Foreign Investment Regulations in Hainan Special Economic Zone

Article 17　Foreign business entities are encouraged to invest in and develop large tracts of land in accordance with unified construction plans. During the periods of validity of the leaseholds vested in foreign business entities for the land developed by them, the foreign business entities may assign and lease such rights as well as mortgage them to banks as security for loans. Specific issues shall be handled pursuant to the methods set forth in the Hainan Special Economic Zone, Granting and Assigning Leaseholds for Value Regulations. 

Article 18　Subject to approval by the People's Bank of China, foreign business entities may establish wholly foreign-owned banks, Sino-foreign equity joint venture banks and other financial institutions in the Hainan Special Economic Zone, and may carry on business within their approved scopes of business. 

Article 19　Subject to approval by the relevant departments of the Hainan Provincial People's Government, foreign business entities may explore for and mine minerals in Hainan Island in accordance with the principle of reasonable mining for consideration, using equity joint ventures, co-operative joint ventures or wholly foreign-owned enterprises as investment vehicles. However, where the State has other regulations, such regulations will prevail. 

Article 20　Industries and projects in which foreign investment is to be restricted or prohibited shall be separately determined by the Hainan Provincial People's Government in accordance with the relevant regulations of the State Council. 

Part four　Import and export of materials 

Article 21　Foreign investment enterprises established in the Hainan Special Economic Zone and enterprises in the Hainan Special Economic Zone who quotas. 

Article 22　The following imports by foreign investment enterprises will be exempt from customs duties and product or value-added tax: machinery, equipment, raw materials (including building materials), parts and fittings necessary for construction and production by the enterprises; and office Articles, means of transportation and other goods and materials for their own use. 

Article 23　Export products produced by foreign investment enterprises will be exempt from customs duties and, except for crude oil, finished oil products and a small number of other products for which the State has provided otherwise, the product or value-added tax already paid in the Hainan Special Economic Zone on such products will be refunded. 

Article 24　The Hainan Special Economic Zone will establish bonded zones in accordance with the relevant regulations of the State, subject to approval by the State Council. Foreign investment enterprises may establish bonded warehouses and bonded factories in accordance with the relevant regulations of the State, subject to approval by Customs. The storage, processing and assembly of goods in bonded zones, bonded warehouses and bonded factories and their subsequent re-export will not require the payment of duty and tax to Customs but will be subject to Customs supervision.

Part five　Exchange control

Article 25　Foreign investment enterprises may open foreign exchange accounts with the banks of their choice in the Hainan Special Economic Zone. All their foreign exchange revenue and expenditure must be deposited in and made from their foreign exchange deposit accounts with such banks. 

Article 26　Foreign investment enterprises shall balance their own foreign exchange revenue and expenditure. Enterprises may adjust their foreign exchange surpluses and deficits in foreign exchange adjustment centers in the Hainan Special Economic Zone. Upon approval by the exchange control departments of the places where the enterprises are located, they may also adjust such surpluses and deficits in foreign exchange adjustment centers outside Hainan province. 

Article 27　Foreign investment enterprises may retain in cash both the foreign exchange revenue derived from the export of their own products and that from other business activities. Such foreign exchange will be administered in accordance with the regulations of the local branch of the People's Bank of China. 

Article 28　Foreign investment enterprises may raise foreign exchange loans from inside and outside China. Within 15 days of borrowing funds from abroad, Hongkong or Macao or from a branch in the PRC of a foreign bank, foreign investment enterprises must carry out foreign debt registration procedures at the exchange control departments of the places where they are located.