REPLY OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE RELEVANT TAXATION ISSUES IN THE GUIDING CATALOGUE OF INDUSTRIES FOR FOREIGN INVESTMENT

State Administration of Taxation

Reply of the State Administration of Taxation Concerning the Relevant Taxation Issues in the Guiding Catalogue of Industries for
Foreign Investment

Guo Shui Han [2005] No. 739

The State Taxation Bureau of Guangxi Zhuang Autonomous Region:

The Request for Instructions on Clarifying the Relevant Taxation Issues in the Guiding Catalogue of Industries for Foreign Investment
(Gui Guo Shui Fa [2005] No. 162 ) has been received, we hereby make the follow reply:

In July of 2004, the National Development and Reform Commission and the Ministry of Commerce jointly promulgated Decree No. 13, a
new Catalogue of Preponderant Industries for Foreign Investment in Central-western Regions (hereinafter refers to as the Catalogue
of Preponderant Industries), which were implemented as of the day of September 1, 2004. The old Catalogue of Preponderant Industries
for Foreign Investment in Central-western Regions promulgated by the original Economic and Trade Committee, the original State Planning
Committee and the original Ministry of Foreign Trade and Economic Cooperation in 2000 shall be annulled therefrom. For the problem
of linking up implementation between the new and old Catalogue of Preponderant Industries involving the exploration of central-western
regions and any other tax preference policies, it shall be implemented in the light of the principles of “the new Catalog applies
to new enterprises and the old Catalogue applies to old enterprises” as prescribed in the Notice of the State Administration of Taxation
on Implementing the Relevant Taxation Issues in the New Guiding Catalogue of Industries for Foreign Investment ( Guo Shui Fa [2002]
No. 63 [2002]) and the specific measures uniformly. The foreign investment projects as approved before September 1, 2004 that exclude
the range of the old Catalogue of Preponderant Industries but falls into the range of the new Catalogue of Preponderant Industries
shall be implemented in accordance with the principles of the original provisions and may not enjoy the relevant tax preference policies
in the light of the New Catalogue ..

State Administration of Taxation

July 23, 2005

State Administration of Taxation
2005-07-23

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION REGARDING THE RELEVANT POLICIES OF ENTERPRISES INCOME TAXES ON THE PURCHASE OF HOME-MADE EQUIPMENT BY FOREIGN INVESTMENT ENTERPRISES AND FOREIGN ENTERPRISES

Ministry of Finance, State Administration of Taxation

Notice of the Ministry of Finance and the State Administration of Taxation Regarding the Relevant Policies of Enterprises Income Taxes
on the Purchase of Home-made Equipment by Foreign Investment Enterprises and Foreign Enterprises

Cai Shui [2005] No. 74

The bureaus of finance of all provinces, autonomous regions, municipalities directly under the Central Government and the cities specifically
designated in the state plan, the state taxation bureaus, the local taxation bureaus and the bureau of finance of Xinjiang Construction
and Production Corps, the financial supervision commissioners’ offices of the Ministry of Finance of all provinces, autonomous regions,
municipalities directly under the Central Government and the cities specifically designated in the state plan:

For the relevant polices concerning the deduction or exemption of the enterprise income taxes by investment for the purchase of home-made
equipment by foreign investment enterprises and foreign enterprises, and the policies concerning the refund of enterprise income
taxes for re-investment of the relevant profits, we hereby make the following notice after deliberation:

In accordance with the provisions of Article 9 of the Law of the People’s Republic of China on the Income Taxes of Foreign Investment
Enterprises and Foreign Enterprises, as for the deduction or exemption of the enterprise income taxes by investment for the purchase
of home-made equipment by foreign investment enterprises and foreign enterprises, the tax amount as deducted or exempted shall be
computed in the light of the enterprise income taxes and the local income taxes as actually collected.

II.

Where a foreign investor of a foreign investment enterprise re-invests the profits got from his investment in China, and if the enterprise
income tax amount of the foreign investment enterprise as actually collected has already deducted or exempted the amount of enterprise
income tax by investment for the purchase of home-made equipment as allowed, the tax refund amount for re-investment shall be computed
according to the actual burden of the enterprise. To be specific, the “original actual applicable enterprise income tax rate” and
the “local income tax rate” in the provisions of Article 82 of the Detailed Rules of Implementing the Law of the People’s Republic
of China on the Income Taxes of Foreign Funded Enterprises and Foreign Enterprises shall be determined in the light of the formulas
as follows:

Original actual applicable enterprise income tax rate = Enterprise income tax amount as actually paid by foreign investment enterprises
in the year of after-tax profits/Payable income tax amount of the foreign investment enterprise in the year

Original actual applicable local income tax rate = Local income tax amount as actually paid by the foreign investment enterprise in
the year of after-tax profits/Payable income tax amount of the foreign investment enterprise in the year

Ministry of Finance

State Administration of Taxation

July 20, 2005

Ministry of Finance, State Administration of Taxation
2005-07-20

REGULATIONS ON DIRECT SELLING ADMINISTRATION

the State Council

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

No.443

The Regulations on Direct Selling Administration, which were adopted at the 101st executive meeting of the State Council on August
10, 2005, are hereby promulgated, and shall go into effect as of December 1st, 2005.

Premier of the State Council Wen Jiabao

August 23rd, 2005

Regulations on Direct Selling Administration

Chapter I General Provisions

Article 1

With a view to regulating direct selling acts, strengthening supervision over direct selling activities, preventing fraud and protecting
the legitimate rights and interests of consumers and public interests, the present Regulations are formulated.

Article 2

The present Regulations shall be subject to the direct selling activities undertaken within the territory of the People’s Republic
of China.

The scope of direct selling products shall be determined and promulgated by the competent department of commerce of the State Council
jointly with the administrative department of industry and commerce of the State Council on the basis of the development of the direct
selling industry and the demands of consumers.

Article 3

The term “direct selling” as mentioned in the present Regulations refers to a type of business mode, in which direct selling companies
recruit door-to-door salesmen to sell products directly to ultimate consumers(hereinafter referred to as consumers)outside the companies’
fixed places of business.

The term “direct selling companies” as mentioned in the present Regulations refers to the companies which, upon approval, sell products
by way of direct selling according to the provisions of the present Regulations.

The term “door-to-door salesmen” as mentioned in the present Regulations refers to any personnel who sell products directly to consumers
outside the fixed places of business.

Article 4

Any company that is established within the territory of the People’s Republic of China (hereinafter referred to as the company) may,
in accordance with the provisions of the present Regulations, apply for establishing a direct selling company that sells the products
produced by itself or the products produced by its parent company or holding company by way of direct selling.

A direct selling company may obtain the trade right and distribution right according to law.

Article 5

When undertaking direct selling activities, no direct selling company or its door-to-door salesman may conduct any fraudulent or misleading
acts and other drumbeating and sales promotion acts.

Article 6

The competent commerce department and the administrative department of industry and commerce of the State Council shall, in line with
the division of their responsibilities and the provisions of the present Regulations, be responsible for conducting supervision and
administration on direct selling companies and door-to-door salesmen as well as their direct selling activities.

Chapter II Establishment and Alteration of Direct Selling Companies and Their Branches

Article 7

Anyone applying for establishing a direct selling company shall satisfy the following requirements:

The investor shall have good commercial reputation, and have no records of serious illegal operation during the past five years before
filing the application; in the case of a foreign investor, it shall, in addition, have undertaken direct selling business outside
China for at least three years;

The paid-in registered capital shall be no less than RMB 80 million Yuan;

The deposits shall have been fully paid in the designated bank in accordance with the provisions of the present Regulation; and

The system of information reporting and disclosure shall have been established as required.

Article 8

Anyone applying for establishing a direct selling company shall fill out the application form and provide the following application
documents and materials:

the certification documents conforming to the conditions as provided for in Article 7 of the present Regulation;

articles of association of the company; in the case of establishment of a Sino-foreign joint venture or cooperative company, the contract
of the joint venture or cooperative company shall be provided as well;

the report on market plan, including the scheme for service networks in the area where direct selling business is conducted as recognized
by the people’s governments at or above the county level, which is drawn up according to the provisions of Article 10 of the present
Regulations;

descriptions of products up to the national standards;

model sales contract to be signed with the door-to-door salesman;

report on the verification of capital as issued by an accounting firm; and

agreement concluded between the company and the designated bank on using the deposit according to the present Regulations.

Article 9

An applicant shall, through the competent commerce department at the province, autonomous region, and municipality directly under
the Central Government at its locality, file an application with the competent commerce department of the State Council. The competent
commerce department at the province, autonomous region, and municipality directly under the Central Government shall, within 7 days
as of the day of receipt of the application documents and materials, submit the application documents and materials to the competent
commerce department of the State Council. The competent commerce department of the State Council shall, within 90 days as of the
day of receipt of all the application documents and materials, and upon the opinions solicited from the administrative department
of industry and commerce of the State Council, make a decision on whether or not to approve it. And if an approval is granted, it
shall issue the direct selling license.

An applicant shall, upon the strength of the direct selling license issued by the competent commerce department of the State Council,
apply for registration of alteration to the administrative department of industry and commerce according to law. The competent commerce
department of the State Council shall, when carrying out examination and issuing the direct selling license, take into account such
factors as national security, public interests, and the development of the direct selling sector, etc.

Article 10

When undertaking direct selling business, a direct selling company shall, in the administrative regions of the provinces, autonomous
regions, and municipalities directly under the Central Government where it plans to undertake direct selling business, establish
branches(hereinafter referred to as branches), which shall be responsible for the direct selling business within their regions respectively
.

A direct selling company shall, within the area where it undertakes direct selling business, establish service networks which may
facilitate and satisfy consumers and door-to-door salesmen to know about the price of products and returning and changing of products
and for the company to provide other services. The establishment of such service networks shall satisfy the requirements of the local
people’s governments at or above the county level.

When applying for establishment of branches, a direct selling company shall provide the certification documents and materials complying
with the provisions of the preceding paragraph, and shall file an application according to the procedures as provided for in paragraph
one of Article 9 of the present Regulations. After approval is granted to the application, the company shall register with the administrative
department of industry and commerce according to law.

Article 11

In the case of any major alteration in the contents as listed in Article 8 of the present Regulations, a direct selling company shall,
in light of the procedures as provided for in paragraph one of Article 9 of the present Regulations, report it to and seek approval
from the competent commerce department of the State Council.

Article 12

The competent commerce department of the State Council shall promulgate on the government website the name list of the direct selling
companies and their branches, and update it in a timely manner.

Chapter III Recruiting and Training of Door-to-door salesmen

Article 13

A direct selling company and its branches may recruit door-to-door salesmen. Any other entity or individual is not allowed to recruit
any door-to-door salesman.

The lawful selling activities of door-to-door salesmen may not be investigated and punished on the ground of unlicensed business.

Article 14

No direct selling company or any of its branches may promulgate any advertisements drumbeating the remunerations for its door-to-door
salesmen, nor may it have the payment of fees or purchase of commodities as the conditions for becoming a door-to-door salesman thereof.

Article 15

No direct selling company or any of its branches may recruit the following personnel as a door-to-door salesman:

person under the age of 18;

person without capacity or with limited capacity for civil conduct;

full-time school students;

teachers, medical personnel, public servants and soldiers in active service;

formal employees of the direct selling company;

overseas personnel; and

personnel as prohibited from taking part-time jobs by laws or administrative regulations.

Article 16

A direct selling company and its branches shall conclude a sales contract with any door-to-door salesman it recruits, and shall ensure
that its door-to-door salesmen carry out direct selling business only in the province, autonomous region, and municipality directly
under the Central Government where one of its branches has established service location. Any person who fails to conclude a sales
contract with a direct selling company or any of its branches may not carry out direct selling business by any way.

Article 17

A door-to-door salesman may, within 60 days as of the day of conclusion of the contract, rescind a sales contract at any time; after
the 60 days as of the day of conclusion of the contract, it shall notify the direct selling company 15 days before rescinding the
sales contract.

Article 18

A direct selling company shall be responsible for organizing the vocational training and examination of the door-to-door salesmen
it recruits, and shall issue the certificates of door-to-door salesman to the door-to-door salesmen who have passed the examination.
Anyone who fails to obtain the certificate of door-to-door salesman may not undertake direct selling activities.

No direct selling company may charge the door-to-door salesman any fees for the vocational training and examination.

No entity or individual outside a direct selling company is allowed to organize the vocational training of door-to-door salesmen in
any name.

Article 19

The teaching staff who give vocational training to door-to-door salesmen shall be the formal employees of the direct selling company,
and shall satisfy the following requirements:

Having worked in the companies for more than one year;

Having received graduate or post-graduate education and having the relevant professional knowledge of law and marketing;

Having no records of being punishment for deliberate crimes; and

Having no records of major illegal operation.

A direct selling company shall issue the certificates of direct selling trainer to the teaching staff that satisfy the provisions
of the preceding paragraph, and shall report the name list of the personnel who have obtained the certificate of direct selling trainer
to the competent commerce department of the State Council for record. The said department shall promulgate on the government website
the name list of the personnel who have obtained the certificate of direct selling trainer.

No foreigner may undertake the vocational training of door-to-door salesmen.

Article 20

The certificate of door-to-door salesman and the certificate of direct selling trainer issued by a direct selling company shall be
printed in the format as prescribed by the competent commerce department of the State Council.

Article 21

A direct selling company shall be responsible for the legitimacy of the vocational training of door-to-door salesmen, the training
order and the safety of the training places.

A direct selling company and its direct selling trainers shall be responsible for the legitimacy of the teaching contents of vocational
training of door-to-door salesmen.

The concrete measures for the administration of vocational training of door-to-door salesmen shall be separately formulated by the
competent commerce department of the State Council and the administrative department of industry and commerce of the State Council
in conjunction with the relevant departments.

Chapter IV Direct Selling Activities

Article 22

When selling products to consumers, a door-to-door salesman shall comply with the following provisions:

showing the certificate of door-to-door salesman and the sales contract;

not entering into the abode of any consumer to sell products compulsively without the consent of the consumer, stopping promotion
activities immediately and leaving the consumer’s abode if the consumer requires him to do so;

giving consumers detailed account of the company’s system of returning goods before the bargain is struck; and

providing consumers with invoices as well as the sales voucher containing such contents as the system of returning goods, the address
of the local service location of the direct selling company and the telephone number, etc. issued by the direct selling company after
the bargain is struck.

Article 23

A direct selling company shall clearly mark the product price on the direct selling product, and the price shall be consistent with
the price of the product as showed at the service website. A door-to-door salesman shall sell direct selling products to consumers
at the marked price.

Article 24

A direct selling company shall pay remuneration to its door-to-door salesmen at least on a monthly basis. The remunerations paid to
any door-to-door salesman by a direct selling company shall be calculated on the basis of the income gained from selling products
directly to consumers by the door-to-door salesman himself/herself, and the total remuneration (including commission, bonus, various
awards and other economic benefits, and etc.) may not exceed 30% of the income gained from selling products directly to consumers
by the door-to-door salesman himself/herself.

Article 25

A direct selling company shall establish and put into practice the sound system of changing and returning of goods.

Any consumer may, within 30 days as of the day of purchasing any direct selling product, upon the strength of the invoice or the sales
voucher issued by the direct selling company , change or return the product to the direct selling company or its branches, or the
service website at his locality or the door-to-door salesman who sells the product, on the condition that the product remains unopened.
The direct selling company and its branches, the service website at his locality or the door-to-door salesman shall, within 7 days
as of the day when the consumer requests for changing or returning the product, handle the change or return of the product according
to the price as made out in the invoice or the sales voucher.

A door-to-door salesman shall, within 30 days as of the day of purchasing the direct selling product, upon the strength of the invoice
or the sales voucher issued by the direct selling company, change or return the product to the direct selling company or its branches,
or the service website at his locality, on the condition that the product remains unopened. The direct selling company and its branches,
or the service website at his locality shall, within 7 days as of the day when the door-to-door salesman requests for changing or
returning the product, handle the changing or returning of the product according to the price as made out in the invoice or the sales
voucher.

Except for the circumstances as prescribed in the two preceding paragraphs, where a consumer or door-to-door salesman requests changing
or returning any product, the direct selling company or its branches or the service website at his locality and the door-to-door
salesman shall, according to the provisions of the relevant laws and regulations or the stipulations of the contract, change or return
the product.

Article 26

If any dispute arises from changing or returning goods between any direct selling company and any of its door-to-door salesman or
between any direct selling company or its door-to-door salesmen and any consumer, the former shall bear the burden of proof.

Article 27

A direct selling company shall bear the joint responsibility for the direct selling acts of any of its door-to-door salesmen, unless
it can prove that the direct selling act of the door-to-door salesman has nothing to do with the company.

Article 28

A direct selling company shall, in accordance with the provisions of the competent commerce department of the State Council and the
administrative department of industry and commerce of the State Council, establish and put into practice a sound information reporting
and disclosure system.

The provisions on the contents and ways of the information reporting and disclosure of any direct selling company and the relevant
requirements shall be separately prescribed by the competent commerce department of the State Council and the administrative department
of industry and commerce of the State Council.

Chapter V Deposit

Article 29

A direct selling company shall open a special account in the bank designated by the competent commerce department of the State Council
together with the administrative department of industry and commerce of the State Council, and put a deposit into it.

The deposit shall be RMB 20 million Yuan at the time when a direct selling company is established. After the direct selling company
starts operation, the deposit shall be adjusted on a monthly basis, and the amount shall remain at 15% of its sales income from direct
selling products of the previous month, but may not exceed RMB 0.1 billion Yuan at the maximum and not less than RMB 20 million Yuan
at the minimum. The interest of the deposit shall be owned by the direct selling company.

Article 30

In the case of any of the following circumstances, the deposit may be used upon the decision jointly made by the competent commerce
department of the State Council and the administrative department of industry and commerce of the State Council:

A direct selling company fails to pay remuneration to its door-to-door salesmen without justifiable reasons, or fails to pay the money
for returned goods to door-to-door salesmen and consumers;

A direct selling company involves itself in such circumstances as suspension of business, merger, dissolution, transfer and bankruptcy
and etc., and lacks the ability to pay remuneration to its door-to-door salesmen or to pay the refunds to door-to-door salesmen or
consumers; or

A direct selling company shall make compensation for any damage to consumers due to the quality of its direct selling products under
the law, but it refuses to do so without justifiable reasons or lack the ability to make compensation.

Article 31

Where any deposit is used according to the provisions of Article 30 of the present Regulations, the direct selling company shall,
within one month, replenish the deposit to the level as prescribed in paragraph two of Article 29 of the present Regulations.

Article 32

No direct selling company is allowed to offer the deposit as a guarantee or use it to discharge debts in violation of the present
Regulations.

Article 33

Where a direct selling company no longer undertakes any direct selling business, it may withdraw the deposit from the aforesaid bank
upon the strength of the credence issued by the competent commerce department of the State Council and the administrative department
of industry and commerce of the State Council.

Article 34

The competent commerce department of the State Council and the administrative department of industry and commerce of the State Council
shall be jointly responsible for the routine supervision on the aforesaid deposit.

The specific measures for payment and use of the deposit shall be separately formulated by the competent commerce department of the
State Council and the administrative department of industry and commerce of the State Council in conjunction with the relevant departments.

Chapter VI Supervision and Administration

Article 35

The administrative department of industry and commerce shall be responsible for the routine supervision and administration on direct
selling companies and door-to-door salesmen and their direct selling activities. The administrative department of industry and commerce
may conduct on-site inspection by taking the following measures:

conducting inspection by entering into the relevant companies;

requiring the relevant enterprises to provide the relevant documents, materials and certification documents;

inquiring of the parties concerned, the interested parties and other relevant personnel about the relevant issues, and requiring them
to provide the relevant materials;

consulting, copying, seizing and detaining the relevant materials and illegal property of the relevant enterprises that are related
to direct selling activities; and

checking up the certificates of direct selling trainers and the certificates of door-to-door salesmen and other certificates of the
relevant personnel.

When the administrative department of industry and commerce carries out on-site inspection pursuant to the preceding provisions, there
shall be no less than two inspectors who shall show lawful certificates. The implementation of seizure or detention shall be subject
to the approval of the person-in-charge of the administrative department of industry and commerce at or above the county level.

Article 36

When conducting routine supervision and administration, in case the administrative department of industry and commerce discovers that
the relevant enterprises commit any act suspected of violating the present Regulations, it may, upon the approval of the person-in-charge
of the administrative department of industry and commerce at or above the county level, order them to suspend their business operations.

Article 37

The administrative department of industry and commerce shall set up and publicize the informants’ hot-line, and accept the report
and complaints on acts that violate the present Regulations, and make investigation on and handle them in a timely manner.

The administrative department of industry and commerce shall keep secret of the informants, and shall, according to the relevant provisions
of the State, grant awards to those meritorious informants.

Chapter VII Legal Liabilities

Article 38

Where the relevant departments and their staff members that carry out administration and supervision on direct selling companies and
door-to-door salesmen and their direct selling activities, grant license to any application that fails to comply with the conditions
as prescribed in the present Regulations, or do not perform the duty of supervision and administration in line with the provisions
of the present Regulations, the person-in-charge who is directly responsible and other personnel held directly liable shall be given
administrative sanctions according to law. If a crime is constituted, they shall be investigated for criminal liabilities according
to law. The license granted to any application that does not comply with the conditions as prescribed in the present Regulations
shall be revoked by the relevant department that has made the decision on granting the license.

Article 39

Where a direct selling company violates the provisions of Articles 9 and 10 of the present Regulations by undertaking direct selling
activity without approval, it shall be ordered by the administrative department of industry and commerce to make corrections, and
shall be subject to the confiscation of its direct selling products and illegal sales income as well as a fine of not less than 50,000
Yuan but not more than 300,000 Yuan. If the circumstances are serious, it shall be imposed upon a fine of not less than 300,000 but
not more than 500,000 Yuan, and shall be banned according to law. If a crime is constituted, it shall be investigated for criminal
liabilities according to law.

Article 40

Where an applicant has obtained the licenses as established in Articles 9 and 10 of the present Regulations by cheating, bribery or
any other foul means, the administrative department of industry and commerce shall confiscate its direct selling products and illegal
sales revenue, and impose upon the applicant a fine of not less than 50,000 Yuan but not more than 300,000Yuan. And the competent
commerce department of the State Council shall revoke its corresponding licenses, and the said applicant shall be prohibited from
filing an application again. If the circumstances are serious, it shall be imposed a fine of not less than 300,000 Yuan but not more
than 500,000 Yuan, and shall be banned according to law. If a crime is constituted, it shall be investigated for criminal liabilities
according to law.

Article 41

Where a direct selling company violates the provisions of Article 11 of the present Regulations, the administrative department of
industry and commerce shall order it to make corrections, and impose upon it a fine of not less than 30,000 Yuan but not more than
300,000 Yuan. Where a direct selling company no longer satisfies the conditions for licensing of direct selling, its direct selling
license shall be revoked by the competent commerce department of the State Council.

Article 42

Where a direct selling company violates regulations by undertaking direct selling business beyond the scope of direct selling products,
the administrative department of industry and commerce shall order it to make corrections, confiscate its direct selling products
and illegal sales revenue, and impose upon it a fine of not less than 50,000 Yuan but not more than 300,000 Yuan. If the circumstances
are serious, it shall be imposed a fine of not less than 300,000 Yuan but not more than 500,000 Yuan. And the administrative department
of industry and commerce shall revoke the business license of the branch of any direct selling company which has illegal operation
acts, till the direct selling license of the direct selling company is revoked by the competent commerce department of the State
Council.

Article 43

Where a direct selling company or any of its door-to-door salesmen violates the provisions of the present Regulations by committing
fraudulent, misleading and other drumbeating and sales promotion acts, the direct selling company shall be imposed a fine of not
less than 30,000 Yuan but not more than 100,000 Yuan by the administrative department of industry and commerce; if the circumstances
are serious, it shall be imposed a fine of not less than 100,000 Yuan but not more than 300,000 Yuan. And the administrative department
of industry and commerce shall revoke the business license of the branch of any direct selling company which has illegal operation
acts, till the direct selling license of the direct selling company is revoked by the competent commerce department of the State
Council. The door-to-door salesman shall be imposed a fine of less than 50,000 Yuan by the administrative department of industry
and commerce; if the circumstances are serious, the direct selling company shall be ordered to revoke the qualification of the said
door-to-door salesman.

Article 44

Where a direct selling company or any of its branches recruits door-to-door salesmen in violation of the present Regulations, it shall
be ordered to make corrections by the administrative department of industry and commerce, and imposed a fine of not less than 30,000
Yuan but not more than 100,000 Yuan. If the circumstances are serious, it shall be imposed a fine of not less than 100,000 Yuan but
not more than 300,000 Yuan. And the administrative department of industry and commerce shall revoke the business license of the branch
of the direct selling company that has illegal operation acts, till the direct selling license of the direct selling company is revoked
by the competent commerce department of the State Council.

Article 45

Anyone, who violates the provisions of the present Regulations and undertakes direct selling activity without obtaining the certificate
of door-to-door salesman, shall be ordered by the administrative department of industry and commerce to make corrections, and shall
be subject to the confiscation of its direct selling products and illegal sales income as well as a fine of less than 20,000 Yuan.
If the circumstances are serious, he shall be imposed a fine of not less than 20,000 Yuan but not more than 200,000 Yuan.

Article 46

Any direct selling company that carries out the vocational training of door-to-door salesmen in violation of the provisions of the
present Regulations shall be ordered by the administrative department of industry and commerce to make corrections, and shall be
subject to the confiscation of its illegal gains as well as a fine of not less than 30,000 Yuan but not more than 100,000 Yuan. If
the circumstances are serious, it shall be imposed a fine of not less than 100,000 Yuan but not more than 300,000 Yuan. And the administrative
department of industry and commerce shall revoke the business license of the branch of the direct selling company that has illegal
business acts till the direct selling license of the direct selling company is revoked by the competent commerce department of the
State Council. The teaching staff members shall be imposed a fine of less than 50,000 Yuan, and if they are the direct selling trainers,
the direct selling company shall be ordered to revoke their qualifications as a direct selling trainer.

If an entity or individual outside a direct selling company organizes the vocational training of door-to-door salesmen, the administrative
department of industry and commerce shall order it/him to make corrections, confiscate its/his illegal gains, and impose upon it/him
a fine of not less than 20,000 Yuan but not more than 200,000 Yuan.

Article 47

Where a door-to-door salesman violates the provisions of Article 22 of the present Regulations, the administrative department of
industry and commerce shall confiscate his/her illegal sales income, and impose upon him/her a fine of less than 50,000 Yuan. If
the circumstances are serious, the direct selling company concerned shall be ordered to revoke his/her qualification as a door-to-door
salesman, and shall be imposed upon a fine of not less than 10,000 Yuan but not more than 100,000 Yuan.

Article 48

Any direct sellin

POLICIES FOR AUTOMOBILE TRADE

the Ministry of Commerce

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

No. 16

The Policies for Automobile Trade, which were adopted at the executive meeting of the Ministry of Commerce upon deliberation, are
hereby promulgated and shall be put in force as of the day of promulgation.

Minister of the Ministry of Commerce Bo Xilai

August 10, 2005

Policies for Automobile Trade

Chapter I General Provisions

Article 1

In order to establish a uniform, open, competitive and orderly automobile market, safeguard the legitimate rights and interests of
automobile consumers, advance the sound development of our automobile industry, promote consumption and expand domestic demand, the
present Policies are specially formulated.

Article 2

The state encourages the development of automobile trade and guides the automobile trade industry to work out an overall plan, to
layout in a reasonable way, to adjust the structure to actively employ modern information technologies, logistic technologies and
advanced operational mode, to promote the electronic commerce, to advance the automobile trade and to realize an intensified, scale,
brand and diversified business operation.

Article 3

In order to create a fair and competitive automobile market environment, bring into play the basic role of the market in resource
allocation, we shall uphold the socialist market economy law, further introduce the competition mechanism, further open up both internally
and externally, break regional blockade and promote the free circulation of automobile products throughout the country.

Article 4

We shall guide automobile trade enterprises to carry out their operations on a legal and credit base, to guarantee the quality of
both products and services and to provide satisfactory services to consumers.

Article 5

In order to elevate the level of our automobile trade as a whole, the state encourages those overseas investors with comparatively
strong economic strength, advanced experience of commercial operations, marketing technologies as well as sound international sales
network to invest in the field of automobile trade.

Article 6

We shall bring into full play the functions of industrial organizations, accreditation organizations and inspection institutions as
a bridge or link, establish and improve an independent, impartial and standardized intermediary service system concerning appraisal,
consultation, accreditation and inspection, and actively advance the marketization process of automobile trade.

Article 7

We shall actively establish and improve the pertinent regulations and systems, accelerate the legalization construction of automobile
trade. The establishment of an automobile trade enterprise shall meet the relevant requirements as prescribed by laws or administrative
regulations. The competent department of commerce of the State Council shall, in conjunction with other relevant departments, deliberate
and formulate and improve the administrative measures, regulations and standards in terms of automobile brand sale, circulation of
second-hand automobiles, circulation of automobile parts and reclamation of discarded automobiles so as to maintain fair competition
in the market.

Chapter II Police Target

Article 8

By way of implementing the present Policies, we shall basically realize the brand sale and services of automobiles, form a circulation
layout of second-hand automobiles with diversified operational subjects and modes, and build up the functions and the system concerning
the sale and after-service of automobiles and second-hand automobiles so that the source, quality and price of automobile parts are
open and transparent, the counterfeit, false and low-quality parts are effectively cracked down, the reclamation and dismantlement
rate of discarded automobiles are increased significantly and a favorable market order of automobile trade takes shape.

Article 9

By 2010, a modern automobile trade system shall be established which is brought in line with the international practice and has its
competitive advantage, and we will have a group of automobile trade enterprises with their own strength, and achieve a considerable
increase in trade volume, a noticeable progress in the level of trade , and a remarkable elevation in the capability of foreign
trade, a coordinated development between the automobile trade and the automobile industry being realized.

Chapter III Sale of Automobiles

Article 10

Automobile manufacturers both home and abroad that sell self-produced automobiles within the territory of China shall establish and
improve their brand sale and service system of automobiles as soon as possible so as to ensure that consumers may receive good service
in the process of purchase and use as well as to maintain the legitimate rights and interests thereof. An automobile manufacturer
may, according to the relevant regulations of the state, make investment by itself or authorize its general distributor to establish
a brand sale and service system.

Article 11

The brand sale and service of automobiles shall be implemented. From April 1, 2005, the brand sale and service shall be implemented
for passenger vehicles. From December 1, 2006, the brand sale and services shall be implemented for all automobiles, with the exception
of special purpose vehicles.

Anyone who engages in the automobile brand sale shall have acquired the authorization from an automobile manufacturer or an authorized
general distributor thereof. The dealers of automobiles (including second-hand automobiles) shall conduct their automobile business
within the scope as verified by the administrative department of industry and commerce.

Article 12

An automobile supplier shall work out a plan for the brand sale and service network of automobiles. In order to safeguard the interest
of consumers, the automobile brand sale network may not be more than 150 kilometers away from its service location that supply automobile
parts and provide after-service.

Article 13

An automobile supplier shall strengthen the management of brand sale and service networks, regulate the sale and service and shall,
after the administrative department of industry and commerce of the State Council puts it on record and promulgate it to the general
public, inform the general public on a periodic basis the name list of the enterprises that engage in the brand sale and service
of automobiles and whose authorization has been granted or abolished, and may not provide any automobile resources to a dealer that
has not been authorized or doesn’t satisfy the relevant conditions of business operations. An automobile supplier shall be responsible
for informing the general public in a timely manner of the automobile type whose production has been ceased and take active measures
to ensure the parts supply within a reasonable time limit.

Article 14

An automobile supplier or dealer shall specify each other’s the rights and obligations by concluding a written contract. An automobile
supplier shall offer guidance and technical support to dealers, may not require a dealer to accept an unequal term for cooperation
or determine the sales quantity or carry out any tie-in sale in a compulsive manner, or terminate the cooperative relation with its
dealer at will.

Article 15

An automobile supplier shall, in accordance with the relevant laws and regulations of the state as well as its promise as made to
consumers, perform the obligation of guaranteeing the quality of automobiles and providing after service.

An automobile dealer shall clearly indicate to consumers in its business place the quality guaranty and after service of automobiles
as promised by the relevant automobile supplier and shall, under the stipulation of the authorization contract and the requirements
of service standards, provide the relevant after service.

No automobile supplier or dealer may supply or sell any automobile that does not comply with the state security technical standards
of automobiles and fails to obtain the compulsory product accreditation of the state and be included in the Announcement of Motor
Automobile Manufacturer and Products. Any imported automobile that fails to pass the inspection as prescribed by the Law of the People’s
Republic of China on Import and Export Commodity Inspection and the Rules for Implementation thereof may not be sold or used.

Chapter IV Circulation of Second-hand Automobiles

Article 16

The state encourages the circulation of second-hand automobiles. We shall establish a competition mechanism, open up the circulation
channels, support competent operational subjects, such as automobile brand dealers, to undertake the second-hand automobile business
and establish branches or sub-branches in different places in the form of chain operation.

Article 17

We shall actively create necessary conditions to simplify the procedures for the transaction and transfer of second-hand automobiles,
improve the efficiency of answering any inquiry on the legality and security of automobiles, lower transaction costs, and standardize
the transaction invoice uniformly; we shall intensify the quality management of second-hand automobiles and set an impetus to the
dealers of second-hand automobiles to provide high-quality after service.

Article 18

We shall accelerate the cultivation and buildup of the second-hand automobile market, guide the change in the concept on the second-hand
automobile market, intensify the market administration, and expand the service functions of the market.

Article 19

A voluntary appraisal system of second-hand automobiles shall be adopted. The transaction value of a second-hand automobile shall
be determined through the negotiation of both parties unless it belongs to the state-owned asset. A party concerned may, on a voluntary
basis, entrust a qualified appraisal and evaluation organization of second-hand automobiles to carry out an appraisal for reference.
No entity or department may overtly force them to conduct an appraisal on a traded automobile or do so in any disguised form except
under the provisions of laws or administrative regulations.

Article 20

We shall actively regulate the appraisal and evaluation of second-hand automobiles. An appraisal and evaluation organization shall,
upholding the principle of “being objective, authentic, impartial and open”, carry out the appraisal and evaluation of second-hand
automobiles, produce relevant reports on the appraisal and evaluation of second-hand automobiles and clarify the technical condition
thereof (including such contents as whether the automobile is involved in an traffic accident) according to the relevant laws and
regulations of the state.

Article 21

Where an enterprise that engages in the business operation or auction of second-hand automobiles sells or auctions a second-hand automobile,
it shall provide the authentic information for the buying party, and may not conceal any facts or conduct any fraudulent practice.
An automobile as sold or auctioned shall have the motor vehicle plate, the Registration Certificate of Motor Automobiles, the Operational
License of Motor Automobiles, the valid mark of passing the security technical examination, the policy of insurance of the automobile,
and the proof of payment of relevant taxes and fees.

Article 22

Where an enterprise that engages in the business operations of second-hand automobiles sells a second-hand automobile, it shall make
a promise regarding the quality guaranty and after service to the buying party. Within the warranty period, an automobile supplier
shall, in accordance with the relevant laws and regulations of the state and the promise as made to consumers, commit itself to quality
assurance and after service of automobiles.

Article 23

The business operations concerning auction or appraisal and evaluation of second-hand automobiles shall be subject to the examination
and approval of the administrative department of commerce at the provincial level.

Chapter V Circulation of Automobile Parts

Article 24

The state encourages the circulation of automobile components to develop into large scale, good brand and networked circulation by
way of franchise and chain operation, supports the component circulation enterprises to carry out integration so as to realize the
structural upgrading and improve the economy of scale as well as service quality.

Article 25

A supplier or dealer of automobiles or automobile components shall intensify the quality management and improve the product quality
as well as service quality.

No supplier or dealer of automobiles or automobile components may supply or sell any automobile component that fails to comply with
the relevant laws, administrative regulations, compulsory standards and the requirements of compulsory product certification of the
state.

Article 26

A supplier of automobiles or automobile parts shall inform the general public of the name list of franchised dealers of automobile
parts whose accreditation has been granted or abolished on a periodic basis.

A dealer of automobile parts shall give clear indications of the names, manufacturers and prices of the automobile parts and any other
automobile articles as sold and shall indicate the parts from original plant, the parts that have been accredited by automobile manufacturer
and the reclaimed articles of discarded automobiles as well as renovated components in a separate way. The product identification
of automobile parts shall meet the requirements of the Law on Product Quality.

Article 27

We shall accelerate the circulation of reclaimed articles of discarded automobiles. For the parts that have been dismantled by an
enterprise that engages in the reclamation and dismantlement of discarded automobiles under the relevant provisions and may be sold
out, the sign “reclaimed articles of discarded automobiles” shall be noticeably indicated on the parts.

Chapter VI Discarding of Automobiles and Reclamation of Discarded Automobiles

Article 28

The state adopts a compulsory automobile discarding system., we shall, in light of the different security technical states and purposes
of automobiles, amend the present Automobile Discarding Standards in effect and formulate different compulsory discarding standards
accordingly.

Article 29

An owner of a discarded automobile shall sell or turn over the discarded automobile timely to an enterprise as qualified to engaging
in the reclamation and dismantlement of discarded automobiles.

Article 30

The local administrative department of commerce shall, in accordance with the relevant requirements of the Measures for the Administration
of Discarded Automobile Reclamation (Order No. 307 of the State Council), work out an overall plan as well as a rational layout for
the discarded automobile reclamation and dismantlement industry.

Anyone who engages in the business operations of reclamation and dismantlement of discarded automobiles shall have the relevant qualifications
as prescribed by the relevant laws and regulations. The administrative department of commerce of the State Council shall inform the
general public of those qualified enterprises that engage in the reclamation and dismantlement of discarded automobiles.

Article 31

An enterprise that engages in the business operations of reclamation and dismantlement of discarded automobiles shall, in strict accordance
with the relevant laws and regulations of the state, carry out its business operations and dismantle the discarded automobiles as
reclaimed in a timely manner. The “five assemblies” of engine, front and rear axles, gearshift, steering gear and frame as dismantled
shall be used as waste iron or steel, which may be sold to an iron and steel works as the raw materials for smelting.

Article 32

The administrative departments of commerce at all levels shall, in conjunction with the relevant public security organs, establish
an information exchange system regarding the management of discarded automobile reclamation, realizing the real-time control in the
reclamation process of discarded automobiles so as to prevent the discarded automobiles or the “five assemblies” from flowing into
the market.

Article 33

In order to use the resources in a reasonable and effective manner, the state shall formulate relevant measures for the administration
of reclamation and utilization of discarded automobiles.

Article 34

We shall improve the measures for the administration of subsidy funds for the discarding and renewal of old automobiles and encourage
the discarding and renewal of old automobiles.

Article 35

The storage, transfer and disposal, etc. of the parts of discarded automobile and other waste, harmful materials (e.g., oil, liquid,
battery and harmful metal, etc.) shall comply with the requirements as prescribed in such laws and regulations as the Environmental
Protection Law and the Law on the Prevention and Control of Atmospheric Pollution so as to ensure that they are safe and pollution-free
(or to minimize the pollution).

Chapter VII Foreign Trade of Automobiles

Article 36

Since January 1, 2005, the state implements the automatic import licensing administration over automobiles, under which no bonded
area at an import port of automobiles is allowed to store automobiles with the purpose of entering the domestic market.

Article 37

The state prohibits the import of any old automobile, or the assembly, parts thereof or any automobile whose steering wheel is on
the right (except for the sample automobiles with a right steering wheel that are imported for the purpose of developing products
for export).

Article 38

Imported automobile shall have obtained the Certificate for China Compulsory Product Certification, be labeled with the China Compulsory
Certification mark (CCC), and have passed the sampling inspection conducted by the inspection and quarantine administration and shall
be accompanied by the instructions in Chinese as well.

Article 39

Any unfair deal in the import of automobiles and the relevant products shall be prohibited. The competent organ of the State Council
shall take anti-dumping and countervailing measures as well as safeguard measures for the automobile industry, organize the relevant
industrial associations to establish and improve an early warning system against any damage in the automobile industry and carry
out investigation and researches on the competitive power of the automobile industry. An automobile supplier or dealer shall be obliged
to offer the relevant information to the relevant department of the State Council in a timely and accurate manner.

Article 40

We shall encourage the foreign trade development of automobiles and the relevant products. We shall support and develop the national
export base of automobiles and parts and components, guide the relevant automobile suppliers and dealers to establish the sales and
service network abroad by diversified means, which may be in the form of joint venture, cooperative business operation or sole investment,
so as to optimize the structure of exported products and expand the access to the international market.

Article 41

We shall support the foreign trade development of automobiles and the relevant products by utilizing the Central Foreign Trade Development
Fund.

Article 42

Suppliers or dealers of export automobiles and the relevant products shall establish a necessary sales and service system according
to the relevant laws and regulations of the destination regions.

Article 43

Intergovernmental consultations shall be intensified, and support shall be provided to exporters of automobiles and related commodities
in their participation of responding to anti-dumping, countervailing and safeguard measures so as to protect the legitimate rights
and interests of China’s exporters of automobiles and related commodities.

Article 44

The automobile industrial association shall intensify the industrial self-discipline and establish competitive and orderly foreign
trade orders for automobiles and related commodities.

Chapter VIII Other Matters

Article 45

The establishment of a foreign-invested automobile trade enterprise shall, in addition to fulfilling the relevant qualifications,
comply with the provisions of the relevant laws and regulations on foreign investment and be subject to the examination and approval
of the administrative department of commerce of the State Council after having passed the preliminary examinations conducted by the
administrative department of commerce at the provincial level.

Article 46

The development of automobile consumption credit shall be accelerated and scale expanded. Support will be provided to the qualified
automobile suppliers for the establishment of automobile financing companies serving the whole industry. And guidance shall be provided
to the automobile financing institutions in their development of cooperative mechanism with other financial institutions, so as to
remarkably elevate the scale of economy and degree of specialization of the automobile consumption credit market and further improve
the risk management system.

Article 47

We shall build up the automobile insurance market, encourage the insurance products to develop toward the direction of individualization
and diversification and improve the automobile insurance service, so as to preliminarily realize a professional and intensified operation
of the automobile insurance industry.

Article 48

All the policies, institutions and regulations as formulated by the people’s governments in all regions concerning automobile trade
shall be in line with the present Policy and shall uphold the principle of being open and transparent. Any discriminative policy
in such respects as the circulation, service and use of the automobiles that are not locally produced or traded may not be adopted.
We shall resolutely prevent anyone from compelling local consumers to buy the locally-produced automobiles or doing so in any disguised
form, or interfering with the choice of an operator on the state licensing production or sale of automobiles by any means.

Article 49

The present Policy shall go into effect as of the day of promulgation. The administrative department of commerce of the State Council
shall be responsible for the interpretation of the present Policy.

Annex:Explanation on the terms as used in the Policies for Automobile Trade

The term “automobile trade” includes the sale of new vehicles, the circulation of second-hand automobiles and automobile parts, the
discarding of automobiles, the reclamation of discarded automobiles as well as the automobile foreign trade.

Unless any automobile brand sale is involved, the term “automobiles” as mentioned in the present Policy includes low-speed product
vehicles, three-wheeled motor car (former agricultural transport vehicles), trailers and motorcycles.

The term “second-hand automobile” refers to an automobile that is traded and whose ownership is transferred in the duration from the
date when the formalities for its registration have been handled to the date when the national compulsory discarding standards are
satisfied.

The term “supplier” refers to a manufacturer of automobiles or automobile parts as well as the general distributor thereof.

The term “dealer” refers to a retailer of automobiles and automobile parts.

the Ministry of Commerce
2005-08-10

THE CIRCULAR OF THE MINISTRY OF COMMERCE AND THE GENERAL OFFICE OF GENERAL ADMINISTRATION OF CUSTOMS ON RELATED MATTERS CONCERNING THE TRADE ADMINISTRATION IN BONDED AREA AND BONDED LOGISTIC PARK

the Ministry of Commerce,the General Administration of Customs

The Circular of the Ministry of Commerce and the General Office of General Administration of Customs on Related Matters Concerning
the Trade Administration in Bonded Area and Bonded Logistic Park

Shan Zi Zi [2005] No.76

The competent department of commerce of all provinces,autonomous regions,municipalities directly under the Central Government,cities
specifically designated in the state plan and Xinjiang Production and Construction Corps,and all customs directly under the General
Administration of Customs:

With a view to taking practical measures to perform the undertakings made by the state in entering WTO,perfecting the trade administration
of the enterprises in bonded area,bonded logistic park,related issues are not notified as follows:

The enterprise,individual in bonded area and bonded logistic park may acquire right to trade and right to apply for distributing in
accordance with the Foreign Trade Law of the People’s Republic of China,the Measures on the File-recording and Registration of Foreign
Trade Operator,the Measures for Administration of Business Area of Foreign Investment and other related provisions.The enterprise
and individual acquiring the above-mentioned rights may conduct trade business with the enterprise and individual (including those
that have not acquired the right to trade)outside the area and park but within the territory.The foreign-funded enterprise acquiring
right to distribute may conduct distribution within the territory.

The foreign trade operator in the bonded area and bonded logistic park selling products outside the area and park but within the territory
or purchasing products outside the area and park but within the territory shall abide by related provisions of the state to import
and export,foreign exchange and the administration of tax collection.

(1)

The entry and exit of goods between the bonded area,bonded logistic park and those outside the area and the park but within the territory
shall handle the import and export procedures in accordance with related provisions of the customs.Where the enterprise within the
area and park distributes goods beyond the area but within the territory as foreign trade operator,it shall handle the formalities
relating to declaration and verification and writing-off of foreign exchange in the name of enterprise in the area or park; where
an enterprise or individual outside the area or park purchases goods from the enterprise or individual in the area or park,it shall
be handled in accordance with current provisions.

(2)

The entry and exit of goods between foreign trade operator within the bonded area,bonded logistic park and those outside the territory
shall not apply to import and export license administration,unless otherwise prescribed by the international treaties to which the
People’s Republic of China is a signatory or a party,or by laws,administrative regulations and related ministerial rules.

(3)

Where the textiles belonging to the Temporary Goods Administrative Catalogue of Textile Export enter into the bonded area,the bonded
logistic park from outside the area and park but within the territory,the customs will not examine the license,and when the goods
really exit the territory and are exported to the countries or regions that the temporary administration of textiles shall be applied
to in accordance with relevant provisions,the customs conducts the examination and release procedures on the strength of the license.

The establishment of enterprise in bonded area,bonded logistic park shall accord with the state industry policies,any enterprise within
the area and park shall not conduct manufacture and business in areas where the investment has been prohibited by the state .

The tax collection,customs supervision,foreign exchange administration of all enterprises in bonded area,bonded logistic park shall
be handled in accordance with relevant provisions of the State Administration of Taxation,the General Administration of Customs,the
State Administration of Foreign Exchange.

The General Office of the Ministry of Commerce of the PRC

The General Office of the General Administration of Customs of the PRC

July 13,2005

the Ministry of Commerce,the General Administration of Customs
2005-07-13

THE TECHNICAL POLICY FOR THE RECOVERY AND UTILIZATION OF AUTOMOBILE PRODUCTS

National Development and Reform Commission, Ministry of Science and Technology, State Environmental Protection Administration

Announcement of the National Development and Reform Commission, the Ministry of Science and Technology and the State Environmental
Protection Administration

No.9

For the purpose of promoting the construction and development of the system of circular economy in China, protecting the environment,
enhancing the efficiency of resource utilization, fulfilling the scientific development concept, and realizing the sustainable development
of society and economy, the National Development and Reform Commission, the Ministry of Science and Technology and the State Environmental
Protection Administration jointly formulated the Technical Policy for the Recovery and Utilization of Automobile Products (hereinafter
referred to as this Technical Policy).

This Technical Policy is a guiding document on pushing forward the establishment of the system of discarding and recovery of automobile
products in China. It aims at guiding the production and sale of automobiles, initiation of relevant enterprises, carrying out and
promoting the design, manufacture, discarding, recovery, and recycling of automobile products, etc. The state will, in good time,
establish the relevant systems as mentioned in the Technical Policy and will start to promulgate and implement such systems in a
successive manner prior to the year of 2010.

National Development and Reform Commission

Ministry of Science and Technology

State Environmental Protection Administration

February 6, 2006

The Technical Policy for the Recovery and Utilization of Automobile Products

Chapter I General Principles

Article 1

This Technical Policy is formulated for the purposes of protecting the environment, enhancing the resource utilization efficiency,
fulfilling the scientific development concept and realizing the sustainable development of society and economy.

This Technical Policy is a guiding document on pushing forward the establishment of the system of discarding and recovery of automobile
products in China. It aims at guiding the production and sale of automobiles, and initiation of relevant enterprises, and carrying
out and promoting the discarding and recovery of automobile products. The state will, in good time, establish the relevant systems
as mentioned in this Technical Policy and will start to promulgate and implement such systems in a successive manner prior to the
year of 2010.

Article 2

The term “automobile” as mentioned in this Technical Policy refers to the Classes M and N motor vehicles as prescribed in the Classification
of Motor Vehicles and Trailers (National Standards of the People’s Republic of China GB/T15089-2001).

Article 3

This Technical Policy shall apply to the scope including design and production of new types of vehicles to be sold and registered
within the territory of China, and the repair, maintenance, discarding, dismantlement and recycling of automobiles in using , as
well as other links.

Article 4

The recycling of materials in the production, maintenance and dismantlement of automobile products shall be taken into consideration
synthetically. It is encouraged to use renewable materials in the manufacture procedure of automobiles, to use recycled component
parts in the repair of automobiles, to enhance the recycling rate of materials, to save the resources and utilize the resources
efficiently, and give an impetus to the development of circular economy.

Article 5

The rate of recovery and utilization of automobiles refers to the rate of the reutilize of discarded automobile component parts and
materials with regenerated energy, which is usually measured on the basis of the percentage of the recoverable and utilizable materials
to the complete vehicle kerb mass.

For the recoverable and utilizable rate of automobiles, please refer to the Methods for the Computation of Recyclability and Recoverability
of Road Vehicles (GB/T195152004/ISO22628: 2002) and other relevant standards.

Article 6

The state shall gradually integrate the indicator of recoverable and utilizable rate of automobiles into the licensing management
system for the market access of automobile products.

Article 7

The management of the responsibilities of automobile producers shall be intensified. A sound management system led by the automobile
manufacturing enterprises shall be established in the sectors of production, use, discarding and recovery of automobiles.

Article 8

The competent department of the government shall, in good time, formulate and amend the matching policies and standards, strengthen
the guidance and supervision management, and direct the automobile industry of China to formulate a scientific and efficient development
plan under the scientific development concept so as to promote the highly efficient utilization of materials and decrease the consumption
of energy.

A system shall be established for the classified collection and separated selection of the materials and substances of discarded automobiles,
to promote the full and reasonable utilization and innocuous disposal of automobile wastes so as to decrease until eliminate the
harm of such wastes, and incessantly to perfect the recovery, treatment and utilization system of renewable resources. By the end
of 2012, it shall establish relatively perfect systems of laws and regulations, policy support system, technological innovation system,
as well as a effective incentive and restraint mechanism for the recovery and utilization of discarded automobiles, shall establish
a system of economic evaluation indicators for the recovery and utilization and shall set forth medium and long term strategic goals
and multi-stage promotion plans.

Article 9

The state shall adopt a ratification system for the enterprises to engage in the treatment of discarded automobiles. Any entity to
engage in the collection, dismantlement, utilization and disposal of discarded automobiles shall apply for a licence. It is forbidden
to engage in the collection, dismantlement, utilization and disposal of discarded automobiles without licence.

Article 10

The development, application of new technologies and new equipment in each link of the chain of automobile industry shall be intensified
according to the “reduction-based, reuse, and resource-based” principles. An economic growth mode, of which the main features are
low consumption, low discharge and high efficiency and which is in line with the sustainable development concept, shall be carried
out so as to make the recoverability rate of the production and sale of complete vehicle products in China reach the international
advanced level.

The goal of the first stage: from 2010, the recoverable and utilizable rate of all home-made and imported vehicles in Classes M2,
M3, N2 and N3 shall reach 85% or so, of which the recyclability rate of materials shall not be less than 80%. The recoverable and
utilizable rate of all home-made and imported automobiles in Classes M1 and N2 shall reach 80%, of which the recyclability rate of
materials shall not be less than 75%. At the same time, except the lead-bearing alloys, storage batteries, lead plating, chromeplating,
additives (stabilisers), and mercury for lamps, the use of lead, mercury, cadmium and hexavalent chromium shall be controlled.

From 2008, the automobile manufacturing or distribution enterprises shall start to undertake the register and archival filing for
the recoverable and utilizable rate of automobiles, and make preparations for carrying out the multi-stage tasks.

The goal of the second stage: from 2012, the recoverable and utilizable rate of all home-made and imported automobiles shall reach
90% or so, of which the recyclability rate of materials shall not be less than 80%.

The goal of the third stage, from 2017, the recoverable and utilizable rate of all home-made and imported automobiles shall reach
95% or so, of which the recyclability rate of materials shall not be less than 85%.

The low-speed cargo automobiles, three-wheel automobiles, motorcycles and trailers shall also be governed by the provisions on motor
vehicles in the Classes M and N, but the specific goal and implementation date shall be determined separately.

Attentions shall be paid to the protection of environment in the links of production, use and discarding of automobiles. The treatment
and disposal of the wastes generated from each link shall meet the national environmental protection standards as well as the relevant
policy and regulatory requirements, and shall try to diminish and even eliminate the harm of the wastes to the living environment
of the mankind.

Chapter II Design and Production of Automobiles

Article 11

In the design and production of any automobile product to be sold in China, the dismantlability and easiness of dismantlement after
the discarding of the product shall be taken into full consideration, and the principle of being easy to sort out different kinds
of materials shall be followed. Priority shall be given to the adoption of technologies and techniques that can utilize the resources
in a highly efficient manner, produce little pollutants, and are conducive to the recovery and utilize of the product after discarding,
so as to enhance the level of technologies for the design and production of automobile products.

Article 12

A relevant enterprise shall try its best to adopt small-sized or light weight and renewable component parts or materials, shall try
its best to choose recyclable materials as the production materials, and shall incessantly reduce the varieties of materials so as
to facilitate the recovery and utilize of materials.

The recoverability rate and recyclability rate of all plastic materials of automobile products shall be raised continuously.

It is forbidden to utilize any materials that will emit toxic substances and do harm to the environment. The relevant enterprises
shall reduce and finally stop the use of non-renewable materials, or materials disadvantageous to the environmental protection.

The utilization of lead, mercury, hexavalent chromium and other heavy metals shall be controlled. The aforesaid heavy metals are allowed
to be used only in some particular circumstances according to a checklist, which is reviewed regularly.

An enterprise shall attach marks and codes to the component parts containing harmful substances.

Article 13

A supporting enterprise of automobile component parts shall provide the automobile production enterprises with the composition, structural
design or dismantlement guide, content and nature of the harmful substances, methods for the disposal of wastes, and other information
relevant to the component parts it supplies so as to help the complete automobile production enterprises calculate the recoverable
and utilizable rate of their respective products.

Article 14

Where conditions are ripe, the state will encourage the automobile production enterprises or the general agents of imported automobiles
to choose distributors and special repair shops of their respective brand to carry out revamp or re-manufacture business relating
to the used component parts. The quality of the revamped or re-manufactured component parts shall satisfy the corresponding quality
requirements, and such component parts shall be given an indication that they are revamped or re-manufactured.

Article 15

From 2010, an automobile production enterprise or general agent of imported automobiles shall be responsible for the recovery and
treatment of the automobile products it sells and their packing articles, or may entrust the relevant institutions or enterprises
to be responsible for the recovery and treatment of the automobile products that it produced or sold and their packing articles.

The design and production of packing articles for automobile products shall be in line with the provisions of the state on clean production
and shall meet the relevant standards and requirements.

An electric automobiles production enterprise (including hybrid-powered automobiles, etc.) shall be responsible for the recovery and
treatment of the storage batteries of the electric automobiles it sells.

Article 16

An automobile production enterprises or general agent of imported automobiles shall be responsible for the recovery of its products,
and treatment or disposal of its products according to the requirements for environmental protection and recovery and utilization,
or pay the relevant recovery and treatment fees.

The recovery and treatment fees for different type of automobiles shall be decided and adjusted by the relevant departments on the
basis of the technological level of recovery and treatment of discarded automobiles, recycling ability, price, entrusted treatment
business and other factors of our country during different periods of time. If the automobile price is changed due to bearing the
recovery and treatment fees, the increased part of price shall not exceed the prescribed amount or rate.

The management, incomes, expenses and purposes of the recovery and treatment fees shall be in line with the principle of openness,
impartiality and fairness and shall be subject to the supervision of the government, enterprises and the public.

Article 17

An automobile production enterprise shall, on its own initiative, cooperate with the downstream enterprises, provide the recovery,
dismantlement and breaking enterprises with a Guiding Brochure for Automobile Dismantlement, relevant technical information and relevant
technical training so as to jointly promote the incessant rise of the recoverable and utilizable rate of discarded automobiles.

Article 18

The automobile production enterprises shall closely cooperate with the enterprises engaging in the production or re-manufacturing
of component parts, recovery and dismantlement of discarded automobile, and renewal of materials, share the relevant information,
track the international advanced technologies and make concerted efforts to tackle the key problems so as to jointly enhance the
recyclability rate and recoverable and utilizable rate of automobile products.

The automobile production enterprises or general agents of imported automobiles shall actively support the governmental departments
to carry out topic research, policy formulation and other relevant tasks, shall actively carry out tackling key problems on scientific
research, technological innovation, equipment renovation and other tasks for the enhancement of the recoverable and utilizable rate
of automobile products.

Chapter III Automobile Decoration, Repair and Maintenance

Article 19

During the courses of automobile decoration, repair and maintenance, the relevant enterprises shall choose and use products with a
high recoverable and utilizable rate, safety and environment protection as the courses of automobile production..

Article 20

The disassembled and discarded component parts shall be classified into different categories and be properly kept. Where policy permits,
it is encouraged to make qualified component parts diverted from the automobiles to re-enter circulation sector as component parts
for the repair of automobiles.

The enterprises meeting the requirements for technologies, equipment and testing are encouraged to re-manufacture component parts
for the repair of automobiles by making use of the component parts diverted from the discarded automobiles as well as the used component
parts replaced in the repair.

The disassembled or discarded accessories and parts, which have lost the originally designed functions and are of no remanufacturing
value, shall be respectively delivered to the corresponding materials recycling and treatment enterprises for recycling and shall
not be disposed by dumping, spilling, burying or any other way whereby the environment will be harmed.

Article 21

The storage batteries, catalytic converter, waste oil, waste liquid, waste rubber (including tyres) and plastic items generated in
the courses of care or maintain of the automobiles shall be recovered, preserved and transported according to different categories,
and shall be delivered to the relevant enterprises for treatment, disposal, changing the purpose, or being used for energy renewal.

Article 22

The items containing any toxic substance or any substance harmful to the environment or human body, such as storage batteries, airbags,
catalyzer and refrigerants, shall be delivered to qualified enterprises for treatment.

The collection, storage, transport and treatment of hazardous wastes shall be in compliance with the Standards on the Control of Pollution
in the Storage of Hazardous Wastes, the Standards on the Control of Pollution When Burying Hazardous Wastes, the Standards on the
Control of Pollution When Burning Hazardous Wastes and other safety and environmental protection requirements.

Article 23

The enterprises engaging in the treatment of polluting wastes and toxic substances shall be subject to strict access management. The
supervision and inspection over such enterprises shall be intensified so as to diminish and avoid harm to the environment and human
health.

No entity may engage in the collection, utilization, storage, transport, treatment or any other business relating to hazardous waste
unless it has obtained a business permit from the environmental protection department.

Chapter IV Import of Used Automobiles and Their Component Parts

Article 24

Except that it is permitted to import auto generator, starter and micro-motors for remanufacturing for automobile repair, it is prohibited
to directly import any discarded or used automobile component parts for remanufacturing for automobile assembling production or repair.

The import of used motors shall meet the requirements in the Environmental Protection Control Standards on the Import of Solid Wastes
as Raw Materials- Discarded Motors (GB16487.8-2005).

Article 25

On the precondition that it does not violate the relevant environmental protection requirements, a materials production enterprise
may, according to the relevant provisions, import discarded automobiles (which have already become chipping) and component parts
as raw materials of production, but it is prohibited to assemble such imported items into vehicles and to let them enter the circulation
link.

It is prohibited to use any component parts which are diverted from any imported discarded or used automobiles, directly or upon re-manufacture,
in the assembly production or repair of automobiles.

Article 26

It is prohibited to import or process any automobile materials with high energy consumption, low efficiency, severe pollution or high
cost, or which are toxic and harmful to the environment.

Article 27

In the international trade relating to the development of resource renewal industry, the import of automobile wastes and other wastes
shall be strictly controlled.

On the precondition that the import of automobile wastes and other toxic and harmful wastes is strictly controlled, two markets,
two kinds of resources shall be fully used, and the international trade relating to the resource renewal industry shall be developed
actively.

Chapter V Recovery and Recycling of Automobiles

Article 28

During the courses of recovery, dismantlement and recycling, the relevant enterprises shall, in accordance with the principles of
scientific procedures, work-related environmental protection, highly efficient renewal, low consumption, enhance the renewal quality,
expand the renewal scope and decrease the quantities of wastes.

The relevant enterprises shall scientifically carry out the pretreatment, dismantlement, cutting, breaking, treatment of non-metal
items (substances which have been confirmed to be used for recycling, or may be used for energy renewal in the future), and shall
increase the reuse, recycling and recovery and utilization rates of the component parts and various substances of discarded automobiles.

Article 29

The enterprises manufacturing automobile materials and substances shall actively develop new materials which are recyclable and will
do no harm to the environment, especially intensify the development and application of technologies of renewable materials and substitutes,
expand the renewable fields of recovered materials, enhance the quality of renewable products and promote the rapid and sound development
of circular economy.

The recovery and dismantlement, renewal of materials, and other recovery and utilization enterprises shall incessantly enhance their
technologies and management levels and shall, jointly with the enterprises manufacturing automobile products, make concerted efforts
to realize the multi-stage goals of our country on the recovery and utilization rate to ensure the social and economic benefits.

Article 30

The discarded automobile recovery and dismantlement, and recovery and recycling enterprises shall meet the requirements of Chapter
III concerning the dismantlement of component parts, waste oil, noble metal materials and solid wastes. At the same time, the operating
rules formulated by such enterprises shall be in line with the requirements of the laws, regulations, and technical standards and
regulations of the state.

Article 31

The recovery and dismantlement enterprises shall have necessary professional technicians and shall have special equipment and places
that can meet the needs of their respective treatment capacity.

The recovery and dismantlement and renewal enterprises shall, through structural adjustment, optimization of industry, technological
renovation, and other measures, establish necessary conditions, enhance the awareness of economization and environmental protection,
improve the treatment facilities, promote the treatment capacity and gradually form professional and mass operations.

Article 32

For the purposes of preventing environmental pollution, and realizing the commitments of automobile production enterprises or general
agents of imported automobiles regarding the recovery and utilization rate, the enterprises of recovery and dismantlement of discarded
automobiles shall sign agreements with the automobile production enterprises or general agents of imported automobiles for enhancing
the ability to dismantle or reuse the discarded or used automobile products.

Where a recovery or dismantlement enterprise does not meet or no longer meets the conditions as stipulated in the recovery and treatment
agreement, the corresponding automobile production enterprise or general import agent may abolish this agreement.

Chapter VI Promotion Measures

Article 33

For the purposes of effectively realizing the recovery and utilization of discarded automobile products, the enterprises whose recovery
and utilization rate of products has reached or exceeded the current limit as provided for by the current policy in advance, or which
has utilized a certain volume of renewable materials in the production, or which has developed and adopted recovery technologies
and equipment, or which has introduced any specialized treatment technology and equipment and has developed such technology and equipment
domestically shall be given necessary preferential policies by state so as to encourage the automobile product production, and recovery
enterprises to increase the recovery and utilization rate of automobile products and to utilize renewable materials actively. ,.

Article 34

The relevant enterprises are encouraged to digest and absorb overseas advanced technologies of product design, production of new materials,
dismantlement of discarded automobiles, re-manufacture of used accessories and parts, and of materials recovery and renewal, to develop
and apply the advanced monitoring and testing devices and equipment, to establish a new and highly efficient production technology
system, and to improve their international competitive ability relating to the automobile recovery and utilization technologies and
equipment through the measures of joint venture, cooperation, technology introduction and etc..

Article 35

The competent department of the government shall organize the research, development and popularization of the production techniques
and equipment that may reduce the quantities of industrial solid wastes and shall publicize the list of backward production techniques
and equipment which bring industrial solid wastes and seriously pollute the environment and which should be eliminated within a time
limit,.

The producers, distributors, importers or users shall, within the time limit as prescribed by the comprehensive administrative department
of economy under the State Council jointly with other relevant departments of the State Council, stop using, selling, importing or
using the equipment included in the list as mentioned in the preceding paragraph. The enterprises shall stop adopting the production
techniques included in the list as mentioned in the preceding paragraph. The equipment washed out under the provisions of the preceding
paragraph shall not be transferred to others for use.

Article 36

The competent department of the government shall timely set forth a timetable for the automobile materials limited for use and direct
the enterprises to actively adopt materials, which will not do harm to the environment and are favorable for recovery.

Where any automobile production enterprise or importer fails to satisfy the requirements for recovery and utilization rate within
a certain time limit, it shall be given a corresponding punishment and be surcharged a sum of environmental protection and treatment
fee.

Article 37

The state advocates the living styles and consumption forms that are favorable to saving resources and protecting the environment,
and encourage the use of green products, such as products with environmental marks, and products with energy-efficiency marks, etc.

When the government purchases automobile products, it shall give top priority to the products with a high recovery and utilization
rate.

The discarded automobile owners and recovery and dismantlement enterprises shall, in strict compliance with the Measures for the Management
of the Recovery of Discarded Automobiles (No. 307) promulgated by the State Council in 2001 and other relevant policies and regulations,
to deliver, dismantle and dispose the discarded automobiles.

Article 38

The relevant enterprises are encouraged to remanufacture automobile engines and other discarded or used electro-mechanical products
and establish a garbage classification and selection system so as to incessantly improve the system of resource recycling, treatment
and utilization.

Article 39

The competent departments of automobile production, industry and commerce, environmental protections, etc. shall intensify the supervision
and control according to law so as to effectively enhance the actual recovery and utilization rate of automobile products of our
country.

Article 40

The recovery and utilization network of discarded automobiles shall be improved, the recovery and treatment of technical route shall
be clarified, and various regulations, policies and measures shall be formulated to promote recoverability and recyclability of discarded
automobiles.

The relevant governmental departments shall, according to the situation of recovery and utilization of automobile products in China,
organize the relevant institutions and enterprises to do deep research into the pertinent policies and regulations, formulate and
improve various supporting policies, try to realize the multi-stage goals of the recovery and utilization rate of automobile products
of our country.

Appendix:Terms and Definitions

For the terms and definitions as mentioned in this technical policy and work guide, please consult the Road Vehicles Recyclability
and Recoverability Calculation Method (GB/T19515- 2004/ISO22628: 2002)

Vehicles mass

The complete vehicle kerb mass as prescribed in GB/T 3730.2-1996

Reuse refers to the act of using the component parts of discarded vehicles on the basis of any of the designed purposes.

Recycling refers to the act of making the discarded materials satisfy the original utilization requirements or be used for other purposes
by way of re-processing, excluding the processing course to make such materials generate energy.

Recovery and utilization refers to the act of making the discarded materials satisfy the original utilization requirements or be used
for other purposes by way of re-processing, including the processing course to make such materials generate energy.

Dismantlability refers to the ability to dismantle the component parts from the vehicles.

Reusability refers to the ability of the component parts to be diverted from vehicles and to be re-utilized.

Recyclability refers to the ability of the component parts/ or materials to be diverted from vehicles and to be re-utilized.

Recyclability rate refers to the percentage (mass percentage) by mass of a new vehicle, potentially able to be reused and recycled.

Recoverability refers to the potential for recovery of component parts or materials diverted from a discarded vehicle.

10.

Recovery and utilization rate refers to the percentage by mass of a new vehicle, potentially able to be reused and recovered (mass
percentage).

11.

Hazardous wastes refer to the wastes included in National Catalogue of Hazardous Wastes or those determined as hazardous wastes under
the national standards on the identification standards and approaches.

12.

Treatment refers to the act of decomposing, cleaning, combining, processing, remanufacturing or regenerating discarded or used articles
or substances through physical, chemical and other methods so as to make such discarded or used articles and substances satisfy the
requirements for reuse, innocuity or harm diminishment and environmental protection.

13.

Disposal refers to burning solid waste and other methods that change the physical, chemical or biological characteristics of the waste
in order to reduce its volume, make its cubage shrink, reduce or eliminate its hazardous components, or refers to the final deposition
of solid wastes into the places or facilities as required by the environmental protection provisions, and never taking them back.

14.

Automobile products include the complete vehicles, component parts and other substances available for automobiles. An automobile refers
to a complete automobile.

15.

The automobile production enterprises refer to enterprises manufacturing (including refitting) complete automobiles. Enterprises manufacturing
automobile products include enterprises manufacturing complete automobiles, component parts and other substances available for automobiles.

National Development and Reform Commission, Ministry of Science and Technology, State Environmental Protection Administration
2006-02-06

LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING THE APPROVAL TO JAPAN MICHINOKU BANK LTD. TO CLOSE UP ITS WUHAN REPRESENTATIVE OFFICE

Letter of China Banking Regulatory Commission concerning the Approval to Japan Michinoku Bank Ltd. to Close up Its Wuhan Representative
Office

Michinoku Bank, Ltd. Japan,

The letter which was signed by Kazuo Harada, president of your bank, and was addressed to this Commission on December 15, 2006 has
been received by this Commission.

You are hereby approved to close up your Wuhan Representative Office according to the Measures on the Administration of Foreign-funded
Financial Institutions’ Representative Offices in China (Order No. 8, 2002 of the People’s Bank of China),. Please carry out the
related cancellation formalities according to the related provisions.

China Banking Regulatory Commission

February 14, 2006

China Banking Regulatory Commission
2006-02-14

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 19 – FOREIGN CURRENCY TRANSLATION

the Ministry of Finance

Accounting Standards for Enterprises No. 19 – Foreign Currency Translation

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

With a view to regulating the accounting treatment for the foreign currency transactions, conversion of foreign currency financial
statements and disclosure of relevant information, the present Standards are formulated according to the Accounting Standards for
Enterprises – Basic Standards.

Article 2

The “foreign currency transaction” refers to transactions which are valuated and settled in foreign currency. The “foreign currency”
refers to a currency other than the functional currency of an enterprise. The foreign currency transactions include:

(1)

the purchase or sale of goods or services valuated in foreign currency;

(2)

foreign currency funds that are borrowed or lent; and

(3)

other transactions which are valuated or settled in foreign currency.

Article 3

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

(1)

The balance of exchange arising from foreign currency borrowings for the purchase and construction or production of qualified assets
shall be subject to the Accounting Standards for Business Enterprises No. 17 – Borrowing Costs;

(2)

The hedge of foreign currency items shall be subject to the Accounting Standards for Enterprise No. 24 – Hedging; and

(3)

The translation of foreign currency in the cash flow statement shall be subject to the Accounting Standards for Business Enterprises
No. 31- Cash Flow Statement.

Chapter II Determination of Functional Currency

Article 4

The “functional currency” refers to the currency of the primary economic environment in which the enterprise is operated.

An enterprise shall, in general, choose RMB as its functional currency. For an enterprise of which the incomes and expenses are mainly
valuated in the currency other than RMB, it may choose a currency as its functional currency according to Article 5 of the present
Standards. However, the financial statements shall be translated into the ones RMB.

Article 5

When an enterprise chooses a functional currency, it shall take account of the following factors:

(1)

This currency mainly affects the selling prices of goods and services, and generally the goods and services are valuated and settled
in this currency;

(2)

This currency mainly affects the labor, materials and other costs for the goods and services, and generally the goods and services
are valuated and settled in this currency; and

(3)

The currency acquired in financing activities as well as the currency utilized to preserve the money charged in the business operation.

Article 6

When an enterprise chooses the functional currency for its overseas business, it shall taking account of the following factors as
well:

(1)

Whether or not the overseas businesses are quite independent from the activities in which it is engaged;

(2)

Whether or not the transactions with the enterprise in overseas business operations account for a relatively large proportion in oversea
business operations;

(3)

Whether or not the cash flow incurred in overseas business operations directly affect the cash flow of the enterprise, and whether
or not the cash may be remitted back at any time;

(4)

Whether or not the cash flow incurred in overseas business operations is sufficient to settle its current liabilities and predictable
liabilities.

Article 7

The “overseas business operation” refers to the enterprise’ overseas subsidiary companies, joint ventures, associated enterprises
and branches.

Where the domestic subsidiary company, joint enterprise, associated enterprise or branch of an enterprise adopts a functional currency
which is difference from that of the enterprise, it shall be deemed as overseas business.

Article 8

Once the functional currency of an enterprise is determined, it shall not be modified at will, unless the main economic environment
in which the enterprise is operated has greatly changed.

Where it is really necessary to modify the functional currency because the primary economic environment in which the enterprise is
operated has greatly changed, the enterprise shall translate all items into the post-change functional currency at the spot exchange
rate of the current date of the change.

Chapter III Accounting Treatment for Foreign Currency Transactions

Article 9

As for a foreign currency transaction, the enterprise shall translate the amount in a foreign currency into amount in its functional
currency.

Article 10

At the time of initial recognition of a foreign currency transaction, the amount in the foreign currency shall be translated into
the amount in the functional currency at the spot exchange rate of the transaction date, or at an exchange rate which is determined
through a systematic and reasonable method and is approximate to the spot exchange rate of the transaction date.

Article 11

An enterprise shall, on the balance sheet date, treat the foreign currency monetary items and foreign currency non-monetary items
in accordance with the following provisions:

(1)

The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The balance of exchange
arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial
recognition or prior to the balance sheet date shall be recorded into the profits and losses at the current period.

(2)

The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the
transaction date, of which the amount of functional currency shall not be changed.

The “monetary item” shall refer to the money held by an enterprise and the assets and liabilities to be received or paid in fixed
or determinable amounts of money.

The “non-monetary item” shall refer to the items other than the monetary ones.

Chapter IV Translation of Foreign Currency Financial Statements

Article 12

When translating the financial statements on the overseas businesses, an enterprise shall comply with the following provisions:

(1)

The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
owner’s equity items, except the ones as “undistributed profits”, others shall be translated at the spot exchange rate at the time
when they are incurred.

(2)

The income and expense items in the profit statements shall be translated at the spot exchange rate of the transaction date, or at
a spot exchange rate which is determined through a systematic and reasonable method and is approximate to the spot exchange rate
of the transaction date.

The balance arisen from the translation of foreign currency financial statements in compliance with the aforesaid Items (1) and (2)
shall be presented separately under the owner’s equity item of the balance sheets.

The translation of comparable financial statements shall be subject to the aforesaid provisions.

Article 13

An enterprise shall translate the financial statements of overseas business as situated in a hyperinflationary economy in accordance
with the following provisions:

It shall restate the balance sheet items by adopting the general price index, restate the items of the profit statement by adopting
the changes of the general price index, and then translate them at the spot exchange rate on the recent balance sheet date.

If an overseas business is no longer situated in the hyperinflationary economy, it shall stop the restatement, and shall translate
the restated financial statements at the price of the cessation date.

Article 14

When disposing an overseas business, an enterprise shall shift the balance, which is presented under the items of the owner’s equities
in the balance sheet and arises from the translation of foreign currency financial statements related to this oversea business, into
the disposal profits and losses of the current period. If the overseas business is disposed of partially, the enterprise shall calculate
the balance arising from the translation of foreign currency statements of the part of disposal based on the disposal rate and shall
shift them into the profits and losses of the current period.

Article 15

Where an enterprise does not choose RMB as its functional currency, it shall translate its financial statements into RMB financial
statements according to Article 12 of the present Standard.

Chapter V Disclosure

Article 16

An enterprise shall, in its notes, disclose the following information related to the translation of foreign currencies:

(1)

The functional currency chosen by an enterprise and its overseas businesses and the reasons for such choice; if the functional currency
is changed, the grounds for the change shall be given;

(2)

If an approximate exchange rate is adopted, the method for the determination of the approximate exchange rate shall be given;

(3)

The balance of exchange which shall be recorded into the profits and losses of the current period; and

(4)

The effects of disposal of any overseas business on the balance arising from the translation of foreign currency financial statements.

the Ministry of Finance
2006-02-15

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON SOME ISSUES CONCERNING LAND VALUE-ADDED TAXES

Notice of the Ministry of Finance and the State Administration of Taxation on Some Issues concerning Land Value-added Taxes

Cai Shui [2006] No. 21
March 2, 2006

The public finance departments or bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly
under the Central Government and cities specifically designed in the state plan, and the finance bureau of Xinjiang Production and
Construction Corps.:

In pursuance of the spirit as embodied in the Interim Regulations of the People’s Republic of China on Land Value-added Taxes (hereinafter
referred to as the Regulations) and the detailed rules for the implementation thereof as well as relevant provisions, we hereby clarify
the relevant issues concerning land value-added taxes as follows:

As for issues concerning the tax collection and exemption in the sale of residential houses of ordinary standard as built by taxpayers
as well as in the transfer of ordinary residential houses by individual residents

The “residential houses of ordinary standard” as mentioned in Article 8 of the Regulations and the “ordinary residential houses”
as mentioned in Article 3 of the Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Tax
Policies for the Real Estate Market (Cai Shui Zi [1999] No. 210) shall be recognized all according to the standards for the “small
or medium-sized ordinary residential houses at moderate and low prices” as formulated and publicized to the general public by the
people’s governments of each province, autonomous region or municipality directly under the Central Government in accordance with
the Notice of the General Office of the State Council transmitting the Opinions on Doing a Good Job in Stabilizing the Real Estate
Price of the Ministry of Construction and Other Departments (Guo Ban Fa [2005] No. 26). Where any taxpayer builds ordinary residential
houses as well as other commercial houses, the amount of land added values shall be verified respectively.

As for ordinary standard residential houses, for which, before the day when this document is publicized, an application for tax exemption
has been filed to the tax authority at the locality of the real estate and has been given the treatment of exemption from land value-added
taxes upon examination in accordance with the standards for ordinary standard residential houses as determined by the people’s governments
of a province, autonomous region or municipality directly under the Central Government, adjustment shall be retroactively made to
the exempted land value-added taxes.

II.

As for Issues concerning the Calculation under the Item of Deduction in the Transfer of Old Houses

Where any taxpayer transfers any old house or building, if he fails to obtain the assessed price but is able to provide the house
purchase invoice, the amount under the item of deduction as provided for in items (1) and (3) of Article 6 of the Regulations may,
upon the recognition of the local tax authority, be calculated in light of an increased interest rate of 5% on an annual basis of
the amount held on it for a term spanning from the year of purchase to the year of transfer. As for the deed tax by a taxpayer when
purchasing a house, if the relevant deed tax payment certificate can be presented, it may be deducted as “tax relating to the transfer
of real estate” and shall not be included into the base corresponding to the interest rate of 5%.

As to the transfer of any old house or building, in the case of no relevant assessed price or house purchase invoice, the local tax
authority may conduct tax collection upon verification in accordance with the provisions of Article 35 of the Law of the People’s
Republic of China on Tax Collection and Administration (hereinafter referred to as the Tax Collection and Administration Law).

III.

As for issues concerning the advance collection of land value-added taxes as well as the settlement thereof

All regions shall further improve the measures on the advance collection of land value-added taxes, and decide the advance collection
rate in a scientific and reasonable manner and adjust it at a proper time in light of the value addition level of the real estate
as well as the market development condition within the respective regions and on the basis of the different house categories such
as ordinary houses, non-ordinary houses and commercial houses. After a project is completed, the relevant settlement shall be made
in a timely manner, with any overpayment refunded or any underpayment supplemented.

In case any tax fails to be paid in advance during the advance collection term, the late fees shall be collected additionally as of
the day next to the expiration of the prescribed advance collection term in accordance with the relevant provisions of the Tax Collection
and Administration Law as well as the detailed rules for its implementation.

As for any real estate project that has been finished and has gone through the check and acceptance, where the building area of the
real estate as transferred makes up 85% or more of the salable building area, the tax authority may require the relevant taxpayer
to conduct settlement of land value-added taxes on the transferred real estate in light of the matching principles regarding the
proportion between the income as generated from the transfer of real estate and the amount under the item of deduction. The specific
settlement methods shall be provided for by the local tax authority of a province, autonomous region, municipality directly under
the Central Government and city specifically designed in the state plan.

IV.

As for issues concerning the tax collection and exemption for the real estate as transferred by a taxpayer himself due to the relocation
as required for the implementation of urban planning and state construction

In Paragraph 4 of Article 11 of the Detailed Rules for Implementing the Interim Regulations of the People’s Republic of China on
Land Value-added Taxes, it prescribes that the relocation due to “the implementation of urban planning” refers to the relocation
since that the reconstruction of an old city or enterprise pollution or disturbing the residents (producing so excessive waste gases,
waste water, waste residues and noises, that the life of urban residents is affected to a certain degree) and thus the government
or the relevant administrative departments of the government decides and thereafter carries out the relocation in light of the urban
planning that has been examined and approved; the “relocation as required by state construction” refers to a situation under which
relocation is required for the purpose of implementing any construction project that has been approved by the State Council, a provincial
people’s government, or the relevant ministry or commission of the State Council.

As for Issues concerning the tax collection and exemption for the investment or joint management with real estate

As for any investment or association by using land (real estate) as payment for the purchase of shares, where an enterprise involved
in the investment or joint management engages in the real estate development or where any other real estate development enterprise
makes investment or conducts joint management with the commercial houses built by itself, it shall not be subject to Article 1 of
the Notice of the Ministry of Finance and the State Administration of Taxation on the Provisions on Some Specific Issues regarding
Land Value-added Taxes (Cai Shui Zi [1995] No. 048) on the interim exemption of land value-added taxes.

VI.

The present Notice shall go into effect as of March 2, 2006.

Ministry of Finance, State Administration of Taxation
2006-03-02

CIRCULAR OF THE MINISTRY OF FINANCE ON THE RELEVANT ISSUES CONCERNING ENTERPRISE ACCOUNTING TREATMENTS AFTER THE EFFECT OF THE COMPANY LAW

Ministry of Finance

Circular of the Ministry of Finance on the Relevant Issues concerning Enterprise Accounting Treatments after the effect of the Company
Law

No. 67 [2006] of the Ministry of Finance

March 15, 2006

To the departments (bureaus) of finance of all provinces, autonomous regions, municipalities directly under the Central Government
and cities under separate state planning, and the bureau of finance of Xinjiang Production and Construction Corp., all the relevant
ministries and commissions of and the relevant institutions directly under the State Council, and all the enterprises directly under
the Central Government,

The Company Law of our country amended and adopted for the third time has come into force as of January 1, 2006, and we hereby circulate
a notice on the enterprise accounting treatments as follows:

On the Appraisal of Capital Contributions in the form of In-kind Capital

According to Article 27 of the Company Law, where an enterprise establishes a company by the capital contributions of substance,
intellectual property right, land use right or other non monetary assets, the aforesaid capital contributions shall be subject to
appraisal and pricing to verify the assets. Where a state-owned or state holding enterprise makes capital contributions in non monetary
assets or accepts the capital contributions in non monetary assets from other enterprises, it shall entrust a qualified asset appraisal
institution for asset appraisal in accordance with the relevant state provisions on asset appraisal; and the appraisal of capital
contributions in other non monetary assets shall be conducted by referring to the aforesaid provisions.

II.

On the Disposal of the Balance of Public Welfare Funds

An enterprise established according to the Company Law shall not draw public welfare funds when it distributes profits according to
Article 167 of the Company Law after January 1, 2006. At the same time, the State-owned enterprises and other enterprises shall
abolish the system of public welfare funds simultaneously in order to keep the coherence between the accounting policies of the enterprises.
With respect to the balance of public welfare funds before December 31, 2005, the enterprise shall put it under the management and
use of the surplus reserves; the deficit of public welfare funds shall be made up by the surplus reserves, capital reserves and the
undistributed profits of the previous year in sequence, and it shall be carried forward to the account of undistributed profits and
be made up by the after-tax profits realized in the later years where there still remains deficits.

Where an enterprise carries out the reform of housing system upon approval, it shall abide by the Notice on the Relevant Accounting
Treatments in the Reform of Enterprise Housing System (Cai Qi [2000] No.295) and the Supplementary Notice on the Relevant Accounting
Treatments in the Reform of Enterprise Housing System (Cai Qi [2000] No. 878) in the process of implementation. An enterprise shall
not purchase or build houses for its employees any more and shall not arrange the relevant expenses in surplus reserves after carrying
out the housing monetization reform according to the uniform State provisions.

With respect to the expenses for purchasing fixed assets necessary for the staff canteen, infirmary, nursery and other welfare institutions
originally operated by the public welfare funds, an enterprise that has not peeled the social functions from itself or has not implemented
the segmentation between main and supplementary businesses and restructuring of the latter shall be subject to examination and approval
in strict accordance with the procedures and privilege prescribed in the internal accounting system of the enterprise, and shall
implement the relevant management system regarding the production and operational assets of the enterprise.

After an enterprise abolishes the system of public welfare funds, if the board of directors of a foreign-funded enterprise decides
to continuously draw the staff bonus and welfare fund, it shall be subject to the liability management, with the purposes, conditions
and procedures for the use thereof being specified.

III.

On the Issue of Accounting Treatments After a Joint-stock Limited Company Purchase its Own Stocks

Where a joint-stock limited company repurchases its own stocks in light of Article 143 of the Company Law, it shall carry out the
accounting treatments according to the following requirements:

The stocks repurchased by a company shall be subject to the management of treasury stocks before cancellation or transfer, and all
the expenses in the stock repurchase shall be transferred into the cost of treasury stocks. However, in case of the stock repurchase
resulted from the merger with any other company that holds its stocks, the cost of treasury bonds shall be determined on the basis
of the book value of the relevant investments of its stocks held by the other company provided that both participants of the merger
are ultimately controlled by a same shareholder both before and after the merger; and if they are not ultimately controlled by a
same shareholder, the cost of treasury stocks shall be determined on the basis of the fair value of the relevant investments of its
stocks held by the other company.

When the treasury stocks are cancelled, the capital stocks shall be correspondingly reduced on the basis of the amount of the stocks
that are cancelled, and the surplus of the cost of treasury stocks over the corresponding capital stocks shall be used to write off
the capital reserves, surplus reserves and the undistributed profits of the previous year in sequence; and the capital reserves shall
be increased for the deficit of the cost of treasury stocks over the corresponding capital stocks.

When the treasury stocks are transferred, the surplus of incomes incurred from the transfer over the cost of treasury stocks shall
be used to increase the capital reserves; and the deficit over the cost of treasury stocks shall be used to write off the capital
reserves, surplus reserves and the undistributed profits of the previous year in sequence.

ii.

With respect to the stocks repurchased due to the implementation of employee equity incentive plans, the stocks to be repurchased
shall not be more than 5% of the total amount of the stocks the company issues, and the required capital shall be within the amount
of profits that can be distributed to the investors in the current term.

Where the date when the general assembly of shareholders adopts the employee equity incentive plans and the date of stock repurchase
do not fall in the same year, the company shall preserve the expense for the planned repurchase in the profits that can be distributed
to the investors in the current term, and the preserved profits shall not be distributed any more when the employee equity incentive
plans are adopted.

When the company repurchases the stocks, it shall transfer all the expenses for stock repurchase into the cost of treasury stocks,
and simultaneously transfer the profits to be distributed to investors into the capital reserves in light of the amount of expenses
for the repurchase.

iii.

The treasury stocks shall not be used in the profit distribution of the company, and a joint-stock limited company shall reflect it
as the deduction item of ownership rights and interests.

IV.

This Notice shall come into force as of April 1, 2006. In case of any problem encountered in the implementation thereof, please timely
report it to this Ministry.

Ministry of Finance
2006-03-15

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Probate

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

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

REPLY OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE RELEVANT TAXATION ISSUES IN THE GUIDING CATALOGUE OF INDUSTRIES FOR FOREIGN INVESTMENT

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION REGARDING THE RELEVANT POLICIES OF ENTERPRISES INCOME TAXES ON THE PURCHASE OF HOME-MADE EQUIPMENT BY FOREIGN INVESTMENT ENTERPRISES AND FOREIGN ENTERPRISES

REGULATIONS ON DIRECT SELLING ADMINISTRATION

POLICIES FOR AUTOMOBILE TRADE

THE CIRCULAR OF THE MINISTRY OF COMMERCE AND THE GENERAL OFFICE OF GENERAL ADMINISTRATION OF CUSTOMS ON RELATED MATTERS CONCERNING THE TRADE ADMINISTRATION IN BONDED AREA AND BONDED LOGISTIC PARK

THE TECHNICAL POLICY FOR THE RECOVERY AND UTILIZATION OF AUTOMOBILE PRODUCTS

LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING THE APPROVAL TO JAPAN MICHINOKU BANK LTD. TO CLOSE UP ITS WUHAN REPRESENTATIVE OFFICE

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 19 – FOREIGN CURRENCY TRANSLATION

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON SOME ISSUES CONCERNING LAND VALUE-ADDED TAXES

CIRCULAR OF THE MINISTRY OF FINANCE ON THE RELEVANT ISSUES CONCERNING ENTERPRISE ACCOUNTING TREATMENTS AFTER THE EFFECT OF THE COMPANY LAW

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