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Investing In China: Who Will Supervise Your Project? - Articles Surfing

If you set up a project in China, it will be supervised by a government department. The main national approval authorities are the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC). In most cases, however, actual approval authority rests with the local or provincial Commission of Foreign Trade & Economic Cooperation (COFTEC).

Under Chinese foreign investment law, the appropriate examination and approval authority varies according to the size of the project. In accordance with the Guidelines for Foreign Invested Industries, the National Development and Reform Commission examines and approves projects the Encouraged and Permitted categories of the Foreign Investment Guidance Catalog with a total investment (including Registered Capital and increased investment such as loan capital) of at least US$100 million, as well as the projects in Restricted category with a total investment of at least US$50 million. It submits examined and approved projects (i) in the Encouraged and Permitted categories with total investments of at least US$500 million and (ii) projects in the Restricted category with total investments of at least US$100 million U.S. dollars to State Council for approval.

The local Development & Reform Commissions examine and approve (i) projects in the Encouraged and Permitted Categories with total investments of less than US$100 million, and (ii) projects in the Restricted category with total investments of less than US$50 million. Projects in the Restricted Category must be examined and approved by provincial Development & Reform Commissions, and these projects cannot be delegated to lower level departments such as municipal governments. The provincial authorities may either examine and approve projects in the Encouraged Categories with total investments of less than US$100 million or delegate them to other local authorities such as municipal governments. Municipal governments in turn may delegate these projects to lower level departments such as county and township governments.

If you are confused now, relax * it gets worse. The above delegations vary according to local regulations. In other words, if your investment is not large enough to require examination and approval by the National Development & Reform Commission, then the identity of your examination and approval authority depends on the location of your project. In addition, many provinces require that even a national-level project be submitted to provincial authorities for preliminary examination and approval, and only then to the national authorities for a repeat of this process. Further complicating matter, there are industry-specific regulations varying these cut-offs in some cases. The above thresholds are subject to adjustment (probably upwards, as the trend has been to delegate more and more authority to provincial and municipal governments).

Perhaps the above explanation might better have been replaced by a single sentence: Consult with an experienced local attorney or consultant to determine who will examine and approve your project.

Submitted by:

Bob Miles

Import From China deals with investing in and importing from China.



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