INTERIM MEASURES ON THE MANAGEMENT OF FOREIGN DEBTS

The State Development Planning Commission, the Ministry of Finance, the State Administration of Foreign Exchange

Decree of the State Development Planning Commission, the Ministry of Finance, and State Administration of Foreign Exchange

No.28

The Interim Measures on the Management of Foreign Debts which are enacted with a view to regulating the act of raising foreign debts,
bringing more benefits from the use of foreign debt funds, and avoiding the risk of foreign debts, and are hereby promulgated and
shall come into effect as of March 1, 2003.

Director of the State Development Planning Commission Zeng Peiyan

Minister of the Ministry of Finance Xiang Huaicheng

Director of the State Administration of Foreign Exchange Guo shuqing

January 8, 2003

Interim Measures on the Management of Foreign Debts

Chapter I General Provisions

Article 1

The present Measures are enacted with a view to regulating the act of raising foreign debts, bringing more benefits from the use foreign
debt funds, and avoiding the risk of foreign debts.

Article 2

The term “foreign debt” as mentioned in the present Measures refers to the debts owed by domestic institutions to non-residents in
the form of foreign currency.

Article 3

“Domestic institutions” as mentioned in the present Measures refers to the permanent bodies established according to law in the territory
of China, including but not limited to the governmental organs, domestic financial institutions, enterprises, institutions and social
organizations.

Article 4

“Nonresidents” as mentioned in the present Measures refer to the institutions and natural persons abroad, and the nonpermanent institutions
established according to law in the territory of China.

Article 5

In accordance with the classification of the debts, foreign debts shall be divided into loans offered by foreign governments, loans
offered by the international financial organizations and international commercial loans.

1.

Loans offered by the foreign governments refer to the official credit raised by the Chinese government from foreign governments;

2.

Loans offered by the international financial organizations refer to the noncommercial credit which the Chinese government owes to
the World Bank, Asia Development Bank, Agricultural Development Funds of the United Nations and other international or regional financial
organizations; and

3.

International commercial loans refer to the commercial credit which the domestic institutions owe to the nonresidents, including:

(1)

loans raised from overseas banks or other financial organizations;

(2)

loans borrowed from overseas enterprises, or other financial organizations and natural persons;

(3)

medium-term or long-term bonds (including convertible bonds) issued by foreign banks or short-term bonds (including commercial negotiable
instruments, and large amount transferable deposit receipts);

(4)

the buyers’ credit, deferred payment and trade finance in other forms;

(5)

international financial leases;

(6)

foreign currency deposits of nonresidents;

(7)

debts repaid in cash in compensation trade; and

(8)

international loans of other categories.

Article 6

According to the responsibility for the repayment, foreign debts may be divided into sovereign debts and non-sovereign debts.

1.

The sovereign debts refer to the foreign debts borrowed by the institutions authorized by the State Council in the name of the state
and guaranteed with the state credit for the repayment; whereas

2.

The non-sovereign debts refer to other foreign debts except as of the sovereign debts.

Article 7

“Foreign guaranty” mentioned in the present Measures refers to the guaranty provided by the domestic institutions for the nonresidents
in accordance with the Guaranty Law of the People’s Republic China through means of surety, mortgage, and pledge. Potential obligations
for the repayment of the foreign debts resulting from the foreign guaranty shall be regarded as feasible foreign debts.

Article 8

The State shall conduct an overall control over all of the foreign debts and feasible foreign debts. The borrowing of foreign debts,
guaranty for foreign debts, and the usage and repayment of foreign debts shall comply with the provisions of relevant laws, rules
and regulations of the State and comply with the present Measures.

Article 9

The State Development Planning Commission, Ministry of Finance, and State Administration of Foreign Exchange are the departments responsible
for the administration of foreign debts.

Chapter II Raising of Foreign Debts and Foreign Guaranty

Article 10

According to the need of the national economy and social development, and the conditions of the international income and expenses
and capacity of bearing foreign debts, the State Development Planning Commission shall, jointly with other relevant departments,
draw up the State’s plan for the borrowing of foreign loans, and rationally determine the overall amount of foreign debts and the
standards of their structural adjustment and control.

Article 11

The State shall, in compliance with the category of foreign debts, liability for repayment, and the nature of the borrowers, effect
separate management on foreign debts.

Article 12

Loans provided by international financial organizations or foreign governments shall be borrowed by the State in a consolidated way.

The State Development Planning Commission shall, jointly with other relevant departments like the Ministry of Finance, make overall
plans for loan projects to be chosen provided by the World Bank, Asia Developing Bank, Agricultural Development Funds of the United
Nations, and foreign governments; the Ministry of Finance shall, in accordance with the overall plans, organize the foreign negotiation,
consultation and conclusion of loan agreements, and the direct relending or relending through the relevant financial institutions
to the domestic debtors. The plans for the loan projects to be chosen provided by the World Bank, Asia Developing Bank, Agricultural
Development Funds of the United Nations, and some key foreign governments shall undergo approval by the State Council.

Article 13

Where the Ministry of Finance, in the name of the State, issues bonds abroad, the Ministry shall report to the State Council for approval,
which shall be included in the plans of foreign loans. Medium-term or long-term bonds issued by any other domestic institutions abroad
shall be subject to examination and verification by the State Development Planning Commission and Ministry of Finance, which shall
report the bonds to the State Council for approval.; short-term bonds issued abroad shall be subject to examination and approval
by the State Administration of Foreign Exchange; where the issue of short-term bonds is scrolled, the issue shall be subject to the
joint approval by the State Administration of Foreign Exchange and State Development Planning Commission and Ministry of Finance.

Article 14

With regard to the medium-term or long-term international commercial loans which national commercial banks raise, the State shall
enforce a balance control; the balance shall be subject to the examination and verification of the State Development Planning Commission
and other relevant departments, and then shall be reported to the State Council for examination and approval.

Article 15

Long-term or middle-term international commercial loans borrowed by domestic institutions such as enterprises with Chinese capital
shall be subject to approval by the State Development Planning Commission.

Article 16

With regard to the short-term international commercial loans which domestic institutions with Chinese capital raise, the State shall
exert a balance control; the balance be subject to examination and approval by the State Administration of Foreign Exchange.

Article 17

With regard to the foreign debts raised by foreign-capital financial institutions within China, the State shall enforce an administration
on the total amount. Measures on the administration shall be separately enacted.

Article 18

The summation of the accumulated medium-term and long-term debts borrowed by enterprises with foreign investment and the balance of
short-term debts shall not exceed the surplus between the total investment in projects approved by the verifying departments and
the registered capital.

Within the range of the surplus enterprises with foreign investment may borrow foreign loans at their own will. If the loans exceed
the surplus, the total investment in projects shall be reexamined by the original examination and approval departments.

Article 19

Foreign guaranty provided by domestic institutions for foreign debts shall be in compliance with the State’s laws, rules and regulations
and the relevant provisions of the State Administration of Foreign Exchange.

Article 20

Domestic institutions shall not provide guaranty for non-business external organizations.

Article 21

Without approval of the State Council, no governmental organs, social organizations or institutions shall raise foreign loans or provide
foreign guaranty.

Article 22

After a domestic institution has concluded a contract for foreign loans or providing foreign guaranty, it shall, in accordance with
relevant provisions, apply to the foreign exchange administration departments for registration. Contracts for international commercial
loans or contracts for the corresponding guaranty shall not enter into force until they are registered.

Chapter III Use of the Foreign Debt Capital

Article 23

Foreign debt funds shall be used in the economic development and structural adjustment of the stored foreign debts.

Article 24

Favorable foreign medium-term or long-term loans such as loans provided by the international financial organizations or foreign governments
shall be mainly used in the infrastructure and construction projects for public welfare, with preference to the western part of China.

Article 25

Medium-term or long-term international commercial loans shall be mainly used for introduction of advanced technology and equipment,
and for the adjustment of the structure of industries and structure of foreign debts.

Article 26

Medium-term or long-term foreign debt capital borrowed by domestic institutions shall, strictly according to the approved purposes,
be rationally used, and shall not be diverted for other purposes. Any necessary change of the purposes of use shall be subject to
approval through the original procedures.

Article 27

Short-term debts borrowed by domestic enterprises shall be mainly used as circulating funds, which shall not be used for medium-term
or long-term purposes such as in fixed assets.

Article 28

Where investment projects of fixed assets are funded with foreign debt capital, legal person responsibility system of a key project
shall be practiced so as to make the legal persons of the project responsible for the benefit of the use of the foreign debt capital.

If, in accordance with the Law of the People’s Republic of China on Bid Invitation and Bidding and the relevant provisions prescribed
by foreign organizations which lend the money, any purchase must be conducted through bid invitation; the bid invitation shall be
handled in strict accordance to the relevant provisions.

Article 29

Foreign debts regulatory departments shall be responsible for the administration and supervision of the use of foreign debt capital.

Article 30

The State Development Planning Commission shall, in accordance with the provisions of the Regulations on the Check of the Important
National Construction Projects, shall send specials to key national construction projects which are funded with foreign debt capital,
and shall perform inspection on the implementation of the projects and usage of the debts.

Chapter IV Repayment of Foreign Debts and Management of Risk

Article 31

Sovereign foreign debts shall be repaid by the State uniformly. If the sovereign foreign debt capital is relent to domestic debtors
directly by the Ministry of Finance or through financial institutions, the domestic debtors shall be liable for repayment of the
debts to the Ministry of Finance or to the financial institutions which handle the relending.

Article 32

Non-sovereign foreign debts shall be subject to the responsibility of the debtors themselves for risk and repayment.

Article 33

Debtors may fulfill the repayment of the debts with the foreign exchanges which they possess, or upon verification and approval by
foreign exchange regulatory departments, with foreign exchanges purchased with Renminbi.

Article 34

With respect to the debts which a debtor fails to repay, if there is a surety, the surety shall be responsible for the repayment of
the debts.

Article 35

If the surety needs, pursuant to the provisions of the contract for surety, to perform the obligation of repayment of the debts for
the debtor, the surety shall apply to the foreign exchange regulatory departments for verification for the performance of the contract
for surety.

Article 36

Debtors shall reinforce the management on the risk of foreign debts, and adjust and optimize the debt structure.

On the premise that the range of the original debts is not enlarged, debtors may, upon examination and approval of the State Development
Planning Commission, reduce the cost of foreign debts and optimize the their structure by means of repayment of foreign debts at
a higher cost with foreign debts borrowed at a lower cost. Therein, if the sovereign foreign debts are concerned, examination and
approval by the Ministry of Finance shall be needed.

Article 37

Debtors may, for the purpose of evasion of risk, entrust competent financial institutions to use financial tools to evade the exchange
rate risk and interest rate risk of the foreign debts.

Chapter V Supervision and Administration on Foreign Debts

Article 38

Foreign debt regulatory departments shall, pursuant to the laws, rules and regulations, and the relevant provisions of the present
Measures, conduct supervision and administration on foreign debts and foreign guaranty.

Article 39

When the foreign debt regulatory departments perform duties and responsibilities of supervision and administration, they are enpost_titled
to demand the debtors and relevant units to offer information concerned, check the bills and capital.

Article 40

If a domestic institution fails to perform the procedures of examination and approval or to fulfill the registration according to
the relevant provisions when it raises foreign debts or provides foreign guaranty, the contracts for loans or guaranty which it concludes
shall not be legally binding.

Article 41

Foreign debts or guaranty, which are not embodied in the form of contracts for foreign debts or guaranty, but actually constitute
obligations or potential obligations of repayment of foreign debts, shall be subject to the supervision and administration on foreign
debts according to the present Measures.

Article 42

Violation of the principle of pooling of interest and joint assumption of risk shall be forbidden so as to ensure that the direct
foreign investors will not raise foreign debts disguisedly by means of fixed return.

Article 43

Without approval by the foreign debts regulatory departments, overseas enterprises with Chinese capital shall not transfer the risk
of their foreign debts or obligations of repayment to domestic enterprises.

Article 44

If financial institutions operating foreign exchange business find any act that violates the present Measures in the course of opening
foreign exchange and foreign debts accounts, and handling the business of foreign exchange, they shall timely submit report to the
foreign debts regulatory departments concerned, and shall cooperate with the regulatory departments to carry out investigations.

Article 45

The foreign debt regulatory departments shall pay strict attention to the trends of the foreign debts, establish and perfect an overall
early warning system.

Article 46

The State Administration of Foreign Exchange shall be responsible for the monitoring of foreign debts through statistics, and regularly
publicize the statistical data of the foreign debts.

Article 47

If any domestic institution, in violation of the present Measures, raises foreign debts or provides foreign guaranty, its competent
department shall impose administrative sanction on the persons directly in charge or the other persons directly responsible. If the
offense constitutes a crime, criminal liability shall be pursued according to law.

Article 48

If a staff member of the foreign debt regulatory department engages in malpractices for personal gain, abuses his power or neglect
his duty, the department for which he works shall impose an administrative sanction on him. If the offense constitutes a crime, the
offender shall be subject to criminal liabilities.

Chapter VI Supplementary Provisions

Article 49

Loans raised by domestic institutions from the Special Administrative Regions of Hongkong and Macau, and from the Region of Taiwain
and guaranty provided for them, shall be subject to administration with reference to the present Measures.

Article 50

Foreign debts regulatory departments shall, according to the present Measures, enact and perfect the relevant regulations for the
implementation of the present Measures.

Article 51

The present Measures shall be subject to interpretation of the State Development Planning Commission, Ministry of Finance, and State
Administration of Foreign Exchange.

Article 52

The present Measures shall enter into force as of March 1, 2003.