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1999

PROCEDURES OF SHANGHAI MUNICIPALITY ON ENDOWMENT INSURANCE FOR TOWN EMPLOYEES

Procedures of Shanghai Municipality on Endowment Insurance For Town Employees

     CHAPTER I GENERAL PROVISIONS CHAPTER II ORGANIZATION CHAPTER III PAYMENT OF ENDOWMENT INSURANCE PREMIUMS CHAPTER IV ENJOYMENT OF ENDOWMENT
INSURANCE TREATMENT CHAPTER V USE AND ADMINISTRATION OF ENDOWMENT INSURANCE FUND CHAPTER VI SETTLEMENT OF DISPUTES AND PUNISHMENT
CHAPTER VII SUPPLEMENTARY PROVISIONS

   Article 1 In order to guarantee the basic needs of life after retirement for town employees, these Procedures are formulated in accordance
with the Plan of Shanghai Municipality for the Implementation of Reform of Endowment Insurance System for Town Employees.

   Article 2 The endowment insurance as defined in these Procedures refers to the social security system, set up through legal procedures, organized
and controlled by the competent government department, under which units and employees have the mutual obligation to pay endowment
insurance premiums, and retirees enjoy basic endowment insurance treatment according to the payment of premiums for endowment insurance.

   Article 3 These Procedures shall apply to town administrative agencies, enterprises and institutions (hereinafter referred to as units), and
employees and retirees of these units.

These Procedures shall not apply to aliens in foreign-invested enterprises or units and personnel otherwise stipulated by the State.

   Article 4 The endowment insurance follows the principles of sharing expenses among the State, units and individuals, combining individual savings
with unified planning and mutual aid, and combining guaranty of the basic needs of life for retirees with stimulation of the initiative
of employees.

Units have the obligation to pay endowment insurance premiums for their employees while employees have the obligation to pay insurance
premiums for themselves.

An employee’s rights to have his/her unit pay endowment insurance premiums and to enjoy endowment insurance treatment after retirement
are protected by the law and no infringement of these rights by any unit or individual is allowed.

   Article 5 The reform of this Municipality’s endowment insurance system aims at phasing in a multi-layer endowment insurance system. In addition
to the endowment insurance stipulated in these Procedures, unit supplementary endowment insurance shall be phased in units whose
conditions permit, and the employees who can afford it shall be encouraged to carry individual savings endowment insurance.

   Article 6 This Municipality shall set up the Municipal Social Insurance Committee that is responsible for the examination of the development
plan of endowment insurance, the study and decision of major policies on endowment insurance, and the plan for maintaining or raising
the value of endowment insurance fund.

   Article 7 The Municipal Social Insurance Administration is responsible for the administration of endowment insurance of this Municipality.
Its functions are:

1. To organize the implementation of endowment insurance system;

2. To prepare the development plan of endowment insurance;

3. To draft local laws and regulations on endowment insurance;

4. To formulate, jointly with relevant departments, the financial, accounting, statistical and internal auditing systems for endowment
insurance fund;

5. To supervise the collection of endowment insurance premiums, the disbursement of pensions, and the operation of endowment funds
for its appreciation;

6. To direct the work of endowment insurance management centers at the municipal, district and county levels; and

7. To execute the decisions of the Municipal Social Insurance Committee.

   Article 8 Endowment insurance industry management centers are the agencies that undertake the routine business about endowment insurance. Their
functions are:

1. To take charge of the collection of endowment insurance premiums and the payment of pensions;

2. To manage individual endowment insurance accounts;

3. To answer inquiries about endowment insurance from units, employees and retirees; and

4. To handle other matters commissioned or authorized by the Municipal Social Insurance Administration.

CHAPTER III PAYMENT OF ENDOWMENT INSURANCE PREMIUMS

   Article 9 All units referred to in Paragraph 1, Article 3 of these Procedures shall register endowment insurance for the units and their employees
in the endowment insurance administrative center designated by the Municipal Social Insurance Administration. Newly-established units
shall complete the procedures of endowment insurance registration within 1 month from the date of their establishment.

When a unit is divided or merged, goes bankrupt or is shut down, and recruits or dismisses employees (including resignation, unauthorized
quit, discharge, and removal), the unit shall, within 1 month, go through the formalities for alteration or cancellation of the endowment
insurance registration with the endowment insurance management center that handled the registration.

When registering endowment insurance, the endowment insurance management center shall set endowment insurance codes for units, open
individual endowment insurance accounts for employees and issue Endowment Insurance Books.

   Article 10 An employee’s individual endowment insurance account shall remain unchanged for life. The Endowment Insurance Book must be used for
recording the employee’s successive working years before the implementation of these Procedures and the savings amount in his individual
endowment insurance account after the implementation of these Procedures, which are the basis for computing pensions granted upon
retirement.

When an employee changes his/her work unit, the Endowment Insurance Book must be transferred with the employee accordingly.

   Article 11 Units and employees shall pay monthly endowment insurance premiums within the prescribed time limit. No delay or failure of payment
nor underpayment is allowed.

   Article 12 A unit shall pay endowment insurance premium at the rate of 25.5% of the total amount of wages paid to all its employees in the preceding
month.

An employee shall pay endowment insurance premiums at the rate of 3% of his/her monthly average wage in the previous year, which is
to serve as the payment base. If an employee’s monthly average wage in the previous year is over 200% of those of the employees of
the whole city in the previous year, the excess above the 200% shall not be included in the base for premium payments. In case the
average monthly wage of an employee in the previous year is below 60% of those of the employees in the whole city in the previous
year, 60% of the monthly average wages of the employees in the whole city in the previous year shall be used as the payment base.

The same approach must be taken to computing the payment base of endowment insurance premium for units and for employees.

The adjustment of the rates of endowment insurance premium paid by units and employees shall be proposed by the Municipal Social Insurance
Administration and reported to the Municipal Social Insurance Committee for decision.

   Article 13 The endowment insurance premiums paid by units shall be entered as expenditures through the following channels:

1. Entered as expenditures before tax for enterprises and institutions that balance their revenue and expenditures by themselves;
or

2. Entered as administrative expenses or operating expenses for administrative agencies and institutions with total or differential
budget.

   Article 14 The endowment insurance premiums shall be paid in the following ways:

1. A unit shall withhold the endowment insurance premiums to be paid by employees from their monthly wages. The deduction from an
employee’s wages for endowment insurance premium may be exempt from individual income tax.

2. A unit shall go to the endowment insurance management center at regular time every month to verify the endowment insurance premiums
to be paid by the unit and its employees and pay the full amount as verified.

   Article 15 The endowment insurance management center shall settle the savings amount in the individual endowment insurance account each year
and issue to each employee a statement of the endowment insurance premiums paid.

   Article 16 The endowment insurance premium to be entered in the individual endowment insurance account shall include:

1. The endowment insurance premium paid by the individual; and

2. The portion of endowment insurance premium paid by the unit, which is to be entered in the individual account;

a. The amount to be entered at certain rates (8% for enterprises and institutions that balance revenue and expenditures by themselves,
10% for administrative agencies and institutions with full budget and 9% for institutions with differential budget) of the employee’s
individual payment base (not more than 150% of the monthly average wages of the employees in the whole city in the previous year);
and

b. The amount to be entered at 5% of the monthly average wages of the employees in the whole city in the previous year.

The portion of the endowment insurance premiums paid by the unit, which is to be entered in the individual account, shall be adjusted
in proportion to the rise of the individual payment rate.

   Article 17 All the endowment insurance premiums paid by units must be used for social unified plannings except for the portion entered in the
individual endowment insurance account.

   Article 18 The interest on the savings amount entered in the individual endowment insurance account shall be computed at a rate not lower than
the bank interest rate for residents’ time deposits mature in one year’s time in the same period.

   Article 19 The endowment insurance fund shall be channeled to the financial special account under the city treasury for the independent social
security fund. The fund shall operate on two separate lines, the line of receipts and that of disbursement, which are to be put under
specialized management with the fund earmarked and used exclusively for its specified purpose.

CHAPTER IV ENJOYMENT OF ENDOWMENT INSURANCE TREATMENT

   Article 20 A retiree who is enpost_titled to endowment insurance treatment shall satisfy the following requirements at the same time:

1. The employee has reached the retirement age stipulated by the State or this Municipality;

2. The unit and the employee have paid endowment insurance premiums as stipulated; and

3. The employee employed before the implementation of these Procedures has 10 successive working years (including premium payment
years) or the employee employed after the implementation of these Procedures and has paid premiums for fifteen years.

The retiree who meets the above requirements may go through the formalities for drawing pensions with the endowment insurance management
center and draw pensions monthly upon verification and determination by the endowment insurance industry management center.

   Article 21 A jobless person who meets the requirement in Section 1 of Article 20 of these Procedures may go through the formalities for drawing
monthly pensions with the endowment insurance center.

   Article 22 A person who got employment before the implementation of these Procedures and has been working for more than 5 but less than 10 successive
years (including payment years) by the retirement age shall quit working. An employee who has 5 successive working years and is incapacitated
by illness or non-working related injury may quit working after being ascertained by the Labor Appraisal Committee as having totally
lost working ability.

A person who has quit working for the above reasons is enpost_titled to corresponding pension treatment as stipulated.

   Article 23 A person who got employment before the implementation of these Procedures with less than 5 successive years (including premium payment
years) or who got employment after the implementation of these Procedures and has paid premiums with less than 15 payment years may,
at the retirement age, apply to the endowment insurance industry management center for the payment of the total savings amount in
his/her individual endowment insurance account to be made to him/her and for the termination of his/her endowment insurance at the
same time.

   Article 24 The person who meets the pension-drawing requirements may draw pensions for life. When the savings amount in his/her individual endowment
insurance account is exhausted, the pension may be paid from the pool of unified social security funds.

   Article 25 After the death of an employee or retiree, the balance of the savings amount in his/her individual endowment insurance account paid
by himself/herself may be given in one lump sum to his/her heir determined through legal procedures.

   Article 26 The Municipal Social Insurance Administration may require pensioners to go through the check-up formalities with the endowment insurance
industry management center at regular time. The payment of pension may be suspended for failure to complete the check-up formalities.

When a retiree can not go through the check-up formalities because of going abroad, or out of border or for other reasons, he/she
must produce a certificate of his/her survival in accordance with relevant provisions of the State.

When a retiree can not draw his/her pension in person because of going abroad or out of border or for other reasons and has to entrust
someone else to draw pensions for him/her, a notarized power of attorney shall be presented.

   Article 27 The formula for computing the pension of the person who got employment after the implementation of these Procedures is:

Monthly pension = total savings in individual endowment insurance account/120

   Article 28 The monthly pension the person who got employment before the implementation of these Procedures and retired or quit working before
the end of 1995 shall first be computed by the said formula and then augmented with a certain percentage of the individual accumulated
payment. The augmentation shall be determined according to the following provisions:

1. The monthly pension shall be augmented with 11% for the person who retired and whose payment years plus his/her successive working
years before the implementation of these Procedures are 10 or more years but less than 15 years. On this base, a further increase
of every 5 years shall bring in a rise of 1 percentage point accordingly, but the augmentation shall not exceed the limit of 16%.

2. The monthly pension shall be augmented with 2% for the person who retired from an administrative agency or institution and whose
payment years plus his/her successive working years before the implementation of these Procedures are 10 or more years but less than
15 years. On this base, an increase of every 5 years shall bring in a rise of 1 percentage point accordingly, but the augmentation
shall not exceed the limit of 7%.

3. The monthly pension shall be augmented by 10% for the person who quits working from an enterprise and 1% for the person who quits
working from an administrative agency or institution.

The above-mentioned person who reaches retirement age in any month of the year shall pay the premium for 12 months in the current
year of his/her retirement and the pension shall be augmented according to the provisions in the preceding Section.

The preferential treatment enjoyed by retired veteran cadres, model workers, senior experts and those who can have an early retirement
as stipulated by the State shall be carried out according to the original provisions as before.

   Article 29 The savings amount in the individual endowment insurance account multiplied by a definite coefficient makes the savings amount for
the total working years for the person who got employment before the implementation of these Procedures and retires after January
1, 1996. The formula for computing his/her monthly pension is:

Monthly pension = savings amount in individual endowment insurance account x coefficient/120

When the pension computed according to the provision in the preceding Section is lower than the standard computed according to the
measure in Article 28 of these Procedures, the measure in Article 28 may be adopted to compute the pension instead.

   Article 30 The savings amount in the individual endowment insurance account must only be used to pay monthly retirement pensions and must not
be diverted to any other purposes.

When a pension is paid to an retiree, a corresponding deduction must be made from the savings amount in the individual endowment insurance
account according to the proportion of the amount paid by the individual to the amount paid by the unit.

   Article 31 The Municipal Social Insurance Committee shall set the lowest standard of retirement pension. In case the pension drawn by according
to the provisions is lower than the lowest standard, the pension may be granted according to the lowest standard.

The lowest standard of pension shall be adjusted with the economic development and the rising consumer price index of local residents.

   Article 32 The retirement pension shall be adjusted every year according to the extent of rise in the local residents’ consumer price index
in the previous year, which becomes effective on April 1 of the current year. The pension of the person who retires in the current
year shall be adjusted the following year. No adjustment is made when the local residents’ consumer price index drops from the previous
year.

   Article 33 This Municipality shall grant living allowances to retirees from time to time according to the national economic development and
the receipts and disbursement of the endowment insurance fund, and with reference to the employees’ actual wages. A special living
allowance may be granted additionally to retirees in special difficulties.

   Article 34 After the death of a retiree, a funeral allowance, grants for lineal dependents and relief benefits shall be paid according to the
relevant provisions of the State and this Municipality.

CHAPTER V USE AND ADMINISTRATION OF ENDOWMENT INSURANCE FUND

   Article 35 The sources of endowment insurance funds shall include:

1. Endowment insurance premiums paid by units and employees;

2. Income from the interest earned by endowment insurance fund;

3. Income from the operation of endowment insurance fund for its appreciation; and

4. Overdue fines collected according to the provisions of these Procedures.

   Article 36 The endowment insurance fund shall be mainly used to pay retirement pensions. When the fund is not enough to make payment, it shall
be subsidized by the local finance.

The endowment insurance fund shall be put under the centralized management of the Municipal Social Insurance Administration and be
earmarked and used exclusively for its specified purpose and must not be drawn on arbitrarily by any unit or individual.

   Article 37 The payments that can be made from the endowment insurance fund are:

1. Retirement pensions;

2. Funeral allowances, grants for lineal dependents, and relief benefits paid after the death of retirees according to the relevant
provisions of the State and this Municipality;

3. The balance of the part attributable to individual payment in the individual endowment insurance account to be given to the legal
inheritor(s) of the deceased employee or retiree; and

4. Living allowances granted under Article 33 of these Procedures.

The endowment insurance industry management center may draw a certain percentage of the endowment insurance premiums actually collected
as management fees upon approval by the Municipal Social Insurance Committee.

The management fees drawn according to the above Section shall be exempt from taxes or fees.

   Article 38 The endowment insurance fund may be put into operation for its appreciation on condition that the regular payment and its safety
are secured, but must not be used to make investment with long recovery period, great risks or of a speculative nature. The increment
included in the endowment insurance fund after operation shall be exempt from taxes or fees.

   Article 39 The Municipal Social Insurance Administration shall timely summarize, verify and report the use and management of the endowment insurance
fund to the Municipal Social Insurance Committee on regular basis or at the request of the latter.

   Article 40 A budget and final accounts must be made annually for the collection, payment and operation of the endowment insurance fund for its
appreciation.

   Article 41 The collection, payment and operation of the endowment insurance fund for its appreciation shall be supervised concurrently by the
public finance, and auditing departments and the financial regulatory departments.

   Article 42 The Municipality shall set up the endowment insurance fund supervisory organization, consisting of the governmental department concerned
and representatives of the social public, to supervise the collection, payment and management of the endowment insurance fund. The
specific measures shall be separately formulated.

CHAPTER VI SETTLEMENT OF DISPUTES AND PUNISHMENT

   Article 43 Disputes between an employee and his/her unit over the payment of endowment insurance premiums or disputes between an employee or
retiree or a unit and the endowment insurance management center may be referred to the Municipal Social Insurance Administration
for adjudication.

   Article 44 An employee or retiree or a unit may ask the endowment insurance management center to check the payment of endowment insurance premiums
made by the individual or the unit and the payment of pensions. The endowment insurance management center shall provide free services.

   Article 45 The endowment insurance management center may examine the payment of endowment insurance premiums. The Municipal Social Insurance
Administration shall instruct the unit that makes no payment of, or fails to make of, or makes underpayment of endowment insurance
premiums to pay the premiums within a prescribed time limit. If the payment is not made within the deadline, the Municipal Social
Insurance Administration may ask the bank to withhold the payment and may impose a fine 1 to 2 times as much as the unpaid amount.
The fine, however, shall not exceed 30,000 yuan.

   Article 46 The endowment insurance management center shall impose an overdue fine equal to 0.2% of the payable amount for each day in arrears
on the unit that fails to make the payment of endowment insurance on time.

Income from overdue fines shall be included in the endowment insurance fund.

   Article 47 When a retiree who enjoys the endowment insurance treatment dies, his/her lineal relative(s) or the unit concerned shall go through
the endowment registration cancellation formalities with the endowment insurance management center in good time.

If any person violates the above Section, overdraws or falsely claims pension by forging documents or by other means, the endowment
insurance management center shall recover the amount overdrawn or falsely claimed. If the case is serious, the Municipal Social Insurance
Administration may impose a fine one to five times as much as the amount overdrawn or falsely claimed. However, such fine shall not
exceed 30,000 yuan for a unit and 1,000 yuan for an individual.

   Article 48 If the party concerned refuses to accept as final the specific administrative act of the Municipal Social Insurance Administration,
it may apply for administrative review according to the Regulations on Administrative Review or institute legal proceedings according
to the Administrative Litigation Law of the People’s Republic of China.

If the party concerned does not apply for review or institute legal proceedings within the prescribed period of time, nor does it
comply with the specific administrative decision, the administrative department that made the decision may apply to the people’s
court for enforcement according to the provisions of the Administrative Procedure Law of the People’s Republic of China.

   Article 49 The public security organs shall inflict penalty on those who disturb the normal working order of endowment insurance agencies according
to the Regulations of the People’s Republic of China on Public Security Administration and the Imposition of Punishment.

CHAPTER VII SUPPLEMENTARY PROVISIONS

   Article 50 The interim measures on endowment insurance for employees in foreign-funded enterprises and the measures on endowment insurance for
employees in privately-owned enterprises and individual industrialists and businessmen shall be separately formulated according to
the principles of these Procedures.

   Article 51 The procedures on unit supplementary endowment insurance and individual savings endowment insurance in this Municipality shall be
separately formulated.

   Article 52 The Municipal Social Insurance Administration shall be responsible for the interpretation of the specific application of these Procedures.

   Article 53 These Procedures shall become effective on June 1, 1994.

Any unit or individual that failed to execute the Plan of Shanghai Municipality for the Implementation of Reform of Endowment Insurance
System for Town Employees during the period from January 1, 1993 until the time of implementation of these Procedures shall fulfill
the obligations under the Plan within 3 months starting from the date of implementation of these Procedures.

    





DECISION OF THE NATIONAL PEOPLE’S CONGRESS ON THE METHOD FOR THE FORMATION OF THE FIRST GOVERNMENT, THE FIRST LEGISLATIVE COUNCIL AND THE FIRST JUDICIARY OF THE MACAO SPECIAL ADMINISTRATIVE REGION

Category  SPECIAL ADMINISTRATIVE REGION Organ of Promulgation  The National People’s Congress Status of Effect  In Force
Date of Promulgation  1993-03-31 Effective Date  1993-03-31  


Decision of the National People’s Congress on the Method for the Formation of the First Government, the First Legislative Council
and the First Judiciary of the Macao Special Administrative Region



(Adopted at the First Session of the Eighth National People’s

Congress on March 31, 1993)

    1. The First Government, the First Legislative Council and the
First Judiciary shall be formed in accordance with the principles
of state sovereignty and  smooth transition.

    2. The National People’s Congress shall establish  a
Preparatory Committee for the Macao Special Administrative Region,
which shall be responsible for preparing the establishment of the
Region and shall prescribe the specific method for forming the
First Government, the First Legislative Council and the First
Judiciary in accordance with this Decision. The Preparatory
Committee shall be composed of mainland members and of Macao
members who shall constitute not less than 50 percent of its
membership. Its Chairman and members shall be appointed by the
Standing Committee of the National People’s Congress.

    3. The Preparatory Committee for the Macao Special
Administrative Region shall be responsible for preparing the
establishment of the Selection Committee for the First Government
of the Macao Special Administrative Region (“the Selection
Committee”).

    The Selection Committee shall be composed entirely of permanent residents of Macao and must be broadly representative.
It
shall include Macao deputies to the National People’s Congress,
representatives of Macao members of the National Committee of the
Chinese People’s Political Consultative Conference, persons with
practical experience who have served in Macao’s executive,
legislative and advisory organs prior to the establishment of the
Macao Special Administrative Region, and persons representative of various strata and sectors of society.

    The Selection Committee shall be composed of 200 members,
among whom:

        Industrial, commercial and financial sectors:      60

        Cultural and educational sectors and other

        professions:                                      
50

        Labor, social services, religious and

        other sectors:                                    
50

        Former political figures, Macao deputies

        to the National People’s Congress, and

        representatives of the Macao members of the

        National Committee of the Chinese People’s

        Political Consultative Conference:                
40

    4. The Selection Committee shall recommend the candidate for
the first Chief Executive through local consultations or through
nomination and election after consultation, and report the
recommended candidate to the Central People’s Government for
appointment. The term of office of the first Chief Executive shall
be the same as the regular term.

    5. The Chief Executive of the Macao Special Administrative
Region shall be responsible for preparing the formation of the
first Government of the Region in accordance with this Law.

    6. The first Legislative Council of the Macao Special
Administrative Region shall be composed of 23 members, with 8
members returned through direct elections, 8 members returned
through indirect elections, and 7 members appointed by the Chief
Executive. If the composition of the last Macao Legislative Council
before the establishment of the Macao Special Administrative Region
is in conformity with the relevant provisions of this Decision and
the Basic Law of the Macao Special Administrative Region, those of the elected members who uphold the Basic Law of the Macao Special
Administrative Region of the People’s Republic of China and pledge
allegiance to the Macao Special Administrative Region of the
People’s Republic of China, and who meet the requirements set forth
in the Basic Law of the Region may, upon confirmation by the
Preparatory Committee, become members of the First Legislative
Council of the Region. Any vacancy in the first Legislative Council
of the Region shall be filled by a decision of the Preparatory
Committee.

     The term of office of members of the first Legislative Council
of the Macao Special Administrative Region shall last until 15
October 2001.

    7. The Preparatory Committee of the Macao Special
Administrative Region shall be responsible for organizing the Court
of the Macao Special Administrative Region in accordance with the
Basic Law of the Region.





PROPOSALS OF THE SECURITIES COMMITTEE OF THE STATE COUNCIL ON PROCEDURES OF ISSUING, SELLING AND SUBSCRIBING STOCKS FOR

Proposals of the Securities Committee of the State Council on Procedures of Issuing, Selling and Subscribing Stocks for 1993

     (Effective Date:1993.08.18–Ineffective Date:)

CHAPTER ONE THE BASIC PRINCIPLES FOR ISSUING, SELLING AND SUBSCRIBING STOCKS. CHAPTER TWO METHODS OF UNLIMITED ISSUING OF APPLICATION
FORMS. CHAPTER THREE METHODS OF ISSUING STOCKS ACCORDING TO BAND DEPOSITS. CHAPTER FOUR FUNCTIONS AND RESPONSIBILITIES OF UNDERWRITING
ORGANIZATIONS.

The Securities Committee of the State Council has made the following proposals on the procedures of issuing, selling of and subscribing
stocks for the year of 1993 with a view to ensuring the smoothgoing of stock deals according to the “Circular on Further Strengthening
the Macro-Control of the Securities Markets” issued by the State Council and “The Interim Provisions on the Management of the Issuing
and Trading of Stocks”:

CHAPTER ONE THE BASIC PRINCIPLES FOR ISSUING, SELLING AND SUBSCRIBING STOCKS.

   Article 1.1 The issuing and selling of stocks must be made under a greater transparency to achieve the principles of openness, fair and just
and prevent malpractices for personal gains to ensure social stability.

   Article 1.2 The trans-regional issuing of stocks must be submitted to the Securities Committee of the State Council for approval.

   Article 1.3 For selling the stocks, the application forms for subscribing may be issued unlimitedly with the limited amount of real stocks to
be distributed through drawing at a later time or limitedly according to the amounts of bank deposits of the subscribers. The use
of other methods of distribution which are deemed as better than the first two is subject to the approval by the Securities Committee
of the State Council.

   Article 1.4 The stocks should be issued in financial developed cities which are accommodated with telecommunications, computer and transport
facilities, a certain number of financial organizations (including securities management organizations) and member organizations
of the Shanghai and Shenzhen stock exchanges.

   Article 1.5 The people’s governments of various provinces autonomous reigons, municipalities under the direct administration of the central
government and cities covered by central planning should formulate concrete plans for executing these proposals and work out actual
scheme of execution.

   Article 1.6 Places which have not fulfilled the purchasing of treasury bonds are not allowed to sell application forms or issue stocks.

CHAPTER TWO METHODS OF UNLIMITED ISSUING OF APPLICATION FORMS.

   Article 2.1 After the issuing is completed within a limited time, drawing of actual stocks should be made openly according to the amount of
application forms that has been issued and the actual amount of stocks planned to be sold. Those who win the lots will then go through
the actual stock subscription procedures according to regulations.

   Article 2.2 To avoid long lining-up and paper waste, the application forms may be sold over the counter designated by the governments at various
levels to facilitate people of various communities or through pre-registration in certain working units at the same time.

   Article 2.3 Each application form can only buy stocks issued by an enterprise or at most the stocks of several enterprises issued in the same
locality and the same year, and the forms must be enpost_titled with the name or names of the stock issuing enterprises.

   Article 2.4 Costs of the application forms which cover expenses for printing and commissions for underwriters must be charged to the buyers
and accounted for independently by the underwriting organizations. The balance in the sales of application forms must be turned over
to the State coffer for use in social welfare undertakings.

   Article 2.5 Amount of stocks contained in each application form should not be less than 500 or more than 1,000 in integer multiples of 100.
No unit or individual is allowed to transfer or resell the forms at prices higher than the actual value subscribed therein.

CHAPTER THREE METHODS OF ISSUING STOCKS ACCORDING TO BAND DEPOSITS.

   Article 3.1 Through consultation between the governments and branches of the People’s Bank at all levels, application forms may be allocated
according to a certain ratio of the bank deposits of residents with the real amount of stocks to be sold through drawing and winners
of lots will go through the subscription procedures according to regulations. If special accounts for deposits are served, the drawing
can also be made on the numbers of the special accounts. Other methods may also be employed.

   Article 3.2 In adopting the method according to bank deposits, effective measures should be taken to prevent the movement of large amount of
funds from area to area.

CHAPTER FOUR FUNCTIONS AND RESPONSIBILITIES OF UNDERWRITING ORGANIZATIONS.

   Article 4.1 Before the date of selling stock applications forms, underwriting organizations should be responsible for making public in newspapers
or magazines the outline prospectus and matters concerning the date and place of the selling of the application forms.

   Article 4.2 During the period of selling the applications forms, the underwriting organizations should make public the prospectus at all selling
points or in other forms.

   Article 4.3 Underwriting organizations are not allowed to sell application forms before the prescribed date or to reserve by any form application
forms for their own units during or after the selling period.

Neither are they allowed to sell application forms in places other than approved (people outside the city are not restricted to buy
application forms in places where the application forms are sold).

They are not allowed to entrust organizations which have no right to act as agents to sell application forms.

   Article 4.4 If an underwriting organization violates the above provisions and relevant laws and regulations during the process of underwriting,
it will be punished or even be disqualified for further underwriting business according to the seriousness of the case.

   Article 4.5 Drawing of application forms should be made openly in prescribed date and procedures and under the supervision of notary public.

After the period of issuing of stocks ends, the application forms remaining unsold should be recovered and destroyed by the underwriting
organizations. After the period of underwriting ends, the stocks remaining unsold shall be handled according to the provisions of
the underwriting agreement.

    

Source:Xinhuanet

EDITOR:Victor





PROTECTION OF CONSUMER RIGHTS AND INTERESTS

_

Category  PROTECTION OF CITIZENS’ RIGHTS AND INTERESTS Organ of Promulgation  The Standing Committee of the National People’s Congress Status of Effect  In Force
Date of Promulgation  1993-10-31 Effective Date  1994-01-01  


Law of the People’s Republic of China on the Protection of Consumer Rights and Interests

Contents
Chaper I  General Provisions
Chapter II  Rights of Consumers
Chapter III  Obligations of Businees Operators
Chapter IV  Protection of the Legitimate Rights and Interests of        
Chapter V  Consumer Organizations
Chapter VI  Settlement of Disputes
Chapter VII  Legal Responsibility
Chapter VIII  Supplementary Provisions

(Adopted at the Fourth Meeting of the Standing Committtee

of the Eighth National People’s Congress on October 31, 1993,
promulgated by Order No.11 of the President of the People’s
Republic of China, and effective as of January 1, 1994)
Contents

    Chapter I     General Provisions

    Chapter II    Rights of Consumers

    Chapter III   Obligations of Bussiness Operators

    ChapterIV     Protection of 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
Chaper 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 clearout 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 purchusing 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
compersations 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, dliminate 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 anthentication 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 b

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.





PROVISIONAL REGULATIONS ON CONSUMPTION

Category  TAXATION Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-12-13 Effective Date  1994-01-01  


Provisional Regulations of the People’s Republic of China on Consumption


Appendix: CONSUMPTION TAXABLE ITEMS AND TAX RATES (TAX AMOUNTS) TABLE

Tax

(Adopted at the 12nd Executive Meeting of the State Council on November

26, 1993, promulgated by Decree No.135 of the State Council of the People’s
Republic of China on December 13, 1993 and effective as of January 1, 1994)

    Article 1  All units and individuals engaged in the production,
sub-contracting for processing or the importation of consumer goods prescribed
by these Regulations (hereinafter referred to as ‘taxable consumer goods’)
within the territory of the People’s Republic of China are taxpayers of
Consumption Tax (hereinafter referred to as ‘taxpayers’) and shall pay
Consumption Tax in accordance with these Regulations.

    Article 2  The taxable items, tax rates (tax amounts) of Consumption Tax
shall be determined in accordance with the Consumption Tax Taxable Items and
Tax Rates (Tax Amounts) Table attached to these Regulations.

    Any adjustments to the Consumption Tax taxable items, tax rates (tax
amounts) shall be determined by the State Council.

    Article 3  For taxpayers dealing in taxable consumer goods with different
tax rates, the sales amounts and sales volumes for the taxable consumer goods
with different tax rates shall be accounted for separately. If the sales
amounts and sales volumes have not been accounted for separately or if the
taxable consumer goods with different tax rates are combined into a whole set
of consumer goods for sales, the higher tax rate shall apply.

    Article 4  Taxable consumer goods produced by the taxpayer shall be
subject to tax upon sales. For self-produced taxable consumer goods for the
taxpayer’s own use in the continuous production of taxable consumer goods, no
tax shall be assessed; tax shall be assessed when the goods are transferred
for other use.

    For taxable consumer goods sub-contracted for processing, the tax shall be
collected and paid by the sub-contractor upon delivery to the contractor. For
taxable consumer goods sub-contracted for processing used by the contractor
for the continuous production of taxable consumer goods, the tax paid can be
credited in accordance with the regulations.

    Imported taxable consumer goods shall be subject to tax upon import
declaration.

    Article 5  The computation of tax payable for Consumption Tax shall follow
either the rate on value or the amount on volume method. The formulas for
computing the tax payable are as follows:

    The tax payable computed under the rate on value mentod

                          
= Sales amount * Tax rate

    The tax payable computed under the amount on volume mentod

                          
= Sales volume * Tax amount per unit

    For taxable consumer goods sold by taxpayer where the sales amounts are
computed in foreign currencies, the taxable amounts shall be converted into
Renminbi according to the exchange rates prevailing in the foreign exchange
market.

    Article 6  The “sales amount” as stipulated in Article 5 of these
Regulations shall be the total consideration and other charges receivable from
the buyer for the taxable consumer goods sold by the taxpayer.

    Article 7  Self-produced taxable consumer goods for the taxpayer’s own use
that shall be subject to tax in accordance with the stipulations of the first
paragraph in Article 4 of these Regulations shall be assessed according to the
selling price of similar consumer goods produced by the taxpayer. If the
selling price of similar consumer goods is not available, the tax shall be
assessed according to the composite assessable value. The formula for
computing the composite assessable value is as follows:

    Composite assessable value = (Cost + Profit) / (1 – Consumption Tax rate)

    Article 8  Taxable consumer goods sub-contracted for processing shall be
assessed according to the selling price of similar consumer goods of the
sub-contractor. If the selling price of similar consumer goods is not
available, the tax shall be assessed according to the composite assessable
value. The formula for computing the composite assessable value is as follows:

    Composite assessable value

      = (Cost of material + Processing fee) / (1 – Consumption Tax rate)

    Article 9  Imported taxable consumer goods which adopt the rate on value
method in computing the tax payable shall be assessed according to the
composite assessable value. The formula for computing the composite assessable
value is as follows:

    Composite assessable value

    = (Customs dutiable value + Customs Duty) / (1 – Consumption Tax rate)

    Article 10  Where the taxable value of the taxable consumer goods of the
taxpayer is obviously low and without proper justification, the taxable value
shall be determined by the competent tax authorities.

    Article 11  For taxpayers exporting taxable consumer goods, the
Consumption Tax shall be exempt, except as otherwise determined by the State
Council. The measures for exemption of exported taxable consumer goods shall
be regulated by the State Administration for Taxation.

    Article 12  Consumption Tax shall be collected by the tax authorities.
Consumption Tax on the importation of taxable consumer goods shall be
collected by the customs office on behalf of the tax authorities.

    Consumption Tax on taxable consumer goods brought or mailed into China by
individuals shall be levied together with Customs Duty. The detailed measures
shall be formulated by the Tariff Policy Committee of the State Council
together with the relevant departments.

    Articie 13  Taxpayers selling taxable consumer goods and self-producing
taxable consumer goods for their own use, except otherwise as determined by
the State, shall report and pay tax to the local competent tax authorities
governing the taxpayers.

    For taxable consumer goods sub-contracted for processing, the Consumption
Tax due shall be paid to the local competent tax authorities where the
sub-contractors are located.

    For imported taxable consumer goods, the tax shall be reported and paid by
the importers or their agents to the customs offices where the imports are
declared.

    Article 14  The Consumption Tax assessable period shall be one day, three
day, five days, ten days, fifteen days or one month. The actual assessable
periods of the taxpayers shall be separately determined by the competent tax
authorities according to the magnitude of the tax payable of the taxpayers;
tax that cannot be assessed in regular periods can be assessed on a
transaction-by-transaction basis.

    Taxpayers that adopt one month as an assessable period shall report and
pay tax within ten days following the end of the period. If an assesable
period of one day, three days, five days, ten days or fifteen days is adopted,
the tax shall be prepaid within five days following the end of the period, and
a monthly return shall be filed with any balance of tax due settled within ten
days from the first day of the following month.

    Article 15  Taxpayers importing taxable consumer goods shall pay tax
within seven days after the completion and issuance of the tax payment
certificates by the customs office.

    Article 16  The collection and administration of Consumption Tax shall be
conducted in accordance with the relevant provisions of the Law of the
People’s Republic of China on Tax Collection and Administration and these
Regulations.

    Article 17  The collection of Consumption Tax from foreign investment
enterprises and foreign enterprises shall be conducted in accordance with the
resolutions of the Standing Committee of the National People’s Congress.

    Article 18  The Ministry of Finance shall be responsible for the
interpretation of these Regulations and for the formulation of the rules for
the implementation of these Regulations.

    Article 19  These Regulations shall come into effect from January 1, 1994.
The relevant regulations of the State Council regarding the collection of
Consumption Tax prior to the promulgation of these Regulations shall be
superseded on the same date.

Appendix: CONSUMPTION TAXABLE ITEMS AND TAX RATES (TAX AMOUNTS) TABLE


        Taxable Items            Scope
of charge    Tax Unit   Tax Rate/Amount

    I. Tobacco

    1. Grade A cigarettes        Including Imported                  
45%

                                
Cigarettes

    2. Grade B cigarettes                                            
40%

    3. Cigars                                                        
40%

    4. Cut tobacco                                                    30%

   II. Alcoholic drinks and

       alcohol                                          

    1. White spirits made from                                        25%

       cereal

    2. White spirits made from                                        15%

       potatoes

    3. Yellow spirits                                  
ton           240yuan

    4. Beer                                            
ton           220yuan

    5. Other alcoholic drinks                                        
10%

    6. Alcohol                                                        5%

  III. Cosmetics                 Including
cosmetics                  30%

                                
sets

   IV. Skin-care and hair-care                                        17%

       products

    V. Precious jewelry and      Including all kinds of              
10%

       precious jade and stones  gold, silver, jewelry,

                                
and precious stone

                                
ornaments

   VI. Firecrackers and                                              
15%

       fireworks

  VII. Gasoline                                        
litre         0.2yuan
VIII. Diesel oil                                      
litre         0.1yuan

   IX. Motor vehicle tyres                                            10%

    X. Motorcycles                                                    10%

   Xl. Motor Cars

    1. Those with a cylinder                                          8%

         capacity (i.e. emission

         capacity) of more than

         2,200 ml (including

         2,200 ml)

       Those with a cylinder                                          5%

         capacity of between

         1,000-2,200 ml

         (including 1,000 ml)

       Those with a cylinder                                          3%

         capacity of less than

         1,000 ml

    2. Cross-country vehicles

         (four-wheel drive)

       Those with a cylinder                                          5%

         capacity of more than

         2,400 ml (including

         2,400 ml)

       Those with a cylinder                                          3%

         capacity of less than

         2,400 ml

    3. Minibuses and vans        less than 22 seats

       Those with a cylinder                                          5%

         capacity of more than

         2,000 ml (including

         2,000 ml)

       Those with a cylinder                                          3%

         capacity of less than

         2,000 ml







CIRCULAR OF THE STATE COUNCIL CONCERNING THE STRICT EXAMINATION AND APPROVAL AND CHECKS ON VARIOUS DEVELOPMENT ZONES

Category  SPECIAL ECONOMIC ZONES AND COASTAL ECONOMIC DEVELOPMENT ZONES Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-04-28 Effective Date  1993-04-28  


Circular of the State Council Concerning the Strict Examination and Approval and Checks on Various Development Zones



(Promulgated by the State Council on April 28, 1993)

    It is one of the important measures of China’s reform and opening-up
policy to set up rationally distributed development zones in places where
conditions permit, concentrate the effort in developing their infrastructure
construction, put into effect preferential policies and create a good
investment environment in order to attract foreign investment. Practice shows
that this is an effective measure and should be maintained in the future.
However, since last year there has been a boom in development zones with
increasing numbers involved in a wider range of activities. As a result, they
have taken over large plots of cultivated land and needed considerable
funding. It is obvious that they have now gone beyond practical needs and,
indeed, economic endurance. In a few places, the tax and land laws issued by
the State are ignored and governments of various levels have exceeded their
authority to make and issue tax-free measures without permission, which has
caused harmful effects. Without strict and resolute measures to check this
trend, it will aggravate the shortage of funding, energy resources,
communications and transportation and supply of raw materials, which will
effect the normal running of the national economy and the healthy development
of opening to the outside world. The following circular is hereby issued
concerning this issue.

    1. Development zones should follow a double level system of examination
and approval — the State Council and the people’s government of provinces,
autonomous regions and municipalities directly under the Central Government.
The people’s governments at various levels under the provinces, autonomous
regions and municipalities under the Central Government cannot examine and
approve the establishment of various development zones.

    2. The State Council has the authority to examine and give approval for
the establishment of economic technology development zones, bonded areas,
hi-tech industrial development zones, state tourist and holiday zones and
frontier economic cooperation zones. If any of the above-mentioned development
zones are to be set up, the people’s government of the concerned province,
autonomous region or municipality directly under the Central Government and
the department of the State Council in charge of the project should guide the
primary planning and the study of its feasibility, then report to the State
Council.

    3. In order to attract foreign investment to develop projects in industry,
agriculture, international tourism and hi-tech industry, the people’s
governments of provinces, autonomous regions and municipalities directly under
the Central Government can, according to local resources, practical needs and
conditions, approve the establishment of a small number of development zones
(tourist and holiday zones), make related preferential policies within the
limit of their authority, and report to the State Council. But the development
zones set up with the approval of the people’s governments of the provinces,
autonomous regions and municipalities directly under the Central Government
cannot continue to use the post_title and policy of the development zones set up
with the approval of the State Council.

    4. The examination and approval of development zones should strengthen
overall planning and rational distribution, and pay attention to
socio-economic efficiency. The government should strictly control the areas of
development zones and emphasize that such projects should actually result in
development. It will insist that progress on such projects should only be made
according to the capability of those involved to develop the plot, build and
make profits. The government should examine and approve the land strictly
according to the law, save land resources and strictly control the occupation
of cultivated land. In principal, cultivated land within the basic farmland
protective region is not to be occupied.

    5. Every region should carry out an inspection of the various development
zones set up without the approval of the State Council or the people’s
governments of provinces, autonomous regions and municipalities directly under
the Central Government. The government should firmly and resolutely terminate
approval for the continued development of zones where the basic construction
conditions are lacking, the project or funding is unsettled, too much land is
occupied or the land is occupied without use. The land should then be returned
to the peasants. To abandon cultivated land or leave a land uncultivated is
strictly forbidden.

    6. All regions and departments should uphold the State policies, laws and
regulations, strictly abide by the tax and land laws, and related policies and
regulations issued by the State. It is forbidden to ignore or exceed the
authority of the State and to make preferential policies, reduce tax or yield
interest in disguised form without permission. The people’s governments and
the department of the State Council concerned should strengthen supervision of
this issue.

    7. The people’s governments of provinces, autonomous regions and
municipalities directly under the Central Government should report before the
end of June 1993 to the General Office of the State Council on the inspection
work carried out on various development zones.





CIRCULAR OF THE STATE COUNCIL CONCERNING PROMOTING SELF-OPERATED IMPORT AND EXPORT OF THE PRODUCTION ENTERPRISES

Category  FOREIGN TRADE Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-05-12 Effective Date  1993-05-12  


Circular of the State Council Concerning Promoting Self-operated Import and Export of the Production Enterprises



(May 12, 1993)

    To authorize the large- and medium-size production enterprises to operate
import and export so as to enable them to participate directly in competition
in the international market is one of the important measures of deepening
enterprise reform and vitalizing the large- and medium-size state-owned
enterprises, which is of great importance to quicken the pace of reform and
opening to the outside world and develop foreign trade in this country. Since
issuing of Circular of the State Council Concerning Vitalizing the Large- and
Medium-Size State-Owned Enterprises and Circular of the State Council
Concerning Approval and Transmitting of Suggestions by the Ministry of Foreign
Economic Relations and Trade and the Production Office of the State Council on
Authorizing the Production Enterprises to Operate Import and Export, the
production enterprises which are authorized to operate import and export have
amounted to more than one thousand due to the effort made by the relevant
departments. The growth rate of the aggregate export value and self-operated
expert value of these enterprises are higher than the average growth level of
export throughout the country, they have obviously become one of the important
sources of foreign currency.

    With a view of implementing in an all-round way the Regulations on
Transformation of Operational Mechanism of the State-Owned Enterprises,
keeping abreast of the socialist market economy regime and giving full play to
the superiority of the production enterprises in self-operated import and
export, the measure on the relevant matters are hereunder provided for:

    1. The production enterprises which are authorized to operate import and
export (hereinafter referred to as “the self-operated enterprises”), after
going through the formalities of registration with the industry and commerce
administration, are to qualify as external legal person. The self-operated
enterprises may establish organization for import and export internally when
necessary. Qualified large-scale enterprise group(s) may establish a wholly
owned subsidiary company for import and export subject to approval. The
self-operated enterprises may export their products and relative technology
and import technology, equipment, spare parts and accessories, raw materials
needed in their production. Eligible self-operated enterprises may be granted
contractual management right for construction projects abroad.

    The self-operated enterprises are obligated to fulfill the tasks of
export and earning foreign exchange assigned by the state, subordinate
themselves to the management and coordination by the local competent economic
and trade departments and submit information on their business operation and
statistics to the competent foreign economic and trade departments as required.

    2. The local people’s governments and the departments concerned of the
State Council shall give support to the self-operated enterprises in every
respect. With a view to promoting the import and export of the self-operated
enterprises, the rights and the preferential policies to which the
self-operated enterprises are enpost_titled shall be positively granted, timely
guidance and assistance shall be rendered and personnel training for the
self-operated enterprises shall be given importance to. To the enterprises
which shoulder heavier task of earning foreign exchange by export, necessary
assistance and guarantee shall be provided in respect of raw material supply,
power supply, transportation arrangement, loans for circulating funds, etc.
so as to help them solve the difficulties in production and operation.

    The State Economic and Trade Commission and the Ministry of Foreign Trade
and Economic Co-operation shall strengthen the coordination and administration
in self-operated import and export, resolve the problems and difficulties
in time and help the enterprises to enhance their ability to participate in
the competition on the world market. The competent authorities of foreign
trade at all levels shall incorporate the self-operated enterprises into
uniform administration and statistics at the state or local level, assign
annual export task and formulate tax refund plan in the light of actual
conditions prevailing in the self-operated enterprises and give necessary
guidance in respect of foreign trade policy and business.

    3. The self-operated enterprises shall be treated equally with the foreign
trade enterprises in respect of the preferential import and export policy of
the state. The self-operated enterprises should apply for quota and licence
according to the relevant regulations of the state in their import and export
business involving commodities covered by the quota and licence control.

    The self-operated enterprises may participate in bid on an equal basis
with the foreign trade enterprises for the export quota and licence
distributed through tendering or auction. The tax refund on export for the
foreign trade enterprises shall be uniformly practised for the self-operated
enterprises and timely, adequate refund shall be made to them based on the
principle of “refund to the full amount of export”.

    4. The self-operated enterprises, after fulfilling the task of handing
over the required amount of foreign exchange earnings to the state, are
enpost_titled to use the foreign exchange self-retained and to make adjustment, no
department or unit is allowed to appropriate or withhold the foreign exchange
retained by the enterprises, to withhold the RMB repayable to the enterprises
after handing over the reimbursable foreign exchange earnings or to attach any
condition to the use of the foreign exchange earnings retained. The qualified
self-operated enterprises may open cash account in foreign currency with the
bank(s) authorized to handle foreign exchange business subject to approval by
the competent authorities. The self-operated enterprises are encouraged to
develop the business of import for the expansion of export, for the foreign
exchange earnings from it, within the amount and turnover approved, the amount
handing over to the state treasury shall be calculated in terms of net foreign
exchange earnings on the scale stipulated by the state.

    5. The self-operated enterprises may open a circulating fund account of
RMB and foreign exchange with the bank(s) handling business of foreign
exchange settlement. The foreign trade circulating fund loan application filed
by the self-operated enterprises shall be considered by the bank on the
merits of their performance in production and operation, and requirements for
import and export, and the preferential interest rate for foreign trade shall
be applied. The self-operated enterprises may apply for export credit with the
relevant banks of the state in accordance with relevant regulations. The
self-operated enterprises are enpost_titled to decide on the use of fund retained
upon entry into force of the General Rules Governing Enterprise Financial
Affairs and the Accounting Criteria for Enterprises. The self-operated
enterprises may establish an export risk fund, withdrawal, utilization and
management of which shall be done as provided for by the Ministry of Finance.

    6. The self-operated enterprises are enpost_titled to decide on theirown the
number and list of business personnel of the enterprises going abroad
frequently, and one-time approval for multiple trips within one year shall be
followed subject to approval by the competent authorities. Political scrutiny
in the case of director(general manager)of the enterprise going abroad shall
be carried out by the personnel department at a higher level, and in the case
of other persons of the enterprise going abroad shall be conducted by the said
enterprise’s personnel department. The enterprise may submit an application to
its responsible department for its persons going abroad with the letter(cable)
of invitation by a foreign firm, and the visa application and other procedures
in relation to departure shall be handled by the department in charge of
foreign affairs after approval.

    The self-operated enterprises which are authorized by the State Council
to approve temporary business trips abroad (out of the territory) and
invitation to China may within their scope of business approve in their power
temporary business trips abroad (out of the territory) of the personnel from
their enterprises and invitation to foreign businessmen to China, and may
accomplish the formalities of departure from and entry into the country as
stipulated. In the case of directors(general managers), approval shall be
given by competent departments.

    the self-operated enterprises may use their own foreign exchange earnings
to finance business trips abroad of their personnel out of the need of
developing their foreign business; in case of shortage in their own foreign
exchange earnings, they may apply to competent authorities for adjustment.
The relevant departments shall provide necessary assistance and facilities
for the self-operated enterprises to participate in or hold exhibitions,
business talks or trade fairs both at home or abroad.

    7. The self-operated enterprises are encouraged to establish maintenance
and repair service network out of the territory (excluding Hongkong and
Macao), for this purpose the approval procedures shall be further simplified.
The establishment of the service network to meet the needs of their business
operations out of the territory (excluding Hongkong and Macao) for which the
investment by the Chinese side is less than one million US dollars may be
approved by the enterprises themselves, in the case of more than one million
US dollars (including one million US dollars), it shall be submitted for
approval as stipulated by the state. The maintenance and repair network so
established out of the territory shall strictly abide by the state regulations
on assets, finance, taxation and foreign exchange, etc. as well as the regime
and provisions for investment out of the territory provided for by the state.

    8. The self-operated enterprises shall build up a reputation for their
brands in the market both at home and abroad. In the case of one trade mark,
the registration of which at home is by a production enterprise and by a
foreign trade enterprise abroad, the production enterprise after being
authorized to operate import and export business itself may become transferee
of the trade mark registered abroad by the foreign trade enterprise on the
basis of reimbursement; if the self-operated enterprise intends to use a
trade mark which has been registered by a foreign trade enterprise in china,
it shall sign a licencing agreement with the foreign trade enterprise in
accordance with the relevant law and guarantee the quality of the products
bearing the trade mark.

    9. The self-operated enterprises of machinery and electronic products
shall be encouraged to expand their export for increasing foreign exchange
earnings while improving their economic efficiency. For the self-operated
enterprises of machinery and electronic products with linkage of the
aggregate salary with its economic performance, one more scale factor linking
the aggregate salary to the increase of their export value (or the foreign
exchange earnings received) may be added apart from the fixed coefficient
between total wage quota and the profits and taxes realized in pursuance of
the Circular of the State Council on Approval and Transmitting of the
Suggestions by the Machinery and Electronic Products Export Office of the
State Council on Further Promoting Export of Machinery and Electronic
Products, with the factors not exceeding 1 accumulatively. The calculation
therefor shall be governed by the Circular on the Calculation of Wage
Increases on the Basis of the Increased Floating Ratio of the Foreign
Exchange Earned by Export for the Production Enterprises of Machinery and
Electronic Products for Export by the former Machinery and Electronic
Products Export Office of the State Council, the Ministry of Labour and the
Ministry of Finance.

    10. the self-operated enterprises must strictly abide by the policies,
laws and regulations on foreign trade by the state and operate under the
guidance and supervision of the competent authorities for foreign trade at
all levels. They must be oriented towards both the domestic and international
markets, aggressively develop new products, improve product quality, upgrade
their products and enhance the ability of competition in the international
market. They shall transform their operational mechanism, streamline internal
management, reduce cost and raise economic efficiency. They should positively
join the relevant chamber of commerce of importers and exporters, and be
subordinate to the guidance and coordination of the chamber in consideration
of the state interest. To keep a breast of the healthy development of
internationalized operation, the leading cadres and foreign trade personnel
of the enterprises shall enhance their political and business quality.

    Reference shall be made to the above measures for the scientific and
research institutions which are authorized to manage import and export
business.





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CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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