CIRCULAR OF THE MINISTRY OF FOREIGN TRADE AND ECONOMIC COOPERATION AND THE MINISTRY OF COMMUNICATIONS ON ISSUES RELATED TO THE ESTABLISHMENT OF SOLELY FOREIGN-OWNED SHIPPING COMPANY IN CHINA BY FOREIGN-FUNDED SHIPPING COMPANIES

The Ministry of Foreign Trade and Economic Cooperation, the Ministry of Communications

Circular of the Ministry of Foreign Trade and Economic Cooperation and the Ministry of Communications on Issues related to the Establishment
of Solely Foreign-owned Shipping Company in China by Foreign-Funded Shipping Companies

December 22,1995

With the gradual relaxing of control over the domestic shipping market, China has approved in succession some foreign shipping companies
to establish shipping lines (hereinafter referred to as the solely foreign-owned shipping lines) in China. The following Circular
is hereby issued in order to further the examination of and approval for establishing such lines:

1.

The establishment of the solely foreign-owned shipping lines in China by foreign shipping companies must be examined and approved
according to the commitment made by China on the reciprocal basis under the maritime transport agreement or memoranda of talks on
maritime transport signed between the governments of China and the country concerned.

2.

An applicant must possess the following qualifications:

(1)

operating the shipping business for more than 15 years and the shipping representative office for three whole years at the cities
where the solely foreign-owned shipping lines are to be established;

(2)

its liners reach the ports of the cities where the solely foreign- owned shipping lines are to be established at least once per month.

3.

The business scope of the solely foreign-owned shipping lines is: to provide cargo contracted to vessels owned and operated by their
parent companies, to issue bills of landing on behalf of the parent companies, to settle freight and to conclude service contracts.

4.

The registered capital of the solely foreign-owned shipping lines shall not be less than US $ 1 million.

5.

The following procedures shall be followed in the establishment of a solely foreign-owned shipping line:

(1)

the applicant shall submit all the documents to the department in charge of foreign trade and economic cooperation in the provinces
and cities where the solely foreign-owned shipping lines are to be established. The said documents shall, upon initial examination,
be forwarded to the Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as the MOFTEC) and the duplicate
of the said documents be sent to the Ministry of Communications;

(2)

the MOFTEC shall, upon examination and verification of the above- mentioned documents, issue an official letter in the name of the
Department of Foreign Investment under MOFTEC (see the attached application documents) to the Department of Water Transport Management
under the Ministry of Communications for its opinions, and the Department of Water Transport Management under the Ministry of Communications
shall reply by letters;

(3)

when both ministries have reached agreement, MOFTEC shall examine and verify the establishment of the solely foreign-owned shipping
lines, and issue the approval certificate of enterprises with foreign investment; after the applicant receives the business license,
the Ministry of Communications shall issue to the applicant the operational license of the solely foreign-owned shipping lines.

6.

The applicant shall submit:

(1)

the written application for the establishment of the solely foreign- owned shipping lines;

(2)

a feasibility study report;

(3)

the articles of association of the solely foreign-owned shipping lines;

(4)

the legal certifying documents and the credit position certifying documents of the applicant;

(5)

the letter of attorney for the legal representatives of the solely foreign-owned shipping lines, the name-lists of the board of directors
and their resumes;

(6)

the balance sheet of the applicant in the last three years;

(7)

the applicants sample bill of landing and the sample timetable for liners arriving in China and the liner rates;

(8)

the photocopies of the approval documents of the established shipping representative offices; and

(9)

other documents that are required to be submitted.

7.

The soley foreign-owned shipping lines may, in the light of business requirement, apply for establishing branches at other port cities,
and their examination and verification procedures shall be the same as the above-mentioned for the establishment of the solely foreign-owned
shipping lines. The establishment of branches by the solely foreign- owned shipping lines shall meet the following conditions:

(1)

its registered capital is paid in full, and it opens the business for one whole year;

(2)

the parent company of a solely foreign-owned shipping line has its liners and vessels registered at the ports where the branch is
to be established, and has established its shipping representative office at the city for more than one year; and

(3)

the solely foreign-owned shipping line shall increase its registered capital by US $ 120,000 for each branch to be established.

8.

The solely foreign-owned shipping lines shall submit the reports concerning the operation of the previous year to the Ministry of
Communications and the MOFTEC respectively before the end of March of each year.

9.

Measures regarding the establishment of the solely foreign-owned shipping lines in Mainland China by shipping companies from Hong
Kong, Macao and Taiwan shall be formulated by the MOFTEC and the Ministry of Communications in accordance with the laws, regulations
and policies and in light of situation of the shipping market in China.