State Development Planning Commission, Ministry of Finance, State Administration of Foreign Exchange, Foreign Debt Administration Tentative Measures

Promulgated: January 8 2003
Effective: March 1 2003
Interpreting authority: State Development Planning Commission, Ministry of Finance and State Administration of Foreign Exchange
Applicability: "Foreign debt" refers to foreign-currency denominated debt obligations of domestic organizations toward non-residents (Article 2). "Provision of security to foreign entities" refers to the provision of security to non-residents in the form of guarantees, mortgages and pledges by domestic organizations (Article 7). "Domestic organizations" refers to organizations legally and permanently established in China (Article 3). Domestic organizations borrowing loans from or providing security to organizations from Macao, Hong Kong or Taiwan shall be governed with reference to these Measures (Article 49).

Main contents: Part One provides for the categorization of foreign debt as foreign government loans, loans from international financial organizations (such as the World Bank), or international commercial loans (Article 5). The last category includes loans from foreign banks or enterprises, medium- to long-term bonds issued overseas, purchaser credit and delayed payment. Part Two details the appropriate approvals required for borrowing of foreign loans and provision of security to foreign entities. Foreign-invested enterprises may borrow medium- to long-term or short-term foreign loans as long as the total amount does not exceed limits based on total project investment or registered capital (Article 18). All foreign loan or security agreements must be registered with the State Administration of Foreign Exchange (Article 22). Part Three deals with the employment of foreign debt. Part Four on repayment and risk management states that creditors may repay foreign debts with the foreign exchange in their possession, or may apply to the State Administration of Foreign Exchange to purchase foreign exchange to repay debts (Article 33). Part Five on the supervision of foreign debts states that any foreign loan or security agreement entered into by a domestic organization without the required approval or registration shall not be considered legally binding (Article 40).
Related legislation: PRC Security Law, Jun 30 1995, CLP 1995 No.6 p21