ANNOUNCEMENT OF CHINA SECURITIES REGULATORY COMMISSION ON CANCELING THE SECOND GROUP OF ADMINISTRATIVE APPROVAL ITEMS AND ON CHANGING THE MANAGEMENT METHODS OF SOME ADMINISTRATIVE APPROVAL ITEMS

The China Securities Regulatory Commission

Announcement of China Securities Regulatory Commission on Canceling the Second Group of Administrative Approval Items and on Changing
the Management Methods of Some Administrative Approval Items

China Securities Regulatory Commission

April 1,2003

According to the requirements of the Decision of the State Council on Canceling the Second Group of Administrative Approval Items
and on Changing the Management Methods of a Group of Administrative Approval Items (GuoFa [2003] No.5), the relevant matters concerning
this commission’s cancellation of the second group of administrative approval items and the change of management methods of some
administrative approval items are hereby notified as follows:

Since the day of issuance of the decision of the State Council, February 27, 2003, China Securities Regulatory Commission (the CSRC)
has cancelled the second group of administrative approval items (27 items, see the attachment for the specific item names and the
basis of establishment).

The CSRC and the agencies thereof will no longer accept the relevant applications filed by the parties according to the administrative
approval items that have been cancelled, and will no longer make examination and approval of such applications that have been accepted.

The CSRC will issue special circulars with respect to the subsequent management methods and follow-up work related to the cancelled
administrative approval items.

The CSRS will start to sort out the departmental regulations and regulatory documents related to the second group of administrative
approval items that have been cancelled, and the result will be publicized.

The CSRC has decided to change the management methods of 7 administrative approval items, namely: “ratification of the qualification
of securities practitioners”, “ratification of the qualification of securities investment consultation practitioners”, “record of
information of stock underwriters”, “assessment of the qualification of fund practitioners”, “ratification of the qualification of
futures practitioners”, “ratification of the texts of futures brokerage contracts”, as well as “ratification of the qualification
of futures investment consultation practitioners”. The above 7 administrative approval items shall be transferred to the Securities
Association of China and the China Futures Association for self-regulation. The CSRC will issue special circulars concerning the
relevant transfer and subsequent management work.

After the second group of administrative approval items are abolished and the management methods for some administrative approval
items are changed, the CSRS will, according to the principle of prudent regulation and through enactment of the management criteria
and standards, improve the regulatory means and strengthen the in-process inspection and ex post facto investigation and punishment
to further strengthen the protection of the investors and the supervision and management of the relevant business activities.

Attachment:Catalogue of the Second Group of Administrative Approval Items Canceled by China Securities Regulatory Commission (27 items)

No. Item Name Establishment Basis

1 Ratification of A-share settlement banks Measures for the Administration of Client Transaction Settlement Fund (Decree No.3 of 2001
of the CSRC)

2 Record of the contracts signed between securities companies and depository banks, or chief depository banks Measures for the Administration
of Client Transaction Settlement Fund (Decree No.3 of 2001 of the CSRC)

3 Record of the contracts signed between settlement companies and settlement banks Measures for the Administration of Client Transaction
Settlement Fund (Decree No.3 of 2001 of the CSRC)

4 Record of the documents of the members’ assembly of Stock Exchanges Measures for the Administration of Stock Exchanges (Decree No.4
of 2001 of the CSRC)

5 Record of the business agreements between securities registration and settlement institutions and Stock Exchanges Measures for the
Administration of Stock Exchanges (Decree No.4 of 2001 of the CSRC)

6 Record of the suspension or restoration of the trading of listed securities by Stock Exchanges Measures for the Administration of
Stock Exchanges (Decree No.4 of 2001 of the CSRC)

7 Approval of the suspension or restoration of the trading of listed securities by Stock Exchanges Measures for the Administration
of Stock Exchanges (Decree No.4 of 2001 of the CSRC)

8 Record of listing agreements Measures for the Administration of Stock Exchanges (Decree No.4 of 2001 of the CSRC)

9 Record of the internal administrative systems and work procedures of securities registration and settlement institutions on business,
finance and security etc Measures for the Administration of Stock Exchanges (Decree No.4 of 2001 of the CSRC)

10 Approval of the period for keeping of original business proofs fixed by securities registration and settlement institutions Measures
for the Administration of Stock Exchanges (Decree No.4 of 2001 of the CSRC)

11 Examination and approval for the services provided by Stock Exchanges for the transaction types that are not listed by them Measures
for the Administration of Stock Exchanges (Decree No.4 of 2001 of the CSRC)

12 Examination and acceptance of the preparation for establishment of securities companies Circular of the CSRC on distributing the
Several Opinions on Further Strengthening the Regulation of Securities Companies (ZhengJianJiGouZi [1999] No.14)

13 Examination and approval of the establishment of securities institutions abroad by non-securities institutions Circular of the
General Office of the State Council on Distributing the Provisions on the Functions, Internal Structures and Personnel Establishment
of China Securities Regulatory Commission (GuoBnaFa [1998] No.31)Measures for the Administration of Overseas Financial Institutions
(Decree No.1 of 1990 of the People’s Bank of China)

14 Ratification of the change, addition or reduction of representatives, deputy representatives, and staff members of foreign nationalities
or from Hong Kong, Macao and Taiwan by the representative offices in China of foreign securities institutions Circular of the CSRC
on Promulgation of the Measures for the Administration of Representative Offices in China of Foreign Securities Institutions (ZhengJianJiGouZi
[1996] No. 26)

15 Record of the employment of Chinese citizens to be ordinary staff members by the representative offices in China of foreign securities
institutions Circular of the CSRC on Promulgation of the Measures for the Administration of Representative Offices in China of Foreign
Securities Institutions (ZhengJianJiGouZi [1996] No. 26)

16 Ratification of the representatives and deputy representatives of the representative offices in China of foreign securities institutions
Circular of the CSRC on Promulgation of the Measures for the Administration of Representative Offices in China of Foreign Securities
Institutions (ZhengJianJiGouZi [1996] No. 26)

17 Examination and approval of the cancellation of securities institutions set up overseas by domestic non-securities institutions
Circular of the General Office of the State Council on Distributing the Provisions on the Functions, Internal Structures and Personnel
Establishment of China Securities Regulatory Commission (GuoBanFa [1998] No.31); Measures for the Administration of Overseas Financial
Institutions (Decree No.1 of 1990 of the People’s Bank of China); Circular of the People’s Bank of China and China Securities Regulatory
Commission on Distributing the Scheme on Handover of the Duties of Regulation of Securities Institutions (YinChuan [1998] No.30 )

18 Recommendation for the securities companies entering the Inter-bank borrowing market Circular of the People’s Bank of China on
Distributing the Provisions on the Administration of the Fund Management Companies’ Entering the Inter-bank Borrowing Market and
the Provisions on the Administration of the Securities Companies’ Entering the Inter-bank Borrowing Market (YinFa [1999] No.288)

19 Designation of the training institutions of securities practitioners Circular of the Securities Commission of the State Council
on Distributing the Interim Provisions on the Administration of the Qualification of Securities Practitioners (ZhengWeiFa [1995]
No.6)

20 Record of the personnel employed by securities intermediary institutions Circular of the Securities Commission of the State Council
on Distributing the Interim Provisions on the Administration of the Qualification of Securities Practitioners (ZhengWeiFa [1995]
No.6)

21 Record of the change of employers of securities practitioners Circular of the Securities Commission of the State Council on Distributing
the Interim Provisions on the Administration of the Qualification of Securities Practitioners (ZhengWeiFa [1995] No.6)

22 Record of the part-time jobs in non-commercial institutions of the managerial personnel and fund managers Promulgation of No.6
Rule of Implementation of the Interim Measures for the Administration of Securities and Investment Fund ?C Interim Provisions on
the Administration of the Qualification of Fund Practitioners (ZhengJianFa [1999] No.53)

23 Record of the appointment and dismissal of the assistants to the general manager and department managers of fund management companies
and fund trustee departments Promulgation of No.6 Rule of Implementation of the Interim Measures for the Administration of Securities
and Investment Fund ?C Interim Provisions on the Administration of the Qualification of Fund Practitioners (ZhengJianFa [1999] No.53)

24 Record of the relevant materials of establishment of offices within China by fund management companies Circular of the CSRC on
the Relevant Issues Concerning the Establishment of Branches within China by Fund Management Companies (ZhengJianJiJinZi [2000] No.
66)

25 Examination and approval for the establishment of futures and investment consultation institutions Circular of the Securities Commission
of the State Council on Promulgation of the Interim Measures for the Administration of Securities and Futures Investment Consultation
(ZhengWeiFa [1997] No.96)

26 Review of the letters of legal advice issued by Chinese lawyers concerning the issuing of stocks and listing overseas by overseas
companies involving domestic rights and interests Circular of the CSRS on the Relevant Issues Concerning the Issuing of Stocks and
Listing Abroad by Overseas Companies Involving Domestic Rights and Interests (ZhengJianFaXingZi [2000] No.72 )

27 Record of the agreements on listing of convertible company bonds Circular of the Securities Commission of the State Council on
Promulgation of the Interim Measures for the Administration of Convertible Company Bonds (ZhengWeiFa [1997] No.6)

The China Securities Regulatory Commission
2003-04-01

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE CONCERNING THE SALE AND PURCHASE OF FOREIGN EXCHANGE FOR THE NON-TRADE ITEMS UNSPECIFIED IN THE LAWS AND REGULATIONS CURRENTLY IN FORCE

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange Concerning the Sale and Purchase of Foreign Exchange for the Non-trade Items
Unspecified in the Laws and Regulations Currently in Force

HuiFa [2003] No.35

March 6, 2003

Branches and Foreign Exchange Administration Offices under the State Administration of Foreign Exchange at levels of provinces, autonomous
regions and municipalities directly under the Central Government, and branch administrations of Shenzhen, Dalian, Qingdao, Xiamen,
Ningbo; and Sino-capital designated banks of foreign exchange:

For the purpose of improving the administration on foreign exchange for non-trade items, settling the issues on sale and purchase
of foreign exchange for the non-trade items unspecified in the laws or regulations currently in force, and providing conveniences
for the real economic and trading activities of domestic organizations, the State Administration of Foreign Exchange decided to classifiably
administrate the non-trade items unspecified in the laws and regulations currently in force concerning foreign exchange administration
in accordance with the prospective provisions of the Regulations of the People’s Republic of China on Administration of Foreign Exchange,
the Administrative Provisions on Settlement, Sale and Purchase of Foreign Exchange, the Circular Concerning Submission of Taxation
Certificates for Sales and Purchase of Foreign Exchange under the Non-Trade Items and Partial Capital Items. A Circular on relative
issues is hereby distributed:

For the sale/purchase of foreign exchange for a non-trade item unspecified in the laws and regulations currently in force, which sum
equivalent is no more than $50,000 (including $50,000), domestic organization may directly perform the transaction directly with
the designated bank of foreign exchange by presenting correlative documents, and the banks shall perform the sale/purchase after
verifying the authenticity. For the sale/purchase of foreign exchange for a non-trade item unspecified in the laws and regulations
currently in force, which sum equivalent is over $50,000 and no more than $500,000 (including $500,000), the domestic organization
shall apply to the branches of the State Administration of Foreign Exchange (hereinafter referred to as AFE). After obtaining the
verification certificate for the authenticity, the organization may make transactions with the designated bank of foreign exchange
by presenting the verification certificate issued by the AFE. For the sale/purchase of foreign exchange under non-trade items unspecified
in the laws and regulations currently in force, which sum equivalent is over $500,000 (excluding $500,000), the domestic organization
shall apply to the local AFE by presenting correlative documents for local AFE to report to the SAFE for approval. After being verified
by the SAFE, the organization may perform the sale/purchase of exchange at the designated bank of foreign exchange by presenting
verification certificate from the local AFE.

II.

The credit enterprises with export proceeds in foreign exchange without any violation of correlative regulations on foreign exchange
administration, the influencing importers with biggish import volume within the jurisdiction, and the institutions with frequent
foreign exchange incomes and expenses on non-trades, such as party, governmental and military organizations and scientific research
institutions at State-level, with a approval of the local branch AFE, may transact the sales/purchases of foreign exchange for non-trades
directly with the designated banks of foreign exchange by presenting relative documents, exempt from the limitation for the sum stipulated
in Article 1 of this Circular. The local AFEs may, according to the actual circumstances of local jurisdictions, formulate specific
approval requirements consistent with the provisions in this Article. The AFEs shall inform the local designated banks of foreign
exchange after verifying such domestic organizations, and transmit the list of verified domestic organizations to the Current Account
Transaction Administration Department of the State Administration of Foreign Exchange for record. For any verified domestic organization
in violation of the regulations on foreign exchange administration, the AFE shall notify the designated bank of foreign exchange
to immediately cancel its qualification.

III.

When designated banks of foreign exchange audit the authenticity of the sales/purchases of foreign exchange for non-trade items unspecified
in the laws and regulations currently in force, they shall audit the written applications, contracts/agreements, invoices (payment
notices) and taxation warrants provided by the domestic organizations.

IV.

When the AFEs audit the authenticities of the sales/purchases of foreign exchange for non-trade items unspecified in the laws and
regulations currently in force, they shall audit the written applications, contracts/agreements, invoices (payment notices), taxation
warrants and other relevant documents provided by the domestic organizations. Meanwhile, they shall also enhance the internal controls,
establish and implement an administrative system of authorization by levels, and decide the items with biggish sum or with uncompleted
documents through collective discussions.

When the AFEs and the designated banks of foreign exchange audit the authenticity of the sales/purchases of foreign exchange for non-trade
items unspecified in the laws and regulations currently in force, they shall audit the original documents, indicate the date and
amount of the sales/purchases of foreign exchange on the original documents, seal the documents with official seals, and keep the
copies for 3 years for future reference.

VI.

The designated banks of foreign exchange shall record all the transactions of sales/purchases of foreign exchange for non-trade items
unspecified in the laws and regulations currently in force which have been handled by them, fill in the Registration Form of Sales/Purchases
of Foreign Exchange for Special Non-Trade Items (Attachment) that shall be submitted to local AFEs within the first 5 working days
at the beginning of each quarter and shall be submitted by the local AFEs (foreign exchange administration department) to the State
Administration of Foreign Exchange within the first 10 working days at the beginning of each quarter.

VII.

This Circular shall enter into force as of April 1, 2003.

Each local AFE (foreign exchange administration department) shall transmit this Circular to the central branch offices and foreign-invested
banks immediately within its jurisdiction upon receiving it. Each Sino-capital designated bank of foreign exchange shall transmit
this Circular immediately to its branch banks after receiving it. They shall feedback any problem occurring in the course of implementation
of this Circular immediately to the Current Account Transaction Administration Department of the State Administration of Foreign
Exchange.

Attachment: Registration Form of Sales/Purchase of Foreign Exchange for Special Non-Trade Items (omitted)

The State Administration of Foreign Exchange
2003-03-06

CIRCULAR ON DOING WELL IN ONGOING REGULATORY AND DOVETAILING WORKS UPON CANCELING THE SECOND GROUP OF ADMINISTRATIVE APPROVAL ITEMS AND CHANGING THE MANAGEMENT METHODS OF SOME ADMINISTRATIVE APPROVAL ITEMS

The China Securities Regulatory Commission

Circular on Doing Well in Ongoing Regulatory and Dovetailing Works Upon Canceling the Second Group of Administrative Approval Items
and Changing the Management Methods of Some Administrative Approval Items

ZhengJianFa [2003] No.17

April 1, 2003

Securities regulatory offices, agencies and special agencies, stock exchanges and futures exchanges, Shanghai and Shenzhen Stock Exchanges
Securities Regulatory Agencies, China Association of Securities and China Association of Futures, China Securities Registration and
Settlement Company, and each department of the SCRC:

On March 27, 2003, the State Council promulgated the Decision on Canceling the Second Group of Administrative Approval Items and on
Changing the Management Methods of a Group of Administrative Approval Items (GuoFa [2003] No.5) (hereinafter referred to as the “Decision”).
With a view to carry out and implement the spirits of the Decisions and do well in the ongoing regulatory and dovetailing works upon
cancellation of the second group of administrative approval items and change of management methods of some administrative approval
items, here is to notify you of the following matters:

For the administrative approval items revoked in the Decision (see the attachment), the CSRC and its agencies will no longer accept,
or examine and approve if accepted already.

For the ongoing regulatory and dovetailing works upon cancellation of the relevant administrative approval items, please enforce as
per the ongoing management modes determined in the attachment.

For the change of management methods of some administrative approval items, please do well in the transfer of the relevant works to
the professional associations, put forth the self-disciplinary principles of professional associations, guide them to formulate operational
procedures and establish the self-disciplinary mechanism.

According to the requirements for the Decision and this Circular, please research on and timely cope with the circumstances and problems
that may occur upon the cancellation of the relevant administrative approval items and change of the management methods for some
administrative approval items, earnestly do well in the ongoing regulatory and dovetailing works, and prevent any disconnection in
management. In case of any material circumstance, please report timely to the CSRC.

Attachment:Follow-up and Dovetailing of the Ongoing Management Methods and Work Upon Cancellation of the Second Group of Administrative Approval
Items of China Securities Regulatory Commissionhtm/e03060.htmNo

No.	Item Name Cancelled	Ongoing Management and Work Dovetailing
1	Ratification of A-share settlement banks	The Securities Registration and Settlement Company shall formulate the standards and criteria for ratification of A-share settlement banks
2	Record of the contracts signed between securities companies and depository banks, or chief depository banks	Within seven days upon signature of the contracts with depository banks and chief depository banks, the securities companies shall report the copies of the contracts in question to the CSRC and the local CSRC agency.
3	Record of the contracts signed between settlement companies and settlement banks	The Securities Registration and Settlement Company shall report its sample format of the contracts signed with the settlement banks to the CSRC.
4	Record of the documents of the members assembly of Stock Exchanges	The Stock Exchanges shall within ten working days upon the members assembly of Stock Exchanges submit all the documents and relevant circumstances to the CSRC
5	Record of the business agreements between securities registration and settlement institutions and Stock Exchanges	The securities registration and settlement institutions shall submit the business agreements signed or modified with the Stock Exchanges to the CSRC.
6	Record of the suspension or restoration of the trading of listed securities by Stock Exchanges	The CSRC shall not examine and approve such administrative examination and approval items but strengthen the examination and inspection on the stop or resumption of the listing of the Stock Exchanges
7	Approval of the suspension or restoration of the trading of listed securities by Stock Exchanges	Same as above (ditto)
8	Record of listing agreements	The CSRC shall no longer examine and approve such administrative examination and approval items
9	Record of the internal administrative systems and work procedures of securities registration and settlement institutions on business, finance and security etc	The internal management system and risk prevention system formulated by the securities registration and settlement institutions should be reported to the CSRC.
10	Approval of the period for keeping of original business proofs fixed by securities registration and settlement institutions	Enforced according to Article 53 of the Securities Law of the PRC.
11	Examination and approval for the services provided by Stock Exchanges for the transaction types that are not listed by them	In case of providing services for the transactions types that are not listed on their stock exchanges, the Stock Exchanges shall report the relevant circumstances to the CSRC.
12	Examination and acceptance of the preparation for establishment of securities companies	The CSRC shall no longer examine and approve such administrative examination and approval items
13	Examination and approval of the establishment of securities institutions abroad by non-securities institutions	The CSRC shall no longer examine and approve such administrative examination and approval items
14	Ratification of the change, addition or reduction of representatives, deputy representatives, and staff members of foreign nationalities or from Hong Kong, Macao and Taiwan by the representative offices in China of foreign securities institutions	Upon change, addition or reduction of representatives, deputy representatives, and staff members of foreign nationalities or from Hong Kong, Macao and Taiwan by the representative offices in China of foreign securities institutions, the name list, identity certification and resumes should be reported to the CSRC and the local CSRC agencies
15	Record of the employment of Chinese citizens to be ordinary staff members by the representative offices in China of foreign securities institutions	Ditto
16	Ratification of the representatives and deputy representatives of the representative offices in China of foreign securities institutions	Ditto
17	Examination and approval of the cancellation of securities institutions set up overseas by domestic non-securities institutions	The CSRC shall no longer examine and approve such administrative examination and approval items
18	Recommendation for the securities companies entering the Inter-bank borrowing market	The securities companies may apply for with the Peoples Bank of China or other competent authorities. If the Peoples Bank of China or other competent authorities require for opinions to be issued by the CSRC, the CSRC shall coordinate accordingly
19	Designation of the training institutions of securities practitioners	Handled with according to the relevant provisions of the China Association of Securities
20	Record of the personnel employed by securities intermediary institutions	Handled with according to the relevant provisions of the China Association of Securities
21	Record of the change of employers of securities practitioners	Handled with according to the relevant provisions of the China Association of Securities
22	Record of the part-time jobs in non-commercial institutions of the managerial personnel and fund managers	The fund management companies shall report to the CSRC the part-time jobs in non-commercial institutions of the managerial personnel and fund managers
23	Record of the appointment and dismissal of the assistants to the general manager and department managers of fund management companies and fund trustee departments	The engagement and dismissal of the assistant General Managers and departmental managers of fund management companies and fund custodian departments should be reported together with the submission of the database information for fund supervision
24	Record of the relevant materials of establishment of offices within China by fund management companies	Within 25 working days upon establishing offices in the territory of China, the fund management companies shall report the relevant content, including the time and place for establishing such offices, the responsible persons and contact mode; and the acts of the offices should be undertaken by the fund management companies as a part of the regulations on the fund management companies by the CSRC.
25	Examination and approval for the establishment of futures and investment consultation institutions	The CSRC shall no longer examine and approve such administrative examination and approval items but review and ratify the qualifications of the futures investment advisory institutions for futures investment advisory services, and issue the Qualification Permits for Futures Investment Advisory Services. For the institutions that project to apply for the qualifications for futures investment advisory services, their practitioners shall have obtained the Qualification Certificate for futures investment consultation issued by China Association of Futures
26	Review of the letters of legal advice issued by Chinese lawyers concerning the issuing of stocks and listing overseas by overseas companies involving domestic rights and interests	The CSRC shall no longer examine and approve such administrative examination and approval items
27	Record of the agreements on listing of convertible company bonds	The CSRC shall no longer examine and approve such administrative examination and approval items

CIRCULAR ON INVESTIGATING ADOPTION OF THE ENTERPRISE ACCOUNTING SYSTEM BY ENTERPRISES WITH FOREIGN INVESTMENT

The Ministry of Finance

Circular on Investigating Adoption of the Enterprise Accounting System by Enterprises with Foreign Investment

CaiBanKuai [2003] No. 8

March 6, 2003

Financial Departments (Bureaus) of provinces, autonomous regions, municipalities directly under the Central Government and municipalities
separately listed on the state plan:

Enterprises with Foreign Investment have started adoption the Enterprise Accounting System as of January 11, 2002 and in order to
further understand the implementation of the Enterprise Accounting System by enterprises with foreign investment, please arrange
for the local certified public accountants firms engaged in auditing enterprises with foreign investment to fill in the attached
Questionnaires (Attachment 1). The certified public accountants firms shall provide opinions and materials on the following issues
according to the actual circumstances:

For enterprises with foreign investment that have adopted the Enterprise Accounting System, what problems exist in account reconciliation
and actual execution? What are the main reasons?

II.

For enterprises with foreign investment that have not adopted the Enterprise Accounting System, what are the main reasons for not
adopting the Enterprise Accounting System? What are the accounting standards that have been adopted by the certified public accountants
firms in auditing the annual reports of the enterprises with foreign investment? What type of auditing opinions has the certified
public accountants firms issued? In case the certified public accountants have issued non-standard auditing opinion, what are the
opinions from the relevant departments of the administration for industry and commerce and taxation?

III.

What are the opinions and suggestions of the certified public accountants firms on the implementation of the Enterprise Accounting
System by the enterprises with foreign investment? What are the opinions and suggestions of the enterprise with foreign investment
on execution of the Enterprise Accounting System?

The local accounting administration of financial department are required to summarize the questionnaires and the relevant materials
filled in by the certified public accountants firms, prepare a written report, which should be sent to the Accounting Department
of the Ministry of Finance together with the materials (original or copy) provided by the certified public accountants firms by May
30, 2003.

The Ministry of Finance
2003-03-06

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON THE TRANSITIONAL POLICY AND MEASURES AFTER CANCELING ADMINISTRATIVE EXAMINATION AND APPROVAL OF FOREIGN EXCHANGE ADMINISTRATION OF SOME CAPITAL PROJECTS

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on the Transitional Policy and Measures after Canceling Administrative Examination
and Approval of Foreign Exchange Administration of Some Capital Projects

HuiFa [2003] No.50

April 3, 2003

Branches and foreign exchange administration departments under the State Administration of Foreign Exchange in provinces, autonomous
regions and municipalities directly under the Central Government, and branch administrations of Shenzhen, Dalian, Qingdao, Xiamen,
Ningbo:

Decisions of the State Council on Canceling the First Batch of Administration Examination and Approval Projects (GuoFa [2002] No.24)
and the Decisions of the State Council on Canceling the Second Batch of Administration Examination and Approval Projects and Altering
the Administrative Methods for Some Administration Examination and Approval Projects (GuoFa [2003] No.5) have been promulgated. In
order to ensure the smooth linking of the administration of capital projects and avoid disjoint after cancellation of relevant administration
examination and approval projects, relevant policy and measures for the transitional period are hereby made as follows:

Cancellation of examinations and approvals on the financing conditions of long-and-medium-term foreign debts of domestic Chinese-capital
organizations, on the financial conditions of financing and leasing of domestic Chinese-capital organizations, on the time selection
and financing conditions for issuing debts abroad, and on the financial conditions for project financing.

After cancellation of relevant examinations and approvals, in borrowing medium-long term foreign debts, issuing medium-long term bonds
denominated in foreign exchange, conducting aircraft financial leasing and project financing, Chinese-capital organizations shall
no longer be required to go through examination and approval formalities with administration of foreign exchange on terms of relevant
financing as they shall only be obliged to handle procedures on registration of foreign debts on a case by case basis after conclusion
of borrowing contracts.

During the course of the Chinese-capital organizations going through formalities of registration of foreign debts for above items
and during the course of enterprises with foreign investment going through formalities of registration of foreign debts for project
financing, capital raising and aircraft financial leasing, the branches and sub-branches of administration of foreign exchange shall
handle the registration in accordance with following procedures:

(I)

All branches and sub-branches of the administrations of foreign exchange shall verify borrowing qualifications of borrowers according
to operational procedures on borrowing qualifications concerning medium-long term international commercial loans, project financing,
aircraft financial leasing, issuance of bonds denominated in foreign exchange(see Attachment 1, Attachment 2, Attachment 3, Attachment
4). Qualification verifications for aircraft financial leasing, project financing and issuance of bonds denominated in foreign exchange
shall be conducted according to corresponding operational procedures for borrowing qualifications while checks on other forms of
medium-long term overseas borrowing (except for those made by enterprises with foreign investment) shall be conducted according to
operational procedures for borrowing qualifications concerning medium-long term international commercial loans.

(II)

Where the borrower meets the above verification requirements on borrowing qualifications, the branches and sub-branches of administration
of foreign exchange shall handle procedures of registration of conclusion of foreign debt contracts and of payment withdrawal, establishment
of special foreign debt account and settlement of foreign exchange and repayment of principals and interests and shall not require
the debtor to present prior approval documents issued by administrations of foreign exchanges.

(III)

Where the borrower does not meet the verification requirements on borrowing qualifications or where registration procedures does not
conform with requirements or where relevant articles in overseas borrowing arrangements do not conform with prevailing provisions
on administration of foreign exchange (such as account arrangement, guarantee arrangement, value preserving clause, etc.), the borrower
shall obtain written approval from the State Administration of Foreign Exchange in advance. The branches and sub-branches of administrations
of foreign exchange shall not handle registration procedures for the borrower without the written approval from the State Administration
of Foreign Exchange.

(IV)

Debtors shall handle withdrawal of payment after they have obtained certificates of registration of foreign debt issued by administration
of foreign exchange.

(V)

The branches and sub-branches shall handle registration of foreign debts of medium-long term overseas borrowings by Chinese-capital
organizations within the following time limits from the date on which all materials required by administration of foreign exchange
are presented by enterprises: 1. The branches and sub-branches shall grant the registration within 10 working days if no report to
and approval from the State Administration of Foreign Exchange is required. 2. The branches and sub-branches shall grant the registration
within 30 working days if no report to and approval from The State Administration of Foreign Exchange is required (which shall include
10 working days for The State Administration of Foreign Exchange to handle procedures).

II.

Cancellation of examination and approval on large amount financing by overseas branches of domestic Chinese-capital financial institutions

After cancellation of examination and approval on large amount financing by overseas branches of domestic Chinese-capital financial
institutions, the institutions shall not be required to handle prior examination and approval procedures with administration of foreign
exchange provided that they shall report the financing to administration of foreign exchange for the record in advance, which means
where a overseas branch of a domestic Chinese-capital financial institution raises commercial loans in a sum of 50,000,000 United
States dollars (inclusive) equivalent in one time, it shall report to the State Administration of Foreign Exchange for the record
10 working days in advance by its head office.

III.

Cancellation of examination and approval on establishment, alteration and cancellation of B share’s margin account opened with domestic
foreign-capital banks by securities companies

After cancellation of the examination and approval, the ways of management of administration of foreign exchange on establishment,
alteration and cancellation of B share’s settlement account (now referred to as the “clients transaction settlement account”) by
securities companies shall be as follows:

(I)

A securities company authorized to conduct foreign exchange business shall open domestic investor’s B share’s settlement account and
foreign investor’s B share’s settlement account separately with banks at its locality by presenting valid License for Conducting
Foreign Exchange Business in Securities Transactions and evidencing documents granting authorizations to conduct relevant businesses
issued by the CSRC etc.

A business department of a securities company authorized to conduct foreign exchange business shall open domestic investor’s B share’s
settlement account and foreign investor’s B share’s settlement account with banks at its locality by presenting power of attorney
of its head office, duplicate of License for Conducting Foreign Exchange Business in Securities Transactions of the securities company,
duplicates of evidencing documents granting authorization to conduct relevant businesses issued by the CSRC etc.

(II)

Within 3 days of establishment, alteration or cancellation of domestic investors’ B share’s settlement account and foreign investors’
B share’s settlement account, the securities companies or their business departments shall report to administration of foreign exchange
for the record.

(III)

The scope of receipt of a domestic investor’s B share’s settlement account shall be the foreign exchange funds transferred from its
domestic foreign exchange non-cash savings account or cash savings account and foreign exchange proceeds from foreign exchange securities
transactions. Its scope of payment shall be the foreign exchange needed in its foreign exchange securities transactions and transfers
therefrom to foreign exchange cash accounts opened with domestic commercial banks. No payment shall be remitted abroad.

The scope of receipt of a foreign investor’s B share’s settlement account shall be foreign exchange funds remitted from aboard by
the foreign investor or transferred from its domestic foreign exchange non-cash savings account and foreign exchange proceeds from
its foreign exchange securities transactions. Its scope of payment shall be the foreign exchange needed in its foreign exchange securities
transactions, transfers therefrom to foreign exchange non-cash accounts opened with domestic commercial banks and foreign exchange
funds to be remitted abroad.

IV.

Cancellation of examination on foreign exchange risks in making investment abroad by domestic institutions

Administration of foreign exchange shall no longer conduct examination on foreign exchange risks in making investment abroad and shall
simultaneously simplify examination procedures on source of foreign exchange capital for making investment abroad. For detailed rules
of operation please refer to the Circular of the State Administration of Foreign Exchange on Simplifying the Examination of Foreign
Exchange Capital Source of Investment Abroad (HuiFa [2003] No.43)

All Branches of the administrations of foreign exchange shall promptly transmit this Circular to designated banks of foreign exchange
at their locality and shall handle relevant business strictly according to requirements of the Circular.

This is hereby the notification.

Attachments:

1. Examination on the Qualifications of Chinese-capital Organizations for Borrowing Medium-long Term International Commercial Loans
(omitted)

2. Examination on the Qualifications for Borrowing under Project Financing (omitted)

3. Examination on the Qualifications for Borrowing under Aircraft Financial Leasing (omitted)

4. Examination on the Qualifications for Borrowing under Issuing Bonds Overseas (omitted)

The State Administration of Foreign Exchange
2003-04-03

DECISION ON AMENDING THE INTERIM PROVISIONS CONCERNING THE ESTABLISHMENT OF INVESTMENT COMPANIES BY FOREIGN INVESTMENT AND THE SUPPLEMENTARY PROVISIONS

20030710

The Ministry of Foreign Trade and Economic Cooperation

Decree of the Ministry of Foreign Trade and Economic Cooperation

No.4

The Decision on Amending the Interim Provisions Concerning the Establishment of Investment Companies by Foreign Investment and the
Supplementary Provisions were adopted at the 4th ministerial office meeting of the MOFTEC, which is hereby promulgated and shall
be implemented thirty days upon the date of the promulgation.

Minister Shi Guangsheng

March 7, 2003

Decision on Amending the Interim Provisions Concerning the Establishment of Investment Companies by Foreign Investment and the Supplementary
Provisions

In order to promote the investment of transnational companies in China, introduce advanced foreign technologies and management experiences,
and perfect the functions of investment companies, hereby is to amend the Interim Provisions Concerning the Establishment of Investment
Companies by Foreign Investment (hereinafter referred to as the Interim Provisions), the Supplementary Provisions on the Interim
Provisions Concerning the Establishment of Investment Companies by Foreign Investment (hereinafter referred to as the Supplementary
Provisions), and the 2nd Supplementary Provisions on the Interim Provisions Concerning the Establishment of Investment Companies
by Foreign Investment (hereinafter referred to as the 2nd Supplementary Provisions) promulgated by the MOFTEC as of 1995.

Item 4 of Article 3 of the Interim Provisions is amended as: The balance sheet of the investors of the past three years audited by
force of law.

II.

Article 4 of the Interim Provisions is amended as: foreign investors shall contribute to the registered capital of the investment
company with freely convertible currencies, or RMB profits obtained in China or legitimate RMB gains or proceeds from the transfer
of shares or liquidation activities. Chinese investors may make contribution to the registered capital with Renminbi. In case foreign
investors contribute to the registered capital of the investment company with legitimate RMB gains or proceeds, they shall submit
the relevant certification and vouchers for payment of taxes. The capital contribution shall be paid in within two years upon issuance
of the business license.

III.

Article 5 of the Interim Provisions is amended as: Upon establishment with approval by the MOFTEC, the investment companies may undertake
the following businesses according to the actual requirements by the operational activities engaged in China:

(I)

Investment in the fields permitted for foreign investment by the state.

(II)

With written authorization by the enterprises invested (through unanimous consent by the Board of Directors), providing the following
services to the enterprise invested:

Assisting or acting as agency in purchasing for the enterprise invested machinery equipment, office equipment, raw materials, components,
spare parts at home and abroad fro self use by the enterprises invested and selling the products produced by the enterprises invested
at home and abroad, as well as providing after-sale services;

Balancing foreign exchanges among the enterprises invested with consent and supervision of the administration of foreign exchanges;

Providing enterprises invested with technical supports, personnel training, internal personnel management and other services during
the production, sales and market development of products;

Assisting the enterprises invested in seeking for loans and provision of guarantee;

(III)

Setting up scientific research and development center or department in China for undertaking of research and development of new products
and high-tech, transferring the R&D results and providing the corresponding technical services.

(IV)

Providing its investors with advisory services, and providing its associated companies with market information on investment and advisory
services relating to investment policies.

IV.

Article 16 of the Interim Provisions is amended as: In case the investment companies invest in establishing enterprises, the investment
made by the investment company or jointly with other foreign investors should not be less than 25% of the registered capital of the
enterprises to be established, which enjoy the treatment granted to foreign-invested enterprises with issuance of certificate of
approval of foreign-invested enterprises and business license of foreign-invested enterprises.

Article 1 of the Supplementary Provisions is amended as follows: In case the registered capital of the investment company is no less
than USD30m, its loan shall not exceed four times that of the paid-in registered capital and in case the registered capital of the
investment company is no less than USD100m, its loan shall not exceed six times that of the paid-in registered capital. In case the
loan of the investment company would exceed the above-mentioned quota as required by its operations, application should be made to
the MOFTEC for approval.

VI.

Article 2 of the 2nd Supplementary Provisions is amended as follows: the investment company may as sponsor prepare and establish
foreign-invested joint-stock companies or hold the corporate shares of foreign-invested joint-stock companies that have not been
public listed. The investment company may also hold the corporate shares of other joint-stock companies in the territory of China
that have not been public listed. The investment company shall be deemed as foreign sponsor or shareholders of the joint-stock companies.

VII.

Article 5 of the 2nd Supplementary Provisions is amended as follows: the importation by the investment company of systematically
complete set of products or trial-sale products should go through the formalities in compliance with the relevant stipulations, with
the cash contribution, profits of foreign exchanges or loans outside China of foreign exchanges in the registered capital of the
investment companies. The accumulated annual importation amount mentioned above should not exceed 35% of the cash foreign exchanges
in the registered capital. Any balance of the accumulated annual importation amount that does not exceed 35% of the cash foreign
exchanges in the registered capital of the year should not be passed for use by the next year.

VIII.

Article 3 , Article 4 , Article 5 and Article 6 of the Supplementary Provisions and Articles 1, 3, 4 and 6 of the 2nd Supplementary
Provisions are consolidated and amended as:

Upon the establishment of the investment company, if the operations are undertaken by force of law without records of legal violation,
with registered capital paid in timely as specified by the Articles of association and if the paid-in capital by the investors is
no less than USD30m that has been used as investment in the enterprises invested, the investment company may with the examination
and consent by the local foreign economic and trade administration of provinces, autonomous regions, municipalities directly under
the Central Government or municipalities separately listed on the state plan apply to the MOFTEC, and upon approval undertake the
following businesses according to the actual requirements of its operations in China:

(I)

With written authorization by the enterprises invested (through unanimous consent by the Board of Directors), undertaking the following
businesses:

Selling he products produced by the enterprises invested by distribution in the market at home and abroad; and

Providing the enterprises invested with transportation, warehousing and integrated services.

(II)

Exporting domestic commodities not involved in export quota or licensing administration by agency, distribution or establishing export
and purchasing institutions;

(III)

Purchasing the products produced by the enterprises invested and selling them at home and abroad after system integration, and in
case the products produced by the enterprises invested may not fully satisfy the demands of system integration, the investment company
is allowed for purchasing complementary products at home and abroad for system integration with the value of the purchase not exceeding
50% of total value of all the products required for the system integration;

(IV)

Providing relevant technical trainings for the domestic distributors and agent of the enterprises invested and domestic companies
and enterprises that have reached agreements on technological transfer with the investment companies or their parent companies;

(V)

For the aim of the development of the product market prior to the production or the production of new products of the enterprises
invested, the investment companies are allowed for importing small amount of products from their parent companies identical or similar
to the products to be produced by the enterprises invested for domestic sales on trial that are not under import quota administration;

(VI)

Providing the enterprises invested with operational leasing services of machine and office equipments;

(VII)

Providing after-sale services for the products produced the parent companies; and

(VIII)

Participating in project contracting outside China of Chinese enterprises qualified for operations of foreign contracting projects
according to the relevant state provisions.

In applying for operation of the above-mentioned businesses, the investment company shall submit the following documents to the examination
and approval authority:

(I)

Application signed by the legal representative of the investment company;

(II)

Resolution of the Board of directors of the investment company;

(III)

Amended Articles of Association of the investment company;

(IV)

Certificate for approval of the investment company (copy) and business license (copy), as well as the report on asset appraisal issued
by Chinese certified public accountants; and

(V)

Report on asset appraisal for the enterprises invested that is issued by Chinese certified public accountants.

IX.

In case the Decision is of discrepancy with the Interim Provisions Concerning the Establishment of Investment Companies by Foreign
Investment, the Interpretation on the Issues Relating to the Interim Provisions Concerning the Establishment of Investment Companies
by Foreign Investment, the Supplementary Provisions on the Interim Provisions Concerning the Establishment of Investment Companies
by Foreign Investment or the 2nd Supplementary Provisions on the Interim Provisions Concerning the Establishment of Investment Companies
by Foreign Investment, this Decision shall prevail.

The Decision shall enter into force thirty days after its promulgation.

The Ministry of Foreign Trade and Economic Cooperation
2003-03-07

CIRCULAR ON THE NOTIFICATION OF THE EXCHANGE INSTRUMENT AND STARTING TIME FOR THE REPURCHASE OF OPEN MARKET BUSINESS BONDS

Circular on the Notification of the Exchange Instrument and Starting Time for the Repurchase of Open Market Business Bonds

[2003] No.5

All primary dealers:

Pursuant to the spirit of the Notice of the People’s Bank of China on the Listing and Exchange of Bonds in the National Inter-Bank
Bond Market (Yin Fa [2003] No. 71), as from the date of promulgation of the present Announcement, the national debts newly released
on the national inter-bank bond market, the financial bonds of national development banks and the financial bonds of China import
and export banks, save and except those that may not be regarded as exchange instrument for repurchase of open market business as
determined by the People’s Bank of China, may be utilized as exchange instrument for the repurchase of open market business bonds.
The starting time shall be the listing date of each period of bond as publicized by China Government Securities Depository Trust
& Clearing Co., Ltd. and the National Inter-bank Funding Center based on the authorization of the People’s Bank of China.

The Operating Office of the Open Market Business of the People’s Bank of China

April 7, 2003

The People’s Bank of Chinacpdf/c05723.pdf
2003-04-07

INTERIM PROVISIONS ON MERGERS AND ACQUISITIONS OF DOMESTIC ENTERPRISES BY FOREIGN INVESTORS

The Ministry of Foreign Trade and Economic Cooperation,the State Administration of Taxation,the State Administration for Industry
and Commerce,the State Administration of Foreign Exchange

Decree of the the Ministry of Foreign Trade and Economic Cooperation, the State Administration of Taxation, the State Administration
for Industry and Commerce and the State Administration of Foreign Exchange

No.3

The Interim Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (hereinafter referred to as the “Provisions”),
reviewed and adopted at the First Ministry Meeting of the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic
of China on January 2, 2003, is hereby published and will come into force on April 12, 2003.

Minister of the Ministry of Foreign Trade and Economic Cooperation Shi Guangsheng

Director General of the State Administration of Taxation Jin Renqing

Director General of State Administration for Industry and Commerce Wang Zhongfu

Director General of State Administration of Foreign Exchange Guo Shuqing

March 7, 2003

Interim Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors

Article 1

The Provisions are formulated in accordance with the laws and administrative regulations governing foreign investment enterprises
and other relevant laws and administrative regulations to promote and regulate foreign investors’ investment in China introduce advanced
technologies and management experience from abroad, improve the utilization of foreign investment, rationalize the allocation of
resources, ensure employment and safeguard fair competition and national economic security.

Article 2

For the purpose of the Provisions, mergers and acquisitions of a domestic enterprise by foreign investors shall mean that foreign
investors, by agreement, purchase equity interest from shareholders of domestic enterprise with no foreign investment (hereinafter
referred to as the “Domestic Company”) or subscribe to the increase in the registered capital of the Domestic Company with the result
that such Domestic Company changes into a foreign investment enterprise (hereinafter referred to as “Equity Merger and Acquisition”);
or the foreign investors establish a foreign investment enterprise and then, through such enterprise, purchase the assets of a domestic
enterprise by agreement and operate such assets, or the foreign investors purchase the assets of a domestic enterprise by agreement
and use such assets as investment to establish a foreign investment enterprise to operate such assets (hereinafter referred to as
“Asset Merger and Acquisition”).

Article 3

In mergers and acquisitions of domestic enterprises, foreign investors shall comply with the laws, administrative regulations and
departmental rules and adhere to the principles of fairness, reasonableness, compensation for equal value, and honesty and good faith,
and shall not create excessive concentration, eliminate or hinder competition, disturb the social economic order or harm the societal
public interests.

Article 4

In mergers and acquisitions of domestic enterprises, foreign investors shall comply with the requirements regarding the investors’
qualifications and industrial policy as set forth in the laws, administrative regulations and departmental rules and the relevant
requirements under industry policies.

In the case of industries where no wholly foreign ownership is allowed under the Guidance Catalog of Foreign Investment Industries,
any merger or acquisition of a domestic enterprise engaging in the industry shall not lead to the foreign investors’ wholly ownership
of all equity interest in the acquired enterprise. In the case of industries which require the Chinese party to be controlling or
relatively controlling, the Chinese party shall remain to be in the controlling or relatively controlling position in the acquired
enterprise after any merger or acquisition of the domestic enterprise engaging in such industries. In the case of industries where
operation by foreign investors is prohibited, no foreign investors may merge with or acquire any enterprise engaging in such industries.

Article 5

Any merger or acquisition of a domestic enterprise by foreign investors to set up a foreign investment enterprise shall be subject
to the approval of the examination and approval authorities in accordance with the Provisions, and procedures for change registration
or establishment registration shall be handled with the registration authorities. The contribution made by the foreign investors
to the registered capital of the foreign investment enterprise established after the merger or acquisition shall generally not be
less than 25% of the registered capital. Except as provided otherwise by the laws or administrative regulations, if the contribution
made by foreign investors is less than 25% of the registered capital, the foreign investment enterprise shall be subject to the examination,
approval and registration in accordance with the currently applicable examination and registration procedures for the establishment
of a foreign investment enterprise. When issuing the foreign investment enterprise approval certificates, the examination and approval
authority shall add a notation “foreign investment proportion less than 25%”. When issuing the foreign investment enterprise business
licenses, the registration authority shall add the notation “foreign investment proportion less than 25%” .

Article 6

For the purpose of the Provisions, the examination and approval authority shall be the Ministry of Foreign Trade and Economic Cooperation
of the PRC (hereinafter referred to as “MOFTEC”) or the administrative authority in charge of foreign trade and economic cooperation
at the provincial level (hereinafter referred to as the “Provincial Examination and Approval Authority”), and the registration authority
shall be the State Administration for Industry and Commerce of the PRC (hereinafter referred to as “SAIC”) or its authorized local
industrial and commercial bureaus.

If the foreign investment enterprise established after the merger or acquisition falls into a specific type or a specific industry
subject to MOFTEC approval in accordance with the laws, administrative regulations and departmental rules, the provincial examination
and approval authority shall submit the application documents to MOFTEC for examination and approval and MOFTEC shall decide to approve
or disapprove the application in accordance with the law.

Article 7

In the case of Equity Merger and Acquisition by foreign investors, the foreign investment enterprise established thereafter shall
succeed to the creditor’s rights and liabilities of the merged or acquired Domestic Company .

In the case of Asset Merger and Acquisition by foreign investors, the domestic enterprise selling assets shall assume all its original
creditor’s rights and liabilities.

The Foreign investors, merged or acquired domestic enterprises, creditors and other parties may reach separate agreements regarding
the disposition of the creditor’s rights and liabilities of the merged or acquired domestic enterprises, provided that the agreement
shall not result in any damage to any third party interest or societal public interest. Any agreement on the disposition of the creditor’s
rights and liabilities shall be submitted to the examination and approval authority.

The domestic enterprise selling assets shall, within 10 days of the adoption of the resolution to sell its assets, gives notice to
its creditors and makes a public announcement on a newspaper at the provincial level or above with national circulation. A creditor
of the domestic enterprise may, within 10 days from the date of receipt of such notice or publication of such public announcement,
requests the domestic enterprise selling assets to provide the corresponding security.

Article 8

The parties to a merger or acquisition shall determine the transaction price on the basis of the result of the evaluation of the equity
interest to be transferred or of the assets to be sold conducted by the asset evaluation institution. The parties to a merger or
acquisition may agree on an asset evaluation institution established within the territory of China in accordance with the law. Asset
evaluation shall be conducted by adopting internationally recognized evaluation methods.

Where the merger or acquisition of a domestic enterprise leads to any change in the equity interest formed by the investment of state-owned
assets or resulting in any transfer of the property right in state-owned assets, evaluation shall be conducted and transaction price
shall be determined in accordance with the relevant regulations governing the administration of state-owned assets.

It is prohibited to transfer equity interest or sell assets at a price obviously lower than the evaluation result for the peupose
of transferring the capital out of China in a disguised way.

Article 9

In case of a merger or acquisition of a domestic enterprise by foreign investors to set up a foreign investment enterprise, the foreign
investors shall, within 3 months from the date of issuance of the foreign investment enterprise business license, pay the full consideration
to the shareholder(s) transferring equity interest or to the domestic enterprise selling assets. If the above time limit needs to
be extended under special circumstances, the foreign investors shall, upon the approval by the examination and approval authority,
pay 60% or more of the total consideration within 6 months and full considerations within 1 year from the date of issuance of the
foreign investment enterprise business license, and shall distribute the proceeds in proportion to the actual capital contribution.

Where the foreign investors conduct Equity Merger and Acquisition and the foreign investment enterprise established after such mergers
and acquisitions increases its registered capital, the investors shall set forth a time schedule for capital contribution in the
contract and the articles of association of the foreign investment enterprise. If it is set forth that the capital contribution shall
be paid up in one lump sum, the investors shall make the contribution within 6 months from the date of issuance of the foreign investment
enterprise business license ; or if it is set forth that the capital contribution shall be paid by installments, the investors’ first
installment shall not be less than 15% of their respective capital subscription and shall be made within 3 months from the date of
issuance of the foreign investment enterprise business license .

In case of an Asset Mergers and Acquisition by foreign investors, the investors shall set forth the time schedule for capital contribution
in the contract and the articles of association of the foreign investment enterprise to be established. If the investors intend to
establish a foreign investment enterprise and purchase and operate such assets of a domestic enterprise through such enterprise,
the investors shall pay the part of its capital contribution equal to the price of such assets within the time schedule specified
for consideration payment in Paragraph 1 of this Article and the remaining part of its capital contribution shall be paid within
the time schedule agreed upon in accordance with Paragraph 2 of this Article .

Where foreign investors establish a foreign investment enterprise through merger or acquisition of a domestic enterprise, and the
proportion of the foreign investors’ capital contribution is less than 25% of the registered capital ,if the investors pay their
capital contribution in cash, the full contribution shall be made within 3 months from the date of issuance of the foreign investment
enterprise business license ; if the investors pay their capital contribution in kind or in industrial property rights and so on,
full contribution shall be made within 6 months from the date of issuance of the foreign investment enterprise business license.

The instruments of payment of any consideration shall be in compliance with the provisions of the relevant state laws and administrative
regulations. Where a foreign investor intends to use any stock it has the right to dispose of or any Renminbi assets it legitimately
possesses as the instrument of payment, such payment shall be subject to the approval of the foreign exchange administration authority
.

Article 10

Where a foreign investor acquires any equity interest held by a shareholder of a Domestic Company by agreement, after the Domestic
Company has changed into and established as a foreign investment enterprise, the registered capital of such foreign investment enterprise
shall be the registered capital of the original Domestic Company and the proportion of the the foreign investor’s capital contribution
shall be the proportion of the equity interest acquired by the foreign investor in the original registered capital. Where a Domestic
Company subject to Equity Merger and Acquisition an Equity Merger and Acquisition also increases its capital at the same time, the
registered capital of the foreign investment enterprise established upon the Merger and Acquisition shall be the sum of the registered
capital of the original Domestic Company and the increased capital. The foreign investors and the other original investors of the
acquired Domestic Company shall determine the proportion of their capital contribution respectively to the registered capital of
the foreign investment enterprise based on the evaluation of the Domestic Company’s assets.

Where foreign investors subscribe to any increased capital of a Domestic Company, after the Domestic Company has changed into and
established as a foreign investment enterprise, the registered capital of such foreign investment enterprise shall be the sum of
the registered capital of the original Domestic Company and the increased capital. The foreign investors and the other original shareholders
of the acquired Domestic Company shall determine the proportion of their capital contribution respectively to the registered capital
of the foreign investment enterprise based upon the evaluation of the Domestic Company’s assets.

If a natural person shareholder of the Domestic Company subject to Equity Merger and Acquisition has been a shareholder of such Domestic
Company for more than 1 year, the person may, upon approval, continue to be a Chinese party investor of the foreign investment enterprise
established after the change.

Article 11

In case of an Equity Merger and Acquisition by foreign investors, the ceiling for the total amount of investment of the foreign investment
enterprise established upon the Merger and Acquisition shall be determined according to the following proportions:

(1)

no more than ten sevenths (10/7) of the registered capital of the foreign investment enterprise, if the registered capital is less
than US$ 2.1 million;

(2)

no more than twice the registered capital, if the registered capital is between US$ 2.1million and US$ 5 million;

(3)

no more than two and a half times the registered capital, if the registered capital is more than US$ 5 million but less than or equal
to US$ 12 million; or

(4)

no more than three times the registered capital, if the registered capital is more than US$ 12 million.

Article 12

In case of an Equity Merger and Acquisition by foreign investors, the investors shall submit the following documents to the examination
and approval authority with corresponding jurisdiction of approval based on the total amount of investment of the foreign investment
enterprise established upon the Merger and Acquisition:

(1)

the resolution adopted by the shareholders of the domestic limited liability company subject to the Merger and Acquisition unanimously
approving the Equity Merger and Acquisition by the foreign investors, or the resolution adopted by the shareholders’ meeting of the
domestic company limited by shares subject to the Merger and Acquisition approving the Equity Merger and Acquisition by the foreign
investors;

(2)

the application of the Domestic Company subject to the Merger and Acquisition to be changed in to and established as a foreign investment
enterprise in accordance with the law;

(3)

the contract and the articles of association of the foreign investment enterprise established upon the Merger and Acquisition;

(4)

the agreement for the purchase of the shareholders’ equity interest or subscription for the increased capital of the Domestic Company
by the foreign investors

(5)

the audited financial report for the most recent fiscal year of the Domestic Company subject to the Merger and Acquisition;

(6)

identification documents or incorporation certification and creditworthiness certification of the foreign investors;

(7)

explanation of the situation regarding the enterprises the Domestic Company subject to the Merger and Acquisition has invested in;

(8)

the business licenses (duplicates) of the Domestic Company subject to the Merger and Acquisition and enterprises it has invested in;

(9)

the plan for the re-settlement of the employees of the Domestic Company subject to the Merger and Acquisition; and

(10)

documents required to be submitted under Articles 7 and 19 of the Provisions.

Where any permission given by any other government authority is required in connection with the business scope or business scale,
or obtaining of any land use right by the foreign investment enterprise to be established upon the Merger and Acquisition, the relevant
documents of such permission shall be submitted simultaneously.

The business scope of any company the Domestic Company subject to the Merger and Acquisition originally invested in shall comply with
the requirements of relevant foreign investment industrial policies. Adjustments shall be made in case of noncompliance.

Article 13

The equity interest purchase agreement or the agreement to increase the capital of the Domestic Company as set forth in Article 12
of these Provisions shall be governed by the Chinese law and shall contain the following main contents:

(1)

information regarding each of the parties to the agreement, including its full name, address, and the name, position and citizenship
of its legal representative,etc.;

(2)

proportions and the price of the equity interest to be acquired or the increased capital to be subscribed;

(3)

term and methods of performance of the agreement;

(4)

rights and obligations of the parties to the agreement;

(5)

liabilities for breach of the agreement and settlement of dispute; and

(6)

the date and the place of the execution of the agreement.

Article 14

In the case of an Asset Merger and Acquisition by foreign investors, the total amount of investment of the foreign investment enterprise
established upon the Merger and Acquisition shall be determined on the basis of the transaction price of such assets and the actual
scale of production and operation. The proportion between the registered capital and the total amount of investment of the foreign
investment enterprise to be established shall be consistent with the relevant regulations.

Article 15

In the case of an Asset Merger and Acquisition by foreign investors, the investors shall submit the following documents to the examination
and approval authority with the corresponding jurisdiction of approval, based on the total amount of investment, enterprise type,
and industry of the foreign investment enterprise to be established and in accordance with the laws, administrative regulations and
departmental rules governing the establishment of foreign investment enterprises:

(1)

the resolution by the property rights holders or the agency of authority of the domestic enterprise approving the sale of such assets;

(2)

the application for the establishment of the foreign investment enterprise;

(3)

the contract and the articles of association of the foreign investment enterprise to be established;

(4)

the asset purchase agreement executed between the foreign investment enterprise to be established and the domestic enterprise or the
asset purchase agreement executed between the foreign investors and the domestic enterprise;

(5)

the articles of association and the business license (duplicates) of the domestic enterprise subject to the Merger and Acquisition;

(6)

certification proving that the domestic enterprise subject to the Merger and Acquisition has given notice and the public announcement
to its creditors;

(7)

identification documents or incorporation certification and creditworthiness certification of the foreign investors;

(8)

the plan for the re-settlement of employees of the domestic enterprise subject to the Merger and Acquisition; and

(9)

documents required to be submitted under Articles 7 and 19 of the Provisions.

Where any permission given by any other government authority is required in connection with the purchase and operation of the assets
of the domestic enterprise as specified in the above paragraph, the relevant documents of such permission shall be submitted simultaneously.

If foreign investors purchase any assets by agreement with the domestic enterprise and invest such assets to set up a foreign investment
enterprise, such assets shall not be used for operation purposes until and unless the foreign investment enterprise has been duly
established.

Article 16

The asset purchase agreement set forth in Article 15 shall be governed by the Chinese law and shall contain the following main contents:

(1)

information regarding each of the parties to the agreement, including its name and address, and the name, position and citizenship
of its legal representative, etc.;

(2)

list and the price of the assets to be purchased;

(3)

term and methods of performance of the agreement;

(4)

rights and obligations of the parties to the agreement;

(5)

liabilities for breach of the agreement and settlement of dispute; and

(6)

the date and the place of the execution of the agreement.

Article 17

Except as otherwise provided for in Article 20 , where foreign investors establish a foreign investment enterprise through merger
and acquisition of a domestic enterprise,, the examination and approval authority shall, within 30 days upon its receipt of all the
documents required to be submitted, decide according to law whether to approve the application for the establishment. Upon such approval,
the examination and approval authority shall issue the foreign investment enterprise approval certificate.

If the examination and approval authority decides to approve foreign investors’ acquisition of equity interest of a Domestic Company
from its shareholders, the examination and approval authority shall concurrently copy the relevant approval documents to the local
foreign exchange administration authority of the transferor and of the Domestic Company respectively. The foreign exchange administration
authority in the locality of the transferor shall complete the foreign capital foreign exchange registration procedures for the transferor’s
receipt of foreign exchange and shall issue the foreign capital foreign exchange registration certificate certifying the payment
of the consideration for the above acquisition by the foreign investors.

Article 18

In the case of an Asset Merger and Acquisition by foreign investors, the investors shall, within 30 days of its receipt of the foreign
investment enterprise approval certificate for, apply to the registration authority for the establishment registration and obtain
the foreign investment enterprise business license.

In the case of an Equity Merger and Acquisition by foreign investors, the acquired Domestic Company shall apply to its original registration
and administration authority for the change of registration and obtain the foreign investment enterprise business license in accordance
with the Provisions. If the original registration and administration authority has no jurisdiction of registration and administration,
it shall, within 10 days upon its receipt of the application documents, deliver such documents to the registration and administration
authority with such jurisdiction, accompanied by the registration files of the Domestic Company. The acquired Domestic Company shall
submit and be responsible for the authenticity and effectiveness of the following documents at the time of its application for the
change of registration:

(1)

the application for the change of registration;

(2)

the resolution adopted by the shareholders’ meeting of the acquired Domestic Company in accordance with the Company Law of the PRC
and its articles of association, approving the transfer of equity interest or the increased capital;

(3)

the agreement for the purchase of the shareholders’ equity interest or subscription for the increased capital of the Domestic Company
by the foreign investors

(4)

amended articles of association of the Domestic Company or any amendment to the original articles of association and the contract
of the foreign investment enterprise to be submitted as required by law;

(5)

the foreign investment enterprise approval certificate ;

(6)

identification documents or incorporation certification and creditworthiness certification of the foreign investors;

(7)

the amended list of directors, the document specifying the names and addresses of new directors and the documents of appointment of
new directors; and

(8)

other relevant documents and certificates required by SAIC.

In case of the transfer of state-owned equity interest and in case of foreign investors’ subscription to any increased capital of
a company with state-owned equity interest, the approval documents of the authority in charge of economic and trade administration
shall also be submitted.

Investors shall, within 30 days upon the receipt of the foreign investment enterprise business license, handle the necessary registration
formalities with authorities for taxation, customs, land administration and foreign exchange administration, etc..

Article 19

In case of any of the following occurrences in connection with the merger or acquisition of a domestic enterprise by foreign investors,
the investors shall submit notification to MOFTEC and SAIC:

(1)

the revenue of a party to the merger or acquisition in the domestic market for the current year exceeds RMB1.5 billion ;

(2)

the foreign investors have merged with or acquired more than 10 domestic enterprises in aggregate engaging in the related businesses
within one year;

(3)

the market share of a party to the merger or acquisition in the domestic market has reached 20%; or

(4)

the market share of a party to the merger or acquisition in the domestic market will reach 25% as a result of the merger or acquisition.

Even without the above occurrences, MOFTEC or SAIC may still require the foreign investors to submit notification upon the request
by any competing domestic enterprise, relevant functional department or industrial association, if MOFTEC or SAIC finds that the
merger or acquisition will involve a huge market share, or if there is any other material aspect of the merger or acquisition which
might severely affect market competition, national economy or people’s livelihood and national economic security.

The above-mentioned “a party to a merger or acquisition” shall include any affiliated enterprise of foreign investors.

Article 20

In case of any of the described in Article 19 in connection with a merger or acquisition of a domestic enterprise by foreign investors,
and if MOFTEC and SAIC believe that the merger or acquisition might lead to over-concentration, impair fair competition or damage
consumers’ interests, MOFTEC and SAIC shall, within 90 days upon its receipt of all the documents required to be submitted, jointly
or separately after consultation with each other, hold a hearing of the relevant departments, organizations, enterprises and other
related parties and decide according to law whether to approve the application for the merger or acquisition.

Article 21

In case of any of the following occurrences in connection with an offshore merger or acquisition, any party to the merger and acquisition
shall, prior to its public announcement of the plan for the merger or acquisition or together with its application to the regulatory
authorities of the country where it is located, submit to MOFTEC and SAIC the plan for the merger or acquisition. MOFTEC and SAIC
shall examine whether the merger or acquisition might cause over-concentration of the domestic market, impair fair competition in
the domestic market or damage the domestic consumers’ interests, and decide whether to approve the plan:

(1)

the assets owned by a party to the offshore merger and acquisition within China exceeds RMB 3 billion;

(2)

the sales of a party to the offshore merger or acquisition in the domestic market for the current year have exceeded RMB 1..5 billion;

(3)

the aggregate market share in the domestic market by a party to the offshore merger or acquisition and its affiliated enterprises
has reached 20%;

(4)

the aggregate market share in the domestic market by a party to the offshore merger or acquisition and all of its affiliated enterprises
in the domestic market will reach 25% as a result of the offshore merger or acquisition; or

(5)

as a result of the offshore merger or acquisition, a party to the offshore merger or acquisition will hold, directly or indirectly,
equity of more than 15 foreign investment enterprises engaging in the related businesses within China.

Article 22

In case of any of the following occurrences in connection with a merger or acquisition, a party to the merger or acquisition may apply
to MOFTEC and SAIC for an exemption from examination:

(1)

the merger or acquisition may improve the conditions for fair competition in the domestic market;

(2)

the merger or acquisition will restructure the enterprise running at a loss and ensure employment;

(3)

the merger or acquisition will absorb advanced technologies and management professionals and enhance the international competitiveness
of the domesticenterprise; or

(4)

the merger or acquisition will improve the environment.

Article 23

All documents submitted by investors shall be grouped into categories as required by the regulations and accompanied by a table of
contents of the documents. All documents required to be submitted shall be in Chinese.

Article 24

The Provisions shall apply to all mergers and acquisi

IMPLEMENTATION MEASURES OF THE MINISTRY OF CONSTRUCTION ON QUALIFICATION ADMINISTRATION IN THE ADMINISTRATIVE PROVISIONS ON ENTERPRISE MANAGEMENT OF CONSTRUCTION ENTERPRISES WITH FOREIGN INVESTMENT

The Ministry of Construction

Circular of Printing and Distributing the Implementation Measures of the Ministry of Construction on Qualification Administration
in the Administrative Provisions on Enterprises Management of Construction Enterprises with Foreign Investment

JianShi [2003] No.73

Construction departments at provincial or autonomous regional level, construction commissions of municipalities directly under the
Central Government, construction administration bureaus of Shandong and Jiangsu, construction departments of relative sections under
the State Council, Construction Bureau of the Production and Construction Corps of Xinjiang, Engineering Bureau of Barracks Department
of General Logistics:

The Circular of Printing and Distributing the Implementation Measures of the Ministry of Construction on Qualification Administration
in the Administrative Provisions on Enterprise Management of Construction Enterprises with Foreign Investment is hereby printed and
distributed to you for implementation. For any problem found during the course of implementation, please inform the Construction
Market Management Department of our Ministry immediately.

The Ministry of Construction of the People’s Republic of China

April 8, 2003

Implementation Measures of the Ministry of Construction on Qualification Administration in the Administrative Provisions on Enterprise
Management of Construction Enterprises with Foreign Investment

These Measure are formulated for the purpose of implementing the Administrative Provisions on Enterprise Management of Construction
Enterprises with Foreign Investment (Decree No.113 of the Ministry of Construction and the Ministry of Foreign Trade and Economic
Cooperation) (hereafter referred to as the “Provisions”).

Targets that the Construction Enterprise with Foreign Investment Qualification Certificates are granted to

The Construction Enterprises with Foreign Investment Qualification Certificates shall be granted to the following construction enterprises
with foreign investment that have gained legal entity qualifications:

Construction enterprise which whole capital is invested by foreign investor(s);

Construction enterprise established jointly by Chinese investor(s) and foreign investor(s) through a way of joint-venture or cooperation.

Newly-established construction enterprise, in the name of an enterprise with foreign investment, or share-purchased construction enterprise
by an enterprise with foreign investment founded legally in China.

Construction Enterprises with Foreign Investment Qualification Certificates shall not be granted to the foreign corporations or branches
established in China by foreign corporations or other economic organizations.

II.

Scope of construction activities of construction enterprises with foreign investment

The construction activities mentioned in Article 3 of the Provisions refer to the activities performed in the territory of China
according to the provisions in Construction Law of the People’s Republic of China and Regulations of Construction Project Quality
Management, including civil engineering, construction, pipe/line infrastructure building, and new construction, expansion and rebuilding
of fitment projects.

III.

Verification of the qualifications of construction enterprises with foreign investment

Applications of construction enterprises with foreign investment for the construction enterprise qualifications shall be accordance
with the Provisions on Enterprise Management of Construction Enterprises with Foreign Investment (Decree No.113 of the Ministry of
Construction and the Ministry of Foreign Trade and Economic Cooperation), Regulations on Administration of Construction Enterprise
Qualifications (Decree No.87 of the Ministry of Construction), Opinions of Implementing the Regulations on Administration of Construction
Enterprise Qualifications (JianBanJian [2001] No.24), Criteria of Grading of Construction Enterprise Qualifications (JianJian [2001]
No.82) and other provisional and standardization documents concerning qualification administration of construction enterprises.

The qualification grade of a new construction enterprise with foreign investment shall be verified at the lowest grade, with an interim
period of one year.

A new construction enterprise with foreign investment invested by a foreign enterprise that has contracted project(s) in China may
apply directly for a qualification of Grade B or above, provided that it meets following requirements in addition to other requirements
necessary for the construction enterprise qualification:

(1)

It has gained a foreign enterprise qualification certificate or an approval certificate for contracting projects, which is issued
by Ministry of Construction, or provincial competent administration on construction or by a competent administration of special economic
zone or costal opening city prior to September 30, 2003, according to the Interim Measures for Qualification Administration on Foreign
Enterprise Contracting Construction Projects in China (Decree No.32 of The Ministry of Construction).

(2)

For the applications for the construction enterprise with foreign investment qualifications, the performances of contracted projects
in China by the applicant foreign corporations shall meet with the standards for contracting projects which are required for applying
for the construction enterprise with foreign investment qualifications. For the application for a qualification of Chinese-foreign
equity joint venture construction enterprise or Chinese-foreign cooperative construction enterprise, the performance of the projects
contracted in China by the foreign corporations as well as the total performance of contracted projects by the Chinese parties shall
meet with the standards for contracting projects that are required for applying for the construction enterprise qualifications.

For the domestic construction enterprises with foreign shares invested by foreign corporations, which natures therefore become Chinese-foreign
equity joint venture construction enterprises or Chinese-foreign cooperative construction enterprises, the qualifications shall be
re-graded according to the standards actually reached.

For the domestic construction enterprises purchased by foreign enterprises, which nature therefore become construction enterprises
with foreign investment, the qualifications shall be graded according to the standards actually reached.

A Chinese-foreign equity joint venture construction enterprise or a Chinese-foreign cooperative construction enterprise established
prior to the enforcement of the Provisions, which registered capital had not met with the requirements in the former Provisions on
Founding Construction Enterprise with Foreign Investment promulgated jointly by the Ministry of Construction and the Ministry of
Foreign Trade and Economic Cooperation may, after the enforcement of the Provisions, apply for an appropriate grade of qualification
of construction enterprise.

IV.

Requirements for the foreign service-providers in construction enterprises with foreign investment

If a construction enterprise with foreign investment employs a foreign service-provider as technical or economic manager, labor contract
signed legally shall be presented when applying for the qualification.

If a construction enterprise with foreign investment employs a foreign service-provider as its operation manager, such foreign service-provider
shall possess the working experience in construction management which is required in the standards for construction enterprise qualification
and shall provide corresponding proofs.

If a construction enterprise with foreign investment employs a foreign service-provider as technical or economic manager, such foreign
service-provider shall possess a professional post_title equivalent to the required standards for construction enterprise qualification.

A foreign service-provider with a college degree or above and with over 10-year working experience in this field, who is employed
by a construction enterprise with foreign investment as technical or economic manager, may be reported as a staff with a senior professional
post_title when applying for the qualification. One with an associate degree or above and with over 5-year working experience in this
field may be reported as one with a middle professional post_title.

A foreign service-provider employed by a construction enterprise with foreign investment as the project manager, who meets with the
following requirements and can provide corresponding proofs, may be approved to be with the corresponding qualification for the project
manager by the qualification administration authority when the enterprise is applying for the qualification.

(1)

A foreign service-provider declared as Grade A project manager shall have been the principal construction manager for one construction
project that meets with the requirements for Grade A construction enterprise or two construction projects that meet with the requirements
for Grade B construction enterprise.

(2)

A foreign service-provider declared as Grade B project manager shall have been the principal construction manager for two construction
projects including at least one project that meets with the requirements for Grade B construction enterprise.

(3)

A foreign service-provider declared as Grade C project manager shall have been the principal construction manager for two construction
projects including at least one project that meets with the requirements for Grade C construction enterprise. The headcounts of the
foreign service-providers approved as the project managers of the enterprise according this Article shall not exceed one-of-the-third
of the headcounts for project managers specified in the standards for qualification of construction enterprise.

The accumulated residing time within the territory of China of each foreign service-provider employed by the construction enterprise
with foreign investment as technical or economic manager shall be no less than 3 months each year.

Verification of the performances of construction enterprises with foreign investment in contracting construction projects

After the enforcement of the Provisions, if the foreign party of a construction enterprise with foreign investment contracts a project
jointly with a Chinese construction enterprise or subcontracts a project to a Chinese construction enterprise, the performance of
such project may be regarded as the performance of this construction enterprise with foreign investment for applying for the construction
enterprise qualification or for annual audit.

VI.

Scope of contracting projects of construction enterprise with foreign investment

“Jointly contracting by Chinese-foreign construction enterprises” mentioned in Item 4, Article 15 in the Provisions means that construction
enterprise with foreign investment may contract projects jointly with domestic construction enterprises, Chinese-foreign equity joint
venture construction enterprises or Chinese-foreign cooperative construction enterprises.

VII.

Acceptance time for the applications for qualifications of construction enterprises with foreign investment

The period from December 1, 2002 to October 1, 2003 is the transition period for implementing both Decree No.32 of the Ministry of
Construction and the Provisions at the same time. Within this transition period, the qualification administration authorities are
ready to accept the applications for construction enterprise with foreign investment qualifications at any time. After October 1,
2003, the applications for construction enterprise with foreign investment qualifications will be accepted by the schedule arranged
by the qualification administration authorities.

VIII.

Relation between the Provisions and former Decree No.32 of the Ministry of Construction

Prior to October 1, 2003, according to Article 26 of the Provisions, construction enterprises with foreign investment may continue
contracting projects in accordance with the former Decree No.32 of the Ministry of Construction, i.e. Interim Measures for Qualification
Management on Foreign Corporations Contracting Construction Projects in China.

Foreign enterprises that have gained qualification certificates for contracting construction projects may continue contracting construction
projects in accordance with the requirements in the Interim Measures for Qualification Management on Foreign Corporations Contracting
Construction Projects in China, including continuing uncompleted construction projects, continuing to apply for expanding contracted
areas and continuing to apply for term extension of the qualification certificate.

Foreign enterprises that have not gained qualification certificates for contracting construction projects may continue to apply for
foreign enterprise qualification certificates in accordance with the requirements in the Interim Measures for Qualification Management
on Foreign Corporations Contracting Construction Projects in China.

After October 1, 2003, the qualification administration authorities will not accept the applications from foreign corporations for
contracting construction projects within the territory of China, and will not deal will the applications for extending qualification
terms or for expanding contracted areas. Foreign corporations may continue to complete the projects contracted before this date which
contract terms or actual performance terms exceed this date.

The Ministry of Construction
2003-04-08

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING TAX ADMINISTRATION ON PERMANENT REPRESENTATIVE OFFICES OF FOREIGN ENTERPRISES

The State Administration of Taxation

Circular of the State Administration of Taxation Concerning Tax Administration on Permanent Representative Offices of Foreign Enterprises

GuoShuiFa [2003] No.28

March 12, 2003

National and district taxation offices at levels of province, autonomous region, municipality directly under the Central Government
and municipality separately listed on the State plan:

For the purpose of further standardizing the taxation administration on permanent representative offices of foreign enterprises, according
to the actual situations of the taxation administration on these representative offices, the issues on the implementation of the
Circular of the State Administration of Taxation Concerning Tax Administration on Permanent Representative Offices of Foreign Enterprises
(GuoShuiFa [1996] No.165) are hereby circularized in the following:

About taxation registration and tax declaration of the representative offices

If foreign enterprises establish various permanent representative offices (hereinafter referred to as ROs) in China which deal with
various activities in China, these ROs shall make tax registration and declare their operations to the competent administrations
of taxation according to relative provisions in the Law of Taxation of People’s Republic of China. The ROs exempt from taxation in
the light of Item 2 of Article 1 of GuoShuiFa [1996] No.165 and other provisions may declare their annual operations within one
month after the end of the year.

II.

About tax levied on the ROs.

The ROs engaged in transactions with payable taxes in accordance of Item 1, Article 1 of GuoShuiFa [1996] No.165 shall calculate
and pay business taxes and enterprise income taxes according to the following regulations:

(1)

The ROs engaged in the transactions listed in Subitem 2, Item 1, Article 1 of GuoShuiFa [1996] No.165, including commercial operation,
law, taxation, accounting and auditing, shall establish and complete account books, correctly calculate incomes and taxable amounts,
and honestly declare the taxes.

(2)

For the ROs providing services that listed in Subitem 1,2 & 5 under Item 1 of Article 1 of GuoShuiFa [1996] No.165, including agenting
and trading (including trading own products and agenting others’ products), which businesses are mainly carried out by requests from
their headquarters without directly signing contracts or agreements with the service-receivers, the incomes from the services by
the ROs are usually collected by their headquarters. Such incomes of the ROs shall be determined via calculation of their expenditures
that will be the basis of levied taxes.

(3)

The ROs engaged in businesses listed in Item 1, Article 1 of GuoShuiFa [1996] No.165, except for the above-mentioned two kinds, shall
on schedule declare to the local competent taxation administrations based on their actual business incomes from their business activities,
including those collected by the headquarters. If there is no business income in current year, the RO may report its annual business
within one month after the end of current year.

III.

About tax exemption for ROs of foreign governments, international organizations, non-profitable institutions and nongovernmental organizations

For the ROs established by foreign governments, international organizations, non-profit institutions and nongovernmental organizations
in China, they (or their headquarters, or their higher levels) may apply to local competent taxation administrations (including local
district taxation administrations) for tax exemption, and provide the certificate documents issued by governments that testify their
natures. Such applications shall be validated by local taxation administration (including local district taxation administrations)
to report to the State Administration of Taxation for approval.

IV.

About administration and audit on ROs

(1)

Local taxation administrations shall strengthen the routine administrations on ROs and establish necessary communication systems to
include all ROs into their normal taxation administration.

(2)

The competent taxation administration shall carefully check the declaration documents submitted by the ROs, and carry out on-spot
audit when necessary. If any operation is found incompliance with that declared in the examination, ROs shall be disposed according
to the provisions of the Law of the People’s Republic of China on Administration of Levy and Collection of Taxes.

This Circular shall enter into force as of July 1, 2003. If previous provisions are inconsistent with this Circular, this Circular
shall prevail.

The State Administration of Taxation
2003-03-12

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CIRCULAR ON THE RELEVANT WORK OF ANNUAL JOINT EXAMINATION OF ENTERPRISES WITH FOREIGN INVESTMENT OF 2003

INTERIM MEASURES FOR ADMINISTRATION OF ASSOCIATIONS OF ENTERPRISES FUNDED BY TAIWAN COMPATRIOTS

ANNOUNCEMENT OF CHINA SECURITIES REGULATORY COMMISSION ON CANCELING THE SECOND GROUP OF ADMINISTRATIVE APPROVAL ITEMS AND ON CHANGING THE MANAGEMENT METHODS OF SOME ADMINISTRATIVE APPROVAL ITEMS

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE CONCERNING THE SALE AND PURCHASE OF FOREIGN EXCHANGE FOR THE NON-TRADE ITEMS UNSPECIFIED IN THE LAWS AND REGULATIONS CURRENTLY IN FORCE

CIRCULAR ON DOING WELL IN ONGOING REGULATORY AND DOVETAILING WORKS UPON CANCELING THE SECOND GROUP OF ADMINISTRATIVE APPROVAL ITEMS AND CHANGING THE MANAGEMENT METHODS OF SOME ADMINISTRATIVE APPROVAL ITEMS

CIRCULAR ON INVESTIGATING ADOPTION OF THE ENTERPRISE ACCOUNTING SYSTEM BY ENTERPRISES WITH FOREIGN INVESTMENT

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON THE TRANSITIONAL POLICY AND MEASURES AFTER CANCELING ADMINISTRATIVE EXAMINATION AND APPROVAL OF FOREIGN EXCHANGE ADMINISTRATION OF SOME CAPITAL PROJECTS

DECISION ON AMENDING THE INTERIM PROVISIONS CONCERNING THE ESTABLISHMENT OF INVESTMENT COMPANIES BY FOREIGN INVESTMENT AND THE SUPPLEMENTARY PROVISIONS

CIRCULAR ON THE NOTIFICATION OF THE EXCHANGE INSTRUMENT AND STARTING TIME FOR THE REPURCHASE OF OPEN MARKET BUSINESS BONDS

INTERIM PROVISIONS ON MERGERS AND ACQUISITIONS OF DOMESTIC ENTERPRISES BY FOREIGN INVESTORS

IMPLEMENTATION MEASURES OF THE MINISTRY OF CONSTRUCTION ON QUALIFICATION ADMINISTRATION IN THE ADMINISTRATIVE PROVISIONS ON ENTERPRISE MANAGEMENT OF CONSTRUCTION ENTERPRISES WITH FOREIGN INVESTMENT

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING TAX ADMINISTRATION ON PERMANENT REPRESENTATIVE OFFICES OF FOREIGN ENTERPRISES

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7