Unlike foreign-investment enterprises in China which are granted limited trading rights upon establishment, domestically funded companies must separately apply for and obtain such rights by satisfying certain threshold requirements under the current legal framework.

The Circular regarding the Adjustment of Import and Export Business Qualification Standards and Approval Procedures (the "Circular"), recently promulgated by the Ministry of Commerce ("MOC"), lowers the threshold requirements for domestic companies to gain the right to import and export.

Taking effect from September 1, the Circular divides the import and export business qualifications into two categories, namely, the general foreign trade qualification which enables qualified domestic business operators to trade commodities and technologies of almost all types, and the import and export qualifications for manufacturers with which a manufacturing company may export its products for overseas sales and import machinery and equipment, parts and components, and raw and supplemental materials for production purposes.

According to the Circular, the minimum registered capital for companies applying for general trading rights is RMB 1 million, down from the previous requirement of RMB 5 million.

The Circular also cancelled a previous requirement that companies must be established for one year or longer in order to apply for this type of trading right.

For manufacturers, the minimum registered capital for trading rights applications is RMB 500,000, down from the previous requirement of RMB 3 million.

In addition, the Circular requires that companies obtain approval from the provincial or municipal foreign trade authorities that the MOC has authorized to give such approvals in their respective business registration localities to acquire the general foreign trade qualification, and that manufacturing companies file and register their applications with the same authorities to acquire the limited import and export rights for self-operation purposes. Previously, the granting of the general foreign trade rights must be approved by MOC at the central level.

The provincial or municipal foreign trade authorities are given 10 working days from its acceptance of a complete application package to approve or register an application and issue an Import and Export Enterprise Qualification Certificate to the applicant. If it decides to disapprove or reject the registration of an application, it must notify the applicant in writing within the same period of time.

Under China's WTO commitments, China is scheduled to permit the import and export of all goods (other than certain products specifically reserved for trading by state trading companies) by all enterprises, foreign invested or domestically funded, throughout the customs territory of China within 3 years after accession.

The promulgation by MOC of the Circular demonstrates a forward step taken by the Chinese government in implementing its WTO commitments in the area of foreign trade rights.

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