REPLY OF THE STATE COUNCIL ON THE DECISION THAT THE CONVENTION OF UNIFYING SEVERAL RULES ON INTERNATIONAL AIR TRANSPORT APPLIES TO HONG KONG SPECIAL ADMINISTRATIVE REGION

Reply of the State Council on the Decision That the Convention of Unifying Several Rules on International Air Transport Applies to
Hong Kong Special Administrative Region

Guo Han [2006] No.92

Civil Aviation Administration of China and Ministry of Foreign Affairs,

The State Council agrees on the decision made on February 28, 2005 by the Standing Committee of the National People’s Congress of
the People’s Republic of China on approving that the Convention of Unifying Several Rules on International Air Transport applies
to Hong Kong Special Administrative Region, and the specific formalities shall be conducted by the Ministry of Foreign Affairs.

The State Council

September 7, 2006

State Council
2006-09-07

CIRCULAR OF THE MINISTRY OF FINANCE & THE STATE ADMINISTRATION OF TAXATION ON ADJUSTING THE STANDARD OF THE TAXABLE AMOUNT OF COAL RESOURCE TAX OF SICHUAN PROVINCE

Circular of the Ministry of Finance & the State Administration of Taxation on Adjusting the Standard of the Taxable Amount of
Coal Resource Tax of Sichuan Province

Cai Shui [2006] No.136

The public finance department and the local taxation bureau of Sichuan Province:

It is decided upon deliberation that the standard of the taxable amount of coal resource tax of your province will be increased to
2.5 yuan per ton as of September 1, 2006.

Please abide hereby.

Ministry of Finance

State Administration of Taxation

September 15, 2006

Ministry of Finance, State Administration of Taxation
2006-09-15

GUIDELINES FOR THE SECURITY EVALUATION OF ELECTRONIC BANKS

Guidelines for the Security Evaluation of Electronic Banks

January 26, 2006
Chapter I General Rules

Article 1

In order to enhance the security and risk management of electronic banks, and ensure the objectivity, timeliness, integrity and effectiveness
of the security evaluation of electronic banks, the present Guidelines are constituted in accordance with related legal provisions
as required by the Measures for the Administration of Electronic Banks.

Article 2

Security evaluation of electronic banks refers to the inspection and evaluation of the security testing as well as the management
and control ability of electronic banks in terms of security strategies, internal control systems, risk management, system security
and protection of clients, etc..

Article 3

A financial institution that develops the business of electronic banking shall perform at least one comprehensive security evaluation
of its electronic banks every two years upon its electronic banking development and management requirements.

Article 4

A financial institution may employ an external professional assessment institution for evaluating the security of its electronic
banks, or may acquire an internal evaluation department that is independent from the electronic banking operation and management
department for security evaluation.

Article 5

A financial institution shall set up a regulatory rules system and work procedures for the security evaluation of its electronic
banks, and make sure the security evaluation of its electronic banks to be performed timely and objectively.

Article 6

The security evaluation of electronic banks of a financial institution shall be subject to the surveillance and guidance of China
Banking Regulatory Commission (hereinafter referred to as CBRC).

Chapter II Security Evaluation Institutions

Article 7

Institutions for taking the security evaluation of electronic banks of financial institutions may be external social professional
organizations or internal independent departments of financial institutions that meet the requirements accordingly.

Article 8

An external organization for the security evaluation of electronic banks shall comply with the requirements as follows:

(1)

having moderately perfect management rules and operational rules for developing the business of the security evaluation of electronic
banks;

(2)

having constituted systematic and complete evaluation handbooks or evaluation guidance documents, and the evaluation procedures, evaluation
methods and foundations and the evaluation criteria, etc. shall be included at least;

(3)

having various types of professionals in line with the security evaluation of electronic banks, and being familiar with related industrial
standards around the world and China; and

(4)

satisfying other requirements prescribed by the CBRC for developing the business in the security evaluation of electronic banks.

Article 9

An internal department of a financial institution shall satisfy the following requirements besides those prescribed in Article 8
when implementing the security evaluation of electronic banks:

(1)

being independent from the development department, operation department or management department of the electronic banking system;
and

(2)

having not participated in the purchase of related equipments for electronic banks directly.

Article 10

The CBRC shall take charge of authorizing the qualifications for security evaluation of electronic banks.

A security evaluation institution of electronic banks may apply to the CBRC for the authorization of its qualification before developing
the business in the security evaluation of electronic banks of financial institutions.

Article 11

A financial institution may choose a security evaluation institution that has or has not been authorized by the CBRC when performing
the security evaluation of its electronic banks.

Where a financial institution chooses a security evaluation institution that has been authorized by the CBRC, related provisions in
the present Guidelines shall apply to the management of the related security evaluation institution. Where a financial institution
chooses a security evaluation institution that has not been authorized by the CBRC, the standards for choosing the security evaluation
institution may not be lower than the requirements prescribed in Articles 8 and 9, and related materials shall be submitted in accordance
with the Measures for the Administration of Electronic Banking.

A security evaluation institution of electronic banks shall observe the related provisions on the implementation and management of
the security evaluation of electronic banks when developing the business in the security evaluation of electronic banks whether it
has been authorized by the CBRC or not.

Article 12

The CBRC shall organize an authorization of security evaluation institutions of electronic banks annually, and it shall be announced
one month prior to the authorization.

Article 13

A security evaluation institution of electronic banks that applies for qualification authorization shall submit the materials (in
septuplicate) as follows within the time limit prescribed in the notice of the CBRC :

(1)

its application report for authorizing the qualification for security evaluation of electronic banks;

(2)

its introduction:

(3)

the management framework, management rules, and operating rules, etc., for the security evaluation business;

(4)

the evaluation handbook or evaluation guidance documents;

(5)

resumes of major assessors; and

(6)

other documents and materials as required by the CBRC.

Article 14

The CBRC shall organize related experts and supervisory personnel for evaluating the application materials after receiving a complete
set of the application materials for security evaluation qualification authorization, and assess whether the security evaluation
institution of electronic banks has met the related qualification requirements by way of ballots.

Article 15

The CBRC shall issue a Letter of Opinions on the Qualification Authorization of the Security Evaluation Institutions of Electronic
Banks, specify the evaluation opinions, and authorize the qualification of the evaluation institution upon the assessment of the
qualification of an evaluation institution.

Article 16

The Letter of Opinions on the Qualification Authorization of the Security Evaluation Institutions of Electronic Banks issued by the
CBRC shall only be used for deliberating the business on security evaluation of electronic banks between the evaluation institution
and financial institutions, and may not affect other business activities of the evaluation institution.

No evaluation institution may use the Letter of Opinions on the Qualification Authorization of the Security Evaluation Institutions
of Electronic Banks for promotion or other activities.

Article 17

As for an evaluation institution, qualification requirements of which are met upon evaluation of the CBRC, the qualification authorization
thereof shall be valid for two years.

Where an evaluation institution fails to satisfy the qualification requirements upon evaluation of the CBRC, the evaluation institution
may apply for a new qualification authorization in the next year.

Article 18

In case any of the following circumstances occurs to a security evaluation institution of electronic banks within the valid term
of qualification authorization, the CBRC shall revoke the evaluation and authorization opinions it has made:

(1)

The evaluation institution is in poor management, and its staff divulges the secrets of any assessed institution;

(2)

The quality of evaluation work is inferior, and there is major omission in its evaluation activities;

(3)

The evaluation institution fails to submit the evaluation reports as required, or there are fake statements in the evaluation reports;

(4)

The evaluation institution uses the Letter of Opinions on the Qualification Authorization of the Security Evaluation Institutions
of Electronic Banks for promotion or other business activities; or

(5)

The evaluation institution commits any other act of severely neglecting its duties.

Article 19

If an evaluation institution commits any of the following acts, the CBRC shall accept its qualification authorization application
no more within a certain time or without day, and no financial institution shall entrust this evaluation institution for the security
evaluation:

(1)

Colluding with the entrusting institution for jointly disguising the security loopholes as found during the course of security evaluation,
and failing to embrace them in the evaluation report as required;

(2)

Practicing falsification during the course of evaluation and producing the security evaluation reports; or

(3)

Divulging the secret information of the evaluated institution, or using the secret materials of the evaluated institution improperly.

In case any of the aforesaid circumstances occurs to an internal evaluation department of a financial institution, the related department
and persons in charge shall be punished by the CBRC in accordance with related laws.

Article 20

The information on any security evaluation institution of electronic banks authorized by the CBRC, as well as the authorization and
cancellation of its qualification, etc. shall be announced to all the financial institutions for developing the business in the electronic
banking only, and may not be publicized.

A financial institution may not divulge the related information announced by the CBRC to any third party to influence other business
activities of the related institution, and may not use the related information for other business activities irrelevant to the security
evaluation of electronic banks.

Article 21

A financial institution may choose a security evaluation institution of electronic banks independently within the scope of evaluation
institutions authorized by the CBRC.

Article 22

As for a foreign-funded financial institution, main electronic banking system of which is established outside of the territory of
China and which performs the security evaluation of electronic banks outside of the territory of China, and for an overseas branch
of a Chinese-funded financial institution that needs to implement the security evaluation of electronic banks outside of the territory
of China as required by the local supervisory organ, choosing the evaluation institution of electronic banks shall comply with the
legal requirements of the local country or region.

The financial institution shall perform the security evaluation with reference to the related provisions in the present Guidelines
if there is no related legal requirement in the local country or region.

Article 23

A financial institution shall sign a service agreement in written form with the security evaluation institution of electronic banks
it employs, and shall comprise explicit confidentiality articles and liabilities in this service agreement.

The electronic banking management department and the evaluation department of a financial institution shall conclude a letter on the
determination of evaluation liabilities when choosing an internal department as the evaluation institution.

Article 24

A security evaluation institution shall earnestly perform its evaluation duties, and authentically assess the security situation
of the electronic banks of any evaluated institution in light of the evaluation agreement.

Chapter III Implementation of Security Evaluation

Article 25

An evaluation institution shall fully communicate with the evaluated institution concerning the scope, focuses, time and requirements
for evaluation, and constitute the evaluation plans that shall be recognized by both parties through signature before implementing
the security evaluation of electronic banks.

Article 26

An evaluation institution shall assess the security of electronic banks of the entrusting institution on the spot subject to the
evaluation plans.

The security evaluation of electronic banks shall assess the security of the electronic banking system faithfully and comprehensively.

Article 27

The security evaluation of electronic banks shall at least contain the matters as follows:

(1)

security strategies;

(2)

construction of internal control system;

(3)

risk management situation;

(4)

system security;

(5)

plans for continuous operation of electronic banking business;

(6)

contingency plans for the operation of electronic banking business;

(7)

risk warning system of electronic banks; and

(8)

administration of other important security links and mechanism;

Article 28

The evaluation of the security strategies of electronic banks shall at least contain the matters as follows:

(1)

procedures for establishing security strategies and their rationality;

(2)

security strategies for system design and development;

(3)

security strategies for testing and accepting the system;

(4)

security strategies for system operation and maintenance;

(5)

security strategies for system backup and contingency; and

(6)

clients information security strategies.

An evaluation institution shall assess the security strategies of a financial institution in terms of whether there are security strategies,
rules, systems and procedures, whether the present rules are implemented and are updated in a timely manner, and whether the electronic
banking system has been covered completely as well.

Article 29

The evaluation of the internal control systems of electronic banks shall at least contain the matters as follows:

(1)

the overall scientific and appropriate construction of internal control systems;

(2)

the duties of the board of directors and the senior management staff in the security and risk management system of electronic banks,
as well as the justification of duties and liabilities of related departments;

(3)

the status of construction and operation of security monitoring mechanism; and

(4)

the status of construction and operation of internal audit systems.

Article 30

The evaluation of the risk management situation of electronic banks shall at least contain the matters as follows:

(1)

the adaptability and justification of the risk management framework of electronic banks;

(2)

how the board of directors and the senior management personnel understands about the security and risk management of electronic banks,
and the circumstances concerning implementing related policies and strategies;

(3)

the justification of the duties of the management bodies of electronic banks, and the capacity to control related risks;

(4)

the situation about employment and training of management personnel;

(5)

the situation about implementing the rules, systems, operational provisions and procedures for the risk management of electronic banks;

(6)

major risks and management situation of electronic banking; and

(7)

the situation about construction and management of business outsourcing management systems.

Article 31

The evaluation of the security of electronic banking system shall at least contains the matters as follows:

(1)

physical security;

(2)

security of the data communications;

(3)

security of the applied systems;

(4)

management of keys;

(5)

authorization and confidentiality of the clients information; and

(6)

intrusion detection mechanism and report response mechanism.

The evaluation institution shall focus on the evaluation of the security of data communications and the security of the applied systems,
impartially evaluate whether the financial institution has adopted encryption techniques appropriately, whether it has reasonably
designed and equipped servers and firewalls, whether the internal operation systems and database of the bank are under control, and
whether the financial institution has constituted the systems and control procedures for controlling and managing the electronic
banking system in order to ensure the testing and examination for the alterations timely.

Article 32

The evaluation of the continuous operation plans of electronic banking shall at least contain the matters as follows:

(1)

equipment and systematic capacity for ensuring the continuous business operation; and

(2)

systematic arrangements and implementation circumstances for ensuring the continuous business operation.

Article 33

The evaluation of the contingency plans for the electronic banking business shall at least contain the matters as follows:

(1)

the construction and implementation of contingency systems of electronic banks;

(2)

the circumstances on contingency facilities of electronic banks;

(3)

the circumstances on regular and continuous testing and drillings; and

(4)

the capability to handle accidents or external attacks.

Article 34

An evaluation institution shall constitute its own standards for the security evaluation of electronic banks. It shall determine
the weights of the impacts of different evaluation contents to the overall risk of electronic banks in light of the actual situation
of an entrusting institution, and grade each content for evaluation, and calculate the risk grade of the electronic banks of the
assessed institution comprehensively when performing the security evaluation.

Article 35

After the evaluation has completed, the evaluation institution shall prepare a report in a timely manner, and submit an evaluation
report accepted by signature of its legal representative or the authorized representative to the entrusting institution within one
month.

Article 36

An evaluation report shall at least contain the matters as follows:

(1)

time and scope for evaluation and other important stipulations in any other agreement;

(2)

the overall framework, procedures, chief methods for evaluation and an introduction of the major assessors;

(3)

the standards for determining the risk weights of different evaluation contents, the calculation methods for risk grades, and the
definitions of risk grades;

(4)

the evaluation contents for and the descriptions of evaluation activities;

(5)

the conclusion of evaluation;

(6)

the suggestions on the security management of electronic banks of the evaluated institution;

(7)

other issues to be explained as required;

(8)

the definitions of main terms and the introduction of international or domestic standards (they may be given in the annex);

(9)

the table of procedures for the evaluation work (it may be given in the annex); and

(10)

the name list of assessors of the evaluation institution that have participated in the evaluation (it may be given in the annex).

The evaluation institution shall adopt quantitative measures to specify the risk grades of electronic banks of an assessed institution
in the evaluation conclusion, to state main issues and hidden dangers in the security management of electronic banks of the evaluated
institution, and offer suggestions for overall reconstruction.

Article 37

If it is possible to modify an evaluation report after it has been completed and submitted to the entrusting institution, the reasons,
basis and opinions for modification shall be attached to the original report as an annex, and no original report shall be modified
directly.

Chapter IV Management of Security Evaluation Activities

Article 38

A financial institution shall implement the security evaluation of the electronic banking system that has been tested in accordance
with the related provisions when applying for developing the business in the electronic banking.

Article 39

In case any of the following circumstances occurs to a financial institution after the operation of the electronic banking business
has started, it shall organize the security evaluation immediately:

(1)

The system is attacked and broken down due to security loopholes, and is being repaired for operation;

(2)

After the electronic banking system has been renewed or upgraded significantly, it has stopped unexpectedly for 12 hours or more;

(3)

After some major accident when the key equipment or facilities of an electronic bank has been changed, and the continuous operation
can not be guaranteed yet after repair; or

(4)

The evaluation needs to be performed immediately due to the security management of electronic banks.

Article 40

The power of employing an external security evaluation institution by a financial institution shall remain with its board of directors
or senior management personnel.

Article 41

As for a banking financial institution that has performed the centralized data management, the security evaluation of electronic
banks by the headquarters (company) shall comprise the evaluation of the security management circumstances of electronic banks of
its branches, so the branches are not required to conduct a separate security evaluation when developing the business in the electronic
banking.

Article 42

As for a banking financial institution that has not performed the centralized data management, if its branches have developed the
business in the electronic banking and have independent equipment and system for business processing, the electronic banking system
of its branches shall, under the uniform management and guidance of the headquarters (company), conduct the security evaluation in
accordance with the related provisions.

Article 43

As for a foreign-funded financial institution that establishes its main business processing system of electronic banks outside the
territory of China, if its headquarters (company) outside the territory of China have performed security evaluation and conform to
the related provisions in the present Guidelines, its domestic branch is not required to separately implement a security evaluation
when developing the business in the electronic banking, however, a security evaluation report shall be submitted to the supervisory
organ in light of the related requirements as prescribed in the present Guidelines.

Article 44

As for a foreign-funded financial institution that sets up its main business processing system of electronic banks within the territory
of China, or sets up its main business processing system of electronic banks outside the territory of China but the overseas headquarters
(company) fail to perform the security evaluation or the security evaluation does not abide by the related provisions in the present
Guidelines, it shall conduct the security evaluation of electronic banks subject to the related provisions.

Article 45

Where several evaluation institutions are required for joint assumption or implementation of the security evaluation of electronic
banks, one main evaluation institution shall be determined by the financial institution to coordinate the overall evaluation work
and the preparation of an overall evaluation report.

Where a financial institution entrusts its electronic banking system to different evaluation institutions for security evaluation,
the security evaluation scope of each evaluation institution shall be determined and the matters under evaluation are completely
covered and no omission may be found.

Article 46

A financial institution shall submit the introduction of the evaluation institution, the evaluation scheme and procedures to be adopted,
etc. to the CBRC within two weeks after an evaluation agreement is signed.

Article 47

The CBRC may designate staff members to participate in the security evaluation of electronic banks of any financial institution upon
the requirements of the supervisory work, but such staff members may not be taken as formal assessors or may not offer evaluation
opinions.

Article 48

An evaluation institution shall perform the evaluation in accordance with the principles of objectivity, fairness, authenticity and
independence, and rigidly preserve the business secrets it has accessed to during the process of evaluation.

Article 49

The entrusting institution and the evaluation institution shall develop an information confidentiality work mechanism during the
evaluation process:

(1)

If it is necessary to consult the related materials, duplicate the related documents or data during the evaluation process, it shall
establish a registration and signature system;

(2)

The documents and materials requested for consultation shall be read at a designated place, and may not be taken out of this place;

(3)

The duplicated documents or data may not be taken out of the working place generally, and if they really need to be carried, it must
specifically register the names, quantity, reasons for taking away, final processing methods, and persons in charge of the documents
or data that have been carried, and the related persons in charge shall confirm with a signature;

(4)

The documents or materials discarded during the process of evaluation or the data that will not be used any more shall be destroyed
or cancelled immediately; and

(5)

The two parties shall sign the notes for the delivery of related confidential data and materials after the evaluation work finishes.

Article 50

A financial institution shall submit the evaluation report to the CBRC within one month as of the receipt of an evaluation report
issued by the evaluation institution.

The financial institution may make necessary explanations concerning the related issues in the evaluation report when submitting an
evaluation report.

Article 51

No security evaluation report on electronic banks may, without approval of the supervisory organ, be used as the promotion materials
or be provided to any third institution excluding the supervisory organ.

Article 52

Where a security evaluation is not performed as required or in which the evaluation procedures and methods or the evaluation report
is seriously flawed, the CBRC may ask the financial institution to conduct a new evaluation.

Article 53

The CBRC may organize independently or entrust an evaluation institution to implement the security evaluation of electronic banks
of a financial institution upon its need in the supervisory work, and the financial institution shall support its work.

Article 54

The CBRC may directly inquire an evaluation institution about its evaluation methods, scope and procedures, etc. upon it need in
the supervisory work.

Article 55

As for any problem reflected in the evaluation report, a financial institution shall take effective measures to remedy.

Chapter V Supplementary Rules

Article 56

The present Guidelines are subject to the interpretation of the CBRC.

Article 57

The present Guidelines shall enter into force as of March 1, 2006.

China Banking Regulatory Commission
2006-01-26

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

Ministry of Commerce

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

[2006] No. 9

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

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

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

Ministry of Commerce

Feb 9, 2006

Ministry of Commerce
2006-02-09

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

Ministry of Finance

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

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

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

Article 2

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

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

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

Article 3

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

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

Chapter II Recognition of Assets with Potential Impairment

Article 4

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

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

Article 5

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

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

Chapter III Measurement of Recoverable Amount of Assets

Article 6

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

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

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

Article 7

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

Article 8

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

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

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

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

Article 9

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

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

Article 10

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

(1)

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

(2)

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

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

(3)

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

Article 11

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

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

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

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

Article 12

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

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

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

Article 13

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

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

Article 14

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

Chapter IV Determination of Losses of Asset Impairment

Article 15

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

Article 16

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

Article 17

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

Chapter V Recognition of Group Assets and Treatments of Impairment

Article 18

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

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

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

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

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

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

Article 19

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

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

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

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

Article 20

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

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

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

Article 21

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

(1)

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

(2)

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

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

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

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

Article 22

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

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

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

Chapter VI Treatment of Impairment of Business Reputation

Article 23

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

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

Article 24

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

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

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

Article 25

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

Chapter VII Disclosure

Article 26

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

(1)

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

(2)

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

(3)

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

Article 27

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

(1)

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

(2)

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

(a)

The basic information of the asset group;

(b)

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

(c)

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

Article 28

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

(1)

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

(2)

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

Article 29

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

Article 30

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

(1)

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

(2)

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

(a)

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

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

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

(b)

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

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

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

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

Article 31

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

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

(1)

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

(2)

The crucial assumptions adopted, and the grounds thereof; and

(3)

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

Ministry of Finance
2006-02-15

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

Ministry of Finance

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

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

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

Article 2

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

Article 3

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

Chapter II Recognition of Transfer of Financial Assets

Article 4

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

(1)

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

(2)

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

(a)

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

(b)

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

(c)

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

Article 5

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

Article 6

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

(1)

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

(2)

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

(3)

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

Article 7

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

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

Article 8

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

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

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

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

Article 9

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

(1)

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

(2)

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

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

Article 10

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

Article 11

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

(1)

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

(2)

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

(3)

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

Chapter III Measurement of Transfer of Financial Assets

Article 12

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

(1)

The book value of the transferred financial asset;

(2)

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

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

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

Article 13

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

(1)

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

(2)

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

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

Article 14

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

(1)

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

(2)

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

Article 15

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

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

Article 16

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

Article 17

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

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

Article 18

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

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

Article 19

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

(1)

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

(2)

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

Article 20

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

Article 21

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

(1)

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

(2)

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

Article 22

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

Article 23

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

Article 24

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

(1)

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

(2)

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

(3)

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

(4)

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

Ministry of Finance
2006-02-15

MEASURES FOR APPLICATION FOR THE USE OF SECURITIES INVESTOR PROTECTION FUNDS (FOR TRIAL IMPLEMENTATION)

Circular of The China Securities Regulatory Commission on Printing and Distributing the Measures for Application for the Use of Securities
Investor Protection Funds (for Trial Operating)

Zheng Jian Fa [2006] No. 20

The branch offices of the China Securities Regulatory Commission in all provinces, autonomous regions, municipalities directly under
the Central Government, the cities specifically designated in the state plan, and the Commissioner’s Offices in Shanghai and Shenzhen,

In order to regulate the applications for the use of securities investor protection funds, guarantee the lawful use and the security
of the securities investor protection funds, the Measures for Application for the Use of Securities Investor Protection Funds (for
Trial Implementation) are hereby printed and distributed to you for implementation.

The China Securities Regulatory Commission

March 7, 2006

Measures for Application for the Use of Securities Investor Protection Funds (for Trial Implementation)
Chapter I General Provisions

Article 1

These Measures have been set down in accordance with the Measures for the Management of Securities Investor Protection Funds, the
Advice on the Purchase of the Personal Credits and the Settlement Funds of Clients’ Securities, the Measures for the Operating of
the Purchase of the Personal Credits and the Settlement Funds of Clients’ Securities, and the Circular on Relevant Issues Concerning
the Purchase of the Personal Credits and the Settlement Funds of Clients’ Securities, etc. in order to regulate the applications
extending, and use of the securities investor protection funds (hereafter referred to as “protection funds” for short).

Article 2

The securities companies which have been commanded by the China Securities Regulatory Commission (hereafter referred to as the CSRC)
to stop their business operations for rectification or have been appointed to any other organization for custody or which have been
taken over or abrogated (hereafter referred to as “securities companies under disposition” for short) shall be subject to these Measures
when they apply for utilizing their protection funds to purchase the personal credits or the settlement funds of their clients’ securities
in accordance with the relevant state policies.

Article 3

The institution that takes charge of operating the legal person duties and functions of a securities company under disposition in
accordance with the relevant provisions (hereafter referred to as “custodian settlement institutions”) shall take charge of filing
applications for utilizing the protection funds, and shall borrow and utilize the protection funds in accordance with the legal provisions.

The China Securities Investor Protection Funds, Co., Ltd. (hereafter “CSIPF”) shall exercise the duties and functions of releasing
and managing the protection funds.

CSRC and the institutions empowered thereby shall take charge of checking and monitoring the applications and use of protection funds.

Article 4

The principles of “use for certain purposes, management under certain accounts, and closed operations” shall be followed in the applications
for, grant and use of protection funds, and it is forbidden severely to use any of the protection funds for any other purpose.

Chapter II Application for Protection Funds

Article 5

CSIPF shall sign a “Loan Agreement on Securities Investor Protection Fund” with the custodian settlement institutions and the institutions
authorized by the CSRC in accordance with the sanctified risk disposition schemes of the securities companies and the protection
fund use schemes in order to elucidate the quotas, purposes of use, processes, etc. for the use of the protection funds as well as
the obligations and functions of the parties involved.

Article 6

The custodian settlement institutions or the groups of the relevant local government for discerning the personal credits shall make
differentiations and recognitions of the settlement funds of the clients’ securities and the personal credits in accordance with
the standards and procedures as provided for in the relevant policies of the state, and shall take the responsibility for the authenticity,
precision, and lawfulness of their differentiations and recognitions.

Custodian settlement institutions shall apply for utilizing protection funds once and for all or many times in accordance with the
certain situation and the real demand of differentiation and recognition.

Article 7

To apply for purchasing the personal credit with protection funds, the custodian settlement institution shall put forward an application
to the institution authorized by the CSRC. The application materials shall be prepared in duplicate, which shall include the following
contents:

(1)

an application report and a form of application (see Appendix I);

(2)

detailed ledgers of the personal credit which is requested to be purchased by the head office of the securities company under disposition
as well the branches thereof, which have been collected together, discerned and recognized by the custodian settlement institution
(see Appendix II);

(3)

a particular audit report on the personal credits;

(4)

a verification report made by the differentiation group of the local government and the accompanying detailed ledgers as well as the
detailed materials, or a verification report made by the custodian settlement institution and the relevant detailed materials (the
part of personal credits constituted as a result of appropriating the securities of the personal clients of a normal broker);

(5)

an operating scheme for purchasing the personal credits; and

(6)

other materials as requested by the CSRC for submission.

Article 8

The purchasing funds that shall be paid by the local government shall have been actually paid in full amount, when a custodian settlement
institution applies for purchasing the personal credits with protection funds. The custodian settlement institution shall submit
it to the CSRC without postponing so that the CSRC could coordinate, if the purchasing funds of the local government cannot be actually
paid timely or in full amount. The custodian settlement institution may first purchase personal small-sum credits of less than 100,000
Yuan within the quota of funds to be implemented by the Central Government, and when the purchasing funds of the local government
are actually paid in full amount, it may then purchase the parts below 100,000 Yuan that has not been purchased as well as the large-sum
personal credits of over 100,000 Yuan.

Article 9

To apply for purchasing the settlement funds of the clients’ securities with protection funds, a custodian settlement institution
shall put forward an application to the institution authorized by the CSRC. The application materials shall be prepared in duplicate,
which shall include the contents as follows:

(1)

an application report and a form of application (see Appendix III);

(2)

the details of the settlement funds of the clients’ securities of the head office of the securities company under disposition as well
the branches thereof, which have been discerned and recognized by the custodian settlement institution (including a CD involving
the detailed relative information of the accounts);

(3)

a particular audit report on the settlement funds of the clients’ securities;

(4)

a verification report on packing up the accounts;

(5)

an operating scheme for offsetting the gap in the settlement funds of the clients’ securities; and

(6)

other materials as requested by the CSRC for submission.

Article 10

In case a custodian settlement institution put forward applications by several times for utilizing the protection funds and when
it put forward application for a second time, it is not requested to present again the materials which are the same as those that
have been already presented , provided that it has to give an account of the use of the protection funds for which it has put forward
an application.

Article 11

The institution authorized by the CSRC shall examine the application materials put forward for utilizing the protection funds to
purchase the personal credits and the settlement funds of the clients’ securities, and shall release clear examination opinions.
The examination materials in which the institution authorized by the CSRC approves to give protection funds shall cover the following
contents:

(1)

opinions of examination;

(2)

a Form of examination of Applications for Utilizing Protection Funds (Form of Examination of Applications for Purchasing the Personal
credits with Protection Funds (see Appendix IV) or Form of Examination of Applications for Purchasing the Settlement Funds of Client’s
Securities with Protection Funds (see Appendix V)); and

(3)

the Detailed Ledgers of the Personal Credits (see Appendix II) or Detailed Ledgers of the Gaps in the Settlement Funds of Clients’
Securities (see Appendix VI) as recognized upon examination.

Article 12

After the institution authorized by the CSRC has inspected and sanctified an application for utilizing protection funds of the custodian
settlement institution, it shall release to the custodian settlement institution a document of approval on giving the protection
fund, which shall be offered to the CSIPF together with the examination materials and the application materials put forward by the
custodian settlement institution.

Article 13

Where a securities company under disposition fails to safeguard the on-the-counter payment of its clients for its normal brokering
businesses because of its lack of adequate funds so that panic bank withdrawal may occur, the custodian settlement institution may
put forward an application to the institution authorized by the CSRC for utilizing the emergency aid fund within the sanctified quota
for utilizing protection funds, and shall simultaneously present a scheme for utilizing the emergency aid fund in order to make clear
the procedures for checking the allocation of emergency aid funds and the clients’ withdrawal of money.

Article 14

The institution authorized by the CSRC shall direct an examination to the scheme of utilizing the emergency aid fund, fill in an
Examination Form of Utilizing Emergency Aid Fund (see Appendix VII), and specify its examination opinions. Where it approves to grant
the emergency aid fund, it shall offer in duplicate to the CSRC its examination opinions, Form of Examination together with the scheme
of utilizing the emergency aid fund as proposed by the custodian settlement institution.

Article 15

If the CSRC agrees to grant the emergency aid fund, it shall release a document of approval to the custodian settlement institution,
and shall send it to the CSIPF together with the examination opinions of its authorized institution, the Form of Examination, as
well as the scheme of utilizing the emergency aid fund which has been proposed by the custodian settlement institution.

Article 16

After receiving the document of approval as released by the CSRC or its authorized institution to offer the protection fund as well
as the relevant materials forwarded thereby, the CSIPF shall grant the protection fund in accordance with these Measures and other
related provisions.

Chapter III Extending of the Protection Fund

Article 17

In accordance with the operational rules of the People’s Bank of China with regard to the reloaning of securities investor protection
funds, the CSIPF shall open a particular account for “deposit of securities investor protection funds” with the Business Department
of the People’s Bank of China in order to check and calculate the reloans extended by the People’s Bank of China for the risk disposition
of the securities company.

Article 18

In case the CSIPF grants to the custodian settlement institution any protection fund so as to purchase the personal credits and the
settlement funds of clients’ securities, it shall sign a loan agreement with the custodian settlement institution and the institution
authorized by the CSRC and shall appoint a commercial bank (hereafter referred to as an “entrusted bank”) to extend the loan on its
behalf.

Article 19

The CSIPF shall open a particular account of protection fund deposit with the entrusted bank so as to check and calculate the protection
funds as granted to the custodian settlement institution, and shall conclude with the head office of the entrusted bank an “Agreement
on the Management of the Particular Settlement Account of Securities Investor Protection Funds”.

Article 20

The CSIPF shall, when handling the formalities of transferring the reloan funds it borrows, send to the Business Department of the
People’s Bank of China an instruction for allocation attached with the seal of its own of which it has left a specimen therewith,
and shall fill in a “Letter for Consulting Allocated Securities Investor Protection Funds”.

Article 21

If the custodian settlement institution utilizes the protection fund to purchase the personal credits and the settlement funds of
clients’ securities, it shall open a deposit account for the protection fund with the entrusted bank upon the strength of the document
of the CSRC or any other department in charge on agreeing the establishment of the custodian settlement institution in order to check
and calculate the protection funds, and shall report its opening of bank accounts to the institution authorized by the CSRC, the
branch organization of the People’s Bank of China in the locality, and the CSIPF for archival purpose.

Article 22

The CSIPF shall, in accordance with the provisions of the loan agreement, allocate the loans once and for all or by installments
to the protection fund deposit account of the custodian settlement institution at the entrusted bank.

When extending protection funds for purchasing the personal credits and the settlement funds of clients’ securities, the CSIPF shall
present the entrusted bank its allocation instruction which has been attached with the seal of which it has left a specimen therewith,
and shall present the entrusted bank the detailed ledgers of the personal credits which have been checked and verified by the institution
authorized by the CSRC.

Article 23

The principle of “purchasing a batch after verifying a batch” shall be followed in the purchase of the personal credits. The custodian
settlement institution shall open a protection fund deposit account with each of the branches of the entrusted bank in all the places
where the purchase of the personal credits is implemented for the sole purpose of purchasing the personal credits, and shall report
its opening of accounts to the institution authorized by the CSRC, the branch organization of the People’s Bank of China, and the
CSIPF for archival filing.

Article 24

When implementing the allocation of protection funds for purchasing the personal credits, the custodian settlement institution shall
release a circular of allocating funds for purchasing the personal credits upon the strength of the checklist of the personal credits
of all places that need to be purchased, and shall present all of them to the branch or sub-branch of the entrusted bank.

Article 25

The branch or sub-branch of the entrusted bank shall extend the purchase funds to the certain creditors in accordance with the relevant
provisions after examining the purchase checklist of the personal credits against the detailed ledgers of the personal credits as
offered by the CSIPF.

Article 26

A creditor or the agent thereof shall gain its purchase money at the appointed business place of the entrusted bank in accordance
with the relevant provisions upon the strength of its valid identity certificate and the Letter of Verification of _____ Securities
Company for Purchasing the Personal credit as released by the differentiation and verification group of the local government.

The branch or sub-branch of the entrusted bank shall recede the Letter of Verification of _____ Securities Company for Purchasing
the personal credit which the personal creditor holds after paying the purchase money.

Article 27

To purchase the credit of a personal formed because of the misappropriation of the securities of the normal broker-clients, the custodian
settlement institution may pay the purchase money directly to the China Securities Registration & Settlement Company if it considers
it appropriate. The purchase money giving circular released by the custodian settlement institution shall have gone through the examination
of the institution authorized by the CSRC.

Article 28

In case the custodian settlement institution utilizes the protection fund to purchase the settlement funds of clients’ securities,
it shall do so simultaneously when it deposits the settlement funds of the clients’ securities in a third party.

When conducting the formalities for giving money for the gap in the settlement funds of clients’ securities, the custodian settlement
institution shall release a circular on giving money for offsetting the gap in the settlement funds of clients’ securities, and shall
offer it to the entrusted bank after succeeding in the examination and getting the approval of the institution authorized by the
CSRC.

The entrusted bank shall allocate funds to the deposit account of a third party upon the strength of the “Circular on Giving Money
for Offsetting the Gap in the Settlement Funds of Clients’ Securities”.

Article 29

To offset the overdrafts of the securities company under disposition in the normal brokering business settlements of the China Securities
Registration & Settlement Company with protection funds, the custodian settlement institution shall release a “Circular on Allocating
Money for Offsetting the Gap in the Settlement Funds of Clients’ Securities”, and then after getting the approval of the institution
authorized by the CSRC, offer to the CSIPF, who shall allocate the fund directly to the bank account appointed by the custodian settlement
institution in China Securities Registration & Settlement Company.

Article 30

The emergency aid fund which the custodian settlement institution put forward an application for shall only be utilized for paying
for the client’s on-the-counter drawing of money in the normal brokering business and other purposes as specified by the relevant
state policies.

When distributing any emergency aid fund out of its protection fund deposit account, the custodian settlement institution shall release
a circular on distributing emergency aid funds, and then present it to the entrusted bank after getting the approval of the institution
authorized by the CSRC. The entrusted bank shall allocate the funds upon the strength of the “Circular on Allocating Emergency Aid
Funds” which has succeeded in the examination and acquired the consent of the institution authorized by the CSRC.

Article 31

A custodian settlement institution shall borrow protection funds from the CSIPF, the interest rate of which shall be 165 basic points
more favorable than the one-year fluid reloan interest rate as provided for by the People’s Bank of China.

If a custodian settlement institution borrows any protection fund, the deposit interests of the deposits in the protection fund deposit
account which it opens shall be utilized to repay the due loan interests of CSIPF.

Article 32

After purchasing the personal credits and the settlement funds of clients’ securities with the protection funds, the custodian settlement
institution shall transfer the interests thereof as well as the remaining funds back to the protection fund deposit account which
the CSIPF has set up in the entrusted bank, and shall adjust the corresponding amount of loan.

The custodian settlement institution shall write off its protection fund deposit account in time, and shall present its written-off
account to the institution authorized by the CSRC, the branch or sub-branch of the People’s Bank of China in the locality, and the
CSIPF for archival purpose.

Chapter IV Supervision and Management

Article 33

The CSRC and the institutions authorized thereby shall take charge of checking and consenting the application materials put forward
by the custodian settlement institutions for utilizing protection funds, monitoring over the lawfulness of the custodian settlement
institutions’ use of protection funds, and for monitoring, regulating, coordinating, and directing the differentiation, verification,
and purchase of the personal credits and the settlement funds of clients’ securities.

Article 34

The CSIPF shall set up and improve its inner management, supervision and control mechanisms, implement supervision, management and
examination to the applications, grant, and utilization of the protection funds in accordance with the related provisions, and shall
report to the related departments on the grant and use of the protection funds in accordance with the related provisions.

Article 35

The CSIPF may entrust intermediary institutions with appropriate qualifications to implement particular audits to the custodian settlement
institutions’ use of protection funds, and the related entities and personal under audit shall assist and cooperate.

Article 36

After purchasing the personal credits and the settlement funds of clients’ securities with protection funds, a custodian settlement
institution shall help the CSIPF to pass the credit transfer and registration formalities.

The CSIPF, which has acquired the corresponding right to repayment in accordance with law, has the right to join the liquidation or
restructuring of the securities company under disposition.

Article 37

If the CSIPF finds any of the following situations that may influence the safety of the protection fund, it shall report it to the
CSRC, and the CSRC or the institution authorized thereby shall command the custodian settlement institution to make corrections within
a time limit. In case the custodian settlement institution cannot make corrections in good time, the CSIPF shall have the right to
stop the allocation of fund or require the entrusted bank to stop the allocation of fund:

(1)

In case the differentiation or verification of the personal credits or the settlement funds of clients’ securities cannot satisfy
the related policies of the state;

(2)

In case there is anything untrue in the protection fund application materials;

(3)

In case the use of the protection fund cannot satisfy the related policies of the state;

(4)

Any other circumstances under which the safety of the protection fund may be influenced.

Article 38

A custodian settlement institution shall employ an accounting firm as recognized by the CSIPF to implement particular audits to the
personal credits and the settlement funds of clients’ securities, and shall do well in registering and purchasing the personal credits
as well as the differentiation, verification, and purchase of the settlement funds of clients’ securities in accordance with the
dictated standards and procedures in order to guarantee that the applications and use of the protection fund satisfy the related
state policies.

Article 39

After utilizing any emergency aid fund, a custodian settlement institution shall offer the related materials to the institution authorized
by the CSRC in a timely manner, and then report it to the CSIPF after acquiring the recognition of the institution authorized by
the CSRC. The materials it shall offer shall include but are not limited to:

(1)

a report on utilizing the emergency aid fund; and

(2)

a detailed account of the settlement funds of clients’ securities involved in the emergency aid fund (including a CD containing the
concrete information of the accounts).

Article 40

In case a custodian settlement institution applies for utilizing any protection fund, it shall present regular reports to the CSIPF
about the assets and liabilities of the securities company under disposition as of the day when the disposition begins, the progress
of the custodian settlement, the differentiation and verification of the personal credits and the settlement funds of clients’ securities,
as well as any other materials as requested by the CSIPF for submission.

Article 41

After receiving the protection funds, a custodian settlement institution shall make regular reports as requested to the institution
authorized by the CSRC and the CSIPF about the progress in the grant and use the protection funds, and shall report, on the quarterly
basis, to the branch organization of the People’s Bank of China at the locality where the legal person securities company under disposition
about the use of the protection funds and the disposition of risks.

In case any grave problem happens in the grant or use of protection funds, the custodian settlement institution shall report it to
the institution authorized by the CSRC and the CSIPF in time.

Article 42

After purchasing the personal credits and the settlement funds of clients’ securities with protection funds, a custodian settlement
institution shall collect in a timely manner the related information about the use of protection funds and the disposition of risks,
and shall report to the CSRC and the institution authorized thereby and the CSIPF.

Article 43

The custodian settlement institutions and the entrusted banks shall set up accounting ledgers for protection funds, registering in
detail the allocation and use of protection funds, and maintain appropriately the vouchers for the receipt and designation of protection
funds, the bills of honor, and other related original vouchers, in order to guarantee the completeness of the original archival files.

Article 44

When executing its duties in allocating protection funds, a custodian settlement institution shall strictly comply with these Measures
and the relevant state policies concerning purchase, and carefully check the relevant materials, in order to guarantee that the no
error persists in the relevant materials and the basis in the course of granting protection funds.

The entrusted bank shall compose regular reports to the CSIPF about the extending and use of protection funds, and shall bear legal
liabilities for the entrusted matters.

Article 45

The parties involved shall strictly carry out the related policies and rules of the state in order to guarantee the lawful use and
safety of the protection funds. The violations of law or rule, if any, such as misappropriating, seizing or acquiring protection
funds by fraudulent means, etc., shall be cracked down, and the relevant personnel who are guilty of dereliction of duty shall be
subjected to legal liabilities in accordance with law. If any crime is formed, the offenders shall be transferred to the judicial
organ for punishment.

Chapter V Supplementary Provisions

Article 46

If any of the protection funds is utilized for any other purpose upon consent, the methods for the application thereof shall be separately
set down.

Article 47

If any securities company under disposition in which the local government or any other department plays a leading role needs to apply
for utilizing any protection fund, these Measures shall be applied by analogy in terms of the duties and responsibilities of the
parties involved and the processes of work.

Article 48

The term “institution authorized by the CSRC” as mentioned in these Measures means a department or entity which is authorized by
the CSRC to monitor and examine the custodian settlement institutions’ application for and use of protection funds.

Article 49

The CSRC is responsible for interpreting these Measures.

Article 50

These Measures shall be implemented as of the date of promulgation.

Appendixes:

Form of Application for Purchasing the Personal Credits with Protection Funds; (Omitted)

Detailed Ledgers of the Personal credits (Omitted)

Application Form for Purchasing the Settlement Funds of Clients’ Securities with Protection Funds (Omitted)

Form of Examination of Applications for Purchasing the Personal credits with Protection Funds (Omitted)

Form of Examination of Applications for Purchasing the Settlement Funds of Client’s Securities with Protection Funds (Omitted)

Detailed Ledgers of the Gaps in the Settlement Funds of Clients’ Securities (Omitted)

Form of Examination of Applications for Utilizing Emergency Aid Funds (Omitted)

The China Securities Regulatory Commission
2006-03-07

RULES FOR THE PRICING ACTIVITIES OF THE GOVERNMENTS

Order of the National Development and Reform Commission of People’s Republic of China

No. 44

In accordance with the Price Law of the People’s Republic of China, we have amended the Rules for the Pricing Activities of the Governments
(for Trial Implementation). The amended Rules for the Pricing Activities of the Governments, which have been adopted upon deliberation
at the director’s executive meeting of the National Development and Reform Commission, are hereby promulgated and shall go into effect
as of May 1, 2006.

Attachment: Rules for the Pricing Activities of the Governments

Ma Kai, Director of the National Development and Reform Commission

March 17, 2006

Rules for the Pricing Activities of the Governments

Article 1

With a view to regulating the pricing activities of the governments, making the pricing activities of the governments more scientific,
impartial and transparent, and protecting the legitimate rights and interests of consumers and business operators, the present rules
are formulated according to the Price Law of the People’s Republic of China.

Article 2

Where the competent departments of pricing or other relevant departments of the people’s governments at or above the provincial level
or the people’s governments at the municipal or county level as authorized by the provincial people’s governments (hereinafter referred
to as the pricing organs) set or adjust, according to law, the prices of goods and services subject to government-guidance prices
or government-set prices (hereinafter referred to as pricing activities), such activities shall be subject to the present rules.

Where it is prescribed otherwise by any law or regulation, such law or regulation shall prevail.

Article 3

The state shall implement and gradually improve the market-based prices and mechanism under the regulation and control of the macro
economy. The government pricing scope shall be determined according to Article 18 of the Price Law, and shall in practice base on
the central and regional pricing catalogues, which shall be adjusted at an appropriate time according to the social and economic
development and shall be publicized to the general public in a timely manner.

The pricing activities of the governments at the municipal or county level, which have been authorized by the corresponding provincial
governments, shall be put under the charge of their inferior affiliated competent departments of pricing.

The pricing organs shall set prices in light of their legitimate authorities, and shall not overstep their respective powers in any
pricing activity.

Article 4

The principles of fairness, openness, impartiality and efficiency shall be abided by in the pricing activities.

Article 5

The pricing activities shall accord with the social average cost of relevant goods or services, the market situation of their demand
and supply, the requirements for national economy and social development as well as social bearing capability. Where the price of
any good or service is closely related to its counterpart in the international market, the international price shall be referred
to.

The competent pricing department of the State Council and its counterparts of the provincial people’s governments may, in light of
different industrial features, determine the concrete principles of and measures for pricing.

Article 6

The pricing organs shall set prices at a proper time in pursuance of the situations of economic and social development as well as
the feedbacks from all social aspects.

Article 7

When setting prices, the pricing organs s shall, according to law, go through such procedures as investigation into prices (costs),
solicitation for social opinions, collective deliberation, decision on pricing, announcement and etc.

Where the cost supervisions and inspections, expert argumentations and price hearings are required by law, they shall be carried out
according to the relevant provisions.

Article 8

Consumers, business operators and other parties concerned (hereinafter referred to as the advisors) may bring forward suggestion
on pricing to the relevant pricing organs.

Article 9

The pricing organs may, when setting prices, require the relevant business operators and industrial organizations to provide the
relevant materials as required for the pricing.

Article 10

When setting prices, the pricing organs shall carry out an investigation into the situations of market supply and demand as well
as the social bearing capability, and make an analysis on the impacts on relevant industries and consumers.

Article 11

The pricing organs shall, when setting prices, carry out an investigation into the prices and costs.

Where any cost supervision and inspection is required according to law, it shall be implemented according to the relevant provisions
thereon.

Article 12

When setting prices for highly professional and technical commodities or services, the pricing organs shall employ the relevant experts
to hold an argumentation.

Article 13

If a hearing is required according to law when the pricing organs set any price, the competent pricing department of the government
shall hold the hearing and solicit for the opinions of consumers, business operators and other parties concerned. The concrete contents
of the hearing shall be subject to the relevant provisions on pricing hearings.

Where a hearing is not required by law, the pricing organs may solicit for the opinions of consumers, business operators and other
parties concerned by holding a symposium, in written form or via the Internet.

Article 14

The pricing organs shall, after fulfilling the procedures as prescribed in Articles 10 through 13 of the present rules, formulate
a pricing scheme that shall include the following contents:

(1)

The current price, the proposed price as well as the adjustment level per unit;

(2)

The basis and reasons for pricing;

(3)

Where any cost supervision and inspection is carried out, a report on cost supervision and inspection shall be attached;

(4)

The impact thereof on the relevant industries and consumers after a price is set;

(5)

Where an argumentation of experts is held, the Summary of Experts’ Argumentation Opinions shall be attached;

(6)

The opinions of consumers, business operators and the relevant parties concerned;

(7)

Where a hearing is held, the Summary of the Hearing shall be attached; and

(8)

The implementing time and scope of the price.

Article 15

The collective deliberation system shall be adopted in principle for formulating pricing schemes. The collective deliberation may
be held in the form of deliberation by the price deliberation committee or deliberation by the executive meeting.

The form of collective deliberation, composition of personnel and working rules shall be formulated by the pricing organs at or above
the provincial level.

Article 16

Where the competent pricing departments of the State Council or other departments set the price of any important commodity or service,
it shall, according to the relevant provisions, be reported to the State Council for approval.

Article 17

If the pricing organ is an industrial competent department, it shall solicit for the opinions of the competent pricing departments
at the same level in written form before any decision is made.

Article 18

Where the relevant pricing is deemed as necessary after a pricing plan has been collectively deliberated, the pricing organ shall,
at a proper time, make a decision on pricing, which shall include the following contents:

(1)

The items subject to pricing and the proposed price;

(2)

The basis for pricing;

(3)

The time and scope for implementing the price; and

(4)

The name of the pricing organ that has made the decision as well as the day when the decision is made.

The Decision on Pricing shall be affixed with the seal of the pricing organ that has made the decision on pricing.

Article 19

Apart form that any state secret is involved, after a decision on pricing is made, the pricing organ that has made the decision shall
publicize it to the general public via the media such as the designated newspapers and websites.

Article 20

The pricing organs shall establish and improve the internal supervision and restriction mechanism for pricing.

The competent pricing department at a higher level shall take charge of the supervision over the pricing activities of its inferior
competent pricing departments.

Any pricing activity conducted by the competent industrial department shall be subject to the supervision of the competent pricing
departments at the same level.

Article 21

If any advisor is involved in a pricing activity, the pricing organs shall, in a proper way, inform the advisor of the treatment
on his advice.

Article 22

After a decision on pricing is implemented, the pricing organ shall conduct follow-up investigation and supervision on the implementation
of the pricing decision, which shall include the following contents:

(1)

The implementation of the price and the existing problems thereabout;

(2)

The impact on the price as incurred from the business operation, costs, labor productivity and the fluctuation of the market situations
of supply and demand;

(3)

The market situations of supply and demand of the relevant goods or services as well as the price fluctuation; and

(4)

The opinions from all social aspects on the price as set.

Article 23

Where the pricing organ has any law-breaking act, the competent pricing department of the government shall carry out the corresponding
investigation and punishment according to the Price Law.

Article 24

Where any functionary of the pricing organs has any law-breaking act during the pricing activities and thus a crime is constituted,
he shall be subject to criminal liabilities according to law. Where a crime is not constituted, he shall be imposed upon an administrative
sanction according to law.

Article 25

The pricing organs shall, in accordance with the administrative rules for archival filing, establish pricing files and put them on
records.

Article 26

The competent pricing department of a province, autonomous region, or municipality directly under the Central Government may, according
to the present rules and in combination of the local situation, formulate the detailed implementation rules.

Article 27

The power to interpret the present rules shall remain with the National Development and Reform Commission.

Article 28

The present rules shall go into effect as of May 1, 2006. The Rules for the Pricing Activities of the Governments (for Trial Implementation)
as promulgated by the National Development and Reform Commission on December 16, 2001 shall be abolished simultaneously.

National Development and Reform Commission
2006-03-17

CIRCULAR ON COOPERATING WITH COMPETENT DEPARTMENTS OF COMMERCE ON THE ESTABLISHMENT ADMINISTRATION OF FOREIGN-INVESTED CONSTRUCTION ENTERPRISES AND FOREIGN-INVESTED CONSTRUCTION ENGINEERING DESIGN ENTERPRISES

the Ministry of Construction

Circular on Cooperating with Competent Departments of Commerce on the Establishment Administration of Foreign-invested Construction
Enterprises and Foreign-invested Construction Engineering Design Enterprises

Jian Shi Han [2006] No. 76

The construction departments of all provinces and autonomous regions, the construction commissions of all municipalities directly
under the Central Government, and the Construction Administrative Bureaus of Jiangsu and Shandong Provinces:

For the purpose of simplifying the examination and approval formalities for establishing foreign-invested enterprises, in accordance
with the Provisions on the Administration of Foreign-invested Construction Enterprises (Order No. 113 of the Ministry of Construction
and the Ministry of Foreign Trade and Economic Cooperation), the Provisions on the Administration of Foreign-invested Construction
Engineering Design Enterprises (Order No. 114 of the Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation),
the Ministry of Commerce printed and issued the Circular of the Ministry of Commerce on Entrusting the Provincial Commercial Administrative
Departments to Examine and Approve Foreign-invested Construction Enterprises (Shang Zihan [2005] No. 90) in January 2006, as well
as the Circular of the Ministry of Commerce on Entrusting the Provincial Commercial Administrative Departments to Examine and Administer
Foreign-invested Construction Engineering Design Enterprises (Shang Zihan [2005] No. 92 ), and the provincial commercial administrative
departments and the administrative committees of national economic and technological development zones are entrusted to examine and
approve the establishment of foreign-invested construction enterprises and foreign-funded construction engineering design enterprises.
For the purpose of cooperating the commercial administrative departments to do well in the work concerning the examination and approval
of the establishment of foreign-invested enterprises, we hereby notify the relative matters as follows:

Regarding an application for the level A+ or A qualification of a general contractor of construction or the level A qualification
of a professional contractor, the Ministry of Commerce should solicit the opinions from the Ministry of Construction as of the receipt
of application materials in accordance with Article 7 of the Provisions on the Administration of Foreign-invested Construction Enterprises,
however, as of the present circular, the provincial commercial administrative department shall solicit the opinions from the construction
administrative department at the same level in accordance with this Circular.

II.

Regarding an application for the level A qualification for construction engineering design or the level A or B qualification for any
other construction engineering design, the Ministry of Commerce should solicit the opinions from the Ministry of Construction as
of the receipt of application materials in accordance with Article 7 of the Provisions on the Administration of Foreign-invested
Construction Engineering Design Enterprises, however, as of the present circular, the provincial commercial administrative department
shall solicit the opinions from the construction administrative department at the same level in accordance with this Circular.

The provincial construction administrative departments shall strictly carry out the above-mentioned provisions; and shall, in accordance
with Article 22 of the Provisions on the Administration of Foreign-funded Construction Enterprises and the Measures of the Ministry
of Construction for the Implementation of the Relevant Qualification Administration in the Provisions on the Administration of Foreign-invested
Construction Enterprises (Jian Shi [2003] No. 73), make primary examination and approval on whether the enterprises have the qualifications
for directly applying for the same levels in the letters of local commercial administrative departments for soliciting opinions.

The relevant qualification administrative departments shall carry out specific examination on the qualifications for the enterprises
in accordance with the relative provisions on the qualification administration.

Ministry of Construction of the People’s Republic of China

March 29, 2006

the Ministry of Construction
2006-03-29

ANNOUNCEMENT NO.34, 2006 OF MINISTRY OF COMMERCE, PROMULGATING ARTICLE NAMES OF RELATED TEXTILES AND APPARELS, AND TAX NUMBER, TIME LIMIT FOR ADMINISTRATION AND RELATED REQUIREMENTS OF BRAZIL

Ministry of Commerce

Announcement No.34, 2006 of Ministry of Commerce, Promulgating Article Names of Related Textiles and Apparels, and Tax Number, Time
Limit for Administration and Related Requirements of Brazil

[2006] No. 34

In accordance with related articles of Ministry of Commerce of the People’s Republic of China and the Ministry of Development, Industry
and Foreign Trade of Federative Republic of Brazil MOU on Strengthening Cooperation in Trade and Investment, Brazil started its unilateral
import administration on silk, corduroy, polyester fiber, sweater and garment, knitted shirt and T-shirt, and coat, overcoat and
jacket, chemical fabric and embroidery originating from China from Apr 3, 2006 while China would not carry out export administration
on the said products. For domestic enterprises’ understanding of specifics of the import administration of Brazil on a part of textiles
and apparels and convenience of exporting related products, article names of related textiles and apparels, and tax number, time
limit for administration and related requirements of Brazil are now announced as follows:

Article Names and Relevant Tax Number

(1)

Corduroy: 58012200, 58012300;

(2)

Embroidery: 58109100, 58109200, 58109900;

(3)

Knitted shirt and T-shirt: 61051000, 61052000, 61059000, 61061000, 61062000, 61069000, 61091000, 61099000;

(4)

Polyester fiber: 54023300;

(5)

Chemical fabric: 54075100, 54075210, 54075220, 54075300, 54075400, 54076100, 54072000, 54073000, 54074100, 54074200, 54074300, 54074400,
54077100, 54077200, 54077300, 54077400, 54078100, 54078200, 54078300, 54078400, 55151200, 55152100, 55159100, 55162100, 55162200,
55162300, 55162400, 54079100, 54079200, 54079300, 54079400, 54083100, 54083200, 54083300, 54083400, 54076900;

(6)

Coat, overcoat and jacket: 61013000, 61032300, 62011300, 62019300, 62032300, 62102000, 61023000, 61042300, 61043300, 62021300, 62029300,
62042300, 62043300, 62103000;

(7)

Sweater and garment: 61102000, 61179000, 61101100, 61101200, 61101900, 61103000, 61109000;

(8)

Silk: 50071010, 50071090, 50072010, 50072090, 50079000.

Time Limit for Administration

From April of 2006 to December of 2008

Related requirements

When exporting above products to Brazil, enterprises should first make sure whether the importers have already received related import
documents of approval of from Brazil government to avoid losses.

Ministry of Commerce

Apr 24, 2006

Ministry of Commerce
2006-04-24

1...678...25 Page 7 of 25

Probate

INTERIM PROVISIONS ON ADMINISTRATION OF THE EXPORT OF PRECURSOR CHEMICALS TO PARTICULAR COUNTRIES (REGIONS)

DETAILED RULES FOR THE IMPLEMENTATION OF THE REGULATION ON THE ADMINISTRATION OF COMMERCIAL PERFORMANCE

REPLY OF THE STATE COUNCIL ON THE DECISION THAT THE CONVENTION OF UNIFYING SEVERAL RULES ON INTERNATIONAL AIR TRANSPORT APPLIES TO HONG KONG SPECIAL ADMINISTRATIVE REGION

CIRCULAR OF THE MINISTRY OF FINANCE & THE STATE ADMINISTRATION OF TAXATION ON ADJUSTING THE STANDARD OF THE TAXABLE AMOUNT OF COAL RESOURCE TAX OF SICHUAN PROVINCE

GUIDELINES FOR THE SECURITY EVALUATION OF ELECTRONIC BANKS

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

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

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

MEASURES FOR APPLICATION FOR THE USE OF SECURITIES INVESTOR PROTECTION FUNDS (FOR TRIAL IMPLEMENTATION)

RULES FOR THE PRICING ACTIVITIES OF THE GOVERNMENTS

CIRCULAR ON COOPERATING WITH COMPETENT DEPARTMENTS OF COMMERCE ON THE ESTABLISHMENT ADMINISTRATION OF FOREIGN-INVESTED CONSTRUCTION ENTERPRISES AND FOREIGN-INVESTED CONSTRUCTION ENGINEERING DESIGN ENTERPRISES

ANNOUNCEMENT NO.34, 2006 OF MINISTRY OF COMMERCE, PROMULGATING ARTICLE NAMES OF RELATED TEXTILES AND APPARELS, AND TAX NUMBER, TIME LIMIT FOR ADMINISTRATION AND RELATED REQUIREMENTS OF BRAZIL

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