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erexchenOffline
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Post  Posted: Jan 25, 2007 - 12:56 PM  Reply with quote  Back to top

Compensation paid by the company

a) In the event the company terminates the employment contract after consultation with the employee, the company shall pay compensation to the employee according to the working years of that employee in the company. The employee is entitled to compensation equivalent to one month salary for each working year in the company, but in any cases the maximum compensation will be 12 months salary. In case the working time is less than one year, the compensation shall be one month salary;

b) In the event the employee is sick or injured due to non work related reasons and he/she is recognized by the laor committee to be unable to continue his/her orignial job position and other job positions designated by the company, the employment contract can be terminated. Under such circustances, the company shall provide compensation equavilent to one month salary for each working year. In addition, the employee is entitled to medical subsidy equavilent to at least 6 months salary.

c) the employee is unqualified for the work assigned and continue this status even after he/she receives training or adjustment to other position and the employment contract is terminated. The employee is entitled to compensation equivalent to one month salary for each working year in the company. But in any cases, such compensatin shall be maximum 12 months salary.

d) no agreement on modification of the employment contract can be reached between the company and the employee when the conditions taken as the basis for the conclusion of the employment contract have greatly changed so that the original employment contract can no longer be carried out and is terminated. Under such circumstances, the employee is entitled to compensation equivalent to one month salary for each working year in the company.

e) during the period of statutory consolidation when the company comes to the brink of bankruptcy or runs into difficulties in production and management, and if reduction of its personnel becomes really necessary, the company may make such reduction and terminate the employment contract. Under such circumstances, the employee is entitled to compensation equivalent to one month salary for each working year in the company.
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Post  Posted: Feb 01, 2007 - 09:45 AM  Reply with quote  Back to top

Employment Registration and Database System to be set up in China

Ministry of Labor and Social Security- From 2007, all companies in China shall register the employment contracts with their employees in the local labor security department and by the end of 2008, a nation-wide employment database will come into being.

The employment registration and database system includes:

- information about the company: company name, its legal representative, corporate code, the employee name, ID etc.

- In the event an employment contract is terminated or renewed, the company shall re-register such employment in the labor security department.
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Post  Posted: Feb 07, 2007 - 11:59 AM  Reply with quote  Back to top

Hi Erex-
I heard there is a new rule that if we make over 120,000RMB a year, we need to claim what we make for taxes...I'm not quite clear on this new rule that just applied...can you give more information about it and what foreign expats need to do???
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Post  Posted: Feb 08, 2007 - 09:41 AM  Reply with quote  Back to top

Thanks for the question. The State Tax Bureau promulgated the rule in 2006. For expat who has been in China for one year or more, he/she shall report his/her annual income to the local tax bureau if such annual income is over RMB 120,000. The expat can do it in person or through his/her company or any tax agent. It shall be emphasized that currently such report is only for the record. No additional tax will be imposed.
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Post  Posted: Feb 25, 2007 - 01:14 PM  Reply with quote  Back to top

Erexchen, I am working for a company that is failing to recognize official medical leave notes from doctors and I believe that they have violated my contract in several other ways. Others who have tried to leave my company have been forced to pay them over one month's salary, so I have a couple of questions.

1. Is it legal for my company to demand payment from an employee that chooses to quit before the contractual period is over?
2. If I have a residence permit through my company, what is my legal status if I quit.
3. If my contract says that I can quit without having to pay them, if they violate my contract, but they fail to recognize that they have violated my contract, what are my options?

Any legal advice you can give me in this area would be much appreciated.
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underh20
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Post  Posted: Feb 25, 2007 - 01:51 PM  Reply with quote  Back to top

Your residence permit is tied to one specific employer and can be rescinded, though almost never done. Still, if you use it to work for another company and are caught you will likely be deported or, at a minimum, face a hefty fine.

Some companies make you pay the visa costs or any airfare reimbursement you may have received if you leave before the contract terms expire.

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Post  Posted: Feb 25, 2007 - 04:55 PM  Reply with quote  Back to top

Dear Domino,

Thank you for your questions.

My answer is as follows:

- According to Chinese Employment law, the employee is entitled to resign at any time during the employment term from his/her company with 30 days prior written notice and in most cases, no obligation of payment to the company.

- In the event that you resign and go to another company here in Shanghai, you shall have to update/register your residence permit at Shanghai Exit & Entry Administration Bureau.

-If that happens, you may submit the dispute for arbitration according to Chinese law.

Should you have further questions, please feel free to contact me erexcxl@yahoo.com.cn

Regards,
Erex
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Post  Posted: Feb 28, 2007 - 11:51 AM  Reply with quote  Back to top

Hi I am looking for an entertainment lawyer that specializes contracts for comercials or media related. Do you have any friends that are specialized in this sort of thing?

Thanks
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Post  Posted: Mar 01, 2007 - 01:02 PM  Reply with quote  Back to top

Dear Trippy,

Do you mean contract draft, review and revision? My practice includes investment and corporate and in my daily work, I am dealing with a lot of such kind of contract. Please don't hesitate to contact me erexcxl@yahoo.com.cn. I believe you will be satisfied with our professional service.

Erex
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Post  Posted: Mar 09, 2007 - 10:10 AM  Reply with quote  Back to top

Effect of divorce decree made by a foreign court

I had a divorce case in which the husband is a Canadian citizen and the wife is a Chinese. They got married in 1990 here in Shanghai. After marriage, they had four children and had been living in HK for some years.

Due to some reasons, they began to live separately from 2000. The wife brought a lawsuit in 2001 in HK and the court made a decree which allows the divorce. Meanwhile, the four children would live with the wife and the husband had to pay a quite high maintenance fee for the children.

I was engaged by the husband to deal with this case. His questions are:

1) if the marriage can be made annulled in China since a divorce decree has been made in HK;
2) the maintenance fee is too high for him. Is it possible the wife can obtain an order from the Chinese court to enforce the maintenence fee?
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Post  Posted: Mar 13, 2007 - 03:23 PM  Reply with quote  Back to top

For the first question, given the fact the china and HK are two seperate legal system, a hk divorce decree cannot be automatically effective in China. Therefore, the husband shall have to first apply for acceptance of the hk divorce decree in Chinese court in accordance with Chinese law. After acceptance, the marriage can be made annulled in China.

For the second question, according to Chinese law, the acceptance of a hk divorce decree by the Chinese court shall only be limited to the effect of divorce. Any other issues such as maintenance fee in the hk decree is not included in such acceptance. Therefore, the mainteannce fee made by the hk court cannot be enforced in China.
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Post  Posted: Mar 20, 2007 - 02:53 PM  Reply with quote  Back to top

CHINA TAX LAW

March 2007
By Erex Chen
H & Y Law Firm

TAX REFUND FOR RE-INVESTMENT WITH PROFIT BY FOREIGN INVESTOR

PART ONE: WHAT IS TAX REFUND FOR RE-INVESTMENT?

Tax Refund for Re-investment is a preferential tax policy adopted by the Chinese government for the purpose of encouraging foreign investors in the existing Chinese-foreign equity joint venture companies, Chinese-foreign cooperative joint venture companies and wholly foreign-owned enterprises (“Foreign-invested Company”) to re-invest with their profit obtained from the Foreign-invested Company into China ’s domestic enterprises.

In accordance with Income Tax Law of the People’s Republic of China on Enterprises with Foreign Investment and Foreign Enterprises and Rules for the Implementation of the Income Tax Law of the People’s Republic of China on Enterprise with Foreign Investment and Foreign Enterprises, there are following situations for tax refund for re-investment:-

1. Any foreign investor of Foreign-invested Company who reinvests directly its profit obtained from Foreign-invested Company into that company by increasing its registered capital, or uses the profit as capital investment to establish other foreign-invested company and operates it for a period of no less than 5 years, shall, upon the approval by the tax authorities to the application filed by the investor, be refunded 40 percent of the income tax already paid on the reinvested amount. In the event that the foreign investor withdraws its reinvestment before the expiration of term of 5 years, it shall repay the refunded tax.

2. Any foreign investor of Foreign-invested Company who reinvests directly its profit obtained from Foreign-invested Company and sets up and/or expands export-oriented company or advanced technology company and operates it for a period of no less than 5 years, shall, upon the approval by the tax authorities to the application filed by the investor, be refunded 100 percent of the income tax already paid on the reinvested amount. In the event that the foreign investor withdraws its reinvestment before the expiration of term of 5 years, it shall repay the refunded tax.

3. Any foreign investor of Foreign-invested Company in the area of Hai Nan Special Economic Zone who reinvests directly its profit obtained from Foreign-invested Company in infrastructure projects and/or agriculture development company in the Zone and operates it for a period of no less than 5 years, shall, upon the approval by the tax authorities to the application filed by the investor, be refunded 100 percent of the income tax already paid on the reinvested amount. In the event that the foreign investor withdraws its reinvestment before the expiration of term of 5 years, it shall repay the refunded tax.
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Post  Posted: Mar 21, 2007 - 03:13 PM  Reply with quote  Back to top

Dear


Last edited by tom&jeri on June 13, 2007 - 06:45 PM; edited 1 time in total
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Post  Posted: Mar 21, 2007 - 09:06 PM  Reply with quote  Back to top

Thanks for your question.

Of course the Girlfriend can stay here in China with an F visa. But she may have to leave China after 90 days and reenter into China. So you may understand if the Girlfriend wants to live with her Boyfriend, this will be a big problem. The Girlfriend is advised to apply for a Z Visa.

With regards the Temporary Residence Permit, it is required by the law. As a lawyer, I just say as an expat in China, you need to obey the law even someone tells you its not a big deal.

My email is erexcxl@yahoo.com.cn. If you have further question, please contact me.

Regards,
erex
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Post  Posted: Mar 26, 2007 - 08:54 AM  Reply with quote  Back to top

The term of “reinvest directly” in above situations refers to profit obtained from Foreign-invested Company by foreign investor which prior to receipt is directly used to increase registered capital, or which following receipt is directly used to invest other foreign-invested company, including (i) setting up a new foreign-invested company with its registered capital from the profit; (ii) increasing registered capital of an existing foreign-invested company with the profit.

However, in the event a foreign investor purchases equity interest of other investors in an existing company, including the Foreign-invested Company, with profit obtained from Foreign-invested Company and such purchase does not increase registered capital and operation capital for that existing company, the foreign investor is not entitled to tax refund.

No tax refund can be enjoyed by a foreign investor in the event the foreign investor re-invests its income gained from liquidation of Foreign-invested Company.

According to a BOD resolution, Foreign-invested Company can use its accumulation fund or development fund or reserve fund which is drawn from the after-tax profit as reinvestment and increase its registered capital. The foreign investor is also entitled to tax refund for the part of such reinvestment which belongs to foreign investor.

PART TWO: WHO CAN ENJOY TAX REFUND POLICY?
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Post  Posted: Mar 29, 2007 - 10:27 AM  Reply with quote  Back to top

Shanghai Employment Department


Last edited by erexchen on Mar 29, 2007 - 09:47 PM; edited 1 time in total
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underh20
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Post  Posted: Mar 29, 2007 - 07:52 PM  Reply with quote  Back to top

^ Interesting. It was just a matter of time.

I wonder how many people they will actually catch. Will they get a large percentage of the people working on tourist or business visas?

It's probably just a question of time before the tax bureau gets their act together, too.

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Post  Posted: Mar 31, 2007 - 01:18 PM  Reply with quote  Back to top

Okay, another divorce question. Me and my wife of ten years are getting a divorce. I am American, she is Japanese. We got married in California, USA. We have lived in Shanghai for one year. We have no children, and a small amount of financial assets to divide, but there is no disagreement about anything. It is a no-fault divorce, with irreconcilable differences. We agree it is time to end our marriage, and have been through counseling, etc. Now we have to figure out how to do this.

What is the best way for an American citizen and a Japanese citizen to get a divorce in China? Do we have to file papers where we were married in California, or can we do it here in Shanghai? And where in Shanghai? The U.S. Consulate, or a private attorney? Help!
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underh20
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Post  Posted: Mar 31, 2007 - 04:23 PM  Reply with quote  Back to top

Up to pretty much recently, two non-Chinese citizens couldn't marry in China. I wonder if they will now also allow non-Chinese citizens to divorce and, if so, what the process would be like.

I do know the US Consulate wouldn't have any role to play in the process, though, unless it were to authenticate documents that may be needed.

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Post  Posted: Apr 07, 2007 - 09:22 PM  Reply with quote  Back to top

Hi, Andyfff, for your situation, you may not be allowed to get a divorce in China. You are advised to divorce in Japan or USA.
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Post  Posted: Apr 09, 2007 - 08:39 PM  Reply with quote  Back to top

How to calculate your income tax?

China's individual income tax system adopts a progressive rates ranging from 5% to 45%(see following table). Usually people shall pay the tax on a month basis. For expats, tax exemption equivalent to RMB 4,800 can be enjoyed. For example, the monthly salary is RMB 100,000, then the monthly taxable income shall be RMB 5,200. And the tax, according to the following table, shall be RMB 665.


Individual Income Tax Rate

Level Monthly taxable income(RMB) Rate(%) Deduction (RMB)
1 The amount less than 500 5 0
2 The amount from 500 to 2000 10 25
3 The amount from 2,000 to 5,000 15 125
4 The amount from 5,000 to 20,000 20 375
5 The amount from 20,000 to 40,000 25 1,375
6 The amount from 40,000 to 60,000 30 3,375
7 The amount from 60,000 to 80,000 35 6,375
8 The amount from 80,000 to 100,000 40 10,375
9 The amount over 100,000 45 15,375
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Post  Posted: Apr 13, 2007 - 02:04 PM  Reply with quote  Back to top

PART TWO: WHO CAN ENJOY TAX REFUND POLICY?

Generally speaking, foreign investors in Foreign-invested Company can be entitled to the tax refund and their Chinese partners cannot enjoy it.

In addition, investment company whose equity interest is 100% held by foreign investor in China can be deemed as foreign investor and can also enjoy the tax refund when it reinvests the profit from foreign-invested company in the territory of China.

PART THREE: THE PROFIT COVERAGE

In accordance with Income Tax Law of the People’s Republic of China on Enterprises with Foreign Investment and Foreign Enterprises, foreign investor can apply for tax refund when it reinvests directly with the after tax profit. Such profit shall be the profit that has been realized and belongs to the foreign investor according to its investment proportion in Foreign-invested Company.
In addition, Foreign-invested Company, according to its BOD resolution, uses its accumulation fund, development fund or reserve fund which is drawn from the after tax profit as reinvestment and increases its company registered capital. Tax refund is applicable to the part of such reinvestment which belongs to the foreign investor.

However, foreign investor cannot be entitled to tax refund for reinvestment with following profits:-

1. Foreign investor acquires the equity interest of a foreign-invested company through purchasing equity interest from shareholders of such company. The profit already realized prior to such equity interest transfer;
2. Prior to distribution of profit, the profit that has already been transferred outside of Foreign-invested company through transaction between affiliated companies;
3. The profit that will be realized in the future and the foreign investor promises to use it as reinvestment. However, actually such profit shall complement as part of the registered capital;
4. The profit that foreign investor has already remitted outside of China and then uses it as reinvestment.

PART FOUR OPERATION PERIOD

In Part one we mentioned the operation period shall be no less than 5 years. If foreign investor reinvests directly with profit into its company where it obtains the profit or other foreign-invested company which has already started production and operation (including trial production and operation), the operation period starting from the date of actual input of reinvestment capital shall be no less than 5 years. If foreign investor uses the profit to establish a new foreign-invested company, the operation period starting from the date of production and operation (including trial production and operation) shall be no less than 5 years.

However, for the reasonable business purpose, in the course of corporate restructure, if foreign investor, including investment company which is 100% held by the foreign investor, transfers its reinvestment equity interest to a company which is owned directly or indirectly by the same foreign investor, or is owned by an entity/individual who also 100% controls the foreign investor, such transfer will not be deemed as withdrawal of reinvestment and refunded tax can be kept by the foreign investor.
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Post  Posted: Apr 14, 2007 - 08:51 PM  Reply with quote  Back to top

Sue in Hong Kong: Enforce in China

In our July 2006 legal update, we reported on a ground-breaking agreement (Agreement) signed by the Hong Kong and Mainland China Governments, under which they agreed to recognise and enforce judgments made in each others courts. Legislative changes are now underway in Hong Kong in order to implement the Agreement.

The Mainland Judgments (Reciprocal Enforcement) Bill, today gazetted in Hong Kong, is modelled on the Foreign Judgments (Reciprocal Enforcement) Ordinance (detailed in our July 2006 legal update). The Bill will implement the Agreement by providing for the registration and enforcement by the Hong Kong courts of certain money judgments given by designated Mainland courts exercising their jurisdiction pursuant to a valid exclusive choice of court clause contained in a commercial agreement. The notable provisions of the Bill are as follows:

Application for Registration in Hong Kong of Mainland Judgments

A judgment creditor under a Mainland judgment may apply to the Court of First Instance to have the judgment registered in Hong Kong. If one or more parties to the judgment are natural persons, such application must be made within 1 year and, in all other cases, within 6 months. The time starts to run from the date by which the Mainland judgment must be performed.

Pre-requisites for registration

Only judgments based on 搒pecified contracts?can be registered. A 搒pecified contract?is defined as a contract other than an employment contract or contract to which a natural person acting for personal consumption, family or other non-commercial purpose is a party.

The judgment creditor must prove to the Court of First Instance抯 satisfaction that:

a. the Mainland judgment was given by a designated Mainland Court on or after the commencement of the Mainland Judgments (Reciprocal Enforcement) Ordinance (搕he Ordinance?;

b. the Mainland judgment was given pursuant to a Choice of Mainland Court Agreement made on or after the commencement of the Ordinance. A 揅hoice of Mainland Court Agreement?is an agreement (in writing or evidenced in writing) made by the parties to a specified contract and designating a Mainland Court to determine a dispute which has arisen or may arise in connection with that contract, to the exclusion of other jurisdictions;

c. the Mainland judgment is final and conclusive as between the parties to the Mainland judgment. The Ordinance will set out the requirements for a judgment to be considered as 揻inal and conclusive?

d. the Mainland judgment is enforceable in the Mainland;

e. the Mainland judgment orders the payment of a sum of money (not being a sum of money payable in respect of taxes or other similar charges or in respect of fines or other penalties).

Effect of Registration

For the purposes of execution, a registered judgment will have the same force and effect as if it had been a judgment originally given by the Court of First Instance and entered on the day of registration. Accordingly, upon the registration of a Mainland judgment (a) proceedings may be taken on the judgment; (b) the sum for which judgment is entered carries interest; and (c) the Court of First Instance has the same control over execution of the judgment as if the judgment had originally been given by the Court of First Instance and entered on the day of registration.

Setting Aside Registration of Registered Mainland Judgments

There will be safeguards under the Ordinance whereby registration of a Mainland judgment can be set aside. When making an order to register a Mainland judgment, the Court of First Instance may specify a period (which may be extended) within which an application can be made to set aside the registration.

On an application by a party against whom the registered Mainland judgment may be enforced, the Court of First Instance shall set aside the registration if satisfied that:

a. the judgment is not a Mainland judgment which satisfies the pre-requisites for registration (as set out above);

b. the Mainland judgment has been registered in contravention of the Ordinance;

c. the Choice of Mainland Court Agreement pursuant to which judgment was given is invalid under Mainland law;

d. the Mainland judgment has been wholly satisfied;

e. the Hong Kong courts have exclusive jurisdiction over the case according to Hong Kong law;

f. the Mainland judgment was given in the absence of the judgment debtor;

g. the Mainland judgment was obtained by fraud;

h. a judgment on the same cause of action between the parties to the Mainland judgment has been given by a Hong Kong court;

i. a judgment on the same cause of action between the parties to the Mainland judgment has been given by a court in a place outside Hong Kong or an arbitral award has been made by an arbitration body, and the judgment or award has already been recognised in or enforced by the Hong Kong courts;

j. the enforcement of the Mainland judgment is contrary to public policy; or

k. the Mainland judgment has been reversed or otherwise set aside pursuant to an appeal or a retrial under Mainland law.

The Court of First Instance may also set aside registration or adjourn an application to set aside registration where an appeal against the Mainland judgment is pending or a designated Mainland Court has ordered a retrial.

Enforcement in the Mainland of Hong Kong Judgments

In the Mainland, the Supreme People抯 Court is to promulgate a judicial interpretation to set out the details for implementation of the Agreement.

Where a sum of money is payable (not being a sum payable in respect of taxes or charges of a similar nature or in respect of a fine or other penalty) under a Hong Kong judgment given by the Court of Final Appeal, the High Court or District Court pursuant to a Choice of Hong Kong Court Agreement, and the judgment creditor wishes to enforce that judgment in the Mainland, s/he can apply under the Ordinance for a certified copy of the Hong Kong judgment.

A 揅hoice of Hong Kong Court Agreement?is an agreement (in writing or evidenced in writing) made between the parties to a specified contract (which has the same definition as above) which designates a Hong Kong court to determine a dispute that has arisen or may arise in connection with that contract, to the exclusion of courts of other jurisdictions.

Upon the issue of the certified copy of the Hong Kong judgment, the High Court or District Court, as the case may be, will issue a certificate certifying that the judgment can be enforced by execution in Hong Kong (which will be pre-requisite for enforcement in the Mainland).

Legislative Timetable

The first reading of the Bill will take place on 7 March 2007. There is no indication of when the second and third readings will take place, but we are hopeful that the Ordinance will come into effect by the end of this year.

Implications for you

The Ordinance will affect everyone doing business with Mainland parties, as with suitably worded contractual clauses, it will be possible to sue in Hong Kong and enforce Hong Kong judgments in the Mainland without the need for lengthy litigation.

All standard form contracts should be reviewed and revised, as necessary. In cases where you are contracting with Mainland parties with assets in the Mainland, you will probably want to be able to enforce Hong Kong judgments in the Mainland, in which case suitably worded clauses must be included in the contract. Conversely, in any cases where reciprocal enforcement is not desired, alternatives should be considered.

Source: world Service Group
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Post  Posted: Apr 20, 2007 - 07:52 AM  Reply with quote  Back to top

Erex,

I am an ethnic Chinese with U.S. citizenship. I am currently living in the U.S. and would like to obtain permanent residency in China and more specifically in Shanghai. I understand that Chinese laws provide preferences to ethnic Chinese with regard to residency and immigration. Is this true?

What are the requirements and steps involved in applying for permanent residency? Is permanent residency difficult to obtain? Is it better to start the process while outside of China through a Chinese Consulate or better while inside China?

Thank you for your help!
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Post  Posted: Apr 22, 2007 - 07:25 PM  Reply with quote  Back to top

Thank you for your question.

In 2004, the Ministry of Public Security and the Ministry of Foreign Affairs jointly promulgated the Rules for the Administration of the Examination and Approval of the Permanent Residence for Foreigners in China (hereinafter refer to as the Rules), which sets conditions for foreigners who want to apply for permanent residence in China.

According to the Rules, permanent residence means there is no limitation on the period of stay of foreigners in China and foreigner can enter into or leave China with his/her passport and Permanent Residence Certificate.

Foreigners can obtain permanent residence in China if they abide by China’s laws, are in good health, have no criminal record and fall in one of the following categories:

1. they have invested directly in China, the investment situation has been stable for the three years in a row and their record of tax payment is good;

2. they hold the position of deputy general manager, deputy factory director, etc. or above or they hold the title of associate professor, assistant researcher or other senior assistant title or above and enjoy equal treatment, provided they have held such position or title for four continuous years, have during those four years resided in China for an aggregate of three years and their tax payment record is good;

3. they have made an important, outstanding contribution to China and are particularly needed by China;

4. they are the spouse or minor child of any of the above persons;

5. they are the spouse of a Chinese citizen or a foreigner with permanent residence in China, provided they have been married for five years, they have lived in China for five years during which they have spent at least 9 months per year in China and they have a stable income and residence;

6. they are unmarried minors who are dependent on their parents; or

7. they are over sixty years old, have no direct relations abroad, are dependent on direct relations inside China and they have lived in China for five years during which they have spent at least 9 months per year in China and they have a stable income and residence.

Should you have further questions, please feel free to contact me erexcxl@yahoo.com.cn
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