Outlines of the Terms of Understanding
(1) Documents and records concerning the administration of the International Settlement which are in the custody of the Municipal Council of the Shanghai International Settlement shall be delivered to the Chinese authorities of the locality concerned simultaneously with the restoration of the concession.
(2) The transfer of the public establishments, assets and various property rights and the taking over of the liabilities under Article 2 of the Agreement shall, with the exception of those concerning prisons of the Municipal Council, be made between the Municipal Council and the Chinese authorities of the locality concerned.
(3) Public establishments to be transferred under Article 2 of the Agreement shall include all fixed establishments attached to them and equipment and materials for their management and maintenance.
(4) Regarding concrete matters with respect to Article 3 of the Agreement, consultation between the Japanese and Chinese authorities of the locality concerned shall be held as necessity arises. Land taxes to be paid by Japanese nationals holding perpetual leases shall continue to be maintained at the existing rate pending the settlement of the question of taxation arising from extra-territorial rights which Japan at present enjoys in the Republic of China.
(5) After the restoration of the administrative rights based on the Land Regulations of the Shanghai International Settlement and the By-Laws thereof, the Government of the Republic of China shall, as a temporary measure to use for expenses for the administration of the locality concerned, pursue and enforce the existing system concerning rates, fees and all other levies of the Municiapl [sic] Council of the Shanghai International Settlement in the locality concerned.
In the case described in the foregoing paragraph, the Japanese Government shall, pending the settlement of the question of taxation, arising from extra-territorial rights which Japan at present enjoys in the Republic of China, take such measures as will cause the Japanese residents in the said locality to pay to the local Chinese authorities these levies as contributions.
(6) With regard to the official staff and other employees of the Municipal Council of the Shanghai International Settlement to be taken over by the Chinese authorities of the locality concerned, the Government of the Republic of China shall continue to pursue and apply all rules and regulations
concerning their allowances, vacations, retirement allowances and annual pensions, and that, in case of any change of these rules and regulations being made, that Government shall make the necessary arrangements in accordance with the spirit of respecting the vested rights of such personnel.