Circular of the State Administration of Foreign Exchange about Matters Regarding the Control of Foreign Exchange With Respect to Cross-border
Transportation of Cargos in Domestic Trade

Hui Fa [2007] No.21

The branches and foreign exchange departments of the State Administration of Foreign Exchange in all provinces, autonomous regions,
and municipalities directly under the Central Government, as well as the municipal branches of the State Administration of Foreign
Exchange in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo:

In order to implement the national strategic deployment of revitalizing Northeast old industrial bases and support the pilot work
of shipping the domestic trade cargos of Heilongjiang Province to the costal areas of Southeastern China by passing Russia, several
matters regarding the control of foreign exchange with respect to cross-border transportation of domestic trade cargos are hereby
notified as follows:

1.

In the case of any pilot work of shipping the domestic trade cargos of Heilongjiang Province to the costal areas of Southeastern China
by passing Russia, the transactions between trading enterprises shall be valuated and settled in RMB given that the customs manage
the said cargos under the surveillance method of cross-border transportation of domestic trade cargos (code: 9600).

2.

With respect to the domestic trade cargos that are transported outside the territory of China, the customs will not verify and release
the said cargos upon the verification and write-off form of export proceeds and the foreign exchange bureau will not handle the write-off
formalities for export proceeds due to the surveillance method that is one under which it is not necessary to adopt the verification
and write-off form of export proceeds.

3.

In case both the carrier and carrying ship are of Chinese nationality, the freight charges, insurance premiums and other relevant
charges shall be valuated and settled in RMB. With respect to the port charges, fuel costs and other transportation-related expenses
incurred to the carrier outside the territory of China, the carrier shall make foreign payments upon relevant vouchers and bills
through a bank under the current provisions on foreign exchange control.

4.

This Circular shall enter into force as of the promulgation date.

Appendix: Announcement No.5, 2007 of the General Administration of Customs of the People’s Republic of China (omitted)

State Administration of Foreign Exchange

April 16, 2007