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

Ministry of Finance

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

Cai Jian [2005] No.355

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

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

Ministry of Finance

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

Chapter I General Provisions

Article 1

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

Article 2

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

Chapter II Application Scope of Investment Subsidy

Article 3

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

(1)

Infrastructure Projects of Public Benefit and for Public Use;

(2)

Projects for Protecting and Improving ecological environment;

(3)

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

(4)

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

(5)

Other projects in line with the relevant State provisions.

Article 4

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

Article 5

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

Chapter III Budgetary Administration of Project Subject to Investment Subsidy

Article 6

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

Article 7

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

(1)

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

(2)

where a project has already applied for other investment subsidies;

(3)

where a project fails to fulfill the capital construction procedure;

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

Article 8

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

Article 9

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

Chapter IV Appropriation of Investment Subsidy Funds and Financial Administration

Article 10

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

Article 11

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

Article 12

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

Article 13

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

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

Article 14

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

(1)

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

(2)

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

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

Chapter V Supervision and Inspection

Article 15

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

Article 16

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

(1)

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

(2)

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

(3)

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

(4)

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

Article 17

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

Article 18

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

Chapter VI Supplementary Provisions

Article 19

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

Article 20

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



 
Ministry of Finance
2005-07-26

 






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

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

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

Zheng Jian Fa [2005] No. 80

August 23, 2005

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

I.

Correctly Understanding the Share-trading Reform

1.

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

2.

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

3.

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

4.

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

II.

Guidelines for the Share-trading Reform

5.

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

6.

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

III.

Overall Requirements for the Share-trading Reform

7.

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

8.

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

9.

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

10.

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

11.

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

IV.

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

12.

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

13.

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

14.

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

15.

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

16.

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

17.

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

V.

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

18.

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

19.

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

20.

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

21.

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

22.

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



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

 






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

Ministry of Finance

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

Cai Jian [2005] No. 354

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

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

inance

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

Chapter I General Provisions

Article 1

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

Article 2

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

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

Article 3

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

(1)

projects of public infrastructures;

(2)

projects for protection and improvement of the ecological environment;

(3)

projects promoting the economic and social development of underdeveloped areas;

(4)

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

(5)

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

Article 4

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

Article 5

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

Chapter III Budgetary Management of Interest-Subsidy Funds

Article 6

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

Article 7

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

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

Article 8

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

Article 9

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

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

Article 10

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

Article 11

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

Article 12

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

Article 13

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

(1)

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

(2)

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

(3)

The banking loans are the loans for the circulating funds;

(4)

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

(5)

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

(6)

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

Article 14

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

Chapter V Supervision and Inspections

Article 15

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

Article 16

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

(1)

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

(2)

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

(3)

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

Article 17

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

Article 18

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

Chapter VI Supplementary Provisions

Article 19

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

Article 20

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



 
Ministry of Finance
2005-07-26

 






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

the Ministry of Commerce

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

No. 17

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

Minister of the Ministry of Commerce, Bo Xilai

August 23, 2005

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

Article 1

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

Article 2

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

Article 3

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

Article 4

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

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

Article 5

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

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

Defrauding export tax refunds;

(9)

Smuggling;

(10)

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

(11)

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

(12)

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

Article 6

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

(1)

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

(2)

Illegal or irregular acts; and

(3)

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

Article 7

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

(1)

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

(2)

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

Article 8

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

Article 9

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

Article 10

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

Article 11

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



 
the Ministry of Commerce
2005-08-23

 






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

Circular of the Ministry of Finance on Relevant Issues concerning Research and Development Fund for High Technology in Packaging Industry

Cai Qi [2005] No.107

Relevant Enterprises directly under the Central Authorities, Departments (Bureaus) of Finance in all provinces, autonomous regions,
municipalities directly under the Central Government, and cities separately listed on the State plan:

In order to encourage the packaging industry to actively develop new products and adopt new technologies, and to promote the development
of China’s packaging industry, a research and development (R&D) fund for high technology in the packaging industry (hereinafter
referred to as “this fund”) will be allocated in the central financial budget to support the R&D of high products, the technological
innovation, the promotion of new technologies etc. in the packaging industry as of the year of 2005. And this Circular on relevant
issues is hereby given as follows.

1.

The Support Scope of this Fund

This fund shall mainly support such projects as are in line with the state’s macro economic polices, environmental protection and
recycling economy policies:

(1)

the research, manufacturing and industrialization projects of new-patterned packing products, materials and machines which has been
verified by relevant authorities as high level projects with international standards or being capable of filling China’s domestic
blank.

(2)

R&D projects of high technologies that are characterized by an integration of industries, academic institutions and research
institutes, new product research program at national level with verification by relevant authorities, design and development programs
of new materials and technologies and application programs of new technologies set up by government departments at or above the provincial
or municipal level;

(3)

projects on new-patterned packing materials that aim at guarantying safety and health of human beings;

(4)

projects on reduction of packing materials and energy-saving packing; projects on the dispose and utilization of packaging refuse;

(5)

projects on the research and establishment of packing regulations and technology standards and relevant testing methods; and

(6)

other projects of new technology in line with the state’s policies on packaging industry.

2.

Fund-supporting Modes and Uses

There shall mainly be two fund-supporting modes, namely aid for free and loan with subsidy interest. Generally, where the investment
of a R&D project is mainly based on self-financing, the mode of aid for free shall be adopted; where the investment of a R&D
project is mainly based on bank loans, the mode of loan with subsidy interest shall be adopted. Each project shall only be subject
to one mode, and no repeated application may be permitted.

The amount of an aid for free for each project shall be within RMB 5 million Yuan, and shall not exceed the amount of an enterprise’s
self-financing. The amount of a loan with subsidy interest shall be determined with reference to the loan amount of project and the
loan interest of the corresponding period that are promulgated by the People’s Bank of China, and the loan with subsidy interest
shall be paid to an enterprise after it pays the interest in advance; the time limit of the subsidy interest shall be no more than
2 years and the amount of subsidy interest shall be no more than RMB 5 million Yuan for each project.

This fund shall mainly be used to pay the relevant expenses that arise during the R&D of a project, including labor cost, expense
for key experiment equipments and software, expense for fuels and energy, lease charge, experiment expense, materials expense, expense
for entrusted development, and other expenses that are in line with the provisions of the current regime and relate to the R&D
of a project upon the approval of the Ministry of Finance.

3.

Fund declaration

(1)

An enterprise that applies for this fund shall meet all the qualification conditions as follows:

(a)

Being a domestic medium-sized or large-sized enterprise engaged in the manufacturing of packaging products, materials and machinery
that possesses an independent legal person post_title , and a normative corporate management structure;

(b)

Having a sound financial management system and timely reporting its financial information to the finance authorities at the corresponding
level; and

(c)

Having a good credit in accounting and tax-payment.

(2)

Aside from the aforesaid basic conditions, an applicant enterprise shall also meet one of the conditions as follows:

(a)

Having a technology center that has been certificated by authorities at a province level or above;

(b)

Having an R&D investment of the previous year that accounts for more than 3% in its proceeds of sale; or

(c)

Having an annual average R&D investment of more than RMB 5 million Yuan in the past 3 years.

(3)

An enterprise that applies for this fund shall submit its application in written form, and provide the documents as follows:

(a)

the ectype of the business license of the enterprise as a legal person as well as the articles of association thereof (duplicate);

(b)

A general presentation of its business performance, including its major products, manufacturing technologies, principal economic
indexes etc.;

(c)

the feasibility study report of the project;

(d)

the accounting statements and auditing report of last annual year audited by an accounting firm;

(e)

the environmental evaluation opinion issued by the environmental protection authority at a province level or above;

(f)

the source of funds needed in the R&D of the project and valid vouchers (the valid voucher(s) of the self-financed funds that
have been fulfilled or invested in the project, the project loan contract and the bank interest bill etc.) and

(g)

other documents required.

4.

Fund Examination and Allocation

Provincial finance authorities shall authorize the Packaging Technology Association at the corresponding level to conduct an examination
on qualifications and relevant documents of applicant enterprises within the territory of its own jurisdiction, and shall, before
August 31 of every year, submit to the Ministry of Finance the fund application reports and documents of the applied projects. And
the fund application report and documents of the applied project of an enterprise directly under the Central Authorities shall directly
be submitted to the Ministry of Finance.

The Ministry of Finance shall authorize China Packaging Federation to organize experts to conduct examinations on the application
reports and the documents about the facts of the applied project that are submitted by enterprises directly under the Central Authorities
and by the local authorities, and determine, upon the examination results, the supported projects, fund-supporting modes and amounts.
The funds for enterprises directly under the Central Authorities shall directly be allocated by the Ministry of Finance; and those
for enterprise under local authorities shall be allocated by the Ministry of Finance to the local finance authorities, who shall
then allocate them to enterprises concerned.

5.

Accounting process of this fund

Such part of an aid for free that an enterprise receives as assets shall be reckoned in reserve fund, and such part that does not
form assets shall be written off according to facts. The loan with subsidy interest that an enterprise receives shall be used to
net off financial charges.

6.

Fund Supervision and Inspection

Project-bearing units shall exercise a special-account management and reckoning on this fund, which shall bear no withholding, occupation
or misappropriation by any unit or individual in any excuse. The management and utilization of this fund shall be subject to the
supervisions and inspections by the Ministry of Finance and the local finance authorities, and may also be subject to the auditing
from the audit authorities or social audit institutions that are entrusted by the Ministry of Finance and the local finance authorities.
Any enterprise that is detected having obtained funds through fraudulence and falsification or having used funds not in accordance
with the prescribed means shall be deprived of the qualification to apply for funds and shall be severely punished in accordance
with the Regulations on Punishment and Disciplinary for Illegal Financial Activities.

Ministry of Finance

July 26, 2005



 
Ministry of Finance
2005-07-26

 






REGULATION ON PROHIBITION OF PYRAMID SELLING

the State Council

Order of the State Council of the People’s Republic of China

No. 444

The Regulation on Prohibition of Pyramid Selling,which was adopted at the 101st executive meeting of the State Council on August 10,2005,are
hereby promulgated and shall go into effect as of November 1,2005.

Premier of the State Council,Wen Jiabao

August 23,2005

Regulation on Prohibition of Pyramid Selling

Chapter I General Provisions

Article 1

With a view to preventing frauds,protecting the legitimate rights and interests of citizens,legal persons and other organizations,maintaining
the socialist market economic order and preserving social stability,this Regulation is formulated.

Article 2

The term”pyramid selling” as mentioned in this Regulation refers to such an act whereby an organizer or operator seeks for unlawful
interests,disturbs the economic order and affects the social stability by recruiting persons,calculating and paying remunerations
to recruiters on the basis of the number of persons a recruiter has directly or indirectly recruited or the sales performance,or
asking the recruiters to pay a certain fee for obtaining the qualification for participation.

Article 3

The local people’s government at or above the county level shall strengthen the leadership in investigating and handling the pyramid
selling,support and urge all relevant departments to perform their administrative and supervisory duties according to law.

The local people’s government at or above the county level shall,in light of actual needs,establish a coordinative mechanism for the
investigation and handling of pyramid selling,and timely coordinate and solve those significant problems occurred in the work relating
to the investigation and handling of pyramid selling.

Article 4

The department of industry and commerce administration and the public security organ shall,pursuant to this Regulation,investigate
and handle the pyramid selling within their respective duties.

Article 5

When investigating and handling the pyramid selling,the department of industry and commerce administration and the public security
organ shall,adhere to the principle of combining education with punishment,and shall instruct citizens,legal persons or other organizations
to voluntarily abide by the law.

Article 6

All entities and individuals are enpost_titled to report any pyramid selling to the department of industry and commerce administration
or the public security organ,which shall,after receiving such a report,promptly carry out investigation and verification,handle it
in accordance with the law and keep secret for the informer. Where the report is found to be true upon investigation,the informer
shall be rewarded pursuant to the relevant state provisions.

Chapter II Types of Pyramid Selling and the Investigation and Handling Authority

Article 7

The following acts belong to the pyramid selling:

(1)

An organizer or operator seeks for unlawful interests by recruiting persons to participate in pyramid selling,asking the recruiters
to persuade others to participate in pyramid selling,calculating and paying remunerations (including material awards and other economic
interests,the same below) to the recruiters on the basis of the number of persons a recruiter has directly or indirectly recruited
in a rotating way;

(2)

An organizer or operator seeks for unlawful interests by recruiting persons to participate in pyramid selling and asking the recruiters
to pay fees explicitly or in any disguised form like purchasing commodities for obtaining the qualification for participating in
pyramid selling or recruiting others to participate in pyramid selling; and

(3)

An organizer or operator seeks for unlawful interests by recruiting persons to participate in pyramid selling,asking the recruiters
to persuade others to participate in pyramid selling so as to form a multi-level relationship,and calculating and paying the remuneration
to an upper-level promoter on the basis of the sales performance of the promoters below.

Article 8

The department of industry and commerce administration shall,under this Regulation,be responsible for investigating and handling the
pyramid selling as prescribed in Article 7 of this Regulation.

Article 9

The release of pyramid selling information as set out in Article 7 of this Regulation via the internet or any other public media
shall be investigated and handled by the department of industry and commerce administration jointly with the telecommunication department
in accordance with this Regulation.

Article 10

Where any organizer or operator deceives others into leaving their homes for unlawful gathering and restricts their liberties in the
name of introducing jobs or engaging in business operations in pyramid selling,the public security organ shall make investigations
and handle it in conjunction with the department of industry and commerce administration.

Article 11

The administrative departments or entities of commerce,education,civil affairs,public finance,labor security,telecommunication and
taxation shall,in pursuance of their respective duties and the relevant laws and administrative regulations,cooperate with the department
of industry and commerce administration and the public security organ in investigating and handling the pyramid selling cases.

Article 12

Such grassroots organizations as the rural villagers’ committee or the urban residents’ committee shall cooperate with the relevant
administrative department in investigating and handling pyramid selling cases under the guidance of the local people’s government.

Article 13

The department of industry and commerce administration shall investigate and handle any pyramid selling,and shall,if it may constitute
a crime,transfer it to the public security organ for placing the case on file for investigation. The public security organ shall
place the case on file for investigation and shall,if the pyramid selling does not constitute a crime upon investigation,transfer
it to the department of industry and commerce administration for investigation and handling.

Chapter III Measures and Procedures of Investigation and Handling

Article 14

The department of industry and commerce administration at or above the county level may,when investigating and handling the suspected
pyramid selling,take the following measures:

(1)

Ordering the violator to cease pertinent activities;

(2)

Making investigations against the organizer,operator or individual suspected of being involved in pyramid selling and making inquiries;

(3)

Carrying out on-the-spot inspections by entering into the business,training gathering places suspected of being involved in pyramid
selling;

(4)

Consulting,copying,sealing up or seizing the relevant contracts,bills,account books or other materials suspected of being involved
in pyramid selling;

(5)

Sealing up or seizing the products (commodities),tools,equipment,raw materials and properties that are suspected of being involved
in pyramid selling;

(6)

sealing up business places suspected of being involved in pyramid selling;

(7)

Consulting accounts,accounting vouchers,account books and statements of account regarding the deposits of the organizer or operator
suspected of being involved in pyramid selling; and

(8)

Applying to the judicial organ for freezing the unlawful funds if there is evidence showing that they are to be transferred or concealed.

In case the department of industry and commerce administration adopts any of the measures as prescribed in the preceding paragraph,it
shall report it,in speech or writing,to the principal leader of the department of industry and commerce administration at or above
the county level for approval. Where it is necessary to adopt any of the measures as prescribed in the preceding paragraph under
emergency conditions,the department of industry and commerce administration shall report it promptly and make up the relevant formalities
afterwards. In particular,the implementation of seal-up or seizure or any measure as prescribed in Item (7) or (8) shall be subject
to obtaining a written approval of the principal leader of the department of industry and commerce administration at or above the
county level in advance.

Article 15

When the department of industry and commerce administration investigates and handles any suspected pyramid selling,there shall not
be less than 2 law enforcers.

Any law enforcer that has a direct interest with the party involved shall withdraw.

Article 16

When investigating and handling a suspected pyramid selling,the law enforcer of the department of industry and commerce administration
shall produce his identity documents to the parties involved or the relevant persons.

Article 17

When the department of industry and commerce administration seals up or seizes properties and materials,it shall deliver to the parties
involved on the spot a written decision on the seal-up or seizure and a list of properties and materials to be sealed up or seized.

Where it is in an inconvenient area or the investigation and handling of the case will be affected if the seal-up or seizure is not
timely carried out,the seal-up or seizure may be carried out in advance and the decision on seal-up or seizure shall be made up within
24 hours and be delivered to the parties involved.

Article 18

The period for the department of industry and commerce administration to carry out the seal-up or seizure may not be more than 30
days as is a general rule; if the case is complicated,it may be extended for another 15 days upon the approval of the principal leader
of the department of industry and commerce administration at or above the county level.

The department of industry and commerce administration shall properly keep properties that are sealed up or seized,and may not use
or destroy them. It shall be liable for any loss incurred unless the loss is caused by force majeure.

Article 19

When the department of industry and commerce administration carries out a seal-up or seizure,it shall ascertain the facts in a timely
manner,and make a handling decision during the period of seal-up or seizure.

Where the pyramid selling case is verified upon investigation,the illegal properties that are sealed up or seized shall be confiscated
in accordance with the law. Where,upon investigation and verification,there is no pyramid selling activity or the seal-up or seizure
is no longer required,the seal-up shall be canceled and the seized properties shall be promptly returned in a prompt manner upon
the handling decision.

If the department of industry and commerce administration fails to make a handling decision within the prescribed time limit,the properties
sealed up shall be regarded as having been unsealed and the seized properties shall be returned. If the department of industry and
commerce administration refuses to return them,the party involved may file an administrative litigation in the people’s court.

Article 20

If the department of industry and commerce administration or any of its functionaries violates this Regulation by using or destroying
any of the properties sealed up or seized and causes economic losses to the parties involved,it/he shall assume the responsibility
for compensation .

Article 21

When the department of industry and commerce administration investigates and handles a suspected pyramid selling case,the party involved
has the right to make statements and defend himself.

Article 22

When the department of industry and commerce administration investigates and handles a suspected pyramid selling case,it shall make
records on the spot.

The records made on the spot and the list of properties and materials sealed up or seized shall be signed or stamped by the parties
involved,witnesses and law enforcers. In case the party involved is absent or the party involved or the witness refuses to sign or
seal,the enforcers shall indicate it down in the on-the-spot records.

Article 23

As for the verified pyramid selling case,the department of industry and commerce administration and the public security organ may
promulgate a warning or a notice to remind the general public.

The release of a warning or notice to the general public shall be subject to the approval of the principal leader of the department
of industry and commerce administration or the principal leader of the public security organ at or above the county level.

Chapter IV Legal Liabilities

Article 24

Where an individual commits any act as prescribed in Article 7 of this Regulation and organizes and contrives pyramid selling,the
department of industry and commerce administration shall confiscate his illegal properties and gains and impose upon him a fine of
500,000 yuan up to 2 million yuan,and if a crime is constituted,he shall be investigated for criminal liabilities according to law.

Where an individual commits any act as prescribed in Article 7 of this Regulation and introduces,induces or coerces any other person
to participate in pyramid selling,the department of industry and commerce administration shall order him to cease the illegal act,confiscate
his unlawful properties and gains and impose upon him a fine of 100,000 Yuan up to 500,000 Yuan; and if a crime is constituted,he
shall be investigated for criminal liabilities according to law.

Where an individual commits any act as prescribed in Article 7 of this Regulation and participates in pyramid selling,the department
of industry and commerce administration shall order him to cease the illegal act and impose upon him a fine of less than 2,000 Yuan.

Article 25

When the department of industry and commerce administration imposes punishments under Article 24 of this Regulation,it can order
the violator to suspend operations for rectification or revoke its/his business license in accordance with the relevant laws and
administrative regulations.

Article 26

Where an entity or individual provides such conditions as business or training places,goods,custodian or storage service and so on,for
pyramid selling as prescribed in Article 7 of this Regulation,the department of industry and commerce administration shall order
it/him to cease the unlawful act,confiscate its/his unlawful gains and impose upon it/him a fine of 50,000 Yuan up to 500,000 Yuan.

Where an entity or individual provides internet information services for pyramid selling as prescribed in Article 7 of this Regulation,the
department of industry and commerce administration shall order it/him to cease the illegal act and inform the relevant department
to mete out punishments according to the Measures for the Administration of Internet Information Services.

Article 27

Where a party involved illegally puts to use,replaces,transfers or destroys the properties sealed up or seized,the department of industry
and commerce administration shall order him to cease the illegal act and impose upon him a fine of 5% to 20% of the value of the
properties used,replaced,transferred or destroyed. If he refuses to make corrections,a fine of one to three times the value of the
properties used,replaced,transferred or destroyed shall be imposed.

Article 28

Where anyone commits any act as prescribed in Article 10 of this Regulation and refuses or impedes the enforcers of the department
of industry and commerce administration to make investigations and handle the case and thus violates the regulations on public security
administration,the public security organ shall impose punishments on him in pursuance of the laws and administrative regulations
on public security administration; if a crime is constituted,he shall be investigated for criminal liabilities according to law.

Article 29

Where the department of industry and commerce administration,the public security organ and their functionaries abuse their power,neglect
their duties or practice favoritism and fail to investigate or handle pyramid selling cases according to the duties and procedures
as prescribed in this Regulation,or fail to investigate or handle the pyramid selling found,or support,harbor or connive any pyramid
selling,and a crime is thus constituted,the person-in-charge and other persons directly responsible shall be investigated for criminal
liabilities according to law; if no crime is constituted,the person-in-charge and other persons directly responsible shall be subject
to administrative sanctions.

Chapter V Supplementary Provisions

Article 30

This Regulation shall go into effect as of November 1,2005.



 
the State Council
2005-08-23

 






CIRCULAR CONCERNING THE MEASURES TO CONTROL THE EXPORT OF PRODUCTS OF HIGH ENERGY CONSUMPTION, HIGH POLLUTION AND RESOURCE

National Development and Reform Commission, Ministry of Finance, Ministry of Commerce, Ministry of Land and Resources, General Administration
of Customs, State Administration of Taxation, State Environmental Protection Administration

Circular concerning the Measures to Control the Export of Products of High Energy Consumption, High Pollution and Resource

Fa Gai Jing Mao [2005] No. 1482

Departments of finance, departments of land and resources (departments of land and resources, bureaus of land and resources, land,
resources & housing administrative bureaus, real estate land and resources administration bureaus, programming &land and resources
bureaus), the Guangdong Sub-Administration of the Customs General Administration, Tianjin and Shanghai Special Commissioner’s of
Tianjin and Shanghai Office in all provinces, autonomous regions, municipalities directly under the central government, cities specifically
designated in the state plan, development and reform commission of Xinjiang Production and Construction Corps and the customs directly
under the General Administration of Customs, state tax bureaus and environmental protection bureaus (departments):

In light of the spirit of plenary meeting of the State Council, the central government has since May of this year taken measures to
control the export of part of the precuts of high energy consumption, high pollution and resources. In order to do it well, the matter
of concern is hereby given as follows:

1.

The necessity to control the export of products of high energy consumption, high pollution and resources

In recent year, the excessive investment in such industries as steel, cement, electrolytic aluminum, coke, aimless extension of the
yield, the surge of export of high-energy-consumption, high-pollution and resources products such as billet, steel ingot, electrolytic
aluminum, ferroalloy, part of the non-ferrous metal intensified the relations between domestic energy, raw material, transportation
and exerted more pressure on resources and environment. In 2004, the export of billet, steel, unforged and unrolled aluminum, ferroalloy
and coke registered 6.058 million ton, 14.23 million ton, 1.68 million ton, and 15.01 million ton, an increase of 312.1%, 104%, 34.8%,
20.5% and 2% respectively on year-on-year basis; that in the first half of this year increased by 262.4%, 154.1%,21.9%, 17% and 16.2%
respectively. In addition, such non-ferrous metals as zinc, tin, antimony and such high-energy-consumption, high-pollution and resources
products as phosphorus yellow and calcium carbide boasted a surge of export.

The massive export of high-energy-consumption, high-pollution and resources products intensified the conflict between coal, electricity
and oil and exerted greater pressure upon the environment. In 2004, the production of unforged and unrolled aluminum, billet, steel,
ferroalloy and phosphorus yellow for export consumed 49 billion kw, accounting for 82% of the electricity shortage, and even more
without the consideration of whole process of transport and electricity consumption. The high-energy-consumption products are largely
at the cost of serious environmental pollution, such as waste air and water released in the process of coke production, fluoride
set off in electrolytic aluminum and industrial dust in ferroalloy. Some electrolytic aluminum and billet enterprises were located
in the hinterland so that the exported material from the southeast regions had to be transported to the middle and the western region
and the finished products had to be transported to the southeast offshore area for export, which exerted greater pressure upon transport.
The massive export of high-energy-consumption, high-pollution and resources products overloaded upon the exterior conditions as energy,
resources, environment, and transport, and had side effect upon the sound and steady operation of our national economy. To control
of the export of high-energy-consumption, high-pollution and resources products was utterly necessary for the implementation of scientific
development outlook, reduction of environmental pollution, freeing the economic development from resource limit and alleviating the
tense relations among coal, electricity and oil.

2.

Measures to control the export of high-energy-consumption, high-pollution and resources products

Since this year, the relevant authorities with the approval of the State Council took a series of measures to set a limit of the export
of high-energy-consumption, high-pollution and resources products.

(1)

Axing the total export volume. The export quotas of coal was reduced from 0.1 billion tons in 2003 to 80 million tons in 2005, that
of raw oil from 5 million tons in 2003 to 1 million ton in 2005, and that of coal from 14.72 million in 2004 to 14 million in 2005.

(2)

Abolishing or reducing tax refund of part of the products. On January 1, 2005, the tax refund of such high-energy consumption products
as electrolytic aluminum, ferroalloy, phosphorus yellow, calcium carbide was abolished, in April, that of the primary products of
steel was annulled and the tax refund of steel was reduced from 13% to 11%, On May 1, that of rare earth metal, rare earth oxide,
rare earth salt, silicon metal, molybdenum ore and concentrate, light and dead burnt magnesite, fluorite, talcum, silicon carbide
and part of the processed timber was abolished; that of coal, zinc, tungsten, tin, antimony and their finished products reduced to
8%. On August 1, the tax refund of electrolytic manganese was abolished.

(3)

Levying export tariff. From January 1 of this year, export tariff was imposed on carbamide and tax of unforged and unrolled aluminum
was 5%. From June 1, the provisional duty rate for exported phosphorus was raised from 10% to 20 %, that of ferrosilicon from 0%
to 5%.

(4)

Stopping processing trade. The central governmental listed successively such products as coal, coke, phosphorous yellow, steel into
the forbidden category of processing trade, on August 22, alumina, ferroalloy mine was planned to be listed in and new processing
trade contract was scheduled to be stopped.

3.

Doing well the implementation of the supporting measures concerning alumina and ferroalloy mine processing trade.

In recent years the investment in electrolyte and ferroalloy industry surged, so does its yield. Stopping the alumina processing trade
was conducive to the reduction of import of alumina and export of electrolyte aluminum, decline of the price of alumina in international
market, recovery of alumina in international market and recovery of its price in the domestic market, as well as the creation of
a fairly competitive market, which was generally beneficial for the electrolyte and ferroalloy market. However, considering that
the supply of electrolyte and ferroalloy exceeded its market demand, the whole industry was generally in difficulties and losses
occurred in some enterprises. Therefore, the relevant authorities in all regions shall do well its work to overcome the difficulties
in electrolyte and ferroalloy industries.

(1)

The processing trade contract approved prior to the stop hereof shall be allowed to be completed. After having listed the export of
alumina and ferroalloy into the forbidden processing trade, the central government will no longer examine and approve new processing
trade control, as for the processing trade contract having been approved by the authorities in charge of commerce and recorded in
the files of the customs, they shall be allowed to be completed in accordance with the current processing trade policy.

(2)

To research some relevant tariff policy. The relevant tariff policy shall, with the combination of the formation of tariff policy
of next year, be researched and studied in the interest of the protecting domestic resources, encouraging the export of resource
products, facilitating the sound development of electrolyte aluminum and ferroalloy

(3)

To perfect the electricity price formation system of high-energy-consumption enterprises. The policy concerning differential electricity
price shall be continued. The price between different voltages class shall be widened, raising the price of low voltage class and
reducing the price of high voltage class. The direct supply and joint operation between electrolyte aluminum enterprises and electricity
ones in the areas rich in electricity shall be undertaken to reduce the cost of electrolyte aluminum. The policy concerning peak
and bottom electricity price shall be perfected and implemented to widen the price difference between electricity peak and electricity
bottom and to reduce the production cost of ferroalloy.

(4)

To perfect the credit policy. The implementation of national macro policy such industries as steel, electrolyte aluminum, coal and
ferroalloy shall be evaluated comprehensively, the industrial investment warning as well as the relevant policy direction be strengthened
so as to master the loan investment orientation and offer effective support to such enterprises and project as accords with national
industrial policy and credit principle.

(5)

To make great effort to maintain social stability. All the relevant authorities shall put into practice the relevant supporting measures
and help the enterprises to solve their difficulties and problems. It is imperative to understand and comprehend promptly the enterprise
operation, to study earnestly the problems occurred after the suspension of processing trade and submit them to the relevant higher
authorities in time.

National Development and Reform Commission

Ministry of Finance

Ministry of Commerce,

Ministry of Land and Resources

General Administration of Customs,

State Administration of Taxation

State Environmental Protection Administration

July 28, 2005



 
National Development and Reform Commission, Ministry of Finance, Ministry of Commerce, Ministry of Land and Resources,
General Administration of Customs, State Administration of Taxation, State Environmental Protection Administration
2005-07-28

 






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON PERTINENT TAX POLICIES FOR EXPORT OF PRODUCTS WITH GOLD INGREDIENTS

Circular of the State Administration of Taxation on Pertinent Tax Policies for Export of Products with Gold Ingredients

Guo Shui Fa [2005] No.125

State taxation bureaus of various provinces, autonomous regions, municipalities directly under the Central Government and cities specifically
designated in the state plan:

In order to further perfect tax policies for export of products with gold ingredients, after deliberation, it is hereby notified as
follows:

1.

If an export enterprise exports products with gold ingredients (including gold and platinum), policies on exemption of value added
tax shall be implemented, and corresponding amount of input tax shall no longer be refunded or credited but must be transferred to
cost for handling. Products with gold ingredients which are enpost_titled to enjoy free export policies have the following Customs commodity
codes: 28431000, 2843300010, 2843300090, 28439000, 3824909030, 3824909090, 71110000, 71123090, 71129110, 71129120, 71129210, 71129220,
71129920,7 1129990, 71131911, 7113191910, 7113191990, 71131991, 7113199910, 7113199990, 7114190010, 7114190090, 7114200010, 7114200090,
71151000, 7115901020, 7115901090, 71159090 and so on.

2.

After having exported the aforesaid products containing gold, an export enterprise must, upon presentation of certificates required
for export tax refund (exemption), apply to the tax refund department of any competent tax authority on a monthly basis for completing
the Declaration of Tax Exemption Certificate for Exporting Products Containing Gold (See Appendix 1, it shall be made out in one
pattern, two sheets; the first sheet shall be retained by any export enterprise itself and the second submitted to the tax refund
department).

3.

The tax refund department under an tax authority shall, in addition to the Declaration of Tax Exemption Certificate for Exporting
Products Containing Gold submitted by an export enterprise and required certificates, also examine pertinent electronic information
through the examination system at the same time. After finding there is no mistake, the tax refund department shall issue a Certification
of Tax Exemption for Exporting Products Containing Gold (Appendix 2, it shall be made out in one pattern, four sheets; the first
sheet shall be retained by the tax refund department, the second submitted to the tax collection department, the third submitted
by an export enterprise to the tax collection department for tax exemption declaration, and the fourth retained by the export enterprise),
and the second sheet shall be submitted to the tax collection authority for handling tax exemption formalities.

4.

An export enterprise shall, upon presenting the Certification of Tax Exemption for Exporting Products Containing Gold (the third sheet)
issued by the tax refund department, declare to the tax collection department for tax exemption. The tax collection department shall,
after checking the tax exemption declaration made by the export enterprise with the Certification of Tax Exemption for Exporting
Products Containing Gold (the second sheet) issued by the tax refund department, and finding no conformity between them, deal with
tax exemption formalities. The export enterprise shall be required to transfer the input tax amount corresponding to goods exported
free of duty to enterprise cost.

5.

In case of failing to declare to the competent taxation authority the products containing gold which are exported free of duty, within
a specified period, an export enterprise must, in accordance with pertinent provisions of the Circular of the State Administration
of Taxation on Several Issues Concerning the Administration of Tax Refund (Exemption) for Export of Goods (Guo Shui Fa [2004] No.64),
and the Circular of the State Administration of Taxation on Several Issues Concerning the Failure to Declare Tax Refund (Exemption)
of Exported Goods within the Prescribed Period (Guo Shui Fa [2005] No.68) provide output tax amount.

Tax authorities of all localities shall strengthen the connection between the tax imposition and tax refund, intensify responsibilities,
establish and perfect work system as well as the administrative measures for communication and negotiation with the tax refund department,
pay attention to the trends of exporting products containing gold and timely report to the State Administration of Taxation (Import
and Export Tax Department) if finding enterprises export products containing gold which don￿￿t bear the aforementioned Customs commodity
codes; products bearing such Customs commodity codes contain no ingredients of gold and platinum; and finding other problems during
the implementation of tax exemption policies.

This Circular shall come into effect as of May 1, 2005. The specific date of implementation shall be subject to the date of export
indicated on the goods declaration for exportation (special for export tax refund). Article 3 of the Circular of the Ministry of
Finance and the State Administration of Taxation on Several Issues Concerning Gold Tax Policies (Cai Shui Zi (2002) No. 142), which
relates to tax refund of gold jewelry, and the Circular of the State Administration of Taxation on Identifying Policies Concerning
Tax Refund (Exemption) for Exporting Products with Gold Ingredients (Guo Shui Fa (2005) No.59) shall be repealed as of May 1, 2005.
Where products stated above are exported by an export enterprise before May 1, 2005, the tax authority of a place where the export
enterprise is located shall allocate and transfer such products from their places of origin by sending a letter, refund (exempt)
taxes levied upon products which are eliminated from suspicion of tax frauds, and shall not refund (exempt) taxes levied upon such
products as unable to be eliminated from the same suspicion for the time being.

Appendix:

1.

Declaration of Tax Exemption Certificate for Exporting Products Containing Gold Applicable to Export Enterprises

2.

Certificate of Tax Exemption for Exporting Products Containing Gold Applicable to Export Enterprises

State Administration of Taxation

July 29, 2005




Appendix 1

￿￿

￿￿

Appendix 1:

Declaration of Tax Exemption
Certificate for Exporting Products Containing Gold Applicable to Export
Enterprises

￿￿

￿￿￿￿Customs code for enterprise:

￿￿￿￿Taxpayer’s identification code             ￿￿ 
   Taxable period (MM/YY):    ￿￿￿￿￿￿        
Unit: yuan

No.

Export Invoice No.

Export Declaration No.

Date of Export

Agency Certificate No.

Verification and Writing-off Form No.

Exported Commodity Code

Name of Exported Commodity

Quantity of Exported Commodity

Export Sales Volume

Remark

USD

RMB

1

2

3

4

5

6

7

8

9

10

11

12

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

Total

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

Export enterprise

￿￿

￿￿

Examination opinions given by the tax
authority in charge of export tax refund

￿￿

￿￿

￿￿

￿￿

￿￿

Tax clerk:                                          

Responsible person:(official seal)

                                  

(MM/DD/YY)

￿￿

￿￿

￿￿

Handling
person:                           

                               

(MM/DD/YY)

￿￿

￿￿

￿￿

Responsible person:(official seal)

                                 

(MM/DD/YY)

￿￿￿￿Note: This Declaration Form is made out
in duplication and completed by an export enterprise, the first one of which
shall be
retained by the export enterprise, and the second declared by the
export enterprise to the tax authority.

￿￿

Appendix 2:

Certificate of Tax Exemption for
Exporting Products Containing Gold Applicable to Export Enterprises

￿￿

￿￿￿￿State taxation bureau, _____ Company
(Customs code: ______, and Taxpayer￿￿s identification code:________)  Where the following
products containing gold are exported, after
examination and approval, the value added tax shall be exempted upon
exportation,
and the relevant input tax amount shall be transferred out.

￿￿￿￿Taxable
period (MM/YY):                                         
Unit: RMB

No.

Export Invoice No.

Export Declaration No.

Date of Export

Agency Certificate No.

Verification and Writing-off Form No.

Exported Commodity Code

Name of Exported Commodity

Quantity of Exported Commodity

Export Sales Volume

Remark

USD

RMB

1

2

3

4

5

6

7

8

9

10

11

12

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

Total

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

Examination opinions given by the tax
authority in charge of export tax refund

￿￿

￿￿

￿￿

￿￿

￿￿

￿￿

Preliminary
examiner:                   

Responsible
person:(official seal)

                              

(MM/DD/YY)

￿￿

￿￿

￿￿

Re-examiner:                            

                        

(MM/DD/YY)

￿￿

￿￿

￿￿

Responsible person:(official seal)

REGULATIONS ON THE ADMINISTRATION OF PRECURSOR CHEMICALS






the State Council

Order of the State Council of the People’s Republic of China

No. 445

The Regulations on the Administration of Precursor Chemicals, which were adopted at the 102nd executive meeting of the State Council
on August 17th, 2005, are hereby promulgated and shall go into effect as of November 1st, 2005.

the Premier of the State Council Wen Jiabao

August 26, 2005

Regulations on the Administration of Precursor Chemicals

Chapter I General Provisions

Article 1

For the purpose of strengthening the administration of precursor chemicals, regulating the production, distribution, purchase, transportation
and import and export of precursor chemicals, preventing precursor chemicals from being used in manufacturing drugs and maintaining
the economic and social order, the present Regulations are formulated.

Article 2

The state adopts the classified administration and licensing system to the production, distribution, purchase, transportation and
import and export of precursor chemicals.

The precursor chemicals are classified into three categories. Category I includes the major materials that can be used for producing
drugs. Categories II and III include the chemical agents that can be used for producing drugs. The detailed classification and types
of precursor chemicals are shown in the annex of the present Regulation.

In case the classification or types of precursor chemicals need to be adjusted, the public security department of the State Council
shall, in conjunction with the supervisory and administrative department of food and drugs, the supervisory and administrative department
of safe production, the competent commerce department, the competent health department of the State Council and the General Administration
of Customs, put forward a proposal and report it to the State Council for approval.

In case the people’s government of the province, autonomous region or municipality directly under the Central Government deems it
necessary to adjust the classification of precursor chemicals or to add any other type other than those as prescribed in the present
Regulations within its administrative jurisdiction, it shall propose this to the public security department of the State Council.
The public security department of the State Council shall put forward a proposal, and shall, in conjunction with the relevant competent
administrative departments of the State Council, report it to the State Council for approval.

Article 3

The public security department, the supervisory and administrative department of food and drugs, the supervisory and administrative
department of safe production, the competent commerce department, the competent health department, the General Administration of
Customs, the competent pricing department, the competent railway department, the competent communications department, the administrative
department for industry and commerce and the competent environmental protection department of the State Council shall, within the
scope of their respective authority, be responsible for the relevant administration of precursor chemicals throughout the country.
The relevant competent administrative departments of all the people’s governments at or above the county level shall, within the
scope of their respective authority, be responsible for the relevant administration of the precursor chemicals within their respective
administrative jurisdictions.

All the people’s governments at or above the county level shall strengthen their leadership in the administration of precursor chemicals,
and coordinate to timely solve the problems arising from the administration of precursor chemicals.

Article 4

The product name (including the scientific name and the common name), chemical molecular formula and ingredients of the chemical liable
to producing drugs shall be clearly indicated on it packaging and instructions.

Article 5

The production, distribution, purchase, transportation and import and export of precursor chemicals shall comply with the relevant
provisions of the present Regulations. And if the precursor chemicals belong to pharmaceuticals or dangerous chemicals, the relevant
provisions of the laws and other administrative regulations on pharmaceuticals and dangerous chemicals shall be complied with as
well.

It’s prohibited to smuggle or illegally produce, operate, purchase, transfer or transport any chemical liable to producing drugs.

It’s prohibited to trade precursor chemicals in cash or kind, however, an individual may legally purchases the pharmaceutical preparations
of precursor chemicals under the item of pharmaceuticals in Category I or the precursor chemicals in Category III.

An entity that produces, distributes, purchases, transports, imports or exports the precursor chemicals shall establish an internal
management system for precursor chemicals.

Article 6

The state encourages informants to inform the relevant competent administrative departments, such as the public security organs, of
any illegal activities related to precursor chemicals. The department that receives a tip-off shall keep secret the relevant informant.
If the tip-off turns out to be true, the people’s government at or above the county level and the relevant competent administrative
department shall award the relevant informant.

Chapter II Management of Production and Distribution

Article 7

An entity that applies for production of precursor chemicals in Category I, shall satisfy the following conditions and may start production
only after it has obtained the production license upon the examination and approval of the competent administrative department as
prescribed in Article 8 of the present Regulations :

(1)

Having been legally registered as a production enterprise of chemical products or pharmaceuticals;

(2)

Having the production equipments, warehouse facilities and pollutant disposal facilities that conform to the state standards;

(3)

Having a strict safe production management system and a prepared plan for environmental emergencies;

(4)

The legal representative and the technical and management personnel of the enterprise having the relevant knowledge of safe production
and precursor chemicals, and having no record of drug-related crimes.

(5)

Other conditions as prescribed by laws, regulations and rules.

An entity that applies for production of precursor chemicals under the item of pharmaceuticals in Category I shall not only satisfy
the above-mentioned conditions, but also install, in key areas such as warehousing places, the video monitors and the alarm devices
networked with the public security organ.

Article 8

An application for the production of precursor chemicals under the item of pharmaceuticals in Category I shall be subject to the examination
and approval of the supervisory and administrative department of food and drugs of the State Council. An application for the production
of precursor chemicals under any item in Category I other than pharmaceuticals shall be subject to the examination and approval of
the supervisory and administrative department of safe production of the people’s government of the province, autonomous region or
municipality directly under the Central Government.

The competent administrative departments as prescribed in the preceding paragraph shall, within 60 days as of the day of receipt of
an application, examine the application materials as submitted by the applicant. If the applicant satisfies the relevant provisions,
it shall issue a production license to the applicant or give an indication on the relevant production license obtained by the relevant
enterprise. In the case of disapproval, it shall notify, in writing, the applicant of the reasons therefore.

When examining the application materials for the production license of precursor chemicals in Category I, the competent administrative
departments may, where necessary, organize an on-site inspection and expert review.

Article 9

An entity that applies for the distribution of precursor chemicals in Category I, shall satisfy the following conditions and may starts
business operation only after it has obtained the distribution license upon the examination and approval of the competent administrative
department as prescribed in Article 10 of the present Regulations:

(1)

Having been legally registered as a distribution enterprise of chemical products or pharmaceuticals;

(2)

Having a business place that conforms to the provisions of the state, and if the precursor chemicals need be stored or kept, having
the warehouse facilities that conform to the technical standards of the state as well;

(3)

Having an management system and a sound sales network for the distribution of precursor chemicals;

(4)

The legal representative and the technical and management personnel of the enterprise having the relevant knowledge of precursor chemicals
and having no record of drug-related crimes; and

(5)

Other conditions as prescribed by laws, regulations and rules.

Article 10

An application for the distribution of the precursor chemicals under the item of pharmaceuticals in Category I shall be subject to
the examination and approval of the supervisory and administrative department of food and drugs of the State Council. An application
for the distribution of the precursor chemicals under any item in Category I other than pharmaceuticals shall be subject to the examination
and approval of the supervisory and administrative department of safe production of the people’s government of the province, autonomous
region or municipality directly under the Central Government.

The competent administrative departments as prescribed in the preceding paragraph shall, within 30 days as of the day of receipt of
an application, examine the application materials as submitted by the applicant. Where the applicant satisfies the relevant provisions,
it shall issue a distribution license to the applicant or give an indication on the relevant business license that has been obtained
by the relevant enterprise. In the case of disapproval, it shall notify, in writing, the applicant of the reasons therefore.

When conduct an examination on the application materials for distribution license for the precursor chemicals in Category I, the competent
administrative departments may, where necessary, organize an on-site inspection.

Article 11

A production enterprise, which has obtained the production license for precursor chemicals in Category I or has gone through the record-keeping
formalities for the production of precursor chemicals in Category II or III under the provisions of paragraph 1 of Article 13 of
the present Regulations, may distribute the precursor chemicals it produces. However, where an enterprise is to establish sales outlets
outside its factory for the distribution of precursor chemicals in Category I, it shall obtain the distribution license in accordance
with the provisions of the present Regulations.

The single preparations of precursor chemicals under the item of pharmaceuticals in Category I shall be distributed by the designated
distribution enterprise of narcotic drugs and may not be retailed.

Article 12

An enterprise that has obtained the production or distribution license for precursor chemicals in Category I shall, upon the strength
of its production or distribution license, register the alteration of its business scope with the administrative department for industry
and commerce . No enterprise may produce or distribute the precursor chemicals in Category I unless the alteration of business scope
has been registered.

Where the production or distribution license for precursor chemicals in Category I is revoked pursuant to the law, the competent administrative
department shall, within 5 days after making the decision on revocation, inform the administrative department for industry and commerce.
The enterprise whose license has been revoked shall timely register the alteration of its business scope or nullify its registration
with the administrative department for industry and commerce.

Article 13

An enterprise that produces the precursor chemicals in Category II or III shall, within 30 days as of the day of starting production,
file such information as the type and quantity for record, with the supervisory and administrative department of safe production
of the municipal people’s government of the districted city where it is located.

An enterprise that distributes the precursor chemicals in Category II shall, within 30 days as of the day of starting distribution,
file such information as the type, quantity and major flow direction for record, with the supervisory and administrative department
of safe production of the municipal people’s government of the districted city where it is located. An enterprise that distributes
the precursor chemicals in Category III shall, within 30 days as of the day of starting distribution, file such information as the
type, quantity and major flow direction for record, with the supervisory and administrative department of safe production of local
people’s government of the county where it is located.

The competent administrative departments as prescribed in the preceding two paragraphs shall issue the record-keeping certification
on the very day when it receives the materials submitted for record.

Chapter III Administration of Purchase

Article 14

An entity that applies for purchasing the precursor chemicals in Category I shall submit the following certificates to the competent
administrative department as prescribed in Article 15 of the present Regulations for examination and approval, and obtain the purchase
license therefrom upon approval:

(1)

As for a distribution enterprise, the business license and the certification of its need for legal use and ;

(2)

As for other organizations, the certificate of registration (approval document of establishment) and the certification of its need
for legal use .

Article 15

With regard to the application for purchasing precursor chemicals under the item of pharmaceuticals in Category I, it shall be subject
to the examination and approval of the supervisory and administrative department of food and drugs of the people’s government of
the province, autonomous region or municipality directly under the Central Government where the applicant is located. With regard
to the application for purchasing precursor chemicals under any item in Category I other than pharmaceuticals, it shall be subject
to the examination and approval of the public security organ of the people’s government of the province, autonomous region or municipality
directly under the Central Government where the applicant is located.

The competent administrative departments as prescribed in the preceding paragraph shall, within 10 days as of the day of receipt of
an application, examine the application materials and certificates as submitted by the applicant. Where the applicant satisfies the
relevant provisions, it shall issue a purchase license to the applicant; in the case of disapproval, it shall notify, in writing,
the applicant of the reasons therefore.

When examining the application materials for purchasing precursor chemicals in Category I, the competent administrative departments
may, where necessary, conduct an on-site inspection.

Article 16

Where a medical institution, which holds the seal card for purchasing narcotic and psychotropic pharmaceuticals in Category I, purchases
the precursor chemicals under the item of pharmaceuticals in Category I, it need not apply for the purchase license for precursor
chemicals in Category I.

No individual may purchase any chemical liable to producing drugs in Category I or II.

Article 17

An entity that is to purchase any chemical liable to producing drugs in Category II or III shall, prior to the purchase, file an information
about the type and quantity in demand for record, with the public security organ of the local people’s government at the county level.
Any purchase of potassium permanganate of small quantity by an individual for self-use need not be put on record.

Article 18

A distribution entity, when selling the precursor chemicals in Category I, shall examine the purchase license and the proof of identity
of the handling person. In the case of an entrusted purchase, it shall examine the power of attorney as held by the purchaser as
well.

A distribution entity may sell the precursor chemicals in Category I only if no error is found through the examination and after the
photocopies of the above-mentioned materials are kept. Upon discovery of any suspicious circumstance, it shall immediately report
it to the local public security organ.

Article 19

A distribution entity shall maintain a ledger for the sale of precursor chemicals and faithfully record the varieties, quantities,
date and purchasers on the precursor chemicals sold. The sales ledger and photocopies of certification materials shall be preserved
for 2 years for future reference and inspection.

The sales information of precursor chemicals in Category I shall be submitted, within 5 days as of the day of sale, to the local public
security organ for record. An entity that uses the precursor chemicals in Category I shall maintain a use ledger and preserve it
for 2 years for future reference and inspection.

The sales information of precursor chemicals in Category II or III shall be submitted, within 30 days as of the day of sale, to the
local public security organ for record.

Chapter IV Administration of Transportation

Article 20

Where the transportation of precursor chemicals in Category I is across two or more the administrative areas at the level of districted
cities (or across boundaries of a municipality in the case of municipalities directly under the Central Government) or across two
or more administrative areas at the level of counties within the key areas where the anti-drug situation is severe, which are determined
by the public security department of the State Council, it shall be subject to the examination and approval of the public security
organ of the municipal people’s government of the departure city which is divided into districts. The transportation of precursor
chemicals in Category II shall be subject to the examination and approval of the public security organ of the people’s government
at the level of the departure county. No transportation may be conducted until the transportation license for precursor chemicals
is granted upon examination.

The transportation of precursor chemicals in Category III shall, prior to departure, be flied for record with the local public security
organ of the people’s government at the level of county where the transportation starts; and the public security organ shall issue
the record-keeping certification at the very day when it receives the materials submitted for record.

Article 21

As for an application for the transportation of precursor chemicals, the contract on purchase and sale of precursor chemicals shall
be submitted. If the owner is an enterprise, its business license shall be submitted. If the owner is any other organization, the
certificate of registration (approval document of establishment) shall be submitted. If the owner is an individual, his identity
certificate shall be submitted. The individual who directly carries out the transportation shall submit his identity certificate.

The public security organ shall, within 10 days as of the day of receipt of the application for the transportation license for precursor
chemicals in Category I, or within 3 days as of the day of receipt of the application for the transportation license for precursor
chemicals in Category II, examine the application materials submitted by an applicant. If the applicant satisfies the relevant provisions,
it shall issue the transportation license to the applicant. In the case of disapproval, it shall notify, in writing, the applicant
of the reasons therefore.

When necessary, an on-site examination may be conducted in examining the application materials for the transportation license for
precursor chemicals in Category I .

Article 22

Where the transportation of precursor chemicals in Category I is approved, a transportation license valid for once shall be issued.

Where the transportation of precursor chemicals in Category II is approved, a transportation license valid for 3 months shall be issued;
and where the transportation condition is safe and sound for 6 months, a transportation license valid for 12 months shall be issued.

Such matters as the type, quantity, destination, owner and consignee, and the carrier of the precursor chemicals to be transported
as well as the type of the transportation license shall be clearly indicated in the transportation license for precursor chemicals.

Article 23

For the transportation of the ephedrine samples of less than 100g for the purpose of teaching or scientific research, or the small
package ephedrine as used by medical institutions for the preparation and prescription, or the ephedrine of not more than 60, 000
pills or 15, 000 injection preparations as purchased by a medical institution or an narcotic drugs distributor, where the owner or
carrier holds the purchase license or the allocating list of narcotic drugs as obtained according to law, it need not apply for the
transportation license for precursor chemicals.

Article 24

When accepting the consignment from a owner, a carrier shall examine the transportation license or record-keeping certification provided
by the owner, and verify whether or not the freight is consistent with the type of precursor chemicals and other information that
are specified in the transportation license or the record-keeping certification. If it is found to be inconsistent, no goods may
be transported.

In the transportation of precursor chemicals, the transportation personnel shall carry with them the transportation license or the
record-keeping certification throughout the transportation period from the departure. The public security organ shall conduct inspections
during the course of transportation of precursor chemicals.

The transportation of precursor chemicals shall comply with the provisions of the State on freight transportation.

Article 25

For the need of treatment of diseases, a patient, his near relative or the person as entrusted by the patient may, upon the strength
of the medical diagnosis issued by a medical institution and his proof of identity, carry with him the medical preparation of precursor
chemicals under the item of pharmaceuticals in Category I, provided it does not exceed the maximum dosage in a single medical prescription.

Chapter V Administration of Import and Export

Article 26

Anyone who applies for the import or export of precursor chemicals shall submit the following materials and may engage in the import
or export of precursor chemicals only after it has obtained the import or export license upon the examination and approval of the
competent commerce department of the State Council or the competent commerce department of the province, autonomous region or the
municipality directly under the Central Government as authorized thereby:

(1)

The photocopy of the registration certification of the foreign trade operator (the certification of annual joint examination for foreign-funded
enterprises);

(2)

The duplicate of the business license;

(3)

The licenses or the record-keeping certification for production, distribution, or purchase of precursor chemicals;

(4)

The duplicate of the import or export contract (agreement); and

(5)

The identity certificate of the handling person.

Anyone who applies for the export license of precursor chemicals shall, in addition, submit the certification of legal use of precursor
chemicals as issued by the competent governmental department of the region where the importer is located or the guaranty documents
as provided by the importer on the legal use of precursor chemicals.

Article 27

The competent commerce department that accepts the application for the import and export of precursor chemicals shall, within 20 days
as of the day of receipt of the application materials, examine the application materials and may, when necessary, conduct on-site
inspection. If the applicant satisfies the relevant provisions, the competent commerce department shall issue the import or export
license. If no license is granted, it shall notify, in writing, the applicant of the reasons therefore.

As for the import of precursor chemicals under the item of pharmaceuticals in Category I, the relevant competent commerce department
shall obtain the consent of the supervisory and administrative department of food and drugs of the State Council before making any
decision on licensing,.

Article 28

Ephedrine and other precursor chemicals falling within the scope of special control shall be imported or exported only by the enterprises
as jointly verified by the competent commerce department of the State Council and the relevant departments of the State Council.

Article 29

The state adopts an international check-up system to the import and export of precursor chemicals. The catalogue of precursor chemicals
subject to international check-up and the specific measures for check-up shall be formulated and promulgated by the competent commerce
department of the State Council in conjunction with the public security department of the State Council.

The time used for the international examination may not be included into the time limit for licensing.

For the export of precursor chemicals and the chemicals other than those as provided by the present Regulations to a country or area
where the illicit manufacture or trafficking of drugs is severe, other control measures may be taken in addition to the international
check-up measures. The concrete measures shall be formulated and promulgated by the competent commerce department of the State Council
in conjunction with the public security department of the State Council, the General Administration of Customs and other relevant
departments.

Article 30

As for the import, export, transition, transshipment or through transportation of precursor chemicals, declaration shall be faithfully
made to the customs and the import or export license shall be submitted thereto. The customs shall handle the clearance formalities
according to the relevant license.

The provisions of the preceding paragraph shall be applicable to the import and export of precursor chemicals between overseas areas
and the areas under special supervision of the customs or bonded areas, such as bonded zones and export processing zones.

As for the import and export of precursor chemicals between the areas within the territory of China and the areas under special supervision
of the customs or bonded areas, such as bonded zones and export processing zones, or between the aforesaid areas under special supervision
of the customs and bonded zones, it is not required to apply for the import or export license of precursor chemicals.

As for the import of precursor chemicals under the item of pharmaceuticals in Category I, the customs clearance notice of imported
pharmaceuticals as issued by the supervisory and administrative department of food and drugs shall be submitted in addition.

Article 31

The pharmaceutical preparations of precursor chemicals under the item of pharmaceuticals in Category I or potassium permanganate carried
by individuals entering and exiting the territory of China shall be limited to a reasonable amount for self-use and shall be subject
to the supervision of the customs.

Any individual entering and exiting the territory of China may not carry with him any precursor chemicals other than those as set
out in the preceding paragraph.

Chapter VI Supervision and Inspection

Article 32

The public security organs, the supervisory and administrative departments of food and drugs, the supervisory and administrative departments
of safe production, the competent commerce departments, the competent health department, the competent pricing departments, the competent
railway departments, the competent communications departments, the administrative departments for industry and commerce, the competent
environmental protection departments of the people’s government above the county level as well as the customs shall, in accordance
with the present Regulations and the provisions of the relevant laws and administrative regulations, and within their respective
authorities, strengthen the supervision and inspection of the manufacture, distribution, purchase, transportation, price and import
and export of precursor chemicals, and shall, according to law, investigate into and deal with illegal manufacture, distribution,
purchase and transportation of precursor chemicals or any smuggling of precursor chemicals.

When carrying out the supervision and inspection of precursor chemicals, the competent administrative departments as prescribed in
the preceding paragraph may, according to law, inspect the scene, consult and copy the relevant materials, record the relevant information,
detain the relevant evidence materials and illicit articles, and may seal up the relevant place temporarily when necessary.

Any entity or individual under inspection shall faithfully provide the relevant information, materials and articles and may not refuse
to provide and conceal them.

Article 33

The precursor chemicals as captured and seized according to law shall be preserved and reclaimed in light of different conditions
of the precursor chemicals under the supervision of the public security organ or the administrative environmental protection department
of the people’s government of the province, autonomous region, municipality directly under the Central Government or the districted
city or under the supervision of the customs, or shall, in accordance with the relevant provisions of laws and administrative regulations
on environmental protection, be destroyed by an qualified entity under the supervision of the administrative environmental protection
department. In particular, the precursor chemicals under the item of pharmaceuticals in Category I as captured and seized shall be
all destroyed.

Where an entity or individual that violates the relevant provisions on the precursor chemicals is unable to afford the expenses for
the prevention, reclamation or destruction of the precursor chemicals concerned, such expenses shall be paid from the income as derived
from the reclamation or shall be allotted in the anti-drug expenses of the relevant competent administrative department.

Article 34

Where precursor chemicals are lost, stolen or robbed, the entity concerned shall immediately report the case to the local public security
organ and, at the same time, to the supervisory and administrative department of food and drugs, the supervisory and administrative
department of safe production, the competent commerce department or the competent health department of the local people’s government
at the county level. The public security organ that receives the report shall immediately file the case and conduct investigations
and shall report it to the public security organ at a higher level. The relevant competent administrative department shall report
the case level by level and shall coordinate with the public security organ in the investigation.

Article 35

The relevant competent administrative department shall notify the relevant public security organ and the administrative department
for industry and commerce of any issuance or revocation of the license of precursor chemicals ac

SUPPLEMENTARY PROVISIONS ON THE MEASURES FOR THE ADMINISTRATION OF OPERATION QUALIFICATION OF FOREIGN LABOR SERVICE COOPERATION

the Ministry of Commerce, the State Administration for Industry and Commerce

Order of the Ministry of Commerce and the State Administration for Industry and Commerce

No.14

The Supplementary Provisions on the Measures for the Administration of Operation Qualification of Foreign labor service Cooperation,
which were adopted upon deliberation at the 11th ministerial meeting of the Ministry of Commerce on July 4th, 2005, and approved
by the State Administration for Industry and Commerce, are hereby promulgated and shall come into force 30 days after the day of
its promulgation.

Minister of the Ministry of Commerce, Bo Xilai

Director General of the State Administration for Industry and Commerce, Wang Zhongfu

August 15, 2005

Supplementary Provisions on the Measures for the Administration of Operation Qualification of Foreign Labor Service Cooperation

With a view to meeting the need of enterprise restructuring and promoting the development of foreign labor service cooperation in
western regions, we hereby make the following supplementary provisions on the Measures for the Administration of Operation Qualification
of Foreign Labor Service Cooperation (Order No.3 of the Ministry of Commerce and the State Administration for Industry and Commerce,
hereinafter referred to as the Measures for Administration):

I.

The following enterprises, which conform to the provisions of items (1) to (7) of Article 5 of the Measures for Administration (excluding
the requirements for the registration time), may continue undertaking foreign labor service within the respective former business
scope of the enterprises, but shall apply for changing the Certificate of the People’s Republic of China for Operation Qualification
of Foreign Labor Service Cooperation:

1.

The enterprise that survives the merger of an enterprise that has the operation qualification of foreign labor service cooperation
(hereinafter referred to as the operation qualification) with any other enterprise that has been written off, or the newly established
enterprise after such merger; or

2.

The enterprise that is newly established after the division of an enterprise that has the operation qualification, in which the former
enterprise has been written off or have given up its operation qualification with its foreign labor service cooperation business
wholly incorporated into the newly established enterprise.

Where an enterprise that has the operation qualification is divided, apart from the circumstances as prescribed in the preceding paragraph,
the enterprise newly established after the division that conforms to the provisions of Article 5 (excluding the requirements for
the registration time) of the Measures for Administration may apply for operation qualification according to law.

II.

In western provinces or autonomous regions where less than 300 laborers are sent abroad in a year, apart from the enterprises that
have had the operation qualification prior to the promulgation of the present Provisions, one enterprise may be specially permitted
to apply for the operation qualification, and the enterprise is not be restricted by the requirements for outstanding achievement
as prescribed in item (8) of Article 5 of the Measures for Administration.

III.

The present Provisions shall come into force 30 days after the day of its promulgation.

 
the Ministry of Commerce, the State Administration for Industry and Commerce
2005-08-15

 



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CONSTITUTION ACT, 1982 – page 22

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

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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