Administrative Regulations on Contracting Foreign Projects (Revised in 2017)

Order of the State Council of the People's Republic of China No.676

March 1, 2017

(Promulgated by the Order of the State Council of the People's Republic of China No. 527 on July 21, 2008; and revised in accordance with the Decision of the State Council on Revising and Repealing Certain Administrative Regulations on March 1, 2017)

Chapter I General Provisions

Article 1 These Regulations are formulated to regulate the administration of the contracting of foreign projects and enhance the sound development of the contracting of foreign projects.

Article 2 For the purpose of these Regulations, the term "contracting foreign project" refers to an activity of a Chinese enterprise or any other unit (hereinafter referred to as unit) of contracting an overseas construction project (hereinafter referred to as construction project).

Article 3 The state encourages the units to contract foreign projects and improve the quality and level of such projects.
The relevant departments under the State Council shall formulate and improve the policies and measures favorable for contracting foreign projects, and establish and improve the service system and risk prevention mechanism for contracting foreign projects.

Article 4 When contracting foreign projects, the units shall safeguard national interests, social public interests and the legal rights and interests of their staff being sent abroad.
A unit contracting foreign project shall abide by the law of the country or region where the construction project is located, stick by the contract, respect the local customs and habits, pay attention to ecological and environmental protection and promote the local economic and social development.

Article 5 The competent commerce authorities of the State Council shall take charge of the supervision and administration of the foreign project contracting activities, and the relevant departments under the State Council shall take charge of the relevant administrative work within their respective scope of duties and functions.
The competent commerce authorities of the State Council shall organize and arrange construction enterprises to participate in contracting foreign projects.
The competent department of commerce of the people's government of a province, autonomous region or municipality directly under the Central Government shall take charge of the supervision and administration of the foreign project contracting activities under their respective jurisdiction.

Article 6 Any association or chamber in contracting foreign projects shall provide information and training services thereabout for its members according to its articles of association, work out industrial norms according to law, give play to its role of coordination and self-discipline, safeguard fair competition and protect the interests of its members.

Chapter II Foreign Project Contracting Activities

Article 7 The competent commerce authorities of the State Council shall, together with other relevant departments of the State Council, establish a safety risk assessment mechanism of foreign projects, publishing the safety appraisal results in the relevant countries and regions on a regular basis so as to provide pre-warning information in a timely manner and guide foreign project contractors to do well the safety protection.

Article 8 No foreign project contractor may contract any project at an illegitimate low price or engage in collusive tendering or commercial bribery.

Article 9 A foreign project contractor shall conclude a written contract with the project employer to clarify the rights and obligations of both parties, and both parties shall fulfill their obligations in accordance with the written contract.

Article 10 A foreign project contractor shall strengthen the administration of project quality and production safety, and set up, improve and put into effect the rules and regulations on project quality and production safety administration.
Where a foreign project contractor subcontracts a foreign project, it shall conclude a special agreement on project quality and production safety administration with the subcontractor or specify their respective responsibilities for project quality and production safety administration in the subcontracting contract, and shall coordinate and administer the project quality and production safety of the subcontractor in a unified way.
No foreign project contractor may subcontract a foreign project to any unit without the qualification required by the state laws, or subcontract the construction part of a foreign project to a domestic construction enterprise which has not obtained the safe production permit according to law.
No subcontractor may further subcontract a project. A foreign project contractor shall, in the subcontracting contract, expressly forbid the subcontractor to further subcontract the project, and shall take the responsibility for supervising the subcontractor to make sure that it abides by the contract clause.

Article 11 To provide intermediate service of employing persons to be assigned abroad for foreign project contractors, a unit shall get the permit of the competent commerce authorities of the State Council, and provide such intermediate service in accordance with the provisions of the competent commerce authorities of the State Council.
When necessary, a foreign project contractor shall employ persons to be assigned abroad through an intermediate agency which has the required permit and has been operating legally instead of one which has not obtained the permit or has committed any gross violation.

Article 12 A foreign project contractor shall conclude labor contracts with all its persons assigned abroad, provide work conditions and pay rewards to them in strict accordance with such contracts, and properly perform its obligations as an employer.

Article 13 A foreign project contractor shall have a specialized safety management institution and workers to protect the personal safety and property safety of the persons assigned abroad, and, in light of the specific situations of the project contracted by it, work out a plan for protecting the personal safety and property safety of the persons assigned abroad and put the funds needed in position.
A foreign project contractor shall, in accordance with the safety situation of the country or region where the contracted foreign project is located, educate and train its persons assigned abroad about security and emergency knowledge so as to improve their security awareness and self-protection capability.

Article 14 A foreign project contractor shall buy overseas accidental harms insurance for its personnel being sent abroad.

Article 15 A foreign project contractor shall pay or deposit reserve funds in accordance with the requirements of the competent commerce authorities and the financial department of the State Council.
The reserve funds prescribed in the preceding paragraph shall be used for paying the following expenses when the contractor refuses or becomes unable to pay:
1. Rewards for the persons being sent abroad;
2. Expenses needed by a person assigned abroad for coming back to China or accepting other emergency rescue in the case of emergency; or
3. Expenses needed for making compensation for the losses suffered by a person assigned abroad.

Article 16 A foreign project contractor shall, after concluding a foreign project contract with a project employer, report to the Chinese embassy (consulate) in the country where the project is located in a timely manner.
A foreign project contractor shall accept the guidance provided by the Chinese embassy (consulate) in the country where the project is located in terms of emergency prevention, project quality, production safety and the protection of persons being sent abroad.

Article 17 A foreign project contractor shall make an emergency response plan, and, in the case of any emergency occurring in a foreign country, timely and properly treat it and immediately report it to the Chinese embassy (consulate) in that country or the relevant competent department in China.
The competent commerce authorities of the State Council shall, together with other relevant departments of the State Council, set up a foreign project emergency pre-warning, preventing and handling mechanism and improve it and make a foreign project emergency response plan under the principle of attaching equal importance to pre-event prevention and post-event disposal.

Article 18 A foreign project contractor shall report its foreign project contracting work to the competent commerce authorities on a regular basis, and file the business statistics with the relevant department in accordance with the provisions of the competent commerce authorities of the State Council and the statistics department of the State Council.

Article 19 The competent commerce authorities of the State Council shall, together with other relevant departments of the State Council, set up an information collecting and reporting system on foreign project contracting so as to provide information service for foreign project contractors free of charge.
The relevant departments shall provide express services for foreign project contractors in customs clearance of cargos and the entry-exit of their workers in accordance with the law.

Chapter III Legal Liabilities

Article 20 Where any foreign project contractor falls under any of the following circumstances, the competent commerce authorities shall order it to correct, impose a fine of not more than RMB200,000 but not less than RMB100,000 upon it and impose a fine of not more than RMB20,000 but not less than RMB10,000 upon the main principal. If it refuses to correct, the competent commerce authorities may forbid it to contract new foreign projects in a certain time (from one year to three years). If it has any big project quality problem, has any relatively serious safety accident or more serious ones or has caused other serious consequences, the competent construction authorities or other relevant competent department may degrade its qualification or revoke its qualification certificate:
1. Failing to set up or abide by the rules and regulations on project quality and production safety administration;
2. Having no specially established safety management institution and persons to protect the personal safety and property safety of the persons being sent abroad, or failing to work out a specific plan for protecting the personal safety and property safety of the persons being sent abroad in accordance with the specific situations of the foreign contracted project and failing to put in position the funds needed for effecting the plan;
3. Failing to educate and train the persons being sent abroad about security and emergency knowledge; or
4. Failing to make an emergency response plan, or failing to timely and properly handle an emergency occurring abroad.

Article 21 Where any foreign project contractor falls under any of the following circumstances, the competent commerce authorities shall order it to correct, impose a fine of not more than RMB300,000 but not less than RMB150,000 upon it and impose a fine of not more than RMB50,000 but not less than RMB20,000 upon the main principal. If it refuses to correct, the competent commerce authorities may forbid it to contract new foreign projects in a certain time (from two years to five years). If it has any big project quality problem, has any relatively serious safety accident or more serious ones or has caused other serious consequences, the competent construction authorities or other relevant competent department may degrade its qualification or revoke its qualification certificate:
1. Contracting any project at an illegitimate low price, or engaging in collusive tendering or commercial bribery;
2. Failing to conclude a special agreement on project quality and production safety administration with a subcontractor, or failing to stipulate their respective responsibility for project quality and production safety in such a contract, or failing to coordinate or manage the project quality and production safety work of the subcontracting units in a unified way;
3. Subcontracting a project to a unit not having the qualification required by the State, or subcontracting the construction part of a project to a domestic constructing enterprise which has not obtained the safe production permit according to law; or
4. Failing to expressly stipulate in the subcontract that the subcontractor may not further subcontract the project.
Where any subcontractor further subcontracts a project, the competent construction authorities shall order it to correct, and impose a fine upon the subcontractor and its main principal based on the amounts prescribed in the preceding paragraph by analogy. If it has any big project quality problem or any relatively serious safety accident or more serious ones, the competent construction authorities or other relevant competent department may degrade its qualification or revoke its qualification certificate.

Article 22 Where any foreign project contractor falls under any of the following circumstances, the competent commerce authorities shall order it to correct, and impose a fine of not more than RMB50,000 but not less than RMB20,000 upon it; impose a fine of not more than RMB10,000 but not less than RMB5,000 upon the main principal if it refuses to correct:
1. Failing to report a contract concluded with a foreign project employer to the Chinese embassy (consulate) in the country where the foreign project is located;
2. Failing to report any emergency occurring in a foreign country where the foreign project is located to the Chinese embassy (consulate) in that country or the relevant competent department in China; or
3. Failing to report the foreign project contracting information to the competent commerce authorities on a regular basis, or failing to file the business statistics with the relevant department as required.

Article 23 Where any foreign project contractor employs persons to be assigned abroad through an intermediate agency which has not obtained the permit to do so or which has committed any gross violation, or fails to buy overseas life accident insurance for the persons being sent abroad in accordance with these Regulations, or fails to pay or deposit reserve funds as required, the competent commerce authorities shall order it to correct within a certain time limit, impose a fine of not more than RMB100,000 but not less than RMB50,000 upon it, and impose a fine of not more than RMB10,000 but not less than RMB5,000 upon the main principal. If it fails to correct within the prescribed time limit, the competent commerce authorities may forbid it to contract new projects in a certain time (from one year to three years).
Where any unit provides intermediate services of employing persons to be assigned abroad for foreign project contractors without getting the permit of the competent commerce authorities of the State Council, the competent commerce authorities of the State Council shall order it to correct, impose a fine of not more than RMB200,000 but not less than RMB100,000 upon it, confiscate the illegal gains if any, and impose a fine of not more than RMB100,000 but not less than RMB50,000 upon the main principal.

Article 24 Where any functionary of a competent commerce authority, a competent construction authority or any other relevant department abuses his power, neglects his duty or engages in fraud for personal gains in supervising and administering the foreign project contracting business, and thus a crime is constituted, he shall be subject to corresponding criminal responsibility; if a crime is not yet constituted, he shall be given a punishment in accordance with law.

Chapter IV Supplementary Provision

Article 25 Matters concerned in contracting foreign projects, such as the import and export of cargos and technology, entry-exit of persons, customs issues, taxation issues and foreign exchange issues, shall be handled in accordance with laws, administrative regulations and other relevant state provisions.

Article 26 Where a foreign project contractor makes an offer for a project valued over the stipulated standard of the competent commerce authorities, the financial department or other relevant departments of the State Council in the manner of tendering or bid negotiation, matters covering bank's issuance of the letter of guarantee shall be handled in accordance with provisions of the competent commerce authorities, the financial department and other relevant departments of the State Council.

Article 27 To contract a specially appointed project or to contract a project in a country or region specially designated by the competent commerce authorities of the State Council together with the Ministry of Foreign Affairs or other relevant departments, a foreign project contractor shall obtain the approval of the competent commerce authorities and other relevant departments of the State Council.

Article 28 Contracting projects in Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan by units from the mainland of China shall be governed by these Regulations.

Article 29 The implementation and administration of the projects constructed with aid from the Chinese Government shall be governed by the relevant state provisions.

Article 30 These Regulations shall come into force as of September 1, 2008.