The Law of Joint Ventures Amended

The Author:

Tian Baicheng

, a lawyer of Hui Cheng Law Office in Beijing China, served as legal advisor of a state owned freight forwarder company and a ship broking company for almost a dozen years after finishing his Masters Degree on civil procedure law at China Political Science and Law University. He started to be a practice lawyer in 1993 and now is a partner of the law firm. He deals with shipping and trade affairs and has developed investment and immigration business with his foreign counterparts. Intellectual properties and internet are additional areas of his practice.

E-mail: tianbcts@public3.bta.net.cn
Web: www.eaglelink.com/cheng/

By Tian Baicheng

N THE LAST DAY of Fourth Session of Ninth National People's Congress, the Decision of Amending the Law of Chinese-Foreign Equity Joint Ventures was adopted. As per the Decision, there are three points on amending the law, which are:

1. The paragraph one of Article 9 was canceled (previous provision isThe production and business operating plans of an equity joint venture shall be submitted to the competent authorities for record and shall be implemented through economic contracts.);

2. The paragraph two of Article 9 was amended as In its purchase of required raw and semi-processed materials, fuel, auxiliary equipment, etc., within the business approved limits, an equity joint venture is at liberty to purchase in domestic markets or international one on the principles of fair and reasonable (previous provision is In its purchase of required raw and semi-processed materials, fuel, auxiliary equipment, etc., an equity joint venture should give first priority to purchases in China. It may also make such purchases directly on the world market with foreign exchange raised by itself).

3. The stipulation of article 15 that The power to amend this law shall be vested in the National People's Congress was amended as The power to amend this law shall be vested in the Standing Committee of National People's Congress.

The law of JV was adopted in 1979 when Chinese economic structure was center controlled one and then the Government just made the decision to reform economic structure and open the door to outside. Now, there have been more than 20 years past and China has basically established her market economy and, on another hand, China is going to enter WTO soon. So, to amend the law of JV is inevitable since the background of the law has changed much. The concrete considerations of the amendment are as follow:

Working a production and business plan out and submitting it to relevant governmental organ to have it approved are the administrative methods of center controlled economy, but in the circumstances of Socialist Market Economy, the enterprises should enjoy the power to draw up decision in managing their business independently, and the functions of the government should mainly be regulating overall situation macroscopically instead of intervening the internal affairs of the enterprises. It is said that actually in recent years, neither the state owned enterprises nor the joint ventures are required to submit the production and business plan to the relevant governmental organ. The amendment at this point comply with the current situation of Chinese economic structure reforming.

Logically, in the circumstances of market economy, to purchase the raw and semi-processed materials, fuel, auxiliary equipment is the business of enterprises and is unnecessary to be interfered by the government. So, the amended law affirms the principle of fair and reasonable only and let the enterprise to decide how, where and when to purchase their raw and semi-processed materials, fuel, auxiliary equipment. This stipulation is also in line with the requirement of entering the WTO.

According to Article 67 of the Constitution adopted at the Fifth Session of the Fifth National people's Congress 1982, the Standing Committee of NPC exercises the power to partially supplement and amend, when the National People's Congress is not in session, laws enacted by the NPC provided that the basic principles of these laws are not contravened. Vesting the power of amending the law in Standing Committee of NPC means that the law will be supplemented and amended timely by the Standing Committee of NPC with the development of China's economic situation. In doing so, to enable the law to be geared to the needs of economic reform and open door policy.

Besides, the State Council once issued Detailed regulations on the Implementation of the Law on Sino-Foreign Joint Venture in 1983 so as to guide the implementation of the Law of JV. To meet the demands of the new situation of China's opening to the rest of the world and in accordance with the Resolution of the Standing Committee of NPC on the amendment of the law of JV, the State Council made the Decision to revise the Regulation last month and 16 major amendments have been made to the Regulation. The experts said that the revised Detailed Regulation consistent with the Law of JV enable the enterprises have a commodious environment in management.

It is learned from the law maker that both the Copyright Law and trademark Law are undergoing consideration by the Standing Committee of NPC so as to amend them in near future.

Web Law Review, 2002