In order to meet the needs of developing foreign economic relations and trade, a set of reform measures have been drawn up which concern the administration of the international ocean shipping industry in China, and which have played an active role in enlivening foreign trade shipping and promoting the development of the international ocean shipping industry. However, non separation between enterprises and administrative departments, too much administrative interference and the inactivity of some reform measures have restricted the management of goods shipping agencies (hereinafter referred to as cargo agencies), shipping agencies and the international ocean shipping enterprises (hereinafter referred to as shipping companies), have caused a lack of vigor in enterprises and affected the international ocean shipping industry in China. Thus, further reform in the administration of the international ocean shipping industry in China must be undertaken. The following are to be especially noted:

1.      Free up cargo agencies and shipping agencies, allow more managers, and encourage competition in order to improve service quality. Those enterprises, including branches which have obtained business licenses, which meet business operational conditions and legally conduct business activities, may engage in cargo agency and shipping agency activities after approval; cargo owners and shipping companies shall have the right to freely select cargo agencies or shipping agencies, and carriers and cargo owners may establish direct carriage and consignment relationships; no department may undertake to interfere with them.

2.      Every positive factor should be brought into play to develop international ocean shipping. Those enterprises, including large scale enterprise groups and specialized import and export companies, which meet business operational conditions and legally conduct business activities may establish shipping companies after being approved for engaging in international ocean shipping.

3.      Freedom in management of the shipping companies shall be enlarged in accordance with the provisions of the Regulations on the Transformation of the Mechanisms of the Industrial Enterprises Owned by the Whole People. Shipping companies may, in light of state macro requirements, freely determine route management, ship allocation, increases or decreases in shipping and ship renewal.

4.      Those routes which domestic shipping companies are not able to open or those routes for which shipping densities are insufficient may, on the principle of reciprocity, absorb foreign-funded regular shipping vessels or overseas Chinese funded regular shipping vessels staying at ports in China, but shipping may not be carried out along the coast. Foreign shipping companies are allowed to run foreign-funded or Chinese-foreign joint shipping ventures in a proper manner, and may canvass cargo business, sign bills, convert foreign exchange and conclude contracts for their own ships after approval.

5.      The management functions of government departments shall be conscientiously transferred. The Ministry of Communications and the Ministry of Foreign Economic Relations and Trade shall, on the principle of simpler administration and loosened control, decrease the approval and administrative interference of the specific routines of enterprises. The Ministry of Foreign Economic Relations and Trade shall be in charge of the policy, guidelines, regulations and statistical surveys concerning the administration of cargo agencies; the Ministry of Communications shall be in charge of the policies, guidelines, regulations and statistical surveys concerning the administration of shipping companies and shipping agencies. Henceforth the two ministries shall, through macroscopic regulation And economic and legal measures, carry out macro management of shipping companies, cargo agencies and shipping agencies engaged in international shipping. Moreover, they shall, in line with international invention and on the basis of China's national conditions, formulate just and reasonable operational qualification standards and administrative approval measures for the shipping companies, shipping and cargo agencies, and provide a fair competitive market environment for enterprises. The two ministries shall strengthen industrial administration of those enterprises which participate in competition, without any discrimination, and shall not treat them differently because they are subject to different ministries. Each local government shall also simplify administration, loosen control, and prevent local protectionism.

6.      The Ministry of Communications shall study the measures taken by foreign countries in developing the shipping industry and, through consultation with the relevant departments, formulate specific policies for promoting the development of the ocean freight industry in China, which shall be effective after being submitted to and approved by the State Council. The Ministry of Communications, the Ministry of Foreign Economic Relations and Trade and other departments shall conduct research on and formulate specific policies for the following items: fair competition in taxation and management between state-owned shipping agency enterprises, cargo agency enterprises, shipping companies and foreign-funded or joint shipping agency enterprises, cargo agency enterprises or shipping companies; improved supervisory and restraint mechanisms; getting rid of barriers between different levels or departments; preventing monopolies; and implementing measures for the banning of illegal businesses and other activities concerning the ocean shipping market. These measures shall be effective after being submitted to and approved by the State Council.

7.      The enterprises subject to the Ministry of Communications and the Ministry of Foreign Economic Relations and Trade shall bring into play their respective superiorities and develop a horizontal integration by adopting joint operation and stock purchasing measures.

8.      The Ministry of Foreign Economic Relations and Trade and the Ministry of Communications shall strengthen unity, cooperate closely and consult with each other in administering international ocean shipping. In case of problems involving other departments concerned, agreement must be reached from such departments or a joint document must be issued; no document with which the relevant departments do not agree shall be promulgated. Major issues which do not have the agreement of the relevant departments through consultation may be submitted to and decided by the State Council.

9.      The China Ocean Shipping Company and the China National Foreign Trade Transportation Corporation are the two largest foreign trade shipping enterprises in China, and shall share the same policy treatment by the state. The relevant departments shall support them, improve their competitive power with foreign companies, and promote the development of the international ocean shipping industry in China.

10. Every relevant department shall, in the spirit of this Circular, check up on the documents promulgated earlier by this department; in case of any discrepancy with this Circular, former documents shall be amended in accordance with the provisions of this Circular and submitted for implementation.

This Circular shall be implemented as of the date of promulgation.