REPLY OF THE STATE ADMINISTRATION OF TAXATION ON RELEVANT ISSUES CONCERNING THE TERM FOR RECOVERING OVERDUE TAXES

the State Administration of Taxation

Reply of the State Administration of Taxation on Relevant Issues concerning the Term for Recovering Overdue Taxes

Guo Shui Han [2005] No.813

Taxation Administration of Hubei Province,

Your Request for Instructions on Specifying the Term for Recovering Overdue Taxes (E Guo Shui Fa [2005] No.82) has been received.
We hereby give a reply as follows upon deliberation:

In accordance with the Law of the People’s Republic of China concerning the Administration of Tax Collection (hereinafter referred
to as the Tax Collection Administration Law) and the provisions of other tax collection laws and regulations, any taxpayer has the
duty to pay taxes according to law. Where a taxpayer owes taxes, the tax authority shall recover the overdue taxes according to law
till they are collected and turned into the national treasury, and no entity or individual may be exempted from payment of overdue
taxes. There is no time limit for the tax authority to recover the overdue taxes.

The provision on the term for recovering overdue taxes as prescribed in Article 52 of the Tax Collection Administration Law shall
mean that any tax that remains outstanding or underpaid due to the reasons of the tax authority or any taxpayer but fails to be discovered
within a certain period, will not be recovered if the time limit expires. If the taxpayer has declared or the tax authority has made
investigation into the overdue taxes, the tax authority will not be restricted by the provision of this Article on the term for recovering
overdue taxes, and shall recover the overdue taxes according to law without a time limit.

The State Administration of Taxation

August 16, 2005

the State Administration of Taxation
2005-08-16

NOTICE OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON THE CENTRALIZED MANAGEMENT OF TURNOVER POSITIONS OF FOREIGN EXCHANGE SETTLEMENT AND SALES OPERATIONS BY FOREIGN-FUNDED BANKS WITHIN THE TERRITORY OF CHINA

State Administration of Foreign Exchange

Notice of the State Administration of Foreign Exchange on the Centralized Management of Turnover Positions of Foreign Exchange Settlement
and Sales Operations by Foreign-funded Banks within the Territory of China

Hui Fa [2005] No. 50

The branches and administrative departments of foreign exchange of the State Administration of Foreign Exchange in all provinces,
autonomous regions and municipalities directly under the Central Government and the municipal branches of the State Administration
of Foreign Exchange in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo:

In order to further regulate the management of turnover positions of foreign exchange settlement and sales operations by foreign-funded
banks within the territory of China, and in accordance with the relevant provisions such as the Interim Measures for the Administration
of Foreign Exchange Settlement and Sales Operations by Designated Foreign Exchange Banks (Order No. 4 [2004] of the People’s Bank
of China), we hereby notify the relevant issues as follows:

For a foreign-funded bank within the territory of China, including a solely-capital bank, a joint-equity bank and the branch of a
foreign bank, the parent bank of a foreign-funded bank or head office of foreign bank or the regional administrative headquarters
thereof may authorize a branch within the territory of China (hereinafter referred to as the authorized branch) to implement a centralized
balance of transactions and uniform management on turnover positions of foreign exchange settlement and sales over all the branches
and sub-branches within the territory of China.

An authorized branch shall, when filing an application for the centralized management mode of business positions of foreign exchange
settlement and sales operations, submit the following materials:

(1)

The authority letter as granted by the parent bank thereof to approve the centralized management mode of business positions of foreign
exchange settlement and sales operations;

(2)

The approval document of the China Banking Regulatory Commission for the resident office of the foreign-funded financial institution
within the territory of China;

(3)

The explanation of the foreign-funded bank on the internal management system, accounting measures and technical support for the
centralized management of business positions of foreign exchange settlement and sales operations;

(4)

The seat certification of the authorized branch in China Foreign Exchange Trade Center; and

(5)

The certifications that the foreign exchange settlement and sales operations of all the branches and sub-branches of this foreign-funded
bank comply with the relevant regulations, which have been affixed with seals of the relevant local foreign exchange bureaus (including
such aspects as the management of positions of foreign exchange settlement and sales operations and the report of relevant statistical
data and etc.)

The branch or the administrative department of foreign exchange of the State Administration of Foreign Exchange shall, within 20 workdays
as of receiving an application of the authorized branch of a foreign-funded bank for the centralized management mode of positions
of foreign exchange settlement and sales operations, carry out an examination thereon and shall report it to the State Administration
of Foreign Exchange for the qualification archival filing.

An authorized branch shall submit the following materials when applying for the total turnover position of foreign exchange settlement
and sales operations:

(1)

An Application Form for the Total Turnover Position of Foreign Exchange Settlement and Sales Operations (see attachment);

(2)

The number of branches and sub-branches of this foreign bank in the inland of China; the working capital in RMB and foreign currencies
of all branches; the written certification document issued by the relevant foreign exchange bureau where a branch thereof is located
that the specific branch has obtained the qualification of foreign exchange settlement and sales operations; and

(3)

The data of foreign exchange settlement and sales operations of all branches and sub-branches of this foreign-funded bank for each
day in the first 6 months, including the daily average margin, a single maximum mount of foreign exchange settlement or sale, daily
maximum amount of foreign exchange settlement or sale, etc. (the aforesaid data of a branch or sub-branch in a different place shall
be affixed with the seal of the local branch or sub-branch of the State Administration of Foreign Exchange for confirmation).

The branch or the administrative department of foreign exchange of the State Administration of Foreign Exchange shall, within 20 workdays
as of receiving an application of an authorized branch for the total turnover position of foreign exchange settlement and sales operations,
verify the total turnover position of foreign exchange settlement and sales operations of the relevant foreign-funded bank. The total
turnover position of foreign exchange settlement and sales operations by an authorized branch with the qualification of non-US dollar
market maker shall be reported to the State Administration of Foreign Exchange for verification. by the branch or the administrative
department of foreign exchange of the State Administration of Foreign Exchange where the authorized branch is located

The measures for verifying the total turnover position of foreign exchange settlement and sales operations shall be implemented according
to the Detailed Rules for Implementing the Foreign Exchange Settlement, Sale and Payment Operations of Foreign-funded Banks (No.
202 [1996] of the People’s Bank of China). To be specific, a foreign-funded bank as authorized to open a special RMB account for
foreign exchange settlement and sale upon approval may sell less than 20% of the registered capital or working capital in foreign
exchange within the territory of China in the inter-bank foreign exchange trade market and purchase RMB currency into the special
RMB account for foreign exchange settlement and sale as turnover capital.

For a foreign-funded bank that implements the centralized management mode of positions of foreign exchange settlement and sales operations,
the original positions of all the branches and sub-branches thereof within the territory of China shall be incorporated into the
management of the total turnover position of foreign exchange settlement and sales operations of the authorized branch. The authorized
branch shall distribute the total turnover position of foreign exchange settlement and sales operations as acquired among all branches
and sub-branches within the jurisdiction thereof and report the specific distribution and adjustment to the foreign exchange bureau
where the corresponding branch or sub-branch is located in a timely manner.

An authorized branch shall, within the authorized scope, carry out the management of the daily position of foreign exchange settlement
and sales operations of other branches and sub-branches of this foreign-funded bank. Where the position of foreign exchange settlement
and sales operation of any other branch or sub-branch goes beyond the authorized scope, the authorized branch shall supervise and
urge the said branch or sub-branch to report it to the foreign exchange bureau where it is located for archival filing.

The branch or the administrative department of foreign exchange of the State Administration of Foreign Exchange where an authorized
branch is located shall carry out daily verification to the total turnover position of foreign exchange settlement and sales operations
according to the electronic information of foreign exchange settlement and sales operations (including the transactions on behalf
of others or for oneself through the internal system or the China Foreign Exchange Trade Center in the previous workday) as reported
by banks in the previous day. All branches and administrative departments of foreign exchange of the State Administration of Foreign
Exchange shall, according to the relevant provisions of the Interim Measures for the Administration of Foreign Exchange Settlement
and Sales Operations by Designated Foreign Exchange Banks (No. 4 [2002] of the People’s Bank of China), carry out the management
on the total position of foreign exchange settlement and sales operations of the authorized branches of foreign-funded banks within
the jurisdiction thereof.

10.

The branch or the administrative department of foreign exchange of the State Administration of Foreign Exchange where an authorized
branch is located shall take charge of the administration of the daily total position as reported by the bank and give treatment
to any overstepping of authorization in a timely manner according to the relevant provisions. The branch or the administrative department
of foreign exchange shall, when verifying the total turnover position of foreign exchange settlement and sales operations, pay a
visit to the business site of the relevant authorized branch so as to inspect and check and accept the support circumstance of technical
system for the centralized management mode of business positions of foreign exchange settlement and sales operations on the spot.

11.

For any foreign-funded bank that hasn’t implemented the centralized management mode of positions of foreign exchange settlement and
sales operations, the turnover positions of foreign exchange settlement and sales operations thereof shall be managed and verified
according to the provisions in force.

12.

The present Notice shall come into force as of August 1, 2005.

All the branches and administrative departments of foreign exchange of the State Administration of Foreign Exchange shall, after receiving
the present Notice, forward it to sub-branches and foreign-funded banks of all centers within the jurisdiction. When encountering
any problem during implementation, if any, the relevant organ or bank shall contact the State Administration of Foreign Exchange
in a timely manner

Contact telephone numbers: 010-68402304 and 010-68402099.

Attachment: Application Form for the Total Turnover Position of Foreign Exchange Settlement and Sales Operations of Bank (omitted)

State Administration of Foreign Exchange

July 12,2005

State Administration of Foreign Exchange
2005-07-12

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE COMING INTO FORCE AND IMPLEMENTATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF CHINA AND THE GOVERNMENT OF ALBANIA ON AVOIDANCE OF DOUBLE TAXATION

the State Administration of Taxation

Circular of the State Administration of Taxation on the Coming into Force and Implementation of the Agreement between the Government
of China and the Government of Albania on Avoidance of Double Taxation

Guo Shui Han [2005] No.131

The bureaus of state taxation and local taxation of all provinces, autonomous regions, municipalities directly under the Central Government
and cities under separate state planning, Yangzhou Taxation Institute, and all the departments under the State Administration of
Taxation:

The Chinese government and the government of the Republic of Albania concluded the agreement on avoidance of double taxation and tax
evasion on incomes and properties in Beijing on September 13, 2004. The Agreement has been confirmed by both governments by exchanging
notes through their respective foreign affair departments on March 1st, 2005 and June 28, 2005 respectively, and now has completed
the necessary legal procedures for becoming effective. According to the stipulations of Article 29 of the Agreement, the Agreement
shall come into force on July 28, 2005, and shall be implemented as of January 1st, 2006. The State Administration of Taxation has
distributed the Agreement text to you in “Guo Shui Han [2004] No.1102” on September 28, 2004. Please comply with and carry out it
earnestly.

The State Administration of Taxation

August 19, 2005

the State Administration of Taxation
2005-08-19

CIRCULAR OF MOF, SAT, AND PBC ON THE ISSUES CONCERNING THE RELEVANT BUDGET MANAGEMENT AFTER THE ADJUSTMENT OF EXPORT TAX REFUND BEARING MECHANISM

the Ministry of Finance, the State Administration of Taxation, the People’s Bank of China

Circular of MOF, SAT, and PBC on the Issues concerning the Relevant Budget Management after the Adjustment of Export Tax Refund Bearing
Mechanism

Cai Yu [2005] No.438

The finance offices or bureaus, state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities
directly under the Central Government, and cities under separate state planning, all branches and business administration departments
of the People’s Bank of China as well as central sub-branches thereof in capital cities and in Shenzhen, Dalian, Qingdao, Xiamen,
and Ningbo, the finance bureau of Xinjiang Production and Construction Corps,

With a view to implementing the Circular of the State Council on Improving Central and Local Export Tax Refund Bearing Mechanism (Guo
Fa [2005] No.25) and ensuring that the all kinds of work for export tax refund progress smoothly, you are hereby notified of the
relevant matters on budget management after the adjustment of export tax refund bearing mechanism:

Since January 1st, 2005 (the date of examination and approval of tax refund shall be referred to, the same hereinafter), the amount
of value added tax refund for export goods calculated within the tax base(including the amount of export value-added tax that is
exempted or offset, the same hereinafter) of all regions shall continue to be borne by the state treasury; the amount of tax refund
calculated beyond the tax base shall be shared by central and local treasuries according to the proportion of 92.5 to 7.5 instead
of the former proportion of 75 to 25. The base of export tax refund of every region as approved and verified by the State Council
shall remain unchanged.

II.

Since January 1st, 2005, the value-added tax refund for export goods shall be handled in the following ways:

Since September 1st, 2005, the value-added tax refund for export goods to be paid by the state treasury shall be paid uniformly from
the central revenue; the value-added tax exempted and offset shall be adjusted in the item of “increased value-added tax from tax
exemption and offset”(Code 010151) for the central and local treasuries respectively according to the proportion of 75 to 25, and
the item of “decreased value-added tax from tax exemption and deduction”(Code 010302) of the central treasury shall be adjusted according
to the amount of tax exemption and offset. And meanwhile, the part of 25% of the value-added tax increased from exemption and offset
shall be transferred to local treasuries from the central treasury. Other measures for adjusting the state treasury for tax offset
and exemption shall be implemented continuously in light of the Circular on the Relevant Issues concerning the Budget Management
for the Implementation of the Measures for Tax Offset, Exemption and Refund as promulgated by the Ministry of Finance, State Administration
of Taxation and the People’s Bank of China (Cai Yu Zi [1998] No.242).

For the value-added tax refund which has been handled for export goods before September 1st, 2005, the departments of finance, bureaus
of state taxation and the .state treasury departments of the people’s bank at all levels shall have the related accounts adjusted.
The concrete measures for account adjustment shall be separately formulated by the Ministry of Finance, State Administration of Taxation
and the People’s Bank of China.

III.

The part of value-added tax refund, which shall be borne by the local treasuries for export goods in 2005 and the following years,
shall be specially turned in to the central treasury by the local treasuries at the year end.

IV.

In order to reflect the changes of export tax refund, the following adjustments are made to the Subjects of Government Budget Revenue
and Expenditure in 2005 and the Subjects of Government Budget Revenue and Expenditure in 2006:

The item of “value-added tax refund for export goods”(Code 010301) under the subject of general budget revenue shall be changed into
the subject of withdrawal of central revenue, which shall reflect the value-added tax refund for export goods returned by the central
treasury. The item of “decreased value-added tax after tax exemption and offset” (Code 010302) shall be changed into the subject
exclusively used by the central treasury, which shall reflect the value-added tax decreased according to the amount of tax exemption
and offset.

The item of “revenue from the return of export tax refund base” (Code 720110) under the subject of general budget revenue and the
item of “expenditure from the return of export tax refund base” (Code 660110) under the subject of general budget expenditure shall
be cancelled.

The item “special revenue turned in from export tax refund” (Code 720203) shall be added to the general item of “revenue turned in
from general budget” (Code 7202) under the subject of general budget revenue, and shall reflect the export tax refund revenue turned
in to the central treasury by the local treasuries. The item of “special expenditure turned in from export tax refund” (Code 660203)
shall be added to the general item of “expenditure turned in from general budget” (Code 6602) under the subject of general budget
expenditure, and shall reflect the expenditure of export tax refund turned in to the central treasury by local treasuries.

The local budget revenue and expenditure shall be adjusted according to the relevant adjustments of the export tax refund bearing
mechanism. The public finance department at the provincial level shall report the relevant adjustment information to the government
at the corresponding level, and shall, in light of the conditions of the export tax refund work of their own regions, formulate corresponding
management measures so as to ensure the smooth progress of all kinds of work.

the Ministry of Finance

the State Administration of Taxation

the People’s Bank of China

August 22nd, 2005

the Ministry of Finance, the State Administration of Taxation, the People’s Bank of China
2005-08-22

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON SCOPE OF APPLICATION OF THE ENTERPRISE INCOME TAX PREFERENTIAL POLICIES FOR REVITALIZING THE OLD INDUSTRIAL BASES IN NORTHEAST CHINA

State Administration of Taxation

Circular of the State Administration of Taxation on Scope of Application of the Enterprise Income Tax Preferential Policies for Revitalizing
the Old Industrial Bases in Northeast China

Guo Shui Han [2005] No. 823

The bureaus of state taxation and local taxation of Liaoning, Jilin, Heilongjiang Provinces and Dalian:

The grassroots tax organs and enterprises request the clarification of the question about whether or not the trans-regional operating
enterprises may enjoy the enterprise income tax preferential policies for the old industrial bases in Northeast China after the
distribution of the Notice of the Ministry of Finance and State Administration of Taxation about the Implementation of the Enterprise
Income Tax Preferential Policies for Revitalizing the Old Industrial Bases in Northeast China (No. 153 [2004] of the Ministry of
Finance),. Upon the discussion, relevant matters are hereby notified as the following:

The scope of application of the enterprise income tax preferential policies for revitalizing the old industrial bases in Northeast
China is only limited to the enterprises that are within the 3 provinces and one city in Northeast China and meet the relevant requirements.
The other enterprises outside the 3 provinces and one city in Northeast China including the subsidiary or branch company established
outside the 3 provinces and one city in Northeast China by the group companies within the 3 provinces and one city in Northeast China,
shall not enjoy the enterprise income tax preferential policies for revitalizing the old industrial base in Northeast China.

State Administration of Taxation

August 22 2005

State Administration of Taxation
2005-08-22

OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE OF TAX EXEMPTION OF SHANGHAI REPRESENTATIVE OFFICE OF THE DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT OF SOUTH AUSTRALIAN GOVERNMENT OF THE COMMONWEALTH AUSTRALIA

the State Administration of Taxation

Official Reply of the State Administration of Taxation on the Issue of Tax Exemption of Shanghai Representative Office of the Department
of Trade and Economic Development of South Australian Government of the Commonwealth Australia

Letter No. 817 [2005] of the State Administration of Taxation

August 22, 2005

Shanghai Municipal Bureau of State Taxation and Shanghai Municipal Bureau of Local Taxation:

Your Bureaus’ Request for Instructions on the Relevant Taxation Issues of Shanghai Representative Office of the Department of Trade
and Economic Development of South Australian Government of Australia (Hu Guo Shui Wai [2005] No. 90) has been received, and an official
reply is hereby given as follows:

Shanghai Representative Office of the Department of Trade and Economic Development of South Australian Government of Australia established
in 2005, mainly engages in the communications and exchanges between China and Australia in politics, economy and culture, etc., and
promotes the high-quality products to be exported from South Australia to China. The Australian consulate general in Shanghai has
issued a document to certify that the head office, i.e., the Department of Trade and Economic Development of South Australian Government
of Australia is a non-profit institution. In accordance with the Circular of the State Administration of Taxation on the Relevant
Issues of Strengthening the Tax Collection and Administration of Foreign Enterprises’ Permanent Representative Offices (Guo Shui
Fa [1996] No. 165) and the Circular of the State Administration of Taxation on the Relevant Issues concerning the Taxation Administration
of Foreign Enterprises’ Permanent Representative Offices” (Guo Shui Fa [2003] No. 28), we hereby approve Shanghai Representative
Office of the Department of Trade and Economic Development of South Australian Government of Australia to be exempted from enterprise
income tax and business tax when it engages in the business within the scope prescribed in Item (2) of Paragraph 2 of Article 1
of the Guo Shui Fa [1996] No. 165.

the State Administration of Taxation
2005-08-22

CIRCULAR OF THE MINISTRY OF FINANCE ON PRINTING AND DISTRIBUTING THE PROVISIONAL MEASURES FOR FISCAL AND FINANCIAL ADMINISTRATION OF SUBSIDY FUND FOR FIXED ASSETS INVESTMENT IN THE CENTRAL BUDGET

Ministry of Finance

Circular of the Ministry of Finance on Printing and Distributing the Provisional Measures for Fiscal and Financial Administration
of Subsidy Fund for Fixed Assets Investment in the Central Budget

Cai Jian [2005] No.355

Relevant Ministries and Commissions under the State Council, relevant authorities directly under the State Council, Departments (Bureaus)
of Finance in all provinces, autonomous regions, municipalities directly under the Central Government and cities specially designated
in the state plan, Bureau of Finance of the Xinjiang Production and Construction Corps, and relevant enterprises administered by
the Central Authorities:

In order to strengthen and improve the budgetary administration of subsidy fund for fixed asset investment in the Central budget,
and to enhance the effectiveness of financial funds, the Ministry of Finance formulates the Provisional Measures for Fiscal and Financial
Administration of Subsidy Fund for Fixed Assets Investment in the Central Budget in accordance with the Budget Law of the People’s
Republic of China, the Measures for the Implementation of the Budget Law of the People’s Republic of China, the Decision of the State
Council on Reforming the Investment System, the Provisions on the Financial Administration of Basic Constructions and other laws
and administrative regulations, and it is hereby printed and distributed. And any problem occurring during the implementation shall
be reported to the Ministry of Finance.

Ministry of Finance

July 26, 2005 Annex:Provisional Measures for Fiscal and Financial Administration of Subsidy Fund for Fixed Assets Investment in the Central Budget

Chapter I General Provisions

Article 1

These Measures are formulated in accordance with the Budget Law of the People’s Republic of China, the Measures for the Implementation
of the Budget Law of the People’s Republic of China, the Decision of the State Council on Reforming the Investment System, the Provisions
on the Financial Administration of Basic Constructions and other laws and administrative regulations, for the purposes of strengthen
the budgetary administration of subsidy fund for fixed assets investment in the Central budget (hereafter referred to as the investment
subsidy) and of enhancing the effectiveness of financial funds.

Article 2

The “investment subsidy” as mentioned in these Measures refers to the investment subsidy funds arranged by the fixed assets investment
in the Central budget (including the funds for treasury bonds projects), and exclusively granted to the appropriate fixed assets
investment projects.

Chapter II Application Scope of Investment Subsidy

Article 3

The investment subsidy shall mainly be applicable in the economic and social fields supported by the government, which mainly include:

(1)

Infrastructure Projects of Public Benefit and for Public Use;

(2)

Projects for Protecting and Improving ecological environment;

(3)

Projects for Promoting the economic and social development in the less-developed regions;

(4)

Projects for Promoting the progress of science and technology and the industrialization of high and new technologies; and

(5)

Other projects in line with the relevant State provisions.

Article 4

The investment subsidy shall be arranged in accordance with the needs of the State’s ‘acroeconomic regulations and with the priorities
determined by the State. And the investment subsidy for a project shall not, in principle, exceed 50% of the total investment of
the project hereof.

Article 5

The investment subsidy may be allocated once for all or in several times in accordance with the construction and implementation progress
of a project.

Chapter III Budgetary Administration of Project Subject to Investment Subsidy

Article 6

The finance authorities shall strengthen the budgetary administration of the investment subsidy funds, practice a method of “budget
allocation coming after examination”, conduct a strict examination on the budget allocation, and allocate the budget for the project
subject to investment subsidy in accordance with the procedure governing the budget administration.

Article 7

In any one of the following circumstances, the finance authorities may suspend or cease the allocation of budget:

(1)

where the investment plan fails to comply with the arrangement principle and priorities defined by the State Council;

(2)

where a project has already applied for other investment subsidies;

(3)

where a project fails to fulfill the capital construction procedure;

(4)

where opinions fail to be issued from the local finance authorities while the financial match-up from the local financial authorities
is needed;

(5)

where promise fails to be granted from the local finance authorities while such a promise is required;

(6)

where opinions fail to be issued from the finance authorities at the same level, while the operational funds are needed from the finance
authorities hereof after the completion of a project;

(7)

where the project unit fails to conduct tendering and bidding or governmental procurement in accordance with the relevant provisions;

(8)

where the audit authorities, financial supervision institutions and assessment institutions find the project unit has violated the
state laws and regulations;

(9)

where the project unit is complained for its acts in violation of laws and regulations; or

(10)

other acts in violation the provisions in the State laws and regulations and these Measures.

Article 8

Once the budget for a project subject to investment subsidy is allocated, it shall strictly be implemented, and bear no readjustments
with the exception of the special circumstances. And such a project as needs readjustment shall be strictly subject to the relevant
provisions governing the budget readjustment.

Article 9

The investment subsidy granted by the Central Authorities to a local project shall be integrated into the local budgetary administration
of the corresponding level.

Chapter IV Appropriation of Investment Subsidy Funds and Financial Administration

Article 10

The finance authorities shall appropriate funds in accordance with the budget of a project subject to investment subsidy, provisions
on centralized payment of the national treasury, and the basic construction procedure etc..

Article 11

The investment subsidy funds shall be appropriated at the same percentage with the local match-up funds, bank loans and other funds.
The finance authorities, when appropriating investment subsidy funds, shall, with reference to the application of a project unit
and in accordance with the budget of a project subject to investment subsidy, take into full consideration the construction progress
of a project, the appropriation progress of the relevant construction funds and other factors.

Article 12

The investment subsidy for a project under the administration of the Central Authorities, shall be appropriated to the authorities
in charge (including the enterprises under the administration of the Central Authorities) by the Ministry of Finance, and then shall
be timely appropriated to the project unit by the authorities in charge hereof; and the investment subsidy for a project under the
administration of the local authorities, shall be appropriated to the local finance authorities by the State revenue, and then shall
be appropriated to the project unit by the local finance authorities hereof. And a project subject to the centralized payment of
the national treasury shall be subject to the relevant provisions.

Article 13

Anyone in any one of the following circumstances shall be ordered to redress within a limited period by the finance authorities, and,
if it fails to do so when the period hereof expires, its subsidy funds shall be reduced, ceased or recalled.

(1)

Where the project unit provides the unauthentic information to gain the investment subsidy by cheating;

(2)

Where the project unit transfers, misappropriates or embezzles the investment subsidy;

(3)

Where the match-up funds fail to be executed or to be granted for a long time;

(4)

Where the project unit fails to finish the pre-project work as required or failing to construct and implement as prescribed;

(5)

Where the project unit alters unauthorizedly the main construction content and standard, situations such as over-budget, over-scale,
over-standard etc. occurring;

(6)

Where the project unit fails to conduct tendering and bidding and governmental procurement in accordance with the relevant provisions;

(7)

Where the project unit is complained for its acts in violation of laws and regulations; or

(8)

Other acts in violation the provisions in the State laws and regulations and these Measures.

Article 14

After receiving the investment subsidy, a project unit shall earmark it for its specified purposes only, separately establish an account
for examination and assessment, and conducting a financial treatment on these items as follows:

(1)

The investment subsidy for a non-business construction project shall be subject to the relevant provisions governing the financial
allocation; and

(2)

The investment subsidy for a business construction project shall managed as capital reserves, and, if the project unit agrees to a
capital increase and a share expansion, may be managed as the State capital.

The investment subsidy granted by the Central Authorities to the local projects shall be with reference to these Measures, and, it
may be subject to the provisions of a local government, if any.

Chapter V Supervision and Inspection

Article 15

The relevant authorities in charge under the State Council and the provincial finance authorities in charge shall strengthen the supervision
and inspection on the arrangement and utilization of the investment subsidy, and organize aperiodically inspection groups or entrust
the local resident financial supervision offices of the Ministry of Finance and other institutions to conduct selective inspections
on the project units using the investment subsidy every year, so as to ascertain that the investment subsidy is used in line with
the provisions and arrangements. And a project unit using the investment subsidy shall, before the end of each year, submit a report
on the use of the investment to the finance authorities at the corresponding level subsidy, and make a copy for the local resident
financial supervision office of the Ministry of Finance.

Article 16

All the authorities shall conduct key inspections on these items as follows, and formulate inspection results in accordance with the
relevant provisions; and such an items as is beyond the power of the authorities hereof shall be transferred to other authorities
in accordance with laws and regulations, which shall be reported to the Ministry of Finance. And the local resident financial supervision
office of the Ministry of Finance shall in situ monitor and hand in to the national treasury the recallable funds under the item
of “Other Revenues”.

(1)

To examine whether the project is implemented as prescribed, whether the project unit uses the investment subsidy as prescribed. And
recall the appropriated investment subsidy funds to the national treasury if the project unit unauthorizedly alters the main construction
content and standard or fails to use the investment subsidy as prescribed;

(2)

Whether the project unit conducts tendering and bidding and governmental procurement in accordance the relevant provisions;

(3)

Whether the investment subsidy funds undergo a financial treatment as prescribed, and timely redress any who fails to treat as prescribed;
and

(4)

To examine the total amount of the investment subsidy for a project and the actually granted amount of other funds sources as listed
in the project budget after the project is completed. Such a project whose total amount of investment subsidy exceeds 50% of its
total investment shall be transferred to an administration of direct investment or capital infusion, and shall undergo a re-determination
of investment ratio in accordance with the relevant provisions and with the funds actually granted by all the investors; and the
finance authorities at the corresponding level shall designate the relevant institutions, on behalf of the State, to exercise the
right of proprietor or investor in accordance with laws and regulations.

Article 17

All the relevant authorities and project units shall manage and use the investment subsidy in accordance with the State provisions,
and self-consciously accept the supervision and inspection from the finance and audit authorities.

Article 18

With regard to anyone who, in violation of the relevant provisions, practices fraudulences, gains by cheating, retains and embezzles
the investment subsidy or fails to implement the project as prescribed, the finance authorities at all levels shall, besides recalling
the appropriated funds to the national treasury in full amount, immediately cease the allocation of investment subsidy to the authorities
in charge in where the project unit is located or to the province, autonomous region, municipality directly under the Central Government
and city specially designated in the state plan, and conduct an overall inspection till these violations are redressed. And the related
persons shall be investigated for liabilities in accordance with the Rules of Penalties and Sanctions against Financial Illegalities
(Decree of the State Council No.427) and with other relevant State provisions, and, if laws are violated, shall be investigated and
prosecuted for the corresponding legal liabilities.

Chapter VI Supplementary Provisions

Article 19

These Measures shall enter into force 30 days after the date of promulgation.

Article 20

The Ministry of Finance shall be responsible for the interpretation of these Measures.

Ministry of Finance
2005-07-26

GUIDING OPINIONS OF THE CSRC, SASAC, MOF, PBC, AND THE MOFCOM ON SHARE-TRADING REFORM OF LISTED COMPANIES

China Securities Regulatory Commission, State-owned Assets Supervision and Administration Commission, Ministry of Finance, People’s
Bank of China, Ministry of Commerce

Guiding Opinions of the CSRC, SASAC, MOF, PBC, and the MOFCOM on Share-trading Reform of Listed Companies

Zheng Jian Fa [2005] No. 80

August 23, 2005

Since the promulgation of the Some Opinions of the State Council on Promoting the Reform, Opening and Steady Growth of Capital Markets
(hereinafter referred to as Some Opinions), vital progress has been made in the various reform and system building of the capital
market, the market operating mechanism and operating environment are improving, and some fundamental and systematic problems that
restrict the full play of functions of the capital market are being solved step by step. In light of the requirements of the State
Council for “solving share-trading problem positively and steadily”, and under the right leadership of the State Council and the
great support of the relevant departments and local people’s governments, the pilot work for share-trading reform has been completed
smoothly, the operating rules and basic practice of the reform have won the recognition of the markets. Policy expectation and market
expectation on the reform are becoming increasingly stable, which has laid a solid foundation and created good conditions for overall
steady and positive shifting of the reform. We hereby bring forward the following guiding opinions on share-trading reform of listed
companies for the next step.

Correctly Understanding the Share-trading Reform

To implement the Several Opinions in an all-round way and perfect the operating mechanism of capital market, we shall, for the purpose
of solving the fundamental and systematic problems, attach high importance to perfecting and bringing into play the function of capital
market, improve the level of investment returns of capital market, and improve the direct financing ability and the efficiency of
resource allocation step by step. We shall not only solve the problems of lack of new market elements, imperfect systems, irregular
operations and inefficient supervision of the emerging market through perfecting the capital market system, diversifying securities
investment products, improving the quality of listed companies, and regulating the management of securities companies as well as
strengthening the legal construction of the securities market. We should also solve share-trading problems left over under the background
of system transition and other various problems and properly solve hidden risks so as to create the desired conditions for the long-term
and steady development of capital market.

Share-trading (the different disposal of equity shares) refers to the distinction of the shares of listed companies in the A shares
market are into non-tradable and tradable shares according to whether they can be listed for trading in the stock exchange. This
is a special problem coming into being during the transition of economic transition of our country. The different disposal of shares
has distorted the pricing mechanism of the capital market, and restricted the effective play of resource allocation functions thereof.
The price of the such stocks of listed companies cannot work as a market-based incentive and restriction for majority shareholders
and the management team so that there is no common basis of interest in corporate governance. For such stocks there are two kinds
of prices in capital flow: the negotiated price for the transfer of non-tradable shares and the competitive transaction price of
tradable shares, so there lacks a market operating basis for capital operations. The different disposal of stocks in this context
cannot meet the need for the reform and opening-up and stable development of the capital market, so we shall eliminate the difference
between tradable shares and non-tradable shares through the share-trading reform.

Share-trading reform is a kind of reform for the purpose of perfecting the basic market system and operating mechanism, the significance
of which is not only to resolve historical problems, but also to create conditions for various other reforms and system innovation
of the capital market, it is an important measure for the overall implementation of the Several Opinions. Therefore, we shall give
overall consideration to the share-trading reform, maintenance of the market stability, promotion of the play of capital market function
by means of pushing forward the opening-up in a positive and steady way. The reform shall be pushed ahead positively and steadily
and step by step. No listed company may carry out such reform until it has met the requirements so as to realize the reasonable adjustment
of the interest relationship of all parties concerned. Meanwhile, we shall take the reform as a turning point, adjust various positive
factors, maintain the market stability, improve the quality of listed companies, regulate the management of securities companies,
and promote the construction of various fundamental systems, perfect the market system and promote the innovation of securities products
with other supportive systems, so as to form a new situation of good circulation and healthy development of the capital market.

The share-trading reform that is now under way is to solve the systemic problems we encounter in the listing and trading of non-tradable
shares rather than to sell State shares through the capital market, and the State does not consider selling the State shares to raise
funds through the domestic capital market. After the listing and trading of non-tradable shares, the controlling shareholders of
the state-owned shareholding listed companies shall, according to the strategic requirements of the State for the overall arrangement
of the national economy and the structural adjustment, determine reasonably the minimum proportion of shares of the listed companies
under its control, and for the important industries and major fields concerning the nation’s economy and the people’s livelihood
and the life line of the national economy, and the state-owned share-holding listed companies in the fundamental and backbone industries
of the national economy, the state shall ensure the controlling power, influence and motivation of state-owned capital, and the shareholders
of state shares may buy shares in the securities market, if necessary. The controlling shareholders in other listed companies shall
also ensure the stable growth and sustainable management of the companies. The securities regulatory department shall, through necessary
systemic arrangement and technical innovation, effectively control the scale and pace for the tradable shares to enter into circulation.

II.

Guidelines for the Share-trading Reform

The guidelines for positively and steadily pushing forward the share-trading reform are: to stick to the general principles of combining
the share-trading reform and the maintenance of stable development of market, further clarify the expectations of the reform, ameliorate
and strengthen coordination and guidance, mobilize various positive factors to implement the various tasks posed by the Several Opinions
as soon as possible, to formulate, amend and perfect the relevant regulations and policies and measures, strengthen the infrastructure
construction of market, improve the market environment of reform and development to realize an important breakthrough in the capital
market, so as to have the market operating on the track of sound progress.

We shall implement the general requirements of the Several Opinions, that is, “observing market rules, being conducive to market stability
and development, and earnestly protecting the lawful interests of investors, especially those of the public investors”. To observe
market rules is to stick to the decision-making mechanism and price formation mechanism based on market rules, improve the reform
driving mechanism, and form a sustainable and steady motivation for the reform of listed companies through policy support and market
guidance. To be conducive to market stability and development is to pay attention to bringing into play the mechanism advantages
and sound market effect formed through reform in light of the principle of unanimous agreement of progress of reform, speed of development
and sustainability of market, so as to ensure that the various reforms of the capital market are pushed in coordination, ensure that
the various policies and measures are integrated and in conformity with each other, and promote the steady development of the market
through reform, and ensure the smooth going of the reform based on the stable development of the market. To protect the lawful interests
of investors, especially of public investors is to ensure the investor’s right to know, right to participate and right to vote through
relevant procedural rules and necessary policy guidance, so as to turn the reform scheme into a basis of mutual interests conducive
to the shareholders of tradable shares and non-tradable shares, and form a stable price expectation of the companies after the reform.

III.

Overall Requirements for the Share-trading Reform

Unified organization shall be stuck to for the share-trading reform. The China Securities Regulatory Commission shall formulate the
Measures for the Administration of Share-trading Reform of Listed Companies, and shall, in light of the operating procedures and
regulatory requirements of “Openness, Fairness and Justness”, regulate the work for share-trading reform to ensure the lawful interests
of investors, especially of the public investors. The relevant departments of the State Council shall strengthen coordination and
cooperation, and shall, in light of the principle of being conducive to pushing forward the share-trading reform, perfect the relevant
policies for promoting the steady development of the capital market, adjust and improve the provisions on such aspects as the management
of state-owned capital, enterprise examination, accounting, credit policy, and foreign investment, and etc., so as to ensure that
the relevant policies of share-trading reform are interconnected and in conformity with each other. The local people’s governments
shall strengthen organization and guidance to the share-trading reform of listed companies within their own regions, bring into full
play the role of comprehensive resource advantage, and combine the share-trading reform and optimization of the structure of listed
companies, the promotion of regional economic development and maintenance of social stability, and plan as a whole the reform work
adapted to the local conditions.

A decentralized decision-making mechanism shall be applied to the share-trading reform scheme. The non-tradable shareholders of listed
companies shall, according to the existing laws, regulations and the measures for the administration of share-trading reform, widely
solicit the opinions of the relevant tradable shareholders of the A shares market, and determine through negotiation the share-trading
reform scheme that complies with the actual situation of their own companies, and shall, by referring to the procedures of shareholders’
meeting, carry out classified votes by convening meetings of relevant shareholders of the A shares market. It is a beneficial trial
of the share-trading reform for non-tradable shareholders and tradable shareholders to balance the interests of the shareholders
by way of consideration, which shall be improved incessantly in the practice of reform.

The share-trading reform scheme of listed companies shall be conducive to the market stability and the long-term development of listed
companies. Companies or majority shareholders are encouraged to take relevant measures for stabilizing price expectations and to
make regrouping arrangements for improving the performance and price increment ability of listed companies in the share-trading reform
scheme. The regulatory department and the stock exchanges shall, under the precondition of not interfering the determination of the
subjects of reform on reform scheme through self-negotiation, strengthen coordination and guidance to the form of realization of
the scheme and the relevant supportive arrangements.

10.

The market-oriented guidance of the reform shall be observed and attention shall be paid to creating a market mechanism for positively
and soundly solving the share-trading issue. We shall, according to the progress of the share-trading reform and the overall market
conditions, choose the right time to apply the policy of “separating the new from the old”, and shall not differentiate tradable
shares and non-tradable shares for companies that make initial public offerings. Listed companies that have completed the share-trading
reform shall be given priority in refinancing, and may implement the incentive of stock rights to their management team, meanwhile,
the ways of supervision over refinancing shall be reformed so to improve the efficiency of refinancing. The concrete measures for
implementing and examining the stock-right-based incentive to the management team of listed companies and the supportive supervision
system shall be formulated by the securities regulatory departments together with other relevant departments. For a company to be
listed overseas that have A shares, and a subsidiary company of a listed A share company which is listed on an overseas stock market,
the listing shall be made after the share-trading reform is completed. For the transfer of non-tradable shares of listed companies
by negotiation, an arrangement on the share-trading reform shall be made correspondingly, or the transfer shall be operated together
with the share-trading reform of the company.

11.

We shall properly handle the share-trading reform issue of listed companies that are special situations. The share-trading reform
is to solve the issue of balancing the interests of the relevant shareholders of the A share market. For listed A share companies
that concurrently hold H shares or B shares, the share-trading issue shall be solved by the relevant shareholders of the A share
market through negotiation. For listed A share companies of the category of bank which hold the documents of approval for foreign-funded
enterprises or which have foreign capital shares, the share-trading reform scheme thereof shall, after being adopted by relevant
shareholders’ meeting through voting, be subject to the examination and approval of the relevant departments of the State Council
according to the relevant laws and regulations. The alteration of foreign capital shares in a share-trading reform scheme shall not,
in principle, affect the relevant preferential policies enjoyed by the listed company. If a foreign shareholder sells its shares
after the expiry of the time limit for selling shares, it shall be handled according to the relevant state provisions, with the concrete
measures to be prescribed by the competent department of commerce of the State Council and the securities regulatory department together
with other relevant departments in addition. Companies with poor performances are advised to solve their share-trading issue through
absorbing high-quality assets and bringing in foreign strategic investors as a consideration.

IV.

Regulating the Order of Share-trading Reform in a Strict Way

12.

A listed company and its board of directors shall carry out its share-trading reform in strict accordance with the procedures as prescribed
in the management measures, carefully perform information disclosure obligations, and earnestly maintain the investors’, inter alia,
the public investors’ right to know, right to participate and right to vote. Public investors shall positively take part in the share-trading
reform, and exercise shareholders’ right according to law. Non-tradable shareholders shall strictly fulfill their commitments in
the share-trading reform, and assume corresponding liabilities for breach of contract.

13.

Recommending institutions and their recommendation representatives shall be honest and faithful, just, objective, and diligent, shall
fulfill their duties, and shall know of the various problems of the companies, bring into full play the role of coordination and
balance, carefully perform their checking obligations, and assist the listed companies and their shareholders in formulating their
share-trading reform schemes that comply with the actual conditions of the companies, urge them to do a good job of information disclosure,
and urge and guide the relevant parties concerned to fulfill their commitments in the reform scheme. Necessary regulatory measures
shall be taken against any recommending institution or any of its representatives that fails to fulfill its recommendation obligations.

14.

Any fund management company, securities company, insurance company, capital management company or any other institutional investor
shall take an active part in the share-trading reform, and take initiatives to maintain the investors’, in particular, the public
investors’ lawful interests and the long-term interests for the steady growth of the market. For any institutional investor who disturbs
the normal decision-making of other investors, manipulates the voting results of relevant shareholders’ meeting, or make interest
tradeoffs by making use of the advantage of shares it holds, the regulatory institution shall make an investigation and give punishment
on it in a strict way.

15.

A stock exchange shall bring into play its flexibility of being close to the market as a self-disciplinary organization and the functional
advantages in organizing market and product innovation, strengthen coordination and guidance to the form of realization of reform
scheme of listed companies and the regrouping measures, and shall, together with the securities depository and clearing agencies,
provide technical support to the innovation of their reform schemes and to the market system and product innovation after the reform.

16.

We shall strengthen supervision over listed companies and their controlling shareholders, recommending institutions, fund management
companies, and the associated parties and senior management personnel of the said institutions so as to prevent and strike down the
illegal and criminal acts of cheating, insider trading and market manipulation by taking advantage of share-trading reforms.

17.

The news media shall stick to the accurate direction of public opinion, positively publicize the significance of share-trading reform,
and report the reform progress and the relevant information objectively and truthfully, observe the discipline of press, and do a
good job of guiding the public in a right way.

Mobilizing Various Positive Factors to Promote the Steady Growth of Capital Market

18.

We shall, taking share-trading reform as a turning point, promote the listed companies to improve their corporate governance structure,
improve the level of corporate governance, and earnestly solve the issue of appropriation of the capital of listed companies by controlling
shareholders or by actual controllers, and curb the guaranty of listed companies which is in violation of any regulation, and prohibit
misappropriating the interests of listed companies by making use of non-bona fide connected transactions. After solving the share-trading
issue, well-managed large companies are encouraged to get listed as an integrated whole through issuing directional shares by the
listed companies under their control; and listed companies are encouraged to consolidate through merger or acquisitions to improve
their performance.

19.

Capital support shall be given to listed companies for their majority shareholders to buy shares through such ways as loans pledged
by shares of majority shareholders, issuing short-term financing securities, bonds, and by other commercialized ways. We shall combine
the share-trading reform, the optimization and reorganization of securities companies, and the expansion of financing channels of
securities companies, positively support securities companies to use comprehensively the various feasible ways of market-ruled financing,
and effectively improve the capital flow status. We shall strengthen the construction of corporate governance and internal risk control
mechanism, strengthen supervision, push forward the resource integration of industries, and properly handle the reorganization or
dropout of securities companies that are of high risk, as well as encourage well-managed securities companies to expand and develop.

20.

We shall encourage innovation on securities transaction mechanisms and products, and launch an independent stock index with the post-reform
companies’ stocks as models, and do research to develop the index derivatives. We shall perfect the system of negotiation-based transfer
and bulk transactions, and introduce certificate of securities and other products in initial public offerings and refinancing, so
as to balance market supply and demand.

21.

We shall continue to perfect the tax policies for encouraging public investment. Corporate pension, more social securities funds and
more qualified institutional foreign investors shall be encouraged to invest in the stock market, and the control over the proportion
of stock investment of insurance companies and other large institutional investors shall be loosened. For the strategic investment
on listed companies by overseas investors after share-trading reform, the regulatory department and the competent commerce department
of the State Council shall do research to promulgate the relevant provisions together with other relevant departments.

22.

We shall positively promote the amendment of the Securities Law, Company Law, Criminal Law, and other laws. We shall do research and
draft out the Regulation on the Supervision over Securities Companies, Regulation on the Risk Disposal of Securities Companies, and
the Regulation on the Supervision of Listed Companies, and other administrative regulations. We shall adjust and improve the policies
and regulations not geared to the positive and steady pushing forward of the share-trading reform. We shall formulate and improve
the corresponding administrative measures in time aiming at the new situations and new issues that emerge after the reform. We shall
improve the means of supervision, improve law enforcement effect, expand the room for market development and innovation, so as to
create a sound legal environment for the reform and opening-up of the capital market and its steady development.

China Securities Regulatory Commission, State-owned Assets Supervision and Administration Commission, Ministry of Finance,
People’s Bank of China, Ministry of Commerce
2005-08-23

CIRCULAR OF THE MINISTRY OF FINANCE ON PRINTING AND DISTRIBUTING THE PROVISIONAL MEASURES FOR FISCAL AND FINANCING MANAGEMENT OF INTEREST-SUBSIDY FUNDS FOR FIXED ASSET INVESTMENTS WITHIN THE CENTRAL GOVERNMENT’S BUDGET

Ministry of Finance

Circular of the Ministry of Finance on Printing and Distributing the “Provisional Measures for Fiscal and Financing Management of
Interest-subsidy Funds for Fixed Asset Investments within the Central Government’s Budget”

Cai Jian [2005] No. 354

The relevant ministries and commissions of, and relevant institutions directly under the State Council, the public finance departments
(bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and municipalities under separate
state planning, the Public Finance Bureau of Xinjiang Production and Construction Corps, the relevant enterprises under management
of the Central Government:

In order to strengthen and enhance the budgetary management of interest-subsidy funds for fixed asset investments within the Central
Government’s budget and increase the benefits from using the fiscal funds, the Ministry has, in accordance with the “Budget Law of
the People’s Republic of China”, the “Regulation for the Implementation of the Budget Law of the People’s Republic of China”, the
“Decision of the State Council on Investment System Reform”, the “Provisions on the Accounting Management of Basic Construction”
and other relevant laws and administrative regulations, formulated the “Interim Measures for Fiscal and Financing Management of
Interest-subsidy Funds for Fixed Asset Investments within the Central Government’s Budget”, which are printed and hereby distributed.
In case of any question arising out of implementation, please feed it back to the Ministry in time.

inance

July 26,2005 Appendix:Provisional Measures for Fiscal and Financing Management of Interest-subsidy Funds for Fixed Asset Investments within the Central
Government’s Budget

Chapter I General Provisions

Article 1

These Measures are formulated in accordance with the “Budget Law of the People’s Republic of China”, the “Regulation for the Implementation
of the Budget Law of the People’s Republic of China”, the “Decision of the State Council on Investment System Reform”, the “Provision
on the Accounting Management of Basic Construction” as well as other relevant laws and administrative regulations for the purpose
of strengthening the budgetary management of interest-subsidy funds for fixed asset investments within the Central Government’s budget
(hereinafter referred to as “interest-subsidy funds”), improving the using benefits of the fiscal funds, promoting and guiding
the social investments.

Article 2

Interest-subsidy funds as mentioned in these Measures shall refer to the funds arranged for the fixed asset investments within the
Central Government’s budget (including treasury bond project funds), and used the interest subsidy for fixed asset investment projects
that accorded with the conditions and used the medium and long-term banking loans.

Chapter II Applicable Scope and Standards of the Arrangements of Interest-subsidy Funds

Article 3

The interest-subsidy funds shall be applicable mainly to the competitive and operative projects by social investments that are needed
to be encouraged and guided by the government. Such projects mainly include:

(1)

projects of public infrastructures;

(2)

projects for protection and improvement of the ecological environment;

(3)

projects promoting the economic and social development of underdeveloped areas;

(4)

projects propelling scientific and technological progress and industrialization of high and new technology; and

(5)

other projects conforming to the relevant legal provisions of the state.

Article 4

The subsidy rate of the interest-subsidy funds shall not exceed the interest rate for medium and long-term banking loans during the
current period. The total amount of interest-subsidy funds shall be calculated and determined on the basis of the total amount of
the banking loans for the project meeting the conditions for interest subsidy, the subsidy rate of the current year, and the term
of the interest subsidy, provided that it shall not exceed the total amount of interest actually paid for the medium and long-term
banking loans during the project construction period.

Article 5

The interest-subsidy funds may be arranged in a lump sum or by installments according to the project construction progress and the
actual amount of the loans.

Chapter III Budgetary Management of Interest-Subsidy Funds

Article 6

The public finance department shall strengthen the budgetary management of the interest-subsidy funds, adopt the way of “making the
check first and distributing the budget thereafter”, and rigidly check the budget distribute and examine and verify . It shall also,
pursuant to the procedures for budgetary management, distribute the budget of interest-subsidy funds for the project concerned.

Article 7

In case any of the following circumstances arises, the public finance department may postpone or stop distributing the budget:

(1)

The investment plan does not conform to the scope and key points of the investment arrangements determined by the State Council, nor
does it conform to the scope of using the interest-subsidy funds or the relevant legal provisions of the state;

(2)

The interest-subsidy funds of the project corresponding to the investment plan exceed the payable total amount of interest for the
medium and long-term banking loans;

(3)

The project entity concerned has applied for other interest-subsidy funds;

(4)

The banking loans to be borrowed by the project entity have not been determined;

(5)

A commitment on relevant matters needs to be made by the local public finance department, but the said department does not do so;

(6)

After a project has been built, the operation expenses need to be arranged by the public finance department at the same level, but
the public finance department at the same level has not issued any opinions in this regard;

(7)

The local public finance department’s financial matching supports are needed, but the local public finance department has not issued
any opinion in this regard;

(8)

An auditing department, a fiscal supervision institution or an appraisal institution finds that the project entity has an act in violation
of any law or regulation of the state;

(9)

The project entity is tipped off due to violation of any law or rule; or

(10)

Any other act in violation of any law or regulation of the state or these Measures.

Article 8

The budget on interest-subsidy funds must be strictly implemented after it is distributed, and shall not be adjusted except for particular
circumstances. For the projects whose budgets really need to be adjusted, the said budgets shall be adjusted in accordance with
the relevant provisions on adjustment of budgets strictly.

Article 9

The interest-subsidy funds provided by the Central Government to local projects shall be included into the local public finance at
the same level for budgetary management.

Chapter IV Funds Allocation and Accounting Management of Interest-subsidy Funds

Article 10

The public finance department shall adhere to complying with the requirements in the administrative provisions on budget of interest-subsidy
funds and centralized payment from the state treasury as well as the procedures of the basic construction and etc. to allocate the
funds.

Article 11

The public finance department shall, when allotting interest-subsidy funds, comprehensively consider the factors such as project construction
progress, actual arrived amount of loans, and the actual amount of interest, etc. upon application of the project entity and according
to the budget of interest-subsidy funds.

Article 12

The interest-subsidy funds of a central project shall be allotted by the Ministry of Finance to the competent departments (including
central enterprises). Each competent department shall timely allot the funds to the project entity. The interest-subsidy funds of
a local project shall be provided via the treasury of the Central Government to the local public finance department, and then be
allotted by the local public finance department to the project entity. The projects by way of centralized payment and managed from
the state treasury shall be governed by the relevant legal provisions.

Article 13

In case any of the following circumstances arises, the public finance department shall order the project entity concerned to make
a rectification within a time limit, and shall, if the said project entity fails to make a rectification within the time limit, reduce
the interest-subsidy funds upon check, suspend the allocation or recover the funds:

(1)

The project entity provides any false information to defraud interest-subsidy funds;

(2)

The project entity transfers, embezzles or peculates the interest-subsidy funds;

(3)

The banking loans are the loans for the circulating funds;

(4)

The project entity changes the main construction contents or construction standards without approval, and is under the over-budgetary-estimation,
over-scale or over-standard situation, etc;

(5)

The project entity is tipped off due to violation of any law or rule; or

(6)

Other acts in violation of any law or regulation of the state or these Measures.

Article 14

A project entity must, after receipt of the interest-subsidy funds, use the funds for the special purpose, make accounting of the
funds separately, and put the funds into accounting treatment either by offsetting the engineering costs of the project under construction
or by offsetting the accounting expenditures of the completed project. .

Chapter V Supervision and Inspections

Article 15

The relevant competent department of the State Council and the public finance competent departments at the provincial level shall
strengthen the supervision and inspections on the use of interest-subsidy funds, and shall, at irregular intervals in each year,
form inspection teams or entrust the institutions such as the local financial supervision commissioners’ offices dispatched by the
Ministry of Finance to randomly inspect the project entities using interest-subsidy funds, so as to guarantee the interest-subsidy
funds be arranged and used in accordance with the legal provisions. A project entity using the interest-subsidy funds shall, by the
end of each year, report the use circumstance of interest-subsidy funds to the public finance department at the same level, and make
copies to the local financial supervision commissioners’ office dispatched by the Ministry of Finance.

Article 16

Each unit shall emphatically examine and check the following contents, and make inspection conclusions in accordance with the relevant
legal provisions. It shall legally transfer the matters not falling within the scope of its own powers to other departments, and
report the relevant information to the Ministry of Finance. With respect to the returned funds, the local financial supervision
commissioners’ office dispatched by the Ministry of Finance shall take charge of monitoring them to be turned in to the local treasury
under the item of “other revenues”.

(1)

Whether the ratified project is carried out in accordance with the legal provisions, and whether the project entity uses the interest-subsidy
funds in accordance with the legal provisions. If the project entity changes the main construction contents or construction standards
without approval, or fails to comply with the legal provisions to arrange or use the interest-subsidy funds, the allotted interest-subsidy
funds shall be confiscated to the state treasury.

(2)

Whether the interest-subsidy funds are put into accounting treatment in accordance with the legal provisions. If the matter is not
handled in accordance with the legal provisions, it shall be corrected in time.

(3)

After the project is completed, verifying the interest calculation list of the medium and long-term loans for the interest subsidy
project. If the accumulative amount of interest subsidies exceeds the amount of interest actually paid to the bank within the project
construction period, the excessive portion shall be confiscated as net balanced surplus funds to the state treasury.

Article 17

Each relevant department and project entity shall manage and use the interest-subsidy funds in accordance with the legal provisions
of the state strictly, and consciously accept the supervision and inspection of the public finance and auditing departments.

Article 18

In case of violation of any provision by practicing frauds, by defrauding, withholding or misappropriating the interest-subsidy funds,
or in case of failure to implement the project in accordance with the legal provisions, the public finance department at the level
concerned shall, in addition to fully confiscating the allotted funds to the state treasury, immediately stop allotting interest-subsidy
funds to the competent department over the project entity, or to the province, autonomous region, municipality directly under the
Central Government, or municipality under separate state planning where the project entity is located, and shall check the funds
in an all-round way until the project entity’s illegal act is corrected. The relevant persons shall be subject to liabilities in
accordance with the “Regulation on Penalties and Sanctions against Illegal Fiscal Acts” (Order No. 427 of the State Council) and
the relevant legal provisions of the state, and he who violates the law shall be subject to legal liabilities accordingly.

Chapter VI Supplementary Provisions

Article 19

These Measures shall come into force 30 days after the date of promulgation.

Article 20

The power and responsibility to interpret these Measures shall remain with the Ministry of Finance.

Ministry of Finance
2005-07-26

MEASURES ON THE NOTIFICATION OF ILLEGAL AND IRREGULAR ACTS OF FOREIGN TRADE OPERATORS

the Ministry of Commerce

Order of the Ministry of Commerce of the People’s Republic of China

No. 17

The Measures on the Notification of Illegal and Irregular Acts of Foreign Trade Operators, which were adopted upon deliberation at
the 12th executive meeting of the Ministry of Commerce on July 21, 2005, are hereby promulgated and shall go into effect as of September
1, 2005.

Minister of the Ministry of Commerce, Bo Xilai

August 23, 2005

Measures on the Notification of Illegal and Irregular Acts of Foreign Trade Operators

Article 1

With a view to maintaining fair and free foreign trade order, these Measures are formulated in accordance with the Foreign Trade Law
of the People’s Republic of China (hereinafter referred to as the Foreign Trade Law) and other relevant laws and administrative regulations.

Article 2

These Measures shall apply to those illegal and irregular foreign trade operators that violate any of the provisions of the Foreign
Trade Law and undermine the foreign trade order in the foreign trade and the foreign-trade-related intellectual property protection,
and the acts thereof.

Article 3

The term “foreign trade operator” as mentioned in these Measures refers to a legal person, or any other organization or individual
that has gone through its/his industrial and commercial registration or other formalities for business operation according to law
and undertakes foreign trade business according to the provisions in the Foreign Trade Law and other relevant laws and administrative
regulations.

Article 4

The Ministry of Commerce is responsible for the communication, coordination and collection of information about illegal and irregular
foreign trade operators and their acts, and shall notify the general public of the illegal and irregular foreign trade operators
and their acts on the official website or in a designated national publication.

The Ministry of Commerce and local competent commerce departments shall establish an information exchange and coordination mechanism
in conjunction with the departments of customs, taxation, industry and commerce, quality inspection, foreign exchange administration,
public security and courts.

Article 5

The illegal and irregular foreign trade operator and its acts notified to the general public refers to any of the following acts committed
in the foreign trade business operations, for which the violator has been punished or investigated for criminal liabilities according
to laws or administrative regulations:

(1)

Importing or exporting any goods or technology that is prohibited from being imported or exported, or importing or exporting without
permission any goods or technology that is subject to import or export restriction;

(2)

Importing or exporting, without authorization, any of the goods subject to the administration of state-trading regime in violation
of any provision on the administration of state trading;

(3)

Undertaking any banned international service trade, or unlawfully undertaking any restricted international service trade;

(4)

The importing or exporting of goods has infringed on any intellectual property right and, or has undermined the foreign trade order;

(5)

Conducting any act of monopolization against the relevant laws or administrative regulations on anti-monopolization;

(6)

Conducting such unfair competition acts as selling commodities at unjustifiably low prices, colluding in the bidding, running false
advertisements, or offering commercial bribes, etc.;

(7)

Counterfeiting or altering the marks of origin of the imported or exported goods, counterfeiting, altering, buying or selling the
certificates of origin, licenses for import or export, certificates of import or export quotas or other certification documents for
import or export;

(8)

Defrauding export tax refunds;

(9)

Smuggling;

(10)

Evading attestations, inspections or quarantines as prescribed by laws or administrative regulations;

(11)

Violating the provisions of the state concerning foreign exchange administration; or

(12)

Committing, in violation of the laws or administrative regulations, any other act that undermines the foreign trade order.

Article 6

The notification of the information about illegal and irregular acts of foreign trade operators shall includes:

(1)

The operator’s name, code of organization, domicile, place of business, legal representative and the industrial and commercial registration
number;

(2)

Illegal or irregular acts; and

(3)

Punishment or criminal liabilities that shall be imposed according to the laws or administrative regulations.

Article 7

Where a foreign trade operator, which has been imposed upon administrative punishment or investigated for criminal liabilities, is
under any of the following circumstances, he/she may not be notified or may not be notified for the time being:

(1)

An administrative reconsideration or lawsuit is filed within the prescribed time limit, but the final decision, ruling or judgment
has not been made yet; or

(2)

Any information is prohibited from being disclosed as prescribed by any law or regulation because it involves the national security
or commercial secret.

Article 8

The Ministry of Commerce shall, in line with the principles of fairness and justice, notify the general public of those illegal or
irregular foreign trade operators who have undermined the foreign trade order and their acts.

Article 9

Where a functionary responsible for notifying according to these Measures neglects his/her duty and causes any adverse influence or
loss to a foreign trade operator, he/she shall bear corresponding liabilities according to the relevant laws and regulations, and
the persons-in-charge shall be subject to the liabilities of leaders.

Article 10

The power to interpret these Measures shall remain with the Ministry of Commerce.

Article 11

These Measures shall go into effect as of September 1, 2005.

the Ministry of Commerce
2005-08-23

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Probate

NOTICE OF THE STATE COUNCIL ON IMPROVING THE BEARING MECHANISM OF CENTRAL AND LOCAL EXPORT TAX REFUND

MEASURES FOR THE ADMINISTRATION OF TAX DEDUCTION OR EXEMPTION (FOR TRIAL IMPLEMENTATION)

REPLY OF THE STATE ADMINISTRATION OF TAXATION ON RELEVANT ISSUES CONCERNING THE TERM FOR RECOVERING OVERDUE TAXES

NOTICE OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON THE CENTRALIZED MANAGEMENT OF TURNOVER POSITIONS OF FOREIGN EXCHANGE SETTLEMENT AND SALES OPERATIONS BY FOREIGN-FUNDED BANKS WITHIN THE TERRITORY OF CHINA

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE COMING INTO FORCE AND IMPLEMENTATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF CHINA AND THE GOVERNMENT OF ALBANIA ON AVOIDANCE OF DOUBLE TAXATION

CIRCULAR OF MOF, SAT, AND PBC ON THE ISSUES CONCERNING THE RELEVANT BUDGET MANAGEMENT AFTER THE ADJUSTMENT OF EXPORT TAX REFUND BEARING MECHANISM

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON SCOPE OF APPLICATION OF THE ENTERPRISE INCOME TAX PREFERENTIAL POLICIES FOR REVITALIZING THE OLD INDUSTRIAL BASES IN NORTHEAST CHINA

OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE OF TAX EXEMPTION OF SHANGHAI REPRESENTATIVE OFFICE OF THE DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT OF SOUTH AUSTRALIAN GOVERNMENT OF THE COMMONWEALTH AUSTRALIA

CIRCULAR OF THE MINISTRY OF FINANCE ON PRINTING AND DISTRIBUTING THE PROVISIONAL MEASURES FOR FISCAL AND FINANCIAL ADMINISTRATION OF SUBSIDY FUND FOR FIXED ASSETS INVESTMENT IN THE CENTRAL BUDGET

GUIDING OPINIONS OF THE CSRC, SASAC, MOF, PBC, AND THE MOFCOM ON SHARE-TRADING REFORM OF LISTED COMPANIES

CIRCULAR OF THE MINISTRY OF FINANCE ON PRINTING AND DISTRIBUTING THE PROVISIONAL MEASURES FOR FISCAL AND FINANCING MANAGEMENT OF INTEREST-SUBSIDY FUNDS FOR FIXED ASSET INVESTMENTS WITHIN THE CENTRAL GOVERNMENT’S BUDGET

MEASURES ON THE NOTIFICATION OF ILLEGAL AND IRREGULAR ACTS OF FOREIGN TRADE OPERATORS

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