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1999

CIRCULAR OF THE STATE COUNCIL TRANSMITTING THE VIEWS OF THE CIVIL AVIATION ADMINISTRATION OF CHINA ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

Category	CIVIL AVIATION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1993-01-12	Effective Date	1993-01-12

Circular of the State Council Transmitting the Views of the Civil Aviation Administration of China on Tightening Civil Aviation Safety Control

VIEWS ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

(January 12, 1993)

The State Council approves the “Views on Tightening Civil Aviation Safety
Control” of the Civil Aviation Administration of China and hereby transmits
the same to you for your implementation accordingly.
VIEWS ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

Since the reform and opening to the outside world, rapid development has
been seen in the air transport of our country. An average annual growth rate
of 20% in total turnover of transport was scored from 1980 to 1991, and in
1992 the growth rate reached 32%. As socio-economic development gives rise to
excessive demand on air transport, such demand cannot be satisfied despite
rapid growth of air transport. Under these circumstances, many regions and
departments in the country have been requesting to purchase or lease aircraft
or set up airlines/aviation companies on after another. Currently, there are
11 airlines directly affiliated to the Civil Aviation Administration of China
(CAAC) and 21 airlines/aviation companies not directly affiliated to CAAC,
making a total of 32 airlines/aviation companies in China engaged in air
transport or general aviation. In addition, 9 airlines/aviation companies are
under preparation and more than a dozen provinces and municipalities are
applying for such operation. By and large, the development of civil aviation
industry in our country is normal and its achievements are remarkable.
However, as the increase of airlines and aircraft has been too fast, the
contradiction of internal structural imbalance in the industry has been
further aggravated, bringing a great deal of problems for flight safety
control. During almost four months from July 31 to November 24, 1992 in
particular, five fatal accidents occurred one after another in civil aviation
operation, leaving 309 persons dead and 5 aircraft and helicopters scrapped.
It is unprecedented in the history of civil aviation of China that so many air
disasters occurred successively within such a short span with so many
casualties and irretrievable loss to the country and people’s life and
property. In compliance with the important instruction of the leading cadres
of the State Council to “take resolute measures to tighten the control of
airworthiness certificates and other safety measures so as to stop the
recurrence of similar accidents”, we bring forward the following views on
tightening civil aviation safety control on the basis of analysing the causes
of past accidents and the problems existing in safety control:

1.Firmly establish the idea of “safety first, prevention foremost”. Civil
aviation industry calls for very high demand on safety technique and safety
control; any negligence of safety will possibly result in serious consequences
and irremediable loss. It is therefore imperative to cherish high sense of
responsibility towards the country and the people, correctly handle the
relationship between safety and business operation, put safety at the first
place at any time, any post and any link, and conscientiously do a good job in
such fields as flight operation, aircraft maintenance, air traffic control,
meteorology, communication, transport service, security inspection, training
and airport supporting service so as to ensure safety. Beginning from 1993 an
annual overall investigation and assessment will be carried out jointly by the
National Safety Board and CAAC on the situation of airline flight safety and
inspection may be carried out from time to time. Those airlines unable to
ensure flight safety must launch a rectification or stop operation for
rectification.

2.CAAC shall, in the light of the socio-economic development of the
country and practical possibility, conscientiously formulate its development
plan and restructuring plan and lay stress on the construction of such
infrastructure as air traffic control, aircraft maintenance and airport
supporting services, and personnel training, especially the training of flight
personnel. All regions and departments shall build airports and purchase
aircraft and promote the steady and coordinated development of the civil
aviation industry of our country in accordance with the State’s industrial
policy highlighting infrastructure and the requirement of civil aviation plan.

3.The applications for establishing airlines/aviation companies shall be
submitted for approval strictly in accordance with prescribed conditions,
procedures and standards, and no other department shall go beyond its
authority to give such approval. No consideration shall be given to places and
units not qualified for establishing airlines/aviation companies. Without the
approval pursuant to State regulations, no unit shall perform civil air
transport and general aviation operations. The administration for industry and
commerce shall not register a civil aviation enterprise which operates air
transport and general aviation without going through lawful formalities of
approval, and CAAC shall order such enterprise to stop operation.

4.Aviation manufacturing industry, aircraft maintenance industry,
airports and aviation schools should not establish air transport enterprises
individually or in partnership. Those already established should close down
within six months; for those established by the aforementioned units jointly
with other units, the former shall have its assets withdrawn or transferred.
The transfer of assets concerned shall be handled through consultation between
such units and the civil aviation department.

5.Major efforts should be devoted to stepping up maintenance work. In the
light of their different situations, aircraft maintenance enterprises should
be investigated one by one and their problems be duly solved, and competent
cadres be selected to reinforce their leadership. Determination should be made
to remove hidden troubles to flight safety caused by lagging maintenance work.

6.Aircraft and helicopters not possessing airworthiness certificates and
pilots not possessing pilot licenses, both issued by CAAC, should not be
engaged in civil aviation flight operation; civil aviation enterprises
approved by CAAC should not operate beyond the scope of business prescribed.
The purchase and leasing of civil aircraft and helicopters must go through
prescribed procedures of examination and approval. All regions and departments
should not import, for the purpose of operating air transport, civil aircraft
and helicopters which have not been type-certificated or
airworthiness-certificated by CAAC. All agreements concluded in violation of
the regulations shall be ineffective. The airwoththiness department of CAAC
shall carry out airworthiness check and assessment of ageing aircraft type by
type and aircraft by aircraft. Those not airworthy shall all be grounded and
retired from service.

7.In employing flight and ground personnel, all airlines aviation
companies should go through organizational contact and prescribed formalities.
For those employed without going through organizational formalities, CAAC
shall withdraw their pilot licenses and maintenance licenses.

8.The personnel of such units as airlines/aviation companies, airports and
air traffic control should base themselves upon civil aviation industry, do
their own jobs well with high sense of responsibility and not be engaged in
second professions.

9.All civil aviation departments should intensify safety control and
supervision, set up concentrated, unified safety control and supervision
systems, and carry out inspection and supervision over airlines/aviation
companies and flight supporting departments through a variety of effective
forms. Civil aviation enterprises should strictly observe the civil aviation
laws and regulations promulgated by the State Council, comply with the
regulations, standards and directives issued by CAAC, conscientiously submit
to the safety control of CAAC, accept its supervision and inspection, and
regularly report to CAAC and regional administrations its compliance with
rules and regulations in ensuring flight safety.

10.The reform of air traffic control system should be sped up. In the near
future stress should be laid on the reform of the delineation of tense
airspace, establishment of air routes and flight level allocation so as to
increase air traffic flow and ensure flight safety.

11.Civil aviation operations by military aircraft shall remain to be
performed in accordance with the “Interim Provisions on the Control of
Military Aircraft Engaged in Non-scheduled Civil Air Transport” (Guo Han
[1992] No.14), approved by the State Council and the Central Military
Commission, and the “Regulations of the State Council and the Central Military
Commission Repromulgated on the Use of Aircraft to Perform Various Specialized
Tasks (Guo Fa [1984] No.178). The military aircraft, helicopters and flight
crews engaged in civil air transport shall be examined and certificated by the
Air Force. With respect to the operation of civil aviation missions by the
military, the Air Force shall lay down effective measures, formulate the
method of control, strictly guarantee its fulfilment, be strict in examination
and certification, and strengthen the control over military aircraft and
helicopters performing civil aviation operations. Those unauthorized and not
up to the standard of airworthiness shall not be permitted to fly.

12.The formulation of “Air Law” and auxiliary laws and regulations should
be stepped up. The civil aviation activities in the whole country should be
standardized by means of law, so that the civil aviation industry of China
shall develop soundly along the track of legal system.

13.In case of major accident or serious damage caused by the violation of
rules and regulations by a unit or an individual, responsibility shall be
investigated and the case solemnly dealt with.

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON PUNISHMENT OF THE CRIMES OF PRODUCTION AND SALE OF FAKE OR SUBSTANDARD COMMODITIES

Category	CRIMINAL LAW	Organ of Promulgation	The Standing Committee of the National People’s Congress	Status of Effect	Invalidated
Date of Promulgation	1993-07-02	Effective Date	1993-09-01	Date of Invalidation	1997-10-01

Decision of the Standing Committee of the National People’s Congress on Punishment of the Crimes of Production and Sale of Fake or Substandard Commodities

(Adopted at the Second Meeting of the Standing Committee of
the Eighth National People’s Congress on July 2, 1993, promulgated
by Order No.7 of the President of the People’s Republic of China on
July 2, 1993 and effective as of September 1, 1993)(Editor’s Note: This
Decision has been invalidated by the Criminal Law of the People’s Republic
of China revised at the Fifth Session of the Eighth National People’s
Congress on March 14, 1997, and effective on October 1, 1997)

For the purpose of punishing the crimes of production and sale
of fake or substandard commodities, safeguarding human health and
the safety of person and property, protecting the lawful rights and
interests of users and consumers, and maintaining social and
economic order, the following supplementary provisions are made to
the Criminal Law:

1. Where a producer or seller mixes impurities or imitations
into a product, or passes a fake product off as a genuine one, or
passes a defective product off as a high-quality one, or passes a
substandard product off as a standard one, if the unlawful earnings
obtained therefrom amount to not less than 20,000 yuan but less
than 100,000 yuan, the offender shall be sentenced to fixed-term
imprisonment of not more than two years or criminal detention and
may concurrently be punished with a fine; or may be punished with
an administrative sanction if the circumstances are relatively
minor; if the unlawful earnings amount to not less than 100,000
yuan but less than 300,000 yuan, the offender shall be sentenced to
fixed-term imprisonment of not less than two years but less than
seven years with a concurrent punishment of fine; if the unlawfull
earnings amount to not less than 300,000 yuan but not more than one
million yuan, the offender shall be sentenced to fixed-term
imprisonment of not less than seven years with a concurrent
punishment of fine or confiscation of property; and if the
unlawfull earnings amount to not less than one million yuan, the
offender shall be sentenced to fixed-term imprisonment of fifteen
years or life imprisonment with a concurrent punishment of confiscation of property.

2. Anyone who produces or sells fake medicine definitely
harmful to human health shall be sentenced to fixed-term
imprisonment of not more than three years or criminal detention
with a concurrent punishment of fine; if the offence has caused
serious harm to human health, the offender shall be sentenced to
fixed-term imprisonment of not less than three years but not more
than ten years with a concurrent punishment of fine; if the offence
has caused death of a person or any other especially serious harm
to human health, the offender shall be sentenced to fixed-term
imprisonment of not less than ten years or life imprisonment or
death penalty with a concurrent punishment of fine or confiscation
of property.

Anyone who produces or sells medicine of inferior quality and
thereby has caused serious harm to human health shall be sentenced
to fixed-term imprisonment of not less than three years but not
more than ten years with a concurrent punishment of fine; if the
consequences are especially serious, the offender shall be
sentenced to fixed-term imprisonment of not less than ten years or
life imprisonment with a concurrent punishment of fine or
confiscation of property.

“Fake medicine” mentioned in this Article refers to a medicine
or a non-medical substance to be categorized as or handled as fake
medicine in accordance with the provisions of Pharmaceutical
Administration Law of the People’s Republic of China. “Medicine of inferior quality” mentioned in this Article refers to a medicine
to
be categorized as a medicine of inferior quality in accordance with
the provisions of Pharmaceutical Administration Law of the People’s
Republic of China.

3. Anyone who produces or sells food that does not conform to
hygiene standards and thereby results in a serious food-poisoning
accident or any serious disease caused by food-borne bacteria, thus
seriously harming human health, shall be sentenced to fixed-term
imprisonment of not more than seven years with a concurrent
punishment of fine; if the consequences are particularly serious,
the offender shall be sentenced to fixed-term imprisonment of not
less than seven years or life imprisonment with a concurrent
punishment of fine or confiscation of property.

Anyone who mixes the food be produces or sells with toxic or
harmful non-food stuffs shall be sentenced to fixed-term
imprisonment of not more than five years or criminal detention and
may concurrently or exclusively be punished with a fine; if the
offence results in a serious food-poisoning accident or any serious
disease caused by food-borne bacteria, thus seriously harming human
health, the offender shall be sentenced to fixed-term imprisonment
of not less than five years but not more than ten years with a
concurrent punishment of fine; and if the offence has caused death
of a person or any other particularly serious harm to human health,
the offender shall be sentenced to fixed-term imprisonment of not
less than ten years or life imprisonment or death penalty with a
concurrent punishment of fine or confiscation of property.

4. Anyone who produces medical appliances or medical hygiene
materials that do not conform to the national or trade standards
safeguarding human health or who sells such appliances or materials
while clearly knowing their inconformity to the national or trade
standards safeguarding human health, thereby seriously harming
human health, shall be sentenced to fixed-term imprisonment of not
more than five years with a concurrent punishment of fine; if the
consequences are particularly serious, the offender shall be
sentenced to fixed-term imprisonment of not less than five years
but not more than ten years with a concurrent punishment of fine;
if the circumstances are especially flagrant, the offender shall be
sentenced to fixed-term imprisonment of not less than ten years or
life imprisonment with a concurrent punishment of fine or
confiscation of property.

5. Anyone who produces electrical appliances, pressure
containers, explosive or inflammable products or any other products
that do not conform to the national or trade standards safeguarding
the safety of person or property or who sells such products while
clearly knowing their inconformity to the national or trade
standardssafeguarding the safety of person or property, thereby
causing serious consequences, shall be sentenced to fixed-term
imprisonment of not more than five years or criminal detention and
be concurrently punished with a fine; if the consequences are
particularly serious, the offender shall be sentenced to fixed-term
imprisonment of not less than five years with a concurrent
punishment of fine.

6. Anyone who produces fake pesticides, fake animal
pharmaceuticals or fake chemical fertilizers, or sells pesticides,
animal pharmaceuticals, chemical fertilizers or seeds while clearly
knowing that such products are fake or no longer effective, or any
producer or seller who passes substandard pesticides, animal
pharmaceuticals, chemical fertilizers or seeds off as those up to
standard and thereby causes considerable losses to production,
shall be sentenced to fixed-term imprisonment of not more than
three years or criminal detention and be concurrently or
exclusively punished with a fine; if the losses caused to
production are heavy, the offender shall be sentenced to fixed-term
imprisonment of not less than three years but not more than seven
years with a concurrent punishment of fine; if the losses are
especially great, the offender shall be sentenced to fixed-term
imprisonment of not less than seven years or life imprisonment with
a concurrent punishment of fine or confiscation of property.

7. Anyone who produces cosmetics that do not conform to the
hygiene standards, or sells cosmetics while clearly knowing its
inconformity with the hygienic standards and thereby cause serious
consequences, shall be sentenced to fixed-term imprisonment of not
more than three years or criminal detention, and may concurrently
or exclusively be punished with a fine.

8. Anyone who produces or sells products listed in Article 2
to Article 7 of this Decision, if the case does not constitute a
crime as stipulated in the respective Articles but involves an
unlawful earning of more than 20,000 yuan, shall be punished in
accordance with the provisions of Article 1 of this Decision.

Anyone who produces or sells products listed in Article 2 to
Article 7 of this Decision, if the case constitutes a crime as
stipulated in the respective Articles as well as a crime as
stipulated in Article 1 of this Decision, shall be punished in
accordance with the provisions demanding a heavier punishment.

9. Any enterprise or institution that commits a crime as
stipulated in Article 2 to Article 7 of this Decision shall be
punished with a fine, and the persons directly in charge and other
persons held directly responsible shall be investigated for their
criminal responsibility in accordance with the provisions of the
respective Articles.

Any enterprise or institution that commits a crime as
stipulated in Article 1 of this Decision shall be punished with a
fine, and if the circumstances are flagrant, the persons directly
in charge and other persons held directly responsible shall be
investigated for their criminal responsibility in accordance with
the provisions of Article 1 of this Decision.

10. Any State functionary who exploits his office to
intentionally shield an enterprise, institution or a person from
prosecution, while clearly knowing that it or he is guilty of a
crime stipulated in this Decision, shall be investigated for
criminal responsibility by applying mutatis mutandis the provisions
of Article 188 of the Criminal Law.

Any State functionary who is charged with the responsibility
of investigating an enterprise, institution or a person guilty of a crime listed in this Decision but fails to perform his duty as
stipulated by the law shall, in light of the different
circumstances, be investigated for criminal responsibility in
accordance with the provisions of Article 187 of the Criminal Law
or by applying mutatis mutandis the provisions of Article 188 of the Criminal Law.

Any State functionary, who by abusing his power or practising
jobbery, retaliates against or frame up a person who exposes or
denounces any crime listed in this Decision shall be investigated
for criminal responsibility in accordance with the provisions of Article 146 of the Criminal Law.

11. Whoever commits a crime as mentioned in any article of this Decision and is found to be a recidivist,
shall be given a
heavier punishment.

12. If a fine is sentenced in accordance with the provisions
of this Decision, the amount of the fine shall be not less than one
time but not more than five times of the unlawful earning.

Whoever commits a crime as mentioned in any article of this
Decision and thereby causes losses to the victims shall, besides
being investigated for criminal responsibility in accordance with
this Decision, be sentenced according to law to compensation for
the losses incurred in light of the circumstances.

Where a crime is committed as mentioned in any article of this
Decision, all his earning and property illegally obtained shall be
confiscated; Where a crime is committed as mentioned in Articles 2
to 7 of this Decision, the products illegally produced or marketed
as listed in these Articles shall be confiscated.

13. This Decision shall enter into force as of September 1,
1993.

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON PRINTING AND DISTRIBUTING ANNOTATIONS ON BUSINESS TAX CATEGORY (TRIAL IMPLEMENTATION)

The State Administration of Taxation

Circular of the State Administration of Taxation on Printing and Distributing “Annotations on Business Tax Category (Trial Implementation)”

GuoShuiFa [1993] No.149

December 27,1993

“Annotations on Business Tax Category “(Trial Implementation) is now printing and issuing to you, and shall enter into force as of
January 1, 1994. “Annotations on Business Tax Category “(Trial Implementation) promulgated by the Ministry of Finance on March 21,
1986 is repealed simultaneously.

Attachment:Annotations on Business Tax Category (Trial Implementation)

Communications and Transportation

The communications and transportation industry refers to the business activity of using means of transportation or manpower and animal
power to carry cargoes or passengers to the destination, so as to shift the position of space.

The levying scope of this tax item includes: land, water, air and pipeline transportation, loading and unloading transportation.

Various labor service activities related to transportation business all come under the levying scope of this tax category.

(I)

Land Transportation

Land transportation refers to the transport business for transporting cargoes or passengers through land (above or under ground),
including railway, highway, cable car, cableway transportation, as well as other land transportation.

(II)

Water Transportation

Water transportation refers to the transportation business of carrying cargoes or passengers through rivers, lakes and streams and
other natural and artificial water courses or sea lanes.

Tax shall be levied on salvage in light of water transportation.

(III)

Air Transportation

Air transportation refers to the transportation business of carrying cargoes or passengers through air routes.

Tax shall be levied on general air service and air-ground service business in light of air transport. General air service refers to
the business of providing flying services for specialized work, such as air photography, aerial survey, air exploration, air forest
range, air suspended sowing and air precipitation.

Air-ground service business refers to the business of providing labor service ground services including navigation by air liners,
airports, civil aviation administrative bureaus and air stations to Chinese and foreign airplanes or other air vehicles which navigate
within China or land in airports within China.

(IV)

Pipeline Transportation

Pipeline transportation refers to the transport business of delivering gas, liquid and solid materials through pipeline facilities.

(V)

Loading-Unloading Transportation

Loading-unloading transportation refers to the business of loading, unloading and transporting cargoes between means of transportation,
between the loading-unloading spots or between the means of transportation and the loading-unloading spots by the use of means of
loading, unloading or manpower and animal power.

II.

Building Industry

The building industry refers to construction and installation engineering operations.

The levying scope of this tax item includes construction, installation, repair, decoration and other engineering operations.

(I)

Construction

Construction refers to the engineering operation of building new, reconstructing, expanding various buildings and structures, including
the engineering operation of installation or decoration of various types of equipment or pillars and operating platforms connected
to the structures, as well as the engineering operation of various kilns and metal structures.

(II)

Installation

Installation refers to the engineering business of the assembly and arrangement of production equipment, power equipment, hoisting
equipment, transport equipment, transmitting equipment, medical and lab equipment, as well as various other kinds of equipment, including
the engineering operation of setting up operating platforms, ladders, balustrades connected to the equipment and engineer operation
of insulation, anti-corrosion, heat preservation and paint for the installation of equipment.

(III)

Repair

Repair refers to the engineering operation of repairing, reinforcing, maintaining and improving the building and structures, so as
to restore their original use value or extend the service period.

(IV)

Decoration

Decoration refers to the engineer operation of decorating the buildings and structures, so that they will look more beautiful or have
a particular purpose.

(V)

Other Engineering Operations

Other engineering operations refer to various engineering operations other than the engineering operations mentioned above, such as
the engineering operations of handling on a commission basis telecommunication projects, water conservancy projects, reconstructing
roads, dredging, drilling wells (sinking wells), demolishing buildings or structures, levelling land, putting up scaffold and dynamiting.

III.

Financial Insurance Business

Financial insurance business means the operation of finance and insurance business.

The levying scope of this tax item include finance and insurance.

(I)

Finance

Finance refers to the operation of the business of monetary funds accommodation activity, including loans, financial leasing, the
transfer of financial commodities, financial brokerage and other financial businesses.

Loan refers to the business of lending money to others for use, including loans lent with funds at one’s own disposal and emending.

Loans lent with money at one’s own disposal means lending money in one’s own hand or savings deposits absorbed from units or individuals
to others for use.

Emending means extending loans with borrowed funds to others for use.

Tax is levied in light of loans extended with funds at one’s own disposal on the mortgage loan business of pawnbroking irrespective
of the source of funds.

No tax is levied on the loan business of the People’s Bank.

Financial leasing refers to the equipment leasing business with the financial nature and the characteristics of the shift of ownership.
I.e., the lessor leases the purchased equipment to the lessee in accordance with the specifications, types, performance and other
conditions required by the lessee. Ownership of the equipment within the contracted period belongs to the lessor, the lessee possesses
only use right. After paying off rental upon expiration of the contract, the lessee has the right to purchase the equipment in light
of the scrap value in order to possess ownership of the equipment. Tax is levied according to this tax item on financial leasing
no matter whether or not the lessor sells the equipment at scrap value to the lessee.

The transfer of financial commodities refers to the behavior of ownership of transferring foreign exchange, negotiable securities
or non-goods futures.

Non-goods futures refers to futures outside commodity futures and rare metal futures, such as foreign exchange futures.

Financial brokerage means the business wherein one is entrusted with the task of engaging in financial activities.

Other financial businesses refer to various financial businesses other than the businesses listed above, such as bank settlement and
bill discount. No tax is levied on savings deposits or the behavior of purchasing financial commodities.

(II)

Insurance

Insurance means the business of using the funds pooled in the form of contract to compensate for the economic benefits of the insurant.

IV.

Postal and Telecommunications Service

Postal and telecommunications service refers to the business of specially handling information transmission. The levying scope of
this tax item includes posts and telecommunications.

(I)

Postal Service

Postal service refers to the business of delivering object information, including the delivery of letters or parcels, postal order,
the distribution of newspapers and magazines, the sales of postal articles, postal savings as well as other postal business.

The delivery of letters or parcels refers to the business of delivering letters or parcels as well as business related to the delivery
of letters or parcels.

The delivery of letters refers to the business of receiving and sending letters, postcards, and printed matters.

The delivery of parcels refers to the business of receiving and sending parcels.

Business related to the delivery of letters or parcels refers to the business of leasing letter boxes, handling imported letters or
parcels, keeping overdue parcels, incidental goods-carrying and other businesses related to the delivery of letters or parcels.

Postal order refers to the business of delivering remittance and the exchange for the remitter.

The distribution of newspapers and magazines refers to the business of the postal departments receiving subscription, delivering and
selling various newspapers and magazines for the publishing units.

The sales of postal articles refers to the business of the postal department which, while providing postal services, incidentally
sells various articles related to postal business (such as envelops, letter paper, money order and parcel wrappers)

Postal savings deposits refers to the business of savings deposits handled by postal departments.

Other postal businesses refer to the various postal businesses other than the businesses listed above.

(II)

Telecommunications Service

Telecommunications service refers to the business of using telex equipment to transmit electrical signals so as to deliver information,
including telegraph, telex, telephone, telephone installation, the sale of telecommunications articles and other telecommunication
businesses.

Telegraph refers to the telecommunications business of using electrical signals to transmit written language matters and related business,
including transmitting telegraphs, leasing telegraph and electric circuit equipment, repairing telegraph and electric circuit equipment
as well as sending and translating telegraphs, checking the sent-out telegraph original on file or the receipt of the sent-in telegraph,
copying the original of the sent-out telegraph.

Telex (fax) refers to the communications business of delivering the original copy through telex equipment, including delivering materials,
graphic, photos and authentic work.

Telephone refers to the business of using telex equipment to transmit words and related business, including wire and wireless telephone,
the paging system, leasing telephone and electric circuit equipment, repairing or leasing broadcasting circuits and TV channels.

Telephone installation refers to the business of installing or telephones for the subscribers.

The sales of telecommunications articles refers to the business of incidentally selling special and general telecommunications articles
(such as telegraph paper, telephone directory, telegraph signing book, telecommunications equipment and telephone) in addition to
providing telecommunication service.

Other telecommunications businesses refer to telecommunications businesses other than those listed above.

Cultural and Sports Undertakings

Cultural and sports undertakings refer to the business of engaging in cultural and sports activities.

The levying scope of this tax item includes the undertakings of culture and sports.

(I)

Cultural undertaking

Cultural undertaking refers to the business of engaging in cultural business, including performances, broadcasting on television,
other cultural undertakings.

Tax is levied on the business of operating sightseeing places in light of the cultural undertaking.

Performances refer to the business of performing activities such as drama, songs and dances, fashion show, aerobics exercise, acrobatics,
folk arts, wushu (martial art) and physical culture.

Broadcast on television refers to the business of transmitting works through wire or wireless device such as broadcasting stations,
television stations, sound system, close-circuit television, satellite communications as well as projecting various programs at cinemas,
theatres, picture recording halls and other sites.

Tax is not levied on advertising broadcast on television in light of this tax category.

Other cultural undertakings refer to the business of engaging in cultural activities other than those listed above, such as various
exhibitions, training activities, the holding of forums on literature, arts, science and technology, giving speeches, public lectures,
the borrowing of books and reference materials from libraries.

The business of operating sightseeing places refers to parks, zoos, botanies as well as other businesses of selling entrance tickets
for various sightseeing sites.

(II)

Sports Undertaking

Sports undertaking refers to the business of holding various sports competitions and providing sites for sports competitions or sport
activities.

Tax is not levied in light of this tax category on the provision of sites for cultural activities and sport competitions in a leasing
form.

VI.

Recreational Undertaking

Recreational undertaking refers to the business of providing sites and services for recreational activities.

The levying scope of this tax item includes: the business of operating song-performing halls, dance halls, karaoke song and dance
halls, music saloon, billiard, golf course and bowling alleys, and amusement parks, as well as the business of recreational centers
providing services for customers’ recreational activities.

(I)

Song-performing halls

Song-performing halls refer to the place where customers performing singing activities with music accompaniment for self-amusement.

(II)

Dance halls

Dance halls refer to providing sites for customers’ dancing activities.

(III)

Karaoke song and dance halls

Karaoke song and dance halls refer to sites where customers engage in song and dance activities for self-amusement under music accompaniment
broadcast by audio and video equipment.

(IV)

Music saloon

Music saloon refers to places which provide customers with music appreciation, tea, coffee, wine and other drinks.

(V)

Billiard, golf course and bowling alley

Billiard, golf course and bowling alley refer to sites where customers engage in billiard, golf and bowling activities.

(VI)

Amusement

Amusement park refers to the place for holding various amusement and recreational activities (such as archery, hunting, horse race
and video games).

The catering service as well as various other services provided by the recreational centers listed above for the customers to engage
in recreational activities all come under the levying scope of this tax item.

VII.

Service Trades

Service trades refer to the business of providing services for society by making use of the equipment, tools, sites, information or
techniques.

The levying scope of this tax item includes: factorage, hotel and catering trades, tourist industry, storehouse, lease, advertising
and other services.

(I)

Factorage

Factorage refers to the business of handling the entrusted matters for the consignor, including buying and selling goods and importing
and exporting on a commission basis, recommendation service and other agent services.

Buying and selling goods on a commission basis refers to the business of a person who is entrusted with buying or selling goods, settling
accounts and receiving service charge in accordance with the value of goods bought or sold.

Handling import and export on a commission basis refers to the business of a person being entrusted with importing and exporting commodities
or labor.

Recommendation service means the business in which the broker introduces both sides to trade talks or other affairs.

Other agency services refer to the business of being entrusted with handling affairs other than those listed above.

Tax is not levied in light of this tax item on financial brokerage, postal departments’ business of distributing newspapers and magazines.

(II)

Hotel Service

Hotel service refers to the business of providing boarding service.

(III)

Catering Trade

Catering trade refers to the business of providing customers with catering consumption service simultaneously while offering food
and places for eating.

Tax is levied in light of the tax item of recreational business on restaurants, dining halls and other catering service sites, simultaneously
at the time of dining, providing customers with service for them to engage in singing and dancing activities in the form of self-amusement.

(IV)

Tourist Industry

Tourist industry refers to the business of arranging boarding and means of communications for the tourists and providing them with
tourist guide and other tourist services.

(V)

Storage

Storage refers to the business of using warehouses, goods yards or other sites to deposit and keep goods for the passengers.

(VI)

Leasing Business

Leasing business means the business of transferring sites, houses, articles, equipment or installations to others for use within an
agreed period of time.

Tax is not levied in light of this tax item on financial leasing.

(VII)

Advertising Business

Advertising business refers to the business of recommending commodities, engaging in the publicity on service items, cultural and
sport programs or announcements and declarations and providing related services by means of books, newspapers, magazines, broadcast,
television, movie, lamp, billboard, showcase, neon light and lamp box.

(VIII)

Other Service Trades

Other service trades refer to service trades other than those listed above. These include bathing, hair dressing, washing and dyeing,
photo-taking, tine art, picture-mounting, copying out, typewriting, engraving, calculating, testing, experimenting, lab testing,
tape recording, video tape recording, duplicating, blue-printing, designing, charting, mapping, expiring, packaging and consulting.

Tax is not levied in light of this tax item on aerial surveying, well drilling (well sinking), prospecting and blasting prospecting.

VIII.

Tansfer of Intangible Assets

The transfer of intangible assets refers to the behavior of transferring the ownership and use right to intangible assets.

Intangible assets refer to the assets which are not in an object form, but can bring about economic benefits.

The levying scope of this tax item includes the transfer of land-use right, trademark right, patent right, non-patent technology,
copyright and goodwill.

(I)

Transfer of Land-Use Right

The transfer of land-use right raters to the behavior of a land-user who transfers the land-use right.

No business tax is levied on the behavior of the land-owner who sells the land-use right and on the land-user who returns the land-use
right to the land-owner.

Tax is not levied in light of this tax category on land-lease.

(II)

The transfer of trademark Right

The transfer of trademark right refers to the behavior of transferring the ownership or use-right of trademarks.

(III)

The Transfer of Patent Right

The transfer of patent right refers to the behavior of the ownership or use-right to patent technology.

(IV)

The Transfer of Non-Patent Technology

The transfer of non-patent technology refers to the behavior of transferring the ownership or use-right of non-patent technology.

Tax is not levied in light of this tax item on the behavior of providing technology without ownership.

(V)

Transfer of Copyright

The transfer of copyright refers to the behavior of transferring the ownership or use-right to works. Works include written works,
figure works (such as picture albums and photo albums) and audio video works (such as the master film and the master video tape).

(VI)

Transfer of Goodwill

The transfer of goodwill refers to the behavior of transferring the use- right of commercial reputation.

No business tax is levied on the behavior of using intangible assets to invest and buy shares participate in receiving the investor’s
profit distribution and jointly share investment risks. But tax is levied in light of this tax item on the transfer of the stock
right.

IX.

Marketing of Immovable Property

The marketing of immovable property refers to the behavior of transferring ownership to the immovable property with compensation.

Immovable property refers to property that cannot be moved or moving will entail changes in nature and shape.

The levying scope of this tax item includes: the sales of buildings or structures and other land attachments.

(I)

Sales of Buildings or Structures

The sales of buildings or structures refers to the behavior of transferring ownership of buildings or structures with compensation.
Marketing buildings in the form of transferring limited property right or permanent use-right is regarded as selling buildings.

(II)

Sales of Other land Attachments

Selling other land attachments means the behavior of transferring the ownership of other land attachments with compensation.

Other land attachments refer to the immovable properties attached to the land other than buildings or structures.

Granting immovable property by a work unit to others is regarded as selling immovable property.

Tax is levied in light of selling immovable property on the behavior of selling immovable property together with the transfer of the
use-right of land occupied by the immovable property.

No business tax is levied on the behavior of using immovable property to invest and buy shares, participate in receiving the investor’s
profit distribution and jointly share investment risks. But tax is levied in light of this tax item on the transfer of the stock
right.

Tax is not levied in light of this tax item on immovable property leasing.

The State Administration of Taxation
1993-12-27

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON THE PROTECTION OF CONSUMER RIGHTS AND INTERESTS

The Standing Committee of the National People’s Congress

Order of the President of the People’s Republic of China

No.11

The Law of the People’s Republic of China on the Protection of Consumer Rights and Interests, adopted at the Fourth Meeting of the
Standing Committtee of the Eighth National People’s Congress on October 31, 1993, is promulgated now, and shall enter into force
as of January 1, 1994.

President of the People’s Republic of China: Jiang Zemin

October 31, 1993

Law of the People’s Republic of China on the Protection of Consumer Rights and Interests ContentsChapter I General Provisions

Chapter II Rights of Consumers

Chapter III Obligations of Businees Operators

Chapter IV Protection of the Legitimate Rights and Interests of Consumers by the State

Chapter V Consumer Organizations

Chapter VI Settlement of Disputes

Chapter VII Legal Responsibility

Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1

The present Law is formulated for the protection of the legitimate rights and interests of consumers, maintenance of the socio-economic
order and promotion of the healthy development of socialist market economy.

Article 2

The rights and interests of consumers in purchasing and using commodities or receiving services for daily consumption shall be under
the protection of the present Law, or under the protection of other relevant laws and regulations in absence of stipulations in this
Law.

Article 3

Business operators shall, in their supply of commodities produced and sold by them or services to consumers, abide by the present
Law, or abide by other relevant laws and regulations in absence of stipulations in the present law.

Article 4

In transactions between business operators and consumers a principle of voluntariness, equality, fairness, honesty and credibility
shall be followed.

Article 5

The State shall protect the legitimate rights and interests of consumers from infringement.

The State shall adopt measures to safeguard consumers’ exercise of their rights in accordance with the law and to maintain the legitimate
rights and interests of consumers.

Article 6

It is the common responsibility of the whole society to protect the legitimate rights and interests of consumers.

The State shall encourage and support all organizations and individuals to exercise social supervision over acts infringing upon consumer
rights and interests.

Mass media shall conduct propaganda defending the legitimate rights and interests of consumers and, through public opinion, exercise
supervision over acts infringing upon the legitimate rights and interests of consumers.

Chapter II Rights of Consumers

Article 7

Consumers shall, in their purchasing and using commodities or receiving services, enjoy the right of the inviolability of their personal
and property safety.

Consumers shall have the right to demand business operators to supply commodities and services up to the requirements of personal
and property safety.

Article 8

Consumers shall enjoy the right to obtain true information of the commodities they purchase and use or the services they receive.

Consumers shall have the right to demand business operators, in light of the different conditions of commodities or services, to provide
their prices, origin, manufacturers, usage, functions, standards, grades, main ingredients, date of production, term of validity,
certificates of inspection, operation instructions, aftersale services or information relating to contents, standards and costs of
the services.

Article 9

Consumers shall enjoy the right of free choice of commodities or services.

Consumers shall have the right to make a free choice of business operators for supply of commodities or services, select freely among
varieties of articles or forms of services and decide independently to buy or not to buy any kind of commodities, or to accept or
not to accept any item of services.

Consumers shall have the right to make comparisons, differentiations and selections when they make a free choice of commodities or
services.

Article 10

Consumers shall enjoy the right of fair deal.

Consumers shall, in their purchasing commodities or receiving services, have the right to obtain fair deal prerequisites such as guarantee
of quality, reasonable prices and correct measurement, and have the right to refuse any compulsory transaction of business operators.

Article 11

Consumers suffering from personal injury or property damage resulting from their purchasing or using of commodities or receiving of
services shall have the right to demand compensations in accordance with the law.

Article 12

Consumers shall have the right to form public organizations for the maintenance of their own legitimate rights and interests according
to law.

Article 13

Consumers shall have the right to acquire knowledge concerning consumption and protection of consumer rights and interests.

Consumers shall make efforts to master the knowledge of their necessary commodities or services and the skill in operation thereof,
apply the commodities in a correct way and raise their consciousness of self-protection.

Article 14

Consumers shall, in their purchasing and using commodities or receiving services, have the right that their human dignity, national
customs and habits are respected.

Article 15

Consumers shall have the right to exercise supervision over commodities, services as well as the work of protection of consumer rights
and interests.

Consumers shall have the right to inform and charge against the infringement upon consumer rights and interests and the breach of
law or neglect of duty on the part of State organs and their functionaries in the work of protection of consumer rights and interests,
and have the right to raise criticism of or proposals for the work of protection of consumer rights and interests.

Chapter III Obligations of Businees Operators

Article 16

Business operators shall, in their supply of commodities and services to consumers, fulfill their obligations stipulated in the Law
of the People’s Republic of China on Product Quality and other laws and regulations concerned.

In case an agreement is reached between business operators and consumers, the business operators shall fulfill the obligations agreed
upon in the agreement; but the agreement between the two parties shall not contravene the provisions of laws and regulations.

Article 17

Business operators shall listen to the consumers’ opinions on the commodities and services they supply and accept consumers’ supervision.

Article 18

Business operators shall guarantee that the commodities and services they supply meet the requirements for personal or property safety.
As to commodities and services liable to harm personal or property safety, business operators shall give the consumers truthful explanation
and clear out warnings, and shall explain or indicate the correct ways of using the commodities or receiving services as well as
the methods of preventing damage.

Business operators shall, upon discovery of serious defects of the commodities or services they supply which are liable to harm personal
or property safety even though the commodities are correctly applied or services are received in a correct way, immediately report
to the administrative departments concerned and inform the consumers, and adopt measures to prevent damage.

Article 19

Business operators shall provide consumers with authentic information concerning their commodities or services, and may not make any
false and misleading propaganda.

Business operators shall give truthful and definite replies to inquiries from consumers about the qualities of the commodities or
services they supply and the operation methods thereof.

Shops shall mark clearly the prices of the commodities they supply.

Article 20

Business operators shall indicate their real names and marks.

Business operators who lease counters or grounds from others shall indicate their own real names and marks.

Article 21

Business operators who supply commodities or services shall make out for consumers invoices for purchases or documents of services
in accordance with relevant regulations of the State or commercial practices; business operators must produce such invoices or documents
in case consumers so demand.

Article 22

Business operators shall guarantee the quality, functions, usage and term of validity which the commodities or services they supply
should possess under normal operation or acceptance, except that consumers are aware of the defects before they buy the commodities
or receive the services.

Business operators who employ advertisements, product instructions, samples or other ways to display the quality state of their commodities
or services shall guarantee that the actual quality of the commodities or services they supply is in conformity with that demonstrated.

Article 23

Business operators who are under the obligation of repair or caveat venditor, or other responsibilities in accordance with regulations
of the State or agreements with consumers shall carry out such obligations correspondingly according to such regulations or agreements,
and may not delay deliberately or refuse unreasonably to do so.

Article 24

Business operators may not, through format contracts, notices, announcements, entrance hall bulletins and so on, impose unfair or
unreasonable rules on consumers or reduce or escape their civil liability for their infringement of the legitimate rights and interests
of consumers.

Format contracts, notices, announcements, entrance hall bulletins and so on with contents mentioned in the preceding paragraph shall
be invalid.

Article 25

Business operators may not insult or slander consumers, may not search the body of consumers or the articles they carry with them,
and may not violate the personal freedom of consumers.

Chapter IV Protection of the Legitimate Rights and Interests of Consumers by the State

Article 26

The State shall heed to the opinions and demands from consumers when making laws, regulations and policies concerning consumer rights
and interests.

Article 27

People’s governments at various levels shall strengthen their leadership, and organize, coordinate and supervise the administrative
departments concerned to do their work well in the protection of the legitimate rights and interests of consumers.

People’s governments at various levels shall strengthen supervision to prevent occurrence of acts damaging to the personal or property
safety of consumers and promptly check any such acts.

Article 28

Departments for industry and commerce of people’s governments at various levels and other administrative departments concerned shall
adopt measures to protect the legitimate rights and interests of consumers within the scope of their respective functions and duties
in accordance with the provisions of the laws and regulations.

Administrative departments concerned shall listen to the complaints of consumers and their public organizations as to the transactions
of business operators and the quality of their commodities and services, and carry out timely investigation and disposition.

Article 29

State organs concerned shall, in accordance with the provisions of laws and regulations, punish any law-breaking or criminial activities
of business operators infringing upon the legitimate rights and interests of consumers in their supplying commodities or services.

Article 30

The people’s courts shall adopt measures to facilitate consumers to take legal proceedings and must entertain and handle without delay
cases of disputes over consumer rights and interests that meet the conditions for a lawsuit specified in the Civil Procedure Law
of the People’s Republic of China.

Chapter V Consumer Organizations

Article 31

Consumer associations and other consumer organizations are public organizations formed according to law to exercise social supervision
over commodities and services and to protect the legitimate rights and interests of consumers.

Article 32

Consumer associations shall perform the following functions:

(1)

to afford consumption information and consultative services to consumers;

(2)

to participate in supervision over or inspection of commodities and services conducted by relevant administrative departments;

(3)

to make reports, inquiries and suggestions to relevant administrative departments about issues relating to the legitimate rights and
interests of consumers;

(4)

to accept and hear complaints of consumers and offer investigations and mediations with respect to points of complaints;

(5)

in case quality of commodities or services is involved, to submit for appraisement the points of complaints to appraisal departments
which shall inform them of the expert conclusions;

(6)

to render support to victims in their legal proceedings against infringement upon the rights and interests of consumers;

(7)

to expose and criticize through mass media the acts infringing upon the legitimate rights and interests of consumers.

People’s governments at various levels shall give support to consumer associations in the performance of their functions.

Article 33

Consumer organizations may not be engaged in commodity transactions or profit-making services, and may not recommend to the society
commodities or services for the purpose of making profits.

Chapter VI Settlement of Disputes

Article 34

In case of disputes with business operators over consumer rights and interests, consumers may settle the disputes through the following
approaches:

(1)

to consult and conciliate with business operators;

(2)

to request to consumer associations for mediation;

(3)

to appeal to relevant administrative departments;

(4)

to apply to arbitral organs for arbitration according to the arbitral agreements with business operators;

(5)

to institute legal proceedings in the people’s court.

Article 35

Consumers whose legitimate rights and interests are infinged upon in their purchasing or using commodities may demand compensation
from the sellers concerned. In case the liability is on the manufacturers or other sellers who supply the commodities to the said
sellers, the said sellers shall, after paying the compensations, have the right to recover the compensations from the manufacturers
or the other sellers.

Consumers or other victims suffering personal injuries or property damage resulting from defects of commodities may demand compensations
either from the sellers or from the manufacturers. If the liability is on the manufacturers, the sellers shall, after paying the
compensations, have the right to recover the compensations from the manufacturers; if the liability is on the sellers, the manufacturers
shall, after paying the compensations, have the right to recover the compensations from the sellers.

Consumers whose legitimate rights and interests are infringed upon in receiving services may demand compensations from suppliers of
the services.

Article 36

Consumers whose legitimate rights and interests are infringed upon in purchasing or using commodities or receiving services may, if
the enterprises supplying the commodities or services have been split-up or merged, demand compensations from the enterprises succeeding
to the rights and obligations of the original ones after the modifications.

Article 37

In case a business operator unlawfully uses another’s business license to supply commodities or services and infringes upon the legitimate
rights and interests of consumers, the consumers may demand compensations either from such business operator or from the holder of
the business licence.

Article 38

Consumers whose legitimate rights and interests are infringed upon in purchasing commodities or receiving services at trade fairs
or leased counters may demand compensations from the sellers or suppliers of the services. In case the fairs are over or the lease
of counters expires, they may also demand compensations from organizers of the fairs or lessors of the counters. Organizers of the
fairs and lessors of the counters shall, after paying the compensations, have the right to recover the compensations from the sellers
or suppliers of the services.

Article 39

Consumers whose legitimate rights and interests are infringed upon on account of commodities or services supplied by business operators
by means of false advertisement may demand compensations from the business operators. Consumers may demand the competent administrative
departments to punish the advertising agents who make false advertisements. Advertising agents who cannot provide the real names
and addresses of the business operators shall bear the responsibility for compensations.

Chapter VII Legal Responsibility

Article 40

Business operators shall, if the commodities and services they supply involve any of the following circumstances, bear civil liability
in accordance with the provisions of the Law of the People’s Republic of China on Product Quality and other relevant laws and regulations,
except as otherwise provided in the present Law:

(1)

there existing defects in the commodities;

(2)

not possessing the properties for use they should possess and no declaration thereabout is made at the time of sale;

(3)

not conforming to the standards indicated on the commodities or on the packaging thereof;

(4)

not conforming to the quality indicated by the product description or by physical samples;

(5)

producing commodities that have been formally declared by the State to be sbsolete or selling commodities that are no longer effective
or deteriorated;

(6)

commodities sold being short of weight or quantity;

(7)

contents and costs of services being not in conformity with the agreements;

(8)

deliberately delaying or unreasonably refusing consumers’ requests for repair, remanufacture, replacement, return of goods, makeup
for the short commodity, return of payment for goods or services, or compensation for losses;

(9)

other circumstances infringing upon consumer rights and interests as specified by laws and regulations.

Article 41

Business operators shall, if the commodities or services they supply have caused personal injuries to consumers or other victims,
pay for the victims’ medical expenses, nursing expenses during medical treatment, the reduced income for loss of working time and
other expenses. And business operators shall, if the commodities or services they supply have disabled the consumers, also pay for
the victims’ expenses on self-help devices, living allowances, compensations for disability and the necessary living cost of the
persons supported by the disabled. Business operators shall, if the case constitutes a crime, be investigated for criminal responsibility
according to law.

Article 42

Business operators shall, if the commodities or services they supply have caused death of consumers or other victims, pay for the
victims’ funeral expenses, compensations for death and the necessary living cost of the persons supported by the deceased during
their lifetime. Business operators shall, if the case constitutes a crime, be investigated for criminal responsibility according
to law.

Article 43

Business operators who violate the provisions of Article 25 of the present Law and violate the human dignity or personal freedom
of consumers shall stop the violations, restore consumers’ reputation, eliminate the bad effects, make apologies, and make compensations
therefor.

Article 44

Business operators shall, if the commodities or services they supply have caused damage to the properties of consumers, bear civil
liabilities by repair, remanufacture, replacement, return of goods, make-up for the short commodity, return of payment for goods
and services, or compensation for losses and so on as demanded by consumers. If consumers and business operators have otherwise agreed
upon, such agreements shall be fulfilled.

Article 45

Business operators shall be responsible for repair, replacement or return of goods, if repair, replacement or return of goods is guaranteed
by provisions of the State or agreed upon between business operators and consumers. Business operators shall be responsible for replacement
or return of goods if the commodities still malfunction after being repaired twice within the term of guaranteed repair.

As to large-sized commodities guaranteed for repair, replacement or return, business operators shall bear the reasonable costs such
as expenses for carriage if consumers demand repair, replacement or return.

Article 46

Business operators who supply commodities by mail-order shall provide their commodities according to the agreements. Business operators
who fail to provide their commodities according to the agreements shall fulfil the agreements or return the consumers’ payment for
the commodities on the demand of the consumers, and bear the reasonable expenses that the consumers must bear.

Article 47

Business operators who supply commodities or services in the form of advance payment shall provide their commodities or services according
to the agreements. Business operators who fail to provide their commodities or services according to the agreements shall fulfil
the agreements or return the advance payment on the demand of the consumers, and shall also bear the interests of the advance payment
and other necessary expenses that the consumers must bear.

Article 48

Business operators shall, on the demand of the consumers, be responsible for return of goods determined to be substandard commodities
by administrative departments concerned according to law.

Article 49

Business operators engaged in fraudulent activities in supplying commodities or services shall, on the demand of the consumers, increase
the compensations for victims’ losses; the increased amount of the compensations shall be two times the costs that the consumers
paid for the commodities purchased or services received.

Article 50

If business operators are under any of the following circumstances and the Law of the People’s Republic of China on Product Quality
and other laws and regulations have provided for punitive organs and forms therefor, the provisions of the laws or regulations shall
be applied; in absence of such provisions in the laws or regulations, administrative departments for industry and commerce shall
order them to make corrections, and may, in light of the circumstances, punish the offenders exclusively or concurrently the offenders
with warning, confiscation of unlawful earings, or imposition of a fine no less than one time but not more than five times the value
of the unlawful earnings; in case there involves no unlawful earnings, the offenders shall be punished with a fine of 10,000 Yuan
or less, and if the circumstances are serious, they shall be ordered to suspend business for rectification, and their business licences
shall be revoked:

(1)

producing or selling commodities failing to meet the requirements for the protection of personal and property safety;

(2)

mixing adulterations into their commodities, or passing fake commodities off as genuine ones, or passing defective commodities off
as good ones, or passing substandard commodities off as standard ones;

(3)

producing commodities which have been formally declared by the State to be obsolete, or selling commodities no longer effective or
deteriorated;

(4)

forging the origin of commodities, forging or counterfeiting the names and addresses of other factories, and forging or counterfeiting
the authentication marks or famous-and-excellent-product marks;

(5)

selling commodities not inspected or quarantined against the requirement therefore, or forging the result of inspection or quarantine;

(6)

making false or misleading propaganda about their commodities or services;

(7)

deliberately delaying or unreasonably refusing consumers’ demand for repair, remanufacture, replacement, return of goods, make-up
for the short commodity, refundment of payment for goods or services, or compensations for losses;

(8)

violating human dignity or personal freedom of consumers;

(9)

other circumstances wherein punishment shall be given for infringement of consumer rights and interests as stipulated by laws or regulation..

Article 51

Any business operator who is not satisfied with the decision on punishment may apply to the organ at the next higher level for reconsideration
within 15 days from the date of receipt of the decision; and he who is still not satisfied with the reconsideration decision may
bring a lawsuit in the people’s court within 15 days from the date of receipt of the reconsideration decision; or he may take legal
proceedings directly in the people’s court.

Article 52

Anyone who, by means of violence or threats, hinders functionaries of the administrative departments concerned from performing their
duties according to law, shall be investigated for criminal responsibility according to law; and those who refuse or hinder functionaries
of the administrative departments concerned from performing their duties according to law, without resorting to violence or threats,
shall be punished by public security organs in accordance with the stipulations of the Regulations of the People’s Republic of China
on the Administrative Penalties for Public Security.

Article 53

Any functionary of the State organs, who neglects his duties or shields any business operator guilty of infringement of the legitimate
rights and interests of consumers, shall be given administrative sanctions by the unit he belongs to, or by an organ at a higher
level; if the circumstances are serious enough to constitute a crime, he shall be investigated for criminal responsibility according
to law.

Chapter VIII Supplementary Provisions

Article 54

The present Law shall be applicable mutatis mutandis to peasants’ purchase or application of means of production used directly in
agricultural production.

Article 55

The present Law shall enter into force as of January 1,1994.

The Standing Committee of the National People’s Congress
1993-10-31

LAW OF THE PEOPLES REPUBLIC OF CHINA ON THE POPULARIZATION OF AGRICULTURAL TECHNOLOGY

The Standing Committee of the National People’s Congress

Order of the President of the People’s Republic of China

No. 5

Law of the Peoples Republic of China on the Popularization of Agricultural Technology adopted by the second meeting of the Standing
Committee of the Eighth National People’s Congress of People’s Republic of China on July 2nd 1993, are hereby promulgated and shall
come into force as of the day of promulgation.

President of the People’s Republic of China, Jiang zemin

July 2nd 1993

Law of the Peoples Republic of China on the Popularization of Agricultural Technology ContentsChapter I General Provisions

Chapter II System of Agro-technical Popularization

Chapter III Popularization and Application of Agro-techniques

Chapter IV Safeguards for Agro-technical Popularization

Chapter V Supplementary Provisions

Chapter I General Provisions

Article 1

This Law is formulated with a view to strengthening the work of agro-technical popularization, enabling the prompt application of
results of agricultural scientific research and practical techniques to agricultural production, safeguarding the development of
agriculture and realizing the modernization of agriculture.

Article 2

Agro-techniques mentioned in this Law refer to the scientific research results and practical techniques to be applied to crop cultivation,
forestry, animal husbandry and fishery, including techniques of breeding good strains, applying fertilizers, preventing and controlling
plant diseases and insect pests, as well as plant cultivation and animal husbandry; techniques of processing, preserving, storing
and transporting products and by-products of agriculture; techniques of agricultural machinery and agricultural aviation; techniques
of irrigation and water conservancy, soil improvement and water and soil conservation; techniques of water supply and energy utilization
in rural areas and agricultural environmental protection; techniques of agricultural meteorology, and techniques of agricultural
management and administration.

Popularization of agricultural technology mentioned in this Law, refers to the dissemination and the application of agro-techniques
to the entire process of the pre-inter-post production of agricultural production by means of experiment, demonstration, training,
and consultation services.

Article 3

The State shall rely on the progress of science and technology and the development of education to invigorate the rural economy speed
up the popularization and application of agro-techniques and develop agriculture with high yield, good quality and high beneficial
results.

Article 4

The following principles shall be observed in the popularization of agricultural technology:

to be conductive to the development of agriculture;

to respect the will of agricultural labourers;

to adopt measures suitable to local conditions after experimentation and demonstration;

to be supported by the State and rural economic collectives;

to practise the combination of institutions of scientific research, relevant schools or colleges and popularization setups with mass
organizations of science and technology, scientific and technical personnel, and agricultural labourers;

to stress economic and social and ecological benefits of agricultural production.

Article 5

The State shall encourage and support scientific and technical personnel to develop, popularize and apply advanced agro-techniques;
encourage and support agricultural labourers and agricultural production and operation organizations to apply advanced agro-techniques.

Article 6

The State shall encourage and support the introduction of advanced agro-techniques from foreign countries and promote the international
cooperation and exchanges of agro-technical popularization.

Article 7

Peoples governments at various levels shall strengthen their leadership in the work of agro-technical popularization and organize
the relevant departments and units to take measures to promote the development of agro-technical popularization.

Article 8

The units or individuals that have made contributions to the work of agro-technical popularization shall be awarded.

Article 9

The administrative departments under the State Council in charge of agriculture, forestry, animal husbandry, fishery and water conservancy
(hereinafter referred to generally as the administrative departments of agro-technical popularization), shall be responsible for
the relevant work of agro-technical popularization in the whole country according to their respective functions and duties. The administrative
departments of agro-technical popularization of the local peoples governments at or above the county level shall, under the leadership
of the peoples governments at the corresponding levels, be responsible for the relevant work of agro-technical popularization within
their administrative areas according to their respective functions and duties. The administrative departments of science and technology
of peoples governments at the corresponding levels shall give guidance to the work of agro-technical popularization.

Chapter II System of Agro-technical Popularization

Article 10

In the process of agro-technical popularization, a popularization system of combining agro-technical popularization setups with institutions
of agricultural scientific research, relevant schools or colleges, mass organizations of science and technology, and peasant technical
personnel shall be practised.

The State shall encourage and support supply and marketing co- operatives, other enterprises and institutions, social organizations,
and scientific and technical personnel in all walks of life to carry out service activities of agro-technical popularization in rural
areas.

Article 11

The functions and duties of the agro-technical popularization setups at or above the township, nationality township and town levels
shall lie in:

participating in the working out of agro-technical popularization plans and organizing the implementation thereof;

organizing professional trainings of agro-techniques;

providing services of agro-technique and information;

carrying out experimentation and demonstration of agro-techniques already decided upon to be popularized; and

instructing agro-technical popularization activities of their subordinate agro-technical popularization setups, mass organizations
of science and technology and peasant technical personnel.

Article 12

Professional scientific and technical personnel of agro- technical popularization setups shall possess the relevant professional qualifications
at or above the secondary professional schooling, or reach corresponding professional and technical standards through the professional
examination and training sponsored by the relevant departments of the people’s governments at or above the county level.

Article 13

Agro-technical popularization service organizations of villages and peasant technical personnel shall, under the guidance of agro-technical
popularization setups, disseminate agro-technical knowledge, carry out measures of agro-technical popularization and provide agricultural
labourers with technical service.

In the popularization of agro-techniques, peasant households with proper conditions shall be selected to demonstrate the application.

The State shall take measures to train peasant technical personnel. Peasant technical personnel who meet relevant requirements after
examinations may accord relevant regulations be awarded with corresponding technical post_titles and certificates.

Villagers committees and village economic collectives shall promote and help agro-technical popularization service organizations and
peasant technical personnel of the villages to carry out their work.

Article 14

Farms, forest farms, animal farms and fishing grounds shall, besides doing a good job in their own work of agro-technical popularization,
unfold service activities of agro-technical popularization to the whole society.

Article 15

Institutions of agricultural scientific research and relevant schools or colleges shall adapt themselves to the needs of the development
of rural economic construction, carry out the work of agro- technical development and popularization, and speed up the dissemination
and application of advanced technology to agricultural production.

Educational departments shall develop professional technical education and agro-technical trainings relating to agro-technical popularization
in the countryside to improve the technical qualification of agro- technical popularization personnel and agricultural labourers.
The State shall encourage agricultural economic collectives, enterprises and institutions, and other social forces to develop agro-technical
education in the countryside.

As to the scientific and technological personnel of institutions of agricultural scientific research and relevant schools or colleges
who are engaged in the work of agro-technical popularization, the practical achievements they have made in the work of agro-technical
popularization shall be taken as major indicators for performance appraisal in determining and conferring academic and technical
post_titles.

Article 16

The State shall encourage and support the development of mass organizations of science and technology in the countryside, and bring
their role in agro-technical popularization into play.

Chapter III Popularization and Application of Agro-techniques

Article 17

Projects of agro-technical popularization shall be drawn up in popularizing agro-techniques. Key projects of agro-technical popularization
shall be included into national and local plans involving the development of science and technology, and be carried out with cooperation
by administrative departments of agro-technical popularization and of science and technology according to their respective functions
and duties.

Article 18

Institutions of agricultural scientific research and relevant schools or colleges shall take up technical problems which need to be
solved in agricultural production as their research subjects, and the results of their scientific research may be popularized by
agro- technical popularization setups or may be popularized directly to agricultural labourers and agricultural production and operation
organizations by such institutions of agricultural scientific research and such schools or colleges.

Article 19

The agro-techniques to be popularized to agricultural labourers must have been proved to be advanced and applicable by experiments
in the areas for popularization.

Anyone who popularizes to agricultural labourers agro-techniques which have not been proved to be advanced and applicable by experiments
in the areas for popularization and thus causes losses to agricultural labourers shall be liable for civil compensation. The competent
personnel in charge and other persons held directly responsible may be given administrative sanctions by the units they belong to
or organs at higher levels.

Article 20

Agricultural labourers shall apply agro-techniques on voluntary basis.

No organization or individual shall force agricultural labourers to apply agro-techniques. Anyone who forces agricultural labourers
to apply agro-techniques and thus causes losses to agricultural labourer shall be liable for civil compensation. The competent personnel
in charge and other persons held directly responsible may be given administrative sanctions by the units they belong to or organs
at higher levels.

Article 21

Agro-technical popularization setups at the county or township level shall organize agricultural labourers to study scientific and
technological knowledge of agriculture so as to raise their ability of applying agro-techniques.

When agricultural labourers apply advanced agro-techniques to their production, the departments and units concerned shall give assistance
to them in aspects of technical trainings, funds, materials and sales. The State shall encourage and support agricultural labourers
to participate in the activities of agro-technical popularization.

Article 22

Popularization of agro-techniques to agricultural labourers by national agro-technical popularization setups shall, except as otherwise
provided in the second paragraph of this Article, be carried out gratis.

Provision of agro-techniques through technical transfer, technical service and technical contract by agro-technical popularization
setups or institutions of agricultural scientific research, relevant schools or colleges or scientific and technological personnel,
may be carried out in the form of compensable service, and their lawful earnings shall be protected by law. In conducting agro-technical
transfer, technical service and technical contract, parties concerned shall conclude contracts to define their respective rights
and duties.

The funds needed to popularize agro-techniques by national agro- technical popularization setups shall be allocated by the financial
department of the Government.

Chapter IV Safeguards for Agro-technical Popularization

Article 23

The State shall gradually increase its input to agro- technical popularization. Peoples governments at various levels shall secure
the funds to be used for agro-technical popularization in their financial budgets and shall increase such funds year by year.

Peoples governments at various levels shall, through channels of financial allocation or drawing a fixed proportion of funds from
agricultural development funds, raise special funds for agro-technical popularization to carry out projects of agro-technical popularization.

No state organ or unit shall intercept or misappropriate funds to be used for agro-technical popularization.

Article 24

Peoples governments at various levels shall take measures to guarantee and improve the working and living conditions of the professional
scientific and technical personnel engaged in the work of agro-technical popularization, better their treatments and give subsidies
to them according to the provisions of the State so as to maintain the stability of agro-technical popularization setups and professional
scientific and technical personnel. In determining and conferring academic and technical post_titles of professional scientific and technical
personnel engaged in the work of agro-technical popularization in townships or villages, their professional technical levels and
achievements in the work of popularization shall be considered as major indicators for performance appraisal.

Article 25

Economic collectives of townships or villages shall draw a fixed portion from the funds owned by the enterprises established by them
for subsidizing and developing agriculture through development of industry to be used for the input to agro-technical popularization
in their own townships or villages.

Article 26

Agro-technical popularization setups, institutions of agricultural scientific research and the relevant schools or colleges may, according
to the need of economic development in rural areas, carry out various forms of management services such as combination of technical
guidance with material supply. And the State shall grant preferential treatment in respect of taxation, loan and credit to enterprises
in service of agriculture run by agro-technical popularization setups, institutions of agricultural scientific research and relevant
schools or colleges.

Article 27

Administrative departments of agro-technical popularization and agro-technical popularization setups at or above the county level
shall carry out in a planned way of technical trainings for agro-technical popularization personnel and organize them to obtain professional
studies so as to update their knowledge and enhance their vocational level.

Article 28

Local peoples governments at various levels shall take measures to guarantee that agro-technical popularization setups obtain essential
experimental bases and means of production to carry out experiments and demonstrations of agro-techniques.

Local peoples governments at various levels shall guarantee that agro- technical popularization setups have necessary conditions for
carrying out work of agro-technical popularization.

Local peoples governments at various levels shall guarantee that the experimental bases, means of production and other properties
of agro- technical popularization setups be free from encroachment.

Chapter V Supplementary Provisions

Article 29

The State Council shall, in accordance with this Law, formulate rules for implementation.

The standing committees of the peoples congresses of provinces, autonomous regions and municipalities directly under the Central Government
shall, in accordance with this Law and in the light of their local conditions, formulate measures for the implementation of this
Law.

Article 30

This Law shall enter into force as of the date of its promulgation.

The Standing Committee of the National People’s Congress
1993-07-02

AUDITING MEASURES FOR CHINESE-FOREIGN EQUITY AND CONTRACTUAL JOINT VENTURES

The State Auditing Administration

Auditing Measures for Chinese-foreign Equity and Contractual Joint Ventures

the State Auditing Administration

January 12,1993

Article 1

These Measures are formulated according to the “Auditing Regulations of the People’s Republic of China” to safeguard the value and
accretion of State assets, enforce the State’s financial and economic laws and regulations, strengthen audit supervision over Chinese-foreign
equity and contractual joint ventures (hereinafter referred to as equity and contractual joint ventures) and promote their sound
development.

Article 2

The equity and contractual joint ventures mentioned in these Measures are businesses established according to the Law on Chinese-foreign
Equity Joint Ventures and Law on Chinese-foreign Contractual Joint Ventures of the People’s Republic of China, and other relevant
laws and regulations.

Any equity and contractual joint ventures and their branches that have State-owned assets shall be subject to examination by auditing
offices.

Article 3

According to PRC’s laws and regulations, the auditing offices shall exercise independent audit supervision over such equity and contractual
joint ventures without interference from any other administrative offices, mass organizations, or individuals.

The auditing offices carry out auditing according to law to safeguard the legal rights and interests of Chinese and foreign investors.

Article 4

The auditing offices shall exercise audit supervision over the maintenance and accretion of the property value, assets and liabilities,
gains and losses, and other related economic activities of equity joint ventures where State assets have a holding status.

When they deem it necessary, the auditing offices can exercise audit supervision over equity joint ventures with equity participation
of State assets and contractual joint ventures having State assets.

Article 5

In the course of auditing the accounts of equity and contractual joint ventures, if the auditing offices discover that the auditor’s
report and acceptance certificate provided by the auditing service or accounting firm are false and unlawful, they shall notify the
department concerned for correction or dealing with the matter.

Article 6

Before they start auditing, the auditing offices should notify the related equity and contractual joint ventures, which should accept
the auditing and provide the necessary work conditions.

In the course of auditing, the auditing offices have the right to examine the vouchers, account books, data, and other relevant documents
of the equity and contractual joint ventures, and to make investigations in related departments or among related personnel for relevant
material and documentary evidence. The related departments or personnel should provide the relevant material and documentary evidence.
The documentary evidence should be under the hand and seal of the person who provides it.

The auditing officers shall not use the relevant material and documentary evidence they have obtained for purposes that are irrelevant
with the auditing.

Article 7

After auditing, the auditing officers shall write a report, and after soliciting the opinions of the equity and contractual joint
ventures to be audited, submit the report to the auditing office. After examining and checking the report, the auditing office shall
reach an audit conclusion and decision and notify the joint ventures.

Article 8

Should violation of financial and economic regulations by equity and contractual joint ventures be discovered, the auditing offices
shall notify, besides the related equity and contractual joint ventures, related department for handling the matter according to
law. If the related department puts off the matter without reason or deals with it improperly, the auditing office, after ascertaining
the reason, has the right to report to the people’s government at the same level.

Article 9

Audit supervision over equity and contractual joint ventures established in China by Hongkong, Macao or Taiwan companies, businesses,
other economic organizations, or individuals shall be exercised with reference to these Measures.

Article 10

The Auditing Administration shall be responsible for interpreting these Measures.

Article 11

These Measures shall enter into force as of January 12, 1993.

The State Auditing Administration
1993-01-12

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON AMENDING THE INDIVIDUAL INCOME TAX LAW (ATTACHED WITH THE FIRST REVISION OF

Category	TAXATION	Organ of Promulgation	The Standing Committee of the National People’s Congress	Status of Effect	Amendment
Date of Promulgation	1993-10-31	Effective Date	1994-01-01

Decision of the Standing Committee of the National People’s Congress on Amending the Individual Income Tax Law of the People’s Republic of China (Attached With the First Revision of

Appendix: Individual Income Tax Law of the People’s Republic of China

the Individual Income Tax Law of the People’s Republic of China)

(Adopted at the Fourth Meeting of the Standing Committee of
the Eighth National People’s Congress on October 31, 1993,
promulgated by Order No.12 of the President of the People’s
Republic of China on October 31, 1993, and effective as of January
1, 1994) (Editor’s Note: For the revised text, see the Amendment to
Decision of the Standing Committee of the National People’s Congress
on Amending the Individual Income Tax Law of the People’s Republic
of China adopted by the 11th Session of the Standing Committee of the
Ninth National People’s Congress on August 30, 1999, promulgated by the
Order No. 22 of the President of the People’s Republic of China on
August 30, 1999, and effective as of the same day)

The Fourth Meeting of the Standing Committee of the Eighth
National People’s Congress, having considered the proposal
submitted by the State Council on the Draft Amendment to the
Individual Income Tax Law of the People’s Republic of China,
decides to amend the Individual Income Tax Law of the People’s
Republic of China as follows, with a view to intensifying the
reform of the tax system, simplifying the tax system and making the
tax burden equitable:

1. Article 1 is amended as follows: “Individual income tax
shall be paid in accordance with the provisions of this Law by
individuals who, with or without domiciles in the People’s Republic
of China, have resided in the country for one year or more on their
income gained within or outside China.

“Individuals who have no domiciles and do not reside in the
People’s Republic of China or who have no domiciles but have
resided in China for less than one year shall pay individual income
tax on their income gained within China in accordance with the
provisions of this Law.”

2. Article 2 is amended as follows: “Individual income tax
shall be paid on the following categories of individual income:

(1) income from wages and salaries;

(2) income from production or business operation conducted by
self-employed industrial and commercial households;

(3) income from contracted or leased operation of enterprises
or institutions;

(4) income from remuneration for personal services;

(5) income from author’s remuneration;

(6) income from royalties;

(7) income from interest, dividends and bonuses;

(8) income from the lease of property;

(9) income from the transfer of property;

(10) incidental income; and

(11) income from other sources specified as taxable by the
department of finance under the State Council.”

3. Article 3 is amended as follows: “Individual income tax
rates:

(1) For income from wages and salaries in excess of specified
amounts, the progressive rates ranging from 5 percent to 45 percent
shall apply (see the appended schedule of tax rates).

(2) For income of self-employed industrial and commercial
households from production or business operation and income of enterprises or institutions from contracted or leased operation
that are in excess of specified amounts, the progressive rates
ranging from 5 percent to 35 percent shall apply (see the appended
schedule of tax rates).

(3) For income from author’s remuneration, a flat rate which
is 20 percent shall apply, and the amount of tax payable shall,
however, be reduced by 30 percent.

(4) For income from remuneration for personal services, a flat
rate which is 20 percent shall apply. Where income gained at one
time from remuneration for personal services is extremely high, an
additive tax may be levied. Specific measures shall be stipulated
by the State Council.

(5) For income from royalties, interest, dividends, bonuses,
lease of property, transfer of property, incidental income or
income from other sources, a flat rate which is 20 percent shall
apply.”

4. Article 4 is amended as follows: “The following categories
of individual income shall be exempted from individual income tax:

(1) awards for achievements in such fields as science,
education, technology, culture, public health, sports and
environmental protection granted by people’s governments at or
above the provincial level, ministries and commissions under the
State Council, units of the Chinese People’s Liberation Army at or
above the corps level or by foreign or international organizations;

(2) interest on savings deposits, national debts and other
financial debentures issued by the State;

(3) subsidies and allowances given according to the unified
provisions of the State;

(4) welfare benefits, pensions for the family of the deceased
and relief payments;

(5) insurance indemnities;

(6) military severance pay and demobilization pay for armymen;

(7) settlement pay, severance pay, retirement pay, as well as
full-pay retirement pension for veteran cadres and their living
allowances, received by carders, staff and workers according to the
unified provisions of the State;

(8) income, exempted from tax according to the provisions of the relevant Laws of China, of diplomatic representatives
and
consular officers and other personnel of foreign embassies and
consulates in China;

(9) income exempted from tax as stipulated in the
international conventions to which the Chinese Government has
acceded or in agreements it has signed; and

(10) income exempted from tax with the approval of the
department of finance under the State Council.”

5. An article is added as Article 5: “In any of the
following circumstances, individual income tax may be reduced upon
approval:

(1) income of the disabled, the aged without families or
family members of martyrs;

(2) suffering great losses from serious natural disasters; or

(3) other cases in which tax reduction is approved by the
department of finance under the State Council.”

6. Article 5 is changed to be Article 6, and two paragraphs
are added as Paragraph 2 and Paragraph 3 respectively. This Article
is amended as follows: “The amount of taxable income shall be
computed as follows:

(1) For income from wages and salaries, the amount of taxable
income shall be the part remaining after deduction of 800 yuan for
expenses from a monthly income;

(2) For income from production or business operation gained by
self-employed industrial and commercial households, the amount of
taxable income shall be the part remaining after deduction of the
costs, expenses and losses from the gross income in a tax year;

(3) For income from contracted or leased operation of enterprises or institutions, the amount of taxable
income shall be
the part remaining after deduction of the necessary expenses from
the gross income in a tax year;

(4) For income from remuneration for personal services,
author’s remuneration, royalties and lease of property, the amount
of taxable income shall be the part remaining after deduction of 800 yuan for expenses from the amount received in a single payment
not exceeding 4,000 yuan; or after deduction of 20 percent from the
amount for a single payment of 4,000 yuan or more;

(5) For income from the transfer of property, the amount of taxable income shall be the part remaining after
deduction of the
original value of the property and the reasonable expenses from the
income gained from such transfer; and

(6) For interest, dividends, bonuses, incidental income and
income from other sources, the amount of taxable income shall be
the full amount received in each payment.

The part of individual income donated to educational and other
public welfare undertakings shall be deducted from the amount of taxable income in accordance with the relevant regulations of the
State Council.

For taxpayers who have no domiciles in China but obtain wages
or salaries within China, or who have domiciles in China but obtain
wages or salaries outside China, an additional deduction for
expenses may be determined on the basis of the average income
level, living standard and the changes in exchange rates. The
applicable scope and standard of the additional deduction for
expenses shall be stipulated by the State Council.”

7. An article is added as Article 7: “For income gained by
taxpayers from outside China, the amount of individual income tax
paid outside China shall be permitted to be deducted from the
amount of tax payable. The amount to be deducted, however, shall
not exceed the amount of tax payable as calculated according to
the provisions of this Law on income gained by the taxpayer from
outside China.”

8. Article 6 is changed to be Article 8 and amended as follows
: “For individual income tax, the income earner shall be the
taxpayer and the paying unit or individual shall be the withholding
agent. If a taxpayer receives wages or salaries from two or more
sources, and there is no withholding agent, the taxpayer shall file
returns and pay tax personally.

9. Article 7 is changed to be Article 9, and three paragraphs
are added as Paragraph 2, Paragraph 3 and Paragraph 4
respectively. This Article is amended as follows: “The tax
withheld each month by a withholding agent and the tax payable each
month by a taxpayer personally filing tax returns shall be turned
in to the State Treasury within the first seven days of the
following month and the tax returns submitted to the tax
authorities.

The tax payable on income from wages and salaries shall be
turned in on a monthly basis by the withholding agents or by the
taxpayers to the State Treasury within the first seven days of the
following month and the tax returns submitted to the tax
authorities. The tax payable on income from wages and salaries for
specified trades may be computed on an annual basis and paid in
advance in monthly installments, and specific measures therefor
shall be stipulated by the State Council.

The tax payable on income gained by self-employed industrial
and commercial households from production or business operation
shall be computed on an annual basis and paid in advance in monthly
installments. Such payment shall be made in advance by taxpayers
within the first seven days of the following month, and final
settlement shall be made within three months after the end of each
year. Any excess payment shall be refunded and any deficiency
repaid.

The tax payable on income of enterprises and institutions
from contracted or leased operation shall be computed on an annual
basis and turned in by taxpayers to the State Treasury within 30
days after the end of each year and the tax returns submitted to
the tax authorities. Taxpayers who gain income from contracted or
leased operation in installments during a year shall pay tax in
advance within the first seven days after each installment, and
final settlement shall be made within three months after the end of each year; any excess payment shall be refunded and any deficiency
repaid.

Taxpayers who earn income outside China shall pay tax to the
State Treasury within 30 days after the end of each year and submit
the tax returns to the tax authorities.”

10. Article 9 is deleted.

11. Article 8 is changed to be Article 10 and amended as
follows: “All categories of income shall be computed in terms of Renminbi(RMB). Income in foreign currency shall be taxed on the
equivalent amount converted into Renminbi according to the foreign
exchange rate quoted by the State Exchange Control Authorities.”

12. Article 10 is changed to be Article 11 and amended as
follows: “A service fee of two percent of the amount of tax
withheld shall be paid to the withholding agent.”

13. Article 11 is deleted.

14. Article 12 is deleted.

15. Article 13 is deleted.

16. An article is added as Article 12: “The collection and
the administration of individual income tax shall be governed by
the provisions of the Law of the People’s Republic of China on the
Administration of Tax Collection.”

17. Article 14 is changed to be Article 13 and amended as
follows: “The State Council shall formulate regulations for
implementation in accordance with this Law.

In addition, the Schedule of Individual Income Tax Rates
(Applicable to income from wages and salaries) is amended as
Schedule 1 of Individual Income Tax Rates (Applicable to income
from wages and salaries) and Schedule 2 of Individual Income Tax
Rates (Applicalbe to income gained by self-employed industrial and
commercial households from production or business operation and
income gained by enterprises and institutions from contracted or
leased operation ).

Schedule 1. Individual Income Tax Rates

(Applicable to income from wages and salaries)

Grade Monthly Taxable Income Tax Rate(%)

1 Income of 500 yuan or less 5

2 That part of income in excess of 500 to 2,000 yuan 10

3 That part of income in excess of 2,000 to 5,000 yuan 15

4 That part of income in excess of 5,000 to 20,000 yuan 20

5 That part of income in excess of 20,000 to 40,000 yuan 25

6 That part of income in excess of 40,000 to 60,000 yuan 30

7 That part of income in excess of 60,000 to 80,000 yuan 35

8 That part of income in excess of 80,000 to 100,000 yuan 40

9 That part of income in excess of 100,000 yuan
45

(Note: “Monthly taxable income” mentioned in this schedule refers
to amount remaining after deduction of 800 yuan for expenses or an
additional deduction for expenses from monthly income in accordance
with the provisions of Article 6 of this Law.)

Schedule 2. Individual Income Tax Rates

(Applicalbe to income gained by self-employed industrial and
commercial households from production or business operation and
income gained by enterprises and institutions from contracted or
leased operation)

Grade Annual Taxable Income Tax Rate(%)

1 Income of 5,000 yuan or less 5

2 That part of income in excess of 5,000 to 10,000 yuan 10

3 That part of income in excess of 10,000 to 30,000 yuan 20

4 That part of income in excess of 30,000 to 50,000 yuan 30

5 That part of income in excess of 50,000 yuan 35

(Note: “Annual taxable income” mentioned in this schedule refers to
the amount remaining after deduction of the costs, expenses and
losses from the gross income in a tax year in accordance with the
provisions of Article 6 of this Law.)

This Decision shall go into effect as of January 1, 1994. The
Interim Regulations of the People’s Republic of China on Income Tax
of the Urban and Rural Self-employed Industrial and Commercial
Households promulgated by the State Council on January 7, 1986 and
the Interim Regulations of the People’s Republic of China on
Individual Income Regulation Tax promulgated by the State Council
on September 25, 1986 shall be annulled therefrom. Where the
contents of other administrative rules and regulations regarding
individual income tax formulated before the implementation of this
Decision contravene the present Decision, the present Decision
shall prevail.

The Individual Income Tax Law of the People’s Republic of China shall be amended correspondingly according
to this Decision
and republished.

Appendix: Individual Income Tax Law of the People’s Republic of China
(Adopted at the Third Session of the Fifth National People’s
Congress on September 10, 1980, and revised in accordance with the
Decision on the Revision of the Individual Income Tax Law of the
People’s Republic of China adopted at the Fourth Meeting of the
Standing Committee of the Eighth National People’s Congress on
October 31, 1993)

Article 1 Individual income tax shall be paid in accordance
with the provisions of this Law by individuals who have domicile in
the People’s Republic of China, or though without domicle but have
resided for one year or more in China on their income gained within
or outside China.

Individuals who are neither domiciled nor resident in the
People’s Republic of China or who are not domiciled and reside for
less than one year in China shall pay individual income tax in
accordance with this Law on their income gained within China.

Article 2 Individual income tax shall be paid on the following
categories of individual income:

(1) income from wages and salaries;

(2) income from production or business operation conducted by
individual industrial and commercial households;

(3) income from contracted or leased operation of enterprises
or institutions;

(4) income from remuneration for personal services;

(5) income from author’s remuneration;

(6) income from royalties;

(7) income from interest, dividends and bonuses;

(8) income from the lease of property;

(9) income from the transfer of property;

(10) contingent income; and

(11) other income specified as taxable by the department of finance under the State Council.

Article 3 Individual income tax rates:

(1) income from wages and salaries shall be taxed at
progressive rates ranging from 5% to 45% (see the appended tax rate
schedule).

(2) income from production and business of individual
industrial and commercial households and income from contracted or
leased operation of enterprises or institutions shall be taxed at
progressive rates ranging from 5% to 35% (see the appended tax rate
schedule).

(3) income from author’s remuneration shall be taxed at a flat
rate of 20%, the amount of tax payable however shall be reduced by
30%.

(4) income from remuneration for personal services shall be
taxed at a flat rate of 20%, where a specific payment of income
from remuneration for personal service is excessively high,
additional tax can be levied at a rate to be specifically
determined by the State Council.

(5) income from royalties, interest, dividends, bonuses, lease
of property and transfer of property, as well as contingent income
and other income shall be taxed at a flat rate of 20%.

Article 4 The following categories of individual income shall
be exempted from individual income tax:

(1) awards for achievements in science, education, technology,
culture, public health, physical culture and environmental
protection granted by the people’s governments at the provincial
level, ministries and commissions under the State Council, the
People’s Liberation Army units at or above the corps level and by
foreign or international organizations;

(2) interest income on savings deposits and national debt
obligations and other financial debentures issued by the state;

(3) subsidies and allowances received under the state uniform
provisions;

(4) welfare benefits, survivors pensions and relief payments;

(5) insurance indemnities;

(6) military severance pay and demobilization pay received by
members of the armed forces;

(7) settlement pay, severance pay, retirement pay and
retirement living allowances received by public servants and
workers under state uniform provisions;

(8) income gained by the diplomatic agents and consular
officers and other personnel of foreign embassies and consulates
who are exempt from tax under the provisions of the relevant Laws
of China;

(9) income exempted from tax as stipulated in the
international conventions to which the Chinese Government is a
party and in agreements it has signed; and

(10) income exempted from tax with the approval of the
department of finance under the State Council.

Article 5 In any of the following circumstances, individual
income tax may be reduced upon approval:

(1) income gained by disabled persons, unsupported aged
persons or members of martye’s family;

(2) the tax payer suffers major losses caused by grave natural
disasters;

(3) other cases in which reduction is approved by the
department of finance under the State Council.

Article 6 The amount of taxable income shall be computed as
follows:

(1) for income from wages and salaries, a monthly deduction of 800 yuan shall be allowed for expenses and
that part in excess of 800 yuan shall be the taxable income;

(2) for income from production or business operation gained by
individual industrial and commercial households, the taxable income
shall be the amount remaining from the gross income in a tax year
after the costs, expenses and losses have been deducted;

(3) for income from contracted or leased operation of enterprises or institutions, the taxable income shall
be the amount
remaining from the gross income in a tax year after the deduction
of necessary expenses;

(4) for income from remuneration for personal services,
author’s remuneration, royalties and lease of property, a deduction
of 800 yuan shall be allowed for expenses, if the amount received
in a single payment is less than 4000 yuan; for single payments of 4000 yuan or more, a deduction of 20% shall be allowed for
expenses, and the remaining amount after the deduction shall be the
taxable income;

(5) for income from the transfer of property, the taxable
income shall be the amount remaining from the gross transfer income
after deducting the original value of the property and reasonable
expenses;

(6) for interest, dividends, bonuses, contingent income and
other income, the taxable income shall be the full amount received
in each payment.

The part of individual income donated to educational and other
public welfare undertakings shall be deducted from the taxable
income in accordance with the relevant stipulations made by the
State Council.

For tax payers who have no domicile in China but obtain wages
and salaries from sources within China, or have domicile in China
but obtain wages and salaries from sources outside China, the
additional deduction for expenses shall be allowed on the basis of the average income level, living standard and the chages of exchanges
rates. The scope of application and amount of the
additional deduction for expenses shall be stipulated by the State
Council.

Article 7 Income tax paid to foreign tax authorities by the
taxpayer on income gained from sources outside China shall be
allowed as credit against the amount of income tax payable. The
creditable amount, however, shall not exceed the amount of tax
otherwise payable under this Law in respect of the income gained
from the sources outside China.

Article 8 For individual income tax, the income earner shall
be the taxpayer and the paying unit or individual shall be the
withholding agent. Taxpayers that receive wages or salaries from
two or more payors, or taxpayers without withholding agent shall
file tax returns and pay tax themselves.

Article 9 The tax withheld each month by a withholding agent
and the tax to be paid each month by a tax payer personally filing
a return shall be turned into the State Treasury within the first
seven days of the following month together with the tax returns
submitted to the tax authorities.

For income from wages and salaries, the tax shall be paid on
monthly basis. The tax shall be withheld by the withholding agent
or paid by the taxpayers to the State Treasury within the first
seven days of the following month together with the tax returns
submitted to the tax authorities. For income from wages and
salaries in specified industries, the tax may be computed on annual
basis and paid in advance in monthly installments, and the specific
measures shall be stipulated by the State Council.

For income from production or business operation gained by
individual industrial and commercial households, the tax payable
shall be computed on annual basis and paid in advance in monthly
installments. Such payments shall be made within the first seven
days after the end of each month and the final settlment shall be
made within three months after the end of each tax year. Any excess
payment shall be refunded and any deficiency repaid.

For income from contracted or leased operation of enterprises
and institutions, the tax payable shall be computed on annual basis
and paid to the State Treasury within thirty days after the end of each tax year together with the tax returns submitted to the tax
authorities. For the taxpayers receiving income from contracted or
leased operation in installment during a year, the tax payable
shall be paid in advance installments within the first seven days
after each time when a payment is made, and the final settlement
shall be made within three months after the end of each tax year;
any excess payment shall be refunded and any deficiency repaid.

For taxpayers who earn income outside China, the tax payable
shall be paid to the State Traeasury within thirty days after the
end of each tax year together with the tax returns submitted to the
tax authorities.

Article 10 All categories of income shall be computed in terms
of Renminbi(RMB). Income in foreign currency shall be taxed on the
equivalent amount converted into Renminbi according to the foreign
exchange rate quoted by the state exchange control authorities.

Article 11 A service fee of two percent of the amount of tax
withheld shall be paid to the withholding agents.

Article 12 The administration of the collection of individual
income tax shall proceed in accordance with the Law of the People’s
Republic of China on the Administration of Tax Collection.

Article 13 The detailed rules and regulations for the
implementation shall be formulated by the State Council in
accordance with this LAw.

Article 14 This Law shall enter into force on the day of its
promulgation.

Schedule 1 of Individual Income Tax Rates

(Applicable to income from wages and salaries)

Grade Monthly Taxable Income Tax Rate(%)

&nbs

PROVISIONAL REGULATIONS ON BUSINESS TAX

Provisional Regulations of the People’s Republic of China on Business Tax

(State Council: 13 December 1993)

Whole Doc.Article 1

All units and individuals engaged in the provision of services asprescribed in these Regulations (hereinafter referred
to as ‘taxableservices’), the transfer of intangible assets or the sale of immovableproperties within the territory of the
People’s Republic of China shall betaxpayers of Business Tax (hereinafter referred to be ‘taxpayers’), andshall pay Business Tax
in accordance with these Regulations.Article 2

The taxable items and tax rates of Business Tax shall be determinedin accordance with the attached to these Regulations.

Any adjustments to the taxable items and tax rates shall bedetermined by the State Council.

The specific tax rates applicable to taxpayers engaged inentertainment businesses shall be determined by the People’s
governmentsof the provinces, autonomous regions and municipalities directly under thecentral government within the range prescribed
by these Regulations.Article 3

For taxpayers engaged in taxable activities under different taxitems, the turnover, transfer and sales amounts (hereinafter
referred toas ‘turnover’) under different taxable items shall be accounted forseparately. If the turnover has not been
accounted for separately, thehigher tax rate shall apply.Article 4

For taxpayers providing taxable services, transferring intangibleassets on selling immovable properties, the tax payable
shall be computedaccording to the turnover and the prescribed tax rates. The formula forcomputing the tax payable is as follows:

Tax payable = Turnover x Tax rate

The tax payable shall be computed in Renminbi, The turnover of thetaxpayer settled in foreign currencies shall be converted
into Renminbiaccording to the exchange rate prevailing in the foreign exchange market.Article 5

The turnover of the taxpayers shall be the total consideration andall other changes receivable from the payers for the provision
of taxableservices transfer of intangible assets or sales of immovable properties bythe taxpayers, except for the following situations:

(1) For transportation enterprises which carry passengers or cargoesfrom the territory of the People’s Republic of China
to over seaslocations and trans-ship passengers or cargoes to other transportationenterprises overseas, the turnover shall
be the balance of transportcharges for the whole journey less the transport charges paid to thesub-contracted transportation
enterprises.

(2) For travel enterprises which organize tourist groups to traveloutside the territory of the People’s Republic of China
and sub-contractto other travel enterprises overseas, the turnover shall be the balance ofthe tourist charges for the whole journey
less the payments made to thosesub-contracted travel enterprises.

(3) For the main contractors in the construction business whosub-contract work to others, the turnover shall be the
balance of thetotal contract sum less the payments made to the sub- contractors.

(4) For re-lending businesses, the turnover shall be the balance ofinterest on lending less the interest on borrowing.

(5) For businesses buying and selling foreign currencies, marketablesecurities and futures, the turnover shall be the balance
of the sellingprices less the buying prices.

(6) Other situations as regulated by the Ministry of Finance.Article 6

The following items shall be exempt from Business Tax:

(1) Nursing services provided by nurseries, kindergartens, homes forthe aged, welfare institutions for the handicapped,
matchmaking andfuneral services.

(2) Services provided on individual basis by the disabled.

(3) Medical services provided by hospitals, clinics and other medicalinstitutions.

(4) Educational services provided by schools and other educationalinstitutions; and services provided by students
participating inwork-study programs.

(5) Agricultural mechanical ploughing, irrigation and drainage,prevention and treatment of plant diseases and insect
pests, plantprotection, insurance for farming and animal husbandry, and relatedtechnical training services; breeding and
the prevention and treatment ofdiseases of poultry, livestock and aquatic animals.

(6) Admission fees for cultural activities conducted by memorialhall, museum, cultural centre, art gallery, exhibition
hall, academy ofpainting and calligraphy, library and cultural protective units; admissionfees for cultural and religious
activities conducted at places ofreligious worship.

Except as stipulated in the above paragraphs, the Business Taxexemption and reduction items shall be regulated by the
State Council.Local governments or departments shall not regulate any tax exemption orreduction items.Article 7

For taxpayers engaged in tax exempt or tax reduced items, theturnover shall be accounted for separately. if the turnover
has not beenseparately accounted for, no exemption of reduction is allowed.Article 8

For taxpayers whose turnover has not reached the Business Tax minimumthreshold stipulated by the Ministry of Finance, the Business
Tax shall beexempt.Article 9

The time at which a liability to Business Tax arises shall be thedate on which the business proceeds are received or documented
evidence ofright to collect business proceeds is obtained by the taxpayer.Article 10

Business Tax shall be collected by the tax authorities.Article 11

Business Tax withholding agents are as follows:

(1) For financial institutions entrusted to grant loans, theentrusted financial institutions shall be the withholding
agents.

(2) For sub-contracting of construction and installation business,the main contractors shall be the withholding agents.

(3) Other withholding agents as stipulated by the Ministry ofFinance.Article 12

The place for the payment of Business Tax is as follows:

(1) Taxpayers providing taxable services shall report and pay tax tothe local competent tax authorities where the taxable services
take place.Taxpayers engaged in the transportation business shall report and pay taxto the local competent tax authorities where
the business establishment islocated.

(2) Taxpayers transferring land use rights shall report and pay taxto the local competent tax authorities where the
land is located.Taxpayers transferring other intangible assets shall report and pay tax tothe local competent tax authorities where
the establishment is located.

(3) Taxpayers selling immovable properties shall report and pay taxto the local competent tax authorities where the immovable
properties arelocated.Article 13

The Business Tax assessable period shall be five days, ten days,fifteen days or one month. The actual assessable period
of taxpayers shallbe determined by the competent tax authorities according to the magnitudeof the tax payable of the taxpayers;
tax that cannot be assessed inregular periods may be assessed on a transaction-by-transaction basis.

Taxpayers that adopt one month as an assessable period shall reportand pay tax within ten days following the end of the
period. If anassessable period of five days, ten days or fifteen days is adopted, thetax shall be prepaid within five days following
the end of the period anda monthly tax return shall be filed with any balance of tax due settledwithin ten days from the first
day of the following month.

The tax payment deadlines for withholding agents shall be determinedwith reference to the stipulations of the above two paragraphs.Article
14

The collection and administration of Business Tax shall be conductedin accordance with the relevant regulations of the and theseRegulations.Article 15

The collection of Business Tax from foreign investment enterprisesand foreign enterprises shall be conducted in accordance
with theresolutions of the Standing Committee of the National People’s Congress.Article 16

The Ministry of Finance shall be responsible for the interpretationof these Regulations and for the formulation of the Detailed
Rules andRegulations for the Implementation of these Regulations.Article 17

These Regulations shall come into effect from January 1, 1994, Thepromulgated by the State Council on September 18, 1984 shall be repealedon the same date.

BUSINESS TAX TAXABLE ITEMS AND TAX RATES TABLE

———————————————————————–

Taxable

items Scope of charge Tax Rate %

———————————————————————–

1. Communications

and transportation Transportation by land, water, 3

air and pipeline, loading

unloading and delivery

2. Construction Construction, installation,

repair, decoration and other

engineering work 3

3. Finance and insurance 5

4. Posts and

telecommunications 3

5. Culture and sports 3

6. Entertainment Singing bars, dance halls, 5-20

karaoke lounges, commercial

music halls, musical tea

houses, billiards, golf,

bowling and amusement

facilities

7. Servicing Agency, hotel, catering, 5

tourism, warehousing,

leasing, advertising and

other services

8. Transfer of

intangible assets Transfer of land-use rights, 5

patent rights, unpatchted

technologies, trade marks,

copyrights and goodwill

9. Sale of immovable

properties Sale of buildings and other 5

attachments to land

———————————————————————–

PROVISIONAL REGULATIONS ON THE ADMINISTRATION OF SHARE ISSUANCE AND TRADING

Category	SECURITIES	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1993-04-22	Effective Date	1993-04-22

Provisional Regulations on the Administration of Share Issuance and Trading

Chapter I  General Provisions
Chapter II  Issuance of Shares
Chapter III  The Trading of Shares
Chapter IV  Acquisition of Listed Company
Chapter V  Safekeeping, Clearance and Transfer
Chapter VI  Disclosure of Listed Companies
Chapter VII  Investigation and Sanctions
Chapter VIII  Arbitration of Disputes
Chapter IX  Supplementary Articles

(Promulgated by Decree No.112 of the State Council of the People’s

Republic of China on April 22, 1993 and effective as of the same date)
Chapter I  General Provisions

Article 1 These Regulations have been formulated in order to suit the
needs of the development of the socialist market economy, to establish and
develop a uniform and efficient national share market, to protect the lawful
interests of investors and the public interest of the society at large and to
promote the development of the national economy.

Article 2 All issuance or trading of shares and related activities within
the territory of the People’s Republic of China must abide by these
Regulations.

The provisions of these Regulations concerning shares shall apply to
securities that have the nature or function of shares.

Article 3 The issuance and trading of shares shall comply with the
principles of openness, fairness, and credit-worthiness.

Article 4 Shares shall be issued and traded so as to preserve the leading
position of socialist public ownership and so as not to endanger state-owned
assets.

Article 5 The State Council Securities Commission (hereinafter referred
to as “SCSC”) shall be the agency in charge of the national securities market
and shall be responsible for the unified administration of securities markets
throughout China in accordance with the provisions of laws and regulations.
The China Securities Supervisory and Regulatory Commission (hereinafter
referred to as “CSSRC”) shall be the supervising and administering agency of
the SCSC and supervise specific activities relating to the issuance and
trading of securities in accordance with the provisions of laws and
regulations.

Article 6 Specific measures with respect to the issuance and trading of
special Renminbi denominated shares shall be formulated separately.

A domestic enterprise must obtain approval from the SCSC before it
directly or indirectly issue shares abroad or has its shares traded abroad.
Specific measures with respect thereto shall be formulated separately.
Chapter II Issuance of Shares

Article 7 Only companies limited by shares qualified to issue shares may
issue shares.

Companies limited by shares referred to in the preceding paragraph include
both already established companies limited by shares and companies limited by
shares that have obtained approval but yet to be established.

Article 8 To establish a company limited by shares and to apply for the
issue of shares to the public, the following conditions must be satisfied:

1. Its production and operations are in compliance with the industrial
policies of the state;

2. Only one class of common shares are to be issued, with equal rights
attaching to the same shares;

3. Shares subscribed for by promoters shall not represent less than 35% of
the total capital that the company intends to issue;

4. Of the total amount of capital that the company intends to issue, the
promoters shall subscribe not less than Renminbi 30,000,000 yuan, except where
national regulations provide otherwise;

5. The shares to be offered to the public shall represent not less than
25% of the total amount of capital that the company intends to issue, and the
amount of capital that employees of the company subscribe for shall not exceed
10% of the total amount of capital to be offered to the public; where the
total amount of capital that the company intends to issue exceeds Renminbi
400,000,000 yuan, the CSSRC may, in accordance with relevant provisions and the
circumstances, reduce the proportion to be offered to the public, provided,
however, that the amount issued to the public shall not be less than 10% of
the total amount of capital that the company plans to issue;

6. The promoters have not engaged in serious illegal activities in the
prior three years;

7. Other conditions that the SCSC may impose.

Article 9 If an existing enterprise that is to be restructured as a
company limited by shares applies to issue shares to the public, it shall meet
the following conditions in addition to those enumerated under Article 8:

1. At the end of the year preceding the issuance, net assets shall account
for at least 30% of the total assets, intangible assets shall be not more
than 20% of the total assets, except where the SCSC provides otherwise; and

2. It shall have shown a profit in each of the most recent three
consecutive years.

If an existing state-owned enterprise is to be restructured as a company
limited by shares and issue shares to the public, the proportion of the
state-owned capital to the total amount of capital that the company proposes
to issue shall be provided for by the State Council or a department authorized
by the State Council.

Article 10 A company limited by shares that applies to issue shares to the
public for the purpose of increasing its capital shall meet the following
conditions in addition to those enumerated in Article 8 and 9 hereof:

1. The proceeds raised from any immediately preceding public issuance of
shares shall have been used in compliance with the description in the
prospectus concerning the use of proceeds and the use of such proceeds shall
have obtained satisfactory results;

2. Not less than twelve months shall have elapsed since the preceding
public issuance of shares;

3. There shall have been no serious illegal activities during the period
from the preceding public issuance of shares to the subject application; and

4. Other conditions that the SCSC may impose.

Article 11 A company that has raised capital by private placement that
applies to issue shares to the public shall meet the following conditions in
addition to those enumerated in Article 8 and 9 hereof:

1. The funds raised by private placement shall have been used in
compliance with the description in the prospectus concerning the use of
proceeds and the use of such proceeds shall have obtained satisfactory results;

2. Not less than twelve months shall have elapsed since the preceding
private placement of shares;

3. There shall have been no serious illegal activities during the period
from the preceding placement of shares to the subject application;

4. Stock purchase warrants for staff and employees shall have been
distributed in accordance with the prescribed scope by the state and in
centralized custody of the securities dealing institution prescribed by the
state; and

5. Other conditions that the SCSC may impose.

Article 12 An application to issue shares to the public shall be made in
accordance with the following procedure:

1. The applicant shall retain professionals such as an accounting firm, an
asset valuation institution and a law firm, to review and evaluate its credit
history, assets and financial status and to issue legal opinions with respect
to related matters. Thereafter, it shall, in accordance with the applicable
jurisdiction, file an application to issue shares to the public with the
People’s Governments of the province, autonomous region, municipality directly
under the Central Government or municipality listed separately under State
plan (hereinafter referred to as the “Local Governments”), or with the
department in charge of central enterprises;

2. Within the scope of permitted share issuances designated by the state,
Local Governments shall review for approval share issuance applications of
local enterprises and the departments in charge of central enterprises shall
review for approval the applications of central enterprises after consultation
with the Local Government of the place where the applicant is located; the
Local Government or the department in charge of central enterprises shall,
within thirty business days of the receipt of the shares issuance application,
render a decision after review and shall send a copy of the decision to the
SCSC;

3. The approved issuance application shall be submitted to the CSSRC for
review. The CSSRC shall issue an opinion within twenty business days of its
receipt of the review application and a copy of the CSRC opinion shall be
transmitted to the SCSC. If approval is granted by the CSSRC after review, the
applicant shall file an application with the listing commission of the
relevant securities exchange. The shares may be issued only after the relevant
listing commission has agreed to the listing of the applicant’s shares.

Article 13 Applicants seeking to issue shares to the public shall submit
the following documents to the Local Government(s) or the department(s) in
charge of central enterprises:

1. an application report;

2. resolutions of the promoters’ or shareholders’ general meeting
approving the issuance of shares to the public;

3. approval documentation with respect to the establishment of the company
limited by shares;

4. the business license of the company limited by shares or a registration
certificate evidencing the subscription for and establishing of the company
limited by shares, issued by the administration for industry and commerce;

5. the articles of association or the draft articles of association of the
company;

6. the share prospectus;

7. a feasibility study concerning the use of proceeds; in the case of the
fixed asset investment project requiring state provided capital or other
conditions, an approval document from the relevant department of the state
evidencing agreement with the capital investment project proposal shall also
be submitted;

8. audited financial statements for the most recent three years or the
period since its establishment accompanied by an audit report signed by more
than two certified accountants (in addition to the auditing firm) and sealed
by the respective firm;

9. a written legal opinion signed by more than two lawyers and sealed by
the respective law firm of such lawyers;

10. an asset valuation report signed by more than two professional
appraisers and sealed by the respective institution of such appraisers and a
verification report signed by more than two certified accountants and sealed
by the respective accounting firm of such accountants; if state-owned assets
are involved, a confirmation document issued by the administrative department
in charge of state-owned assets shall also be furnished;

11. the proposed share distribution and the distribution agreement;

12. other documents that the Local Governments or the departments in
charge of central enterprises may require.

Article 14 When the approved share issuance application is submitted to
the CSSRC for review, the following documents shall be submitted in addition
to those enumerated in Article 13 hereof:

1. the document of the Local Government or the department in charge of
central enterprises approving the issuance application; and

2. other documents that the CSSRC may require.

Article 15 The prospectus referred to in Article 13 hereof shall be
prepared in accordance with the form prescribed by CSSRC and shall address the
following matters:

1. the name and domicile of the company;

2. a brief description of the promoter(s) and issuer;

3. the purpose of the funds subscription;

4. the company’s current total capital, the classes and total value of the
shares that the company proposes to issue in the subject issuance, the par
value and sale price per share, the net asset value attributable to each share
prior to the issuance and the estimated net asset value attributable to each
share on the conclusion of the issuance, distribution expenses and commissions
related to the issuance;

5. information regarding share subscriptions by the promoters of the
initial issuance, the share rights structure and the verification
certifications for the subscriptions;

6. the name of the distributing institutions, the method of distribution
and the number of shares to be distributed;

7. the proposed purchasers of the share issuance, the time and place of
the share issuance, and the methods for share subscription and payment of
purchase;

8. the plan for the use of proceeds and the prediction of profitability
and risks;

9. a near-term development plan of the company, and a projection of the
following year’s profit of the company, audited by a certified accountant and
for which such accountant has issued an audit opinion;

10. major contracts;

11. major litigations involving the company;

12. a list of the names and brief biographies of each of the board
directors and the supervisors of the company;

13. a description of production and operations for the most recent three
years or in the period since the company’s establishment and the basic
business development situation;

14. audited financial statements of the company for the most recent three
years or the period since its establishment accompanied by an audit report
signed by more than two certified accountants (in addition to the auditing
firm) and sealed by their respective firm;

15. with respect to any company seeking to increase its capital,
information on the use of proceeds from any previous public share issue;

16. other matters that the CSSRC requires to be addressed.

Article 16 The cover of the share prospectus shall set forth the
following: “THE ISSUER HEREBY WARRANTS THE TRUTHFULNESS, ACCURACY AND
COMPLETENESS OF THE CONTENTS OF THIS SHARE PROSPECTUS. NO DECISION MADE BY THE
GOVERNMENT OR ANY STATE SECURITIES REGULATORY DEPARTMENT CONCERNING THIS
ISSUANCE INDICATES THAT SUCH BODIES HAVE SUBSTANTIVELY PASSED UPON OR
WARRANTED THE VALUE OF THE SHARES BEING OFFERED BY THE ISSUER OR ANY POTENTIAL
GAIN TO THE INVESTORS.”

Article 17 All the promoters or directors and the principal distributors
shall sign the share prospectus, warranting that the share prospectus contains
no false or seriously misleading statements or important omissions and that
such persons will be jointly and severally liable for the same.

Article 18 In performing their duties, the certified accountants and
their firms, professional appraisers and their institutions and lawyers and
their firms that issue documents for the issuer shall, in accordance with the
recognized business standards and ethics codes of their respective
professions, check and verify the truthfulness, accuracy and completeness of
the contents of the documents that they have issued.

Article 19 Before a public share issuance has been approved, no person
shall disclose in any form the contents of the prospectus. The issuer shall
publicize the share prospectus within two to five business days prior to the
commencement of the distribution period after the public share issuance has
been approved.

The issuer shall provide all subscribers with a prospectus. Institutions
distributing securities shall place copies of the prospectus at the place of
business and have the obligation to remind the subscribers to read the
prospectus.

The prospectus shall be effective for a period of six months, commencing
from the date when all of the signatures to the prospectus have been applied.
After the prospectus ceases to be effective the share issuance shall be
terminated immediately.

Article 20 Shares being offered to the public shall be distributed by
securities dealing institutions. “Distribution” comprehends two methods:
underwriting and sales on a best effort basis.

The issuer and the securities dealing institution shall execute a
distribution agreement, in which the following matters shall be addressed.

1. the names and domiciles of the parties and the names of their legal
representatives;

2. the method of distribution;

3. the types, volume, value and issue price of the shares to be
distributed;

4. the distribution period and the commencement and termination dates;

5. the time and method of payment for the distribution;

6. calculation of the distribution expenses, and the method and time of
payment therefor;

7. liability for breach of contracts;

8. other matters that need to be agreed upon.

The principles pursuant to which a securities dealing institution
collects distribution fees shall be determined by the CSSRC.

Article 21 In distributing the shares, a securities dealing institution
shall check the truthfulness, accuracy and completeness of the prospectus and
other related materials that are distributed; if it is determined that they
contain false or substantially misleading statements or important omissions,
no offer invitation or offer may be made; if an offer invitation or an offer
has already been made, distribution shall be stopped immediately and
appropriate remedial measure shall be taken.

Article 22 Public share issuances, the total par value of which exceeds
Renminbi 30,000,000 yuan or the projected total sales price of which may
exceed Renminbi 50,000,000 yuan, shall be distributed by a distribution
syndicate.

A distribution syndicate shall be made up of two or more distributing
institutions. The principal distributor(s) shall be selected by the issuer in
accordance with the principle of fair competition and by means of bid
invitation or consultation. The principal distributor(s) shall sign a
distribution syndicate agreement with the other distributors.

Article 23 If the total par value of the shares to be offered to the
public exceeds Renminbi 100,000,000 yuan or the projected total sales price of
the shares to be offered to the public may exceed Renminbi 150,000,000, the
number of distributors from other localities shall account for a reasonable
proportion of the distribution syndicate and the number of shares to be sold
in other localities shall account for a reasonable proportion of total sales.

“Other localities” referred to in the preceding paragraph means places
other than the province, autonomous region or municipality directly under the
Central Government where the issuer is located.

Article 24 The distribution period shall not be less than ten days and
more than ninety days.

During the distribution period, the distributing institution must make
every effort to sell to subscribers the shares that it has undertaken to sell,
and may not keep distributed shares for itself.

Upon the expiration of the distribution period, the then unsold shares
shall be disposed of in accordance with the method of underwriting or sale on
a best effort basis, respectively, as agreed in the distribution agreement.

Article 25 In issuing share subscription or applications to the public, a
distributing institution or its authorized organ may not collect a fee that
equals more than the cost of the print of subscription form and issuing
expenses. Moreover, such entities may not place a limit on the number of
subscription forms distributed.

If the number of shares subscribed for exceeds the total number of shares
to be offered, the distributing institutions shall sell the shares in
accordance with the principle of fairness and by means of proportional
allotments, proportional allotments after cumulative reductions, or by
lottery. In case the lottery method is used, the distributing institution
shall, under the supervision of the notary public office and in accordance
with the prescribed procedures, publicly conduct the lottery form of all the
share subscription applications at a given date and sell shares to those whose
lots are drawn.

Other than the distributing institutions or their authorized organs, no
unit or individual may distribute or resell share subscription applications.

Article 26 Within fifteen business days after the expiration of the share
distribution period, the distributing institutions shall submit to the CSSRC a
written report on the share distribution.

Article 27 If, after the distribution period expires, the securities
dealing institution intends to make to the public (other than the issuer) an
offer invitation to buy or an offer to sell, or intends to sell, the issuer’s
shares in its possession to the public (other than the issuer), the matter
shall be handled in accordance with prescribed procedures, subject to approval
by the CSSRC.

Article 28 The provisions of this Chapter shall not apply if an issuer
replaces its already issued share certificates with new share certificates,
and no direct or indirect expenses are incurred as a result thereof.
Chapter III The Trading of Shares

Article 29 The trading of shares must be conducted at securities
exchanges authorized for share trading by the SCSC.

Article 30 A company limited by shares that applies to have its shares
traded on a securities exchange shall meet the following conditions:

1. Its shares shall have been already offered to the public;

2. Its total amount of capital after the issuance shall be not less than
Renminbi 50,000,000 yuan;

3. Not less than 1,000 shareholders hold individually shares the par value
of which is at least Renminbi 1,000 yuan and the total par value of the shares
owned by individuals is not less than Renminbi 10,000,000 yuan;

4. The company has a record of profitability over the most recent three
consecutive years; in the case of an existing enterprise that is being
restructured as a company limited by shares, the existing enterprise shall
have had a record of profitability over the most recent three consecutive
years, without regard to the newly-established company limited by shares; and

5. Other conditions that the SCSC may impose.

Article 31 A company limited by shares which intends to apply to have its
shares traded on a securities exchange and that offers shares to the public
and meets the conditions provided in the preceding Article shall apply to the
listing commission of the relevant securities exchange; the listing commission
shall, within twenty business days upon receipt of the application, make a
decision after review and determine the specific time when the applicant may
be listed. The approved review document shall be submitted to the CSSRC for
the record, with a copy thereof to the SCSC.

Article 32 A company limited by shares that applies for its shares to be
traded on a securities exchange shall file the following documents with the
listing commission of the securities exchange:

1. the application document;

2. the registration document of the company;

3. the document approving the public issuance of shares;

4. the company’s financial statements for the three most recent years or
the period since its establishment audited by an accounting firm, accompanied
by an audit report signed by more than two certified accountants (in addition
to the auditing firm) and sealed by the accounting firm of such accountants;

5. recommendation letter(s) from members of the securities exchange;

6. the most recent prospectus; and

7. other documents that the securities exchange may require.

Article 33 After the shares are approved for trading on a securities
exchange, the listing company shall make a listing announcement and publicize
the documents listed in Article 32 hereof.

Article 34 In addition to the major items of the prospectus provided for
in Article 15 hereof, the contents of the listing announcement shall also
include the following matters:

1. the date when approval is granted for the shares to be traded at the
securities exchange and the approval document number;

2. information on the share issue, the share rights structure and the
names of the ten largest shareholders and the amount of shares they each hold;

3. the resolution of the company’s inaugural meeting or a shareholder’s
general meeting approving the trading of the company’s shares on the
securities exchange;

4. brief biographies of the directors, supervisors and senior managers and
information with respect to their ownership of company shares;

5. documents showing the operating results and financial status of the
company over the most recent three years or the period since its establishment
and profit projection for the following year; and

6. other matters that the securities exchange may require to be specified.

Article 35 In performing their duties, the certified accountants and
their firms, professional appraisers and their institutions and lawyers and
their firms that issue documents for the listing company shall, in accordance
with the recognized business standards and ethics codes of their respective
professions, check and verify the truthfulness, accuracy and completeness of
the contents of the documents that they have issued.

Article 36 The transfer of state-owned shares shall be subject to
approval by the relevant state authorities, for which specific measures will
be formulated separately.

The transfer of state-owned shares may not jeopardize the rights and
interests of the state-owned shares.

Article 37 The securities exchanges and institutions administering the
safekeeping, clearance, transfer, registration and distribution of securities
shall ensure that clients of different localities shall enjoy the same
treatment as the clients of the locality of such institutions and shall not be
discriminated against or be subjected to restrictions.

Article 38 Any profits made by any company limited by shares’ director,
supervisor, senior management and a legal person shareholder that owns more
than 5% of the voting shares of a company from selling company shares that
such person purchased within the six months prior to such sale, or from
purchasing company shares that such person sold within the six months prior to
such purchase, shall be vested in the company.

The preceding paragraph shall apply to the directors, supervisors and
management of a legal person shareholder that owns more than 5% of the voting
shares of the company.

Article 39 No pe

PRODUCT QUALITY

Category	TECHNOLOGICAL CONTROL	Organ of Promulgation	The Standing Committee of the National People’s Congress	Status of Effect	In Force
Date of Promulgation	1993-02-22	Effective Date	1993-09-01

Law of the People’s Republic of China on Product Quality

Contents
Chapter I  General Provisions
Chapter II  Supervision and Control over Product Quality
Chapter III  Liability and Obligation of Producers and Sellers
Chapter IV  Compensation for Damage
Chapter V  Penalty Provisions
Chapter VI  Supplementary Provisions

(Adopted at the 30th Meeting of the Standing Committee of the

Seventh National People’s Congress on February 22, 1993,
promulgated by Order No.71 of the President of the People’s
Republic of China on February 22, 1993, and effective as of September 1, 1993)
Contents

Chapter I General Provisions

Chapter II Supervision and Control over Product Quality

Chapter III Liability and Obligation of Producers and Sellers

Concerning Product Quality

Section 1 Liability and Obligation of Producers Concerning

Product Quality

Section 2 Liability and Obligation of Sellers Concerning

Product Quality

Chapter IV Compensation for Damage

Chapter V Penalty Provisions

Chapter VI Supplementary Provisions
Chapter I General Provisions

Article 1 This Law is enacted to strengthen the supervision
and control over product quality, to define the liability for
product quality, to protect the legitimate rights and interests of users and consumers and to safeguard the socio-economic order.

Article 2 Anyone who corducts activities of production and
sale of any product within the territory of the People’s Republic
of China must abide by this Law.

“Product” referred to in this Law means a product which is
processed or manufactured for the purpose of sale.

This Law shall not apply to construction projects.

Article 3 Producers and sellers shall be liable for product
quality in accordance with this Law.

Article 4 It is prohibited to forge or falsely use
authentication marks, famous-and-excellent-product marks or other
product quality marks; it is prohibited to forge the origin of a
product, to forge or use the name and address of a factory of another producer; and it is prohibited to mix impurities or
imitations into products that are produced or sold, or pass a fake
product off as a genuine one, or pass a defective product off as a
high-quality one.

Article 5 The State shall encourage the popularization of scientific methods in product quality control and the adoption of advanced
science and technology. The State shall encourage
enterprises to make their product quality meet and even surpass
their respective trade standards, the national and international
standards. Units and individuals that have made outstanding
achievements in ensuring advanced product quality control and in
raising product quality to the advanced international standards
shall be awarded.

Article 6 The department in charge of supervision and control
over product quality under the State Council shall be responsible
for nation-wide supervision and control over product quality. The
relevant departments under the State Council shall be responsible
for supervision and control over product quality within the scope
of their respective functions and responsibilities.

The administrative departments responsible for supervision
over product quality in the local people’s governments at or above
the county level shall be in charge of supervision and control over
product quality within their administrative regions. The relevant
departments in the local people’s governments at or above the
county level shall be in charge of supervision and control over
product quality within the scope of their respective functions and
responsibilities.
Chapter II Supervision and Control over Product Quality

Article 7 The quality of a product shall be inspected and
proved to be up to the standards. No sub-standard product shall be
passed off as a product up to the standards.

Article 8 Industrial products constituting possible threats to
the health or safety of human life and property must be in
compliance with the national standards and trade standards
safeguarding the health or the safety of human life and property;
In the absence of such national standards or trade standards,
the product must meet the requirements for safeguarding the health
or safety of human life and property.

Article 9 The State shall, in compliance with the
international quality control standards in general use, practise
a rule of authentication for enterprise quality An enterprise may
on voluntary basis apply to the department in charge of supervision
and control over product quality under the State Council or an
authentication agency approved by a department authorized by the
department in charge of supervision and control over product
quality under the State Council for authentication of enterprise
qualitysystem. With respect to the enterprise which has passed the
attestation, the authentication agency shall issue an
authentication certificate of enterprise quality system.

The State shall practise a product quality attestation system
by taking reference to the internationally advanced product
standards and technical requirements. An enterprise may on
voluntary basis apply to the department in charge of supervision
and control over product quality under the State Council or to an
authentication agency approved by a department authorized by the
department in charge of supervision and control over product
quality under the State Council for authentication of product
quality. With respect to the enterprise which has passed the
authentication, the attestation agency shall issue a product
quality authentication certificate and permit it to use the
product quality authentication marks on its products or the
packages thereof.

Article 10 The State shall, with respect to product quality,
enforce a supervision and inspection system with random checking as
its main form. Products constituting possible threats to the health
or safety of human life and property, important industrial products
which have a bearing on the national economy and the people’s
livelihood, and products with quality problems as reported by
users, consumers or relevant organizations shall be subjected to
random checking. Such supervision and random checking shall be
planned and organized by the department in charge of supervision
and control over product quality under the State Council. The
administrative departments responsible for supervision over product
quality of the local people’s governments at or above the county
level may also organize supervision and random checking within
their respective administrative regions. However, overlapping
random checking shall be avoided. The results of random checking of product quality shall be made public. Where the law provides
otherwise with respect to the supervision over and inspection of product quality, the provisions of such law shall apply.

Products may be inspected if the supervision and random
checking of such products so require, but no fees shall be charged
for such purposes from the enterprises concerned. Expenses thus
incurred shall be disbursed in accordance with the relevant
regulations of the State Council.

Article 11 Product testing and inspection institutions must
have appropriate testing facilities and capabilities, and shall
undertake the work of testing and inspection of product quality
only after being appraised and endorsed by a department in charge
of supervision and control over product quality under the people’s
government at or above the provincial level or an organization
authorized by the department. Where the laws, administrative rules
and regulations provide otherwise with respect to the institutions
for testing and inspection of product quality, the provisions of such laws, rules and regulations shall apply.

Article 12 Users and consumers shall have the right to make
inquiriesto the producers and sellers about the quality of their
products. Where a complaint is made to a department in charge of supervision and control over product quality or to an
administrative department for industry and commerce or to any other
department concerned, such department shall be responsible for
handling the case.

Article 13 Social organizations responsible for the protection
of the rights and interests of consumers may, with respect to
matters concerning product quality as reported by consumers,
suggest to the departments concerned that they handle the matters,
and may give support to consumers in bringing a suit to a people’s
court with respect to the damage caused by quality problems of products.
Chapter III Liability and Obligation of Producers and Sellers
Concerning Product Quality

Section 1 Liability and Obligation of Producers
Concerning Product Quality

Article 14 Producers shall be liable for the quality of the
products they produce.

The products shall meet the following quality requirements:

(1) being free from unreasonable dangers threatening the
safety of human life and property, and conforming to the national
standards or trade standards safeguarding the health or safety of human life and property where there are such standards;

(2) possessing the properties and functions that they ought to
possess, except for those with directions stating their functional
defects;

(3) conforming to the product standards marked on the products
or the packages thereof, and to the state of quality indicated by
way of product directions, samples, etc.

Article 15 All marks on the products or the packages thereof shall meet the following requirements:

(1) with certificate showing that the product has passed
quality inspection;

(2) with name of the product, name and address of the factory
that produced the product, all being marked in Chinese;

(3) with corresponding indications regarding the
specifications, grade of the product, the main ingredients and
their quantities contained in the product, where such particulars
are to be indicated according to the special nature and
instructions for use of the product;

(4) with production date, safe-use period or date of invalidity if the product is to be used within a time
limit;

(5) with warning marks or warning statements in Chinese for
products which, if improperly used, may cause damage to the
products perse, or may endanger the safety of human life or
property.

Food products without package and other non-packed products
which are difficult to be marked because of their special nature
may dispense with product marks.

Article 16 The packages of poisonous, dangerous or fragile
products, or products that should be kept upright during storage
and transportation, or other products with special requirements
must meet the corresponding requirements and carry warning marks or
warning statements in Chinese indicating directions for storage
and transportation.

Article 17 No producer may produce any product that has been
officially eliminated by the State.

Article 18 No producer may forge the origin of a product, nor
forge or falsely use another producer’s name and address.

Article 19 No producer may forge or falsely use another
producer’s authentication marks, famous-and-excellent-product marks
or other product quality marks.

Article 20 In producing products, producers may not mix
impurities or imitations into the products, nor substitute a fake
product for a genuine one, a defective product for a high-quality
one, nor pass a substandard product off as a good-quality one.

Section 2 Liability and Obligation of Sellers
Concerning Product Quality

Article 21 A seller shall practise a check-for-acceptance
system while replenishing his stock, and examine the quality
certificates and other marks.

Article 22 A seller shall adopt measures to keep the products
for sale in good quality.

Article 23 A seller may not sell invalid or deteriorated
products.

Article 24 The marks of a seller’s products shall conform to
the provisions of Article 15 of this Law.

Article 25 A seller may not forge the origin of a product,
nor forge or falsely use another producer’s name and address.

Article 26 A seller may not forge or falsely use another
producer’s authentication marks, famous-and-excellent-product marks
or other product quality marks.

Article 27 In selling products, sellers may not mix impurities
or imitations into the products, nor substitute a fake product for
a genuine one, a defective product for a high-quality one, nor pass
a substandard product off as a good-quality one.
Chapter IV Compensation for Damage

Article 28 A seller shall be responsible for repair, or change
of the product, or for refund of a product if the it is sold under
any of the following circumstances, and, where the product has
caused any loss on users or consumers, the seller shall compensate
for such loss:

(1) not having the functions it ought to have, and no prior
explanation thereabout being given by the seller;

(2) not conforming to the product standards marked on the
product or its package;

(3) not conforming to the state of quality indicated by way of product directions or sample, etc.

After repair, change, refund or compensation has been made
according to the provisions of the preceding paragraph, if the
liability is attributed to the producer or to another seller who
had supplied the product (hereinafter referred to as supplier), the
seller shall have the right to recover his losses from the producer
or the supplier.

Where a seller fails to make repair, change, refund or
compensation in accordance with the provisions in the first
paragraph, the department in charge of supervision over product
quality or the administrative department for industry and commerce
shall order the seller to make rectification.

Where contracts for purchase and sale of products or for processing
concluded between producers or sellers or between producers and sellers
provide otherwise, the parties concerned shall act in accordance
with the provisions of the contracts.

Article 29 A producer shall be liable for compensation if his
defective product causes damage to human life or property other
than the defective product itself (hereinafter referred to as
another person’s property).

A producer shall not be liable for compensation if he can
prove the existence of any of the following circumstances:

(1) The product has not been put in circulation;

(2) The defect causing the damage did not exist at the time
when the product was put in circulation;

(3) The science and technology at the time the product was put
in circulation was at a level incapable of detecting the defect.

Article 30 Where damage to human life or another person’s
property is due to a product’s defect caused by the fault of a
seller, the seller shall be liable for compensation.

Where the seller can identify neither the producer of the
defective product nor the supplier thereof, the seller shall be
liable for compensation.

Article 31 Where a defective product causes damage to human
life or another person’s property, the victim may claim
compensation from the producer and may also claim compensation from
the seller of such product. Where the liability falls on the
producer, but the seller has made the compensation, the seller
shall have the right to recover the loss from the producer. Where
the liability falls on the seller, but the producer has made the
compensation, the producer shall have the right to recover the loss
from the seller.

Article 32 Where bodily injury is caused by a product due to
its defect, the infringer shall compensate for the medical expenses
of the infringed, the decreased earnings due to the loss of his
working time as well as the subsistence allowance if the infringed
is disabled; where such defect causes death of the infringed, the
infringer shall also pay the funernal expenses, the pension for the
family of the deceased and the living expenses necessary for any
other person(s) supported by the decased before his death.

Where damage is caused to the property of the infringed is
caused due to the defect of a product, the infringer shall restore
the damaged property to its original state, or pay compensation at
the market price. Where the infringed suffers any other serious
losses, the infringer shall also compensate for such losses.

Article 33 The limitation period for bringing an action for
damages arising from the defect of a product is two years, counting
from the day when the party concerned knew or should have known the
infringement of his rights and interests.

The right to claim for damages from defective products shall
be forfeited upon completion of ten years from the day when the
defective product causing the damage is delivered to the first user
or consumer, except that the clearly stated safe-use period has not
expired.

Article 34 “Defect” referred to in this Law means the
unreasonable danger existing in a product which endangers the
safety of human life or another person’s property; where there are
national or trade standards safeguarding the health or safety of human life and property, “defect” means inconformity to such
standards.

Article 35 Where a civil dispute concerning product quality
arises, the parties concerned may seek a settlement through
negotiation or mediation. If the parties are unwilling to resort to
negotiation or mediation, or negotiation or mediation provies to be
unsuccessful, they may apply to an arbitration organization for
arbitration as agreed upon between the parties; if the parties fail
to reach an arbitration agreement, they may bring a suit before a
people’s court.

Article 36 The arbitration organization or the people’s court
may entrust an organization in charge of product quality inspection
specified in Article 11 of this Law with product quality
inspection.
Chapter V Penalty Provisions

Article 37 Where products produced do not comply with the
relevant national or trade standards safeguarding the health or
safety of human life and property, the producer shall be ordered
to stop the production, the products and earnings illegally
produced and made shall be confiscated. And, a fine from twice to
five times the amount of the unlawful earnings shall be imposed
concurrently, and the business licence may be revoked; if the act
constitutes a crime, the offender shall be investigated for
criminal responsibility according to law.

Where products sold do not comply with the relevant national
or trade standards safeguarding the health or safety of human life
and property, the seller shall be ordered to stop the sale. If a
seller intentionally sells products not complying with the relevant
national or trade standards safeguarding the health and safety of human life and property, the products for illegal sale and the
unlawful earnings thus made shall be confiscated. And, a fine from
twice to five times the unlawful earnings shall be imposed
concurrently, and the business licence may be revoked; if the act
constitutes a crime, the offender shall be investigated for
criminal responsibility according to law,.

Article 38 Where a producer or a seller mixes impurities or
imitations into a product, or passes a fake product off as a
genuine one, or passes a defective product off as a high-quality
one, or passes a substandard product off as a good-quality one, the
producer or seller shall be ordered to stop production or sale, the
unlawful earnings shall be confiscated. And, a fine from twice to
five times his unlawful earnings shall be imposed concurrently, and
the business licence may be revoked; if the act constitutes a
crime, the offender shall be investigated for criminal
responsibility according to law.

Article 39 Where a product which has been officially
eliminated by the State is produced, the producer shall be ordered
to stop the production, the products and earnings illegally
produced and made shall be confiscated. And, a fine from twice to
five times the unlawful earnings shall be imposed concurrently, and
the business licence may be revoked.

Article 40 Where invalid or deteriorated products are sold,
the seller shall be ordered to stop the sale, the products for
illegal sale and the unlawful earnings shall be confiscated. And,
a fine from twice to five times the unlawful earnings shall be
imposed concurrently, and the business licence may be revoled; if
the act constitutes a crime, the offender shall be investigated for
criminal responsibility according to law.

Article 41 Where a producer or a seller forges the origin of a product or falsely uses another producer’s name and address, or
forges or falsely uses authentication marks,
famous-and-excellent-product marks or other product quality marks,
the producer or seller shall be ordered to make public
rectification, and the unlawful earnings shall be confiscated; a
fine may be imposed concurrently.

Article 42 Where anyone sells or purchases products mentioned
in Articles 37 to 40 of this Law by offering or accepting bribes or
other unlawful means and if the act constitutes a crime, the
offender shall be investigated for criminal responsibility
according to law.

Article 43 Where the marks of a product do not comply with the
provisions of Article 15 of this Law, the producer or seller
concerned shall be ordered to make rectification; where the marks
of the packed products do not comply with the provisions of item
(4) or (5) of Article 15 of this Law and if the case is serious,
the producer or seller concerned may be ordered to stop production
or sale. And, a fine from 15% to 20% of the unlawful earnings may
be imposed concurrently.

Article 44 Whoever forges inspection data or inspection
conclusion of a product shall be ordered to make rectification, and
a fine from twice to three times the inspection fee may be imposed.
If the circumstance is serious, the business licence shall be
revoked; where the act constitutes a crime, the person held
directly responsible shall be investigated for criminal
responsibility by applying mutatis mutandis the provisions of Article 167 of the Criminal Law.

Article 45 An administrative sanction in the form of revocation of business licence provided for in this Law shall be
decided by the administrative department for industry and commerce,
while other administrative sanctions shall be decided by the
department responsible for supervision over product quality or the
administrative department for industry and commerce according to
the functions and powers prescribed by the State Council. Where the
laws or administrative regulations provide otherwise as to the
authorities exercising the power of administrative sanctions, the
relevent provisions of such laws and administrative regulations
shall apply.

Article 46 If a party is not satisfied with the decision on
administrative sanction, it may, within 15 days of the receipt of the sanction notice, apply for reconsideration to the authorities
at the next higher level to the authorities that have made the
decision on sanction; the party may also bring a suit in a people’s
court directly within 15 days of the receipt of the sanction
notice.

The authorities responsible for reconsideration shall make a
reconsideration decision within 60 days of the receipt of the
application for reconsideration. If a party concerned is not
satisfied with the reconsideration decision, it may bring a suit in
a people’s court within 15 days of the receipt of such decision. If
no decision has been made by the authorities responsible for
reconsideration upon the expiry of the time limit, the party
concerned may bring an action in a people’s court within 15 days of the expiry of the time limit for reconsideration.

If the party concerned does not apply for reconsideration, nor
bring a suit in a people’s court upon the expiry of the time limit,
nor carry out the decision on sanction, the authorities that have
made the decision on sanction may apply to the people’s court for
compulsory enforcement.

Article 47 Any State functionary engaged in the work of supervision and control over product quality, who abuses power,
neglects duty, engages in malpractice for private benifit, shall
be investigated for criminal responsibility if his act constitutes
a crime; if his act does not constitute a crime, he shall be
subjected to administrative sanction.

Article 48 Any State functionary who clearly knows that an
enterprise, institution or individual has committed criminal
actions in violation of this Law, and takes advantage of his
position to protect the offenders intentionally from prosecution,
shall be investigated for criminal responsibility according to law.

Article 49 Whoever obstructs, by means of violence or
intimidation, State functionaries engaged in the work of supervision and control over product quality from carrying out
their duties according to law shall be investigated for criminal
resposibility in accordance with the provisions of Article 157 of the Criminal Law; whoever refuses or impedes, without resorting
to
violence or intimidation, State functionaries engaged in the work
of supervision and control over product quality to carry out their
duties shall be punished by the public security organs in
accordance with the relevant provisions of the Regulations on
Administrative Penalties for Public Security.
Chapter VI Supplementary Provisions

Article 50 Measures for supervision and control over quality
of military industrial products shall be formulated separately by
the State Council and the Central Military Commission.

Article 51 This Law shall come into force as of September 1,
1993.

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1999

REGULATIONS FOR THE IMPLEMENTATION OF WILD AQUATIC ANIMAL PROTECTION

SUPPLEMENTARY PROVISIONS CONCERNING THE PUNISHMENT OF CRIMES OFCOUNTERFEITING REGISTERED TRADEMARKS MADE BY THE STANDING COMMITTEE NATIONAL PEOPLE’S CONGRESS

CIRCULAR OF THE STATE COUNCIL TRANSMITTING THE VIEWS OF THE CIVIL AVIATION ADMINISTRATION OF CHINA ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON PUNISHMENT OF THE CRIMES OF PRODUCTION AND SALE OF FAKE OR SUBSTANDARD COMMODITIES

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON PRINTING AND DISTRIBUTING ANNOTATIONS ON BUSINESS TAX CATEGORY (TRIAL IMPLEMENTATION)

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON THE PROTECTION OF CONSUMER RIGHTS AND INTERESTS

LAW OF THE PEOPLES REPUBLIC OF CHINA ON THE POPULARIZATION OF AGRICULTURAL TECHNOLOGY

AUDITING MEASURES FOR CHINESE-FOREIGN EQUITY AND CONTRACTUAL JOINT VENTURES

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON AMENDING THE INDIVIDUAL INCOME TAX LAW (ATTACHED WITH THE FIRST REVISION OF

PROVISIONAL REGULATIONS ON BUSINESS TAX

PROVISIONAL REGULATIONS ON THE ADMINISTRATION OF SHARE ISSUANCE AND TRADING

PRODUCT QUALITY

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CONSTITUTION ACT, 1982 – page 21

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CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

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CONSTITUTION ACT, 1982 – page 10

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