With the intention of both fortifying the amicable relations between China and Germany and strengthening the military readiness of the Chinese Empire, His Majesty the Emperor of China agrees to the following: while reserving all rights of sovereignty within a radius of fifty kilometers (100 Chinese li) from Kiaochow Bay, measured at high tide, His Majesty promises to allow the free march of German troops through this zone at all times, to refrain from any measures or directives in this zone without the prior agreement of the German government, and to place no obstacles in the way of any necessary regulation of these bodies of water. His Majesty the Emperor of China reserves the right to station troops and to take other military measures in this zone in cooperation with the German government.
With the intention of fulfilling the justifiable request of His Majesty the German Kaiser, who wants Germany, like other powers, to have a place on the Chinese coast to repair and fit out ships, to store materials and supplies, and to maintain other related facilities, His Majesty the Emperor of China shall lease both sides of the entrance to Kiaochow Bay to Germany for a provisional period of 99 years. At an opportune time, Germany shall undertake to build fortifications in the leased area to protect both the planned structural works and the entrance to the bay.
To prevent any conflicts, the Imperial Chinese Government will not exercise sovereign rights in the leased area for the duration of the lease. It will surrender such rights to Germany for the following area:
1. On the northern side of the entrance to the bay: the area comprising the spit bounded to the northeast by the line drawn from the northeastern corner of Potato Island to Loshan Harbor;
2. On the southern side of the entrance to the bay: the area comprising the spit bounded to the southwest by the line drawn to Tolosan Island from the southwestern tip of the inlet southwest of Chiposan Island;
3. Chiposan Island and Potato Islands;
4. The entire water area of the bay up to the high water mark;
5. All Islands lying off Kiaochow Bay as well as those needed for its defense from the sea, including Tolosan, Chaolian Dao, etc.
As regards the area leased to Germany and the fifty-kilometer zone around the bay, the supreme parties to this agreement reserve the right to define the boundaries more precisely in keeping with local conditions. This task will be carried out by commissioners appointed by both sides.