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New company law amendments: What businesses need to know

New company law amendments: What businesses need to know

Highlight of Key Amendments

After four rounds of review and public consultation in the past five years, the PRC National People’s Congress formally approved the sixth amendment to the Company Law of the People’s Republic of China on December 29, 2023. This newly amended Company Law (New Company Law) will come into effect on July 1, 2024 with a universal impact on all companies in the PRC, including foreign invested enterprises.

 

The New Company Law now has a total of fifteen chapters and 266 articles, including 112 articles newly added or revised per the sixth amendment, covering substantial changes in areas such as corporate governance, capital contribution, management responsibilities, corporate information disclosure, corporate bonds, corporate litigation, and registrations. This alert is to highlight and summarize some key changes in the New Company Law, with a view to provide some high-level guidance to foreign investors and their subsidiaries in the PRC.

 

 

1. 5-year Maximum Capital Contribution Period for Limited Liability Companies

The New Company Law has introduced a 5-year maximum capital contribution time limit that applies to all limited liability companies, with a view to enforce actual capital contributions and to protect the interests of creditors.1 In particular, the registered capital of a limited liability company subscribed by its shareholders must now be contributed in full within five years from the date of the company’s incorporation.

 

For existing limited liability companies who do not comply with the new 5-year requirement, the New Company Law generally requires that such companies should gradually adjust their capital contribution schedule to comply with the 5-year requirement. However, it is unclear if there will be a special grace period for existing companies, or if the 5-year maximum time limit for existing companies will start from the effective date of the New Company Law. This remains to be clarified in the implementation rules to be released by the State Council.

 

The New Company Law also grants the company registration authority the power to examine the amount and period of capital contribution of a limited liability company. If the company registration authority believes that the registered capital of a limited liability company is abnormal, or the agreed capital contribution schedule is in violation of the New Company Law, the company registration authority may require the company to make adjustments. Based on our experience, the company registration authority is likely to issue an implementation measure to require existing companies to conduct self-examination and adjust excessively high registered capital and capital contribution periods exceeding five years within a certain period of time after the New Company Law takes effect.

 

2. Enhanced Rights and Obligations against Outstanding Capital Contribution

The New Company Law adopts several new rules surrounding rights and obligations against outstanding capital contribution to ensure full capital contribution by shareholders and protection of company and creditors’ interest. These rules are applicable to both limited liability companies and joint stock limited companies.

 

Acceleration Rights of Company and Creditor

Under the current Company Law and PRC Bankruptcy law, only when a company becomes insolvent, may the administrator appointed by the court demand the shareholders of the company to accelerate the contribution of any outstanding capital.

 

The New Company Law now provides a company and its creditors the right to accelerate the shareholders’ obligation to make capital contribution if the company is unable to pay off its debts when they fall due. Under such circumstances, the company or the creditor will be entitled to demand the shareholders’ immediate payment of the outstanding capital prior to scheduled contributions provided under the articles of association of the company.

 

Shareholders’ Joint Liability for Outstanding Capital Contribution

If, at the time of the incorporation of a company, a shareholder fails to pay the capital contribution in accordance with the articles of association of the company, or if the actual value of the in-kind capital contribution is significantly lower than the amount of the capital contribution subscribed to, the other shareholders at the time of the incorporation of the company will be jointly and severally liable for the shortfall in capital contribution.

 

Directors’ Responsibility for Outstanding Capital Contribution

After the incorporation of a company, the board of directors shall verify the capital contributions of the shareholders. If the board finds that a shareholder has not paid up the capital contributions stipulated in the articles of association in full and on time, the board shall require the company to issue a written demand letter calling for the payment of the capital contributions. If a director fails to fulfill such verification and demand responsibilities in a timely manner, and thereby causes losses to the company, the director will be held liable to compensate the company for such losses.

 

Forfeiture of Shareholders’ Equity Interests

If a company issues a demand letter to its shareholder for payment of outstanding capital contribution, the shareholder will have a minimum sixty-day grace period to fulfil its capital contribution obligations. If the shareholder fails to fulfill such obligations within the grace period, the company may, by resolution of the board of directors, forfeit the shareholder’ equity interests corresponding to the outstanding capital contribution.

 

Furthermore, the forfeited equity interests shall either be transferred, or cancelled by means of registered capital reduction. If the forfeited equity interests are not transferred or canceled within six months, the other shareholders of the company will be responsible to make up for the outstanding capital contribution based on their respective equity ratio.

 

Directors and Senior Management’s Joint Liability for Illegal Capital Withdrawal

Other than going through proper capital reduction procedures, shareholders are generally forbidden to withdraw their capital contributions made to a company. In the event of a violation, the shareholders shall be liable to return the withdrawn capital contributions. The directors, supervisors and senior management personnel of the company, to the extent responsible for any such illegal withdrawal, will also be jointly and severally liable for any losses caused to the company. Moreover, the company registration authority may impose a punitive fine against such responsible directors, supervisor and senior management, ranging from RMB30,000 to RMB300,000.

 

3. Reconstruction of Corporate Governance Structure

The New Company Law makes some significant adjustments to the corporate governance rules, which to some extent reconstructs the organizational structure and reallocates governance powers of companies.

 

Employee Representative as Supervisor or Director

Under the current Company Law, only state-owned companies are required to have employee representatives on their board of directors. Non-state-owned companies may but are not required to have an employee representative on their board of directors.

 

The New Company Law further extends this employee representative rule to mid-large scale non-state-owned companies. In particular, a company with no less than 300 employees (including both limited liability companies and joint stock limited companies whether state-owned or not, must have at least one employee representative on the board of directors, unless the company has a board of supervisors with employee representative(s) on such board of supervisors. The employee representative must be elected by the company’s employees through the employees’ congress or meetings.

 

Audit Committee as Alternative to the Board of Supervisors

Under the current Company Law, a company must have a supervisor or a board of supervisors, which has the right to monitor, investigate and supervise the company’s operation in view of protecting the interests of the company. In practice, it is very often observed that such supervisory system is seriously out of place in corporate governance and most supervisors in the non-state-owned space are inactive.

 

The New Company Law now provides for an audit committee as an alternative to the supervisory system. In particular, the New Company Law allows a company to set up an audit committee under the board of directors that consists of directors, and such audit committee may exercise the powers and authorities of a board of supervisors under the New Company Law. In this alternative, the power of board decisions and the obligation of supervision to a large extent will consolidate in the directors.

 

In addition, the New Company Law allows the small scale limited liability companies or limited liability companies with a small number of shareholders, with the unanimous consent of all shareholders, not to have a board of supervisors or a supervisor.

 

Executive Personnel as Legal Representative

The current Company Law allows the chairman, executive director or general manager of a company to act as the company’s legal representative, regardless of whether this person is actually controlling or executing the company’s business operations.

 

The New Company Law now requires the legal representative to be a director or the general manager that actually execute the business operations of the company. The New Company Law also provides that the resignation of a director or general manager who serves as the legal representative shall be deemed to be a simultaneous resignation from the position of legal representative. If the legal representative resigns, the company shall have a new legal representative appointed within thirty days from the date of the legal representative’s resignation.

 

4. Elaboration and Enforcement of Duties of Loyalty and Diligence

The New Company Law reconfirms the duties of loyalty and diligence of a company’s directors, supervisors and senior management personnel, and further defines such duties as the following:

  • directors, supervisors and senior management personnel should take measures to avoid conflicts between their own interests and those of the company, and they should not use their authority to seek improper benefits;
  • directors, supervisors and senior management personnel should perform duties in the best interests of the company with the reasonable level of care normally expected of a management personnel.

 

On top of the above, the New Company Law provides that the controlling shareholders and actual controllers of the company who do not serve as directors of the company but actually execute the affairs of the company also owe duties of loyalty and diligence to the company. The New Company Law also provides that the controlling shareholders and actual controllers of the company who instruct the directors and senior management of the company to engage in acts detrimental to the interests of the company or its shareholders shall be jointly and severally liable for the damages and losses of the company.

 

5. Improvement of Rules on Transfer of Equity Interest

The New Company Law has introduced some improvement on the rules for transfer of equity interests in a limited liability company.

 

Simplified rule on the right of first refusal

Under the current Company Law, the transfer of equity interest by a shareholder to a person other than a shareholder of the company shall first be approved by a majority of the other shareholders. This requirement has been removed by the New Company Law. A selling shareholder shall now notify the other shareholders in writing of the quantity, price, method of payment and period of time for the intended transfer, and the other shareholders shall have the right of first refusal under the same conditions. The shareholders who fail to respond within thirty days from the date of receipt of the written notice will be deemed to have waived their right of first refusal.

 

Capital Contribution Liability related to Transferred Equity Interest

In practice, it is common that a shareholder may transfer its equity interest in a limited liability company when the corresponding registered capital has not been fully paid up. The New Company Law lays out some specific rules on the allocation of capital contribution liabilities between the transferor and transferee.

 

If at the time of the transfer, the outstanding capital contribution has not become due per the capital contribution schedule in the company’s articles of association, the transferee shall be liable for the outstanding capital contribution. If the transferee fails to fulfil its obligation of capital contribution by the due date, the transferor shall remain the secondary obligor to make up for the outstanding capital contribution.

 

If at the time of the transfer, the outstanding capital contribution is already overdue according to the capital contribution schedule in the company’s articles of association, or the actual in-kind contribution made by the transferor is, in term of value, significantly lower than the subscribed capital amount, the transferor will be liable for the outstanding capital contribution. The transferee will be held jointly and severally liable, unless it is a bona fide transferee, ie who is not aware and should not have become aware of the status of the outstanding (or defective) capital contribution.

 

6. Optimization of Registration and Liquidation Procedures

The New Company Law has a new chapter on company registration, which clarifies the matters and procedures for company establishment, change, deregistration and public announcement, and requires the company registration authority to optimize the registration process and improve registration efficiency and convenience. At the same time, the New Company Law requires companies to ensure that the information disclosed through the National Enterprise Credit Information Disclosure System must be true, accurate, and complete.

 

Company’s information disclosure obligations and authenticity requirements are also strengthened with corresponding legal responsibilities. These new provisions will help enhance the safety and reliability of transactions and better protect the interests of companies, creditors and the public.

 

The New Company Law also improves the company liquidation system. In particular, the New Company Law clarifies that directors shall be liquidation obligors and also set out their obligations and responsibilities in liquidation. With reference to the relevant provisions of the Market Entity Registration and Management Regulations, the New Company Law includes a simplified liquidation procedure, which stipulates that if a company has not incurred debts during its existence, or has paid off all debts, as guaranteed by all shareholders, the company may be deregistered through a simplified procedure.

 

This New Company Law is released against the backdrop of China facing a fast changing and competitive international market environment while continuing to promote reform and opening up to shore up foreign and domestic investments. The current Company Law is old and stale as well as clumsy and inadequate for regulating corporate governance and relationships among market participants; its many vague mechanisms are often only successful in protecting the status quo and fall out of place in an economy that continues its significant growth. The main objectives of this New Company Law are to improve capital adequacy of Chinese companies, protect the rights and interests of companies and creditors, optimize corporate governance structures, provide clarity to facilitate and protect equity transactions, improve transparency of information disclosure, and simplify company establishment and liquidation procedures. These welcome amendments will operate to help reduce disputes, facilitate transactions and improve management efficiency. We also anticipate that the State Council, the People’s Court and other relevant Chinese authorities will over time issue new implementation rules, practical guidelines, interpretations and transitional measures before any future amendments to the Company Law. Foreign investors will be well advised to seek counsel advice to ensure their new and existing China subsidiaries should comply with the New Company Law on a transitional and continuing basis.

 

Future Global Policeman? The Growing...

Future Global Policeman? The Growing Extraterritorial Reach of PRC Law Enforcement

The recently signed security agreement between the Solomon Islands and the People’s Republic of China (PRC), along with the support of Chinese police to the Solomon Islands government to suppress social unrest in November 2021, highlight the increasing international deployment of PRC law enforcement (China Daily, April 2). This deployment follows several decades of expanding PRC international law enforcement activity, which is intended for extraterritorial enforcement action, seeking the return of fugitives, and as part of China’s engagement with other countries.

 

 

The 2021 violence in the capital, Honiara, led to destruction in the local Chinatown and the subsequent deployment of Chinese police officers, who have previously provided equipment and training to the Solomon Islands. The China Police Liaison Team is led by Zhang Guangbo, an officer of the rank of Commissioner third class, who stated that the deployment is intended to protect the safety of Chinese communities in the Solomon Islands as well as to contribute to the overall stability in the islands (Embassy of the PRC in the Solomon Islands, March 4). There has been considerable unease in wider region over the expanded deployment of Chinese police officers to the Solomon Islands. The governments of Australia, Japan, and the United States have all criticized the security pact, and have raised concerns that the deployment of Chinese police officers could lead to a future military presence. Australian Minister for Foreign Affairs Marise Payne stated on March 25 that “Australia is aware of the proposed draft Security Cooperation agreement between China and Solomon Islands…We would be particularly concerned by any actions that undermine the stability and security of our region, including the establishment of a permanent presence such as a military base”  to Australia has said that if Chinese police officers were called on for assistance they would be under the command of the Royal Solomon Islands Police and stated that “We will try and do our best in terms of dealing with them to make sure that what is happening in other countries where, like Hong Kong, doesn’t happen in our country” (Solomon Times, 6 May 2022).

 

The Chinese police deployment to the Solomon Islands is part of the PRC’s efforts to develop closer ties with the Pacific Islands through the Belt and Road Initiative (BRI), which is described as “a reflection of the indomitable spirit of the Chinese people and the symbiotic relationship with the Communist Party of China (CPC) that they can help Pacific nations in their sustainable development goals” (National Development and Reform Commission, July 27, 2021). However, these official statements neglect to note that the influence of the PRC agencies is not necessarily welcomed by ethnic Chinese in the Solomon Islands, many of whom are from families that have resided there for generations and who became Christians during British colonial rule. Most importantly, the presence of PRC police is likely to grow as part of efforts to ensure that the Solomon Islands does not reverse its September 2019 decision to switch diplomatic recognition of the Republic of China (Taiwan) for China, which ended 36 years of diplomatic relations with Taiwan.

 

As the PRC has expanded its economic power through the BRI, it has also exported criminality, including online fraud, online gambling, human trafficking (for slavery and prostitution), animal or animal parts trafficking (for use in traditional Chinese medicine), and money laundering. This growing regional Chinese organized crime problem has led PRC law enforcement agencies to expand their operations outside of their national borders and increase collaboration with police in other Asian countries.

 

PRC overseas law enforcement operates in three main areas: enforcement action against crime in neighboring countries that affect  citizens living abroad or within China; the overseas “Fox Hunt” search and apprehension of suspects wanted for crimes in the PRC, most often corruption; and finally, the pursuit of political dissidents or opponents of the Chinese Communist Party (CCP).

 

Crime Affecting Chinese Citizens Overseas

Crime affecting Chinese citizens in neighboring countries is illustrated by the People’s Armed Police (PAP) joint armed patrols along the Mekong River. These patrols, which occur outside of China’s borders with police forces from Laos, Myanmar, and Thailand, have been underway since 2011. In March, these countries undertook the 115th joint Mekong River patrol involving 81 officers sailing over 680 kilometers, and including two Chinese law enforcement vessels from Yunnan Province. The deployment of PAP patrols has created a “pax sinica” on the Mekong River, which is important for PRC economic interests in neighboring countries.

 

The Mekong River is a vital geostrategic waterway for cross-border shipping as it runs through China, Myanmar, Laos, and Thailand, but the area suffers from significant crime including drug smuggling, arms trafficking, and piracy. In October 2011, the discovery of two deserted Chinese cargo ships carrying 920,000 amphetamine pills and the murder of 13 Chinese crew members triggered greater action by the PRC authorities. The culprit for these acts of murder and piracy was  “Naw Kham,” an ethnic Burmese former officer in the Mong Tai Army of the late warlord Khun Sa, and his 60 to 100 gunmen known as the “Hawngleuk militia” based in eastern Shan State. The group patrolled the Mekong on speedboats trafficking drugs, and committing robbery, kidnapping, and murder without being interdicted by Myanmar, Laos, and Thailand authorities (The Irrawaddy, October 13, 2011).

 

Authorities targeted Naw Kham and his gang with Chinese and Lao police officers raiding locations in Laos, leading to his arrest in April 2012 (The Irrawaddy, May 11, 2012). Following his arrest, Naw Kham and his associates were sent to China and tried in Kunming, where they were convicted of the murder of the 13 Chinese sailors on the Mekong River, which highlighted the influence of Chinese authorities vis-à-vis its neighbors. In March 2013, Naw Kham and his colleagues were executed in Kunming by lethal injection, showing that the reach of PRC law enforcement is not only long, but also deadly (China Daily, March 1, 2013).

 

Overseas Crime Targeting Chinese Citizens in the PRC

In recent years, Chinese organized crime groups have exploited the PRC’s international economic expansion to increase their overseas presence (China Brief, March 25). This has driven PRC law enforcement agencies to pursue Chinese criminals in other jurisdictions. Key areas of this transnational organized crime include gambling and fraud targeting PRC citizens inside China. In April, authorities reported that in the past year they have destroyed 2,500 gambling platforms and over 1,900 illegal payment platforms and underground banks. These included criminal groups with revenue of over 1.6 billion yuan ($251 million) in Jilin and Heilongjiang Provinces, and 15 billion yuan ($2.3 billion) in Chongqing, Sichuan Province

 

Over the past decade, the PRC has also been plagued by telecommunications and cyber fraud, perpetrated by Chinese gangs operating across Asia. Six of the ten alleged masterminds of telecom and cyber fraud who established bases in the Philippines, Cambodia, and Myanmar, allegedly recruited gang members from the PRC to solicit people in China for fraudulent investments and gambling (Ministry of Public Security, October 24, 2020). For China, the extent of economic loss from telecommunications fraud is huge, reportedly amounting to 35.37 billion yuan ($5.5 billion) in 2020 (Ministry of Public Security, June 22, 2021).

 

Law enforcement action against Chinese criminals overseas does not even have to involve leaving the country. The Public Security Bureau (PSB) in multiple provinces reportedly threatened fugitives in Myanmar that they would suspend pensions and medical coverage of their relatives in the PRC if they did not voluntarily return home to face trial.

 

Corruption – “Fox Hunt” and “Sky Net”

The PRC’s huge economic growth over the past two decades has resulted in systematic corruption and a large number of fugitives from justice. At the onset of General Secretary Xi Jinping’s tenure (2012-), the Ministry of Public Security launched “Fox Hunt” (猎狐,lie hu) for Chinese fugitives wanted for corruption. The driver of the “Fox Hunt” operations was the huge number of fugitive officials facing corruption charges as a result of Xi’s anti-corruption campaign. From 2012-2014, around 18,000 officials reportedly fled overseas taking over 800 billion yuan ($125 billion) with them, largely to Asia Pacific countries with large Chinese communities.

 

Launched in 2015, “Sky Net” (天网,tian wang) involved a division of labor among multiple agencies. The State Supervisory Commission led the international pursuit of fugitives and stolen goods for duty-related crimes. The Ministry of Public Security carried out the “Fox Hunting” special operation to track down officials in hiding abroad. The People’s Bank of China, together with the Ministry of Public Security, worked to target offshore companies and underground banks that transfer illicit money overseas. Finally, the Supreme People’s Court and the Supreme People’s Procuratorate undertook judicial action against those apprehended for crimes (Central Commission for Discipline Inspection, March 3).

 

Both “Fox Hunt” and “Sky Net” are problematic for several reasons. First, the conviction rate for criminal charges in the PRC is reported to be 99.9 percent and only 30 percent of defendants are represented by lawyers, indicating insufficient legal protections for individuals and no presumption of innocence until proven guilty. The presumption of guilt is even greater in cases concerning politics, for instance, trials of dissidents. Countries with a system that provides legal rights for all individuals have great difficulty extraditing suspects to the PRC. This leads to the second problem, which is that many of the fugitives wanted by the PRC authorities may also be subject to politically-related arrest.

 

By 2015, the PRC had signed extradition treaties with 39 countries, judicial assistance treaties with 52 countries, and agreements for cooperation with 91 countries. In addition, the PRC had entered police cooperation with 189 countries and sent 62 police liaison officers to 36 Chinese embassies in 31 countries. However, some countries where fugitives may have fled have either avoided signing extradition agreements with the PRC or have rescinded them following the introduction of the National Security Law to Hong Kong in 2020. These include Australia, Canada, Germany, Finland, Ireland, the Netherlands, the UK, and the United States.

 

The lack of formal extradition arrangements with so many countries has forced the PRC authorities to use alternative means to apprehend fugitives. “Persuasion” has become a common tactic, which human rights groups have called “involuntary returns.” Such returns are achieved by threats against family members in the PRC, directly approaching and intimidating the fugitive overseas, or outright kidnapping. Involuntary returns of Chinese nationals to the PRC comprise a mix of genuine criminal fugitives, officials who have fallen out of favor with the CCP leadership, and others pursued for their religious or political beliefs. The latter includes Falun Gong practitioners, Uyghurs from Xinjiang, Tibetans, and more recently, protesters from Hong Kong. The resultant lack of clarity regarding which cases relate to genuine criminality is worsened by the involvement of multiple PRC government agencies.

 

In January 2017, Chinese billionaire Xiao Jianhua, founder of the Tomorrow Group, was taken by a group of people from the Four Seasons Hotel in Hong Kong and has not been seen in public since, January 31, 2017). There were multiple unconfirmed reports that Xiao may have been abducted by Ministry of State Security officers, possibly because of his close financial connections to senior PRC leaders. Similar concerns were raised in late 2015, when five Hong Kong booksellers linked to the Hong Kong publisher Mighty House, known for selling books critical of China’s leaders, disappeared and were later found to have been held by PRC authorities. All five later appeared in Mainland China and were reported as being under investigation for illegally delivering banned books to customers across the border. Swedish national Gui Minhai, the owner of the publishing house, was sentenced to 10 years imprisonment for “illegally providing intelligence to overseas entities.” One of the imprisoned booksellers later claimed that his confession was coerced .

 

Conclusion

The systematic international pursuit of fugitives by PRC authorities since 2014 shows a determination to apprehend corrupt officials, political critics, and political opponents. Legal channels for extradition have narrowed as a result of the reticence of many governments to have formal return of suspects to face the legal system in the PRC. The result has been a widening of extraterritorial activities by the PRC authorities, employing coercion, rendition, and even kidnapping to ensure repatriation of suspects. As the economic and political influence of the PRC expands, it is likely that the extraterritorial work of its law enforcement and state security agencies will rise as well. The growing deployment of PRC law enforcement officers to other countries also raises the question of whether China may become the world’s policeman in the near future.

 

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Source: By Martin Purbrick for the Jamestown Foundation. A writer, analyst, and consultant. He spent over 32 years in Asia working in the Royal Hong Kong Police serving in Special Branch and the Criminal Intelligence Bureau, followed by senior leadership roles managing financial crime risk with several major companies.

 

Substantial changes in China’s protect...

Substantial changes in China’s protection of IPR.

The country is making the transition from net importer of ideas to net innovator, and as it does, it is finding that good patent laws matter. Whilst addressing the recent Global Trade in Services Summit, President Xi Jinping stated ‘China will work with all countries in enhancing the protection of intellectual property rights (IPR) and actively promote the development of the digital economy and sharing economy’. At the end of 2019 the general offices of the Communist Party of China (CPC) Central Committee and the State Council have jointly issued a directive calling for intensified protection of IPR:  ‘Strengthening IPR protection is the most important content of improving the IPR protection system and also the biggest incentive to boost China's economic competitiveness.  By 2022, China will strive to effectively curb IPR infringement, and largely overcome challenges including high costs, low compensation and difficulties in providing evidence for safeguarding intellectual property rights’.

 

 

A case of this policy in action was demonstrated in September this year when nine people in Shanghai were sentenced up to six years in prison on for infringing on the copyright of Danish toymaker LEGO. The toys the group designed, produced and sold were under the brand name LEPIN, similar to LEGO. LEPIN's packaging, design and colour were all similar to that used by LEGO. The gang produced and sold nearly 4.25 million boxes of their copycat products worth over 300 million yuan, including 634 different models, from September 11, 2017 to April 23, 2019.

 

 

IPR infringement is a particularly worrying issue for new foreign business, and the policy document calls for China to make greater efforts to stepping up international cooperation in IPR protection, facilitating communication between domestic and foreign rights holders, and providing support in overseas IPR disputes.

 

 

Overall, China’s IP regime has made significant strides in the past few decades. For instance, China’s world leadership in patent quantity—though not in quality—signals its commitment to develop a robust innovation ecosystem at home. Minimum damage payouts for violations have continually increased, as have durations of patent protection. China even became the most litigious country in terms of the number of IP-related cases as early as 2005, and the number of cases has increased at a rate of over 40 percent per year for the past two years. In 2014, China debuted three specialized IP courts, and there are as many as 19 more in the pipeline. And contrary to popular expectations, foreign plaintiffs have actually fared better in patent litigation in these courts than their Chinese counterparts.

 

 

China now ranks second globally (excluding tax haven countries) in annual spending on acquisition of foreign IP as well as in gross research and development expenditure. In short, IP infringement remains a significant problem in China and the country’s IP protection regime still has shortcomings but robust change is occurring at China’s own initiative.

 

 

China IPR Procedures.

Patent registration procedure for inventions

  • File the patent application, submit relevant documents, and pay the filing costs (RMB 900 or US$128);
  • CNIPA accepts the application and conducts a preliminary examination (within 18 months from the filing date);
  • CNIPA conducts substantive examination (on the applicant’s request); and
  • CNIPA registers the designated patent and grants a standard patent for the invention.

 

 

Patent registration procedure for utility models or designs

  • File the patent application, submit relevant documents, and pay the filing costs (RMB 500 or US$71);
  • CNIPA accepts the application and conducts a preliminary examination; and
  • CNIPA register the designated patent and grant a standard patent for the utility models or designs.

 

 

Trademark registration procedure

  • Check whether the trademark is already registered and the category of the trademark;
  • Submit an application form and other relevant documents to the TMO;
  • TMO accepts the application;
  • TMO conducts preliminary and substantive examination (within nine to twelve months of the filing date);
  • TMO publishes a notification (followed by a three-month period to consider any objections); and
  • TMO issues a trademark registration certificate.

 

 

The procedure generally takes about 14 to 18 months. Within three months from the date of publication, any person can file an opposition against the trademark. A trademark in China is valid for 10 years and renewal of registration must be filed within 12 months before the date of expiration.

 

 

Copyright registration procedure

  • Apply with a sample of the work;
  • CNAC/CPCC accepts the application and conducts an examination; and
  • CNAC/CPCC issues the certificate.

 

 

For further information on China IPR issues, we suggest you visit the EU IPR SME Helpdesk: https://www.china-iprhelpdesk.eu which has the most up to date information on all IPR issues and gives free guidance on procedures and best practices.

 

 

 

Legal system of the PRC related to Busin...

Legal system of the PRC related to Business debt

In China, the courts are divided into the Supreme People’s Court, the High People’s Courts, the Intermediate People’s Courts and the Basic People’s Courts. Generally, the Basic People’s Courts have jurisdiction as courts of first instance over civil cases. The Intermediate People’s Courts have jurisdiction as courts of first instance over civil cases that have major impacts on the area under their jurisdiction. The High People’s Courts have jurisdiction as courts of first instance over civil cases that have major impact on the areas under their jurisdiction. The Supreme People’s Court has the right to give interpretation of questions concerning specific applications of laws and decrees in judicial proceedings.

 

 

Supreme People’s Court

High People’s Courts

Intermediate People’s Courts

Basic People’s Courts

 
 

Required documents

The following conditions must be met when a lawsuit is filed:

  •   The plaintiff must be a citizen, legal person or any organisation that has a direct interest in the case.
  •   There must be a definite defendant.
  •   There must be a specific claim or claims, facts and a cause or causes for the suit.
  •   The name, gender, age, ethnic status, occupation, work unit and home address of the parties must be provided. If the parties are legal persons or any other organisations, their names, addresses and the names and posts of the legal representatives or the principal heads must be provided.
  •   The evidence and its source, as well as the names and home addresses of the witnesses, must be provided. Original documents do not need to be provided.

 

When a lawsuit is filed, copies of statements as well as other evidence will be provided depending on the number of defendants in court.

 

 

Legal dunning procedure

When a creditor requests payment of a debt or recovery of negotiable instalments from a debtor, they may, if the following requirements are met, apply to a Basic People’s Court that has jurisdiction for an order of payment.

  •   No other debt disputes exist between the creditor and the debtor
  •   The order of payment can be served on the debtor.

 

 

China are the most credit-averse country with less than 40% of the business-to-business transactions made on credit.

The debtor will, within 15 days after receipt of the order of payment, clear off their debts or submit to the people’s court their dissent in writing. If the debtor has neither dissented from nor complied with the order of payment within 15 days, the creditor may apply to the people’s court for execution. The order of payment is effective only when the debtor has failed to submit a dissent in writing within 15 days. Once such a dissent is submitted, the order of payment will be terminated and the creditor will take action.

 

 

Lawsuit

A lawsuit can only be initiated by a creditors.

Generally, a civil lawsuit brought against a citizen will be under the jurisdiction of the people’s court in the area where the defendant lives. If the place of the defendant’s address is different from that of the defendant’s usual residence, the lawsuit will be under the jurisdiction of the people’s court of the place of the defendant’s habitual residence.

A civil lawsuit brought against a legal person or any other organisation will be under the jurisdiction of the people’s court of the place where the defendant has their domicile. A lawsuit brought on a contract dispute will be under the jurisdiction of the people’s court at the place where the defendant has their domicile or where the contract is

 

 

Appeal

If a party disagrees with a judgment made by a local people’s court at first instance, the party has the right to lodge an appeal with the immediate superior people’s court within 15 days from the date when the written judgment was served. When filing an appeal, a petition for the purpose will be submitted. The content of the appeal petition will include the names of the parties, the names of the legal persons and their legal representatives or names of other organisations and their principal heads, the name of the people’s court where the case was originally tried, the file number of the case and the cause of action, and the claims of the appeal and the reasons.

 

 

Expected time frame

When a case is tried according to a summary procedure, the people’s court will conclude the trial within three months from the date of entering it on its trial docket. When a case is handled according to an ordinary procedure, the people’s court will conclude the case within six months from the date of accepting it. When an extension of the period is necessary under special circumstances, a six-month extension may be allowed subject to the approval of the president of the court. Further extension, if needed, will be reported to the people’s court at a higher level for approval. The case on appeal will be concluded within three months after being docketed by the people’s court.

 

 

Interest and costs in the legal phase

Interest and costs in the legal phase can be claimed as well with the same rate set by the People’s Bank of China, plus 30% to 50% (the Reply of Supreme People’s Court on the Calculation Standard of Late Payment Penalty).

 

 

Enforcement of debt

The parties concerned must comply with legally effective judgments or written orders in civil cases. If a party refuses to do so, the other party may apply to the people’s court for execution, or the judge may refer the matter to the execution officer for enforcement. All fees arising from the enforcement will be borne by the debtor, and the applicant does not have to pay such fees.

Enforcement in movable property and immovable property
If the debtor subjected to execution fails to fulfil the obligations according to the execution notice and the obligations specified in the legal document, the people’s court will be empowered to make inquiries with the banks, credit cooperatives or other units that deal with saving into the accounts of the debtor and will be empowered to freeze or transfer deposits. If the debtor subjected to execution fails to fulfil the obligations specified in the legal document, the people’s court will be empowered to seal up, freeze, sell by public auction or sell off part of the property of the debtor for the fulfilment of their obligations.

 

 

Costs

Any party filing a civil lawsuit will pay the court costs according to the rules. In most cases, the litigation fees are borne by the losing party.

 

 

Expected time frame

The time frame for enforcement is usually less than six months, but it can be extended when necessary after being approved by the president of the court.

 

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PRC Cyberspace Security Law

PRC Cyberspace Security Law

The Cyber Security Law is the first national-level legislation establishing principles for the protection of the People’s Republic of China’s cyberspace security and the law is intended to address, amongst others, the need to control China’s critical information infrastructure (CII) and its data. The law focuses on the security challenges facing information infrastructure in a range of critical sectors, such a telecommunications, energy, transportation and finance and addresses unlawful cyber activities including illegally obtaining or selling personal information, disseminating malicious software or prohibited information, and online fraud.

 

 

The PRC Cybersecurity Law generally imposes obligations on three types of entities: 1. network operators; 2. critical information infrastructure operators; and 3. providers of network products and services.

 

 

Network Operators

The PRC Cybersecurity Law imposes a range of cybersecurity obligations on “network operators,” which are defined as owners and administrators of networks and network service providers. A “network” is defined as any system comprising computers or other information terminals and related equipment for collection, storage, transmission, exchange, and processing of information. On its face, the term network operator could broadly be interpreted to encompass any company that uses a network to do business in China despite not having a physical presence in China.

 

 

Generally, network operators must:

  • Develop internal security management systems and procedures, appoint personnel responsible for network security, and implement network security protection responsibility.
  • Adopt measures to prevent viruses, network attacks, network intrusions, and other threats to network security.
  • Monitor and record network activity and security incidents, and store network logs for at least six months.
  • Implement measures to classify, back up, and encrypt data.
  • Network operators must also provide “technical support and assistance” to law enforcement authorities to safeguard national security and investigate crimes. The term “technical support” is not formally defined, and it remains to be seen whether this includes providing backdoor and decryption assistance for encrypted data. To the extent it does, it will permit government access to data stored and potentially to data transferred (such as data in motion) in the PRC.

 

 

Critical Information Infrastructure Operators

Critical information infrastructure (CII) operators are defined as entities providing services that, if lost or destroyed, would endanger China’s national security, economy, or public interest. The PRC Cybersecurity Law lists public communication and information services, energy, finance, transportation, water conservation, public services, and e-government as examples of CII.

 

 

CII operators are subject to the same cybersecurity requirements applicable to network operators as outlined above. CII operators must also sign security and confidentiality agreements with their suppliers of network products and services, and evaluate cybersecurity and other potential risks at least once a year.

 

 

Providers of Network Products and Services

Providers of network products and services must comply with relevant national and industry standards and ensure the security of their products. Products determined to be “Critical Network Equipment and Network Security Products” are required to go through testing by accredited evaluation centers prior to being marketed in China.

 

 

Penalties for Non-Compliance

Failure to comply with the Cyber Security Law carries penalties, ranging from making corrections to fines and confiscation of unlawful gains. At the end of the spectrum lies temporary suspension of operations, closing down of websites, and revocation of relevant operation permits and the business license. The CAC and other related governmental departments are also entitled to take technical measures and other necessary actions to intervene and stop the transmission of data which is imported from sources outside of PRC and is prohibited by PRC laws from being released or transmitted.     

 

                

Cross-Border Transfers

One of the most significant and controversial provisions of the PRC Cybersecurity Law restricts the cross-border transfer of personal information and important data collected or generated through operations in China (collectively, Local Data). Specifically, a network operator may transfer Local Data outside of China only if it has a business need to do so and passes a security assessment.

 

 

The Scope of Local Data

Local Data subject to the cross-border transfer requirements consists of “personal information” and “important data.” Notably, the definition of “personal information” is not explicitly limited to information pertaining to Chinese citizens.

 

 

Security Assessments for Cross-Border Transfers

If a network operator wishes to transfer Local Data outside of China, it must undergo a security assessment. Self-assessments generally suffice for this requirement and must consider, among other factors:

  • The legality, legitimacy, and necessity of the cross-border transfer.
  • The amount, scope, type, and sensitivity of the data.
  • If the transfer involves personal information, whether data subjects have consented to the transfer.
  • The data recipient’s security capability, measures, and environment.
  • The risks associated with the data being leaked, damaged, tampered with, or misused after the data transfer or subsequent re-transfer.
  • The risks to national security, societal and public interests, and the individual lawful rights and interests after the cross-border transfer.

 

 

Prohibited Cross-Border Transfers

Cross-border transfers of Local Data are prohibited in the following circumstances:

  • The transfer does not comply with state laws, administrative regulations, or departmental rules.
  • Data subjects do not consent to a transfer involving personal information.
  • The transfer poses risks to China’s national security or public interests.
  • The transfer could endanger China’s security of national politics, territory, military, economy, culture, society, technology, information, ecological environment, resources, and nuclear facilities.
  • Other circumstances where the Chinese government determines that the data involved in the transfer is prohibited from being transferred offshore.

 

 

Implications

Businesses operating in China should evaluate how the PRC Cybersecurity Law might impact their operations and amend their policies and procedures as necessary. Companies should pay close attention to their data transfer practices to meet the new restrictions on cross-border transfers. Companies should also understand the implications of data localization requirements and the ability of the government to access private and proprietary data stored and transferred in China.

 

 

Trademark Law of the PRC.

Trademark Law of the PRC.

China's new Trademark Law has been issued and becomes effective May 1st, 2014. Important changes in the areas of anti-piracy, prosecution, enforcement, well-known mark determination and usage, opposition, and cancellation have been made. Foreign companies and their counsel should be aware of these changes so that rights and interests are not prejudiced and opportunities are not missed.

 



The significant changes include:

 

  • Strengthened protection against piracy.
  • Shortened trademark prosecution times.
  • Sound marks and multiple class trademark applications made available.
  • Strengthened well-known mark protection.
  • Narrowed legal standing for oppositions and invalidation.
  • A mark proceeding to registration if the opposition fails at the first level of adjudication at the Trademark Office.
  • Increased fines, compensation, and statutory damage against infringement.

 

For the full updated atricles of the new law please click here for the PDF.

Constitution of the Peoples Republic...

Constitution of the Peoples Republic of China, Part 1.

PREAMBLE

 

 

China is one of the countries with the longest histories in the world. The people of all nationalities in China have jointly created a splendid culture and have a glorious revolutionary tradition. Feudal China was gradually reduced after 1840 to a semi-colonial and semi-feudal country. The Chinese people waged wave upon wave of heroic struggles for national independence and liberation and for democracy and freedom. Great and earth-shaking historical changes have taken place in China in the 20th century. The Revolution of 1911, led by Dr Sun Yat-sen, abolished the feudal monarchy and gave birth to the Republic of China. But the Chinese people had yet to fulfil their historical task of overthrowing imperialism and feudalism. After waging hard, protracted and tortuous struggles, armed and otherwise, the Chinese people of all nationalities led by the Communist Party of China with Chairman Mao Zedong as its leader ultimately, in 1949, overthrew the rule of imperialism, feudalism and bureaucrat capitalism, won the great victory of the new-democratic revolution and founded the People's Republic of China. Thereupon the Chinese people took state power into their own hands and became masters of the country.

 

After the founding of the People's Republic, the transition of Chinese society from a new- democratic to a socialist society was effected step by step. The socialist transformation of the private ownership of the means of production was completed, the system of exploitation of man by man eliminated and the socialist system established. The people's democratic dictatorship led by the working class and based on the alliance of workers and peasants, which is in essence the dictatorship of the proletariat, has been consolidated and developed. The Chinese people and the Chinese People's Liberation Army have thwarted aggression, sabotage and armed provocations by imperialists and hegemonists,safeguarded China's national independence and security and strengthened its national defence. Major successes have been achieved in economic development. An independent and fairly comprehensive socialist system of industry has in the main been established. There has been a marked increase in agricultural production. Significant progress has been made in educational, scientific, cultural and other undertakings, and socialist ideological education has yielded noteworthy results. The living standards of the people have improved considerably. Both the victory of China's new-democratic revolution and the successes of its socialist cause have been achieved by the Chinese people of all nationalities under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, and by upholding truth, correcting errors and overcoming numerous difficulties and hardships.

 

The basic task of the nation in the years to come is to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism- Leninism and Mao ZedongThought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship and follow the socialist road, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defence and science and technology step by step to turn China into a socialist country with a high level of culture and democracy. The exploiting classes as such have been eliminated in our country. However, class struggle will continue to exist within certain limits for a long time to come. The Chinese people must fight against those forces and elements, both at home and abroad, that are hostile to China's socialist system and try to undermine it. Taiwan is part of the sacred territory of the People's Republic of China. It is the lofty duty of the entire Chinese people, including our compatriots in Taiwan, to accomplish the great task of reunifying the motherland. In building socialism it is imperative to rely on the workers, peasants and intellectuals and unite with all the forces that can be united. In the long years of revolution and construction, there has been formed under the leadership of the Communist Party of China a broad patriotic united front that is composed of democratic parties and people's organizations and embraces all socialist working people, all patriots who support socialism and all patriots who stand for reunification of the motherland. This united front will continue to be consolidated and developed. The Chinese People's Political Consultative Conference is a broadly representative organization of the united front, which has played a significant historical role and will continue to do so in the political and social life of the country, in promoting friendship with the people of other countries and in the struggle for socialist modernization and for the reunification and unity of the country. The People's Republic of China is a unitary multi-national state built up jointly by the people of all its nationalities. Socialist relations of equality, unity and mutual assistance have been established among them and will continue to be strengthened. In the struggle to safeguard the unity of the nationalities, it is necessary to combat big-nation chauvinism, mainly Han chauvinism, and also necessary to combat local-national chauvinism. The state does its utmost to promote the common prosperity of all nationalities in the country. China's achievements in revolution and construction are inseparable from support by the people of the world. The future of China is closely linked with that of the whole world. China adheres to an independent foreign policy as well as to the five principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality and mutual benefit, and peaceful coexistence in developing diplomatic relations and economic and cultural exchanges with other countries; China consistently opposes imperialism, hegemonism and colonialism, works to strengthen unity with the people of other countries, supports the oppressed nations and the developing countries in their just struggle to win and preserve national independence and develop their national economies, and strives to safeguard world peace and promote the cause of human progress. This Constitution affirms the achievements of the struggles of the Chinese people of all nationalities and defines the basic system and basic tasks of the state in legal form; it is the fundamental law of the state and has supreme legal authority. The people of all nationalities, all state organs, the armed forces, all political parties and public organizations and all enterprises and undertakings in the country must take the Constitution as the basic norm of conduct, and they have the duty to uphold the dignity of the Constitution and ensure its implementation.


CHAPTER I. GENERAL PRINCIPLES

 

Article 1. The People's Republic of China is a socialist state under the people's democratic dictatorship led by the working class and based on the alliance of workers and peasants. The socialist system is the basic system of the People's Republic of China. Sabotage of the socialist system by any organization or individual is prohibited.

 

Article 2. All power in the People's Republic of China belongs to the people. The organs through which the people exercise state power are the National People's Congress and the local people's congresses at different levels. The people administer state affairs and manage economic, cultural and social affairs through various channels and in various ways in accordance with the law.

 

Article 3. The state organs of the People's Republic of China apply the principle of democratic centralism. The National People's Congress and the local people's congresses at different levels are instituted through democratic election. They are responsible to the people and subject to their supervision. All administrative, judicial and procuratorial organs of the state are created by the people's congresses to which they are responsible and under whose supervision they operate. The division of functions and powers between the central and local state organs is guided by the principle of giving full play to the initiative and enthusiasm of the local authorities under the unified leadership of the central authorities.

 

Article 4. All nationalities in the People's Republic of China are equal. The state protects the lawful rights and interests of the minority nationalities and upholds and develops the relationship of equality, unity and mutual assistance among all of China's nationalities. Discrimination against and oppression of any nationality are prohibited; any acts that undermine the unity of the nationalities or instigate their secession are prohibited. The state helps the areas inhabited by minority nationalities speed up their economic and cultural development in accordance with the peculiarities and needs of the different minority nationalities. Regional autonomy is practised in areas where people of minority nationalities live in compact communities; in these areas organs of self- government are established for the exercise of the right of autonomy. All the national autonomous areas are inalienable parts of the People's Republic of China. The people of all nationalities have the freedom to use and develop their own spoken and written languages, and to preserve or reform their own ways and customs.

 

Article 5. The state upholds the uniformity and dignity of the socialist legal system. No law or administrative or local rules and regulations shall contravene the constitution. All state organs, the armed forces, all political parties and public organizations and all enterprises and undertakings must abide by the Constitution and the law. All acts in violation of the Constitution and the law must be investigated. No organization or individual may enjoy the privilege of being above the Constitution and the law.

 

Article 6. The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of 'from each according to his ability, to each according to his work.

 

Article 7. The state economy is the sector of socialist economy under ownership by the whole people; it is the leading force in the national economy. The state ensures the consolidation and growth of the state economy.

 

Article 8. Rural people's communes, agricultural producers' co-operatives, and other forms of co- operative economy such as producers' supply and marketing, credit and consumers co-operatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm private plots of cropland and hilly land, engage in household sideline production and raise privately owned livestock. The various forms of co-operative economy in the cities and towns, such as those in the handicraft, industrial, building, transport, commerical and service trades, all belong to the sector of socialist economy under collective ownership by the working people. The state protects the lawful rights and interests of the urban and rural economic collectives and encourages, guides and helps the growth of the collective economy.

 

Article 9. Mineral resources, waters, forests, mountains, grassland, unreclaimed land, beaches and other natural resources are owned by the state, that is, by the whole people, with the exception of the forests, mountains, grassland, unreclaimed land and beaches that are owned by collectives in accordance with the law. The state ensures the rational use of natural resources and protects rare animals and plants. The appropriation or damage of natural resources by any organization or individual by whatever means is prohibited.

 

Article 10. Land in the cities is owned by the state. Land in the rural and suburban areas is owned by collectives except for those portions which belong to the state in accordance with the law; house sites and private plots of cropland and hilly land are also owned by collectives. The state may in the public interest take over land for its use in accordance with the law. No organization or individual may appropriate, buy, sell or lease land, or unlawfully transfer land in other ways. All organizations and individuals who use land must make rational use of the land.

 

Article 11. The individual economy of urban and rural working people, operated within the limits prescribed by law, is a complement to the socialist public economy. The state protects the lawful rights and interests of the individual economy. The state guides, helps and supervises the individual economy by exercising administrative control.

 

Article 12. Socialist public property is sacred and inviolable. The state protects socialist public property. Appropriation or damage of state or collective property by any organization or individual by whatever means is prohibited.

 

Article 13. The state protects the right of citizens to own lawfully earned income, savings, houses and other lawful property. The state protects by law the right of citizens to inherit private property.

 

Article 14. The state continuously raises labour productivity, improves economic results and develops the productive forces by enhancing the enthusiasm of the working people, raising the level of their technical skill, disseminating advanced science and technology, improving the systems of economic administration and enterprise operation and management, instituting the socialist system of responsibility in various forms and improving organization of work. The state practises strict economy and combats waste. The state properly apportions accumulation and consumption, pays attention to the interests of the collective and the individual as well as of the state and, on the basis of expanded production, gradually improves the material and cultural life of the people.

 

Article 15. The state practises economic planning on the basis of socialist public ownership. It ensures the proportionate and co-ordinated growth of the national economy through overall balancing by economic planning and the supplementary role of regulation by the market. Disturbance of the orderly functioning of the social economy or disruption of the state economic plan by any organization or individual is prohibited.

 

Article 16. State enterprises have decision-making power in operation and management within the limits prescribed by law, on condition that they submit to unified leadership by the state and fulfil all their obligations under the state plan. State enterprises practise democratic management through congresses of workers and staff and in other ways in accordance with the law.

 

Article 17. Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they accept the guidance of the state plan and abide by the relevant laws. Collective economic organizations practise democratic management in accordance with the law, with the entire body of their workers electing or removing their managerial personnel and deciding on major issues concerning operation and management.

 

Article 18. The People's Republic of China permits foreign enterprises, other foreign economic organizations and individual foreigners to invest in China and to enter into various forms of economic co-operation with Chinese enterprises and other economic organizations in accordance with the law of the People's Republic of China. All foreign enterprises and other foreign economic organizations in China, as well as joint ventures with Chinese and foreign investment located in China, shall abide by the law of the People's Republic of China. Their lawful rights and interests are protected by the law of the People's Republic of China.

 

Article 19. The state develops socialist educational undertakings and works to raise the scientific and cultural level of the whole nation. The state runs schools of various types, makes primary education compulsory and universal, develops secondary, vocational and higher education and promotes pre-school education. The state develops educational facilities of various types in order to wipe out illiteracy and provide political, cultural, scientific, technical and professional education for workers, peasants, state functionaries and other working people. It encourages people to become educated through self- study. The state encourages the collective economic organizations, state enterprises and undertakings and other social forces to set up educational institutions of various types in accordance with the law. The state promotes the nationwide use of Putonghua (common speech based on Beijing pronunciation).

 

Article 20. The state promotes the development of the natural and social sciences, disseminates scientific and technical knowledge, and commends and rewards achievements in scientific research as well as technological discoveries and inventions.

 

Article 21. The state develops medical and health services, promotes modern medicine and traditional Chinese medicine, encourages and supports the setting up of various medical and health facilities by the rural economic collectives, state enterprises and undertakings and neighbourhood organizations, and promotes sanitation activities of a mass character, all to protect the people's health. The state develops physical culture and promotes mass sports activities to build up the people's physique.

 

Article 22. The state promotes the development of literature and art, the press, broadcasting and television undertakings, publishing and distribution services, libraries, museums, cultural centres and other cultural undertakings, that serve the people and socialism, and sponsors mass cultural activities. The state protects places of scenic and historical interest,valuable cultural monuments and relics and other important items of China's historical and cultural heritage.

 

Article 23. The state trains specialized personnel in all fields who serve socialism, increases the number of intellectuals and creates conditions to give full scope to their role in socialist modernization.

 

Article 24. The state strengthens the building of socialist spiritual civilization through spreading education in high ideals and morality, general education and education in discipline and the legal system, and through promoting the formulation and observance of rules of conduct and common pledges by different sections of the people in urban and rural areas. The state advocates the civic virtues of love for the motherland, for the people, for labour, for science and for socialism; it educates the people in patriotism, collectivism, internationalism and communism and in dialectical and historical materialism; it combats the decadent ideas of capitalism and feudalism and other decadent ideas.

 

Article 25. The state promotes family planning so that population growth may fit the plans for economic and social development.

 

Article 26. The state protects and improves the living environment and the ecological environment, and prevents and controls pollution and other public hazards. The state organizes and encourages afforestation and the protection of forests.

 

Article 27. All state organs carry out the principle of simple and efficient administration, the system of responsibility for work and the system of training functionaries and appraising their work in order constantly to improve quality of work and efficiency and combat bureaucratism. All state organs and functionaries must rely on the support of the people, keep in close touch with them, heed their opinions and suggestions, accept their supervision and work hard to serve them.

 

Article 28. The state maintains public order and suppresses treasonable and other counter- revolutionary activities; it penalizes actions that endanger public security and disrupt the socialist economy and other criminal activities, and punishes and reforms criminals.

 

Article 29. The armed forces of the People's Republic of China belong to the people. Their tasks are to strengthen national defence, resist aggression, defend the motherland, safeguard the people's peaceful labour, participate in national reconstruction, and work hard to serve the people. The state strengthens the revolutionization, modernization and regularization of the armed forces in order to increase the national defence capability.

 

Article 30. The administrative division of the People's Republic of China is as follows: (1) The country is divided into provinces, autonomous regions and municipalities directly under the Central Government; (2) Provinces and autonomous regions are divided into autonomous prefectures, counties, autonomous counties and cities; (3) Counties and autonomous counties are divided into townships, nationality townships and towns. Municipalities directly under the Central Government and other large cities are divided into districts and counties. Autonomous prefectures are divided into counties, autonomous counties, and cities. All autonomous regions, autonomous prefectures and autonomous counties are national autonomous areas.

 

Article 31. The state may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by law enacted by the National People's Congress in the light of the specific conditions.

 

Article 32. The People's Republic of China protects the lawful rights and interests of foreigners within Chinese territory, and while on Chinese territory foreigners must abide by the law of the People's Republic of China. The People's Republic of China may grant asylum to foreigners who request it for political reasons.

 


CHAPTER II. THE FUNDAMENTAL RIGHTS AND DUTIES OF CITIZENS

 

Article 33. All persons holding the nationality of the People's Republic of China are citizens of the People's Republic of China. All citizens of the People's Republic of China are equal before the law. Every citizen enjoys the rights and at the same time must perform the duties prescribed by the Constitution and the law.

 

Article 34. All citizens of the People's Republic of China who have reached the age of 18 have the right to vote and stand for election, regardless of nationality, race, sex, occupation, family background, religious belief, education, property status, or length of residence, except persons deprived of political rights according to law.

 

Article 35. Citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration.

 

Article 36. Citizens of the People's Republic of China enjoy freedom of religious belief. No state organ, public organization or individual may compel citizens to believe in, or not to believe in, any religion; nor may they discriminate against citizens who believe in, or do not believe in, any religion. The state protects normal religious activities. No one may make use of religion to engage in activities that disrupt public order, impair the health of citizens or interfere with the educational system of the state. Religious bodies and religious affairs are not subject to any foreign domination.

 

Article 37. The freedom of person of citizens of the People's Republic of China is inviolable. No citizen may be arrested except with the approval or by decision of a people's procuratorate or by decision of a people's court, and arrests must be made by a public security organ. Unlawful deprivation or restriction of citizens' freedom of person by detention or other means is prohibited; and unlawful search of the person of citizens is prohibited. Article 38. The personal dignity of citizens of the People's Republic of China is inviolable. Insult, libel, false charge or frame-up directed against citizens by any means is prohibited.

 

Article 39. The home of citizens of the People's Republic of China is inviolable. Unlawful search of, or intrusion into, a citizen's home is prohibited.

 

Article 40. The freedom and privacy of correspondence of citizens of the People's Republic of China are protected by law. No organization or individual may, on any ground, infringe upon the freedom and privacy of citizens' correspondence except in cases where, to meet the needs of state security or of investigation into criminal offences, public security or procuratorial organs are permitted to censor correspondence in accordance with procedures prescribed by law.

 

Article 41. Citizens of the People's Republic of China have the right to criticize and make suggestions to any state organ or functionary. Citizens have the right to make to relevant state organs complaints and charges against, or exposures of, violation of the law or dereliction of duty by any state organ or functionary; but fabrication or distortion of facts with the intention of libel or frame-up is prohibited. In case of complaints, charges or exposures made by citizens, the state organ concerned must deal with them in a responsible manner after ascertaining the facts. No one may suppress such complaints, charges and exposures, or retaliate against the citizens making them. Citizens who have suffered losses through infringement of their civil rights by any state organ or functionary have the right to compensation in accordance with the law.

 

Article 42. Citizens of the People's Republic of China have the right as well as the duty to work. Using various channels, the state creates conditions for employment, strengthens labour protection, improves working conditions and, on the basis of expanded production, increases remuneration for work and social benefits. Work is the glorious duty of every able-bodied citizen. All working people in state enterprises and in urban and rural economic collectives should perform their tasks with an attitude consonant with their status as masters of the country. The state promotes socialist labour emulation, and commends and rewards model and advanced workers. The state encourages citizens to take part in voluntary labour. The state provides necessary vocational training to citizens before they are employed.

 

Article 43. Working people in the People's Republic of China have the right to rest. The state expands facilities for rest and recuperation of working people, and prescribes working hours and vacations for workers and staff.

 

Article 44. The state prescribes by law the system of retirement for workers and staff in enterprises and undertakings and for functionaries of organs of state. The livelihood of retired personnel is ensured by the state and society.

 

Article 45. Citizens of the People's Republic of China have the right to material assistance from the state and society when they are old, ill or disabled. The state develops the social insurance, social relief and medical and health services that are required to enable citizens to enjoy this right. The state and society ensure the livelihood of disabled members of the armed forces, provide pensions to the families of martyrs and give preferential treatment to the families of military personnel. The state and society help make arrangements for the work, livelihood and education of the blind, deaf-mute and other handicapped citizens.

 

Article 46. Citizens of the People's Republic of China have the duty as well as the right to receive education. The state promotes the all-round moral, intellectual and physical development of children and young people.

 

Article 47. Citizens of the People's Republic of China have the freedom to engage in scientific research, literary and artistic creation and other cultural pursuits. The state encourages and assists creative endeavours conducive to the interests of the people made by citizens engaged in education, science, technology, literature, art and other cultural work.

 

Article 48. Women in the People's Republic of China enjoy equal rights with men in all spheres of life, political, economic, cultural and social, and family life. The state protects the rights and interests of women, applies the principle of equal pay for equal work for men and women alike and trains and selects cadres from among women.

 

Article 49. Marriage, the family, and mother and child are protected by the state. Both husband and wife have the duty to practise family planning. Parents have the duty to rear and educate their minor children, and children who have come of age have the duty to support and assist their parents. Violation of the freedom of marriage is prohibited. Maltreatment of old people, women and children is prohibited.

 

Article 50. The People's Republic of China protects the legitimate rights and interests of Chinese nationals residing abroad and protects the lawful rights and interests of returned overseas Chinese and of the family members of Chinese nationals residing abroad.

 

Article 51. The exercise by citizens of the People's Republic of China of their freedoms and rights may not infringe upon the interests of the state, of society and of the collective, or upon the lawful freedoms and rights of other citizens.

 

Article 52. It is the duty of citizens of the People's Republic of China to safeguard the unity of the country and the unity of all its nationalities.

 

Article 53. Citizens of the People's Republic of China must abide by the constitution and the law, keep state secrets, protect public property and observe labour discipline and public order and respect social ethics.

 

Article 54. It is the duty of citizens of the People's Republic of China to safeguard the security, honour and interests of the motherland; they must not commit acts detrimental to the security, honour and interests of the motherland.

 

Article 55. It is the sacred obligation of every citizen of the People's Republic of China to defend the motherland and resist aggression. It is the honourable duty of citizens of the People's Republic of China to perform military service and join the militia in accordance with the law.

 

Article 56. It is the duty of citizens of the People's Republic of China to pay taxes in accordance with the law.


CHAPTER III. THE STRUCTURE OF THE STATE

 

SECTION 1. THE NATIONAL PEOPLE'S CONGRESS

 

Article 57. The National People's Congress of the People's Republic of China is the highest organ of state power. Its permanent body is the Standing Committee of the National People's Congress.

 

Article 58. The National People's Congress and its Standing Committee exercise the legislative power of the state.

 

Article 59. The National People's Congress is composed of deputies elected by the provinces, autonomous regions and municipalities directly under the Central Government, and by the armed forces. All the minority nationalities are entitled to appropriate representation. Election of deputies to the National People's Congress is conducted by the Standing Committee of the National People's Congress. The number of deputies to the National People's Congress and the manner of their election are prescribed by law.

 

Article 60. The National People's Congress is elected for a term of five years. Two months before the expiration of the term of office of a National People's Congress, its Standing Committee must ensure that the election of deputies to the succeeding National People's Congress is completed. Should exceptional circumstances prevent such an election, it may be postponed by decision of a majority vote of more than two- thirds of all those on the Standing Committee of the incumbent National People's Congress, and the term of office of the incumbent National People's Congress may be extended. The election of deputies to the succeeding National People's Congress must be completed within one year after the termination of such exceptional circumstances.

 

Article 61. The National People's Congress meets in session once a year and is convened by its Standing Committee. A session of the National People's Congress may be convened at any time the Standing Committee deems this necessary, or when more than one-fifth of the deputies to the National People's Congress so propose. When the National People's Congress meets, it elects a presidium to conduct its session.

 

Article 62. The National People's Congress exercises the following functions and powers:

(1) To amend the Constitution;

(2) To supervise the enforcement of the Constitution;

(3) To enact and amend basic statutes concerning criminal offences, civil affairs, the state organs and other matters;

(4) To elect the President and the Vice-President of the People's Republic of China; (previously translated as Chairman and Vice-Chairman of the People's Republic of China--translator's note.)

(5) To decide on the choice of the Premier of the State Council upon nomination by the President of the People's Republic of China, and to decide on the choice of the Vice-Premiers, State Councillors, Ministers in charge of Ministries or Commissions and the Auditor-General and the Secretary-General of the State Council upon nomination by the Premier;

(6) To elect the Chairman of the Central Military Commission and, upon his nomination, to decide on the choice of the other members of the Central Military Commission;

(7) To elect the President of the Supreme People's Court;

(8) To elect the Procurator-General of the Supreme People's Procuratorate;

(9) To examine and approve the plan for national economic and social development and the reports on its implementation;

(10) To examine and approve the state budget and the report on its implementation;

(11) To alter or annul inappropriate decisions of the Standing Committee of the National People's Congress;

(12) To approve the establishment of provinces, autonomous regions, and municipalities directly under the Central Government;

(13) To decide on the establishment of special administrative regions and the systems to be instituted there;

(14) To decide on questions of war and peace; and

(15) To exercise such other functions and powers as the highest organ of state power should exercise.

 

Article 63. The National People's Congress has the power to recall or remove from office the following persons:

(1) The President and the Vice-President of the People's Republic of China;

(2) The Premier, Vice-Premiers, State Councillors, Ministers in charge of Ministries or Commissions and the Auditor-General and the Secretary-General of the State Council;

(3) The Chairman of the Central Military Commission and others on the commission;

(4) The President of the Supreme People's Court; and

(5) The Procurator-General of the Supreme People's Procuratorate.

 

Article 64. Amendments to the Constitution are to be proposed by the Standing Committee of the National People's Congress or by more than one-fifth of the deputies to the National People's Congress and adopted by a majority vote of more than two-thirds of all the deputies to the Congress. Statutes and resolutions are adopted by a majority vote of more than one half of all the deputies to the National People's Congress.

 

Article 65. The Standing Committee of the National People's Congress is composed of the following: The Chairman; The Vice-Chairmen; The Secretary-General; and Members. Minority nationalities are entitled to appropriate representation on the Standing Committee of the National People's Congress. The National People's Congress elects, and has the power to recall, all those on its Standing Committee. No one on the Standing Committee of the National People's Congress shall hold any post in any of the administrative, judicial or procuratorial organs of the state.

 

Article 66. The Standing Committee of the National People's Congress is elected for the same term as the National People's Congress; it exercises its functions and powers until a new Standing Committee is elected by the succeeding National People's Congress. The Chairman and Vice-Chairmen of the Standing Committee shall serve no more than two consecutive terms.

 

Article 67. The Standing Committee of the National People's Congress exercises the following functions and powers:

(1) To interpret the Constitution and supervise its enforcement;

(2) To enact and amend statutes with the exception of those which should be enacted by the National People's Congress;

(3) To enact,when the National People's Congress is not in session, partial supplements and amendments to statutes enacted by the National People's Congress provided that they do not contravene the basic principles of these statutes;

(4) To interpret statutes;

(5) To examine and approve, when the National People's Congress is not in session, partial adjustments to the plan for national economic and social development and to the state budget that prove necessary in the course of their implementation;

(6) To supervise the work of the State Council,the Central Military Commission, the Supreme People's Court and the Supreme People's Procuratorate;

(7) To annual those administrative rules and regulations, decisions or orders of the State Council that contravene the Constitution or the statutes;

(8) To annul those local regulations or decisions of the organs of state power of provinces, autonomous regions and municipalities directly under the Central Government that contravene the Constitution, the statutes or the administrative rules and regulations;

(9) To decide, when the National People's Congress is not in session, on the choice of Ministers in charge of Ministries or Commissions or the Auditor-General and the Secretary-General of the State Council upon nomination by the Premier of the State Council;

(10) To decide, upon nomination by the Chairman of the Central Military Commission, on the choice of others on the commission, when the National People's Congress is not in session;

(11) To appoint and remove the Vice-Presidents and judges of the Supreme People's Court, members of its Judicial Committee and the President of the Military Court at the suggestion of the President of the Supreme People's Court;

(12) To appoint and remove the Deputy Procurators-General and procurators of the Supreme People's Procuratorate, members of its Procuratorial Committee and the Chief Procurator of the Military Procuratorate at the request of the Procurator-General of the Supreme People's Procuratorate, and to approve the appointment and removal of the chief procurators of the people's procuratorates of provinces, autonomous regions and municipalities directly under the Central Government;

(13) To decide on the appointment and recall of plenipotentiary representatives abroad;

(14) To decide on the ratification and abrogation of treaties and important agreements concluded with foreign states;

(15) To institute systems of titles and ranks for military and diplomatic personnel and of other specific titles and ranks;

(16) To institute state medals and titles of honour and decide on their conferment;

(17) To decide on the granting of special pardons;

(18) To decide, when the National People's Congress is not in session, on the proclamation of a state of war in the event of an armed attack on the country or in fulfillment of international treaty obligations concerning common defence against aggression;

(19) To decide on general mobilization or partial mobilization;

(20) To decide on the enforcement of martial law throughout the country or in particular provinces, autonomous regions or municipalities directly under the Central Government; and

(21) To exercise such other functions and powers as the National People's Congress may assign to it.

 

Article 68. The Chairman of the Standing Committee of the National People's Congress presides over the work of the Standing Committee and convenes its meetings. The Vice-Chairmen and the Secretary-General assist the Chairman in his work. Chairmanship meetings with the participation of the chairman, vice- chairmen and secretary-general handle the important day-to-day work of the Standing Committee of the National People's Congress.

 

Article 69. The Standing Committee of the National People's Congress is responsible to the National People's Congress and reports on its work to the Congress.

 

Article 70. The National People's Congress establishes a Nationalities Committee, a Law Committee, a Finance and Economic Committee, an Education, Science, Culture and Public Health Committee, a Foreign Affairs Committee, an Overseas Chinese Committee and such other special committees as are necessary. These special committees work under the direction of the Standing Committee of the National People's Congress when the Congress is not in session. The special committees examine, discuss and draw up relevant bills and draft resolutions under the direction of the National People's Congress and its Standing Committee.

 

Article 71. The National People's Congress and its Standing Committee may, when they deem it necessary, appoint committees of inquiry into specific questions and adopt relevant resolutions in the light of their reports. All organs of state, public organizations and citizens concerned are obliged to supply the necessary information to those committees of inquiry when they conduct investigations.

 

Article 72. Deputies to the National People's Congress and all those on its Standing Committee have the right, in accordance with procedures prescribed by law, to submit bills and proposals within the scope of the respective functions and powers of the National People's Congress and its Standing Committee.

 

Article 73. Deputies to the National People's Congress during its sessions, and all those on its Standing Committee during its meetings, have the right to address questions, in accordance with procedures prescribed by law, to the State Council or the ministries and commissions under the State Council, which must answer the questions in a responsible manner.

 

Article 74. No deputy to the National People's Congress may be arrested or placed on criminal trial without the consent of the Presidium of the current session of the National People's Congress or, when the National People's Congress is not in session, without the consent of its StandingCommittee.

 

Article 75. Deputies to the National People's Congress may not be called to legal account for their speeches or votes at its meetings.

 

Article 76. Deputies to the National People's Congress must play an exemplary role in abiding by the Constitution and the law and keeping state secrets and, in production and other work and their public activities, assist in the enforcement of the Constitution and the law. Deputies to the National People's Congress should maintain close contact with the units and people which elected them, listen to and convey their opinions and demands and work hard to serve them.

 

Article 77. Deputies to the National People's Congress are subject to the supervision of the units which elected them. The electoral units have the power, through procedures prescribed by law, to recall the deputies whom they elected.

 

Article 78. The organization and working procedures of the National People's Congress and its Standing Committee are prescribed by law.

 

SECTION 2. THE PRESIDENT OF THE PEOPLE'S REPUBLIC OF CHINA

 

Article 79: The President and Vice-President of the People's Republic of China are elected by the National People's Congress. Citizens of the People's Republic of China who have the right to vote and to stand for election and who have reached the age of 45 are eligible for election as President or Vice-President of the People's Republic of China. The term of office of the President and Vice-President of the People's Republic of China is the same as that of the National People's Congress, and they shall serve no more than two consecutive terms.

 

Article 80. The President of the People's Republic of China, in pursuance of decisions of the National People's Congress and its Standing Committee, promulgates statutes; appoints and removes the Premier, Vice-Premiers, State Councillors, Ministers in charge of Ministries or Commissions, and the Auditor- General and the Secretary-General of the State Council; confers state medals and titles of honour; issues orders of special pardons; proclaims martial law; proclaims a state of war; and issues mobilization orders.

 

Article 81. The President of the People's Republic of China receives foreign diplomatic representatives on behalf of the People's Republic of China and, in pursuance of decisions of the Standing Committee of the National People's Congress, appoints and recalls plenipotentiary representatives abroad, and ratifies and abrogates treaties and important agreements concluded with foreign states.

 

Article 82. The Vice-President of the People's Republic of China assists the President in his work. The Vice-President of the People's Republic of China may exercise such parts of the functions and powers of the President as the President may entrust to him.

 

Article 83. The President and Vice-President of the People's Republic of China exercise their functions and powers until the new President and Vice- President elected by the succeeding National People's Congress assume office.

 

Article 84. In case the office of the President of the People's Republic of China falls vacant, the Vice-President succeeds to the office of President. In case the office of the Vice-President of the People's Republic of China falls vacant, the National People's Congress shall elect a new Vice-President to fill the vacancy. In the event that the offices of both the President and the Vice-President of the People's Republic of China fall vacant, the National People's Congress shall elect a new President and a new Vice-President. Prior to such election, the Chairman of the Standing Committee of the National People's Congress shall temporarily act as the President of the People's Republic of China.

 

SECTION 3. THE STATE COUNCIL

 

Article 85. The State Council, that is, the Central People's Government of the People's Republic of China, is the executive body of the highest organ of state power; it is the highest organ of state administration.

 

Article 86. The State Council is composed of the following: The Premier; The Vice-Premiers; The State Councillors; The Ministers in charge of Ministries; The Ministers in charge of Commissions; The Auditor- General; and The Secretary-General. The Premier has overall responsibility for the State Council. The Ministers have overall responsibility for the respective ministries or commissions under their charge. The organization of the State Council is prescribed by law.

 

Article 87. The term of office of the State Council is the same as that of the National People's Congress. The Premier, Vice-Premiers and State Councillors shall serve no more than two consecutive terms.

 

Article 88. The Premier directs the work of the State Council. The Vice- Premiers and State Councillors assist the Premier in his work. Executive meetings of the State Council are composed of the Premier, the Vice-Premiers, the State Councillors and the Secretary-General of the State Council. The Premier convenes and presides over the executive meetings and plenary meetings of the State Council.

 

Article 89. The State Council exercises the following functions and powers: (1) To adopt administrative measures,enact administrative rules and regulations and issue decisions and orders in accordance with the Constitution and the statutes; (2) To submit proposals to the National People's Congress or its Standing Committee; (3) To lay down the tasks and responsibilities of the ministries and commissions of the State Council, to exercise unified leadership over the work of the ministries and commissions and to direct all other administrative work of a national character that does not fall within the jurisdiction of the ministries and commissions; (4) To exercise unified leadership over the work of local organs of state administration at different levels throughout the country, and to lay down the detailed division of functions and powers between the Central Government and the organs of state administration of provinces, autonomous regions and municipalities directly under the Central Government; (5) To draw up and implement the plan for national economic and social development and the state budget; (6) To direct and administer economic work and urban and rural development; (7) To direct and administer the work concerning education, science, culture, public health, physical culture and family planning; (8) To direct and administer the work concerning civil affairs, public security, judicial administration, supervision and other related matters; (9) To conduct foreign affairs and conclude treaties and agreements with foreign states; (10) To direct and administer the building of national defence; (11) To direct and administer affairs concerning the nationalities and to safeguard the equal rights of minority nationalities and the right of autonomy of the national autonomous areas; (12) To protect the legitimate rights and interests of Chinese nationals residing abroad and protect the lawful rights and interests of returned overseas Chinese and of the family members of Chinese nationals residing abroad; (13) To alter or annul inappropriate orders, directives and regulations issued by the ministries or commissions; (14) To alter or annul inappropriate decisions and orders issued by local organs of state administration at different levels; (15) To approve the geographic division of provinces, autonomous regions and municipalities directly under the Central Government, and to approve the establishment and geographic division of autonomous prefectures, counties, autonomous counties and cities; (16) To decide on the enforcement of martial law in parts of provinces, autonomous regions and municipalities directly under the Central Government; (17) To examine and decide on the size of administrative organs and, in accordance with the law, to appoint, remove and train administrative officers, appraise their work and reward or punish them; and (18) To exercise such other functions and powers as the National People's Congress or its Standing Committee may assign it.

 

Article 90. The ministers in charge of ministries or commissions of the State Council are responsible for the work of their respective departments and convene and preside over their ministerial meetings or commission meetings that discuss and decide on major issues in the work of their respective departments. The ministries and commissions issue orders, directives and regulations within the jurisdiction of their respective departments and in accordance with the statutes and the administrative rules and regulations, decisions and orders issued by the State Council.

 

Article 91. The State Council establishes an auditing body to supervise through auditing the revenue and expenditure of all departments under the State Council and of the local governments at different levels, and those of the state financial and monetary organizations and of enterprises and undertakings. Under the direction of the Premier of the State Council,the auditing body independently exercises its power to supervise through auditing in accordance with the law, subject to no interference by any other administrative organ or any public organization or individual.

 

Article 92. The State Council is responsible, and reports on its work, to the National People's Congress or, when the National People's Congress is not in session, to its Standing Committee.

 

SECTION 4. THE CENTRAL MILITARY COMMISSION

 

Article 93. The Central Military Commission of the People's Republic of China directs the armed forces of the country. The Central Military Commission is composed of the following: The Chairman; The Vice-Chairmen; and Members. The Chairman of the Central Military Commission has overall responsibility for the commission. The term of office of the Central Military Commission is the same as that of the National People's Congress.

 

Article 94. The Chairman of the Central Military Commission is responsible to the National People's Congress and its Standing Committee.

 

SECTION 5. THE LOCAL PEOPLE'S CONGRESS AND THE LOCAL PEOPLE'S GOVERNMENTS AT DIFFERENT LEVELS

 

Article 95. People's congresses and people's governments are established in provinces, municipalities directly under the Central Government, counties, cities, municipal districts, townships, nationality townships and towns. The organization of local people's congresses and local people's governments at different levels is prescribed by law. Organs of self-government are established in autonomous regions, autonomous prefectures and autonomous counties. The organization and working procedures of organs of self-government are prescribed by law in accordance with the basic principles laid down in Sections V and VI of Chapter Three of the Constitution.

 

Article 96. Local people's congresses at different levels are local organs of state power. Local people's congresses at and above the county level establish standing committees.

 

Article 97. Deputies to the people's congresses of provinces, municipalities directly under the Central Government, and cities divided into districts are elected by the people's congresses at the next lower level; deputies to the people'scongresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns are elected directly by their constituencies. The number of deputies to local people's congresses at different levels and the manner of their election are prescribed by law.

 

Article 98. The term of office of the people's congresses of provinces, municipalities directly under the Central Government and cities divided into districts is five years. The term of office of the people's congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns is three years.

 

Article 99. Local people's congresses at different levels ensure the observance and implementation of the Constitution, the statutes and the administrative rules and regulations in their respective administrative areas. Within the limits of their authority as prescribed by law, they adopt and issue resolutions and examine and decide on plans for local economic and cultural development and for development of public services. Local people's congresses at and above the county level examine and approve the plans for economic and social development and the budgets of their respective administrative areas, and examine and approve reports on their implementation. They have the power to alter or annul inappropriate decisions of their own standing committees. The people's congresses of nationality townships may, within the limits of their authority as prescribed by law, take specific measures suited to the peculiarities of the nationalities concerned.

 

Article 100. The people's congresses of provinces and municipalities directly under the Central Government, and their standing committees, may adopt local regulations, which must not contravene the Constitution, the statutes and the administrative rules and regulations, and they shall report such local regulations to the Standing Committee of the National People's Congress for the record.

 

Article 101. At their respective levels, local people's congresses elect, and have the power to recall, governors and deputy governors, or mayors and deputy mayors, or heads and deputy heads of counties, districts, townships and towns. Local people's congresses at and above the county level elect, and have the power to recall, presidents of people's courts and chief procurators of people's procuratorates at the corresponding level. The election or recall of chief procurators of people's procuratorates shall be reported to the chief procurators of the people's procuratorates at the next higher level for submission to the standing committees of the people's congresses at the corresponding level for approval.

 

Article 102. Deputies to the people's congresses of provinces, municipalities, directly under the Central Government and cities divided into districts are subject to supervision by the units which elected them; deputies to the people's congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns are subject to supervision by their constituencies. The electoral units and constituencies which elect deputies to local people's congresses at different levels have the power, according to procedures prescribed by law, to recall deputies whom they elected.

 

Article 103. The standing committee of a local people's congress at and above the county level is composed of a chairman, vice-chairmen and members, and is responsible, and reports on its work, to the people's congress at the corresponding level. The local people's congress at and above the county level elects, and has the power to recall, anyone on the standing committee of the people's congress at the corresponding level. No one on the standing committee of a local people's congress at and above the county level shall hold any post in state administrative, judicial and procuratorial organs.

 

Article 104. The standing committee of a local people's congress at and above the county level discusses and decides on major issues in all fields of work in its administrative area; supervises the work of the people's government, people's court and people's procuratorate at the corresponding level; annuls inappropriate decisions and orders of the people's government at the corresponding level; annuls inappropriate resolutions of the people's congress at the next lower level; decides on the appointment and removal of functionaries of state organs within its jurisdiction as prescribed by law; and, when the people's congress at the corresponding level is not in session, recalls individual deputies to the people's congress at the next higher level and elects individual deputies to fill vacancies in that people's congress.

 

Article 105. Local people's governments at di

Constitution of the Peoples Republic...

Constitution of the Peoples Republic of China, Part 2.

 

Article 105. Local people's governments at different levels are the executive bodies of local organs of state power as well as the local organs of state administration at the corresponding level. Local people's governments at different levels practise the system of overall responsibility by governors, mayors, county heads, district heads, township heads and town heads.

 

Article 106. The term of office of local people's governments at different levels is the same as that of the people's congresses at the corresponding level.

 

Article 107. Local people's governments at and above the county level, within the limits of their authority as prescribed by law, conduct the administrative work concerning the economy, education, science, culture, public health, physical culture, urban and rural development, finance, civil affairs, public security, nationalities affairs, judicial administration, supervision and family planning in their respective administrative areas; issue decisions and orders; appoint, remove and train administrative functionaries, appraise their work and reward or punish them. People's governments of townships, nationality townships and towns carry out the resolutions of the people's congress at the corresponding level as well as the decisions and orders of the state administrative organs at the next higher level and conduct administrative work in their respective administrative areas. People's governments of provinces and municipalities directly under the Central Government decide on the establishment and geographic division of townships, nationality townships and towns.

 

Article 108. Local people's governments at and above the county level direct the work of their subordinate departments and of people's governments at lower levels, and have the power to alter or annul inappropriate decisions of their subordinate departments and people's governments at lower levels.

 

Article 109. Auditing bodies are established by local people's governments at and above the county level. Local auditing bodies at different levels independently exercise their power to supervise through auditing in accordance with the law and are responsible to the people's government at the corresponding level and to the auditing body at the next higher level.

 

Article 110. Local people's governments at different levels are responsible, and report on their work, to people's congresses at the corresponding level. Local people's governments at and above the county level are responsible, and report on their work, to the standing committee of the people's congress at the corresponding level when the congress is not in session. Local people's governments at different levels are responsible, and report on their work, to the state administrative organs at the next higher level. Local people's governments at different levels throughout the country are state administrative organs under the unified leadership of the State Council and are subordinate to it.

 

Article 111. The residents' committees and villagers' committees established among urban and rural residents on the basis of their place of residence are mass organizations of self-management at the grass-roots level. The chairman, vice-chairmen and members of each residents' or villagers' committee are elected by the residents. The relationship between the residents' and villagers' committees and the grass-roots organs of state power is prescribed by law. The residents' and villagers' committees establish committees for people's mediation, public security, public health and other matters in order to manage public affairs and social services in their areas, mediate civil disputes, help maintain public order and convey residents' opinions and demands and make suggestions to the people's government.

 

SECTION 6. THE ORGANS OF SELF-GOVERNMENT OF NATIONAL AUTONOMOUS AREAS

 

Article 112. The organs of self-government of national autonomous areas are the people's congresses and people's governments of autonomous regions, autonomous prefectures and autonomous counties.

 

Article 113. In the people's congress of an autonomous region, prefecture or county, in addition to the deputies of the nationality or nationalities exercising regional autonomy in the administrative area, the other nationalities inhabiting the area are also entitled to appropriate representation. The chairmanship and vice- chairmenships of the standing committee of the people's congress of an autonomous region, prefecture or county shall include a citizen or citizens of the nationality or nationalities exercising regional autonomy in the area concerned.

 

Article 114. The administrative head of an autonomous region, prefecture or county shall be a citizen of the nationality, or of one of the nationalities, exercising regional autonomy in the area concerned.

 

Article 115. The organs of self-government of autonomous regions, prefectures and counties exercise the functions and powers of local organs of state as specified in Section V of Chapter Three of the Constitution. At the same time, they exercise the right of autonomy within the limits of their authority as prescribed by the Constitution, the law of regional national autonomy and other laws, and implement the laws and policies of the state in the light of the existing local situation.

 

Article 116. People's congresses of national autonomous areas have the power to enact autonomy regulations and specific regulations in the light of the political, economic and cultural characteristics of the nationality or nationalities in the areas concerned. The autonomy regulations and specific regulations of autonomous regions shall be submitted to the Standing Committee of the National People's Congress for approval before they go into effect. Those of autonomous prefectures and counties shall be submitted to the standing committees of the people's congresses of provinces or autonomous regions for approval before they go into effect, and they shall be reported to the Standing Committee of the National People's Congress for the record.

 

Article 117. The organs of self-government of the national autonomous areas have the power of autonomy in administering the finances of their areas. All revenues accruing to the national autonomous areas under the financial system of the state shall be managed and used independently by the organs of self- government of those areas.

 

Article 118. The organs of self-government of the national autonomous areas independently arrange for and administer local economic development under the guidance of state plans. In developing natural resources and building enterprises in the national autonomous areas, the state shall give due consideration to the interests of those areas.

 

Article 119. The organs of self-government of the national autonomous areas independently administer educational, scientific, cultural, public health and physical culture affairs in their respective areas, sort out and protect the cultural legacy of the nationalities and work for the development and prosperity of their cultures.

 

Article 120. The organs of self-government of the national autonomous areas may, in accordance with the military system of the state and concrete local needs and with the approval of the State Council, organize local public security forces for the maintenance of public order.

 

Article 121. In performing their functions, the organs of self-government of the national autonomous areas, in accordance with the autonomy regulations of the respective areas, employ the spoken and written language or languages in common use in the locality.

 

Article 122. The state gives financial, material and technical assistance to the minority nationalities to accelerate their economic and cultural development. The state helps the national autonomous areas train large numbers of cadres at different levels and specialized personnel and skilled workers of different professions and trades from among the nationality or nationalities in those areas.

 

SECTION 7. THE PEOPLE'S COURT AND THE PEOPLE'S PROCURATORATES

 

Article 123. The people's courts in the People's Republic of China are the judicial organs of the state.

 

Article 124. The People's Republic of China establishes the Supreme People's Court and the local people's courts at different levels, military courts and other special people's courts. The term of office of the President of the Supreme People's Court is the same as that of the National People's Congress; he shall serve no more than two consecutive terms. The organization of people's courts is prescribed by law.

 

Article 125. All cases handled by the people's courts, except for those involving special circumstances as specified by law, shall be heard in public. The accused has the right of defence.

 

Article 126. The people's courts shall, in accordance with the law, exercise judicial power independently and are not subject to interference by administrative organs, public organizations or individuals.

 

Article 127. The Supreme People's Court is the highest judicial organ. The Supreme People's Court supervises the administration of justice by the local people's courts at different levels and by the special people's courts; people's courts at higher levels supervise the administration of justice by those at lower levels.

 

Article 128. The Supreme People's Court is responsible to the National People's Congress and its Standing Committee. Local people's courts at different levels are responsible to the organs of state power which created them.

 

Article 129. The people's procuratorates of the People's Republic of China are state organs for legal supervision.

 

Article 130. The People's Republic of China establishes the Supreme People's Procuratorate and the local people's procuratorates at different levels, military procuratorates and other special people's procuratorates. The term of office of the Procurator-General of the Supreme People's Procuratorate is the same as that of the National People's Congress; he shall serve no more than two consecutive terms. The organization of people's procuratorates is prescribed by law.

 

Article 131. People's procuratorates shall, in accordance with the law, exercise procuratorial power independently and are not subject to interference by administrative organs, public organizations or individuals.

 

Article 132. The Supreme People's Procuratorate is the highest procuratorial organ. The Supreme People's Procuratorate directs the work of the local people's procuratorates at different levels and of the special people's procuratorates; people's procuratorates at higher levels direct the work of those at lower levels.

 

Article 133. The Supreme People's Procuratorate is responsible to the National People's Congress and its Standing Committee. Local people's procuratorates at different levels are responsible to the organs of state power at the corresponding levels which created them and to the people's procuratorates at the higher level. Article 134. Citizens of all nationalities have the right to use the spoken and written languages of their own nationalities in court proceedings. The people's courts and people's procuratorates should provide translation for any party to the court proceedings who is not familiar with the spoken or written languages in common use in the locality. In an area where people of a minority nationality live in a compact community or where a number of nationalities live together, hearings should be conducted in the language or languages in common use in the locality; indictments, judgments, notices and other documents should be written, according to actual needs, in the language or languages in common use in the locality.

 

Article 135. The people's courts, people's procuratorates and public security organs shall, in handling criminal cases, divide their functions, each taking responsibility for its own work, and they shall co- ordinate their efforts and check each other to ensure correct and effective enforcement of law.

 

CHAPTER IV. THE NATIONAL FLAG, THE NATIONAL EMBLEM AND THE CAPITAL

 

Article 136. The national flag of the People's Republic of China is a red flag with five stars.

 

Article 137. The national emblem of the People's Republic of China is Tian'anmen in the centre illuminated by five stars and encircled by ears of grain and a cogwheel.

 

Article 138. The capital of the People's Republic of China is Beijing.

 

    AMENDENTS TO THE CONSTITUTION

 

AMENDMENT ONE
(Approved on April 12, 1988, by the 7th NPC at its 1st Session)

1. Article 11 of the Constitution shall include a new paragraph which reads: "The State permits the private sector of the economy to exist and develop within the limits prescribed by law. The private sector of the economy is a complement to the socialist public economy. The State protects the lawful rights and interests of the private sector of the economy, and exercises guidance, supervision and control over the private sector of the economy."

2. The fourth paragraph of Article 10 of the Constitution, which provides that "no organization or individual may appropriate, buy, sell or lease land or otherwise engage in the transfer of land by unlawful means," shall be amended as: "no organization or individual may appropriate, buy, sell or otherwise engage in the transfer of land by unlawful means. The right to the use of land may be transferred according to law."

 

AMENDMENT TWO
(Approved on March 29, 1993, by the 8th NPC at its 1st Session)

3. The last two sentences of the seventh paragraph of the Preamble which reads "The basic task of the nation in the years to come is to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship and follow the socialist road, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a socialist country with a high level of culture and democracy," shall be amended as: "China is at the primary stage of socialism. The basic task of the nation is, according to the theory of building socialism with Chinese characteristics, to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship and follow the socialist road, persevere in reform and opening to the outside, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a socialist country with prosperity and power, democracy and culture."

4. At the end of the tenth paragraph of the Preamble, add "The system of multi-party cooperation and political consultation led by the Communist Party of China will exist and develop in China for a long time to come."

5. article 7 which reads "The State economy is the sector of socialist economy under ownership by the whole people; it is the leading force in the national economy. The State ensures the consolidation and growth of the State economy," shall be changed to: "The State-owned economy, that is, the socialist economy under ownership by the whole people, is the leading force in the national economy. The State ensures the consolidation and growth of the State-owned economy."

6. The first item of Article 8 which reads "Rural people's communes, agricultural producers' cooperatives, and other forms of cooperative economy such as producers', supply and marketing, credit and consumers' cooperatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately-owned livestock," shall be amended as: "Rural household-based contract responsibility system with remuneration linked to output, and other forms of cooperative economy such as producers', supply and marketing, credit and consumers' cooperatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately-owned livestock."

7. Article 15 which reads "The State practices economic planning on the basis of socialist public ownership. It ensures the proportionate and coordinated growth of the national economy through overall balancing by economic planning and the supplementary role of regulation by the market.

Disturbance of the orderly functioning of the social economy or disruption of the State economic plan by any organization or individual is prohibited," shall be changed to: "The state has put into practice a socialist market economy. The State strengthens formulating economic laws, improves macro adjustment and control and forbids according to law any units or individuals from interfering with the social economic order."

8. Article 16 which reads "State enterprises have decision-making power in operation and management within the limits prescribed by law, on condition that they submit to unified leadership by the State and fulfil and their obligations under the State plan.

State enterprises practice democratic management through congresses of workers and staff and in other ways in accordance with the law," shall be revised as: "Stated-owned enterprises have decision-making power in operation and management within the limits prescribed by law. State-owned enterprises practice democratic management through congresses of workers and staff and in other ways in accordance with the law."

9. Article 17 which reads "Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they accept the guidance of the State plan and abide by the relevant laws.

Collective economic organizations practice democratic management in accordance with the law, with the entire body of their workers electing or removing their managerial personnel and deciding on major issues concerning operation and management", shall be amended as: "Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they abide by the relevant laws. Collective economic organizations practice democratic management, elect or remove their managerial personnel and decide on major issue concerning operation and management according to law."

10. The their item of Article 42 which reads "Work is the glorious duty of every able-bodied citizen. All working people in State enterprises and in urban and rural economic collectives should perform their tasks with an attitude consonant with their status as masters of the country. The State promotes socialist labor emulation, and commends and rewards model and advanced workers. The state encourages citizens to take part in voluntary labor," shall be amended as: "Work is the glorious duty of every able-bodied citizen. All working people in State-owned enterprises and in urban and rural economic collectives should perform their tasks with an attitude consonant with their status as masters of the country. The State promotes socialist labor emulation, and commends and rewards model and advanced workers. The State encourages citizens to take part in voluntary labor."

11. Article 98 which reads "The term of office of the people's congresses of provinces, municipalities directly under the Central Government and cities divided into districts is five years. The term of office of the people's congresses of countries, cities not divided into districts, municipal districts, townships, nationality townships and towns is three years," shall be revised as: "The term of office of the people's congresses of provinces, municipalities directly under the Central Government, counties, cities and municipal districts is five years. The term of office of the people's congresses of townships, nationality townships and towns is three years."

 

AMENDMENT THREE
(Approved on March 15, 1999, by the 9th NPC at its 2nd Session)

The original text of paragraph seven in the Preamble of the Constitution is: "Both the victory of China's new-democratic revolution and the successes of its socialist cause have been achieved by the Chinese people of all nationalities under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, and by upholding truth, correcting errors and overcoming numerous difficulties and hardships. China is currently in the primary stage of socialism. The basic task of the nation is to concentrate its effort on socialist modernization in accordance with the theory of building socialism with Chinese characteristics. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship, follow the socialist road, persist in reform and opening-up, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a powerful and prosperous socialist country with a high level of culture and democracy."

It is revised into: "Both the victory of China's new-democratic revolution and the successes of its socialist cause have been achieved by the Chinese people of all nationalities under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, and by upholding truth, correcting errors and overcoming numerous difficulties and hardships. China will stay in the primary stage of socialism for a long period of time. The basic task of the nation is to concentrate its efforts on socialist modernization by following the road of building socialism with Chinese characteristics. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship, follow the socialist road, persist in reform and opening-up, steadily improve socialist institutions, develop a socialist market economy, advance socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a powerful and prosperous socialist country with a high level of culture and democracy."

One section is added to Article Five of the Constitution as the first section: "The People's Republic of China practices ruling the country in accordance with the law and building a socialist country of law."

The original text of Article Six of the Constitution is: "The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people." "The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of 'from each according to his ability, to each according to his work'."

It is revised into:"The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of 'from each according to his ability, to each according to his work'." "During the primary stage of socialism, the State adheres to the basic economic system with the public ownership remaining dominant and diverse sectors of the economy developing side by side, and to the distribution system with the distribution according to work remaining dominant and the coexistence of a variety of modes of distribution."

The original text of the first section in Article Eight of the Constitution is:"The rural household-based output-related contracted responsibility system and other forms of the cooperative economy such as producers', supply and marketing, credit and consumers' cooperatives belong to the sector of the socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately owned livestock."

It is revised into:"Rural collective economic organizations practice the double-tier management system that combines unified and separate operations on the basis of the household-based output-related contracted responsibility system. Various forms of the cooperative economy in rural areas such as producers', supply and marketing, credit and consumers' cooperatives belong to the sector of the socialist economy under collective ownership by the working people.

Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately owned livestock."

The original text of Article 11 of the Constitution is: "The individual economy of urban and rural working people, operating within the limits prescribed by law, is a complement to the socialist public economy. The State protects the lawful rights and interests of the individual economy." "The State guides, helps and supervises the individual economy by exercising administrative control." "The State permits the private economy to exist and develop within the limits prescribed by law. The private economy is a complement to the socialist public economy. The State protects the lawful rights and interests of the private economy, and guides, supervises and administers the private economy."

It is revised into: "Individual, private and other non-public economies that exist within the limits prescribed by law are major components of the socialist market economy." "The State protects the lawful rights and interests of individual and private economies, and guides, supervises and administers individual and private economies."

The original text of Article 28 of the Constitution is: "The State maintains public order and suppresses treasonable and other counter-revolutionary activities; it penalizes actions that endanger public security and disrupt the socialist economy and other criminal activities, and punishes and reforms criminals."

It is revised into: "The State maintains public order and suppresses treasonable and other criminal activities that endanger State security; it penalizes actions that endanger public security and disrupt the socialist economy and other criminal activities, and punishes and reforms criminals.

 

AMENDMENT FOURTH
(Approved on March 14, 2004, by the 10th NPC at its 2nd Session)

1 "... along the road of building socialism with Chinese characteristics..." and "...under the guidance of Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory..."

Revised to: "... along the road of Chinese-style socialism..." and "...under the guidance of Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and the important thought of 'Three Represents'..."

2 Seventh paragraph of the Preamble: After "... to modernize the industry, agriculture, national defence and science and technology step by step..."

Is added: "... promote the co-ordinated development of the material, political and spiritual civilizations..."

3 The second sentence of the 10th paragraph of the Preamble: "In the long years of revolution and construction, there has been formed under the leadership of the Communist Party of China a broad patriotic united front that is composed of the democratic parties and people's organizations and embraces all socialist working people, all patriots who support socialism, and all patriots who stand for the reunification of the motherland. This united front will continue to be consolidated and developed."

After "... a broad patriotic united front that is composed of the democratic parties and people's organizations and embraces all socialist working people..." is added "... all builders of socialism, ..."

4 Third paragraph of Article 10: "The State may, in the public interest, requisition land for its use in accordance with the law."

Revised to: "The State may, in the public interest and in accordance with the provisions of law, expropriate or requisition land for its use and shall make compensation for the land expropriated or requisitioned."

5 Second paragraph of Article 11:"The State protects the lawful rights and interests of the individual and private sectors of the economy, and exercises guidance, supervision and control over individual and the private sectors of the economy."

Revised to: "The State protects the lawful rights and interests of the non-public sectors of the economy such as the individual and private sectors of the economy. The State encourages, supports and guides the development of the non-public sectors of the economy and, in accordance with law, exercises supervision and control over the non-public sectors of the economy."

6 Article 13: "The State protects the right of citizens to own lawfully earned income, savings, houses and other lawful property." and "The State protects according to law the right of citizens to inherit private property."

Revised to: "Citizens' lawful private property is inviolable" and "The State, in accordance with law, protects the rights of citizens to private property and to its inheritance" and "The State may, in the public interest and in accordance with law, expropriate or requisition private property for its use and shall make compensation for the private property expropriated or requisitioned."

7 Article 14 has a fourth paragraph added: "The State establishes a sound social security system compatible with the level of economic development."

8 Article 33 has a third paragraph added: "The State respects and preserves human rights."

9 The first paragraph of Article 59 is revised to: "The National People's Congress is composed of deputies elected from the provinces, autonomous regions and municipalities directly under the Central Government and of deputies elected from the armed forces. All the minority nationalities are entitled to appropriate representation."

Revised to: "The National People's Congress is composed of deputies elected from the provinces, autonomous regions, municipalities directly under the Central Government, and the special administrative regions, and of deputies elected from the armed forces. All the minority nationalities are entitled to appropriate representation."

10 On "State of Emergency"

Subparagraph 20 of Article 67: "... to decide on the imposition of martial law throughout the country or in particular provinces, autonomous regions, or municipalities directly under the Central Government."

Revised to: "... to decide on entering the state of emergency throughout the country or in particular provinces, autonomous regions, or municipalities directly under the Central Government."

Article 80: "The President of the People's Republic of China ... proclaims martial law, ..."

Revised to: "... proclaims entering of the state of emergency, ..."

Subparagraph 16 of Article 89: "... to decide on the imposition of martial law in parts of provinces, autonomous regions and municipalities directly under the Central Government..."

Revised to: "... in accordance with the provisions of law, to decide on entering the state of emergency in parts of provinces, autonomous regions, and municipalities directly under the Central Government..."

11 Article 81: "The President of the People's Republic of China receives foreign diplomatic representatives on behalf of the People's Republic of China."

Revised to: "The President of the People's Republic of China, on behalf of the People's Republic of China, engages in activities involving State affairs and receives foreign diplomatic representatives."

12 Article 98: "The term of office of people's congresses of provinces, municipalities directly under the Central Government, counties, cities and municipal districts is five years. The term of office of the people's congresses of townships, nationality townships and towns is three years."

Revised to: "The term of office of the local people's congresses at various levels is five years."

13 Provision on the National Anthem:

Title of Chapter IV: "The National Flag, the National Emblem and the Capital"

Revised to: "The National Flag, the National Anthem, the National Emblem and the Capital"

Article 136 has a second paragraph added: "The National Anthem of the People's Republic of China is the March of the Volunteers." (Updated on March 22, 2004)

Labour Law.

Labour Law.

A very comprehensive break-down of the various points on the New Chinese labour Law of 2008. For the PDF please click here

Social insurance for foreigners, an...

Social insurance for foreigners, an unknown.

“Compared to October last year, many cities have issued implementing rules for the PRC social insurance contributions by foreign nationals,” said Gordon Feng, chair of Paul Hastings’ employment law practice in Shanghai. Beijing, Chengdu, Qingdao, Suzhou and Chongqing have all issued local implementing rules requiring foreign employees to enroll in government schemes for pension, medical care, work-related injury, unemployment and maternity.

 

 

With many of China’s foreigners residing in Shanghai, the city still maintains that contributions to the schemes are voluntary in the country’s most populated municipality. “It seems Shanghai is not interested in enforcing the Social Insurance Law against foreigners as it is keeping quiet about any implementing regulations and so far the enrollment remains voluntary,” said Feng.

 

Hong Kong, Macau, and Taiwan residents were also part of the initial measures, but later removed as previous legislation required contributions from them. “The Ministry of Human Resources and Social Security already had regulations for Hong Kong, Macau, and Taiwan residents in place, requiring them to enroll in the social insurance system, but the enrollment was not mandatory in practice before October 15, 2011” said Feng. He believed HMT residents were later removed because otherwise the rules would have been redundant.

 

The southwestern city of Chengdu and the eastern city of Suzhou are two cities where contributions are mandatory. Despite the removal of HMT residents, Chengdu and Suzhou are unique in that their implementing regulations included HMT residents. “The Chengdu Circular and Suzhou Circular do not go against the Ministry because previous regulations required HMT residents to pay social insurance,” commented Feng.

 

But what about enforcement? China is notorious for releasing measures where enforceability is non-existent. Despite repercussions of forced transfers from the social insurance administrative authority and interest fee penalties of 5% for non-compliance, there has not been any news that they have been enforced or companies employing foreigners chased for contributions.

 

Social insurance for PRC nationals is a far greater problem in China. The social insurance centre does not have the energy or the appetite to go after foreigners. Foreigners are such a small percentage of the population compared to local residents, and the authorities already have a big problem dealing with nationals.

 

Even though stories of enforcement or penalties have yet to surface, Feng always recommends his clients to follow local laws. Companies employing several foreigners need to be careful, as enforceability of the measures could increase at anytime. It remains to be seen which other municipalities will release circulars and whether Shanghai will require such regulations.



By David Tring www.chinalawandpractice.com

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