(Approved by the State Council on December 30, 1987, promulgated by the Ministry of Foreign Economic Relations and Trade on January 20,1988)

Article 1 These Rules are formulated in accordance with the provisions of Article 12of the Regulations of the People's Republic of China on Administration of Technology-Introduction Contracts (hereinafter referred to as the "Regulations").

Article 2 Regardless of the country or region of the supplier, or of the source of funds and modes of payment of the recipient, the recipient and the supplier as specified in Article 2 of the Regulations shall apply for examination and approval to the examining and approving authorities in accordance with the Regulations and these Rules when they are to conclude any of the technology-introduction contracts listed below

:1. Contracts for assignment or licensing of industrial property rights; Contracts for assignment or licensing of industrial property rights refer to those for assignment or licensing of rights relating to invention patents, new utility model patents, exterior design patents as well as trademarks, excluding those merely for assignment of rights of trademarks.

2. Contracts for licensing of proprietary technology. Contracts for licensing of proprietary technology refer to those for supply or impairment of technical know-how which is not yet publicized nor under legal protection as industrial property, for manufacturing a product or applying a technology as well as for product designs, technological processes, formulae, quality control and management, etc.

3. Contracts for technical services. Contracts for technical services refer to those for offering services or consultancy to the recipient by the supplier with its technology for achieving a specific goal, including contracts for feasibility study or engineering design undertaken by the supplier upon the entrustment of the recipient or by the recipient in cooperation with the supplier, contracts for providing technical services by foreign geological exploration or engineering teams that are employed and contracts for providing services or consultancy by the supplier upon the entrustment of the recipient for technical transformation of an enterprise, improvement of production technology or product design and quality control as well as enterprise management (excluding contracts for employing foreigners in China's enterprises).

4. Contracts for co- production and co-design which involve any one of such items as assignment or licensing of industrial property rights, licensing of know-how or technical services.

5. Contracts for importing complete set of equipment, production line or key equipment which involve any one of such items as assignment or licensing of industrial property rights, licensing of know-how or technical services.

6. Other technology-introduction contracts which, according to the examining and approving authorities, must go through the procedure for examination and approval.

Article 3 When companies, enterprises, institutions or individuals with no rights to engage in foreign technology-introduction business are to introduce technology from abroad, they shall, with letters of commission, entrust those companies and enterprises with such rights to conclude technology-introduction contracts.

Article 4 Technology-introduction contracts concluded by Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and foreign capital enterprises (hereinafter referred to as enterprises with foreign investment) established in the territory of the People's Republic of China for acquiring technology from suppliers shall comply with the procedures of examination and approval as stipulated in these Rules .If foreign investors in enterprises with foreign investment use industrial property rights or technical know-how as equity shares, the case shall be dealt with in accordance with the relevant laws and regulations of the State for enterprises with foreign investment.

Article 5  The examining and approving authorities for examining and approving technology-introduction contracts are the Ministry of Foreign Economic Relations and Trade (hereinafter referred to as MOFERT) and its authorized departments, commissions, bureau of foreign economic relations and trade and other administrative organs of provinces, autonomous regions ,municipalities directly under the Central Government, coastal open cities, special economic zones and cities under separate planning (hereinafter referred to as the "authorized examining and approving authorities").

Article 6Technology-introduction contracts shall be examined and approved at different levels in accordance with the following stipulations:

1. Technology-introduction contracts for projects with feasibility study reports approved by the ministries/commissions of and agencies directly under the State Council shall be examined and approved by MOFERT.

2. Technology-introduction contracts for projects with feasibility study reports approved by people's governments or their authorized competent organs of provinces, autonomous regions, municipalities directly under the Central Government, coastal open cities, special economic zones and cities under separate planning shall be examined and approved by the authorized examining and approving authorities at the same level; if the technology-introduction contracts are concluded by other transregional companies with parties abroad through entrustment, they may be examined and approved by the authorized examining and approving authorities of the locality where the conclusion takes place with the consent of the authorized examining and approving authorities of the locality where the entruster is located. After approval, the authorized examining and approving authorities of the locality where the contract is concluded shall send a copy of the Approval Certificate to the authorized examining and approving authorities of the locality where the entruster is located for the record. Nevertheless, technology-introduction contracts concluded with parties abroad by companies located in Beijing pursuant to transregional entrustment(excluding those companies directly under Beijing municipality) shall be examined and approved by MOFERT.

3. Technology-introduction contracts concluded by enterprises with foreign investment for acquiring technology from suppliers shall be examined and approved by MOFERT if the enterprises concerned were established with the approval of ministries/commissions of and agencies directly under the State Council; or shall be examined and approved by the relevant authorized examining and approving authorities if the enterprises concerned were otherwise established.

Article 7 A technology-introduction contract shall specify the following items:1. name of the contract;2. contents, scope and requirements of the target technology to beintroduced;3. criteria, time limits and measures for quality rectification of the introduced technology and liabilities for risks;4. obligation to preserve the secrets of the introduced technology, ownership and sharing of the improved technology;5. price or remuneration in total, prices of separate items and modes ofpayment;6. calculations for compensation in case of violation of the contract;7. settlement of disputes; and8. definitions of terms and phrases. Annex and data relating to implementation of the contract may constitute an integral part of the technology-introduction contract in accordance with the agreement of the contracting parties.

Article 8 With respect to technology-introduction contracts involving assignment or licensing of patent or trademark rights obtained in China, relevant patent numbers or patent application numbers, trademark registration number together with trademark design shall be expressly specified. Contracts for assignment of patent rights shall be recorded with the Patent Office in accordance with provisions of the Patent Law of the People's Republic of China, and those for licensing of the trademarks shall be recorded with the Trademark Office in accordance with the provisions of the Trademark Law of the People's Republic of China.

Article 9 The supplier shall ensure that the technology or data documents provided are complete, accurate, effective and capable of attaining the technology target specified in the contract. The time for the delivery of technology documents shall correspond with the progress of the engineering program of the recipient.

Article 10 If the recipient requires the supplier to provide raw materials, spare parts or equipment for the introduced technology, the prices shall not be higher than those of the like products on international market.

Article 11 The supplier shall ensure that it is the lawful owner of the technology provided or that it has the right to assign or license the technology. If the recipient, in producing or selling products with the assigned or licensed technology, is accused of infringement by a third party, the supplier shall respond to the lawsuit. If the infringement charged by the third party is proved, all economic losses the recipient may suffer shall be compensated for by the supplier.

Article 12 Within the term of validity of the contract, the ownership of the improved technology including the right to apply for patents belongs to the party that has made the improvements. Where the recipient provides the supplier with an improved technology, the terms shall be the same as those when the supplier provides the recipient with an improved technology.

Article 13 The recipient shall undertake the obligation to preserve the secrets of the proprietary technology and relevant data provided or imparted by the supplier in accordance with the scope and duration as agreed in the contract. The duration for preserving secrets shall not generally exceed the term of validity of the contract. If special circumstances require that the duration exceed the term of contract, it shall be expressly specified in the contract, and reasons shall be stated when applying for examination and approval. Within the duration in which the recipient undertakes the obligation to preserve secrets, if the technology is made public owing to reasons for which the recipient is not responsible, the obligation undertaken in this regard by the recipient shall immediately terminate. If it is specified in the contract that the supplier shall also supply its developed and improved technology to the recipient within the term of validity of the contract, the recipient may continue to undertake the obligation of secret-preservation after expiration of the contract. In that case, the new duration shall begin from the date when the supplier provides the technology but shall not exceed the duration originally specified in the contract

.Article 14 No provisions of restrictions on exportation of products manufactured by the recipient with the introduced technology may be included in the contract without the approval of the examining and approving authorities, however, either of the following cases shall be excepted:1. in countries and regions where exclusive license contracts have be enconcluded by the supplier;2. in countries and regions where sole agent contracts have been concluded by the supplier.

Article 15 No provisions of prohibiting the continued use of the introduced technology by the recipient after the expiration of the contract shall be included in the contract without the approval of the examining and approving authorities. Where the duration of the patent relating to the introduced technology has not expired at the expiry of the contract, the relevant stipulations of the Patent Law of the People's Republic of China shall govern.

Article 16  The supplier shall pay taxes in accordance with the provisions of the tax laws of the People's Republic of China.

Article 17  The recipient of a technology-introduction contract or the company or enterprise acting as its agent to conclude the contract shall, in accordance with the provisions of Article 6 of these Rules, submit to the examining and approving authorities, within 30 days from the date of conclusion, the following official documents:

1. a written application for approval of the contract. The contents of the application shall include the name of the contract, the country of the supplier and the name of the firm, the contents and scope of the target technology to be introduced, the organ that has approved the feasibility study report of the project and its approval number, etc.;
2. copies of the contract (with a Chinese translation attached, if it is in a foreign language);
3. copies for each of the documents certifying the legal status of the contracting parties;

Article 18 In case the technology-introduction contracts and other documents submitted to the examining and approving authorities in accordance with the provisions of Article 17 of these Rules fall under any one of the following cases, the examining and approving authorities shall require the parties concerned to make due amendments within a prescribed time limit, and the approval shall be denied in case of failure to make amendments:

1. where they contravene the current laws and regulations of the State and impair social and public interests;
2. where they impair national sovereignty;
3. where the contents of the contract are inconsistent with the approved feasibility study report of the project;
4. where the basic clauses and contents of the contract are imperfect;
5. where the contract contains no explicit and rational stipulations concerning the responsibilities about and solutions to possible disputes over property rights arising from the assigned or licensed technology or other disputes that may occur in the course of implementation of the contract;

6. where the contract contains no rational stipulations on the technical level and economic benefits to be attained by the assigned or licensed technology, including the quality warranty for the products manufactured with the said technology;

Article 19The examining and approving authorities shall decide to approve or disapprove the contract within 60 days from the date when the applications received. If the examining and approving authorities require amendments in accordance with the provisions of Article 18, the duration needed for examination and approval shall be counted from the date when the amended contract or an instrument of amendment is received. If the examining and approving authorities make no response at the expiry of the specified period, the contract shall be deemed to have been approved.

Article 20The contract shall come into force as of the date of approval and the examining and approving authorities shall issue a unified Approval Certificate for a Technology-Introduction Contract printed and serial-numbered by MOFERT

.Article 21 If the term of validity of a technology-introduction contract exceeds the period of 10 years as stipulated in Article 8 or includes the restrictive provisions as listed in Article 9 of the Regulations, the recipient shall submit an application with detailed explanations to the examining and approving authorities when going through the procedure for examination and approval in accordance with the stipulations of these Rules.

Article 22  Any modifications of the clauses relating to the target technology content, price, duration and secret-preserving time limit of an approved technology-introduction contract shall be made by consultations between the contracting parties upon a written consent of the examining and approving authorities. If the modifications are inconsistent with the approved content of the target technology or require an amount of foreign exchange exceeding the approved amount, the procedure for reexamination and reapproval shall be gone through in accordance with the provisions of Article 4 and Article 11 of the Regulations and Article 6 of these Rules.

Article 23 The relevant authorized examining and approving authorities shall submit a copy of the Approval Certificate for a Technology-Introduction Contract and other relevant data to MOFERT for the record within 10 days from the date of the approval of a technology-introduction contract.

Article 24 In the course of the implementation of a contract, the Approval Certificate for a Technology-Introduction Contract or its copy must be presented to the organs concerned in accordance with the relevant stipulations while handling such matters as bank guarantee, letter of credit, payment, foreign exchange settlement, Customs declaration and tax payment, etc. Banks, Customs or tax authorities are entitled to refuse to handle such matters if no Approval Certificate or its copy is presented.

Article 25 The authority to interpret and revise these Rules resides in MOFERT.

Article 26 These Rules shall enter into force as of the date of promulgation. The Measures for Examination and Approval of Technology-Introduction Contracts promulgated on September 18, 1985 by MOFERT shall be abrogated as of the same date.

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