ANNOUNCEMENT NO.9, 2006 OF THE MINISTRY OF COMMERCE OF THE PEOPLE’S REPUBLIC OF CHINA, ON CEASING THE ANTI-DUMPING INVESTIGATION TO IMPORTED ETHYLENE PROPYLENE TERPOLYMER ORIGINATED FROM THE USA, SOUTH KOREA AND NETHERLANDS

Ministry of Commerce

Announcement No.9, 2006 of the Ministry of Commerce of the People’s Republic of China, on Ceasing the Anti-dumping Investigation to
Imported Ethylene Propylene Terpolymer Originated from the USA, South Korea and Netherlands

[2006] No. 9

In accordance with Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce released announcement on Aug 10,
2004, deciding to carry out anti-dumping investigation on Ethylene Propylene Terpolymer (“investigated commodity” for short in the
following) originated from the United States, the Republic of Korea and Netherlands, which is under item 40027010 and 40027090 in
Import and Export Tariff of the People’s Republic of China.

Ministry of Commerce carried investigation into the existence of dumping, dumping margin, and injury and injury degree of the domestic
industries. According to investigating results as well as Article 24 of Anti-dumping Regulations of the People’s Republic of China,
Ministry of Commerce released preliminary arbitration, confirming the existence of dumping and injury of the domestic industries
as well as the causality between the dumping and the injury.

On Jan 23, 2006, Jilin Chemical Industry Company Limited, the applicant of this case apply to cancel his application on anti-dumping
investigation on Ethylene Propylene Terpolymer and ask for termination of Ethylene Propylene Terpolymer anti-dumping investigation.
In accordance related regulations of Article 27 of Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce
accepted the application and decided to terminate anti-dumping investigation on Ethylene Propylene Terpolymer originated from the
United States, the Republic of Korea and Netherlands as from release of this announcement. Chinese Customs will return deposit of
related importers for import of investigated commodities originated from the United States, the Republic of Korea and Netherlands.

Ministry of Commerce

Feb 9, 2006

Ministry of Commerce
2006-02-09

ACCOUNTING STANDARD FOR BUSINESS ENTERPRISES NO. 8 – IMPAIRMENT OF ASSETS

Ministry of Finance

Accounting Standard for Business Enterprises No. 8 – Impairment of Assets

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

To standardize the confirmation and measurement of the impairment of assets, and the disclosure of relevant information, these Standards
are formulated according to the Accounting Standard for Business Enterprises – Basic Standards.

Article 2

The term “impairment of assets” refers to that the recoverable amount of assets is lower than its carrying value.

The assets as mentioned in these standards shall include single item assets and group assets.

The term “group assets ” refers to a minimum combination of assets that may be recognized by an enterprise, by which the flow-in cash
generated shall be generally independent of those by other assets or group assets.

Article 3

The following items shall be subject to other relevant accounting standards:

(1)

The impairment of inventories shall be subject to the Accounting Standard for Business Enterprises No. 1 – Inventories;

(2)

The impairment of investment properties measured through the fair value method shall be g subject to the Accounting Standard for Business
Enterprises No. 3 – Investment Properties;

(3)

The impairment of consumptive biological assets shall be subject to the Accounting Standard for Business Enterprises No. 5 – Biological
Assets;

(4)

The impairment of assets formed by construction contracts shall be subject to the Accounting Standard for Business Enterprises No.
15 – Construction Contracts;

(5)

The impairment of deferred income tax assets shall be subject to the Accounting Standard for Business Enterprises No. 18 – Income
Taxes;

(6)

The impairment of the unsecured residual value of the lessor in a financial leasing shall be subject to the Accounting Standard for
Business Enterprises No. 21 – Leases;

(7)

The impairment of financial assets regulated by the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement
of Financial Instruments shall be subject to the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement
of Financial Instruments; and

(8)

The impairment of the rights and interests of unverified petroleum and natural gas mining areas shall be subject to the Accounting
Standard for Business Enterprises No. 27 -Extraction of Petroleum and Natural Gas.

Chapter II Recognition of Assets with Potential Impairment

Article 4

An enterprise shall, on the day of balance sheet, make a judgment on whether there is any sign of possible assets impairment.

No matter whether there is any sign of possible assets impairment, the business reputation formed by the merger of enterprises and
intangible assets with uncertain service lives shall be subject to impairment test every year.

Article 5

There may be an impairment of assets when one of the following signs occurs:

(1)

The current market price of assets falls, and its decrease is obviously higher than the expected drop over time or due to the normal
use;

(2)

The economic, technological or legal environment in which the enterprise operates, or the market where the assets is situated will
have any significant change in the current period or in the near future, which will cause adverse impact on the enterprise;

(3)

The market interest rate or any other market investment return rate has risen in the current period, and thus the discount rate of
the enterprise for calculating the expected future cash flow of the assets will be affected, which will result in great decline of
the recoverable amount of the assets;

(4)

Any evidence shows that the assets have become obsolete or have been damaged substantially;

(5)

The assets have been or will be left unused, or terminated for use, or disposed ahead of schedule;

(6)

Any evidence in the internal report of the enterprise shows that the economic performance of the assets have been or will be lower
than the expected performance, for example, the net cash flow created by assets or the operating profit (or loss) realized is lower
(higher) than the excepted amount, etc.; and

(7)

Other evidence indicates that the impairment of assets has probably occurred.

Chapter III Measurement of Recoverable Amount of Assets

Article 6

Where any evidence shows that there is possible assets impairment, the recoverable amount of the assets shall be estimated.

The recoverable amount shall be determined in light of the higher one of the net amount of the fair value of the assets minus the
disposal expenses and the current value of the expected future cash flow of the assets.

The disposal expenses shall include the relevant legal expenses, relevant taxes, truckage as well as the direct expenses for bringing
the assets into a marketable state.

Article 7

When either of the net amount of the fair value of an asset minus the disposal expenses or the current value of the expected future
cash flow of the asset exceeds the carrying value of the asset, it shows that no asset impairment has occurred, and it does not need
to estimate another amount of the asset.

Article 8

The net amount of the fair value of an asset minus the disposal expenses shall be determined in light of the amount of the basis of
the price as stipulated in the sales agreement in the fair transaction minus the disposal expenses directly attributable to the asset.

Where there is no sales agreement but there is an active market of assets, the net amount of the fair value of an asset minus the
disposal expenses shall be determined in light of the amount of the market price of the asset minus the disposal expenses. Generally
the market price of the asset shall be determined according to the price bidden by the buyer of the asset.

Where there is no sales agreement and no active market of assets, the net amount of estimated fair value of an asset minus the disposal
expenses shall be estimated in light of the best information available. The said net amount may be estimated by reference to the
latest transaction prices or results of similar assets among the counterparts.

Where the net amount of the fair value of an asset minus the disposal expenses cannot be estimated reliably according to the provisions
as described above, the enterprise shall regard the current value of the expected future cash flow of the asset as the recoverable
amount of the asset.

Article 9

The current value of the expected future cash flow of an asset shall be determined by the discounted cash with an appropriate discount
rate, on the basis of the expected future cash flow generated during the continuous use or final disposal of an asset.

To predict the current value of the future cash flow, the enterprise shall take into comprehensive consideration the expected future
cash flow, service life, discount rate, and other factors.

Article 10

The expected future cash flow of an asset shall include the following items:

(1)

The cash inflow generated during the continuous use of the asset.

(2)

The necessary expected cash outflow for realizing cash inflow generated during the continuous use of the asset (including the cash
outflow for bring the asset to the expected conditions for use).

The outflow of cash shall be the outflow cash that is directly attributable to, or that may be distributed to the asset on reasonable
and consistent basis.

(3)

At the end of the service life of an asset, the net cash flow received or paid for the disposal of the asset. The cash flow shall
be, during the process of fair transaction between parties that are familiar with the situation on their own free will, the amount
expected to obtain from or pay for the disposal of the asset minus the expected disposal expenses.

Article 11

When making an estimate of the future cash flow of an asset, the managers of the enterprise shall make a best estimate of the entire
economic status of the asset in its remaining service life in a reasonable and well-grounded manner.

The expected future cash flow of an asset shall base on the latest financial budget or forecast data as well as the stable or regressive
growth rates after the year of the aforesaid budget or forecast. Where the managers can prove that the progressive growth rates are
reasonable, the expected future cash flow of the asset may base on the progressive growth rates.

The expected cash flow set forth on the basis of the budget or forecast can cover 5 years at most. Where the managers can prove that
a longer period is reasonable, it may cover longer time.

When making estimate of the cash flow after the year of the budget or forecast, the growth rates adopted shall not, unless the enterprise
can prove that it is reasonable to adopt higher growth rates, exceed the long-term average growth rate of the products, or the market,
or the industrial field which the enterprise belongs to, or the country or region where the enterprise is located, or the long-term
average growth rate of the market where the asset is situated.

Article 12

The expected future cash flow of an asset shall base on the current status of the asset. It shall not include any possible and uncommitted
recombination items or any expected future cash flow related to the asset improvement.

The expected future cash flow of an asset shall not include the cash inflow or outflow generated by financing activities, or the cash
flow related to the receipt or payment of income taxes.

Where an enterprise has made a commitment of recombination, when determining the current value of the future cash flow of assets,
the amounts of the expected future cash inflow and outflow shall reflect the expenses that can be saved in the recombination, other
benefits to be brought about by the recombination, and the estimated amount of the future cash outflow that may result from the recombination.
Generally, the expenses that can be saved in the recombination and other benefits that could be brought about by the recombination
shall be estimated on the basis of the latest financial budget or forecast data as approved by the management of the enterprise.
The amount of future cash outflow that may result from the recombination shall be estimated according to the expected amount of liabilities
incurred due to the recombination as described in the Accounting Standard for Business Enterprises – Contingencies.

Article 13

The discount rate is the pre-tax interest rate, which can reflect the time value of money in the present market and the specific risks
of the asset. The discount rate is the necessary return rate as required by an enterprise when it purchases or invests in the asset.

Where an adjustment has been made to the specific risks of the asset when an estimate of the future cash flow of an asset is made,
it does not need to take into consideration these specific risks when making an estimate of the discount rate. Where the estimate
of the discount rate is based on the post-tax factors, it shall be adjusted to the pre-tax discount rate.

Article 14

Where the expected future cash flow of an asset involves any foreign currency, the current value of the asset shall, on the basis
of the settlement currency of the future cash flow to be generated by the asset, be calculated with a discount rate applicable to
this currency. Then the current value of the foreign currency shall be converted at the spot exchange rate of the current day when
the future cash flow of the asset is calculated.

Chapter IV Determination of Losses of Asset Impairment

Article 15

Where the measurement result of the recoverable amount indicates that an asset’s recoverable amount is lower than its carrying value,
the carrying value of the asset shall be recorded down to the recoverable amount, and the reduced amount shall be recognized as the
loss of asset impairment and be recorded as the profit or loss for the current period. Simultaneously, a provision for the asset
impairment shall be made accordingly.

Article 16

After the loss of asset impairment has been recognized, the depreciation or amortization expenses of the impaired asset shall be adjusted
accordingly in the future periods so as to amortize the post-adjustment carrying value of the asset systematically (deducting the
expected net salvage value) within the residual service life of the asset.

Article 17

Once any loss of asset impairment is recognized, it shall not be switched back in the future accounting periods.

Chapter V Recognition of Group Assets and Treatments of Impairment

Article 18

Where there is any evidence indicating a possible impairment of assets, the enterprise shall, on the basis of single item assets,
estimate the recoverable amount. Where it is difficult to do so, it shall determine the recoverable amount of the group assets on
the basis of the asset group to which the asset belongs.

The recognition of an asset group shall base on whether the main cash inflow generated by the asset group is independent of those
generated by other assets or other group assets. Simultaneously, when recognizing an asset group, the enterprise shall take into
consideration how its managers manage the production and business activities (for example, according to the production lines, business
varieties or according to the regions or areas), and the ways of decision-making for the continuous use or disposal of the assets,
etc.

Where there is an active market for the products manufactured by (or other outputs of) a combination of several assets, even if some
or all of these products (or other outputs) are provided for the internal use, the enterprise shall also recognize this combination
of assets as an asset group on the condition that the provisions of the preceding paragraph are accorded with.

Where the cash inflow of the asset group is affected by the internal transfer price, the future cash flow of the asset group shall
be determined on the basis of the best available estimate made by the managers of the enterprise for the future price in the fair
transaction.

Once an asset group is recognized, it shall be kept consistent during different accounting periods, and not be changed at will.

Where it is necessary to make any change, the managers of the enterprise shall prove that this change is reasonable, and shall make
an explanation pursuant to Article 27 of these Standards in its annotation.

Article 19

The basis for the determination of the carrying value of an asset group shall be the same as that for the determination of the recoverable
amount.

The carrying value of an asset group shall include the carrying value that may be directly attributed to or may be reasonably and
consistently distributed to the asset group. Generally it shall not include the carrying value of liability that has already been
recognized, unless it is unable to determine the recoverable amount of the asset group if not considering the amount of liability.

The recoverable amount of an asset group shall be determined on the basis of the higher one of the net amount of the fair value of
the asset minus the disposal expenses and the current value of the expected future cash flow of the asset.

Where the purchaser is required to bear a liability (such as environment resumption liability, etc.) when an asset group is disposed
of, the amount of liability has been recognized and has been recorded in the carrying value of the relevant assets, and the enterprise
can only obtain the net amount of the unitary fair value of the assets and liability aforesaid minus the disposal expenses, the amount
of liability that has been recognized shall be deducted from the liability when determining the carrying value and the current value
of expected future cash flow of the asset group, so as to compare the carrying value with the recoverable amount of the asset group.

Article 20

The assets of the headquarter of an enterprise shall include the office buildings, electronic data processing equipments of the enterprise
group or its business departments. A conspicuous character of the assets of the headquarters is that it is difficult to generate
independent cash inflow when it is separated from other assets or asset group and difficult to attribute its carrying value completely
to a certain group.

Where any evidence shows any possible impairment of a particular asset of the headquarter, the enterprise shall calculate and determine
the recoverable amount of the asset group to which the asset group or the combination of group assets belongs to, then compare it
with the corresponding carrying value of the asset so as to decide whether it is necessary to confirm the impairment loss.

The term “combination of group assets” refers to the minimum combination of group assets formed by several asset groups, including
the asset groups or combination of group assets, and the proportion of the assets of the headquarter allocated by a reasonable method.

Article 21

When an enterprise conducts an impairment test on a certain asset group, it shall first determine all the assets of the headquarter
which are related to the asset group, then treat it according to the following circumstances respectively by taking into consideration
whether the assets of the headquarter can be apportioned to this asset group on a reasonable and consistent basis:

(1)

For the part of the relevant assets of the headquarter that can be apportioned to this asset group on a reasonable and consistent
basis, the enterprise shall apportion the carrying value of this proportion to this asset group, then compare the carrying value
of the asset (including the carrying value of the headquarters’ assets which have been apportioned to) with its recoverable amount
and treat it in pursuance of Article 22 of these Standards.

(2)

Where it is difficult to apportion some assets of the related assets of the headquarter to this asset group on a reasonable and consistent
basis, the enterprise shall take the following steps to treat these assets:

First, without taking into consideration the relevant assets of the headquarter, estimating and comparing the carrying value with
its recoverable amount of the asset group, and treating it in accordance with Article 22 of these Standards.

Second, deciding the minimum combination of asset groups formed by several asset groups. This combination of asset groups shall include
the asset groups that have been tested, and the proportion of the carrying value of the headquarters’ assets that can be apportioned
to this combination on a reasonable and consistent basis.

Finally, comparing the carrying value of the combination of asset groups it has determined (including the proportion of the headquarter’
assets that have been apportioned to) with the recoverable amount of the combination, and treats it according to Article 22 of these
Standards.

Article 22

Where the recoverable amount of an asset group or a combination of asset groups is lower than its carrying value (where the headquarter’
assets and business reputation are apportioned to a certain asset group or a combination of asset groups, the carrying value of the
asset group or the combination of asset groups shall include the amount of the relevant assets of the headquarter and business reputation
that have been apportioned to), it shall be recognized as the corresponding impairment loss. The amount of the impairment loss shall
first charge against the carrying value of the headquarter’ assets and business reputation which are apportioned to the asset group
or combination of asset groups, then charge it against the carrying value of other assets in proportion to the weight of other assets
in the asset group or combination of asset groups with the business reputation excluded.

The charges against the carrying value of the assets above shall be treated as the impairment loss of the assets (including the business
reputation) and recorded as profit or loss for the current period. The carrying value of each asset after charging against shall
not be lower than the highest one of the following three: the net amount of the fair value of the asset minus the disposal expenses
(if determinable), the current value of the expected future cash flow of the asset (if determinable), and zero.

The amount of impairment loss that cannot be apportioned incurred thereby shall be apportioned on the basis of the weight of the carrying
value of other assets in the relevant asset group or combination of the asset groups.

Chapter VI Treatment of Impairment of Business Reputation

Article 23

The business reputation formed by merger of enterprises shall be subject to an impairment test at least at the end of each year. The
business reputation shall, together with the related asset group or combination of asset group, be subject to the impairment test.

The related asset group or combination of asset groups shall be the asset group or combination of asset groups that can benefit from
the synergy effect of enterprise merger, and shall be smaller than the reporting segments as determined according to Accounting Standard
for Business Enterprises No. 35 – Segment Reporting.

Article 24

When an enterprise makes an impairment test of assets, it shall, as of the purchasing day, apportion the carrying value of the business
reputation formed by merger of enterprises to the relevant asset groups by a reasonable method. Where it is difficult to do so, it
shall be apportioned to the relevant combinations of asset groups.

When apportioning the carrying value of the business reputation to the relevant asset groups or combinations of asset groups, it shall
be apportioned on the basis of the proportion of the fair value of each asset group or combination of asset groups to the total fair
value of the relevant asset groups or combinations of asset groups. Where it is difficult to measure the fair value reliably, it
shall be apportioned on the basis of the proportion of the carrying value of each asset group or combination of asset groups to the
total carrying value of the relevant asset groups or combinations of asset groups.

Where the report structure is changed due to enterprise recombination or for any other reason, which thus has affected the structure
of one or several asset group(s) or combination(s) of asset groups to which the business reputation has already been apportioned,
the business reputation shall be reapportioned to the affected asset group(s) or combinations of the asset group(s), with the apportion
method similar to that as provided for in the preceding paragraph of this Article.

Article 25

When making an impairment test on the relevant asset groups or combination of asset groups containing business reputation, if any
evidence shows that the impairment of asset groups or combinations of asset groups is possible, the enterprise shall first make an
impairment test on the asset groups or combinations of asset groups not containing business reputation, calculate the recoverable
amount, compare it with the relevant carrying value and recognize the corresponding impairment loss. Then the enterprise shall make
an impairment test of the asset groups or combinations of asset groups containing business reputation, and compare the carrying value
of these asset groups or combinations of asset groups (including the carrying value of the business reputation apportioned thereto)
with the recoverable amount. Where the recoverable amount of the relevant assets or combinations of the asset groups is lower than
the carrying value thereof, it shall recognize the impairment loss of the business reputation, and treat them according to Article
22 of these Standards.

Chapter VII Disclosure

Article 26

An enterprise shall disclose the following information relevant to the impairment of assets in its annotation:

(1)

The amount of impairment loss of each asset recognized at the current period;

(2)

The accumulative amount of provision for the impairment of each asset; and

(3)

The amount of impairment loss recognized in each reporting segment of the current period, if segment reporting information is provided.

Article 27

Where any serious asset impairment loss has been incurred, the enterprise shall, in its annotation, disclose the reasons why each
of the serious asset impairment losses has occurred, and the amount of serious asset impairment losses recognized in the current
period.

(1)

Where a serious impairment loss has been incurred for a single item asset, the enterprise shall disclose the nature of the single
item asset. Where any segment of the reporting information is provided, the enterprise shall also disclose the segment of the main
reporting to which this asset belongs to.

(2)

Where a serious impairment loss has been incurred to an asset group (or combination of asset groups, the same below), it shall disclose:

(a)

The basic information of the asset group;

(b)

The amounts of impairment loss of each asset of the asset group as recognized in the current period; and

(c)

Where the formation of the asset group is deferent from those in the previous period, the enterprise shall disclose the reasons for
the change, as well as the constitution of the asset group in the previous period and the current period.

Article 28

With regard to any serious impairment of assets, the enterprise shall disclose the method for the determination of the recoverable
amount of the assets (or asset group, the same below) in its annotation:

(1)

Where the recoverable amount is determined on the basis of the net amount of the fair value of the asset minus the disposal expenses,
the enterprise shall disclose the basis for the estimate of the net amount of the fair value minus the disposal expenses.

(2)

Where the recoverable amount is determined on the basis of the expected future cash flow of the assets, the enterprise shall disclose
the discount rate it adopts for estimating the current value of the assets, as well as the discount rate it adopted in the previous
period when the recoverable amount of the asset in the previous period was also determined on the basis of the expected future cash
flow of the asset.

Article 29

The information as described in Paragraph 1,2 of Article 26 and Item 2 of Paragraph 2 of Article 27 shall be disclosed according
to different sorts of the assets. The sorts of assets shall be determined by considering whether the nature or function of the assets
in production and business operation are identical or similar.

Article 30

Where the carrying value of the business reputation apportioned to a particular asset group (or intangible asset with uncertain service
life, the same below) accounts for a large portion of the total carrying value of the business reputation, the enterprise shall disclose
the following information in its annotation:

(1)

The carrying value of the business reputation apportioned to the asset group;

(2)

The method for the determination of the recoverable amount of the asset group.

(a)

Where the recoverable amount is determined on the basis of the net amount of the fair value of the asset group minus the disposal
expenses, the enterprise shall disclose the method for the determination of the net amount of the fair value minus the disposal expenses.
Where the net amount of the fair value of the asset group minus the disposal expenses is not determined on the basis of the market
price, the enterprise shall disclose:

(i)the crucial assumptions adopted by the managers of the enterprise for the determination of the net amount of the fair value minus
the disposal expenses, and the basis for these assumptions;

(ii)whether or not the values of the crucial assumptions as determined by the managers of the enterprise are consistent with the experiences
of the enterprise or its external information; if not, the reasons shall be accounted for.

(b)

Where the recoverable amount is determined according to the current value of future cash flows as predicted by the asset group, the
enterprise shall also disclose:

(i)the assumptions for predicting the cash flows in the future and the grounds thereof made by the managers of the enterprise;

(ii)when the managers of the enterprise determine the values relating to the relevant assumptions, whether they are in consistence
with the experiences of the enterprise or the external information; if not, the reasons shall be accounted for;

(iii)the discount rate adopted for the estimate of the current value.

Article 31

Where the total or partial carrying value of the business reputation is apportioned to several asset groups, and the proportion apportioned
to each asset group to the total carrying value of the business reputation is not large, the enterprise shall describe it and offer
the aggregate amount of the business reputation apportioned to the above-mentioned asset groups in its annotation.

Where the carrying value of the business reputation is apportioned to the above-mentioned asset groups according to the same crucial
assumptions, and the amount of business reputation apportioned to each assets group accounts for a large proportion of the total
carrying value of the business reputation, the enterprise shall describe it and disclose the following information in its annotation:

(1)

The aggregate carrying value of the business reputation apportioned to the above-mentioned asset groups;

(2)

The crucial assumptions adopted, and the grounds thereof; and

(3)

Whether or not the values of the crucial assumptions as determined by the managers of the enterprise are consistent with the experiences
of the enterprise or the source of its external information; if not, the reasons shall be accounted for.

Ministry of Finance
2006-02-15

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 23 – TRANSFER OF FINANCIAL ASSETS

Ministry of Finance

Accounting Standards for Enterprises No. 23 – Transfer of Financial Assets

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

These Standards are formulated in accordance with the Accounting Standards for Enterprises – Basic Standards for the purpose of regulating
the recognition and measurement of the transfer of financial assets (including a single or a group of similar financial assets).

Article 2

The term “transfer of a financial asset” refers to an enterprise’s (the transferor’s) transferring or delivering a financial asset
to a party other than the issuer of the financial asset (the transferee).

Article 3

If the enterprise has the control right over the transferee of the financial asset, it shall not only apply these Standards to its
financial statements, but also include the transferee into its scope of consolidated financial statements according to the Accounting
Standards for Enterprises No. 33 -Consolidated Financial Statements.

Chapter II Recognition of Transfer of Financial Assets

Article 4

The transfer of financial asset by an enterprise includes two circumstances as follows:

(1)

The enterprise transfers the right to another party for receiving the cash flow of the financial asset; and

(2)

The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset
and undertakes the obligation to pay the cash flow it receives to the final recipient, and meets the conditions as follows at the
same time :

(a)

The enterprise is not obliged to make any payment to the final recipient until it receives the cash flow which is equivalent to the
financial asset. For any short-term payment made by the enterprise on behalf of others, if the enterprise has the right to recover
the full amount of the payment and charge interests according to the market bank loan interest rate of the same period, the conditions
shall be deemed to have been satisfied.

(b)

In accordance with the contractual stipulations, the enterprise can’t sell the financial asset or use it as a guaranty, but it may
use it as an guarantee for paying the cash flow to the final recipient.

(c)

The enterprise is obliged to pay the cash flow it receives to the final recipient in a timely manner. The enterprise has no right
to make a re-investment with the cash flow, but in accordance with the contractual stipulations, it may make investment with cash
or cash equivalent by using the cash flow it receives during the interval of between 2 consecutive payments. If the enterprise makes
a reinvestment in accordance with the contractual stipulations, it shall pay the proceeds by investment to the final recipient in
accordance with the contractual stipulations.

Article 5

An enterprise shall differentiate the transfer of a financial asset into the entire transfer and the partial transfer of financial
assets, and deal with them respectively according to these Standards.

Article 6

The partial transfer of financial asset includes the circumstances as follows:

(1)

To transfer the specific or identifiable portion of the cash flow arising from the financial asset, for example, the enterprise transfers
the receivable interests of a group of similar loans and etc.;

(2)

To transfer a certain proportion of the total cash flow arising from the financial asset, for example, the enterprise transfers a
certain proportion of the principal and receivable interests of a group of similar loans and etc.; and

(3)

To transfer a certain proportion of the specific or identifiable portion of the cash flow arising from the financial asset, for example,
the enterprise transfers a certain portion of the receivable interests of a group of the similar loans and etc..

Article 7

Where an enterprise has transferred nearly all of the risks and rewards related to the ownership of the financial asset to the transferee,
it shall stop recognizing the financial asset. If it retained nearly all of the risks and rewards related to the ownership of the
financial asset, it shall not stop recognizing the financial asset.

The expression “to stop recognizing” shall refer to a financial asset or financial liability to be written off from the account and
balance sheet of the enterprise.

Article 8

When an enterprise makes a judgment about whether nearly all of the risks and rewards related to the ownership of a financial asset
are transferred to the transferee, it shall compare the pre- and post-transfer risks it faces due to the change of the net present
value of the future cash flow of the financial asset and the time distribution.

If the risks that the enterprise faces have changed substantially resulting from the transfer of a financial asset, it shows that
the enterprise has transferred nearly all of the risks and rewards related to the ownership of financial asset to the transferee,
for example, the sale of a financial asset without any additional term of guarantee and etc..

If the risks that the enterprise faces have not changed substantially resulting from the transfer of a financial asset, it shows that
the enterprise still retains all the risks and rewards related to the ownership of the financial asset, for example, it transfers
an entire loan and undertake a full amount of compensation for the possible credit losses of the loan and etc..

Where an enterprise requires to judge, by calculation, whether it has transferred nearly all of the risks and rewards related to the
ownership of financial asset to the transferee, when it calculates the net present value of the future cash flow of the financial
asset, it shall take into consideration all the reasonable and possible fluctuating of the cash flow, and shall adopt an appropriate
present market interest rate as the discount rate.

Article 9

Where an enterprise does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset
(that is to say, it is not under a circumstance as mentioned in Article 7 of these Standards), it shall deal with it according to
the circumstances as follows, respectively:

(1)

If it gives up its control over the financial asset, it shall stop recognizing the financial asset;

(2)

If it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the
transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly.

The term “continuous involvement in the transferred financial asset” shall refer to the risk level that the enterprise faces resulting
from the change of the value of the financial asset.

Article 10

When an enterprise judges whether its control over the transferred financial asset has been given up, the enterprise shall pay more
attention to the transferee’s actual ability of selling the financial asset. If the transferee is able to independently sell the
entire transferred financial asset to a third party without any relationship with it as an associated party and there is no additional
conditions to limit the sale, it shows that the enterprise has given up its control over the financial asset.

Article 11

To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these Standards for stopping the recognition
of a financial asset, the enterprise shall pay more attention to the essential of the transfer of the financial asset.

(1)

For the sale of a financial asset with a repurchase agreement, if the asset to be repurchased by the transferor is identical with
or substantially identical with the sold financial asset, and if the repurchase price is fixed or is the original sales price plus
a reasonable return, the sold financial asset shall not be stopped to recognize , for example, selling any bonds through a buyout
repo or a pledged repo transaction.

(2)

After the transfer of a financial asset, if the transferor only retains the priority to repurchase the right of financial asset at
its fair value (when the transferee sells the financial asset), it shall stop recognizing the transferred financial asset.

(3)

For the transfer of a financial asset in which the secondary equities are retained or a credit guaranty is given for upgrading the
level of credit, if the transferor only retains partial (not nearly all of) the risks and rewards related to the ownership of the
transferred financial asset and may control the transferred financial asset, it shall recognize the relevant asset and liability
according to the extent of its continuous involvement in the transferred financial asset.

Chapter III Measurement of Transfer of Financial Assets

Article 12

If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts
of the following 2 items shall be recorded in the profits and losses of the current period:

(1)

The book value of the transferred financial asset;

(2)

The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded
in the owner’s equities (in the event that the financial asset involved in the transfer is a financial asset available for sale).

Where an enterprise obtains a new financial asset or undertakes a new financial liability due to the transfer of a financial asset,
it shall, on the date of transfer, recognize the financial asset or liability according to its fair value (including the call option,
put option, guaranteed liability, future contract, interchange, etc.) , and shall treat the net amount as an integral part of the
aforesaid consideration through deducting the financial liability from the financial asset .

Where an enterprise concludes a service contract with the transferee of a financial asset on providing relevant services (including
receiving cash flow of the financial asset and delivering the received cash flow to the fund preservation institution as designated),
it shall recognize a service asset or liability based on the service contract. The service liability shall be subject to the initial
measurement according to its fair value and shall be treated as an integrate part of the aforesaid consideration.

Article 13

If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire book value of the transferred
financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition has not been stopped
(under such circumstance, the service asset retained shall be deemed as a portion of financial asset whose recognition has not been
stopped), be apportioned according to their respective relative fair value, and the difference between the amounts of the following
2 items shall be included into the profits and losses of the current period :

(1)

The book value of the portion whose recognition has been stopped;

(2)

The sum of consideration of the portion whose recognition has been stopped, and the portion of the accumulative amount of the changes
in the fair value originally recorded in the owner’s equities which is corresponding to the portion whose recognition has been stopped
(in the event that the financial asset involved in the transfer is a financial asset available for sale).

The portion of the accumulative amount of changes in the fair value originally recorded in the owner’s equities which corresponds
to the portion whose recognition has been stopped, shall be recognized after the apportionment of the accumulative amount according
to the relative fair values of the portion of financial asset whose recognition has been stopped and the portion of financial asset
whose recognition has not been stopped.

Article 14

If the entire book value of the transferred financial asset is apportioned according to the relative fair values between the portion
whose recognition has been stopped and the portion whose recognition has not been stopped in accordance with the provision of Article
13 of these Standards, the fair value of the portion whose recognition has not been stopped shall be determined according to the
following provisions:

(1)

It shall be determined based on the latest actual transaction price if the enterprise has ever sold any financial asset similar to
the portion whose recognition has not been stopped, or has ever conducted any other market transaction related to the portion whose
recognition has not been stopped;

(2)

If no quotation for the portion whose recognition has not been stopped is available in the active market and if there is no actual
transaction price relating to it, it shall be determined based on the residual amount deducting the consideration of the portion
whose recognition has been stopped from the entire fair value of the transferred financial asset . If the entire fair value of the
financial asset is really difficult to determine reasonably, it shall be determined based on the residual amount deducting the consideration
of the portion whose recognition has been stopped from the entire book value of the financial asset.

Article 15

If an enterprise still retains nearly all of the risks and rewards related to the ownership of the transferred financial asset, it
shall continue to recognize the entire financial asset to be transferred and shall recognize the consideration it receives as a financial
liability.

The financial asset shall not be used to offset the relevant financial liabilities it has recognized. In the subsequent accounting
periods, the enterprise shall continue to recognize the income generated by the financial asset and the expenses generated by the
financial liability. If the transferred financial asset is measured at the amortized cost, the relevant liability it has recognized
shall not be designated as a financial liability, which is measured at its fair value and the changes are recorded in the profits
and losses of the current period.

Article 16

If an enterprise does not transfer or retain nearly all of the risks and rewards related to the ownership of the financial asset,
and does not waive its control over the financial asset, the relevant asset and liability it recognizes according to these Standards
shall fully reflect the rights it retains and the obligations it undertakes.

Article 17

If the enterprise is continuously involved in the transferred financial asset by way of providing a financial guarantee, it shall,
on the date of transfer, recognize the assets formed by its continuous involvement based on the book value of the financial asset
and the amount of financial guarantee, whichever is lower. In the meanwhile, it shall, based on the sum of amount of financial guarantee
and the fair value of the financial guaranty contract (the charge for providing the guarantee), recognize the liability formed by
its continuous involvement. The amount of financial guarantee shall refer to the highest amount of repayment to be demanded among
the considerations the enterprise receives.

In the subsequent accounting periods, the initially recognized amount of the financial guarantee contract shall be amortized in accordance
with the time proportion within the period of the financial guarantee contract and shall be recognized as income for each period.
The book value of the asset formed by the guarantee shall be conducted a devalue test on the balance sheet date.

Article 18

If an enterprise fails to satisfy the conditions to stop the recognition due to it sells a put option or holds a call option, and
it measures the financial asset at the amortized cost, it shall recognize the liability formed by its continuous involvement in the
light of the consideration it receives on the date of transfer.

The difference between the amount of the amortized cost of the transferred financial asset on the maturity date of the option and
the amount of the initially recognized liability formed by continuous involvement shall be amortized through the actual interest
rate method and recorded into the profits and losses of the current period. In the meanwhile, an adjustment shall be made to the
book value of the liability formed by its continuous involvement. For the relevant option exercise, the difference between the book
value of the liability formed by its continuous involvement and the exercise price of option shall, when exercising the option, be
recorded in the profits and losses of the current period.

Article 19

If an enterprise fails to satisfy the conditions to stop the recognition due to it holds a call option, and if it measures the financial
asset according to its fair value, it shall, on the date of transfer, recognize the transferred financial asset according to its
fair value and shall, in the light of the following provisions, simultaneously measure the liability formed by its continuous involvement:

(1)

If the option is an in-the-money option or at-the-money option, the liability formed by its continuous involvement shall be measured
in accordance with the residual amount of the option exercise price deduct the time value of the option; and

(2)

If the option is an out-of-the-money option, the liability formed by its continuous involvement shall be measured in accordance with
the residual value of the fair value of the transferred financial asset deduct the time value of the option.

Article 20

If an enterprise fails to satisfy the conditions to stop the recognition due to it sells a put option and if it measures the financial
asset according to its fair value, it shall, on the date of transfer, recognize the asset formed by its continuous involvement in
accordance with the fair value of the financial asset and the option exercise price, whichever is lower. At the same time, it shall
recognize the liability formed by its continuous involvement in accordance with the sum of option exercise price and the time value.

Article 21

If an enterprise fails to satisfy the conditions to stop the recognition for transferred financial asset due to it sells a put option
and purchases a call option (namely up-and-down options) and it measures the financial asset according to its fair value, it shall,
on the date of transfer, still recognize the transferred financial asset according to its fair value. At the same time, it shall
measure the liability formed by its continuous involvement in accordance with the following provisions:

(1)

If the call option is an in-the-money option or at-the-money option, the liability formed by its continuous involvement shall be measured
in accordance with the residual amount of the sum of option exercise price and the fair value of the put option less the time value
of the call option; and

(2)

If the call option is an out-of-the-money option, the liability formed by its continuous involvement shall be measured in accordance
with the residual value of the sum of total fair value of the transferred financial asset and the fair value of the put option less
the time value of the call option.

Article 22

An enterprise shall recognize the relevant assets formed by its continuous involvement in the transferred financial assets as the
relevant incomes and shall recognize the relevant liabilities formed by its continuous involvement therein as the relevant expenses.
The relevant assets and liabilities so formed by its continuous involvement shall not be offset each other, and their subsequent
measurement shall be governed by the Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments.

Article 23

An enterprise’s continuous involvement in merely a portion of its transferred financial asset shall be treated according to the Article
13 of these Standards.

Article 24

Where an enterprise provides the transferee of a financial asset with a non-cash guaranty (such as a liability instrument or equity
instrument investment), this enterprise and the transferee shall make treatments in accordance with the provisions as follows:

(1)

If the transferee has the right to sell the guaranty or reuse it as a guaranty in accordance with the contract or practices, the enterprise
shall put this non-cash guaranty into a new category in the balance sheet and present it separately;

(2)

If the transferee has sold this guaranty, the transferee shall recognize the a liability according to fair value for the obligation
to return the guaranty. ;

(3)

If the enterprise defaults and loses the right to redeem the guaranty, it shall stop recognizing the guaranty, and the transferee
shall recognize the guaranty as an asset according to its fair value. If the transferee has sold the guaranty, it shall stop recognizing
the obligation to return it; and

(4)

In a circumstance other than that as described in Item (3), the enterprise shall continue recognizing the guaranty as an asset.

Ministry of Finance
2006-02-15

NOTICE THE STATE ADMINISTRATION OF TAXATION ON IMPOSING BUSINESS INCOME TAX IN REAL ESTATE DEVELOPMENT

The State Administration of Taxation

Notice the State Administration of Taxation on Imposing Business Income Tax in Real Estate Development

Guo Shui Fa [2006] No.31

March 6, 2006

To states tax bureaus, local tax bureaus of all provinces, autonomous region, municipalities under the Central Government, cities
specifically designated in the state plan:

In order to strengthen and standardize the administration on business income tax in the enterprises concerning real estate development,
in accordance with Provisional Regulations of the People’s Republic of China on Enterprise Income Tax and its enforcement regulations,
laws and provisions related to Law of The People’s Republic of China concerning the Administration of Tax Collection Order, as well
as the operational characteristics of the enterprises of real estate development, business income tax concerning real estate development
enterprises is hereby given as follows:

Tax handling of uncompleted development products

Where such development products as residence developed and constructed by development enterprises, commercial occupancy as well as
other buildings, attaching, supporting facilities and etc. are sold by means of advance sale prior to its completion, its presale
income shall, in accordance with assessable gross profit, work out quarterly( or monthly) gross profit volume of the current period
and subsequently the taxable income after having deducted relevant period charge, sales tax and adjunct account and then be adjusted
after the assessable cost of development products was calculated.

(i)

The item of economically affordable housing shall comply with the provisions such as Notice of the Ministry of Construction, State
Development and Reform Commission, Ministry of Natural Resources, People’s Bank of China on Printing and Distributing Measures for
Economic Affordable Houses (Jian Zhu Fang (2004) No.77) and etc, the assessable gross profit margin rate of the presale income shall
be no less than 3%. The real estate development shall, when applying for initial tax returns filing, attach the certificate documents
of the related departments as well as other relevant certificate document. For those who do not comply with the provisions or fail
to submit the certified documents of the related departments as well as other related certificate documents, they shall calculate
the business income tax in accordance with the provisions about sale of non-economic affordable houses.

(ii)

The estimated assessable gross profit margin rate of non-economic affordable houses shall be determined in accordance with the following
provisions:

Where the development item is located in the urban and suburban areas of provinces, autonomous regions, and cities specifically designated
in the state plan, its estimated assessable gross profit margin rate shall be not less than 20%.

Where the development item is located in prefecture or its suburban region, its estimated assessable gross profit margin rate shall
be not less than 15%.

Where the development item is located in other areas, its estimated assessable gross profit margin rate shall be not less than 10%.

II.

Tax affairs treatment about completed development products

(i)

Those who comply with any of the following circumstances shall be deemed as having completed the development product:

The certificate of project completion of the development product or (cost objective) has been submitted to the management department
of real estate for record;

The development product or (cost objective) has obtained the certificate of initial property right.

(ii)

After the completion of development product, development enterprises shall, in accordance with the nature and means of production
of its income and means of sale as well as the principle of income confirmation, confirm rationally the presale as real sale income,
and simultaneously carry forward the corresponding assessable cost and work out the gross profit of the real sale income hereof.
The difference between gross profit margin of its real sale and the estimated gross profit margin shall be calculated in the tax
payable of the project completion year. Where those completed development products yet fail to calculate the assessable cost in the
project completion year in accordance with the related provisions, or fail to adjust the taxpaying difference between the real sale
income of real sale and gross profit margin, the tax authorities is enpost_titled to confirm or verify its assessable cost and thereby
conduct taxpaying adjustment and handle it in accordance with Law of The People’s Republic of China concerning The Administration
of Tax Collection Order.

(iii)

After the completion of product development, development enterprises shall, prior to the annual taxpaying declaration, submit the
status quo of the project completion to the taxation authorities in responsible. The development enterprises shall, when declaring
annual taxpaying, submit the tax appraisal report issued by related departments concerning adjustment of difference between gross
profit margin of its real sale and the presale gross profit margin as well as other related documents required by the tax authorities.

The aforesaid tax appraisal report concerning difference adjustment includes: geographical locations and survey of the development
item, floor space, development usage, initial development time, completion time, salable areas and sold areas, presale income and
gross profit, real sale income and gross profit margin, development cost and real sale cost and etc.

(iv)

The income of development product covers all the purchase price in the process of product development, including cash, cash equivalent
as well as other economic interest. Where various fund, expenses and adjunct account charged by the development enterprise in the
name of relevant departments, units and enterprises are included in cost of development product or invoice issued by development
enterprise, they shall be confirmed as sale income; otherwise, they may be deemed funds to collect or remit for management.

(v)

The sale income of development product shall be confirmed in accordance with the following provisions:

Where the development products are sold by means of one-off collection, the income shall be confirmed on the very day when real payment
or price certificate (right) are fulfilled.

Where the development products are sold by means of installment collection, the income shall be confirmed by means of the settled
price and cash day. Where the payer pays in advance, the income shall be confirmed on the actual cash day.

Where development products are sold by means of bank mortgage, the income volume shall be determined in accordance with the settled
price determined in sale contract or agreement, its initial payment shall be confirmed on very day when it is received, the remaining
part shall be confirmed on the very day when the account is transferred by means of bank mortgage.

Where the development products are sold by means of entrustment, they shall be realized in accordance with the following principles:

(1) Where the development products are entrusted to be sold by means of paying service charge, fund shall be confirmed on the very
day when the list of sold development products from entrusted party is received in accordance with the settled sum in sales contract
or agreement.

(2) Where development products are entrusted to be sold by means of buyout, and sales contract or agreement are signed by the development
enterprise or buyer, or jointly signed by the development enterprise, the entrusted party and the buyer, if the settled price in
the sales contract or agreement is higher than the buyout price, the fund calculated by the settled price in the sales contract or
agreement shall confirmed on the very day when the list of the sold development products from the entrusted party is received; where
the settled price in the sales contract or agreement in the former two occasions is lower than the buyout price and the sales contract
or agreement is signed by the entrusted party and the buyer, the fund calculated in accordance with buyout price shall be confirmed
on the very day when the list of sold products from the entrusted party is received.

(3) Where the development products is entrusted to be sold by means of base price (minimum price) and profit-sharing by the two parties
through excessive base price and sales contract or agreement is signed by the development enterprise and the buyer or jointly signed
by development enterprise, the entrusted party, the buyer, if the settled price in the sales contract or agreement is higher than
the base price, the fund calculated in accordance with the settled price in the sales contract or agreement shall be confirmed on
the very day when the bill of sold development products from the entrusted party is received, and the sum paid by development enterprises
to the entrusted party shall not be deducted from sales income; where the settled price in sales contract or agreement is lower than
the base price, the sum calculated by base price shall be confirmed on the very day when the bill of sold development products form
the entrusted party is received. Where the sales contract is directly signed by the entrusted party and the buyer, the sum calculated
by base price plus the gained sum shall be confirmed on the very day when the list of sold development products from the entrusted
party is received.

(4) Where the development products is entrusted to be sold by means of exclusive sales, the sum in the exclusive sales term may be
confirmed in accordance with the related provisions of exclusive contract and the aforesaid items from (1) to (3); where the development
products have not been sold after the expiration of the exclusive sales term, the development enterprise shall be confirmed in accordance
with the price and means of paying in sales contracts or agreement.

The list of sold development products shall include such contents of the development products as name, geographical location, serial
number, amount, unit price, sum, service charges and etc. are calculated on month or quarter basis regularly, and taxpaying declaration
and prepay tax shall be submitted to tax authorities within the prescribed time limit. Where those fail to conduct regular settlement,
taxpaying declaration and prepay tax, they should be punished in accordance with Law of The People’s Republic of China concerning
the Administration of Tax Collection Order.

Where the development enterprises rent and then sell the development products, those who transform the development products to fixed
assets, the purchase price obtained in the period of rent shall be confirmed through the amount of rent; where those fail to transform
development products to fixed assets, the purchase price in the period of rent shall be confirmed through rent and then through the
income from sale of development products in time of its sale.

III.

Confirmation of order-rent income of development products

Where the development enterprise sign forward contract with leaseholder prior to completing newly built development products or
undertaking house property initial registration and obtaining property certificate, the order-rent income gained by the renter shall
be confirmed through rent, and the order-rent expense paid by the leaseholder shall undertake pre-tax deduction in accordance with
rent expense.

IV.

Tax treatment about cooperation in the construction of development products

Where the development enterprise relies mainly on itself and cooperates with other enterprises, units, individuals or through joint-venture
to develop real estate item which has not established independent incorporated company, it shall carry it out in accordance with
the following provisions:

(i)

Where it is settled in the development contract or agreement that development products will be distributed to all of the investors
and the item has calculated its assessable cost in the first time for the development enterprise to distribute its development products,
the difference between the assessable cost of the development products due to be distributed to the investor ( i.e. its cooperation
and joint party, the same below) and its investment cost shall be calculated in the tax payable income; where the assessable cost
is not calculated in, the investment cost shall be deemed as presale income for related tax treatment.

(ii)

The distribution of item profit settled in development contract or agreement shall be handled in accordance with the following provisions:

The development enterprise shall incorporate the operating profit arisen from the item into the taxable income of the current period
and apply universally for business income tax and shall not distribute profit of the item prior to tax. Meanwhile, it shall not amortize
in the cost because of the acceptance of investment volume form the investor or deduct the relevant interest payment prior to tax.

The operating profit gained by the investor shall be deemed as equivalent to acquisition of dividend and bonus and pay the overdue
tax by holding the certificate issued by tax authorities in responsible in accordance with the provisions.

Tax treatment about investment development item in the land use right

(i)

Where the enterprise or unit invests land use right in real estate development item to exchange for development products, it shall
conduct it in accordance with the following provisions:

Where the enterprise or unit initially acquires development products, it shall divide it into transfer of land use right and buying
in development products to conduct income tax, and estimate, on the basis of fair market value of the acquired development products
(including that in the first time and that acquired later) the gain and loss due to the transfer of land use right.

The developer who have obtained land use right shall, when dividing it for the first time, divide it into two economic businesses
for treatment of income tax: the development products needed to be divided (including the initial time and the following ones), and
buying-in of the land use right, and calculate the value of land use right into the cost of this item.

(ii)

Where the enterprise or unit invests land use right in real estate development item in the form of stock rights, it shall conduct
it in accordance with the following provisions:

The enterprise or unit shall, on occasion of investment trade, divide it into sale of relevant non-cash asset and investment for business
income treatment and estimate loss and gain from asset transfer.

Where the proportion of the income of aforesaid transfer of land use right exceeds 5 % in the tax payable of the same year, the enterprise
or unit may, as of the commencement of investment trade, share equally in the taxable income by five tax years.

The developer who has accepted the land use right may, in time of investment trade, calculate the aforesaid investment trade volume
to confirm the cost of land use right and calculate it in the cost of development products.

VI.

Tax treatment concerning deeming development products as marketing

Such acts as the development enterprise transforms the development products to fixed assets or uses them for donate, sponsorship,
welfare of staff and worker, rewarding and overseas investment, or distributes them to stockholders or investor, reclaims debt, or
trades for non-cash assets of other enterprises and institutions, shall be deemed as marketing and the income (or profit) shall be
confirmed on the occasion when the ownership or right of use is transformed or the actual interest and profits are gained. The means
and orders to confirm the realization of income (or profit) shall be:

(i)

confirmed in accordance with the marketing price of the same kind of development products in the recent or the latest month of
the enterprise;

(ii)

confirmed by the tax authority in responsible by referring to the fair market value of the same kind of development products;

(iii)

confirmed in line with the cost-profit ratio of the development product. The cost-profit ratio of the development cost shall be no
less than 15% with the tax authority responsible for the determination of its detailed ratio.

VII.

Tax treatment concerning consigned project construction

(i)

Where the term of consigned project and labor service provided by the development enterprise is no more than 12 months, its receipt
may be confirmed in accordance with the settlement date agreed in the contract or on the date when the project is completed; where
the duration is more than 12 months, the receipt may be confirmed quarterly be means of percentage of project completion. Percentage
of project completion means that receipt and expenses are confirmed in accordance with the progress of contract. Its completion progress
may be determined in accordance with the proportion of the actual accumulative contract cost in estimated contract cost, the proportion
of the completed contract workload in the total contract workload as well as the completed contract workload.

(ii)

Where the material, leftovers, abandoned project or scrap of the products and etc. spared by the development project in the process
of project construction, labor service provisions are required to be owned by the development project, the receipt shall be confirmed
in accordance with the fair market value closing cost

VIII.

Deduction of development product cost and expense

The development enterprise shall, when conducting accounting and deduction of development product cost and expenses, differentiate
period expense and development product expense, accounting cost of development cost and the assessable cost hereof, the assessable
cost of the sold development products and unsold development products.

(i)

The development enterprise shall, when settle the assessable cost, behave in accordance with the following provisions:

Where all kinds of expenses in the process of development products construction arise in the current period, they shall be calculated
in cost objective in accordance with the principle of accrual system. Where the expenses have yet not arisen and born by the current
period, they shall not be calculated in the cost objective of the current period except that they are enpost_titled to be calculated in
the cost objective of the current period in accordance with tax provisions.

The development products shall, in accordance with common operation and accounting conventions, rationally divide cost objective,
meanwhile, divide all expenses into direct cost, indirect cost and common cost.

The direct cost, indirect cost and common cost arisen prior to the completion of development products shall, in accordance with the
Matching Principle, allocate them in all cost objective, of which direct cost and indirect cost may make a clear distinction between
the cost incidence objectives and shall be calculated in cost objectives; where common cost and indirect cost cannot make a clear
distinction between the cost incidence objective due to the simultaneous development or rolling development, the allocation shall
be calculated in accordance with floor spacebuilding area, or project estimate of every cost objective(project).

The expenses calculated in development products shall be actual, except otherwise prescribed, all withdrawing (or accrued expense)
shall not be calculated in development product cost.

The expense calculated in development product cost shall comply with the provision of state tax. Otherwise, it shall be adjusted in
line with tax provisions.

The assessable cost shall be calculated within the prescribed time limit after the completion of development products, yet shall not
advanced or put off. Should the accounting cost be settled, its tax shall be adjusted in accordance with revenue provisions.

(ii)

The following items shall be deducted in accordance with the following provisions:

The assessable income of sold development products. Such cost of sold development product as is authorized to be deducted shall be
confirmed in accordance with the actual sale and project cost of saleable area. The assessable cost of unit project concerning saleable
area and the sold development shall be determined by the following formula:

unit project cost of saleable area= total cost of cost objectiveunit project cost of total area assessable cost of sold development
products= actual sale of saleable areaunit project cost of saleable area

The expense due to calculated in development product cost by the development enterprise, including construction cost in the prior
period, infrastructural construction cost, public supporting facility expenses, land acquisition and removal cost, building and installation
project cost, development overhead expense and etc, shall be allocated in accordance with the following provisions:

(1) Such expenses as occur before the project completion shall be calculated into cost objective in accordance with the provisions
concerning assessable cost and other relevant provisions.

(2) Such expenses as occur after the project completion shall, in accordance with provision concerning assessable settlement as well
as other provision, firstly be divided between completed cost objective and the uncompleted cost objective and then divide the expenses
due to be shouldered by the completed cost objective into the sold development products and unsold development products.

Accrued expense. All kinds of accrued expense arisen from development enterprises may be calculated in the assessable income of development
products on the strength of legal certificate or be deducted before taxpaying, provided that expense drawing is otherwise prescribed.

Maintenance costs. The actual expenses spent by the development enterprise to undertake daily maintenance, upkeep, repair and etc
on unsold development product and the sold development products (common part, common facilities and equipments) in accordance with
the relevant laws, rules or contract provisions shall be deducted in the current period.

Maintenance expenses for common part and common facilities. Where the maintenance expenses for common part and common facilities calculated
by the development enterprise is transferred to relevant units and department, it shall be deducted in time of its transfer. The
collected and remitted maintenance expenses and withholding maintenance shall not be deducted.

Such facilities built by the development enterprise in the development zone as chambers, parking lots, property management place,
electric plants, water works, physical and cultural places, kindergarten and etc shall be handled in accordance with the following
provisions:

(1) Where these facilities are unprofitable or owned by all the proprietors or donated to local governments or public utilities,
they may be deemed public supporting facilities, the construction expenses shall be undertaken in accordance with the provisions
concerning supporting facilities.

(2) Where these facilities are profitable or owned by the development enterprise or their ownership is not clearly expressed or donated
to other units except local governments or public facilities, their cost shall be calculated independently. Except that those facilities
developed by the enterprises for their own use shall be used for the construction of fixed assets, others shall be used for the construction
of development products.

The postal and communication facilities, schools, medical facilities built in the development zone by the development enterprises
shall have their cost calculated independently and handled in accordance with the following provisions:

(1) Where these facilities are completed after their investment and construction by development enterprises, they shall be handled
in accordance with the standard for construction of development products, where they are rent, they shall be handled in accordance
with the standard for the construction of fixed assets; where they are donated freely to the relevant national departments and units,
they shall be handled in accordance with the standard for the construction of public supporting facilities

(2) Where these facilities are constructed by the development enterprises and relevant operation management departments and units
through joint venture and transferred with compensation, the economic compensation given by relevant national service management
departments and units may directly offset the construction cost of the project and the difference of offset shall be calculated into
the assessable income.

Where the house sale department (reception) and showcase houses can be deemed as cost objective for calculation independently, it
may be handled in accordance with the standard for self-built fixed assets, others shall be handled in accordance with the criteria
for the construction of development products. The fitment expenses shall, regardless its volume, shall be calculated in its construction
cost.

Bail. Where the development enterprise sells development products by means of bank mortgage, and the development enterprise presents
a guarantee for bank mortgage of the buyer, the bail (caution money) shall neither be deducted from its sales income, nor deducted
as expenses from its current period tax, yet the actual loss may be deducted faithfully.

10.

The advertising cost, publicity expenses and business reception expenses shall be handled in accordance with the following provisions:

(1) The presale income acquired by the development enterprise shall not be deemed as cardinal number for such three expenses as advertising
cost, publicity expenses and business reception expenses until the presale income has been transferred to actual sale income.

(2) The advertising cost, publicity expenses and business reception expenses concerning the construction and sale of development products
arisen from the acquisition of the first actual sale income of development products by the newly-built enterprise may be carried
forward and deducted in accordance with the tax provisions with the maximum carry-forward period no more than three tax years.

11.

Interest shall be handled in accordance with the following provisions:

(1)Where the borrowing cost arisen from the borrowed capital from the development enterprises to construct development enterprise
in accordance with the tax provisions prior to the completion of cost objective, it shall match the cost objective; where it arises
after the completion of cost objective, it may be directly deducted as financial expenses.

(2) Where the development enterprise borrows fund from financial institution universally and lends to the other enterprises and units
within its group, and the debit may present the loan certificate gained from the financial institution, its interest to be paid shall
be deducted prior to tax in accordance with the tax provisions.

(3) Where the development enterprise lends its own fund to exclusively-invested enterprises (including its branches) and other relevant
enterprises and the fund borrowed by the related-party is more than 50% of its registered capital, the interest expenditure for the
excessive part shall not be deducted prior to taxpaying; the interest expenditure otherwise is allowed deducted prior to tax in accordance
with the calculated amount calculated in line with benchmark ratio of the same kind of the same period loan in the financial institution.

12.

Charge for idle land. Where the development enterprise acquires the land use right for real estate development by means of assignment,
it shall assign the contracted use of land in line with land use right and land development time limit. Where the charge of idle
land is handed over because of exceeding the contracted date for commencement of construction, it shall be calculated in the construction
cost of cost objective; loss arisen from the withdrawal of land use right by the country may be deemed as property loss and deducted
prior to tax in accordance with tax provisions.

13.

Loss for scrap and damage of the cost objective. Where scrap and loss arisen from the cost objective of individual item or unit project
in the process of its construction, they shall, after deducting net loss of scrap value and the compensation from negligence-doer
from insurance companies, be calculated as project cost for continuous project construction; where the cost objective is scrapped
or damaged totally, its net loss may be deemed as property loss and deducted in accordance with tax collection provisions.

14.

Depreciation. Where the development enterprise transfers the development products to fixed assets, it may deduct the depreciation
expense; otherwise, it shall not deduct the depreciation expenses.

IX.

On collection management

(i)

The development enterprise shall, when declaring annual taxpaying, verify the deduction items prior to tax one by one examined, approved
or recorded by tax authorities. Where the development enterprise fails to submit the relevant documents for examination, approval
or record in accordance with the relevant provisions, or does not have complete documents, it shall make up the relevant procedures
and documents; otherwise, it shall not be deduct the income prior to tax.

(ii)

Where any of the following circumstances occurs, the tax authorities are enpost_titled to collect, manage and gradually standardize the
previous tax payable by means of verification of collection, and to conduct in accordance with taxation laws and provisions such
as Law of The People’s Republic of China concerning the Administration of Tax Collection Order, however, it shall not prescribe in
advance that the income tax of development enterprise should be collected and managed by means of collection verification.

Account may be opened in accordance with laws and administrative regulations;

Account should have been made in accordance with laws and administrative regulations;

The account was destroyed the account without authorization or data of tax payments fails to be presented.

The account, albeit opened, is in chaos or lack of compete cost data, income revenue, expenses certificate so that account cannot
be checked;

Those who fails to handle the due tax payment declaration within the prescribed time limit, o

NOTIFICATION NO.4, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

Notification No.4, 2006 of Foreign Assistance Project Bid Board of the Ministry of Commerce

Tong Gao [2006] No.4

Foreign Assistance Project Bid Board of the Ministry of Commerce held the 4th regular meeting on March 8, 2006. Matters of concern
and resolution are notified as follows:

The tender mode of Tonga Assembly Hall Construction assistance project was discussed. The Bid Board adopted limited invitation tendering
mode, and 7 enterprises including China Foreign Construction Corporation, Guangsha Chongqing Construction (Group) Co., Ltd., China
Civil Engineering Construction Corporation, Jiangsu Construction Group Corp., Hunan Construction Engineering Group Corporation, China
National Overseas Engineering Corporation, Qingdao Construction Group Corporation will be invited to participate in the bid. Specific
matters of concern shall be notified later.

The tender mode of Zimbabwe National Stadium Maintenance Construction assistance project was discussed. The Bid Board adopted limited
invitation tendering mode, and 15 enterprises including China Jiangsu International Economic Technical Cooperation Corp., China Jiangxi
Corporation For Economic and Technical Cooperation, Gansu Foreign Engineering Corporation, China Henan International Cooperation
Group Co., Ltd., Jiangsu Construction Engineering Corp., China State Construction Engineering Corp., Weihai International Economic
& Technical Cooperative Co., Ltd., China Shandong Foreign Economic Technical Cooperation Corp., Anhui Foreign Economic Construction
Corporation (group) Co., Ltd., Liaoning International Techno-Economic Cooperation Co., Ltd., China Shanxi International Economic
& Technical Cooperation Corporation, Hubei Construction Engineering Group Corporation, Ningbo Construction Group Co., Ltd., China
Tianjian International Economic and Technical Cooperative Corporation and China SFECO Group Co., Ltd. will be invited to participate
in the bid. Specific matters of concern shall be notified later.

The tender mode of Providing 10, 000 tons of Diesel Oil to the Democratic People’s Republic of Korea assistance project was discussed.
The Bid Board adopted limited invitation tendering mode, and 5 enterprises including Sinochem Corporation, Henan Light Industrial
Products Imp.& Exp. Group Co., Ltd., Henan Yuguang Gold & Lead Co., Ltd., Henan Cereals, Oil & Foodstuff Imp. & Exp.
Group Corp. Ltd. and Heilongjiang United Oil & Chemicals CO., Ltd. will be invited to participate in the bid. Specific matters
of concern shall be notified later.

The implementation mode of providing a batch of commodities to Eritrea assistance Project was discussed. The Bid Board determined
to provide the commodities by means of agency by agreement, and appointed CITIC Int’l. Cooperation Co., Ltd. as the commercial agent
to handle the specific tasks on commodity arrangement and shipping.

Foreign Assistance Project Bid Board of the Ministry of Commerce

March 17, 2006

Foreign Assistance Project Bid Board of the Ministry of Commerce
2006-03-17

MEASURES OF THE CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA FOR THE ASSESSMENT AND DETERMINATION OF DUTY-PAID VALUE OF IMPORT AND EXPORT GOODS

General Administration of Customs

Order of the General Administration of Customs

No.148

The Measures of the Customs of the People’s Republic of China for the Assessment and Determination of Duty-paid Value of Import and
Export Goods deliberated and adopted at the executive meeting of the General Administration of Customs on March 8, 2006, are hereby
promulgated and shall come into force as of May 1, 2006. The Measures of the Customs of the People’s Republic of China for the Assessment
and Determination of Duty-paid Value of Import and Export Goods as promulgated by Order No. 95 of the General Administration of Customs
on December 31, 2001 and the Measures of the Customs of the People’s Republic of China for the Evaluation of Royalties of Imported
Goods as promulgated by Order No. 102 of the General Administration of Customs on May 30, 2003 shall be repealed simultaneously.

General Director of General Administration of Customs, Mou Xinsheng

March 28, 2006

Measures of the Customs of the People’s Republic of China for the Assessment and Determination of Duty-paid Value of Import and Export
Goods

Chapter I General Provisions

Article 1

For the purpose of correctly measuring and determining the duty-paid value of import and export goods, these Measures are formulated
in pursuant to the Customs Law of the People’s Republic of China and the Regulation of the People’s Republic of China on the Import
and Export Duties.

Article 2

The customs shall observe the principles of objectiveness, fairness and unification when checking and determining the duty-paid value
of import and export goods.

Article 3

These Measures shall apply when the customs checks and determines the duty-paid value of import and export goods.

These Measures shall not be applicable to the checking and determination of the duty-paid value of such articles for personal use
that are permitted to be imported as the luggage of passengers entering China, personal postal items and etc., or the assessable
value of the import and export goods and articles that are suspected of being involved in smuggle.

Article 4

The customs shall properly keep the materials involving business secrets provided by taxpayers, and shall not provide them to any
other people or entity unless it is otherwise prescribed by the laws or administrative regulations according to the relevant provisions
of the State.

A taxpayer may request the customs to keep business secrets in the form of written application and specifically mention the contents
that need to be kept confidential, but shall not refuse to provide relevant materials for the customs on the pretext of business
secrets.

Chapter II Duty-paid Value of Imported Goods

Section 1 Method for Determining the Duty-paid Value of Imported Goods

Article 5

The duty-paid value of imported goods shall be checked and determined by the customs on the basis of the transaction value of those
goods, which shall include the freight and relevant expenses and the insurance premiums of the goods before they are transported
to and unloaded at the entry spot within the territory of the People’s Republic of China.

Article 6

Where the transaction value of imported goods does not comply with the provisions in Section 2 of this Chapter or cannot be determined,
the transaction value of those goods shall be determined in sequence by the following methods after the customs gains knowledge of
the relevant situations and carries out consultation on pricing with the taxpayer:

(1)

The appraisal method for the transaction value of identical goods;

(2)

The appraisal method for the transaction value of similar goods;

(3)

The subtractive method;

(4)

The computing method; and

(5)

Other reasonable methods.

The taxpayer may file an application for reversing the applying order for Item (3) and Item (4) of the preceding Paragraph after providing
relevant materials.

Section 2 Appraisal Method for the Transaction Value

Article 7

The transaction value of imported goods shall refer to the total amount of the paid-in or payable value that the buyer shall pay to
the seller for the imported goods when the goods are sold within the territory of the People’s Republic of China after adjustment
according to the provisions in Section 3 of this Chapter, which shall include the price that is directly and indirectly paid.

Article 8

The transaction value of imported goods shall comply with the following conditions:

(1)

The buyer shall not be restricted with regard to the disposal or use of imported goods, except for the restrictions prescribed and
implemented by laws or administrative regulations, the restrictions on areas where the goods are to be sold, and the restrictions
that have no substantial impact on the value of the goods;

(2)

The value of imported goods shall not be affected by the conditions or factors that may make the determination of the transaction
value of those goods impossible;

(3)

The seller shall not directly or indirectly acquire any proceeds from the buyer’s selling, disposal or use of imported goods, unless
the adjustment can be made according to Item (4) of Paragraph 1 of Article 11 of these Measures; and

(4)

There shall be no special relation between the buyer and the seller, unless the special relation will not affect the transaction value
according to Article 17 of these Measures.

Article 9

It shall be regarded that the buyer is restricted with regard to the disposal or use of imported goods under any of the following
circumstances:

(1)

The imported goods can be used solely for exhibitions or as free gifts;

(2)

The imported goods can be sold solely to the designated third party;

(3)

The imported goods can be sold solely to the seller or the designated third party after they are processed into finished products;
or

(4)

Any other circumstance under which the buyer is regarded as being restricted with regard to the disposal or use of imported goods
upon examination of the customs.

Article 10

It shall be regarded that the value of imported goods has been affected by the conditions or factors that make the determination of
the transaction value of those goods impossible under any of the following circumstances:

(1)

The value of imported goods is determined on condition that the buyer purchases a certain amount of other goods from the seller;

(2)

The value of imported goods is determined on condition that the buyer sells other goods to the seller; or

(3)

Any other circumstance under which the value of imported goods is affected by the conditions or factors that makes the determination
of the transaction value of those goods impossible upon examination of the customs.

Section 3 Adjustment Items for the Transaction Value

Article 11

When the duty-paid value of imported goods is checked and determined on the basis of transaction price, the following expenses or
values that are excluded from the paid-in or payable value of those goods shall be taken into account of the duty-paid value:

(1)

The following expenses as borne by the buyer:

Commissions and brokerages other than the commission for buying goods;

Expenses for the containers which are regarded as integral parts of those goods; and

Expenses for the package materials and packing services.

(2)

The value of the following goods or services that are relevant to the production of imported goods and the selling thereof within
the territory of the People’s Republic of China and are provided for free or sold at a price lower than the cost price by the buyer,
which may be apportioned in appropriate proportion:

Materials, parts, accessories and similar goods contained in imported goods;

Tools, molds and similar goods used in the production of imported goods;

Materials consumed in the production of imported goods;

Relevant services occurring out of China such as engineering design, technological research and development, techniques and drawings,
etc. that are needed for the production of imported goods.

(3)

The royalties that the buyer needs to pay to the seller or the relevant party directly or indirectly, unless it is under either of
the following circumstances:

The royalties are irrelevant to those goods; or

The payment of royalties does not constitute the conditions for those goods to be sold within the territory of the People’s Republic
of China.

(4)

The proceeds directly or indirectly acquired by the seller from the buyer’s selling, disposal or use of those goods after the import
thereof.

The taxpayer shall provide objective and quantitative data and materials about the aforesaid expenses or values to the customs. Where
the taxpayer fails to provide the aforesaid data and materials, the customs shall check and determine the duty-paid value upon consultation
on pricing with the taxpayer according to the methods as mentioned in Article 6 of these Measures.

Article 12

When determining the value of goods that shall be taken into account of the duty-paid value of imported goods according to Item (2)
of Paragraph 1 of Article 11 of these Measures, the relevant expenses shall be calculated according to the following methods:

(1)

The purchasing price shall be taken into account of the value in case that the buyer purchases goods from the third party that has
no special relation therewith;

(2)

The cost of manufacture shall be taken into account of the value in case that the buyer manufactures goods by it or purchases goods
from the third party that has any special relation therewith;

(3)

The cost of lease borne by the buyer shall be taken into account of the value in case that the buyer acquires the goods by leasing;
and

(4)

The value of tools, molds and similar goods used in the production of imported goods shall include the expenses for engineering design,
technological research and development, techniques and drawings, etc.

Where the goods have been used by the buyer before they are provided to the seller, the value to be taken into account shall be the
value upon depreciation according to the domestically recognized accounting principles.

Article 13

The royalties that comply with any of the following conditions shall be regarded as relevant to the imported goods:

(1)

The royalties are paid for the patent or the right to use know-how, and the imported goods are under any of the following circumstances:

The imported goods contain patent or know-how;

The imported goods are produced by using any patented method or know-how; or

The imported goods are specially designed or manufactured for implementing the patent or know-how.

(2)

The royalties are paid for trademark right, and the imported goods are under any of the following circumstances:

The imported goods are attached with the trademark;

The imported goods are attached with the trademark after importing and may be directly sold; or

The imported goods contain the trademark right when imported and may be sold with the trademark attached after minor processing.

(3)

The royalties are paid for copyright, and the imported goods are under either of the following circumstances:

The imported goods contain software, words, music, graphics, images, or other similar contents, including the form of tape, disk,
compact disk, or other similar media; or

The imported goods contain other contents with copyright.

(4)

The royalties are paid for the right to distribute, or sell or other similar rights, and the imported goods are under either of the
following circumstances:

The imported goods may be directly sold after importing; or

The imported goods may be sold after minor processing.

Article 14

Where the buyer cannot purchase the imported goods or the deal cannot be made under the conditions stipulated in the contract because
the buyer fails to pay the royalties, it shall be regarded that the payment of royalties constitutes the conditions for the imported
goods to sell within the territory of the People’s Republic of China.

Article 15

The following taxes and expenses separately listed in the value of imported goods shall not be taken into account of the duty-paid
value of those goods:

(1)

The expenses for the construction, installation, assembly, maintenance or technical aid that occur after the import of workshops,
machines, equipments or other goods, except for the warranty costs;

(2)

The freight and relevant expenses and the insurance premiums of the imported goods that occur after the goods are transported to and
unloaded at the entry spot within the territory of the People’s Republic of China;

(3)

The import duties, the import linkage taxes levied by the customs on behalf of other authorities and other internal taxes;

(4)

The expenses paid for the reproduction of imported goods within China; and

(5)

The expenses for domestic and overseas technical trainings and overseas inspection.

The expenses for interests that comply with the following conditions simultaneously shall not be taken into account of the duty-paid
value:

(1)

The expenses for interests are incurred from the financing for the buyer to purchase imported goods;

(2)

There is a written financing agreement;

(3)

The expenses for interests are separately listed; and

(4)

The taxpayer can prove that the relevant interest rate is not higher than that for local similar transactions at the time and the
value of identical or similar imported goods for which there is no financing arrangement is very close to the paid-in or payable
value of imported goods.

Section 4 Special Relations

Article 16

It shall be regarded that there is a special relation between the buyer and the seller in case of any of the following circumstances:

(1)

Both the seller and the buyer are the members of a same family;

(2)

One of the seller and the buyer is a business senior employee or board director of the other;

(3)

One of the seller and the buyer is directly or indirectly controlled by the other;

(4)

Both the seller and the buyer are directly or indirectly controlled by a third party;

(5)

The seller and the buyer directly or indirectly control a third party together;

(6)

One of the seller and the buyer directly or indirectly possesses, controls or holds 5% or more of the voting stocks or shares publicly
issued by the other;

(7)

One of the seller and the buyer is the employee, senior employee or board director of the other; or

(8)

Both the buyer and the seller are members of a partnership.

Where the buyer and the seller have mutual relations in business, and one party is the exclusive agent, distributor or assignee of
the other, it shall be deemed that there is a special relation between them providing that the provisions of the preceding Paragraph
are met.

Article 17

Where the taxpayer can prove that the transaction value is close to any of the following values occurring at or about the same time
even though there is a special relation between the buyer and the seller, it shall be regarded that such special relation has no
impact on the transaction value of imported goods:

(1)

The transaction value of identical or similar goods sold to a buyer with no special relation within China;

(2)

The duty-paid value of identical or similar goods determined according to Article 22 of these Measures; or

(3)

The duty-paid value of identical or similar goods determined according to Article 24 of these Measures.

When comparing the aforesaid values, the customs shall consider the differences in business level and import quantity, and the expense
differences resulted from the special relation between the buyer and the seller.

Section 5 Checking Methods Other Than the Checking Method for the Transaction Value

Article 18

The checking method for the transaction value of identical goods refers to such an checking method with which the customs checks and
determines the duty-paid value of imported goods on the basis of the transaction value of identical goods sold within the territory
of the People’s Republic of China at or about the same time as the imported goods were imported.

Article 19

The checking method for the transaction value of similar goods refers to such an checking method with which the customs checks and
determines the duty-paid value of imported goods on the basis of the transaction value of similar goods sold within the territory
of the People’s Republic of China at or about the same time as the imported goods are imported.

Article 20

When checking and determining the duty-paid value of imported goods according to the checking method for the transaction value of
identical or similar goods, the customs shall use the transaction value of the identical or similar goods of the same business level
and in basically the same quantity as the imported goods. However, the differences between the imported goods and the identical or
similar goods in costs and other expenses resulted from the differences of transportation distance and modes shall be adjusted in
light of the objective and quantitative data when the aforesaid value is used.

Where there is no transaction value of identical or similar goods mentioned in the preceding Paragraph, the transaction value of identical
or similar goods of different business level or in different import quantity may be adopted, however, the differences between the
imported goods and the identical or similar goods in value, costs and other expenses resulted from the differences in business level,
import quantity, transportation distance and modes shall be adjusted in light of the objective and quantitative data and materials
when the aforesaid value is used.

Article 21

When checking and determining the duty-paid value of imported goods according to the checking method for the transaction value of
identical or similar goods, the customs shall first use the transaction value of the identical or similar goods manufactured by the
same manufacturer.

Where there is no transaction value of the identical or similar goods manufactured by the same manufacturer, the customs may use the
transaction value of the identical or similar goods manufactured by other manufacturers in the same manufacturing country or region.

Where there are several transaction values of the identical or similar goods, the duty-paid value shall be checked and determined
in light of the lowest transaction value.

Article 22

The subtractive method refers to such an checking method with which the customs checks and determines the duty-paid value of imported
goods in light of the sales price of the imported goods, the identical or similar goods that are sold within China by deducting the
relevant expenses incurred within China. And the sales price shall meet the following conditions at the same time:

(1)

It is the price for selling the imported goods, the identical or similar goods at or about the same time of the import of those goods;

(2)

It ii the price for selling the goods in the status as they are imported;

(3)

It is the price for selling the goods at the first link within China;

(4)

It is the price for selling the goods to the parties without special relations within China; and

(5)

The accumulated sales quantity of the goods is the largest when the goods are sold at the aforesaid price.

Article 23

When the duty-paid value of imported goods is checked and determined according to the subtractive method, all the following items
shall be subtracted:

(1)

Usual profits and general expenses (including direct and indirect expenses) as well as the generally paid commission of the goods
of the same grade or same kind as those goods when they are sold at the first sales link within China;

(2)

Freight and relevant expenses and insurance premiums incurring after the goods are transported to and unloaded at the entry spot within
China; and

(3)

Import duties, import linkage taxes levied by the customs on behalf of other authorities and other internal taxes.

Where the imported goods, the identical or similar imported goods are not sold within China in the state as they are imported, the
sales price of the further processed goods may be used to check and determine the duty-paid value at the request of the taxpayer
providing that other conditions prescribed in Article 22 are met, but the added value from processing shall be deducted at the same
time.

The “added value from processing” mentioned in the preceding Paragraph shall be calculated in light of the objective and quantitative
data and materials relevant to the costs of processing and according to the standards, calculation methods and other industrial practices
generally recognized by the industry.

When determining the items of subtraction according to this Article, the customs shall use the principles and methods in accordance
with the accounting principles generally acknowledged within China.

Article 24

The computing method refers to such an checking method with which the customs check and determine the duty-paid value of imported
goods in light of the sum of all the following items:

(1)

The costs of materials and parts used for the manufacture of those goods and the expenses of processing;

(2)

The usual profits and general expenses (including direct and indirect expenses) for the sales of the goods of the same grade or same
kind within China; and

(3)

The freight and relevant expenses and the insurance premiums incurring before the goods are transported to and unloaded at the entry
spot within China.

When checking and determining the duty-paid value of imported goods according to the preceding Paragraph, the customs may verify the
relevant materials provided by that enterprise out of China after obtaining the consent of the overseas manufacturer and notifying
the government of the relevant country or region in advance.

When determining the relevant value or expenses according to Paragraph 1 of this Article, the customs shall use the principles and
methods in accordance with the accounting principles generally acknowledged in the manufacturing country or region.

Article 25

The method of rational checking refers to such an checking method with which the customs check and determine the duty-paid value of
imported goods according to the principles prescribed in Article 2 of these Measures and in light of the objective and quantitative
data and materials when the checking method for the transaction value, the checking method for the transaction value of identical
or similar goods, the subtractive method and the computed method cannot be used to determine the duty-paid value.

Article 26

When using the method of rational checking to determine the duty-paid value of imported goods, the customs shall not use the following
prices:

(1)

The domestic sales price of the goods manufactured within China;

(2)

The higher prices among the available prices;

(3)

The sales price of the goods on the market of the export place;

(4)

The price of identical or similar goods calculated in light of the values or expenses other than those specified in Article 24 of
these Measures;

(5)

The sales price of the goods exported to a third country or region; and

(6)

The lowest fixed price, or other arbitrary or fictive prices.

Chapter III Duty-paid Value of Special Imported goods

Article 27

Where the duties shall be levied on the imported materials and parts for processing trade or the finished products thereof, the customs
shall check and determine the duty-paid value according to the following provisions:

(1)

With regard to the imported materials and parts for the processing with the imported materials for which the duties shall be collected
at importation, the transaction value declared for the import of those materials and parts shall be taken as the basis for the checking
and determination of duty-paid value;

(2)

With regard to the imported materials and parts for the processing with imported materials or the finished products thereof (including
inferior products) that are sold in the domestic market, the customs shall check and determine the duty-paid value in light of the
original import transaction value of those materials and parts. If the original import transaction value of those materials and parts
cannot be determined, the customs shall check and determine the duty-paid value in light of the import transaction price of the identical
or similar goods imported at or about the same time when accepting the declaration for domestic sales;

(3)

With regard to the imported materials and parts for the processing with customers’ materials or the finished products thereof (including
inferior products) that are sold in the domestic market, the customs shall check and determine the duty-paid value in light of the
import transaction price of the identical or similar goods imported at or about the same time when accepting the declaration for
domestic sales; and

(4)

With regard to the leftover materials produced in the processing of the processing enterprises to be sold in the domestic market,
the domestic sales price as checked and determined by the customs shall be taken as the duty-paid value.

Where the duty-paid value of the goods of processing trade that will be sold in the domestic market still cannot be determined after
referring to the preceding Paragraph, the customs shall check and determine the duty-paid value in light of the method of rational
checking.

Article 28

With regard to the finished products (including inferior products) sold in the domestic market by the processing enterprises within
export processing zones, the customs shall check and determine the duty-paid value in light of the import transaction value of the
identical or similar goods imported at or about the same time when accepting the declaration for domestic sales.

With regard to the leftover materials or by-products produced in the processing of the processing enterprises within export processing
zones, the domestic sales price as checked and determined by the customs shall be taken as the duty-paid value.

If the duty-paid value of the finished products (including inferior products), leftover materials or by-products of the processing
enterprises within export processing zones that will be sold in the domestic market still cannot be determined according to the preceding
two paragraphs, the customs shall check and determine the duty-paid value in light of the method of rational checking.

Article 29

With regard to the import materials and parts or the finished products thereof (including inferior products) of the processing enterprises
within export processing zones that will be sold in the domestic market, the customs shall check and determine the duty-paid value
in light of the import transaction value of the identical or similar goods imported at or about the same time when accepting the
declaration for domestic sales.

Where there are materials and parts purchased within China in the finished products from the imported materials of the processing
enterprises within export processing zones that will be sold in the domestic market, the customs shall check and determine the duty-paid
value in light of the original import transaction value of the materials and parts purchased from abroad and contained in the finished
products. Where the original import transaction value of the materials and parts cannot be determined, the customs shall check and
determine the duty-paid value in light of the import transaction value of the identical or similar goods imported at or about the
same time when accepting the declaration for domestic sales.

Where there are materials and parts purchased within China in the finished products from the customers’ materials of the processing
enterprises within export processing zones that will be sold in the domestic market, the customs shall r the duty-paid value in light
of the import transaction value of the identical or similar goods, as the materials and parts purchased abroad and contained in the
finished products, imported at or about the same time when accepting the declaration for domestic sales.

With regard to the leftover materials or by-products of the processing enterprises within export processing zones that are produced
during the course of the processing for domestic sales, the domestic sales price as checked and determined by the customs shall be
taken as the duty-paid value.

Where the duty-paid value of the finished products (including inferior products), leftover materials or by-products of the processing
enterprises within export processing zones that will be sold in the domestic market still cannot be determined after referring to
the preceding 4 Paragraphs of this Article, the customs shall check and determine the duty-paid value in light of the method of rational
checking.

Article 30

With regard to the goods (excluding the imported materials for processing trade and the finished products thereof) that are imported
from such areas or places as bonded zones, export processing zones, bonded logistics parks, or bonded logistics centers into China
and that should be taxed, the customs shall, by referring to the relevant provisions in Chapter II of these Measures, check and determine
the duty-paid value in light of the sales price of the goods that are imported from the aforesaid areas or places.

Wher

ANNOUNCEMENT NO. 35, 2006 OF MINISTRY OF COMMERCE AND GENERAL ADMINISTRATION OF CUSTOMS, ON POSTPONING THE IMPLEMENTATION OF ANNOUNCEMENT NO. 16, 2006

Ministry of Commerce, General Administration of Customs

Announcement No. 35, 2006 of Ministry of Commerce and General Administration of Customs, on Postponing the Implementation of Announcement
No. 16, 2006

[2006] No. 35

In order to protect the non-renewable resources and the environment, and control the severe damage caused by exploration of natural
sand resources, Ministry of Commerce and General Administration of Customs issued Announcement No. 16, 2006 to stop export of natural
sand (2505100000, 2505900000) as from May 1, 2006.

In order to offer more time for enterprises to establish new operation channels and to adjust operation styles, Announcement No. 16,
2006 shall be postponed. The specific implementation date shall be notified later.

Ministry of Commerce

General Administration of Customs

April 24, 2006

Ministry of Commerce, General Administration of Customs
2006-04-24

NOTICE OF THE MINISTRY OF FINANCE AND STATE ADMINISTRATION OF TAXATION CONCERNING THE RELATED POLICIES FOR COLLECTIVE AND URBAN LAND USE TAX

Notice of the Ministry of Finance and State Administration of Taxation Concerning the Related Policies for Collective and Urban Land
Use Tax

Cai Shui [2006] No. 56

The public finance departments (bureaus) and local taxation bureaus in each province, autonomous region, municipality directly under
the Central Government and city specifically designated in the state plan as well as the Finance Bureau of Xinjiang Production and
Construction Corporations:

In accordance with the new situation and problems in currently utilizing collective land, the related policies for collective and
urban land use tax are hereby, announced upon deliberation as follows:

In case any collectively-owned construction land as taxable is actually utilized, which falls within the levy scope of the urban land
use tax, and if the related procedures for circulating the land use right have not been conducted, the related entity or individual
that actually utilizes the collective land shall pay the urban land use tax subject to the related provisions.

This Notice shall enter into force as from May 1, 2006. In case any of the previous policies and provisions conflicts with this Notice,
this Notice shall prevail.

Ministry of Finance

State Administration of Taxation

April 30, 2006

Ministry of Finance, State Administration of Taxation
2006-04-30

ANNOUNCEMENT NO. 32, 2006 OF MINISTRY OF COMMERCE ON FINAL ARBITRATION OF ANTI-DUMPING INVESTIGATION ON PYROCATECHOL ORIGINATING FROM THE UNITED STATES AND JAPAN

Ministry of Commerce

Announcement No. 32, 2006 of Ministry of Commerce on Final Arbitration of Anti-dumping Investigation on Pyrocatechol Originating from
the United States and Japan

[2006] No. 32

In accordance with Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce released announcement on May 31,
2005, deciding to carry out anti-dumping investigation on pyrocatechol (hereinafter referred to as “investigated commodity”) originating
from the United States and Japan.

In line with investigation, Ministry of Commerce finally verdicts dumping of the investigated commodity, injures the domestic pyrocatechol
industry, and the existence of causality between dumping of the investigated commodity and the injury of domestic industry.

In accordance with related regulations of Anti-dumping Regulations of the People’s Republic of China, Tariff Committee of the State
Council decides to impose anti-dumping duties on pyrocatechol originating from the United States and t Japan as from May 22, 2006.

The tariff code of the investigated commodity is 29072910.

Rate of Anti-dumping Duties on Different Companies:

American companies:

RHODIA INC 4%;

Other American companies 46.81%

Companies in Japan 42.86%

In case importers cannot provide certificate of origin and the Customs cannot confirm the origin of the imported pyrocatechol either,
a maximum anti-dumping duties among the effective anti-dumping measures will be imposed on the imported investigated commodity.

As from May 22, 2006, importers should pay relevant anti-dumping duties for import of pyrocatechol originating from the United States
and Japan. The formula for counting of anti-dumping duties:

Amount of anti-dumping duty= duty-paying value * rate of anti-dumping duty

The duration of the anti-dumping duties on pyrocatechol originating from the United States and Japan is 5 years as from May 22, 2006.

Appendix: Ministry of Commerce’s Final Arbitration on Anti-dumping Investigation on Pyrocatechol Originating from the United States
and Japan(Omitted)

Ministry of Commerce

May 22, 2006

Ministry of Commerce
2006-05-22

CIRCULAR OF THE PEOPLE’S BANK OF CHINA ON RELATIVE ISSUES CONCERNING THE ADJUSTMENT OF HOUSING CREDIT POLICIES

Circular of the People’s Bank of China on Relative Issues concerning the Adjustment of Housing Credit Policies Yin Fa [2006] No.184

All the state-owned commercial banks, joint stock commercial banks, the Shanghai headquarters of the People’s Bank of China and all
branches and business management departments of the People’s Bank of China, the central sub-branches of the People’s Bank of China
in all provincial capital cities, and the central sub-branches of the People’s Bank of China in all vice-provincial cities,

It is specified in the Circular of the General Office of the State Council on Transferring the Opinions of the Ministry of Construction
and Other Departments on Adjusting House Supply Structure and Stabilizing House Price (Guo Ban Fa [2006] No.37, hereinafter referred
to as the Circular) that: From June 1, 2006, the proportion of the down payment of the mortgage loans for individual houses shall
be no less than 30%. But the provisions on the proportion of the down payment of 20% for houses purchased for living with less than
90 square meters in the dwelling size shall still be followed. For the purpose of implementing the spirit of the Circular, the following
Circular on the relative matters is hereby made: I. Each commercial bank shall pay close attention to and seriously implement the decisions and plans of the Central Government concerning
strengthening the adjustment and control on real estate market, and formulate implementation measures strictly according to the requirements
of the Circular and in combination with the reality to carry out the new housing credit policy. II. When accepting applications for housing loans, each commercial bank shall require the applicants to specify the use for buying houses
in light of the facts, and determine the minimum down payment of the housing loans strictly according to the provisions of the Circular,
and input information on housing mortgage loans into the basic database for personal credit information of the People’s Bank of China
in light of relative provisions in time. III. Each branch of the People’s Bank of China shall pay close attention to the change of the real estate market, strengthen monitoring
and analysis, and reinforce the “Window Guidance”, and urge commercial banks to carry out the aforesaid provisions, and report the
relative information in time.

The Shanghai headquarters of the People’s Bank of China and each branch and business management department of the People’s Bank of
China shall forward this Circular to each urban commercial bank and urban and rural credit cooperatives within areas under their
jurisdiction. People’s Bank of China May 31, 2006

People’s Bank of China
2006-05-31

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Probate

CIRCULAR OF THE MINISTRY OF FINANCE ON RELEVANT ISSUES CONCERNING RESEARCH AND DEVELOPMENT FUND FOR HIGH TECHNOLOGY IN PACKAGING...

REGULATION ON PROHIBITION OF PYRAMID SELLING

ANNOUNCEMENT NO.9, 2006 OF THE MINISTRY OF COMMERCE OF THE PEOPLE’S REPUBLIC OF CHINA, ON CEASING THE ANTI-DUMPING INVESTIGATION TO IMPORTED ETHYLENE PROPYLENE TERPOLYMER ORIGINATED FROM THE USA, SOUTH KOREA AND NETHERLANDS

ACCOUNTING STANDARD FOR BUSINESS ENTERPRISES NO. 8 – IMPAIRMENT OF ASSETS

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 23 – TRANSFER OF FINANCIAL ASSETS

NOTICE THE STATE ADMINISTRATION OF TAXATION ON IMPOSING BUSINESS INCOME TAX IN REAL ESTATE DEVELOPMENT

NOTIFICATION NO.4, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

MEASURES OF THE CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA FOR THE ASSESSMENT AND DETERMINATION OF DUTY-PAID VALUE OF IMPORT AND EXPORT GOODS

ANNOUNCEMENT NO. 35, 2006 OF MINISTRY OF COMMERCE AND GENERAL ADMINISTRATION OF CUSTOMS, ON POSTPONING THE IMPLEMENTATION OF ANNOUNCEMENT NO. 16, 2006

NOTICE OF THE MINISTRY OF FINANCE AND STATE ADMINISTRATION OF TAXATION CONCERNING THE RELATED POLICIES FOR COLLECTIVE AND URBAN LAND USE TAX

ANNOUNCEMENT NO. 32, 2006 OF MINISTRY OF COMMERCE ON FINAL ARBITRATION OF ANTI-DUMPING INVESTIGATION ON PYROCATECHOL ORIGINATING FROM THE UNITED STATES AND JAPAN

CIRCULAR OF THE PEOPLE’S BANK OF CHINA ON RELATIVE ISSUES CONCERNING THE ADJUSTMENT OF HOUSING CREDIT POLICIES

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