Prior to China's accession to the WTO, under MOC Decree No.321, it was possible for foreign contractors without a presence in China to apply for a Foreign Contractor Qualification Certificate ("FCQC") on a project-by-project basis. In practice, obtaining a FCQC was a quite straightforward process, and after acquiring one FCQC, foreign contractors only needed to file for registration with local administrations of industry and commerce on subsequent projects. Based on the FCQC, it was possible, as a practical matter, for foreign contractors to convert their RMB earnings from China projects into foreign currency and remit such earnings abroad, subject to paying the applicable PRC taxes.
The legal environment has changed quite radically since China's accession to the WTO. The MOC and MOFCOM have issued a number of new regulations to regulate market entry, the establishment of foreign-invested enterprises in the construction area, and on construction qualification issues. On the one hand, these new regulations simplify the approval process, but on the other hand, the promulgation of Decree Nos. 1132 and 1143 (in particular) has meant that foreign contractors carrying out regulated activities in China have had to substantially restructure their business activities in China to remain compliant and, as a practical matter, foreign contractors face stiffer market entry requirements than ever before.
1.6 In addition to Decree Nos. 113 and 114, the MOC has issued other regulations or rules with a view to further regulating the PRC construction and engineering services markets. Such regulations and rules include, among others, the Implementing Rules for Decree No. 1134, Circular No. 1595, Decree No. 2006 and Decree No. 787. These new regulations and rules have all been issued within a relatively short period of time, and foreign contractors will need time in order to work out how such regulations and rules will be implemented and administered in practice, whilst regulatory bodies in China will still be "finding their feet" in this regard.
