THE RULES OF VERIFICATION OF BOND TRADING AND NEGOTIATION IN COUNTRYSIDE INTERBANK BOND MARKET

The People’s Bank of China

Announcement of the People’s Bank of China

NO.19

With a view to improving the administrative examination and approval efficiency, strengthening the market transparency, protecting
the lawful rights and interests of investors, and promote the normalized and healthy development of interbank bond market, the People’s
Bank of China formulates the Rules of Verification of Bond Trading and Negotiation in Countryside Inter-bank Bond Market; it is thereby
published.

The People’s Bank of China

December 7, 2004

The Rules of Verification of Bond Trading and Negotiation in Countryside Interbank Bond Market

Article 1

The Rules are formulated with a view to normalizing the verification of bond trading and negotiation in the interbank bond market,
and maintaining the lawful rights and interests of investors, in accordance with such laws, regulations and rules as the Law of the
People’s Republic of China on the People’s Bank of China, the Administrative License Law of the People’s Republic of China, the Measures
for the Implementation of the People’s Bank of China of Administrative License, and the Measures for the Administration of Bond Trading
in Countryside Inter-bank Bond Market.

Article 2

The bond in the Rules shall have the same meaning as the bond in the Measures for the Administration of Bond Trading in Countryside
Inter-bank Bond Market promulgated by the People’s Bank of China.

Article 3

A bond issuer (hereinafter referred to as the issuer) applying for trading and negotiation of the bond issued by it in the inter-bank
bond market (hereinafter referred to as the trading and negotiation ) shall report term by term to the People’s Bank of China for
verification.

The trading and negotiation of short-tem financing bond of securities companies shall be executed in accordance with the Measures
for Administration of Short-term Financing Bond of Security Companies (announcement of the People’s Bank of China, [2004] No. 12)

Article 4

An issuer applying for trading and negotiation of the bond issued by it shall satisfy the following conditions:

(1)

The bond has been issued legally;

(2)

The credit-debit relationship has been established and the registration thereof has been completed;

(3)

A relatively sound governance structure and system have been possessed and no material violation of laws, regulations and rules occurred
during the two years prior to the application.

(4)

The actual amount issued of the bond shall not be less than 500 Million RMB;

(5)

An individual investor shall not hold more than 30% of the amount issued of the bond; and

(6)

Other conditions provided for by the People’s Bank of China.

Article 5

An issuer applying for trading and negotiation of the bond issued by it shall submit following documents:

(1)

The application report for the trading and negotiation;

(2)

The documents of competent authorities for the approval of the issuance of the bond;

(3)

The Article of Association or issuing proclamation for the issuance of the bond;

(4)

The report of the information of the issuance of the bond;

(5)

The register of the holders ranking top 30 in the amount held (for the holders less than 30, the register of the actual holders);

(6)

The audited financial statements of the issuer of two years prior to application and the account of the material litigation the issuer
is involved in; and

(7)

Other materials to be submitted as required by the People’s Bank of China.

Article 6

Where the applying material is not complete or not in accordance with the form prescribed by law, the People’s Bank of China shall,
on spot or within five days, inform once the applicant the whole contents to be supplemented; where the applying material is complete
and in accordance with the prescribed form, or the issuer submit all supplementary applying material as required, the People’s Bank
of China shall accept the application. Where the People’s Bank of China decides to accept, it shall make written decision of approval
or rejection within 20 days from the acceptance date.

Article 7

The People’s Bank of China approves the application for trading and negotiation of bond, which does not indicate that it has made
any judgment on the invest value and risk of the bond in that term; the investor shall be keen on the basic status of the issuer
and the information disclosed, make independent investment judgment and bear the investment risk independently.

Article 8

The issuer shall, within 7 workdays from the receipt of the approval document, submit simultaneously the trading and negotiation proclamation
to the National Inter-bank Borrowing Center (hereinafter referred to as the inter-bank center) and the Central National Debts Registration
and Settlement Limited Company (hereinafter referred to as the central settlement company); the contents of the proclamation shall
include items 3 and 6 of Article 5 of this Rules, the credit rating report for the bond of that term and the account of the arrangement
of the tracing rating thereof, the information of the credit of the guarantor and the guarantee contract (if it is a guaranteed issuance).

Article 9

The central settlement company can, after it receives the approval document, instantly determine the basic elements of trading and
negotiation of the bond and inform the inter-bank center. The inter-bank center and the central settlement company shall, on the
second working day after they receive the trading and negotiation proclamation of the issuer, publicize the following information
to the market participants and handle the trading and negotiation of the bond on the third workday:

(1)

The document of the People’s Bank of China for the approval of the trading and negotiation of the bond;

(2)

The trading and negotiation proclamation of the bond;

(3)

The basic elements of trading and negotiation of the bond; and

(4)

Other information to be publicized as required by the People’s Bank of China.

Article 10

During the period of trading and negotiation of the bond, the issuer shall disclose information continually to the market participants
as provided for by the People’s Bank of China.

Article 11

The issuer, when submitting bond applying documents and disclosing information according to provisions, shall observe the following
basic requirements:

(1)

The applying documents for trading and negotiation of the bond and the documents disclosed to the market participants that are submitted
by the issuer according to provisions shall be real, precise and complete, and shall not include false record, misleading representation
or material omission;

(2)

The information disclosed by the issuer shall include the trading and negotiation proclamation, annual report, interim report and
the outcome of tracing credit rating of the bond;

(3)

The information disclosed by the issuer concerning such issues as financial accounting, law, asset evaluation shall be examined, validated
and given written opinion by such intermediate agencies as certificate public accountants, lawyer’s office and asset evaluation agency
that have relevant business qualification.

Article 12

During the trading and negotiation period of the bond, the issuer and relevant insider shall not disclose the contents before publicizing
the information as required to be disclosed by the issuer.

Article 13

During the trading and negotiation period of the bond, the issuer shall, with 4 months after the completion of every fiscal year (where
there are special circumstances, it can be prolonged after the approval of the People’s Bank of China), disclose the annual report
to the market participants.

Article 14

The issuer shall publicize, without delay, to the market participants and report to the People’s Bank of China the material events
occurred during the trading and negotiation period of the bond.

The material events referred to in this article include but are not limited to the following events:

(1)

The occurrence of heavy debts or breach of contract such as failure to pay due debts;

(2)

The occurrence of big loss or incurrence of big damnification;

(3)

The capital reduction,merger, division, dissolution, trusteeship, suspension of business and application for bankruptcy of the issuer;

(4)

The material litigation involving the issuer; or

(5)

The guarantor changes its legal entity, or great changes take place in the operation, finance of the guarantor (in cases of guaranteed
issuance).

Article 15

The issuer shall agree on the arrangements about the tracing rating with the credit rating agency, and publicize the tracing rating
report of previous year to market participants before July 31 every year during the bond trading negotiation period.

Article 16

The disclosure of the issuer’s information shall be carried out through the website of Chinamoney, Chinabond or the other news media
designated by the People’s Bank of China.

Article 17

The issuer shall publicize relevant matters concerning interests payment or redemption of the bond no later than the third workday
prior to the day of interests payment or expiration of the bond.

Article 18

During the bond trading negotiation period, the issuer shall not conduct bond trading by taking the bond issued by itself as object
asset, except in the redemption in advance by the issuer in accordance with relevant provisions or contracts.

Article 19

The trading and negotiation of the bond approved to trade and negotiate shall be terminated on the third workday prior to the expiration
date.

Article 20

The participating party to the inter-bank bond market that has one of the following circumstances shall be punished by the People’s
Bank of China in accordance with article 46 of the Law of the People’s Republic of China on the People’s Bank of China. In accordance
with the provisions of article 5 and 27 of the Administrative Punishments Law of the People’s Republic of China, the participating
party to the market that actively and in time correct the violation acts may be given a lighter or mitigated punishment, those that
do not result in harm or damage may be exempted from administrative punishment.

(1)

The issuer conducts bond trade by taking the bond issued by itself as the object asset without authorization or in a disguised form;
the issuer does not perform its information disclosure liability as provided for by the People’s Bank of China; or during the period
of trading and negotiation of the bond, the issuer or relevant insiders reveal the information as required to be disclosed; or any
act of the issuer violating other provisions of this Rules;

(2)

The participants to the inter-bank bond market trade without authorization the bond that is publicized legally but not approved to
trade and negotiate; or

(3)

The inter-bank center and central settlement company do not handle trading and negotiation of the bond in accordance with rules or
arrange for trading and negotiation of the bond without authorization; the inter-bank center and central settlement company violate
the rules of information disclosure;

Article 21

The verification on the trading and negotiation of central government bond, central bank bond or development financial bond of government
will not be conducted term by term; the issues of trading and negotiation are handled directly by the inter-bank center and central
settlement company in accordance with the time and procedure provided for by the People’s Bank of China. But the bond mentioned above
shall subject to the requirements of items 1, 2, and 4 of article 4 of the Rules.

The issuer of the development financial bond of government shall report the issuing information to the People’s Bank of China within
5 workdays after the completion of the registration of the claim and debt.

The issuer of central government bond and central bank bond is exempted from the information disclosure and credit rating liability,
and the issuer of the development financial bond of government is exempted from the credit rating liability.

Article 22

The power to interpret the present Rules shall be vested in the People’s Bank of China.

Article 23

The Rules shall enter into force as of December 15, 2004.