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TABLE OF CONTENTS CHAPTER I GENERAL RULES CHAPTER II EXTERNAL SETTLEMENT CHAPTER III INTERNAL SETTLEMENT CHAPTER IV SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL RULES Article 1. In order to ensure the smooth going of China's foreign aid work, to further strengthen the financial administration of China's general foreign aid, these Measures are enacted in accordance with the Measures for the Administration of Expenditure Budget of Foreign Aid (No.308 [1998] Cai-Wai-Zi) promulgated by the Ministry of Finance. Article 2. General foreign aid refers to the general civil materials (hereinafter referred to general materials) provided by China to the recipient country or region under the projects of foreign economic and technical aid, and is a form of China's foreign economic and technical aid. Article 3. General foreign aids are divided into loan aid and gratuitous aid. For general materials under projects of loan aid, settlement and account keeping must be handled by the banks designated by the governments of both countries; for general materials under projects of gratuitous aid and where an account is opened for the foreign recipient, the settlement and account keeping shall also be handled by the banks of both countries; for general materials under projects of gratuitous aid, where no account is opened for the foreign recipient, and settlement and account keeping for the foreign recipient is not needed, the procedures for takeover shall be gone through with the recipient. Article 4. The Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to MOFTEC) shall draw up a budget for general foreign aid according to the approved relevant documents or foreign agreements, include the budget in the expenditure budget of foreign aid of the current year and submit the budget to the Ministry of Finance for examination and approval. It shall draw up the annual final accounts according to the general foreign aid budget and the implementation thereof, and submit the accounts to the Ministry of Finance for examination and approval. It shall be in charge of assigning the tasks of export delivery of general foreign aid to the entities undertaking the tasks of general foreign aid (hereinafter referred to undertaking entities). It shall also verify and allocate RMB settlement fund and the needed RMB quota for the purchase of foreign exchange, and check the foreign settlement work. Article 5. For general materials under the project of loan aid or of gratuitous aid with an account opened for foreign recipient, the Head Office of the Bank of China shall, according to the agreement or contract signed with the foreign party, be responsible for the deliberating with the bank of the recipient country or the functional body designated thereby concerning the detailed technical rules for bank account handling and account keeping of general foreign aid, and shall designate its relevant branches to handle the foreign settlement. Article 6. An undertaking entity shall be responsible for signing the supply contract (except that no supply contract is needed to be signed by the relevant bodies of both sides under the project of gratuitous aid) with the relevant body of the recipient country directly or through the economic and commercial counselor's office stationed abroad by reference to the price of the supplied materials in the international market or the price agreed to by the recipient country; after the goods are sent for delivery, the undertaking entity shall handle internal settlement with MOFTEC according to the actual export cost and expenses or the contracting price stipulated in the contract, where it is needed to make external settlement through the Bank of China, the undertaking entity shall at the same time provide the relevant delivery and settlement documents to the Bank of China, which will handle external settlement, and the undertaking entity shall submit a summary report to MOFTEC after the task is finished. Article 7. The working capital needed for general foreign aid shall be financed by the undertaking entity itself. If a large sum is needed for a single task of general foreign aid or the task is urgent, and the undertaking entity has real difficulty in raising the money, MOFTEC may, at the application of the enterprise, allocate in advance a working capital of no more than 50% of the total value of the aid materials regarding the circumstances and offset that sum in the settlement; with respect to a special project that is urgent and needs large sum of money, the proportion of advance paid working capital may range within 70% of the total value of the aid materials. CHAPTER II EXTERNAL SETTLEMENT Article 8. Under a project of loan aid or of gratuitous aid with an account opened for the foreign recipient, after the general materials are sent for delivery, the undertaking entity shall fill in the settlement notification of the Bank of China [provided by the Bank of China, see attachment for the format (omitted)] according to the price stipulated in the supply agreement or contract, and send the notification, together with the task letter issued by MOFTEC, the foreign contract and other relevant documents to the local Bank of China. Article 9. The local branch of the Bank of China shall, within 3 workdays from receiving the settlement notification sent by the undertaking entity, verify the relevant documents according to the foreign contract and examine the settlement notification, if there is no mistake found, the branch shall mail the first and second pages together with the relevant documents to the bank or functional body designated by the recipient country; send the third, fourth, sixth and seventh pages to the Head Office of the Bank of China; keep the fifth page, and return the eighth page which is sealed, together with the counterpart of the supply contract to the undertaking entity. Article 10. The Head Office of the Bank of China shall, after receiving the four pages of the settlement notification sent by the handling bank, handle the account keeping formalities on the basis of the third and fourth pages and keep that two pages, and mail the sixth and seventh pages to MOFTEC, which will transmit the seventh page to the economic and commercial counselor's office of China's embassy in the recipient country, thus to urge the relevant bodies of the recipient country to confirm it in time. Article 11. In case of nonpayment in settlement, and if it is the Chinese party that voluntarily makes the settlement anew after finding the causes, the undertaking entity shall fill in the re-settlement notification [provided by the Bank of China, see attachment for the format (omitted)]. The number of resettlement notification and the delivery procedures are the same as those of the settlement notification. Article 12. In handling of export of general aid materials without external settlement conducted by the Bank of China, the undertaking entity need not fill in the external settlement notification. However, the undertaking entity shall handle in good time the formalities for takeover and confirmation with the relevant bodies of the recipient country after the goods are sent for delivery, and shall mail the relevant documents to MOFTEC, so that MOFTEC may, through the economic and commercial counselor of the China's embassy in the recipient country, urge the relevant bodies of the recipient country to handle the formalities for takeover and confirmation in good time. Article 13. Where the surplus in account keeping or barter trade are changed into general foreign aid upon approval of Chinese government, the sum of cost shall be calculated according to the relevant provisions, and after the Ministry of Finance makes examination and gives consent, MOFTEC will allocate the RMB capital to the Bank of China or the relevant enterprises pursuant to the relevant provisions. The relevant external fund transfer shall be handled by the Bank of China according to the relevant agreement between the governments of the two countries. Article 14. In order to avoid confusion between general foreign aid and foreign trade, and that between the loan aid and gratuitous aid in general foreign aid, MOFTEC shall define the aforesaid situations by appropriate forms when assigning the task of general foreign aid, thus to help accelerate the internal and external settlement work. CHAPTER III INTERNAL SETTLEMENT Article 15. Internal settlement of general foreign aid is divided into the system of reimbursing all expenses actually incurred and undertaking contract system. (1) Settlement by reimbursing all expenses actually incurred 1. The system of reimbursing all expenses actually incurred refers to that the undertaking entity submit the expense account according to the undertaking cost and expenses actually occurred in accordance with the matters of internal settlement provided for in Article 16 of these Measures. This system applies to the general aid tasks that are urgent, in small sum or that are carried out during the visit of central leaders to foreign countries. 2. After sending the goods for delivery, the undertaking entity shall respectively fill in, both in four pages, the general foreign aid internal settlement list (in the case of the system of reimbursing all expenses actually incurred) and the settlement list of RMB quota for the purchase of foreign exchange in general foreign aid [see attachment for the formats, (omitted)], among which, one page is kept for archivist purposes, and the other three pages, together with the copies (in duplication) of the letter of task and the settlement notification issued by the Bank of China (the eighth page, such notification need not to be provided in the gratuitous aid without an account opened for the foreign recipient), the original documents of various expenses, the packing list, proforma invoice, bill of lading, insurance policy, counterpart of commodity inspection certificate and one piece of other relevant documents required for implementation of that project, shall be sent to MOFTEC for examination before settlement. (2) Undertaking contract settlement 1. Undertaking contract system refers to that MOFTEC chooses the undertaking entity through invitation (evaluation) of bids and according to the reasonable prices quoted by the bidding entities on the basis of the matters of internal settlement promulgated by these Measures, signs the internal undertaking contract with the undertaking entity, and makes the payment according to that contract. 2. After sending out the goods, the undertaking entity shall, according to the internal undertaking contract, respectively fill in the general foreign aid internal settlement list (in undertaking contract system) and the settlement list of RMB quota for the purchase of foreign exchange in general foreign aid, both in four pages, among which, one shall be kept for archivist purposes, and the other three, together with the copies (in duplication) of the letter of task and the settlement notification issued by the Bank of China (the eighth page, such notification need not to be provided in the gratuitous aid without an account opened for the foreign recipient), the original documents of various expenses, the packing list, proforma invoice, bill of lading, insurance policy, counterpart of commodity inspection certificate and one piece of other relevant documents required for implementation of that project, shall be sent to MOFTEC for examination before settlement. (3) With respect to the once-off settlement for which the actual expense account or undertaking contract hasn't provided for the specific settlement proportion, MOFTEC shall, according to the internal settlement list of general foreign aid and the settlement list of RMB quota for purchase of foreign exchange in general foreign aid submitted by the undertaking entity and the documents required to be provided, allocate 95% of the approved fund to the undertaking entity after examination and verification, and after receiving the customs declaration examined by the customs and the takeover certificate made by the Chinese government and the government of the recipient country or the confirmation of the external settlement from the recipient country, allocate the remaining 5% approved fund to the undertaking entity. Where it is needed to agree upon the specific settlement progress and proportion in the undertaking contract, the relevant clauses shall be concluded according to the aforesaid principles, and the fund shall be allocated according to the specific progress and proportion stipulated in the contract and the documents required to be provided after examination. MOFTEC shall, within 10 workdays from receiving all the aforesaid settlement documents, feed back the examination opinions to the undertaking entity or allocate the fund. Article 16. Items of internal settlement in general foreign aid include various reasonable expenses occurred in the implementation of the general aid task, including the commodity cost, the direct expenses incurred from the task, agent commissions, taxes, economic and technical consulting fees and the technical service fees. (1) Commodity cost refers to the original purchase price of the commodities purchased by the undertaking entity directly from the supply entity, such as production enterprise or commodity wholesale enterprise, and the taxes payable in the purchase link. (2) Direct expenses incurred from the task include: 1. Domestic transport and miscellaneous expenses: refer to the domestic transport fee, loading fee, port expenses and labor fees, occurred when the materials are transported from the place of purchase to the loading port. 2. Packing fees: refers to the transport packing and special packing fees actually occurred. 3. Keeping fees: refer to the keeping fees for storage etc., in the links from the materials are taken out of the factory of the place of purchase to the place of delivery. 4. Inspection and quarantine fees: include commodity inspection, animal and plant quarantine, medicine inspection, suffocating and braising fees. 5. Insurance: refers to insurance premiums occurred during the process of transporting materials from the place of purchase to the destination agreed upon by the governments of the two countries. 6. Foreign freightage: refers to the freightage (including by shipping, land and air) occurred during the process of transporting the materials from the loading port of Chinese party to the destination agreed upon by the governments of the two countries. 7. Cost of capital occupation: which is calculated on the basis of the sum of commodity cost and the direct expenses listed in Items (1) through (6) and at the current loan rate of the Bank of China. Under general situations, the cost of capital occupation shall be calculated on a 3-month basis; with respect to the commodities that are not directly supplied in the market, the cost of capital occupation shall be calculated on the basis of the time actually needed after examination. No cost of capital occupation shall be calculated for the working capital already allocated in advance. (3) Agent commissions shall be calculated according to the following two situations. First: on the base of the commodity cost and calculated on the regressive rate: 1. 3.5% for the part less than 2 million (RMB, hereinafter the same) (including 2 million); 2. 3% for the part from 2 million to 5 million (including 5 million); 3. 2.5% for the part from 5 million to 10 million (including 10 million); 4. 1.5% for the part from 10 million to 20 million (including 20 million); 5. 1% for the part more than 20 million. Second: If the commodity cost is less than 200, 000 (including 200, 000) and the commodities are in various types and numerous specifications (there are more than 10 types or specifications), such as teaching instrument, student appliances, office supplies, broadcasting equipment, and disaster relief, the sum shall be 6% on the base of the commodity cost. (4) Taxes: refer to the business tax collectable for the agent commission income of the enterprises implementing actual expense settlement according to the relevant provisions of the Notice of the State Administration of Taxation on the Taxation Issues Relating to Foreign Aid Export Goods (No.20 [1999] Guo-Shui-Fa), and the value-added tax calculated on the basis of the total internal contracting price and the value actually paid by the enterprises that implemented undertaking settlement. In case of actual expense settlement, the input tax shall be included in the commodity cost; in case of undertaking settlement, the taxes payable in the purchase link shall be included in the total internal contracting price. (5) Economic and technical consulting fees: refer to all the expenses incurred from retaining the relevant entities to undertaking economic and technical consulting such as job matching and bid evaluation. (6) Technical service fees: refer to the expenses incurred from the technical services, such as training, installation and use, provided by the Chinese party, including the fees for personnel going abroad, travel expenses, fees for local employees and sparkle material fees. Article 17. The bank account name provided by the undertaking party in the settlement must be identical with the undertaking entity of the project defined in the task letter. If the undertaking entity assigns the task to its independent accounting subsidiary company or business department for implementation, the payment shall be directly allocated to that subsidiary company or business department, the undertaking entity shall present the trust deed with the signature of the legal representative and the official seal, and the subsidiary company or business department implementing the task shall fill in the settlement list, indicate the bank account, and go through the aforesaid settlement formalities after the legal representative affixes the signature and official seal. Article 18. Where an undertaking entity implements a general aid task by reimbursing all expenses actually incurred, if it applies for writing off extra expenses occurring due to force majeure, such as war and natural disaster, it shall submit detailed explanation and relevant certifications to MOFTEC, and shall submit the original documents of relevant expenses to MOFTEC for examination, the extra expenses may be written off only after MOFTEC acknowledges the force majeure or makes confirmation documents with the recipient country, or the undertaking shall bear such expenses by itself. Article 19. If an undertaking entity needs to alter the relevant clauses of the internal undertaking contract or of the bidding documents due to change in the implementation of the task, it shall get acknowledgement from MOFTEC before handling the settlement, if the undertaking entity alters the clauses of the internal undertaking contract or the contents of the bidding documents by itself without consent of MOFTEC, MOFTEC has the right to investigate the whole process and reduce the relevant expenses, and will deal with the case regarding the seriousness of the circumstances. Article 20. If an undertaking entity breaches the contract in settlement under the undertaking system, it will be liable for the breach according to the stipulations of the undertaking contract or the provisions of the Contract Law of the People's Republic of China. If the undertaking entity uses false documents, false invoices in the settlement of general foreign aid by the method of reimbursing all expenses actually incurred or alters the supplies, reduce the goods, lowers the goods specifications and uses inferior quality goods as superior ones in the delivery of general materials to foreign recipients, MOFTEC will reduce the settlement sum of that undertaking entity and impose on it a fine of 30,000 yuan or less. If acts mentioned in the second paragraph involves large sum of money or causes serious consequences, and violates the criminal law of the People's Republic of China, the offender shall be subject to criminal liabilities. CHAPTER IV SUPPLEMENTARY PROVISIONS Article 21. The power to interpret these Measures for the Financial Administration shall remain with MOFTEC. Article 22. These Measures shall come into force on the day of printing and distributing. The Measures for the Financial Administration of General Foreign Aid Provided by the Chinese Government (No.279 [89] Wai-Jin-Mao-Cai-Jin-Zi) shall be repealed on the day of printing and distributing of these Measures. The projects for which tasks have been assigned but are uncompleted before the printing and distributing of these Measures shall be carried out in accordance with the relevant provisions of the Measures for the Financial Administration of General Foreign Aid Provided by the Chinese Government (No.279 [89] Wai-Jin-Mao-Cai-Jing-Zi). |
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