By Of-Counsel Ms. Qin Zhao

The National Development and Reform Commission (“the Commission”) is one of the most important governmental branches that are responsible for the approval for part of FDI investment. Obtaining the approval of the Commission is the first step for these foreign investors. Without its approval, the enterprise registration administration and the foreign exchange administration will refuse the application to establish a FIE or its request to remit foreign currency into or out of China.

The Department of Foreign Capital in the Commission is the branch that is responsible to review and approve the application in the area of FDI. Major foreign investment shall be approved by the Department, for example, foreign investment in the fixed assets (i.e., real property), communication, transportation, nature resource (i.e., mining). Some affairs after a FIE is established needs to be approved by the Commission as well, for example, foreign debt application and conversion of company category. But those applications might be approved by the department other than the Department of Foreign Capital.

The Commission has its bureaus in the provincial level government and its offices in some municipal level government. Such provincial subsidiaries, according to the law or the regulation, have authority to approve some application; while the municipal offices give the foreign investor an important and efficient access to get and understand the law and policy, they have no such authority.

The documents for different applications vary. The following example is the required information for a project invested by foreign investors.

1. Name of the project, business duration of the project, basic information of the investor;
2. Scale of the project, main tasks of the project or products, main techniques, targeted market, planned labors;
3. Site of the project, demand for the land, water, and other natural resource, demand of the main raw materials;
4. Environmental evaluation;
5. Price of the relative public commodities or services;
6. Total investment of the project, registered capital of the project, amount of each investor, financing plan, needed imported equipment and the price of the equipment.

The following documents shall be attached to the application portfolio:

1. Business licenses of each local and foreign enterprises;
2. The most recent financial report (audited), including the balance sheet, the income statement, and the cash flow statement;
3. The bank credit letter (or the bank reference letter);
4. Term sheet, Board resolution of the capital increase or M&A;
5. LOI of Financing issued by a bank;
6. Environmental appraisal by an environmental administration in the provincial level or the state level;
7. Letter of site approval by a provincial land planning administration;
8. The preliminary approval of the construction land by a provincial or state land administration;
9. The confirmation letter by the relevant authority if the investment includes a state-owned property or a right of land use.