IV. Widening the Opening of, and Cooperation in,
Mineral Resources Exploration and Exploitation

China will carry out its policy of opening to the outside world unswervingly. It will take an active part in international cooperation in the field of mineral resources to promote the exchange of domestic and foreign resources, capital, information, technology and markets on the basis of reciprocity and mutual benefit.

China implements the policy of encouraging foreign businesses to invest in mineral resources prospecting and exploitation in the country. China encourages domestic mining enterprises to cooperate with international mining companies, draw on advanced international experience, import advanced technology and operate in accordance with international practices. China began to open its oil industry to the outside world in 1982 by using foreign capital and technology to prospect and exploit oil and gas resources. As a result, the range of exploitation has been extended, and the output of crude oil has risen by big margins. Now, China has begun to participate in the exploitation of petroleum resources outside the country. The Chinese government has already taken or will take a number of new measures to further improve the environment for foreign investment, widen the opening-up and strengthen international cooperation.

— Giving further encouragement to foreign businesses to invest in China. China issued the “Opinions on Further Encouraging Foreign Investment at Present” in August 1999, the revised “Directory of Industries for Foreign Investment” in March 2002, and the “Catalogue of Dominant Industries for Foreign Investment in the Central and Western Regions” in June 2000. It clearly emphasizes that greater financial support will be extended to enterprises with foreign investment; encourages those enterprises to make technical innovations and increase domestic purchases; encourages foreign investors to invest in the central and western regions; and further improves the management and services for enterprises with foreign investment.

— Further improving cooperation with foreign companies in prospecting and exploiting oil and gas resources. In the field of oil and gas resources, the Chinese government has always adopted the pattern of cooperation with foreign companies through one “window” based on product-sharing contracts, and this has been widely endorsed by foreign oil companies. China issued the revised “Regulations on the Exploitation of Offshore Oil Resources in Cooperation with Foreign Enterprises” and the “Regulations on the Exploitation of Onshore Oil Resources in Cooperation with Foreign Enterprises” in September 2001.

— Encouraging foreign businesses to make investment in exploration and exploitation of other mineral resources. China issued the “Opinions on Further Encouraging Foreign Businesses to Make Investment in Exploring and Exploiting Mineral Resources Other Than Oil and Gas” in October 2000, thus further opening the prospecting and mining rights market to allow foreign businesses to start prospecting ventures with exclusive capital or in cooperation with Chinese partners, and guarantees their legal priority rights in exploiting the mineral resources of workable economic value in the zones explored. The prospecting and mining rights obtained by foreign businesses with such investment can be transferred according to law. Foreign businesses which invest in exploiting and recovering paragenous (associated) minerals, utilizing tailings, raising the rate of multipurpose utilization and exploration and exploitation of mineral resources in the western regions shall be entitled to reduction of or exemption from mineral resources compensation fees under a preferential policy. Foreign businesses which make exclusive investment or set up joint ventures or cooperate with Chinese enterprises in exploiting mineral resources, the exploitation of which is encouraged in the “Directory of Industries for Foreign Investment,” shall be exempted from mineral resources compensation fees for five years. It is stipulated that governments at all levels shall not start joint ventures or enter into cooperation with foreign investors in running mines, and in no way should they make irrational economic demands on foreign investors, make irrational inspections, requisition donations arbitrarily or collect charges other than those stipulated in the laws and regulations.

— Further improving the environment for investment in exploring and exploiting domestic mineral resources. The Chinese government sticks to the protocol on its accession to the WTO and other relevant commitments by annulling the administrative statutes and departmental rules incompatible with the WTO rules and gives national treatment to foreign investors in prospecting and exploitation. The Central Government shall guarantee the consistent implementation of the policies, laws and regulations of the state regarding mineral resources exploration and exploitation in all parts of the country, and standardize the behavior of governments at all levels in exercising management over foreign investment in running mines. China has revised the rules for the management of geological data according to the WTO’s principle of transparency, broadened the scope of geological data to be released to the public, and established an open information service system on mineral resources to ensure the availability of public geological data for foreign investors. It has clarified, simplified and standardized the approval procedure for foreign investment in mineral resources prospecting and exploitation.

— Changing the import mechanism and operation mode. In the course of taking the new road to industrialization and attracting foreign investors to make investment in mineral resources prospecting and exploitation, efforts will be made to shift from laying emphasis on importing funds only to placing equal emphasis on importing funds, technology, modern management and people with expertise, from the mere emphasis on bringing in foreign funds in prospecting and exploitation to the establishment of joint ventures and cooperation in the development of services and trade in the mining industry, and from dependence chiefly on foreign loans and direct foreign investment to the direct use of the international mining capital market.

China will continue to strive for mutual supplement with other countries in mineral commodities and promote the development of foreign trade in mineral products by expanding its international trade in mineral commodities according to the principle of reciprocity and mutual benefit. The Chinese government shall formulate a unified policy on the import and export of mineral products in accordance with the WTO rules and its commitments on its accession to the WTO, coordinate, in a unified way, the export of its dominant mineral products and the import of mineral products in short supply, adjust the import and export mix of mineral products, improve the economic results, and encourage the export of deep-processed mineral products with high added value and the import of primary mineral products. Direct import of mineral products will remain the chief way by which China utilizes foreign mineral resources for a fairly long time to come. The Chinese government shall gradually change the situation in which the proportion of the spot trade in mineral commodities, including crude oil, is too big at present, encourage the signing of long-term supply contracts with foreign companies, and import minerals from diversified sources. With regard to mineral resources in which China has advantages, such as tungsten, tin, antimony, rare earths, fluorspar and barite, the government will improve the export structure, increase the added value of the export products, standardize the order of export business, and actively urge the trade intermediary organizations to improve trade coordination and self-discipline, and promote the healthy development of the trade in domestic and foreign mineral products.

The Chinese government encourages domestic enterprises to take part in international cooperation in the sphere of mineral resources, and in exploration, exploitation and utilization of foreign mineral resources. It will promote and protect investments in mineral resources prospecting and exploitation outside China, and standardize the investment and business operation behavior in accordance with international practices. It will actively develop cooperation with foreign companies in geological survey and mineral resources prospecting and exploitation, and promote bilateral and multilateral exchanges and cooperation in the relevant scientific and technological fields.