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CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION CONCERNING ADJUSTING THE EXPENDITURE DEDUCTION STANDARDS FOR INDIVIDUAL INCOME TAXES ON INDIVIDUAL BUSINESS OWNERS AS WELL AS INDIVIDUAL PROPRIETORSHIP ENTERPRISE OR PARTNERSHIP ENTERPRISE INVESTORS

Circular of the Ministry of Finance and the State Administration of Taxation concerning Adjusting the Expenditure Deduction Standards
for Individual Income Taxes on Individual Business Owners as well as Individual Proprietorship Enterprise or Partnership Enterprise
Investors

Cai Shui [2006] No. 44

The public finance departments (bureaus) and bureaus of local taxation of all provinces, autonomous regions, municipalities directly
under the Central Government, cities specifically designed in the state plan, and the Bureau of Public Finance of Xinjiang Production
and Construction Army Corps:

According to the provisions of the current Individual Income Tax Law, the Regulations for its implementation and other relevant policies,
we hereby notice of the relevant issues concerning the expenditure deduction standards for individual income taxes on individual
business owners as well as individual proprietorship enterprise or partnership enterprise investors as follows:

I.

When individual income taxes are calculated and collected on the production and management incomes of individual business owners
as well as individual proprietorship enterprise and partnership enterprise investors according to law, the expenditure deduction
rate for every individual business owner, individual proprietorship enterprise or partnership enterprise investor shall be determined
at 19,200 Yuan/year (1,600 Yuan/month).

II.

Paragraph 1 of Article 13 of the “Circular of the State Administration of Taxation on Printing and Distributing the Measures for
Calculation of Individual Income Taxes of Individual Businesses (for Trial Implementation)” (Guo Shui Fa [1997] No. 43) is amended
as: “The expenditure deduction rate for an individual business owner shall be 19,200 Yuan/year (1,600 Yuan/month); the wage deduction
rates for practitioners shall be determined by the bureau of local taxation of each province, autonomous region, or municipality
directly under the Central Government in light of the local actual situation, and shall be reported to the State Administration of
Taxation for archival filing.”

III.

Item (1) of Article 6 of Attachment 1 of the “Circular of the Ministry of Finance and the State Administration of Taxation on Printing
and Distributing the Provisions on the Collection of Individual Income Taxes from Individual Proprietorship Enterprise and Partnership
Enterprise Investors” (Cai Shui [2000] No. 91) is amended as: “The expenditure deduction rate for every investor shall be 19,200
Yuan/year (1,600 Yuan/month). None of an investor’s wages may be deducted before tax is collected.”

The present Circular shall go into effect as of January 1, 2006.

The Ministry of Finance

The State Administration of Taxation

April 10, 2006



 
Ministry of Finance, State Administration of Taxation
2006-04-10

 






LETTER OF THE INTERNATIONAL TAXATION DEPARTMENT OF SAT ON RELATIVE ISSUES PERTINENT TO THE AUDITING TOOLS FOR THE DATA ON THE SETTLEMENT AND PAYMENT OF INCOME TAX OF FOREIGN-FUNDED ENTERPRISES AND FOREIGN ENTERPRISES

State Administration of Taxation

Letter of the International Taxation Department of SAT on Relative Issues Pertinent to the Auditing Tools for the Data on the Settlement
and Payment of Income Tax of Foreign-funded Enterprises and Foreign Enterprises

Ji Bian Han [2006] No.43

April 10, 2006

The administrations of state taxes of all the provinces, autonomous regions, municipalities directly under the Central Government,
and cities separately listed in the state plan, and administrations of local taxes of Guangdong Province and Shenzhen City,

In order to enhance the quality of settlement and payment data of income taxes of foreign-funded enterprises and foreign enterprises
(hereinafter referred to as enterprises), the auditing tools for the data on the settlement and payment of enterprise income taxes
(hereinafter referred to the “auditing tools”) have been revised and improved based on summarizing the specific problems found out
by each locality during the data audit process in the five-year (from 2000-2004). The letter notice on relative issues on the downloading
and using of the auditing tools is made as follows:

I.

Downloading Address. The newly revised auditing tools are put under the index of FTPlocalInternational Taxation Department. Each
locality shall download and use them in time.

II.

Installation Method. The method of installing the auditing tools is exactly like that of other standard Windows installation files.
Double click the installation file (tax_tools_setup.exe), and follow the instructions on the screen to finish the installation. The
system will acquiesce the installation index “..Program Files ax_tools”, and append the shortcut “settlement and payment tools
(2006 Edition)” on the desktop.

III.

Running of the Auditing Tools. When opening the auditing tools, you need to take two steps: selecting database and choosing a tax
authority.

1.

Selecting database. Double click the shortcut “settlement and payment tools (2006 Edition)”on the desktop, and enter into the “window
for opening database”, and the default index of the database is “My documents
elative data of income taxdata files”. Select the
settlement and payment database files in relevant ACCESS format, and the general default name of the files is “settlement.mdb”. Select
relevant database and then click the “Open” button.

Reopen the database through the “System/Open database” in the menu or through the button “Open” in the toolbar, and then select the
proper path and name of the database files in the pop-up dialog box, and click the button “Open”.

2.

Choosing a tax authority. After a database is chosen, the window of “Toggle among tax authorities” pops up automatically. Choose “All”
, “by provinces or municipalities”, “by prefectures or cities”, or “by districts or counties” in accordance with the scope of audit,
and then choose the target tax authority to be audited in the list of the tax authorities.

All: means to audit the data of all the enterprises available in the current database in the year 2005;

“By provinces or municipalities”: means to audit the data of the enterprises of different provinces and municipalities available in
the current database in the year 2005;

“By prefectures or cities”: means to audit the data of the enterprises of different prefectures and cities available in the current
database in the year 2005;

“By districts or counties”: means to audit the data of the enterprises of different districts and counties available in the current
database in the year 2005; and

The tax authorities in cities separately listed in the state plan and special economic zones shall be treated as those in the form
of “by provinces and municipalities”, and shall not be listed in the form of “by prefectures or cities”.

IV.

Functions and Operations. The working principle of the auditing tools shall be: to summarize and conclude the problems found out in
the work of auditing settlement and payment, and transform them to a series of logic judgment formulas, and then analyze and judge
the problems existing in the settlement and payment data by making use of these logic audit formulas. The object of audit is the
driving table in the system of settlement and payment and the essential information of the relative enterprises, and there is no
revision on the settlement and payment database in the data audit. The auditing tools mainly consist of data auditing test, inquiry
on information of accounts number, statistics on tax sources, inquiry on supplementary information, and other essential functions.
The methods of specific operations are as follows:

1.

Data Audit and Test

Click “false information test” in the menu “data test tools” or the button “data test” in the toolbar, the system will audit the current
settlement and payment data of the tax authorities in the year 2005 account by account, and the audit result will be listed in the
table, the contents of which consist of: serial number, identification number of the taxpayers, type A and B, enterprise name, existing
errors, existing disputed points, code of the tax authority taking in charge.

Click the “false information statistics” in the menu “data test tools” or the button “error statistics” in the toolbar, the system
shall make classified statistics on the false information in accordance with different tax authorities, but excluding the information
of disputed points.

Select any enterprise in the table, and click the button of “details of enterprises” in the toolbar, the system shall indicate the
information on account management of the enterprise, declaration information, adjustment information, to provide convenience for
tax staffs to check the error and the information with disputed points.

2.

Inquiry Account Management Information

Click the relative items under the menu of ” inquiry account management information”, the system will make statistics on the information
relevant to the number of accounts for opening business registered by enterprises in the year 2005 in accordance with the economic
type, and make statistics on the information relevant to the number of accounts registered by enterprises in accordance with different
investment countries, and inquire and output the information of the enterprises newly registered, newly set up, and newly written
off in the current year.

3.

Statistics on Tax Sources

Click the relative items under the menu of “statistics on tax sources”, the system may inquire and output the statistics form on the
preferential information of the enterprises under the current tax authorities, the statistics form on the tax sources in accordance
with different industries in the year 2005, and the statistics form on tax sources in accordance with different accounts, and its
function is equivalent to a set of ledgers for managing tax sources of foreign-related enterprises￿￿ income tax.

4.

Inquiry Supplementary Information

Click the relative items under the menu of “inquiry supplementary information”, the system may inquire and output the information
involving the tax of the enterprises doing related transaction in the year 2005 under the current tax authorities, and the prepayment
of the income tax (including loss-incurring enterprises), adjustment information on tax payment of enterprises, and details of the
tax rate, and etc..

5.

Print and Output

The function of print and output has been perfected in the upgraded examination tools. The audit or inquiry result may be output into
the EXCEL form through the button of “EXCEL output” in the menu “System” or the button of the “Output” in the toolbar.

The audit or inquiry result may be printed or output directly through the module of “direct print” in the menu “System”.

V.

Strictly in the light of the provisions of Article 4 of the Circular of the State Administration of Taxation on Relative Issues pertinent
to Doing A Good Job in the Settlement and Payment of Income Taxes of Foreign-funded Enterprises and Foreign Enterprises (Guo Shui
Han [2006] No.101), each locality shall do a good job in the audit of settlement and payment data, for the purpose of ensuring the
accuracy of the settlement and payment data countrywide. This year, in the audit of settlement and payment, State Administration
of Taxation will lay emphasis on the quality of the data reported by each locality. Each locality shall strengthen the consciousness
of responsibility, and guarantee the quality of the data. Any locality that reports the data overdue, or reports disc data that is
unable to be read, or incomplete or has any error, which may affect the collection of the data countrywide, shall be circulated a
notice of criticism by the State Administration of Taxation.

Please carry out the aforesaid provisions accordingly.



 
State Administration of Taxation
2006-04-10

 






CIRCULAR OF THE STATE ADMINISTRATION FOR INDUSTRY AND COMMERCE AND THE MINISTRY OF COMMERCE ON THE RELEVANT ISSUES CONCERNING FOREIGN INVESTORS’ ESTABLISHING FOREIGN-FUNDED ADVERTISING ENTERPRISES THROUGH SHARE RIGHT MERGER

Circular of the State Administration for Industry and Commerce and the Ministry of Commerce on the Relevant Issues Concerning Foreign
Investors’ Establishing Foreign-funded Advertising Enterprises through Share Right Merger

Gong Shang Guang Zi [2006] No. 99

The administrations for industry and commerce and the commerce administrative departments of all provinces, autonomous regions, municipalities
directly under the Central Government and cities directly under separate state planning,

According to the Provisions on the Administration of Foreign-funded Advertising Enterprises (Order No. 8 of the State Administration
for Industry and Commerce and the Ministry of Commerce issued on March 2, 2004, hereinafter referred to as the Advertising Provisions)
and the Interim Provisions on Foreign Investors to Merge Domestic Enterprises (Order No. 3 of 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 issued on March 7, 2003, hereinafter referred to as the Merger Provisions), we hereby make the following notices
on the issues concerning foreign investors’ establishing foreign-funded advertising enterprises through share right merger:

1.

A foreign investor may, according to the Merger Provisions, Advertising Provisions, and other relevant provisions, establish a Sino-foreign
joint advertising enterprise through purchasing part of the share rights of a domestic enterprise, or establish a foreign-funded
advertising enterprise through purchasing all of the share rights of a domestic enterprise.

2.

As for a foreign-funded advertising enterprise that is established by a foreign investor through share right merger, the Chinese
and foreign investors shall meet the conditions as prescribed in Articles 9 and 10.

If the domestic advertising enterprise to be merged or purchased has mainly or concurrently engaged in advertising business for 2
years or more, the original Chinese investor of the domestic advertising enterprise may continue to hold its shareholder’s position
and is not subject to the restriction as prescribed in the preceding paragraph.

3.

Where a foreign investor invests in advertising industry by merging a domestic advertising enterprise, it shall transact the formalities
of examination, approval and registration according to Articles 6 and 7 of the Advertising Provisions.

When applying for the Opinion on the Examination and Approval of the Foreign-funded Advertising Enterprise Project, an applicant shall
submit the following documents to the State Administration for Industry and Commerce or its authorized provincial administration
for industry and commerce:

(1)

The share right merger requisition signed jointly by the foreign investor and the domestic advertising enterprise to be merged;

(2)

The resolution of the shareholder’s meeting (the board of directors) of the domestic advertising enterprise to be merged;

(3)

The resolution of the shareholders’ meeting (the board of directors) of the foreign investor;

(4)

The registration certificate of the domestic advertising enterprise to be merged;

(5)

The registration certificate of the foreign investor;

(6)

The capital and credit certificate of the foreign investor; and

(7)

The preliminary examination opinion of the local administration for industry and commerce.

The foreign investor, which intends to establish a Sino-foreign joint advertising enterprise through purchasing part of the share
rights of a domestic advertising enterprise, shall, besides the documents as mentioned above, submit the situation of the shareholders
of the domestic advertising enterprise to be merged and the relevant registration certificate of every foresaid shareholder, the
capital and credit certificate of the domestic advertising enterprise to be merged as well as the capital and credit certificate
of every shareholder of the domestic advertising enterprise to be merged.

4.

After an applicant obtains the Opinion on the Examination and Approval of the Foreign-funded Advertising Enterprise Project issued
by the State Administration for Industry and Commerce, it shall submit the documents to the commerce administrative department, and
transact the formalities of examination and approval according to the Advertising Provisions and the relevant provisions of the state
on the merger.

Please execute the opinions as mentioned above accordingly.

State Administration for Industry and Commerce

Ministry of Commerce

April 11, 2006



 
State Administration for Industry and Commerce, Ministry of Commerce
2006-04-11

 






ANNOUNCEMENT OF THE PEOPLE’S BANK OF CHINA

The People’s Bank of China

Announcement of the People’s Bank of China

[2006] No. 5

For the purpose of deepening the reform of foreign exchange management mechanism, supporting the facilitation of trade and investment,
further cultivating the foreign exchange market and promoting the basic international balance of payments, we hereby announce, upon
approval of the State Council, the issues concerning the adjustment of foreign exchange management policies as follows:

I.

Where an enterprise opens, alters or closes current accounts of foreign exchange, the procedure of examination and approval in advance
shall be adjusted to direct handling by the bank according to the foreign exchange management requirements and business convention
and the archival filing at the foreign exchange bureau. The quota for the current accounts of foreign exchange of the enterprises
shall be enhanced. The enterprises that have real transactions and need to make external payment shall be allowed to purchase foreign
exchange in advance.

II.

Banks shall simplify the vouchers for the sale and payment of foreign exchange in the service trade, and broaden the purview of examination
and approval thereof.

III.

Banks shall further simplify the formalities for individual purchase of foreign exchange by domestic citizens, raise the quota of
foreign exchange purchase and implement the management of total annual amounts. Where an individual purchases foreign exchange within
the limit, he shall purchase foreign exchange from and declare its purposes to the bank upon the strength of his real identity certification;
and where an individual purchases foreign exchange that exceeds the limit, the bank shall offer foreign exchange in light of the
actual demands after examination of the relevant vouchers.

IV.

The business of overseas financial management of foreign exchange by domestic banks on behalf of their clients shall be broadened,
and the qualified banks shall be allowed to gather the RMB capital of domestic institutions and individuals and use it for purchasing
foreign exchange for the purpose of investing in the overseas products with fixed proceeds.

V.

The qualified fund management companies and other securities management institutions shall be allowed to gather the foreign exchange
owned by domestic institutions and individuals within a certain amount for the purpose of investing in the overseas compound securities,
including the stocks.

VI.

The business of overseas securities investments by insurance institutions shall be broadened, and the qualified insurance institutions
shall be allowed to purchase foreign exchange for investing in overseas products with fixed proceeds and money market instruments,
with the amount of foreign exchange purchase limited in light of a certain proportion of total assets of an insurance institution.

The People’s Bank of China shall organize the implementation of the above-mentioned policies and measures in real time and item by
item jointly with the relevant department. At the same time, the People’s Bank of China shall closely follow up and analyze the international
balance of payments, timely adjust the relevant policies, practically guard against risks and maintain the national economy and financial
safety.

The People’s Bank of China

April 13, 2006



 
The People’s Bank of China
2006-04-13

 






CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON ADJUSTING THE POLICIES CONCERNING THE ADMINISTRATION OF CURRENT FOREIGN EXCHANGE ACCOUNTS

the State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Adjusting the Policies Concerning the Administration of Current Foreign
Exchange Accounts

Hui Fa [2006] No. 19

April 13, 2006

To all branches and foreign exchange administration departments of the State Administration of Foreign Exchange (the SAFE) in all
provinces, autonomous regions, and municipalities directly under the Central Government, the branches in Shenzhen, Dalian, Qingdao,
Xiamen and Ningbo, and all designated Chinese-funded foreign exchange banks:

For the purpose of better satisfying the demands of domestic institutions and individuals for using foreign exchanges and promoting
the trade facilitation, we hereby notify the relevant matters on adjusting the policies concerning the administration of current
foreign exchange accounts as follows according to the Announcement No. 5 [2006] of the People￿￿s Bank of China:

I.

Annulling the beforehand examination and approval for the opening of current accounts of foreign exchange and raising the quota of
current foreign exchange accounts

1.

The foreign exchange bureau shall not conduct advance examination and approval for the opening, alteration and closing of current
foreign exchange accounts of domestic institutions any more. Where a domestic institution that has already opened any current foreign
exchange account needs to open a new current foreign exchange account again, it may directly go through the account opening formalities
at a designated foreign exchange bank (hereinafter referred to as the bank) upon the strength of an account opening application form,
its business license (or registration certificate for social organizations) and its organization code. Where a domestic institution
that has not opened any current foreign exchange account before needs to open a new current foreign exchange account, it shall firstly
register its basic information at the foreign exchange bureau upon the strength of its business license (or registration certificate
for social organizations) and its organization code before going through aforesaid formalities.

2.

The quota of the foreign exchange that can be preserved at the current foreign exchange accounts of a domestic institution shall be
raised and be determined in light of the sum of 80% of the foreign exchange incomes under current accounts and 50% of the foreign
exchange expenditures under the current accounts in the previous year. Where a domestic institution that has no foreign exchange
expenditure under current accounts in the previous year and needs to open an account, the initial quota of its current foreign exchange
account shall be adjusted to the equivalent not more than 500,000 US Dollars.

3.

Where a domestic institution that has carried out transactions before needs to pay foreign exchange for external payment, it may purchase
foreign exchange in advance at the account-opening bank upon the strength of valid vouchers and business documents as prescribed
by the Provisions concerning the Control of Settlement, Sale and Payment of Foreign Exchange and other relevant provisions on the
administration of foreign exchange, and deposit the foreign exchange into its current account of foreign exchange.

II.

Simplifying the vouchers for the sales and payments of foreign exchange in the service trade and adjusting the quotas for the examination
and approval of sales and payments of foreign exchange in the service trade

1.

Where a domestic institution or individual pays the equivalent of 50,000 US Dollars or less to an overseas institution or pays the
equivalent of 5,000 US Dollars or less to an overseas individual for the expenses under the item of service trade, the domestic institution
or individual shall, upon the strength of the contract (agreement) or the invoices (letter of payment), go through the formalities
for purchasing foreign exchange; where a domestic institution or individual purchases foreign exchange exceeding the aforesaid quota,
the original provisions shall prevail.

2.

Where a domestic institution or individual pays foreign exchange under the item of service trade through the internet or by any other
method of electronic commerce, it or he may go through the formalities for purchasing foreign exchange upon the strength of the relevant
contract (agreement), the notice on payment that are downloaded from the network and affixed with signature or seal.

3.

As to the sales or payment of foreign exchange under the item of service trade, for which the examination and approval of documents
are not clearly prescribed by any law, it shall be subject to the examination and approval of the bank if the foreign exchange is
the equivalent of 100,000 US Dollars or less and, or shall be subject to the examination and approval of the local foreign exchange
bureau if the foreign exchange is the equivalent of more than 100,000 US Dollars.

4.

Where an international ocean shipping enterprise (including the international shipping transportation, non-vessel shipping, shipping
agency and freight forwarding enterprises) pays the freight and relevant expenses under the item of international ocean shipping,
it may, directly purchase the foreign exchange at the bank; and a consignor may, in light of the business requirements, directly
pay the freight and the relevant expenses under the item of international ocean shipping to overseas shipping enterprises.

III.

Loosening the policies concerning the purchase of foreign exchange by domestic residents and implementing the administration of total
annual amounts

1.

The purchase of foreign exchange by domestic residents shall be subject to the administration of total annual amounts, and the total
annual amount shall be the equivalent of 20,000 US Dollars for each person per year. Where a domestic resident purchases foreign
exchange within the total annual amount, he shall handle it after declaring the purposes to the bank upon the strength of his real
identity certification; where he purchases foreign exchange that exceeds the total annual amount, he shall handle it after the bank
examines the voucher on real demands as prescribed in the provisions on the administration of foreign exchange.

2.

The foreign exchange purchased by a domestic resident within the total annual amount can be deposited into his domestic foreign exchange
account or used for the payment of foreign exchange under current accounts. Where he remits the foreign exchange abroad, withdraws
foreign currencies or carries them abroad, he shall handle it according to the prior provisions on the administration of foreign
exchange.

3.

The purchase of foreign exchange within the total annual amount by a domestic resident shall be conducted by himself or his lineal
relative he entrusts. Where the purchase is conducted by a lineal relative of the resident, the identity certifications of both the
trustor and the agent, the certification on the kindred and the letter of authorization issued by the trustor shall be provided.

4.

The foreign exchange bureau shall not undertake the cancellation administration of the purchase of foreign exchange by domestic residents.

IV.

Regulating the administration of operations and strengthening the monitoring and warning

1.

The foreign exchange bureau shall exercise the supervision over the foreign exchange incomes and expenses of domestic institutions
and individuals through the information system, and adjust the quota for the current foreign exchange accounts and the total annual
amounts of domestic residents for purchasing foreign exchange in light of the real requirements of the development of foreign-related
economy and the situation of balance of payment in the world market.

2.

A bank shall strengthen the examination and approval of the authenticity of foreign exchange inflows and settlements of domestic institutions
and individuals, and report the information on the opening and closing of foreign exchange accounts as well as the purchase of foreign
exchange by individuals to the foreign exchange bureau according to relevant provisions.

3.

The foreign exchange bureau shall investigate and deal with any violation of the provisions in the present Notice according to the
regulations on the administration of foreign exchange.

The present Notice shall come into force as of May 1, 2006. The matters as prescribed by the present Notice shall still be subject
to the current provisions. Where any provision promulgated earlier conflicts with the provisions in the present Notice, the latter
shall prevail.

All branches of the SAFE shall forward it to the sub-branches, foreign-funded banks, city commercial banks and rural credit cooperative
banks in their respective jurisdictions upon receipt of the present Notice; and all designated Chinese-funded foreign exchange banks
shall forward it to the branches in their respective jurisdictions upon receipt of the present Notice as soon as possible. In case
of any problem encountered in the implementation of the present Notice, please timely report it to the SAFE.



 
the State Administration of Foreign Exchange
2006-04-13

 






NOTICE OF THE MINISTRY OF STATE LAND AND RESOURCES CONCERNING FURTHER REGULATING THE MANAGEMENT OF REMISING OF MINING INDUSTRY RIGHTS

Ministry of State Land and Resources

Notice of the Ministry of State Land and Resources concerning Further Regulating the Management of Remising of Mining Industry Rights

Guo Tu Zi Fa [2006] No. 12

The departments of state land and resources (departments of state land, environment and resources, bureaus of state land and resources,
bureaus of state land, resources and housing, bureaus of housing, land and resources) of all provinces, autonomous regions, and municipalities
directly under the Central Government, and the Bureau of State Land and Resources of Xinjiang Production and Construction Corps:

Since the Measures for the Administration of Invitation to Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining
Rights (For Trial Implementation) (Guo Tu Zi Fa [2003] No. 197) were issued in 2003, the national mining industry right market construction
has been made an active progress. In light of the laws and regulations on mineral resources, and according to the requirement
of the Notice of the State Council concerning Rectifying and Regulating the Mineral Recourse Exploration Order in an All-around Way
(Guo Fa [2005] No. 28), a supplementary Notice on perfecting relevant matters as mentioned in the Measures for the Administration
of Invitation to Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining Rights is hereby given as follows:

I.

Classification and ways of remising of mining industry rights

In accordance with the statutory power issued prospecting permits or mining permits, the competent department of state land and
resources of the people’s governments at the county level and above shall take charge of the remising of mining industry rights
in light of the law.

(1)

Under the prospecting of Class 1 minerals listed in the Classified Catalogue for the Prospecting and Exploitation of Minerals (hereinafter
refers to as the Classified Catalogue, see appendix) and lies in the blank area of mineral prospecting work or in areas where mineral
prospecting has been carried out but further mineral prospecting place has not been obtained, the mineral prospecting right shall
be remised in light of the principle of “he who applies first gets registered first”.

(2)

The mineral prospecting rights shall be remised by bidding, auction or quotation in any of the situations as follows.

(a)

Class II minerals listed in the Classified Catalogue; or

(b)

For Class I mineral listed in the Classified Catalogue, mineral prospecting has been carried out and ore-field has been obtained for
further prospecting or prior mining activities shows there exists ore-field for further prospecting.

(3)

Prospecting right may not be created, the mining right shall be remised directly by bidding, auction or quotation in any of the situations
as follows.

(a)

Class III minerals listed in the Classified Catalogue;

(b)

For an ore-field with Class I and Class II mineral listed in the Classified Catalogue, the prospecting right has not been existed,
but the mineral prospecting has reached the extent of sifting prospecting or higher level, and the ore-field meets the exploitation
design requirements; or

(c)

For an ore-field with Class I and Class II mineral listed in the Classified Catalogue, the prospecting right has not been existed
, or prospecting activities have ever been carried out therein, and it is found upon verification that exist the mineral deposit
amount for mining or mineral resource with economic value.

(4)

The prospecting and exploitation of oil, natural gas, coal-bed gas, uranium and thorium mineral resources shall be managed and be
gradually consummated according to the prevailing provisions.

(5)

Where the remising of a prospecting right or mining right by bidding, auction or quotation is in the any of situations as follows,
the remising shall be effected by the way of the agreement after approval is obtained.

(a)

An ore-field of important mineral resource development projects approved by the State Council or an ore-field that provides matching
resources for important construction projects approved by the State Council;

(b)

The adjacent areas where it is needed to integrate the already established mining rights or to expand the prospecting and exploitation
circle by use of the original production system;

(c)

A large-scale mineral resource development project which is approved by the people’s government of the province (district or city)
and a formal document has been submitted to the Ministry of State Land and Resources for approval; or

(d)

A project financed by the state in order to search for an ore-field as a resource substitute for a mine in crisis.

The remising of prospecting right or mining right under the agreement shall be subjected to collective review and control in a rigorous
manner. The price of a prospecting right or mining right remised under the agreement shall not be lower than the market price in
similar conditions.

(6)

A prospecting right or mining right shall be remised by biding in any of situations as follows.

(a)

According to laws or regulations or the state policies, an area for which a new mineral prospecting right or mining right may be established
because it is environmentally sensitive or does not meet the environment and quality standards prescribed by the state;

(b)

The ore-field has many joint or associated compositions and the technical level requirement for comprehensive development and utilization
is high; or

(c)

Other situations prescribed in the plan on mineral resources.

II.

Other provisions

(1)

In case a prospecting right holder applies for the mining right in its prospecting area, it shall be approved if it meets the relevant
provision and its legitimate rights and interests shall be protected s.

(2)

If the prospecting application and mining application simultaneously for a same area, and it is found upon examination that the conditions
for setting a mining right are met, when an competent department of state land and resources handle the applications for any mining
industry right, a mining right shall be set according to the provisions of this Notice.

(3)

The competent department of state land and resources of each province (district or city) shall clear up and announce those ore-fields
that have been carried out mineral prospecting and mining activities and do not meet the provisions of this Notice on the remising
of the prospecting rights to the ore-fields subject to priority in application, and report the relevant information to the Ministry
of State Land and Resources for archival purposes.

(4)

In accordance with the actual situation of the area as well as the depth, geological structure and other considerations of the local
minerals prospect, the competent department of state land and resources of each province (district or city) may properly adjust
the way of remising of mining industry rights, formulate detailed administrative measures and report them to the Ministry of State
Land and Resources for archival purposes. In case it is necessary to formulate separate provisions on other special situations,
such provisions shall be implemented until they are approved by the Ministry of State Land and Resources.

(5)

The provisions of this Notice shall be more powerful than the contents in Articles 7 through 9 of the Measures for the Administration
of Invitation to Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining Rights (For Trial Implementation).
The competent departments of state land and resources of each province (district or city) shall clear up all former relevant provisions
according to the requirements of this Notice.

Appendix: Classified Catalogue for the Prospecting and Exploitation of Minerals(Omitted)

Ministry of State Land and Resources

January 24, 2006



 
Ministry of State Land and Resources
2006-01-24

 






CIRCULAR OF PBC, CBRC AND SAFE ON PROMULGATING THE INTERIM MEASURES FOR THE ADMINISTRATION OF COMMERCIAL BANKS PROVIDING OVERSEAS FINANCIAL MANAGEMENT SERVICES

People’s Bank of China, China Banking Regulatory Commission, State Administration of Foreign Exchange

Circular of PBC, CBRC and SAFE on Promulgating the Interim Measures for the Administration of Commercial Banks Providing Overseas
Financial Management Services

Yin Fa [2006] No. 121

April 17, 2006

To Shanghai Head Office of the People’s Bank of China, all branches and business management departments and the central sub-branches
of the provincial capital cities, the central sub-branches of Dalian, Qingdao, Ningbo, Xiamen and Shenzhen, the banking regulatory
bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated
in the state plan, the branches and foreign exchange departments of the State Administration of Foreign Exchange of all provinces,
autonomous regions and municipalities directly under the Central Government, the branches of the State Administration of Foreign
Exchange of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, all wholly state-owned commercial banks and joint-stock commercial banks,

For the purpose of advancing the convertibility of Renminbi capital accounts in an orderly and controllable way, meeting the reasonable
demands of domestic institutions and individuals for financial investments and asset management abroad, and promoting the balance
of international payments, the People’s Bank of China, China Banking Regulatory Commission and State Administration of Foreign Exchange
have jointly formulated the Interim Measures for the Administration of Commercial Banks Providing Overseas Financial Management Services,
which are hereby promulgated. Please implement them accordingly.

All branches and business management departments of the People’s Bank of China shall transmit it to the commercial banks and foreign
capital banks in the cities within their respective jurisdictions immediately after receipt of the present Notice.

Appendix: The Interim Measures for the Administration of Commercial Banks Providing Overseas Financial Management Services Appendix:Interim Measures for the Administration of Commercial Banks Providing Overseas Financial Management Services

Chapter I General Provisions

Article 1

For the purpose of regulating commercial banks’ provision of overseas financial management services, the present Measures are formulated
in light of the relevant laws and administrative regulations.

Article 2

The term “overseas financial management services ” as mentioned in the present Measures shall refer to the business activities carried
out by commercial banks that are qualified for overseas financial management services and are entrusted by domestic institutions
and individual residents (except non-domestic residents, hereinafter referred to as “investors”) to make stipulated financial product
investments with the investors’ funds pursuant to the relevant requirements of the present Measures.

Article 3

The China Banking Regulatory Commission (hereinafter referred to as “the CBRC”) shall take charge of the access administration and
business administration of commercial banks’ overseas financial management services.

Article 4

The State Administration of Foreign Exchange (hereinafter referred to as “the SAFE”) shall take charge of the foreign exchange quota
administration of commercial banks’ overseas financial management services.

Article 5

The commercial bank shall accord with the laws and regulations of the state, the provisions of the state on foreign exchange administration
and industry administration when making overseas financial management investments service, and shall carry out investment activities
in accordance with the laws and regulations at the locality of the investments.

Article 6

Where a commercial bank is entrusted by a domestic individual resident to provide overseas financial management services, it shall
accord with the relevant provisions on the administration of commercial banks’ provision of personal financial management services;
where a commercial bank is entrusted by a domestic institution to provide overseas financial management services, it shall perform
the activities with reference to the relevant requirements on building up internal control rules and risk management systems as in
the administration of commercial banks’ provision of personal financial management services as well as other prudential requirements.

Article 7

A commercial bank shall take practical and effective measures to strengthen the management of relevant risks when providing overseas
financial management services.

Chapter II Management of Business Access

Article 8

The commercial bank shall apply to the CBRC for approval when intending to provide overseas financial management services.

Article 9

The commercial bank that provides overseas financial management services shall be a designated foreign exchange bank, which shall
meet the following requirements:

(1)

It has established an effective market risk management system and has improved it;

(2)

It has sound internal control rules;

(3)

It has the capacities for and experiences in overseas investment management;

(4)

It has not been penalized by the CBRC within one year before applying for the financial management activities; and

(5)

Other prudential conditions as required by the CBRC.

Article 10

The commercial bank shall submit the following materials (in triplets) when applying to the CBRC for the qualification for providing
overseas financial management services:

(1)

A letter of application;

(2)

Relevant rules on internal control and risk management;

(3)

Draft of the custody agreement; and

(4)

Other documents as required by the CBRC.

Article 11

The CBRC shall examine and approve the commercial banks’ qualifications for overseas financial management services in accordance with
the relevant procedures and provisions on administrative license.

Article 12

Where a commercial bank sells personal financial management products within the territory of China after obtaining the qualification
for overseas financial management services, the activities shall be governed by the relevant provisions of the Interim Measures for
the Administration of Commercial Banks’ Personal Financial Management Services.

Where a commercial bank sells financial management products or provides integrated financial management services to domestic institutions
after obtaining the qualification for overseas financial management services, the access administration shall be subject to the reporting
system, and the issues concerning the reporting procedures and requirements as well as management of relevant risks shall be handled
in light of the relevant provisions on the administration of personal financial management services.

Chapter III Quota of Foreign Exchange Purchased for Investment and Conversion Administration

Article 13

Where a commercial bank is entrusted by an investor to purchase foreign exchange with Renminbi to provide overseas financial management
services, it shall apply to the SAFE for the quota of foreign exchanges purchased for overseas financial management services.

Where a commercial bank is entrusted by an investor to invest in overseas financial management with the investor’s own foreign exchange,
the amount of funds under entrustment shall not be counted into the quota of foreign exchange purchased for investment as approved
by the SAFE.

Article 14

The commercial bank shall submit the following documents to the SAFE when applying for the quota of foreign exchange purchased for
overseas financial management:

(1)

A letter of application (including but not limited to the basic information on the applicant, the requested quota of foreign exchange
purchased for investment, the investment plan, etc.);

(2)

Approval document on the business qualification issued by the CBRC;

(3)

Draft of the custody agreement;

(4)

Sample of the agreement of entrustment (in standard form) to be concluded with the certain investor, which shall include the rights
and obligations of both parties, the assumption of proceeds and risks and other relevant contents; and

(5)

Other documents required by the SAFE.

The SAFE shall make a reply on approval or disapproval, and notify the applicant in written form and send a copy to the CBRC, within
20 working days as of receipt of the entire application documents.

Article 15

The commercial bank may issue to investors the overseas financial management products whose prices are marked in Renminbi within the
approved quota of purchased foreign exchange, and shall uniformly go through the formalities for the purchase of foreign exchange
for raising Renminbi funds.

Article 16

The commercial bank shall pay the investment principals and proceeds to the investors after the overseas financial management funds
are remitted to China. Where an investor purchases foreign exchange with Renminbi for investment, the commercial bank shall pay the
foreign exchange to the investor after the settlement of exchange; where an investor makes investments with foreign exchange, the
commercial bank shall transfer the foreign exchange into the investor’s original account, or may transfer the foreign exchange into
the account designated by the investor in case that the original account has been closed up.

Article 17

The quota of net foreign exchange purchased by a commercial bank for providing overseas financial management services shall not exceed
the quota of purchased foreign exchange as approved by the SAFE.

Article 18

The commercial bank shall take effective measures to hedge and cope with the foreign exchange rate risks of overseas financial management
services by making use of forward foreign exchange settlement and other business.

Chapter IV Administration of Inward and Outward Funds

Article 19

The commercial bank shall entrust another domestic commercial bank approved by the CBRC for custody business as the custodian to keep
custody of all the assets used for overseas investments when making overseas financial management investments.

Article 20

Besides the duties as prescribed by the CBRC, the custodian shall perform the following ones:

(1)

Opening the domestic custody account, the settlement account on use of overseas foreign exchange funds, and the securities custody
account on behalf of the commercial bank according to the financial management plan;

(2)

Supervising the commercial bank’s investment operation, and in case any of the commercial bank’s investment instructions violates
any law or rule, timely reporting it to the SAFE;

(3)

Preserving the relevant information such as the records on the remittance and conversion of the commercial bank’s funds, collection
and payment of foreign exchange, and flow of funds and etc. for not less than 15 years;

(4)

Making statistical reports on the balance of international payments according to the provisions;

(5)

Assisting the SAFE in inspecting the use of the commercial bank’s funds abroad; and

(6)

Other duties as prescribed by the SAFE in light of the principle of prudential supervision.

Article 21

The custodian shall submit the relevant reports according to the following requirements:

(1)

Reporting the fact to the CBRC and the SAFE within 5 working days as of opening domestic custody account, the settlement account on
use of oversea foreign exchange funds, and the securities custody account on behalf of the commercial bank;

(2)

Reporting the remittance of funds to the SAFE within 5 working days as of the day when the commercial bank remits the principal or
proceeds out or back;

(3)

Reporting the income and expenditures of the commercial bank’s domestic custody account to the SAFE within 5 working days as of the
end of each month;

(4)

Submitting the commercial bank’s statement on using foreign exchange funds abroad in the last year to the SAFE within 1 month as of
the end of each accounting year;

(5)

In case any of the commercial bank’s investment instructions violates any law or rule, timely reporting it to the CBRC and the SAFE;
and

(6)

Other reporting matters as prescribed by the CBRC and the SAFE.

Article 22

The commercial bank shall bring the approval document to conclude a custody agreement with the domestic custodian, and open a domestic
custody account after receipt of the SAFE’s approval document on the quota of purchased foreign exchange. The commercial bank shall
submit the formal custody agreement to the SAFE within 5 working days as of opening the domestic custody account.

Article 23

The scope of income of a commercial bank’s domestic custody account shall include the foreign exchange funds transferred by the commercial
bank into the said account, the investment principal and proceeds remitted from abroad and other income as prescribed by the SAFE.

The scope of expenditure of a commercial bank’s domestic custody account shall include the funds transferred into the settlement account
on use of overseas foreign exchange funds, the funds remitted back to the commercial bank, the currency conversion fee, the custody
fee, the asset management fee, various commissions and other expenditure as prescribed by the SAFE.

Article 24

In light of the principle of prudence, the domestic custodian shall select an overseas financial institution as its overseas custody
agent according to the risk management requirements and commercial practices.

The domestic custodian shall open the settlement account for the use of the commercial bank’s foreign exchange funds and the securities
custody account at the overseas custody agent, and use the said accounts for the funds settlement business and securities custody
business with overseas securities registration and settlement institutions.

Article 25

The domestic custodian and its overseas custody agent shall separately set up custody accounts for different commercial banks.

Chapter V Disclosure of Information and the Supervision and Administration

Article 26

The commercial bank shall conform to the relevant risk management provisions of the CBRC when buying overseas financial products.

The CBRC shall supervise the risks in commercial banks’ overseas financial management services in accordance with the relevant laws
and regulations.

Article 27

The commercial bank that provides overseas financial management services shall inform the investors in details and in an all-round
way of the investment plans, product features and relevant risks when selling its products, so that the investors may make their
choices independently.

Article 28

The commercial bank that provides overseas financial management services shall disclose the information on investment conditions,
investment behaviors, risk conditions and etc. to investors at regular intervals.

Article 29

The commercial bank that provides overseas financial management services shall perform the obligations of making statistical reports
on settlement and sale of foreign exchange according to the provisions.

Article 30

The SAFE may adjust the quota of commercial banks that provide overseas financial management services for purchasing foreign exchange
for investment in light of the requirements of the balance of international payments.

Article 31

The CBRC and the SAFE may require a commercial bank, a domestic custodian or an overseas custody agent to provide the relevant information
on the commercial bank’s overseas investment activities, and may make on-site inspections on the commercial bank with their supervisory
duties when necessary.

Article 32

In case a commercial bank is under any of the following circumstances, it shall report the circumstance to the CBRC and the SAFE for
archival filing within 5 working days as of the occurrence:

(1)

The custodian or the custody agent is changed;

(2)

The registered capital of the company or the structure of shareholders is changed greatly;

(3)

It has been involved in any lawsuit or severely penalized; or

(4)

Other circumstances as prescribed by the CBRC and the SAFE.

Article 33

In case a commercial bank’s domestic custodian is under any of the following circumstances, it shall report the circumstance to the
SAFE within 5 working days as of the occurrence:

(1)

Its registered capital or stock right structure is changed greatly;

(2)

It has been involved in any major lawsuit or severely penalized; or

(3)

Other matters as prescribed by the SAFE.

Article 34

Where a commercial bank or its domestic custodian violates the present Measures, it shall be given administrative penalties by the
SAFE. Where the circumstance is serious, the CBRC and the SAFE shall have the power to require the commercial bank to replace the
domestic custodian, or to revoke the commercial bank’s quota of foreign exchange for overseas financial management services. Where
an overseas custody agent refuses to provide relevant information, the CBRC and the SAFE shall have the power to demand replacement
of the overseas custody agent.

Chapter VI Supplementary Provisions

Article 35

Where a commercial bank invests in the financial products in Hong Kong Special Administrative Region or Macao Special Administrative
Region, it shall take the relevant clauses of the present Measures as reference.

Article 36

The power to interpret the present Measures shall remain with the People’s Bank of China and the CBRC.

Article 37

The present Measures shall come into force as of the date of promulgation.



 
People’s Bank of China, China Banking Regulatory Commission, State Administration of Foreign Exchange
2006-04-17

 






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CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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