SecProbe.io

CORRESP
1
filename1.htm

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

Tel. +1.202.739.3000

Fax: +1.202.739.3001

www.morganlewis.com

Leland S. Benton

Partner

+1.202.739.5091

leland.benton@morganlewis.com

November 16, 2022

VIA EDGAR AS CORRESPONDENCE

United States Securities and Exchange Commission

Division of Corporation Finance

Office of Energy & Transportation

100 F Street, N.E.

Washington, D.C. 20549

Attention: Jennifer O’Brien

 Re: China Natural Resources, Inc.

   Form 20-F for Fiscal Year Ended December 31, 2021

   Response dated September 28, 2022

   File No. 000-26046

Dear Ms. O’Brien:

On behalf of China Natural Resources,
Inc., a British Virgin Islands company (the “Company”), we are responding to the comments of the staff (the “Staff”)
of the U.S. Securities and Exchange Commission contained in its letter dated November 7, 2022 (the “Comment Letter”),
relating to the above-referenced filing of the Company’s Annual Report on Form 20-F (the “Form 20-F”) and the
Company’s prior response to the Staff’s prior comments (the “Prior Response”).

Set forth below are the Company’s
responses to the Staff’s comments. The responses set forth below are based upon information provided by the Company, which we have
not independently verified. For the convenience of the Staff, the responses contained herein utilize the numbering of the comments and
the headings used in the Comment Letter, and the text of the Staff’s comments is reproduced in italics below. Capitalized terms
used but not defined herein have the meanings set forth in the Form 20-F.

Jennifer O’Brien

November 16, 2022

Page 2

Form 20-F for Fiscal Year Ended
December 31, 2021

Item 3. Key Information, page
1

 1. We note from your response to prior comment 3 that you will add disclosure under the heading of “Transfers
of Cash and Assets Between our Company and Our Subsidiaries.” In this regard, your response describes three primary types of cash
and asset transfers (i.e. capital contributions, shareholder loans and dividends). With reference to the tabular disclosure of “all
cash or asset transfers between the Company and its subsidiaries,” please further revise to quantify the amounts presented by type
or clearly state if none have been made to date.

Response: Set forth
below for the Staff’s consideration are the Company’s proposed revisions to the proposed disclosure under the heading of “Transfers
of Cash and Assets Between our Company and Our Subsidiaries” contained in the Prior Response. The Company undertakes to make conforming
changes in future Annual Reports on Form 20-F. For the Staff’s convenience, the proposed new text is underlined and removed text
is struck through.

Transfers of Cash and Assets Between Our
Company and Our Subsidiaries

Cash and asset transfers through
the Group are primarily attributed to: (1) capital contributions from the Company to its subsidiaries; (2) shareholder
loans from the Company to its subsidiaries; and (3) dividends paid from the subsidiaries to the Company. Under PRC laws
and regulations, we are subject to various restrictions on intercompany fund transfers and foreign exchange controls. To the extent
our cash is in the PRC or a PRC entity, the funds may not be available for the distribution of dividends to our investors, including
our U.S. investors, or for other use outside of the PRC, due to the interventions in or the imposition of restrictions and limitations
by the PRC government on our ability by the PRC government to transfer cash. The PRC government imposes controls
on the convertibility of Renminbi RMB into foreign currencies and, in certain cases, the remittance of currency
out of mainland China. Our PRC subsidiaries receive substantially all revenue in RMB. Our PRC subsidiaries may pay dividends, if any,
only out of their accumulated after-tax profits upon determined in accordance with Chinese accounting standards and
regulations, only after satisfaction of relevant statutory conditions and procedures, if any, determined in accordance with
Chinese accounting standards and regulations, and would be subject to the PRC dividend withholding tax at a tax rate of 10% for
any dividends paid by the Company’s PRC subsidiaries from their earnings derived after January 1, 2008, to the Company’s Hong
Kong subsidiaries, or a reduced rate of 5% if certain conditions are met. If the PRC foreign exchange control system prevents us from
obtaining sufficient foreign currency to satisfy foreign currency demands, we may not be able to pay dividends in foreign currencies to
our shareholders, including U.S. shareholders. PRC regulation of loans to and direct investment in PRC entities by offshore holding
companies and governmental control of currency conversion may delay or prevent us from using our funds to make loans or additional capital
contributions to our PRC subsidiaries, which could materially and adversely affect the liquidity of our PRC subsidiaries and our ability
to fund and expand our business in the PRC and cause the value of our securities to significantly decline or become worthless. We cannot
assure you that the PRC government will not intervene in or impose restrictions on our ability to make intercompany cash transfers or
dividends to investors, including U.S. investors.

Jennifer O’Brien

November 16, 2022

Page 3

During
the three years ended December 31, 2021, aAll cash or asset transfers between the Company and our subsidiaries during
the three years ended December 31, 2021, are set forth in the table below. There were no cash or asset transfers between the Company
and our subsidiaries during the six months ended June 30, 2022. The purpose of the outbound transfers, in the form of shareholder
loans, was to pay off the subsidiaries’ expenses. The purpose of the inbound transfers, in the form of loan repayments, was to centralize
the treasury function of the Group. There are no fixed repayment terms and no tax implication for these transfers. The
Company did not make any capital contributions to, or receive any dividends from, our subsidiaries during these periods.

    Transferor
    Transferee
    Year ended December 31,
    Six Months ended June 30,

    2019

    2020

    2021

    2021

    2022

    2022

    HK$
    HK$
    HK$
    US$
    HK$
    US$

    Outbound Transfers

    China Natural Resources, Inc.
    Feishang Mining
    —
    —
    50,000
    6,410
    —
    —

    China Coal
    8,000
    8,000
    8,000
    1,026
    —
    —

    Feishang Yongfu
    8,000
    8,000
    8,000
    1,026
    —
    —

    Feishang Dayun

    8,000

    8,000

    8,000

    1,026

    —

    —

    Total

    24,000

    24,000

    74,000

    9,488

    —

    —

    Inbound Transfers

    Feishang Mining
    China Natural Resources, Inc.
    —
    150,000
    —
    —
    —
    —

    China Coal
    —
    30,000
    —
    —
    —
    —

    Feishang Yongfu
    —
    50,000
    30,000
    3,846
    —
    —

    Feishang Dayun

    —

    50,000

    30,000

    3,846

    —

    —

    Total

    —

    280,000

    60,000

    7,692

    —

    —

 2. In addition to the above, please further expand your disclosure to i) address your ability to transfer
cash to U.S. investors and ii) describe any limitations on your ability to distribute earnings from the company, including your subsidiaries,
to U.S. investors.

Response: The
Company’s proposed revisions to the proposed disclosure under the heading of “Transfers of Cash and Assets Between our
Company and Our Subsidiaries” contained in the Prior Response is set forth above in response to comment 1. The Company
undertakes to make conforming changes in future Annual Reports on Form 20-F. For the Staff’s convenience, the proposed new
text is underlined and removed text is struck through.

D. Risk Factors, page
1

 3. We note from your disclosure on page iv that you exclude Hong Kong and Macao from your definition of
“PRC” or “China” for the purpose of your annual report. Please clarify that all the legal and operational risks
associated with having operations in the People’s Republic of China also apply to operations in Hong Kong and Macao. In this regard,
please ensure that your disclosure does not narrow risks related to operating in the PRC to mainland China only. Where appropriate, you
may describe PRC law and then explain how commensurate laws in Hong Kong and Macao differs from PRC law and describe any risks and consequences
to the company associated with those laws. As an example, please further expand the risk factor on page 21 to also provide disclosure
related to the enforceability of civil liabilities in Hong Kong and Macao.

Jennifer O’Brien

November 16, 2022

Page 4

Response:

(a) In response to the Staff’s
comment, the Company respectfully submits that while its principal executive offices are located in Hong Kong, and certain of the entities
in its corporate structure are formed under Hong Kong law, it has no operations in Hong Kong, limiting any potential operational risks
as a result of Hong Kong law. In addition, it is management’s understanding that there are no restrictions, limitations, rules,
or regulations under Hong Kong law that are commensurate to those of the PRC with respect to (i) payment of dividends and other distributions
from the Company’s subsidiaries to the Company, (ii) currency conversion that may affect payment of dividends or foreign currency
denominated obligations, (iii) offshore financing activities, (iv) anti-monopoly laws, or (v) data protection and cybersecurity, that
have impacted or may impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other
exchange.

The Company believes that
it is not subject to Macao law because it does not operate any business or have any employees in Macao.

(b) Set forth below for
the Staff’s consideration are the Company’s proposed revisions to the risk factor titled “Failure to make adequate
contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.” The Company
undertakes to make conforming changes in future Annual Reports on Form 20-F. For the Staff’s convenience, the proposed new text
is underlined and removed text is struck through.

Failure to make adequate contributions
to various mandatory social security plans as required by PRC regulations may subject us to penalties.

Under the PRC Social Insurance Law
and the Administrative Measures on Housing Fund, our PRC subsidiaries are required to participate in various government sponsored employee
benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and to contribute
to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees up to a maximum amount
specified by the local government from time to time at locations where they operate the businesses. The requirements of employee
benefit plans have not been implemented consistently by the local governments in China given the different levels of economic development
in different locations. If the local governments deem our subsidiaries’ contribution to be not insufficient,
our subsidiaries may be subject to late contribution fees or fines in relation to any underpaid employee benefits, and our financial condition
and results of operations may be adversely affected.

In Hong Kong, employers are required
to select and join a provident fund scheme (“MPF Scheme”) in accordance with the statutory requirements of the Mandatory Provident
Fund Schemes Ordinance for all employees in Hong Kong and to make contributions to the MPF Scheme based on the minimum statutory contribution
requirement of 5% of the eligible employees’ relevant aggregate income, subject to a capped amount. Any non-compliance with statutory
requirements with respect to our employees located in Hong Kong may result in enforcement being taken by the relevant authorities, which
could lead to financial penalties or imprisonment.

Jennifer O’Brien

November 16, 2022

Page 5

(c) Set forth below for
the Staff’s consideration are the Company’s proposed revisions to the risk factor titled “Because our assets are
located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for
you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment
of a United States court against us or our officers and directors in the PRC.” The Company undertakes to make conforming changes
in future Annual Reports on Form 20-F. For the Staff’s convenience, the proposed new text is underlined and removed text is struck through.

Because our
assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult
for you to enforce your rights based on the U.S. federal securities laws against us or our officers and directors or to enforce a judgment
of a United States court against us or our officers and directors in the PRC.

We
are a BVI company, our officers and directors are nonresidents of the United States, our assets are located in the PRC and Hong Kong,
and our operations are conducted in the PRC. We do not maintain a business presence in the United States. Therefore, it may not be possible
to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against us
or them. Moreover, there is doubt whether courts in the BVI, or the PRC, or Hong Kong would enforce (a)
judgments of United States courts against us, our directors or officers based on the civil liability provisions of the securities laws
of the United States or any state, or (b) in original actions brought in the BVI, or the PRC, or Hong Kong,
liabilities against us or any nonresidents based upon the securities laws of the United States or any state.

 4. Please further expand your disclosure to address how regulatory actions related to data security or
anti-monopoly concerns in Hong Kong or Macao have impacted or may impact the company’s ability to conduct its business, accept foreign
investments, or list on a U.S. or other foreign exchange.

Response: The Company
respectfully submits that there are no such regulatory actions related to data security or anti-monopoly concerns in Hong Kong or Macao
that have impacted or may impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or
other foreign exchange. Set forth below for the Staff’s consideration are the Company’s proposed revisions to the second paragraph
in the proposed revisions to the introductory section of Item 3.D. contained in the Prior Response. The Company undertakes to make conforming
changes in future Annual Reports on Form 20-F. For the Staff’s convenience, the proposed new text is underlined.

Recent statements and
regulatory actions by the Chinese government, such as those related to data security or anti-monopoly concerns, could have a significant
impact on our ability to conduct our business, accept foreign investments, or maintain our listing on the Nasdaq Capital Market (“Nasdaq”)
or list on another U.S. or foreign exchange. There have not been comparable developments in Hong Kong yet, but such developments may
occur.

Jennifer O’Brien

November 16, 2022

Page 6

 5. Please further expand your disclosure to explain whether there are any commensurate laws or regulations
in Hong Kong or Macao which result in oversight over data security and explain how this oversight impacts the company’s business
and to what extent the company believes that it is compliant with the regulations or policies that have been issued.

Response: The Company
respectfully submits that there are no laws in Hong Kong or Macao regardi