(Approved by the People's Bank of China on August 1, 1991 Promul-gated by the State Administration of Exchange Control on September 26,1991)

(Approved by the People's Bank of China on August 1, 1991 Promul-gated by the State Administration of Exchange Control on September 26,1991) Whole Doc.

Article 1 These Measures are hereby formulated with a view to promoting foreign economic and technical cooperation, developing foreign financial activities smoothly and strengthening the control of foreign exchange guarantees, in accordance with the Provisional Regulations for the Foreign Exchange Control of the People's Republic of China.

Article 2 The term "foreign exchange guarantee" mentioned in these Measures refers to an undertaking which a guarantor, against its own foreign exchange funds, promises to guarantee the repayment in foreign exchange currency to a foreign creditor, a wholly foreign-owned bank, a Chinese-foreign equity bank or a non-banking financial institution which is wholly foreign-owned or uses Chinese and foreign investment within China, in the event of the failure of the debtor to pay its foreign exchange debt under the contract, including: (1) loan guarantee; (2) financial leasing guarantee; (3) performance guarantee under the compensation trade; (4) debt guarantee in external contracting projects; (5) guarantee in other forms.

Article 3 The State Administration of Exchange Control and its branch offices (hereinafter referred to as the exchange control departments) are the administrative organs in charge of foreign exchange guarantee, which are responsible for the examination and approval, administration and registration of the foreign exchange guarantee.

Article 4 Institutions and units which are permitted to provide a foreign exchange guarantee are limited to: (1) financial institutions which have the authority to conduct foreign exchange guarantee business upon approval; (2) non-financial enterprises with the status of a legal person which have foreign exchange income.

No governmental departments and institutions shall provide foreign exchange guarantee.

Article 5 The total amount of the balance of foreign exchange guarantee issued by a financial institution together with the balance of its external liabilities shall not exceed 20 times of its own foreign exchange funds.

The remaining sum of foreign exchange guarantee issued by a non-financial institution shall not exceed the amount of its own foreign exchange funds.

Guarantor shall not provide a guarantee to cover the registered capital of the foreign party to an enterprise with foreign investment.

Article 6 The authority of examination and approval of the foreign exchange guarantee: (1) where a foreign exchange guarantee is provided externally to an institution within China, it shall be examined and approved by the exchange control department in the guarantor's locality; (2) where a foreign exchange guarantee is provided to a Chinese enterprise resident in foreign country, it shall be examined and approved by the State Administration of Exchange Control; (3) where a foreign exchange guarantee is provided to a foreign institution and an enterprise with foreign investment at home and abroad, it shall be examined and approved by the State Administration of Exchange Control.

Article 7 The scope of examination and approval for foreign exchange guarantee provided externally: (1) the loan guarantees provided externally by the Industry and Commerce Bank of China, the Agriculture Bank of China, the Bank of China, the Investment Bank of China and the Bank of Communications, the Industry Bank of China Trust and Investment Corporation within the Chinese territory; (2) the foreign exchange guarantees provided externally by other financial institutions and non- financial enterprises with legal person status except the banks listed above.

Article 8 When a guarantor goes through the guarantee procedures of submission and approval, it shall submit to the exchange control department all or part of the following documents and materials: (1) the approval documents for the feasibility study report of the project to be guaranteed and relative written documents; (2) the certificate of the guarantor's own foreign exchange funds; (3) documents of guarantor's external liabilities and guarantee; (4) the letter of intent of the guarantee contract; (5) the principal debt contract or letter of intent under the guaranteed proje ct and relative documents; (6) documents concerning the implementation of counter guarantee measures; (7) the mortgage certificate which shows that the guarantee amount will be sec ured by foreign exchange assets at equivalent value of foreign institutions and enterprises with foreign investment, when a foreign exchange guarantee is provided to them.

Article 9 A guarantor who provides foreign exchange guarantee shall conclude written contract with the creditor and debtor, which specifies the rights and obligations in all respects of the guarantor, creditor and debtor.

(1) the guarantor has the right to supervise the funds and assets of the debtor; (2) the creditor has the right to require the guarantor to provide the related materials such as its financial statement, information concerning the exchange ncome and expenditure, etc.; (3) after a guarantee is provided by the guarantor, any amendment to the guarantee contract by the creditor and debtor shall be subject to the guarantor's permission, and the guarantor shall report it to the exchange control department for examination and approval. Otherwise, the guarantor's obligations of guarantee shall be relieved automatically; (4) after a guarantee is provided by the guarantor, in case the debtor fails to fulfill its obligations in accordance with the provisions of the contract during the term of the guarantee contract, the guarantor shall fulfill its guarantee obligations. After its fulfillment, the guarantor has the right to require the debtor for reimbursement; (5) if the creditor fails to fulfill its obligations in accordance with the provisions of the contract during the term of the guarantee contract after a guarantee is provided by the guarantor, the guarantor will be automatically relieved of its obligations, the guarantor has the right to require the creditor for reimbursement of the corresponding loss; (6) the guarantor has the right to require the debtor to implement the counter guarantee measures or furnish corresponding mortgage, and charge a fixed amount of guarantee fee.

Article 10 After a guarantee is provided, the guarantor shall go through the registration formalities with the local department of exchange control where the guarantor is located.

(1) after a guarantee is provided by a non-financial institution, the institution shall, within 10 days, fill in the "Foreign Exchange Guarantee Registration Form", and obtain the "Foreign Exchange Guarantee Registration Certificate"; (2) the financial institutions follow a regular month registration system, and shall, within 15 days after the last month, fill in the "Form of Information on Foreign Exchange Guarantee" so as to report the changing condition of guarantee liabilities in the last month.

Article 11 In the event that an extension of the guarantee term is required, the guarantor shall apply for the extension to the local exchange control department 15 days prior to the expiration of the debt. When going through the extension formalities, the guarantor shall submit the relative documents concerning the extension to the exchange control department for a new approval.

Article 12 When a debt under the guarantee becomes due or is repaid, or the guarantee contract terminates under other conditions, for a non-financial institution as a guarantor, it shall, within 10 days, return the "Foreign Exchange Guarantee Registration Certificate" to the original exchange control department which issued the certificate for verification and cancellation, and for a financial institution as a guarantor, it shall go through the formalities of verification and cancellation monthly.

Article 13 If the guarantor violates these Measures, the exchange control department will, according to the seriousness of the case, impose a warning, notice of criticism, suspension or cancellation of the guarantor's foreign exchange guarantee business, and give penalty in accordance with the provisions of the Implementing Rules of Penalties for the Violation of Foreign Exchange Control.

Article 14 These Measures shall also apply to the external counter-guarantees.

Article 15 The authority to interpret these Measures resides in the State Administration of Exchange Control.

Article 16 These Measures will enter into force from the date of promulgation.

The Provisional Measures for the Control of the Issuing Foreign Exchange Guarantee by Organizations within Chinese Territory promulgated in 1987 shall be abrogated on the same date.