding plan for the taking out and use of international commercial loans;

　　4. the project financing agreement;

　　5. documents related to the project financing that are in the nature of a guarantee; and

　　6. other necessary documents.

　　PART FIVE　TAKING OUT OF INTERNATIONAL COMMERCIAL LOANS BY OVERSEAS BRANCH OFFICES OF ORGANIZATIONS IN CHINA

　　Article 30　The term "overseas branch offices of Chinese-funded financial institutions" (hereafter, "overseas branches") as used in the Procedures refers to branch offices having a non-independent legal person status established abroad by Chinese-funded financial institutions in accordance with the local law.

　　Article 31　Chinese-funded financial institutions shall decide the total amount of financing abroad of each of their overseas branches based on such indices as its operating capital, assets liabilities ratio and volume of business of the current year, and report the same to the SAFE for the record before the end of February every year. In cases where an overseas branch needs to take out an international commercial loan of the equivalent value of US$50,000,000 or over on a lump-sum basis, a report shall be submitted in advance by its head office to the SAFE for approval.

　　Article 32　Funds financed abroad by an overseas branch shall be put under the control of the assets-liabilities ratio of its head office.

　　Funds raised abroad by overseas branches shall be used only for developing business abroad, and are not allowed to be transferred for use within the PRC without approval from the SAFE.

　　Article 33　Non-business establishments such as administrative or representative offices established abroad by Chinese-funded enterprises are not allowed to finance funds abroad.

　　Article 34　Loans taken out from foreign entities by a branch or other business organization established abroad by a Chinese-funded enterprise in the name of and authorized by its head office (parent company) shall be regarded as loans take-out by the head office (parent company). The head office (parent company) shall carry out the necessary formalities of submitting reports for approval within the PRC in accordance with the relevant provisions hereof.

　　PART SIX　LEGAL LIABILITY

　　Article 35　Where organizations in China take out international commercial loans without approval or carry out hedging business other than in accordance with Article 42 of the Procedures, the SAFE will give them a warning, circulate a notice of criticism and impose on them a fine of Rmb

100,000 or thereabove to Rmb 500,000 or thereunder. Where a criminal offence is constituted, criminal liability shall be pursued in accordance with the law.

　　Article 36　Where organizations in China deposit abroad the international commercial loans they take out or effect direct payment abroad without approval, or convert the international commercial loans they take out into Renminbi without approval, the SAFE will order them to rectify the matter, give them a warning, circulate a notice of criticism and impose on them a Renminbi fine of 30% or thereabove to fivefold or thereunder of the amount involved in the violation. Where a criminal offence is constituted, criminal liability shall be pursued in accordance with the law.

　　Article 37　Where overseas branches of organizations in China finance funds abroad without approval, violating the provisions of Article 31, 33 or 34 of the Procedures, the SAFE will give the organizations in China a warning, circulate a notice of criticism and impose on them a fine of Rmb 100,000 or thereabove to Rmb 500,000 or thereunder.

　　Article 38　Where overseas branches of Chinese-funded financial institutions in China transfer the funds they take out abroad for domestic use without approval, violating the provisions of Article 32 of the Procedures, the SAFE will order them to rectify the matter and give the Chinese-funded financial institutions in China a warning, circulate a notice of criticism and impose on them a fine of Rmb 100,000 or thereabove to Rmb 500,000 or thereunder.

　　Article 39　Where organizations in China submit to the SAFE false or invalid documents and information with the intention of obtaining SAFE approval by cheating, the SAFE will recover the approval document and impose penalty on them in accordance with the provisions of Article 35. Where a criminal offence is constituted, criminal liability shall be pursued.

　　Article 40　Where organizations in China fail to submit statements and information in accordance with the provisions of the Procedures, or refuse to accept and co-operate with the SAFE's examination, the SAFE will give them a warning, circulate a notice of criticism, and impose on them a fine of Rmb 10,000 or thereabove to Rmb 30,000 or thereunder.

　　PART SEVEN　SUPPLEMENTARY

　　Article 41　After an organization in China has entered into an international commercial loan agreement, it shall carry out foreign debt registration with the SAFE in accordance with regulations on statistical monitoring of foreign debt, as well as formalities of repayment in accordance with the relevant regulations.

　　Article 42　Organizations in China taking out loans from foreign entities shall follow the principles stated below and act properly to guard against foreign debt risk in accordance with the changes of exchange rates and interest rates in the international market and provided that the scale of foreign debt is not expanded and the terms of the foreign loans are not extended:

　　1. Borrowing at low rates but repaying at high rates shall be reported to the SAFE for examination and approval;

　　2. Chinese-funded financial institutions which have been approved to deal in foreign exchange for themselves or for their clients may carry out hedging business of international commercial loans for their own debts or agree to be entrusted by other organizations in China to do the same;

　　3. Where other Chinese-funded organizations entrust financial institutions outside China or foreign-funded financial institutions in China to hedge the international commercial loans they have taken out, approval fr

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