The State Development Commission (SDC) and the Ministry of Finance and State Administration of Foreign Exchange (SAFE) have jointly promulgated Interim Measures on the Administration of Foreign Debts. The new Measures, which were enacted on January 8 will be effective from March 1 2003.
The Interim Measures are divided into six chapters and 52 articles, including foreign debt borrowing and external guarantee, use of foreign debt capitals, foreign debts repayment and risk management, and supervision on foreign debts.
The Interim Measures are China's first regulations to stipulate that the state must implement full administration on various foreign debts and implement grading administration on foreign debt borrowing based on the type of foreign debt, repayment responsibility and debtor's nature. A key part on the Interim Measures is that foreign debt agreements and guarantee agreements should be properly registered with the authorities, and international commercial loan agreements or guarantee agreements can become effective only after registration. It is the first time that it has been stipulated that borrowing agreements are valid only after they have been registered.
According to the Interim Measures, the borrowing of medium and long-term international commercial loans by the domestic Chinese-invested enterprises must be approved by the SDC, but there is a different treatment of foreign-invested enterprises (FIEs). FIEs can borrow the foreign debts on their own within the scope of balance. If the balance is exceeded, the total project investment will be re-checked and ratified by the original approval department.