(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.


Chapter 1 General Provisions Article 1 With a view to strengthening the administration of international commercial loans, these Procedures are formulated in accordance with the Provisional Regulations for Exchange Control of the People's Republic of China and the relevant regulations of the State Council.

Article 2 The international commercial loans refer to the loans raised by those institutions resident in China, and with a contracting duty of repayment in foreign currency, from the banks as well as other financial institutions, enterprises and individuals abroad, from foreign banks, Sino-foreign joint venture banks, and other foreign or Sino-foreign joint venture financial institutions resident in China. These include ordinary foreign exchange commercial loans, buyer's credit, foreign exchange loans under the categories of processing with supplied materials, drawings and samples, assembling with supplied parts, and compensation trade; those under the categories of international financial leasing, and foreign exchange loans in other forms.

The domestic institutions who may gain access to the international commercial loans are limited only to: (1) the financial institutions engaging in the borrowing business abroad with the approval by the State Administration of Exchange Control.

(2) the approved industrial and trade enterprises or conglomerates.

Article 3 The People's Bank of China is the institution in charge of the examination and approval of the international commercial loans. The People's Bank of China authorizes the State Administration of Exchange Control and its local branch offices to be specifically responsible for the examination, approval, supervision and administration of the international commercial loans.

Chapter 2 Medium and Long-term International Commercial Loans Article 4 The medium and long-term international commercial loans refer to those lasting more than 1 year (1 year excluded).

Article 5 The medium and long-term international commercial loans which the domestic institutions intend to borrow must be listed in the foreign fund utilization plans of the State.

Article 6 The medium and long-term international commercial loans should be used to introduce advanced technical equipment, to enhance the capability of foreign exchange earnings, and should be in line with the foreign fund utilization policies of the State.

Article 7 The domestic institutions must apply to the State Administration of Exchange Control for the medium and long-term international commercial loans. Without the approval, the signed agreement on foreign loans are not effective, and the departments of exchange control will not handle the registration of foreign debts. The banks are not allowed to open the foreign exchange accounts for them. The principals and the interest of the loans are not permitted to be remitted out of China.

Article 8 The borrowing of foreign loans by the national financial institutions is subject to the examination and approval of the State Administration of Exchange Control. The regional financial institutions' borrowing, as well as that made by financial institutions of various provinces, autonomous regions and municipalities directly under the Central Government is subject to the verification of the local branch offices of exchange control, and must be submitted to the State Administration of Exchange Control for examination and approval. The branch offices of the national and regional banks, however, can, in this order, apply to the State Administration of Exchange Control for approval only after being authorized by their head offices.

Article 9 The domestic institutions should apply to the departments of exchange control for foreign loans, and should provide the complete or partial certificates and documents as follows: (1) certificates that the borrowing of foreign loans is listed in the foreign funds utilization plans of the State; (2) approved document on establishment of the borrowing project, including the usage of the loans and the readiness of the supporting Renminbi (RMB); (3) letter of intent on conditions of loans, including the name of the creditor, the amount of the loans, kind of currency, the interest rate and other charges and fees, time of validity and grace period, the intention of advanced repayment and other financial terms; (4) sources and plans of repayment, and foreign exchange guarantees; (5) the latest foreign exchange or Renminbi (RMB) assets, the liabilities and other financial statements of the financial institutions applying for foreign loans; (6) the branch offices of the banks borrowing foreign loans have to provide the re evant authorized documents of their head offices; (7) for foreign exchange loans under the categories of processing with supplied materials, drawings and samples, assembling with supplied parts and compensation trade, the relevant approved documents of the departments of foreign economic relations and trade are to be provided; (8) other relevant documents that the departments of exchange control deem necessary.

Article 10 The medium and long-term international commercial loans can not be used as Renminbi (RMB) loans mortgaged by foreign exchange, nor can they enter into the foreign exchange swap market. If the loans, in special circumstances, need to enter into the foreign exchange swap market, the approval by the State Administration of Exchange Control is needed.

Chapter 3 Short-term International Commercial Loans Article 11 The short-term international commercial loans refer to those lasting less than 1 year (1 year included).

Article 12 The departments of exchange control exercise the balance control of the short-term international commercial loans.

Article 13 The national financial institutions' application for the quotas of the balance control of the short-term international commercial loans is subject to the ratification and the allocation by State Administration of Exchange Control (short-term quota for short). The branch offices of the banks may apply to their head offices for short-term quotas, and their borrowing of short-term international commercial loans is to be submitted by their head offices to the State Administration of Exchange Control for approval. The local departments of exchange control in the region where the branch offices of the banks are located are responsible for the supervision and administration.

Article 14 The regional banks and non-banking financial institutions of various provinces and cities may apply to the highest local branches of exchange control for short-term quotas, and the highest provincial branches of the State Administration of Exchange Control examine and approve the application within the short-term quotas ratified and allotted by the State Administration of Exchange Control.

Article 15 Of raising circulating fund of foreign exchange for export purpose, the State-owned enterprises' and conglomerates' direct borrowing of onetime short-term international commercial loans must be submitted to the State Administration of Exchange Control for approval item by item before they can negotiate and sign agreements on the loans. Without the approval, they are not allowed to gain access to the foreign loans directly.

Article 16 The short-term quotas are subject to the annual readjustment of the State Administration of Exchange Control. The financial institutions' monthly average remaining sum of the short-term international commercial loans should not exceed the ratified short- term quotas.

Article 17 The short-term international commercial loans can only be used as the circulating fund for export purpose, and these loans are not allowed to be used as the investment in the long-term projects, as the fixed assets loans or for other improper purposes.

Chapter 4 Supplementary Provisions Article 18 After the domestic institutions signed agreements on international commercial loans, they must go through the formalities of foreign debt registration with the departments of exchange control according to the Provisional Regulations for Statistics and Supervision of External Debt.

Article 19 The international commercial loans borrowed by the domestic institutions should be transferred into China, and are not allowed to be deposited abroad, nor can the direct payment be made abroad, without the approval by the departments of exchange control.

Article 20 The principle of "who borrows, who makes repayment" is adopted in the repayment of international commercial loans. The following foreign exchanges can be used to repay the principals and interest of the international commercial loans: (1) the newly increased foreign exchange earnings from exporting the products by using the international commercial loans and from non-trade foreign exchange earning projects.

(2) the foreign exchange earning from the newly development project by using the international commercial loans.

(3) the retained foreign exchange and the foreign exchange of their own.

(4) other foreign exchanges agreed by the departments of exchange control.

Article 21 The domestic institutions using the international commercial loans should, under the condition of not enlarging the amount of foreign debt, take the initiative to actively guard against the foreign debt risks according to the changes of the exchange and interest rates on the world market.

Article 22 The domestic institutions using the international commercial loans should provide the departments of exchange control with a report on the economic efficiency of the loans used in the previous year by the end of March each year.

Article 23 The departments of exchange control will impose, as the case may be, the penalty of warning fining, or abolishing of the right of borrowing foreign loans to those domestic institutions who violate the relevant regulations, and punish them according to the Detailed Implementating Rules for the Punishment on Violation of Exchange Control.

Article 24 These Procedures, except Article 18, do not apply to foreign-funded enterprises' direct borrowing of international commercial loans.

Article 25 These Procedures shall be subject to the interpretation of the State Administration of Exchange Control.

Article 26 These Procedures shall come into force on the date of promulgation.