CIRCULAR OF THE STATE COUNCIL ON ACCELERATING THE STRUCTURE ADJUSTMENT OF THE INDUSTRIES WITH PRODUCTION CAPACITY REDUNDANCY

State Council

Circular of the State Council on Accelerating the Structure Adjustment of the Industries with Production Capacity Redundancy

Guo Fa [2006] No.11

The people’s governments of all provinces, autonomous regions and municipalities directly under the Central Government, all the ministries
and commissions of the State Council and the institutions directly under the State Council:

It is a major and arduous task in the “11th Five-Year Plan” period to promote the strategic adjustment to the economic structure as
well as to elevate the international competitiveness of all industries. At present, it has been a predominant problem on the economy
development in parts of industries to make blind investments and low-level expansions that they have caused production capacity redundancy.
If it is not solved in a timely manner, the problem may further aggravate the conflict on the irrational industrial structure and
thus impede a sustainable, fast, balanced and sound development of the economy. In order to speed up and promote the structure adjustment
in those industries with production capacity redundancy, we hereby notify the relevant issues as follows:

The Importance and Urgency of Speeding up and Promoting the Structure Adjustment of the Industries with Production Capacity Redundancy

In recent years, the incessant upgrading of the consumption structure as well as the speeding up of the industrialization and urbanization
process have motivated a fast growth of such industries as iron &steel, cement, electrolytic aluminum and automobiles. As a result
of the extensive growth pattern of our economy, imperfect institution and mechanism, such problems as blind investment and low-level
expansion have arisen in the fast development of the foregoing industries. In 2004, the state adopted, in a timely manner, a series
of macro control measures so that the blind expansions in some industries has been preliminarily kept within limits, the over-increase
of investment has shrunk and the relevant goals concerning the mergence and recombination, readjustment, closure and bankruptcy
of enterprises as well as the elimination of laggard production capacities thereof have been fulfilled.

However, as a whole, the problem of production capacity redundancy in some industries caused by an over-investment has not been solved
at all.. There is an obvious redundancy in the production capacity of such industries as iron & steel, electrolytic aluminum, calcium
carbide, ferroalloy, coke and automobiles. For such industries as cement, coal, power and textile, although there is a balance between
their production and demand for the time being, their ongoing construction scale is so large that there is a potential of production
capacity redundancy. Under such circumstances, new projects still are introduced in the foregoing industries in some regions and
enterprises, that will definitely further aggravate the conflict of the production capacity overwhelming the demand. Furthermore,
except for the gross redundancy in such industries, there exit other serious problems concerning irrational enterprise organizational
structure, industrial technical structure and product structure. At present, the unfavorable aftermaths caused by the production
capacity redundancy of some industries, have visualized in such forms as decline of product prices, increase of inventory, decrease
of enterprise profit margin and increase of losses. If such situation is not prevented from spreading, the conflict rooting in the
binding force of resource scarcity will pop up further, the issue of structural imbalance will be worsen off, there will witness
an obvious increase in enterprise bankruptcy as well as in unemployment. So we shall resolutely make efforts to solve all the problems
as soon as possible. We shall adequately realize that, to accelerate the structure adjustment of those industries with production
capacity redundancy, is not only an objective requirement to consolidate and advance the achievement in macro control but also an
important and arduous task in this regard as well as is not only an urgent requirement to effectively shift the socio-economic development
onto a track of scientific development but also an important measure to maintain the current economic growth in a stable, comparatively
fast and sustainable way..

Though the production capacity redundancy in some industries has caused a negative impact on the socio-economic development, it, at
the same time, offers an opportunity to promote the structure adjustment. Only under such condition that the market supply exceeds
the market demand, and that the market competition is consequently aggravating, may the enterprises be willing to or rather be compelled
to adjust their structure and eliminate their laggard production capacity. The state has, in the process of implementing the macro
control, accumulated the relevant experience to coordinate the industrial policies with other economic policies so as to form comparatively
perfect standard system for market access, which provide definite institutional standards and means to promote the industrial structure
adjustment and eliminate the laggard production capacity. All regions and relevant departments shall further build up and carry
out the scientific development concept, further advance their understanding in the necessity and urgency of an overall and sound
development as well as transition of economic growth pattern, intensify their predictability, avoid any aimlessness, elevate their
initiation and self-consciousness, improve the occasion and turn harm to profit so as to accelerate the structure adjustment of the
industries with production capacity redundancy.

II.

General Requirements and Principles to Promote the Structure Adjustment of the Industries with Production Capacity Redundancy

The general requirements to accelerate the structure adjustment of the industries with production capacity redundancy are: we shall,
under the guidance of the scientific development concept, in virtue of the market, improve the occasion, control the increased
capacity, optimize the structure, give differential treatment, and support the superior and eliminate the inferior so as to step
forward substantially in the current year and achieve effective outcomes through years of efforts. The following principles shall
be carried out in the specific work:

(1)

We shall give full play to the fundamental role of the market in allocating resources. We shall, based on the market orientation,
utilize the restrictions on the market and resources to intensify the reversed transmission of the pressure for easing monetary condition
so as to promote the gross balance and structural optimism. We shall adjust and rationalize the relationship on prices of resource
products so as to better bring into play the regulation function of the price leverage in adjustment and thus promote enterprises’
independent innovation and structural adjustment initiatively.

(2)

We shall employ the economic and legal means as well as necessary administrative means in a comprehensive manner. We shall strengthen
the guidance of industrial policies, support of credit policies, adjustment of the policies for finance and taxes so as to promote
the industrial structure adjustment. We shall enhance and strictly implement the relevant standards for market access concerning
environmental protection, security, techniques, lands and comprehensive utilization of resources so as to guide the orientation of
market investment. We shall improve and strictly implement the relative laws and regulations and regulate the acts of both enterprises
and the government.

(3)

We shall insist on giving differential treatment and promote the support for the superior and elimination of the inferior. We shall,
in accordance with the specific situation in an industry, region or enterprise, offer classified guidance as well as relative protection
and restriction. We shall keep on the combination of supporting the superior and eliminating the inferior, the combination of upgrading
and restructuring and eliminating the fall-behind, the combination of merger and recombination and closure and bankruptcy. We shall
utilize and digest the present production capacity in a reasonable manner and further optimize the structure and allocation of enterprises.

(4)

We should improve the system guarantee that ensures a continuous structure adjustment. We shall combine the solving of current
problems and long-term problems, accelerate the progress of reform, eliminate the obstacles in institution or mechanism on the way
of structure adjustment, and promote the structure adjustment in the industries with production capacity redundancy in an orderly
manner so as to promote a continuous, fast and sound development of the economy.

III.

Key Measures for Promoting the Structure Adjustment in the Industries of Production Capacity Redundancy

To promote the structure adjustment in the industries with production capacity redundancy, the key is to give full play to the fundamental
role of the market in allocating resources and fully exert the market strength to promote the competition as well as the support
for the superior and the elimination of the inferior. The people’s governments at any level shall, in the process of structure
adjustment, play the role of not only regulating the market order by means of further promoting the reform so as to create the relevant
conditions to exert the function of the market mechanism but also employing the relevant economic, legal and necessary administrative
means in a comprehensive manner to intensify the guidance and make positive promotion. In 2006, we shall, by means of restructuring,
reforming and eliminating and etc. , accelerate the structure adjustment progress in the industries with production capacity redundancy.

(1)

We shall effectively prevent any rebound of the fixed-asset investment, which is a key prerequisite to promote smoothly the structure
adjustment in the industries with production capacity redundancy. If the investment is inflated again, the fall-behind production
capacity will be revival, and consequently the conflict caused by the gross redundancy and unreasonable structure will be more
and more thorny rather than be solved. We shall continue carrying out the policies of the Central Government for macro control
and strictly keeping watch on the strobes of land and credit, strictly control the investment scale of fixed assets so as to create
the necessary prerequisites of and a favorable environment for the structure adjustment in the industries with production capacity
redundancy.

(2)

We shall strictly control those newly initiated projects. We shall, in accordance with the relevant laws and regulations, formulate
more strict standards concerning environment, security, energy consumption, water consumption, comprehensive utilization of resources
as well as quality, techniques and scale and elevate the threshold for access. We shall give different treatments to projects under
construction and those under the planning of construction and continue the relative straightening-out and rectification. As to any
project that fails to meet the relevant requirements of the state for market access concerning the relevant planning, industrial
policies, policies for land supply, environmental production and work safety, the construction thereof shall be stopped in accordance
with law. In the case of refusal to carry out any relevant order, we shall employ the relevant economic, legal means as well as
necessary administrative means to conduct it and investigate the liabilities of relevant personnel. As is the general principle,
we shall not grant any approval for the setting up a new steel plant and shall implement strict examination and approval on a project
concerning the relocation of a steel plant or concerning the elimination through selection on laggard production capacity of a steel
plant. We shall elevate the standards for well-sizes in coal exploration and clarify the resource recovery rate as well as the requirements
for work safety. As to a newly established automobiles & complete vehicle production enterprise as well as any investment project
concerning the production of trans-category products by a current enterprise, both the requirements for the industrial policies and
the requirements for independent brand and independent development of products shall be met. Where any current enterprise sets up
a factory in a different place, its production and sales volume shall be not less than 80% of the approved production capacity, as
required. We shall elevate our efficiency in utilizing foreign investment and prohibit the access of any foreign investment with
poor techniques and security, high energy-consumption and heavy pollution.

(3)

We shall eliminate the laggard production capacity through selection. We shall, in accordance with law, close down those small-sized
enterprises that destroy resources, pollute the environment and fail to meet the relevant requirements for work safety, eliminate
through selection the laggard production capacity by stages and batches and dispose of the laggard production equipments by means
of destruction. We shall, gradually, eliminate through selection the laggard production capacity of cement such as vertical kiln,
close or eliminate small open furnaces of calcium carbide or those with a production capacity of not more than 10, 000 tons; eliminate,
as soon as possible, ferroalloy submerged arc furnaces with a power of not more than 5, 000 kilovolt/ampere (except special ferroalloy),
ferroalloy blast furnaces with a volume of not more than 100 cubic meters; iron-smelting blast furnaces with a volume of not more
than 300 cubic meters and steel-smelting converters and electronic furnaces with a production capacity of not more than 20 tons.
We shall eliminate thoroughly the facilities concerning indigenous coking and improved coking; stop the use of mini petrol engines
and condensing coal-fired mini-set of 50, 000 kilowatts gradually and eliminate those small coal mines that fail to meet the requirements
for scale as prescribed in the industrial policies and standards for work safety.

(4)

We should promote the technical innovation. We shall support large-sized enterprises’ projects concerning technique innovation according
to the relevant industrial policies, of high technical level and conducive to industrial upgrading. We shall put emphasis on elevating
the technical level, improving the varieties, protecting the environment, ensuring the security, debasing the consumption and elevating
comprehensive utilization, so as to carry out reforms and innovation in the traditional industries. We shall promote the project
of taking the place of smaller thermal power generators with larger ones and applying coal instead of petrol as well as any other
project alike. We shall support automobile enterprises in their building a research and development system and develop, in the
light of assimilating the relevant techniques as introduced, those techniques with independent intellectual property right. We shall
support the development of key textile techniques, research and development of the whole-set equipments and the public innovation
platform of clustered industries as well as independent costume brands. We shall support the major technical innovation of large-sized
iron & steel conglomerates as well as their new product projects, accelerate the development of grain-oriented cold rolled silicon
steel sheets, elevate the production of automobile sheets, and promote the domestic production of large-sized cold/hot continuous
rolling sets. We shall also support the construction of coal mines with high production and efficiency as well as the technical
innovation concerning the security of coal mines.

(5)

We shall promote the merger and recombination. We shall, in accordance with the market principles, encourage those large-size enterprise
groups with competitive strength to carry out trans-regional and trans-industrial merger and recombination by employing their assets,
resources, brands as well as the market mechanism and promote the centralization of industry and the macro-scale and large bases.
We shall promote the joint recombination between a predominant large-sized iron & steel enterprise and other iron & steel enterprises
in the same region so as to form several iron & steel enterprise groups with an annual production capacity of not less than 30 million
tons. We shall encourage large-sized cement enterprise groups to make merger, recombination and combination over middle/small-sized
cement plants so as to enhance its influence on the regional market. We shall break through the production and business allocation
of current carbonization enterprises, carry out merger and combination between carbonization enterprises and iron & steel enterprises
and chemical industrial enterprises and therefore develop them towards those featured by integration of production and application,
on-scale business operation, diversification of products and comprehensive application of resources. We shall support large-sized
coal enterprise to acquire, merge, recombine and re-construct a batch of small coal mines so as to realize the integration of resources,
elevate the mining return extraction rate and work safety level.

(6)

We shall intensify the coordination between the policies for credit, lands, construction, environmental protection and security and
the relevant industrial policies. We shall earnestly implement the Decision of the State Council on Promulgating and Implementing
the Interim Provisions on Promoting the Industrial Structure Adjustment (Guo Fa [2005] No.40) and make efforts to detail the measures
formulated to implement all the policies. For the relevant development planning of as well as industrial policies for such industries
as iron & steel, electrolytic aluminum and automobiles, we shall intensify the implementation of these policies, strengthen the
examination thereover and improve them in practice as well. For any industrial development planning or industrial policy that has
not been promulgated, we shall make efforts to formulate and perfect it as soon as possible. Such departments as financial institutions
and state land resources, environmental protection and security supervision shall, in the light of the requirements of the state’s
macro control as well as the relevant industrial policies strictly, optimize the credit system and the structure of land supply,
support those projects and enterprises, which meet the relevant state industrial policies and requirements for market access in the
supply of land and loans, and simultaneously, shall prevent changing up and down radically in the credit industry and positively
support any merger or recombination bringing favorable market prospects, producing good benefits and conducive to the formation of
a scale economy. For any project or enterprise that fails to meet the concerning state industrial policies, land supply policies
and requirements for market access or which has been clearly eliminated by a state order, no loan or land shall be provided thereto
and the departments in charge of urban planning, construction, environmental protection and security supervision shall not conduct
the relevant formalities therefore. We shall firmly stop any act of attraction of investment by unlawfully lowering the land price
or playing down the standards for environmental protection or security, or any act of blindly initiating a project. We shall improve
the relevant policies and measures for restricting the export of those products of high energy-consumption, heavy pollution or resource
products.

(7)

We shall further carry out the reform in such aspects as the administrative administration, investment system, pricing mechanism and
market exit mechanism. We shall, in accordance with the requirements for establishing a socialist market economic system, further
promote the reform in the administrative administration and investment system, implement conscientiously to separate government
function from enterprise management, improve and strictly carry out the system concerning the check and archival filing of enterprise
investment so as to achieve the goal of enterprises making their own decisions about investment, undertaking by themselves the relevant
risks and banks carrying out independent credit assessment. We shall promote the price reform for resource products in an active
and stable manner, improve the pricing mechanism that reflects the market demand and supply as well as the scarcity of resources
and set up and improve an ecological compensation mechanism. We shall establish and perfect an enterprise exit mechanism and formulate
as well as promulgate the relevant policies for reform concerning personnel arrangement, land use, asset disposal and guaranty for
the employees’ rights and interests, which shall be conducive to promoting the merger and recombination of enterprises and to enterprises’
exiting the market and conducive to maintaining employees’ legitimate rights and interests. We shall accelerate the setting up and
improvement of the relevant system of laws and regulations that preserve a fair market competition and break the regional blockade
as well as regional protection.

(8)

We shall improve the industrial information release system. The relevant departments shall improve the relative statistical and monitoring
system and do well in the follow-up analysis on the dynamic operation of those industries with production capacity redundancy. We
shall set up, as soon as possible, the relevant indicators to measure the production capacity redundancy as well as the data collection
system and set up, in a well-planned and step-by-step manner, an information release system so as to offer guidance regularly for
investment prediction in the market. We shall intensify the guidance for information concerning the industrial development and bring
into fully play the function of the industrial associations, do well in the market research and disclose, at a proper time, the information
on the supply and demand of products, current production capacity, ongoing construction scale, development tendency, raw material
supply and price fluctuation. Simultaneously, we shall pay close attention to the production and investment of other relative industries
and the development of their market supply and demand so as to find and solve any up-coming problem and prevent the emergence of
serious production capacity redundancy in any other industry.

The task of accelerating the readjustment in the industries with production capacity redundancy involves many aspects, concerns strong
policy orientation, and is difficult and complicated. All regions and relevant departments shall build up the concept of the overall
situation, strengthen the organization and leadership, carry out close coordination and do well in an active and orderly manner.
They shall correctly conduct the relation between reform, development and stability and, on the basis of the real situation of a
specific region or entity, improve the supporting measures, earnestly solve any difficulty or problem incurred during any merger,
bankruptcy or recombination of enterprises, do a good job do well in the personnel arrangement and asset preservation, minimize the
losses so as to avoid any societal instability. All regions and relevant departments shall report the implementation of the present
Circular to the State Council in time. The National Development and Reform Commission shall, together with the relevant departments,
make efforts to formulate the specific policies and measures and do well in the relevant implementation.

The State Council

March 12, 2006

State Council
2006-03-12

CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION OF THE PEOPLE’S REPUBLIC OF CHINA ON ADJUSTING AND IMPROVING THE POLICY ON EXCISE DUTIES

the Ministry of Finance, the State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation of the People’s Republic of China on Adjusting and Improving
the Policy on Excise Duties

Cai Shui [2006] No. 33

Departments (Bureaus) for Finance of all provinces, autonomous regions, municipalities directly under the Central Government and cities
specifically designated in the state plan, State Administration of Taxation, Bureau for Finance of Xinjiang Production and Construction
Group,

In order to fit in with the needs of objective development of the society, improve further the excise duty system, with the approval
of the State Council, the item, rate and corresponding policies of excise duties shall be readjusted. Relative points are hereby
informed as follows:

About new added tax items:

(1)

Golf ball and its equipments, high-grade wrist watch, pleasure boat, throwaway wooden chopsticks, wooden floor are newly added items.
The applicable tax rate is:

The tax rate for golf ball and its equipments is 10 percent;

The tax rate for high-grade wrist watch is 20 percent;

The tax rate for pleasure boat is 10 percent;

The tax rate for throwaway wooden chopsticks is 5 percent;

The tax rate for wooden floor is 5 percent.

(2)

Cancel the tax items of petrol, diesel oil, add the tax item of processed oil. Petrol and diesel oil are changed to the specific items
under the tax item of processed oil (the tax rate is still the same). In addition, five specific items are newly added, they are
naphtha, solvent oil, lubricating, fuel oil and aviation kerosene.

The applicable tax rate of above newly added specific items is:

(a) Naphtha, unit tax is 0.2 yuan / litre;

(b) Solvent oil, unit tax is 0.2 yuan / litre;

(d) Fuel oil, unit tax is 0.1 yuan / litre;

(e) Aviation kerosene, unit tax is 0.1 yuan / litre.

The conversion standard for measuring unit of above newly added specific items is:

(a) Naphtha, 1T= 1,385L;

(b) Solvent oil, 1T = 1,282L;

(d) Fuel oil, 1T = 1,015L;

(e) Aviation kerosene, 1T = 1,246L.

The conversion standard for measuring unit shall be set by Ministry of Finance and State Administration of Taxation.

About taxpayer

An unit and individual that produce, manufacture as consignment and import above newly added consumer goods in the territory of the
People’s Republic of China is a taxpayer for excise duties and shall apply for paying excise duties according to Temporary Regulations
of the People’s Republic of China for Excise duties (Regulations in short below).

About cancellation of tax items

Cancel the tax item of skin and hair care articles. List the tax item of high-grade skin care cosmetics originally subject to the
tax item of skin and hair care articles under the tax item of cosmetics

About adjustment of tax rate

(1)

Adjust the tax of cars

Cancel the specific item of Volkswagen, rover, small buses under the tax item of cars. Specific items of passenger vehicle and medium
commercial buses are listed separately under the tax item of cars.

Passenger vehicle

(a) Cylinder capacity (displacement, the same below) lower than 1.5L, the tax rate is 3 percent;

(b) Cylinder capacity higher than 1.5L to 2.0L (including 2.0L), the tax rate is 5 percent;

(d) Cylinder capacity higher than 2.5L to 3.0L (including 3.0L), the tax rate is 12 percent;

(e) Cylinder capacity higher than 3.0L to 4.0L (including 4.0L), the tax rate is 15 percent;

(f) Cylinder capacity higher than 4.0L, the tax rate is 20 percent.

Tax rate for medium and light commercial buses is 5 percent.

(2)

Adjust tax rate of motorcycle.

The tax rate for motorcycle shall be set according to different displacement and grade:

Cylinder capacity lower than 250ml(including 250ml), the tax rate is 3 percent;

Cylinder capacity higher than 250ml, the tax rate is 10 percent.

(3)

Adjust tax rate of tyre.

Reduce the tax rate of tyre from 10 percent to 3 percent.

(4)

Adjust the tax rate of spirit.

Tax rate for both rice wine and tuber wine is uniformly set as 20 percent. Quota tax rate is 0.5 yuan / jin (500g) or 0.5 yuan /500ml.
The measuring unit for quota tax shall be set according to the weight of actual sold product. If the measuring unit of the actual
sold product is marked for size, 500ml shall be converted to 1 jin, shall not be converted according to the degree of wine.

About tax base on a complete set bases

A taxpayer who sells taxable consumer goods produced on one’s own together with purchased or own produced non-taxable consumer goods
on a complete set bases, the tax base shall be total sales of a complete set product (excluding value added tax).

About tax of using one’s own produced naphtha for successive production of this enterprise

A production enterprise that uses one’s own produced naphtha for successive production of petrol and other taxable consumer goods
does not need to pay excise duties, for successive production of ethylene and other non-payable consumer goods or others, pay excise
duties while transferring the use of them.

About deduction of paid-up tax

The excise duties that have been paid for the materials are allowed to be deducted from payable excise duties:

(1)

Golf club that is produced by using the recalled tax-paid club head, body and handle as materials in the form of purchasing from others
or processing deal.

(2)

Throwaway wooden chopsticks that are produced by using recalled tax-paid throwaway wooden chopsticks as materials in the form of purchasing
from others or processing deal.

(3)

Wooden floor that is produced by using recalled tax-paid wooden floor as materials in the form of purchasing from others or processing
deal.

(4)

The taxable consumer goods that are produced by using recalled tax-paid naphtha as materials in the form of purchasing from others
or processing deal.

(5)

Solvent oil that is produced by using recalled tax-paid solvent oil as materials in the form of purchasing from others or processing
deal.

Measures for management of tax deduction of tax-paid excise duties shall be worked out separately by State Administration of Taxation.

About nationwide average rate of cost profit of newly added and adjusted tax

Nationwide average rate of cost profit of newly added and adjusted tax is set as follows:

(1)

10 percent for Golf ball and equipment;

(2)

20 percent for high-grade wrist watch;

(3)

10 percent for pleasure boat;

(4)

5 percent for throwaway wooden chopsticks;

(5)

5 percent for wooden floor;

(6)

8 percent for passenger vehicle;

(7)

5 percent for medium and light commercial vehicle.

About export

Policy for tax rebate (exemption) for export of taxable consumer goods shall be handled according to adjusted tax rate, regulations
and relative rules.

10.

About tax deduction and exemption

(1)

The excise duties of naphtha, Solvent oil, Lubricating, Fuel oil will be collected at 30 percent of the amount of taxable income.
It defers to collect excise duties of Aviation kerosene.

(2)

Redial tyre is exempted from excise duties.

11.

Other corresponding issues

(1)

After the implementation of this circular, the taxable consumer goods subject to newly added, cancelled or adjusted tax rate that
are returned back due to quality problems shall be implemented in accordance with the provisions of detailed rules of the regulation.
The concrete measures shall be worked out separately by the State Administration of Taxation.

(2)

It doesn’t need to pay an overdue tax for the taxable consumer goods subject to the tax range as prescribed in this circular stored
by the commercial enterprises before March 31, 2006.

(3)

To the excise duties that any unit or individual has not paid, the competent taxation authority shall clear the tax in time in accordance
with Tax Collection Management Law of the People’s Republic of China and its detailed implementation rules.

(4)

The calculation of the amount of tax drawback for the export enterprises to purchase taxable consumer goods takes the tax amount clarified
in the payment book for excise duties collection (special for export goods) as standard.

(5)

If the taxable export consumer goods purchased by export enterprises before March 31, 2006 will be exported after April 1, 2006, and
the payment book for excise duties collection (special for export goods) was obtained, the tax drawback may still be handled according
to the original tax rate. The implementation time shall take the issuing date of the payment book for excise duties collection (special
for export goods) as standard.

12.

About the implementation time

This circular shall be implemented as of April 1, 2006. Following documents or regulations shall be abolished simultaneously.

(1)

Article 4 and 11 of About Distributing Circular for Annotation of Collection Range of Excise Duties ([1993] 153).

(2)

About Distributing Supplementary Circular for Annotation of Collection Range of Excise Duties (State Taxation [1994].026).

(3)

About Reply to Collection of Excise duties from CH1010 Mini Van and Etc.( [1994] 303)

(4)

Article 4 of Circular of State Administration of Taxation on Some Problems on Tax Collection of Excise duties ([1997] 84)

(5)

Article 1 and 2 of Reply of State Administration of Taxation to Collecting Excise Duties from Some Oil Products. ([2004] 1078

(6)

Reply of State Administration of Taxation to Collection of Excise duties from wagon car refitted from “Pika” ([2005] 217).

(7)

Reply of State Administration of Taxation to Collection of Excise Duties of MeiBaoLian Pure Stay and Etc. ([2005] 1231).

Appendix: Annotation of Newly Added and Adjusted Excise Duties(Omitted)

Ministry of Finance of the People’s Republic of China

State Administration of Taxation

March 20, 2006

the Ministry of Finance, the State Administration of Taxation
2006-03-20

ANNOUNCEMENT NO. 27, 2006 OF MINISTRY OF COMMERCE AND GENERAL ADMINISTRATION OF CUSTOMS, ON ADJUSTING PART OF LIST OF COMMODITIES SUBJECT TO AUTOMATIC IMPORT LICENSES ADMINISTRATION

Ministry of Commerce, General Administration of Customs

Announcement No. 27, 2006 of Ministry of Commerce and General Administration of Customs, on Adjusting Part of List of Commodities
Subject to Automatic Import Licenses Administration

[2006] No. 27

With the approval of State Council, as from April 1, 2006, the consumption taxes and tax rates shall be adjusted. Some commodity codes
concerning Automatic Import Licenses Administration have been adjusted and are promulgated (see Appendix for detail). The unadjusted
part shall still follow Announcement No. 101 and 106, 2005 of Ministry of Commerce and General Administration of Customs.

As from April 1, all the license institutions and import enterprises shall issue and apply Automatic Import Licenses in line with
the adjusted commodity codes.

The enterprises with Automatic Import Licenses, which were issued before April 1 and were concerned with the adjusted commodity codes,
shall reapply for the Automatic Import Licenses. The validity of former one lasts until April 30, 2006.

Appendix: Adjusted List of Commodities Subject to Automatic Import Licenses Administration (omitted)

Ministry of Commerce

General Administration of Customs

March 31, 2006

Ministry of Commerce, General Administration of Customs
2006-03-31

CIRCULAR OF THE PEOPLE’S BANK OF CHINA CONCERNING THE ADJUSTMENT OF THE RMB LOAN INTEREST RATES OF FINANCIAL INSTITUTIONS

Circular of the People’s Bank of China concerning the Adjustment of the RMB Loan Interest Rates of Financial Institutions

Yin Fa [2006] No. 134

Shanghai Headquarters, all branches and business management departments of the People’s Bank of China, all central sub-branches in
all provincial cities (capitals) and the Central Sub-branch in Shenzhen Municipality of the People’s Bank of China, all policy banks,
state-owned commercial banks, joint stock commercial banks, and the China Postal Savings and Remittance Bureau,

The People’s Bank of China decides to increase the benchmark interest rates for the loans granted by financial institutions as of
April 28, 2006. The relevant matters are hereby notified to you as follows,

The interest rates for the loans granted by financial institutions shall be increased, among which the one-year loan interest rate
shall be increased by 0.27 %, from the present 5.58% to 5.85%. The loan interest rates for other loans shall also be adjusted accordingly
(For the details, please see Attachment 1). The floating methods for the loan interest rates shall remain unchanged.

II.

The interest rates for the loans of the individuals’ house accumulation funds shall be increased properly (For the details, please
see Attachment 1).

III.

The interest rates for the saving deposits in financial institutions shall remain unchanged. And the interest rates for the loans
granted by the People’s Bank of China to the financial institutions, the deposit reserve interest rates and the excessive reserve
deposit interest rates of financial institutions shall also remain unchanged.

IV.

The interest rates for the preferential loans (For the details, please see Attachment 2) increases correspondingly. The criterions
on the subsidies for the interest differences of preferential loans and the subsidizing methods shall remain unchanged.

Shanghai Headquarter and all branches (business management departments) of the People’s Bank of China, the central sub-branches of
the People’s Bank of China in all provincial cities (capitals), and the Central Sub-branch in Shenzhen Municipality of the People’s
Bank shall timely forward this Circular to the urban (rural) commercial banks, urban and rural credit cooperatives, foreign-funded
banks conducting RMB loan business, and other financial institutions within their respective jurisdictions, and urge them to timely
execute it. Meanwhile, they shall investigate into and research the responses and problems posed by all sides after the adjustment
of the interest rates, and report them to the Monetary Policy Department of the Headquarter of People’s Bank of China in a timely
manner.

(Fax: 010-66012765)

Attachments:

Form of Adjustments of the Loan Interest Rates of Financial Institutions

Form of Adjustments of the Interest Rates for Preferential Loans

The People’s Bank of China

April 27, 2006

The People’s Bank of China
2006-04-27

ANNOUNCEMENT NO.37, 2006 OF THE MINISTRY OF COMMERCE, THE STATE ENVIRONMENTAL PROTECTION ADMINISTRATION OF THE PEOPLE’S REPUBLIC OF CHINA

Announcement No.37, 2006 of the Ministry of Commerce, the State Environmental Protection Administration of the People’s Republic of
China

In accordance with related regulations of Administrative Measures on Import and Export of Ozone-Depleting Substances (ODSs, No.278,
2003) jointly released by State Environmental Protection Administration, the former Ministry of Foreign Trade and Economic Cooperation
and General Administration of Customs, the gross volume of import quotas of controlled chlorofluorocarbons (CFCs) and the detergent
TCA in 2006 and related matters are now announced as follows for purposes of making good to the international conventions, phasing
out the production and consumption of ODSs and encouraging the use of ODSs substitutes.

In line with principle of gradually cutting down the consumption of ODSs year by year and actual status of domestic productions and
consumption of ODSs, the gross volume of import quotas of the dispersant of MDI CFC-11 (trichlorofluoromethane) and the detergent
TCA in 2006 are 380 and 2,200 ton (please refer to Appendix for details).

For the time being, 70 percent of the gross volume of import quotas of the dispersant of MDI CFC-11 (trichlorofluoromethane) and
the detergent TCA will be distributed, and the other 30 percent will be distributed in accordance with actual demands of both domestic
and overseas markets in September of 2006.

Enhancing administration on quotas licensing of CFCs and controlling the gross volume of exports of CFC11, CFC12 and Halon 1301.
Enterprises shall submit the declaration forms of export and the duplicates to National Office of Import and Export Administration
of Ozone-Depleting Substances for registration immediately after finishing the contracts.

In accordance with Administrative Measures on Import and Export of Ozone-Depleting Substances and Regulations on Strengthening Administration
on Import and Export of Ozone-Depleting Substances (No.85, 2000), enterprises applying for import quotas of CFCs and the detergent
TCA shall put forward applications to National Office of Import and Export Administration of Ozone-Depleting Substances and then
applying for import and export license to license-releasing organs authorized by Ministry of Commerce with Notice of Examination
and Approval of Import and Export of Controlled Ozone-Depleting Substances released by Office of Import and Export Administration.

Appendix: Form of Gross Volume of Import Quotas of Controlled Ozone-Depleting Substances in 2006 (omitted)

Ministry of Commerce

State Environmental Protection Administration

May 9, 2006

Ministry of Commerce, State Environmental Protection Administration
2006-05-09

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON RELEVANT ISSUES ABOUT THE ADJUSTMENT OF FOREIGN EXCHANGE POLICIES ON PART OF THE INSURANCE BUSINESSES

Circular of the State Administration of Foreign Exchange on Relevant Issues about the Adjustment of Foreign Exchange Policies on Part
of the Insurance Businesses

Hui Fa [2006] No. 23
May 23, 2006

The branches and foreign exchange management departments under the State Administration of Foreign Exchange (SAFE) in all provinces,
autonomous regions, and municipalities directly under the Central Government, the branches in the cities of Shenzhen, Dalian, Qingdao,
Xiamen and Ningbo; all designated Chinese-funded foreign exchange banks, and all insurance companies,

For the purpose of facilitating the operation of insurance companies, and promoting the development of the insurance industry, the
SAFE determines to adjust the provisions on foreign exchange management on part of the insurance businesses, and makes the following
circular on relevant issues:

The domestic insurance company that operates foreign exchange insurance business upon approval (including Chinese-funded insurance
companies, Sino-foreign joint venture insurance companies, solely foreign-funded insurance companies and the branches of foreign
insurance companies) and its branches (hereinafter referred to as the “insurance operation institutions”) shall make the following
adjustment on the foreign exchange policy for the insurance contracts which comply with the conditions prescribed in Articles 33
and 34 of the Interim Provisions on Foreign Exchange Management of Insurance Business (Hui Fa [2002] No.95), and are valued and
compensated with foreign exchange:

The provisions that insurance operation institutions shall collect insurance premiums in foreign exchange shall be adjusted as: the
insurance operation institutions may choose Renminbi or foreign exchange in collection of insurance premiums, but shall not collect
foreign currency cash.

The provisions that insurance operation institutions may pay compensations or reimburse insurance money with their self-owned foreign
exchange shall be adjusted as: the insurance operation institutions may pay insurance money from their foreign exchange accounts
or pay it by purchasing foreign exchange at the designated foreign exchange banks on the strength of the relevant insurance contracts
and claims computation letters.

II.

The domestic insurance operation institutions or insurance assets management companies may, upon the need of operation, make conversion
between foreign currencies at designated foreign exchange banks to adjust the kinds of their foreign exchange currencies.

III.

The restrictions on the purchase of foreign exchange by domestic insurance companies for handling overseas reinsurance ceding business
shall be cancelled. When dealing with overseas reinsurance ceding business of domestic insurance according to the relevant provisions
of the China Insurance Regulatory Commission, the domestic insurance operation institution that undertakes foreign exchange reinsurance
business upon the approval of SAFE or its branch administrations may make the payment of foreign exchange directly or through purchasing
foreign exchange at the designated foreign exchange banks in accordance with the actual need of operation and upon the strength of
the reinsurance contract, reinsurance policies or reinsurance lists of payment and other effective credences.

IV.

In accordance with the Notice of the State Administration of Foreign Exchange on Relevant Issues concerning the Submission of Foreign
Exchange Regulatory Statements on Insurance Business (Hui Fa [2003] No.27), the domestic insurance operation institutions shall
fill in the Statistical Forms for Foreign Exchange Insurance Business of Insurance Companies, and shall, in the column of “remarks”,
specify the information on the payment of foreign exchange for overseas reinsurance business of the last quarter. If they make the
payment by purchasing foreign exchange, they shall list the relevant amount of foreign exchange purchased, time of purchase, and
other contents.

The present Notice shall enter into effect as of June 1, 2006. If there is any conflict in the previous provisions with this Circular,
the latter shall prevail. The Notice of the State Administration of Foreign Exchange and the China Insurance Regulatory Commission
on Relevant Issues concerning the Sale and Payment of Foreign Exchange for Overseas Reinsurance Ceding Business (Hui Fa [2003] No.75)
shall be abolished simultaneously.

After this Circular is received, each branch administration shall forward it to the insurance companies and foreign-funded banks within
its jurisdiction as soon as possible. Each Chinese-funded designated foreign exchange bank shall forward it to its subordinated branches
and subsidiaries as soon as possible. If any problem is encountered in the implementation, please feed back to the State Administration
of Foreign Exchange in time.

Contact Telephone: 010-68402381

Fax: 010-68402272

State Administration of Foreign Exchange
2006-05-23

MEASURES OF THE CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA FOR ADMINISTRATION OF THE ORIGIN OF IMPORT GOODS UNDER THE SPECIAL PREFERENTIAL TARIFF TREATMENTS

Decree of the General Administration of Customs of the People’s Republic of China

No. 149

The Measures of the Customs of the People’s Republic of China for Administration of the Origin of Import Goods under the Special Preferential
Tariff Treatments were deliberated and adopted at the Executive Meeting of the General Administration of Customs on May 30, 2006
and are hereby promulgated, and shall come into force as of July 1, 2006. Provisions of the Customs of the People’s Republic of China
on the Implementation of the Rules of Origin of Goods under Special Preferential Tariff Treatments Given by the People’s Republic
of China to the Least-developed African Countries as promulgated as Decree No. 123 by the General Administration of Customs on December
30, 2004 shall be abolished simultaneously.

Mu Xinsheng, Director of the General Administration of Customs

May 31, 2006

Measures of the Customs of the People’s Republic of China for Administration of the Origin of Import Goods under the Special Preferential
Tariff Treatments

Article 1

The present Measures are formulated in accordance with the Customs Law of the People’s Republic of China, the Regulations of the
Origin of Imports and Exports of the People’s Republic of China, rules of origin of goods under the special preferential tariff treatments
of China as well as provisions of relevant laws and administrative regulations for the purposes of correctly determining the origin
of import goods under the special preferential tariff treatments and promoting the economic and trade contacts between China and
relevant countries.

Article 2

The present Measures shall apply to the goods which are imported from the beneficiary countries (see the name list in Appendix 1)
under special preferential tariff treatments. But goods imported in bond and for home use by means of processing trade shall be excluded.
Any change in the name list of beneficiary countries shall be otherwise promulgated by the General Administration of Customs.

Article 3

If the goods are directly imported from a beneficiary country and in accordance with one of the conditions as follows, their place
of origin shall be the said beneficiary country and the corresponding special preferential tariff rates provided in the Import and
Export Tariff Regulations of the People’s Republic of China (hereinafter referred to as Tariff Regulations) shall be applied.

(1)

entirely obtained from or manufactured in the beneficiary country; or

(2)

incompletely obtained from or manufactured in the beneficiary country but where the final substantial transformation is completed.

Article 4

Goods “entirely obtained from or manufactured in the beneficiary country” as mentioned in Item (1) of Article 3 of the present Measures
refer to:

(1)

The mineral products exploited and excavated from this country;

(2)

The plants or their products harvested from this country;

(3)

The live animals borne and raised in this country;

(4)

The products obtained from the animals of this country as mentioned in Item (3) of this Article;

(5)

The products obtained from hunting or fishing in this country;

(6)

The fish and other marine products obtained from the high seas by vessels registered in this country or lawfully flying the flag of
this country;

(7)

The products obtained from processing the articles as listed in Item (6) of this Article on the processing vessels registered in this
country or lawfully flying the flag of this country;

(8)

The waste and old articles that are gathered in the course of consumption in this country and that can only be suited to recycling
of raw materials;

(9)

The waste and piecemeal materials that are generated in the course of production in this country and that can only be suited to recycling
of raw materials; or

(10)

The products obtained from processing the articles as listed in Items (1) to (9) of this Article within this country.

Article 5

Any of the following types of minor processing or treatment, no matter whetherer it is completed independently or together with the
others, may not affect the determination on whether the products are entirely obtained from or produced in a country or not:

(1)

The processing or treating carried out in order to preserve the goods during transportation or storage;

(2)

The processing or treating carried out to facilitate the loading and unloading of the goods; or

(3)

The packing, exhibiting and other types of processing or treating carried out in order to sell the goods.

Article 6

The criteria on the determination of “substantial transformation” specified in Item (2) of Article 3 of the present Measures shall
be the criterion of “the change in tariff item classification” or the criterion of “ad valorem percentage”.

(1)

The criterion of “the change in tariff item classification” means that, the tariff code in the Tariff Regulations of the raw materials
which do not originate from the beneficiary country used during the production or processing of goods in the said country is any
code other than the 4-digit tariff code of the aforesaid goods.

(2)

The criterion of “ad valorem percentage” means that, following the manufacturing and processing in the beneficiary country using materials
which do not originate from the said country, the value added portion may not be less than 40% of the resulting goods. The calculating
formula shall be:

Price of Goods * Price of Materials Not Originating from the Beneficiary Country

100%0%

Price of Goods

“Price of Goods” refers to the price of FOB which, no matter what way the goods shall be transported, shall always be the price at
the final port of shipment or site.

“Price of Materials Not Originating from the Beneficiary Country” refers to the price of the materials used by the manufacturers which
do not originate from the beneficiary country, including the import costs as well as the insurance and freight for transporting them
to the port of destination or site.

The calculation of the above-mentioned “ad valorem percentage” shall comply with the universally acknowledged accounting rules as
well as the Customs Evaluation Agreement.

Article 7

The simple dilution, mix, packing, bottling, drying, assembly, classification or decoration may not be deemed as substantial transformation.
Any production or pricing measures, made by enterprises for the purpose of circumventing the present Measures, may not be deemed
as substantial transformation.

Article 8

In the determination of the origin of goods, the origin of the energy, workshops, equipment, machines and tools employed during the
production course of goods, as well as the origin of the materials that are employed during the production course but do not constitute
any component or constituent part of the goods, may not affect the determination of the origin of goods.

Article 9

The origin of the packages, packing materials and containers that are declared and uniformly classified into the same category of
the goods under the Tariff Regulations together with that of the accessories, spare parts, tools and introductory materials with
which the said goods are regularly accompanied, may not affect the determination of the origin of the goods.

Article 10

The imported goods that are to declare the special preferential tariff treatments shall be transported directly from the beneficiary
country into the territories of China without transiting a third country (region) apart from China and the beneficiary country (hereafter
referred to as a third country (region)).

As regards goods which transit a third country (region) into the territories of China, if the following conditions are satisfied,
it will be deemed as direct transportation:

(1)

merely for the geographical reason or for the need of transportation;

(2)

except for loading, unloading and other necessary work to keep the goods in good condition or for transportation, the goods haven’t
undergone any other type of processing when transiting a third country (region), and

(3)

the goods don’t enter a third country (region) for trade or consumption.

Article 11

When declaring goods under the special preferential tariff treatments, the consignee of imports shall offer the following documents
to the entry Customs:

(1)

A certificate of origin issued by an issuance institution of a beneficiary country bearing the seal of the Customs of the country
when exporting the goods (see the format in Appendix 2);

(2)

Through Bill of Lading issued by the beneficiary country or that issued by other countries (regions) as the departure station of international
through transport; and

(3)

The original invoice of the goods issued by the beneficiary country.

As regards imported goods transiting a third country (region), relevant documents that, according to the Customs of China, are necessary
to certify that the provisions specified in Item (2) of Article 10 are satisfied shall be offered.

Article 12

The certificate of origin offered by the consignee of imports to the Customs, shall be issued by an official institution of a beneficiary
country and shall be valid for a period of 180 days as of the date of issuance.

The certificate of origin shall be printed on A4 paper, and the words on the face shall be in English. A certificate of origin shall
consist of 1 original and 3 duplicates: color of the original shall be apricot cream and that of the duplicates light green. The
duplicates include the second duplicate, the third duplicate and the fourth. The second duplicate shall be prepared for the verification
where the Customs of the People’s Republic of China considers necessary, the third duplicate shall be kept by the issuance institution
of the export country and the fourth duplicate shall be kept by the exporter. When declaring the goods, the consignee of imports
shall offer the original certificate of origin and the second duplicate to the entry Customs.

The name and address of the issuance institution of the certificate of origin as well as the seal and the pattern hereof shall be
kept for record by the General Administration of Customs of the People’s Republic of China.

Article 13

When declaring the import goods, the consignee of import goods shall, on its own initiative, declare to the Customs that the relevant
goods are under the special preferential tariff and shall submit the certificate of origin bearing the seal of the Customs of the
export country. The entry Customs shall in line with files on record by the beneficiary country, verify the certificate of origin
of relevant goods, and permit the import goods to enjoy the special preferential tariff upon the strength of the valid certificate
of origin and relevant documents.

Article 14

When having any doubt about the authenticity of the certificate of origin, the General Administration of Customs of the People’s
Republic of China or its authorized institution may, via the economic and commercial counselor’s office of the embassy or consulate
of China based in the corresponding beneficiary country, require the Customs of the beneficiary country or the original issuance
institution of the certificate of origin to conduct verification, and to offer a reply within 90 days as from the day when it receives
the verification request. If the Customs of the beneficiary country or the original issuance institution of the certificate of origin
fails to offer a reply within 90 days, the goods may not enjoy the special preferential tariff treatments.

During the period of waiting for the result of verification of the certificate of origin of the beneficiary country, the entry Customs
may, at the request of the consignee of imports, release the goods after it charges a sum of security deposit equivalent to the amount
of tariff calculated under the most favored nation tariff rate applicable to the goods, and it shall handle the import procedures
in accordance with the relevant provisions and complete the corresponding statistical work of the Customs. After the Customs of the
export country or the issuance institution of the certificate of origin completes the verification, the entry Customs shall, in accordance
with the verification result, promptly handle the formalities for refunding the security deposit or converting the security deposit
to the import Customs tariff, and make correct the relevant statistic data. As for import goods on which the State place restrictions
or those suspected of being against the law, the Customs may not release the goods before the verification of the certificate of
origin comes to an end.

Article 15

The Customs shall have the obligation to maintain in confidence the trade secrets they obtained on the condition of being in compliance
with the provisions of the present Measures. Without the coonsignee’s consent, the Customs may not reveal or put these secrets into
other use, except as otherwise provided by law, administrative regulations and relevant judicial interpretation.

Article 16

Anyone who violates the present Measures shall be punished in accordance with the Customs Law of the People’s Republic of China,
and the Regulations on the Implementation of the Administrative Punishments of the Customs of People’s Republic of China and other
relevant laws and administrative regulations. If any crime is constituted, he shall be subject to the criminal liabilities according
to law.

Article 17

Definitions of the following terms as mentioned in the present Measures:

The “beneficiary country” refers to the country or region with whom China has signed exchange of notes concerning special preferential
tariff treatments.

“Customs Evaluation Agreement” refers to the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade
1994, which serves as part of Marrakech Agreement Establishing the World Trade Organization.

The “materials” refer to components, spare parts, constituent parts, semi-assembly, etc. that have actually constituted part of another
product or has been used in the production course of another product.

The “production” refers to the ways of obtaining products, including planting, exploiting, harvesting, fishing, entrapping, hunting,
manufacturing, producing, processing or assembling of the products.

Article 18

The power to interpret the present Measures shall remain with the General Administration of Customs of the People’s Republic of China.

Article 19

The present Measures shall be implemented as of July 1, 2006. Provisions of the Customs of the People’s Republic of China on the
Implementation of the Rules of Origin of Goods under Special Preferential Tariff Treatments Given by the People’s Republic of China
to the Least-developed African Countries as promulgated as Decree No. 123 by the General Administration of Customs on December 30,
2004 shall be abolished simultaneously.

Appendix:

1. Name List of the Beneficiary Countries (Omitted)

2. Format of Certificates of Origin (Omitted)

The General Administration of Customs
2006-05-31

ANNOUNCEMENT NO. 43, 2006 OF MINISTRY OF COMMERCE ON STARTING ANTI-DUMPING INVESTIGATION ON IMPORTED SULFAMETHOXAZOLE

Announcement No. 43, 2006 of Ministry of Commerce on Starting Anti-dumping Investigation on Imported Sulfamethoxazole

[2006] No. 43

Ministry of Commerce announced an anti-dumping investigation on imported Sulfamethoxazole originating in India (hereinafter referred
to as “investigated product “) on June 16, 2006.

In respond to an appeal from domestic industry on April 21, 2006, Ministry of Commerce examined related issues and evidence. Since
the examination shows the appeal is in line with Article 11 , 13 and 17 and includes related contents and evidence of Article 14
and 15 of Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce decided to start an anti-dumping investigation
on the investigated product as of June 16, 2006.

The period of dumping investigation is from January 1, 2005 to December 31, 2005. The period of industry injury investigation is
from January 1, 2002 to December 31, 2005.

The investigated product is classified under Tariff No. 29350030 in Customs Tariff of Import and Export of the People’s Republic
of China.

Interested parties can apply to Bureau of Fair Trade for Imports and Exports or Bureau of Industry Injury Investigation of Ministry
of Commerce for responding to the charges within 20 days as of the date the Announcement is issued.

At the same time, the related exporters and producers should provide the quantity and amount of the product exported to mainland China
during January, 2005 to December, 2005. Registration Form on Dumping Investigation can be downloaded from

https://gpj.mofcom.gov.cn.

Besides, the interested parties should provide explanation materials on production capacity, output, storage, construction plans,
and quantity and amount of the product exported to mainland China during the period of investigation on injury to domestic industry.
Registration form on Industry Injury Investigation can be downloaded from https://www.cacs.gov.cn.

If the interested parties are not registered responding to charges within the fixed time limit, Ministry of Commerce shall have the
right to refuse their materials and make adjudication according to the available materials.

Interested parties can submit their written opinions to Ministry of Commerce in 20 days as of the date when the Announcement is issued
if they have objections to the qualifications of the applicants, the investigated products, investigation range and other issues.

Interested parties can look up the unclassified version of the application handed in by the applicants at Open Information Look-up
Office of Ministry of Commerce during the above-mentioned period.

Investigation measures can be conducted by questionnaire, sampling, hearing and examination on the spot.

The investigation begins on June 16, 2006 and last 1 year normally. In case of special situation, it could be extended to December
16, 2007.

Address of Ministry of Commerce:

Address: No. 2, DongChangAn St., Beijing

Postcode: 100731

Bureau of Fair Trade for Imports and Exports:

Tel: 86-10-65197354, 65198497, 65198740

Fax: 86-10-65198172, 65198164

Bureau of Industry Injury Investigation:

Tel: 86-10-65198184, 65198190, 65198070

Fax: 86-10-65197583

Ministry of Commerce

June 16, 2006

Ministry of Commerce
2006-06-16

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING PRINTING AND DISTRIBUTING THE PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF MAURITIUS ON THE AVOIDANCE OF DOUBLE TAXATION AND GETTING PREPARED FOR ITS IMPLEMENTATION

Circular of the State Administration of Taxation concerning Printing and Distributing the Protocol to the Agreement between the Government
of the People’s Republic of China and the Government of the Republic of Mauritius on the Avoidance of Double Taxation and Getting
Prepared for Its Implementation

Guo Shui Han [2006] No. 833

The bureaus of state taxes and those of local taxes of each province, autonomous region, municipality directly under the Central Government,
and city specially designated in the state plan:

The Agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion in respect of Taxes on Income between the Chinese
Government and government of the Republic of Mauritius was formally subscribed by Xie Xuren, Director of the State Administration
of Taxation of China, and Mr. Paul R. Lit Fong Chong Leung, Ambassador of Mauritius to China, in Beijing on September 5, 2006. After
both contracting states have completed their respective legal procedures the Agreement shall be effective. The text of the Agreement
is hereby printed and distributed to you. Please prepare well before the carrying out of the Agreement.

Appendix: The Agreement between the Government of the People’s Republic of China and the Government of the Republic of Mauritius on
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income

State Administration of Taxation

September 8th, 2006
Appendix:
The Agreement between the Government of the People’s Republic of China and the Government of the Republic of Mauritius concerning
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion in respect of Taxes on Income

The Government of the People’s Republic of China and the Government of the Republic of Mauritius, desiring to conclude a protocol
to make revision on the Agreement between the Government of the People’s Republic of China and the Government of the Republic of
Mauritius on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion in respect of Taxes on Income (hereinafter referred
to as “Agreement”) concluded in Beijing on August 1, 1994, have agreed as follows:

Article 1 .

The following paragraph shall be added in Article 13 in the Agreement as Paragraph 5:

“5. The gains reaped by a resident of a contracting party out of transferring stocks, any other kind of interest in companies or other
rights held in a resident company of the other contracting party may be taxed in that other contracting state if the person has once
directly or indirectly participated in the ownership of at least 25% of the capital of this company within 12 months.”

Paragraph 5 in Article 13 of the original Agreement shall be canceled and taken place by the following Paragraph:

“6. The gains reaped out of the alienation of the properties except those as specified in paragraphs from 1 to 5 shall only be taxed
in the contracting state of which the alienator is a resident.”

Article 2 .

Article 26 of the original Agreement shall be canceled and taken place by the following Article:

“Article 26 Exchange of Information

The competent authorities of the contracting states shall exchange the intelligence which may be foreseen to be related with the carrying
out of the provisions of this Agreement or of the domestic laws concerning various kinds of taxes levied by the contracting states
or their local authorities, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of intelligence shall
not be restricted by Article 1 and Article 2 .

Any intelligence received by a contracting state in accordance with Paragraph 1 shall be treated as secret in the same manner as intelligence
obtained according to the domestic laws of that contracting state and shall be informed only to the persons or authorities (including
courts and administrative departments) and their supervision departments concerning the assessment, collection, enforcement, prosecution
or appeal judgment of the taxation categories as indicated in Paragraph 1. Such persons or authorities shall use the intelligence
only as purposes like these, but may disclose the intelligence in public court proceedings or in court judgments.

The provisions of Paragraph 1 and Paragraph 2 shall be understood as imposing the following obligations on a contracting state on
no condition:

(1)

Administrative measures in violation of the laws and administrative practices of that or of the other contracting state should be
taken;

(2)

Providing intelligence that is not available according to the laws or through the normal administrative courses of that or of the
other contracting state;

(3)

Providing intelligence that would disclose any trade, business, industrial, commercial, or professional secret or trade process, or
any intelligence the disclosure of which would in violation of public policy (public order).

Where a contracting state requests for intelligence subject to the present Article, the other contracting party shall obtain the intelligence
requested in the manner of information acquisition, even the other contracting party may do not need such intelligence for the purposes
of taxation . The obligation defined in the front sentence shall be restricted by Paragraph 3, but the restriction shall be understood
on no condition as allowing a contracting state to refuse to provide such intelligence because it has no domestic benefits.

The provision of Paragraph 3 shall be understood on no condition as allowing a contracting state to refuse the provision of such intelligence
only because the intelligence is possessed by any bank, any other financial institution, designated representative, agent or trustee,
or because the intelligence in respect of people’s ownership equity.”

Article 3 .

The governments of the contracting states shall confirm the completion of their respective legal procedures which is indispensable
to entry into force of this Protocol through diplomatic exchange of letters. This Protocol shall go into effect as of the date a
later letter is sent, and shall apply to:

(1)

As regards China, the gains derived during the taxable years beginning on or after the first day of January of the next year following
the year in which the present Arrangement goes into effect;

(2)

As regards Mauritius, the gains derived during the taxable years beginning on or after the first day of July of the next year following
the year in which the present Arrangement goes into effect.

Article 4 .

This Protocol shall be valid permanently with the Agreement.

In witness whereof the undersigned, the following representatives, as officially authorized, have signed on this Protocol.

This Protocol was signed in Beijing on September 5, 2006. It is in duplicate and is written in Chinese and English. In case any divergence
as to the interpretation of the text arises, the English version shall prevail.

Government of People’s Republic of China Government of the (Representative)

Xie Xuren

Republic of Mauritius

(Representative)

Mr. Paul R. Lit Fong Chong Leung

State Administration of Taxation
2006-09-08

THE QUANTITY, THE APPLICATION CONDITIONS AND THE PRINCIPLE OF THE DISTRIBUTION OF THE IMPORT TARIFF QUOTAS OF GRAIN AND COTTON OF 2007

Announcement of National Development and Reform Commission

No. 64

“The Quantity, Application Conditions and Principle of the Distribution of the Import Tariff Quotas of Grain and Cotton” of 2007 is
formulated in accordance with the “Interim Measures for Administration of Tariff Quota of Import of Agricultural Products” and is
hereby promulgated.

Appendix: The Quantity, Application Conditions and Principle of the Distribution of the Import Tariff Quotas of Grain and Cotton in
2007

National Development and Reform Commission of PR. China

September 18, 2006

The Quantity, the Application Conditions and the Principle of the Distribution of the Import Tariff Quotas of Grain and Cotton of
2007

According to the “Interim Measures for the Administration of the Import Tariff Quotas of Agricultural Products” (Decree No.4 of the
Ministry of Commerce and the National Development and Reform Commission of 2003), issues concerning the quantity, the application
conditions and the principle of the distribution of the import tariff quotas of grain and cotton of 2007 are hereby promulgated as
follows:

The quantity of the import tariff quotas of grain and cotton of 2007 is: 9.636 million tons of wheat, of which the state-run trade
reaches 90%; 7.2 million tons of corn, of which the state-run trade reaches 60%; 5.32 million tons of rice (among which: 2.66 million
tons of long-grain rice, 2.66 million tons of medium-and-short-grain rice), of which the state-run trade reaches 50%; 8.94 tons of
cotton, of which the state-run trade reaches 33%.

Any enterprise that imports the aforesaid agricultural products in such trade forms as general trade, processing trade, barter trade,
small amount of border trade, assistance, donation, shall apply for the import tariff quotas of agricultural products, and handle
the formalities of Customs clearance by virtue of the certificate of the import tariff quotas of agricultural products. The products
entering bonded warehouses, bonded areas and export-oriented processing areas from abroad, shall be exempted from applying for the
certificate of the import tariff quotas of agricultural products.

The fundamental conditions of the applicant who applies for the import tariff quotas of agricultural products are: Having registered
with the administration for industry and commerce of the state (a copy of the business license of the enterprise as a legal person
is required); Having good financial situation and tax payment record (it is necessary to provide relevant materials of 2005and 2006);
having no violation record in the field of the customs, industry and commerce, taxation, as well as inspections and quarantines from
2004 to 2006; having passed the annual examination of enterprises of 2005; committing no violation of the “Interim Measures for the
Administration of the Import Tariff Quota of Agricultural Products”.

On the premise of the above-mentioned conditions, the applicant of import tariff quotas shall also conform to one of the following
conditions:

(1)

. Wheat

(a)

State-run trade enterprise

(b)

Enterprise directly under the Central Government that has the function of national reserves;

(c)

Enterprise with actual achievements in import in 2006;

(d)

Manufacturing enterprise processing more than 400 tons of wheat every day; or

(e)

Enterprise which is engaged in processing trade in which wheat is taken as raw materials, and which has no actual achievements in
import in 2006, but is enpost_titled to operate the import and export business and has obtained the certificate of the productive capacity
of processing trade issued by the local competent department of foreign trade and economic cooperation.

(2)

. Corn

(a)

State-run trade enterprise;

(b)

Enterprise directly under the Central Government that has the function of national reserves;

(c)

Enterprise with actual achievements in import in 2006;

(d)

Mixed fodder manufacturing enterprise that takes corn as raw materials and has an annual demand of more than 50 thousand tons of
corn;

(e)

Other manufacturing enterprise that takes corn as raw materials and has an annual demand of more than 100 thousand tons of corn;
or

(f)

Enterprise which is engaged in processing trade in which wheat is taken as raw materials, and which has no actual achievements in
import in 2006, but is enpost_titled to operate in the import and export business and has obtained the certificate of the productive capacity
of processing trade issued by the local competent department of foreign trade and economic cooperation.

(3)

. Paddy and rice (respective application for long-grain rice and medium-and-short-grain rice is required)

(a)

State-run trade enterprise;

(b)

Enterprise directly under the Central Government that has the function of national reserves;

(c)

Enterprise with actual achievements in import in 2006;

(d)

Enterprise which has grain wholesale and retail qualifications and whose annual sale amount is more than 100 million RMB;

(e)

Trade enterprise whose annual amount of import and export grain is more than 25 million US dollars; or

(f)

Enterprise which is engaged in processing trade in which paddy and rice are taken as raw materials, and which has no actual achievements
in import in 2006, but is enpost_titled to operate in the import and export business and has obtained the certificate of the productive
capacity of processing trade issued by the local competent department of foreign trade and economic cooperation.

(4)

. Cotton

(a)

State-run trade enterprise;

(b)

Enterprise with actual achievements in import in 2006; or

(c)

Cotton and textile enterprise with more than 50 thousand ingots of weaving equipments;

The import tariff quotas of the above-mentioned agricultural products will be distributed in accordance with the applicant’s application
quantities, historic actual achievements in import, productive capacity, and other relevant commercial standards.

(1)

. If the quantity of the import tariff quotas may satisfy the overall application quantity of the eligible applicants, the quantity
of the import tariff quotas shall be distributed according to the applicant’s application quantity.

(2)

. If the quantity of the import tariff quotas can not satisfy the overall application quantity of the eligible applicants, the applicants
with actual achievements in import may have priority in obtaining quotas, while the applicants without actual achievements in import,
mainly based on their processing capacity or operation quantity, shall be distributed the import tariff quotas in proportion. If
the application quantity is less than the quantity distributed in proportion, the distribution shall accord with the application
quantity.

The date of application of the import tariff quotas of grain and cotton in 2007 shall be from October 15 to October 30, 2006. The
applicants may obtain the “application form of the import tariff quotas of agricultural products” (See the appendix) from the institution
entrusted by the National Development and Reform Commission or download it in the website of the National Development and Reform
Commission (https://www.ndrc.gov.cn), and shall fill it in truthfully.

The institution entrusted by the National Development and Reform Commission shall be responsible for accepting enterprises’ applications
within its territory, and submit the applications that conform to the publicly announced conditions to the National Development and
Reform Commission prior to November 30, 2006. At the same time, a copy of aforesaid application shall be submitted to the Ministry
of Commerce.

The National Development and Reform Commission shall distribute the import tariff quotas of agricultural products to the final users
via the entrusted institutions prior to January 1, 2007.

Appendix: the Application Form of the Import Tariff Quotas of Agricultural Products

National Development and Reform Commission
2006-09-18

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Probate

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OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE OF TAX EXEMPTION OF SHANGHAI REPRESENTATIVE OFFICE OF...

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CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION OF THE PEOPLE’S REPUBLIC OF CHINA ON ADJUSTING AND IMPROVING THE POLICY ON EXCISE DUTIES

ANNOUNCEMENT NO. 27, 2006 OF MINISTRY OF COMMERCE AND GENERAL ADMINISTRATION OF CUSTOMS, ON ADJUSTING PART OF LIST OF COMMODITIES SUBJECT TO AUTOMATIC IMPORT LICENSES ADMINISTRATION

CIRCULAR OF THE PEOPLE’S BANK OF CHINA CONCERNING THE ADJUSTMENT OF THE RMB LOAN INTEREST RATES OF FINANCIAL INSTITUTIONS

ANNOUNCEMENT NO.37, 2006 OF THE MINISTRY OF COMMERCE, THE STATE ENVIRONMENTAL PROTECTION ADMINISTRATION OF THE PEOPLE’S REPUBLIC OF CHINA

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON RELEVANT ISSUES ABOUT THE ADJUSTMENT OF FOREIGN EXCHANGE POLICIES ON PART OF THE INSURANCE BUSINESSES

MEASURES OF THE CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA FOR ADMINISTRATION OF THE ORIGIN OF IMPORT GOODS UNDER THE SPECIAL PREFERENTIAL TARIFF TREATMENTS

ANNOUNCEMENT NO. 43, 2006 OF MINISTRY OF COMMERCE ON STARTING ANTI-DUMPING INVESTIGATION ON IMPORTED SULFAMETHOXAZOLE

THE QUANTITY, THE APPLICATION CONDITIONS AND THE PRINCIPLE OF THE DISTRIBUTION OF THE IMPORT TARIFF QUOTAS OF GRAIN AND COTTON OF 2007

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7