CIRCULAR OF THE GENERAL OFFICE UNDER THE STATE COUNCIL ON THEAPPROVAL AND TRANSMISSION OF A REPORT SUBMITTED BY THE NATIONAL TOURISMADMINISTRATION CONCERNING THE STRENGTHENING OF TOURIST WORK

CIRCULAR OF THE GENERAL OFFICE UNDER THE STATE COUNCIL ON THEAPPROVAL AND TRANSMISSION OF A REPORT SUBMITTED BY THE NATIONAL TOURISMADMINISTRATION CONCERNING THE STRENGTHENING OF TOURIST WORK This English document is coming from the "LAWS AND REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA GOVERNING FOREIGN-RELATED MATTERS" (1991.7) which is compiled by the Brueau of Legislative Affairs of the State Council of the People's Republic of China, and is published by the China Legal System Publishing House.

In case of discrepancy, the original version in Chinese shall prevail.

Whole Document CIRCULAR OF THE GENERAL OFFICE UNDER THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF A REPORT SUBMITTED BY THE NATIONAL TOURISM ADMINISTRATION CONCERNING THE STRENGTHENING OF TOURIST WORK (December 21, 1988) The Report, "Suggestions Concerning the Strengthening of Tourist Work", submitted by the National Tourism Administration, has been approved by the State Council and is hereby transmitted to you for implementation in the light of the actual conditions of the respective localities and departments.

The tourist industry is a comprehensive undertaking which involves departments such as aviation, communications, culture, construction, light industry, textile industry, and commerce. All the departments concerned shall coordinate and support each other and make joint efforts to promote the sound and coordinated development of tourism in our country.

SUGGESTIONS CONCERNING THE STRENGTHENING OF TOURIST WORK Since the conclusion of the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China, under the guidance of the policy of reform and opening to the outside world, tourism has been developing very rapidly in our country; and it has played an active part in increasing our country's non-trade foreign exchange earnings, in boosting international trade and cultural exchange, and in promoting the mutual understanding and friendship between peoples throughout the world.

At present, our country possesses a fairly good foundation for the development of tourism and the necessary conditions for speeding up such development. The general trend of continuous and steady development of the international tourism is also favourable to us for promoting our tourist industry. In order to further strengthen the coordinated administration of tourist work and strive for a greater development of our tourist industry, we hereby advance the following suggestions: 1. Strengthening the administration of the tourist industry and doing a good job in the reform of tourism administration organs at various levels.

The people's governments of various provinces, autonomous regions, and municipalities directly under the Central Government, as well as tourist cities, especially those favourite haunts with relatively rich tourist resources, shall, in accordance with the principles of "separating Party organs from government organs", "separating government organs from enterprises", and "simplified and unified administration", and in the light of local conditions and needs of the development of international and domestic tourism, set up and improve the tourism administration organs by combining them with the reform of local setups and making overall arrangements. The tourism administration departments at various levels shall make timely and specific adjustments to their responsibilities, clearly define their scope of duties, and rationally deploy their organizations. In order to effect the separation of government organs from enterprises, it is imperative to lay stress on the following measures: (1) The persons in charge of the tourism administration departments shall not assume concurrently posts of manager of local tourist companies, tourist agencies, or hotels; (2) The tourism bureaus shall be completely separated from the enterprises directly under them in the administration of such aspects as personnel, finance, and materials, so that the tourist enterprises shall carry on their business operations independently, and assume sole responsibility for their profits and losses; (3) The expenses for the tourism administration departments at various levels to conduct tourist business operations shall be appropriated by the finance departments at various levels. In order to strengthen the connections between tourism administration departments and tourist opera- ting units, the National Tourism Administration shall, in accordance with the requirements of work, make necessary adjustments with regard to the "China Association of Tourism" and the "China Association of Tourist Hotels", and establish thereby the "China Association of Domestic Tourism", which shall assist the competent authorities for tourism in coordinating relations with other departments concerned and in studying and providing guidance to the development of domestic tourism.

2. Further clarifying the scope of responsibility and the limits of powers of the tourist administration bureaus, and establishing a system of graded administration. The subordinative relationship of all the tourist enterprises and tourist institutions throughout the country-including institutes and schools of tourism, research institutes of tourism, tourist agencies that are engaged in the international and domestic tourist industries; various categories of tourist hotels, guest houses, restaurants, and tourist automobile and vessels companies for the reception of foreign tourists; key tourist scenic spots, tourist attractions, and shops selling tourist goods that are open to foreigners; tourist representative offices abroad, as well as the tourist representative offices established in China by foreign tourist agencies-to the competent administrative authorities directly over them shall remain unchanged; but the tourist bureau shall, in accordance with the provisions of the State, implement the system of trade administration, inspection, and supervision. The tourism administration departments at various levels shall treat tourist enterprises of various categories equally without discrimination. The National Tourism Administration shall, in accordance with the aforesaid principle, and working in coordination with other departments concerned, make a study of, and work out, ways to implement the system of graded administration and effect a stricter procedure in examining and approving the establishment of tourist enterprises. All the tourist enterprises and tourist institutions shall, without exception, subject themselves to trade administration and supervision.

3. Deepening the reform in a comprehensive way and implementing the responsibility system of contracted business operations. The tourism administration departments at various levels and the departments that run tourist enterprises shall, taking into consideration the actual conditions of the local areas and of their own departments, and in accordance with the pertinent provisions of the State, make a study of, and submit a report on, a specific plan and practicable procedures for the implementation of the responsibility system of contracted business operations in state-run and collectively-run tourist enterprises and, at the same time, formulate other provisions to perfect such a system. In the course of implementing the aforesaid responsibility system of contracted business operations, different forms of contracted business operations may be adopted, in accordance with the differences in the nature of business operations (tourists agencies, tourist hotels specialized in receiving foreign guests, fleets of tourist automobiles and vessels) and business operations of different conditions (enterprises with profits, enterprises that have to repay loans, enterprises suffering losses and with a deficit). All those enterprises that have foreign exchange earnings shall carry out a contracted target for earning foreign exchange, and work out a corresponding method for the administration of the settlement of the exchange. Enterprises, which possess the necessary conditions, may gradually set up risk funds for themselves. The contractor shall be finally determined, through various kinds of competition, such as by inviting tenders, or by advertising for employment. The contract period shall, in principle, be no shorter than 3 years. Once a contract is confirmed and signed, the two parties, the contractor and the party awarding the contract, shall execute the contract strictly, and under no circumstances shall it be violated. The implementation of the responsibility system of contracted business operations calls for a close integration of the improvement of enterprise management and the promotion of reform in the internal administration system of enterprises, and for further efforts in reforming and improving the labour wage system and the policy of reward and punishment, in accordance with the principle of combining responsibility, power, and profit.

4. Reforming the administration system of tourist agencies. The three backbone travel services-China International Travel Service, China Travel Service, and China Youth Travel Service-shall be encouraged and supported to develop towards the establishment of an integrated complex or enterprise group.

With respect to those tourist agencies of various categories that have already been set up, the National Tourism Administration and local tourism administration departments shall carry out assessment and rectification in accordance with the provisions in Interim Regulations on the Administration of Tourist Agencies and Rules of Implementation for Interim Regulations on the Administration of Tourist Agencies. Tourist agencies of various categories shall all carry out effectively the reform in the internal work of their respective tourist agencies, further tap their potentials, so as to raise standard of their operation and administration, and to improve the quality of their services.

5. Strengthening overseas tourist publicity and the endeavouring for soliciting tourists, and striving to expand the international market for foreign tourists. The National Tourism Administration shall make further efforts in investigating and analyzing the market for international tourists, work out specific plans for the expansion of the said international market, and take measures to put it into practice. Our resident representative tourist offices abroad shall try their best to investigate into the market for international tourists and carry out publicity work for soliciting visiting tourists, take the responsibility to supervise the publicity and soliciting endeavour carried out abroad by units in charge of liaison work with foreign countries, actively make contacts with the institutions concerned, tourist agencies and tourist wholesalers in countries where our representative tourist offices are resident, and pay attention to collecting and feeding back relevant information. Various resident representative tourist offices abroad may, within the scope of law of the respective countries where they are resident, and at their discretion, undertake some paid services or other business operational activities.

Various units in charge of liaison work with foreign countries, while canvassing among foreigners for tourists itineraries, shall work in close coordination and take the interests of the whole country into account.

They may not play down the others and compete against them by offering prices lower than the protective price. Various units in charge of liaison work with foreign countries shall be encouraged to collaborate on a voluntary basis to canvass jointly among foreigners. With respect to those who have violated external liaison disciplines, the National Tourism Administration and the local tourism administration departments shall, depending on the seriousness of the cases, impose disciplinary sanctions, or economic penalty, on the violators. In order to meet the needs of the development of the tourist industry in our country, the outlay for conducting tourist publicity and canvassing abroad may be increased with each passing year. From now on, various units in charge of liaison work with foreign countries, when canvassing jointly among foreigners may collect service charges: all units that take part in the canvassing activities and derive benefits there from shall pay the charges.

6. Strengthening the macro-administration of those newly-built tourist hotels that specialize in receiving foreign guests and promoting the reform of hotel administration system. The tourism administration departments at various levels shall conscientiously implement Interim Regulations on the Construction and Administration of Storied Buildings, Halls, Hotels and Guest Houses, promulgated by the State Council on September 22, 1988, and, working in coordination with the local planning departments, carry out a checking-up on the projects of local tourist hotels that specialize in receiving foreign guests. From now on, in principle, no more high-grade tourist hotels that specialize in receiving foreign guests shall be built in any place. In areas less frequented than favourite tourist haunts, medium-and low-grade hotels may be built, in accordance with the tourist market's demand, and depending on the actual circumstances, (a number of highgrade rooms may be provided in a medium-grade hotel, if necessary). In such highly frequented tourist cities as Beijing, Shanghai, Guangzhou, Guilin, Xi'an, and Hangzhou, no new hotel construction projects with Chinese-foreign joint investment or by Chinese-foreign cooperation shall, in principle, be approved. In accordance with the guideline of Document No. 17 (1988) issued by the General Office under the State Council, it shall be imperative to speed up the establishment of the hotel administration company of our own country.

In cases where necessity arises for the building of new hotels in form of Chinese-foreign joint ventures or Chinese-foreign contractual joint venture, the cases shall be handled in accordance with the provisions in Document No. 101 (1986) and Document No. 32 (1988), issued by the General Office under the State Council. As regards the tourist scenic spots and tourist attraction, built and facilitated with, or partly with the investment of the National Tourism Administration, the local tourism administration departments shall take part in the leadership and administration of the aforesaid tourist places.

Promoting the reform in the hotel administration system. There are now specific standards for the "star-rating" of the country's tourist hotels that specialize in receiving foreign guests; the rating process shall be speeded up and strive to complete the task by the end of next year. The system for issuing and revoking business licence for tourist hotels that specialize in receiving foreign guests (including various categories of tourist agencies and tourist automobiles and vessels companies) shall be gradually set up. With respect to those tourist enterprises that have committed serious illegal acts, the competent authorities for tourism may suggest to the relevant administrative departments for industry and commerce that the business licences of the aforesaid enterprises be revoked.

7. Carrying out, with caution, the reform in tourist prices, and strengthening the administration of the receipts and expenditures in foreign exchange as well as the settlement of exchange relating to tourist enterprises. The problem of tourist prices has a direct bearing on the interests and reputation of the State; therefore it is imperative to conduct careful investigation and studies before taking cautious steps in the reform, and submit the reform plan to higher authorities for approval.

It is necessary to reform the price structure so as to fix the tourist prices more scientifically and reasonably by taking into full consideration the necessity to meet the challenge of international competition, and in accordance with the special features of different tourist itineraries and different seasons (from now on, the National Tourism Administration and the State Administration for Commodity Prices shall chiefly fix the ceiling price and the floor price - the protective price). Once the price principles are determined, the tourist enterprises at various levels and of various categories shall execute them strictly.

Those who have violated the price discipline shall be dealt with seriously.

The National Tourism Administration shall, working in coordination with such departments as the State Statistical Bureau, the State Administration of Foreign Exchange Control, the Ministry of Finance, and the Bank of China, strengthen the statistical work on the tourist enterprises' receipts and expenditures, and tighten the control of the foreign exchange receipts and expenditures of the tourist enterprises, establish the system for the settlement of tourist foreign exchange, and bring this work into line with the State plan. It is imperative to formulate, through studies, the Measures for Foreign Exchange Control in Tourism and the Measures for the Financial Administration of Foreign Exchange in Tourism, and submit these two documents to the State Council for approval before implementation so as to reverse as early as possible the present situation of serious drain on foreign exchange earnings from tourism.

8. Developing vigorously the manufacture and marketing of tourist goods and tourist souvenirs, increasing the volume of the foreign exchange earning from tourism in our country and improving its economic results.

The manufacture and marketing of tourist goods and tourist souvenirs constitute an important component part of the tourist industry, and is also an important channel for earning foreign exchange for the State. It is imperative to establish gradually a nationwide network for the production and marketing of tourist goods and tourist souvenirs. For the aforesaid purpose, the "China Tourist Services Company" under the National Tourism Administration, the "China Tourist Products Production and Supply Company" under the Ministry of Light Industry, and the "China Friendship Services Company" under the Ministry of Commerce shall be taken as the foundation; their leading role shall be brought into full play, and their businesses shall be further expanded so that they shall grow into complexes of enterprises specialized in different lines of business, handling different assortments of tourist goods and tourist souvenirs.

These complexes of enterprises may establish, in a planned way, a number of production bases for the production of tourist souvenirs, and a number of research institutes for carrying on studies in the marketing quotations of international tourist goods and tourist souvenirs and for developing new products, so that scientific research and product development will be combined in the integrated process of production-supply-marketing. It is necessary to encourage various places, especially the key tourist areas, to vigorously develop the production of tourist goods and tourist souvenirs that are of national style with various local colours, to increase designs and varieties, to expand channels for sources of goods, to improve sales service, and to strengthen market administration. It is imperative to implement conscientiously the provisions approved long ago by the State Council: "the foreign exchange earned through the sales of tourist goods shall be deemed as the foreign exchange earned by foreign trade" and to formulate, through studies, specific measures for carrying out the said provisions; with respect to those export goods which do not come under the licence control, it is important to expand their sales to foreign tourists; the selling prices of tourist goods and tourist souvenirs shall be handled flexibly in accordance with the different conditions of goods supply, the international market quotations, and the specific marketing policy pursued by the economic and trade departments.

The special raw and processed materials which are needed for the development of the production of tourist goods and tourist souvenirs and are in short supply in the country, shall be brought into the goods supply channels handled by the departments of goods and materials at various levels; those raw and processed materials that are imported solely by the State shall be brought into the plan for importation executed by the State; the special imported raw and processed materials needed shall be handled in accordance with the pertinent provisions in Document No. 16 (1987) issued by the General Office under the State Council. As Beijing, Shanghai, and Guangzhou are the three main ports of entry and exit for overseas tourists, they shall be turned into cities with sizable tourist shopping centres and good reputation in Asia. At present, some tourist hotels that specialize in receiving foreign guests spend a large amount of foreign exchange in importing fitting-up materials, sanitary utensils, machinery and electrical equipment, and spare and component parts. In order to change this situation without delay, from now on, all similar products which can already be manufactured in our country and reasonably priced and whose quality and delivery time can be guaranteed shall cease to be imported. We suggest that a catalogue of products to be restricted in importation be put forward by the departments concerned and the importation of the aforesaid products shall be examined and approved by the administrative departments of the trades concerned.

9. Strengthening the building of a contingent of tourist personnel and paying close attention to the education in professional ethics and professional discipline. It is imperative to improve the educational work in schools and institutes of tourism and the professional training of tourist personnel, especially the training of qualified specialized personnel at various levels and of different categories. It is also imperative to intensify the education in professional ethics and professional discipline, so as to improve the political and professional quality of tourist personnel, to foster a sense of honour and responsibility, to oppose all kinds of unhealthy tendencies, to improve the quality of tourist services and offer high-quality services, thus enabling our tourist industry to establish good international reputation and image.

10. Strengthening the coordination between different departments concerned. The tourist industry is a comprehensive undertaking, the development of which relies not only on its own work, but also on the close coordination with such organizations as the departments of aviation, communications, city construction, gardens and parks, historical relics, culture, light industry, textile industry, commerce, and religious affairs. The tourist industry is also a trans-regional trade, and a large amount of organizational work shall be done by the local departments; a harmonious coordination is thus indispensable. Tourist departments at various levels shall strengthen their coordination with other departments concerned and make joint efforts in promoting a sound and co-ordinated development of the tourist industry in our country.