GUARANTEE LAW OF THE PEOPLE’S REPUBLIC OF CHINA

The Standing Committee of the National People’s Congress

Order of President of the People’s Republic of China

No.50

Adopted at the 14th Meeting of the Standing Committee of the Eighth National People’s Congress on June 30, 1995, promulgated by Order
No.50 of the President of the People’s Republic of China on June 30, 1995, and effective as of October 1, 1995

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

June 30, 1995

Guarantee Law of the People’s Republic of China

Chapter I General Provisions

Article 1

This Law is formulated for the purpose of promoting the capital flow and commodity circulation, safeguarding the realization of obligatory
right, and developing the socialist market economy.

Article 2

In such economic activities as loans, sales, goods freight and hire of processing work, etc., where the creditor needs to safeguard
the realization of his obligatory right by the way of guarantee, a guarantee may be established in accordance with the provisions
of this Law.

The modes of guarantee provided for in this Law shall be guaranty, mortgage, pledge, lien and deposit.

Article 3

In activities of guarantee, the principle of equality, voluntariness, fairness and good faith shall be complied with.

Article 4

When a third party offers the creditor a guarantee on behalf of the debtor, he may require the debtor to offer a counterguarantee.

The provisions on guarantee of this Law shall be applicable to counter-guarantee.

Article 5

A guarantee contract shall be an accessory contract to the master contract. Where the master contract is invalid, the guarantee contract
shall also be invalid. Where an agreement is otherwise reached in the guarantee contract, that agreement shall prevail.

Where a guarantee contract is affirmed to be invalid, the debtor, surety or creditor is in fault, they shall respectively bear the
relevant civil liability according to their own faults.

Chapter II Guaranty

Section 1 Guaranty and Guarantor

Article 6

In this Law, guaranty means that the guarantor and the creditor agree that, when the debtor fails to perform his debt, the guarantor
will perform the debt or bear the liability in accordance with the agreement.

Article 7

A guarantor may be a legal person, other organization or a citizen who has ability to discharge of debts on behalf of others.

Article 8

The state administrative departments shall not be a guarantor, unless they, with the approval of the State Council, transfer loans
for the purpose of using the loans of foreign governments or international organizations.

Article 9

Such institutions and social organizations as schools, kindergartens and hospitals, etc., which are established for the purpose of
public interest shall not be a guarantor.

Article 10

A branch or functional department of an enterprise as legal person shall not be a guarantor.

If a branch of an enterprise as legal person has been delegated in writing by the legal person, it may offer the guaranty within the
delegation extent.

Article 11

No organization or individual may oblige enterprises or financial institutions such as a bank to offer guaranty for others; enterprises
and financial institutions such as a bank shall have the right to refuse to offer guaranty for others when they are obliged to.

Article 12

Where there are two or more guarantors for the same debt, the guarantors shall, according to their own guaranty shares agreed in the
guaranty contract, bear the guaranty liability. In case of no agreement on the guaranty shares, the guarantors shall bear the joint
liability. Thus the creditor may demand any of the guarantors to bear the entire guaranty liability, and any of the guarantors shall
bear the obligation to guarantee the entire realization of the obligatory right. The guarantor who has borne the guaranty liability
shall be enpost_titled to claim repayment from the debtor, or to demand other guarantors bearing the joint liability to satisfy him their
shares that they shall bear.

Section 2 Guaranty Contract and Guaranty Mode

Article 13

The guarantor and creditor shall enter into a guaranty contract in written form.

Article 14

The guarantor and creditor may enter into a guaranty contract respectively as for a single master contract, and may also, within the
maximum obligatory right amount as for a loan contract occurred continuously during a certain period or a commodity trade contract,
enter into a guaranty contract.

Article 15

A guaranty contract shall contain the following contents:

1.

the categories and amount of a master obligatory right guaranteed;

2.

the time limitation to perform the debt by the debtor;

3.

the guaranty mode;

4.

the scope guaranteed by the guaranty;

5.

the time period of guaranty; and

6.

other items which the two parties consider necessary to agree.

If a guaranty contract has the contents prescribed in the proceeding paragraph incomplete, it may be supplemented.

Article 16

The guaranty mode contains:

1.

the general guaranty; and

2.

the joint liability guaranty.

Article 17

That the parties in a guaranty contract agree that, when the debtor cannot perform the debt, the guaranty liability is to be borne
by the guarantor, is the general guaranty.

The guarantor of a general guaranty may, without trial or arbitration on the disputes of a master contract, and before the debt cannot
be performed yet with compulsory enforcement on the debtors’ property according to the law, refuse to bear the guaranty liability
for the creditor.

When there is any one of the following circumstances, the guarantor shall not exercise the right prescribed in the proceeding paragraph:

1.

the address of the debtor has changed, so that it becomes a major difficulty for the creditor to demand him to perform the debt;

2.

the people’s court accepting a debtor’s bankruptcy case, orders suspension of execution procedure; or

3.

the guarantor abandons the right described in the proceeding paragraph in written form.

Article 18

That the parties in a guaranty contract agree that the guarantor and debtor bear the joint liability on a debt, is the joint liability
guaranty.

If the debtor of a joint liability guaranty cannot perform the debt at the date of expiration of the debt performance time limitation
prescribed in the master contract, the creditor may demand the debtor to perform the debt, and may also demand the guarantor to bear
the guaranty liability within the extent of guaranty.

Article 19

If no agreement or the agreement is not clear on the guaranty mode by the parties, the guaranty liability shall be borne according
to the joint liability guaranty.

Article 20

The guarantor of a general guaranty and joint liability guaranty shall be enpost_titled to have the counterplead right of the debtor. If
the debtor abandons his counterplead right, the guarantor shall still be enpost_titled to have right to counterplead.

The counterplead right means that the right of, when the creditor exercises his obligatory right, the debtor according to legal reasons
executing the petition right against the creditor.

Section 3 Guaranty Liability

Article 21

The guaranteed scope of a guaranty concludes the master obligatory right and its interest, contractual fine, damage compensation and
expense of credit realization. If there is an agreement otherwise in the guaranty contract, it shall be complied with.

If no agreement or the agreement is not clear on the guaranteed scope of a guaranty by the parties, the guarantor shall bear the liability
to the entire debt.

Article 22

During the time period of guaranty, where the creditor assigns the master obligatory right to a third party according to the law,
the guarantor continues to bear the guaranty liability within the original guaranteed scope of the guaranty. If there is an agreement
otherwise in the guaranty contract, it shall be complied with.

Article 23

During the time period of guaranty, if the creditor wants to permit the debtor to assign the debt, he shall get the written consent
from the guarantor, the guarantor bears no guaranty liability on the debt assigned without his consent.

Article 24

If the creditor and debtor agree to change the master contract, they shall get the written consent from the guarantor, without this
written consent, the guarantor bears no longer guaranty liability. If there is an agreement otherwise in the guaranty contract, it
shall be complied with.

Article 25

If no agreement on guaranty period between the guarantor and creditor of a general guaranty, the guaranty period shall be 6 months
from the date of expiration of the master debt performance time limitation.

During the guaranty period agreed in the contract or described in the proceeding paragraph, if the creditor has not filed a case against
the debtor or applied for the arbitration, the guarantor shall be exempted from the guaranty liability; if the creditor has filed
a case or applied for the arbitration, the guaranty period shall be applied to the provisions on the discontinuance of limitation
of action.

Article 26

If no agreement on a guaranty period between the guarantor and creditor of a joint liability guaranty, the creditor shall be enpost_titled
to have the right within 6 months from the date of expiration of the master debt performance time limitation to demand the guarantor
to bear the guaranty liability.

During the guaranty period agreed in the contract or described in the proceeding paragraph, if the creditor has not demanded the guarantor
to bear guaranty liability, the guarantor shall be exempted from the guaranty liability.

Article 27

The guarantor shall make a guaranty on a credit occurred continuously according to the provisions of Article 14 in this law, if no
agreement on guaranty time period, the guarantor may at all times inform the creditor in written form to terminate the guaranty contract,
however the guarantor shall, as for the credit occurred before having informed the creditor, bear guaranty liability.

Article 28

Where there are both a guaranty and a guarantee of real right on a same obligatory right, the guarantor shall bear the guaranty liability
on the obligatory right except the guarantee of real right.

If the creditor abandons the guarantee of real right, the guarantor shall, within the scope of right abandoned by the creditor, be
exempted from the guaranty liability.

Article 29

Where a branch of an enterprise as a legal person enters into a guaranty contract with the creditor without written delegation from
the enterprise as legal person or exceeding the extent of delegation, this contract shall be invalid or the part exceeding the extent
of delegation shall be invalid; if the creditor and the enterprise as legal person has default, they shall bear the relevant civil
liability according to their fault respectively; if the creditor has no default, the civil liability shall be borne by the enterprise
as legal person.

Article 30

If there is any one of the following circumstances, the guarantor shall not bear the civil liability:

1.

the parties of the master contract collude to defraud the guarantor to offer a guaranty; or

2.

the creditor of the master contract take means of fraud or coercion to force the guarantor to offer a guaranty against his true intention.

Article 31

After the guarantor has borne the guaranty liability, he shall be enpost_titled to claim repayment from the debtor.

Article 32

After the people’s court accepts a debtor’s bankruptcy case, if the creditor does not declare his obligatory rights, the guarantor
may take part in the bankrupted property distribution, exercise the right to claim repayment in advance.

Chapter III Mortgage

Section 1 Mortgage and Gage

Article 33

The mortgage prescribed in this Law, means a guarantee that a debtor or a third party does not transfer the possession of the property
listed in Article 34 in this Law, make the said property as obligatory right. When the debtor does not perform the debt, the creditor
shall be enpost_titled to have right to keep the said property to offset the debt or have priority in satisfying his claim out of proceeds
from the auction, sale of the said property pursuant to the provisions of this Law.

The debtor or third party prescribed in the proceeding paragraph shall be the mortgagor, the creditor shall be the mortgagee, the
property offered to guarantee shall be the gage.

Article 34

The following properties may be mortgaged:

1.

the house and other land fixtures owned by the mortgagor;

2.

the machine, transportation means and other property owned by the mortgagor;

3.

the state-owned right to the use of land, house and other land fixtures which the mortgagor is enpost_titled to dispose of pursuant to
the law;

4.

the state-owned machine, transportation means and other property which the mortgagor is enpost_titled to dispose of pursuant to the law;

5.

the right to the use of land on the unreclaimed land such as unreclaimed mountains, unreclaimed valleys, unclaimed hills or unreclaimed
beaches which is contracted for management by the mortgagor in accordance with law and is agreed to mortgage by the contractee; or

6.

other property which may be mortgaged in accordance with the law.

The mortgagor may mortgage the properties listed in the proceeding paragraph all together.

Article 35

The obligatory right guaranteed by the mortgagor shall not exceed the value of the gage.

After the property is mortgaged, the surplus part that the said property is more than the obligatory right guaranteed, may be mortgaged
once more, but shall not exceed the surplus part.

Article 36

If the house upon the state-owned land obtained according to the law is to be mortgaged, the right to the use of the state-owned land
within the scope the house occupies shall be mortgaged at the same time.

If the right to the use of state-owned land obtained by way of transfer according to the law, when mortgaged the house upon the said
state-owned land shall be mortgaged at the same time.

The right to the use of land of enterprises of a township (town) or village shall not be mortgaged separately. If the buildings of
enterprises of township (town) or village such as a plant is to be mortgaged, the right to the use of the land within the scope it
occupies shall be mortgaged at the same time.

Article 37

the following properties shall not be mortgaged:

1.

the ownership of land;

2.

the ownership of the lands owned by collectives such as cultivated land, house sites, private plots of cropland and hilly land shall
not be mortgaged, except that prescribed in item 5 of Article 34 , paragraph 3 of Article 36 of this Law;

3.

the facilities for education, the facilities for public health and medicine and other facilities for social benefit of the institutions
or social units for purpose of public interest such as schools, kindergartens or hospitals;

4.

the properties whose ownership or right to use is uncertain or in dispute;

5.

the properties sealed up, distrained or regulated; or

6.

other properties which shall not be mortgaged pursuant to law.

Section 2 Mortgage Contract and Gage Registration

Article 38

The mortgagor and the mortgagee shall enter into a mortgage contract in written form.

Article 39

A mortgage contract shall contain the following contents:

1.

the categories and amount of master obligatory right guaranteed;

2.

the time limitation to perform the debt by the debtor;

3.

the name, quantity, quality, situation, address, ownership or right to the use of the gage;

4.

the extent guaranteed by the mortgage; and

5.

other items the parties consider necessary to agree.

If a mortgage contract has the contents prescribed in the proceeding paragraph incomplete, it may be supplemented.

Article 40

When entering into a mortgage contract, the mortgagor and the mortgagee shall not agree that, when the mortgagee is not satisfied
at date of expiration of the time limitation for the debt performance, the ownership of the gage is to be transferred to the creditor.

Article 41

Where the parties take the properties prescribed in Article 42 of this Law to mortgage, he shall go through the gage registration,
the mortgage contract shall be effective as the date of registration.

Article 42

The departments handling the gage registration are as follows:

1.

in case that the right to the use of land without fixtures upon the land is to be mortgaged, it shall be the land administration departments
which upon verification issue certificates for the right to the use of land;

2.

in case that the city real estates or the building of the township (town) or village enterprises such as a plant is to be mortgaged,
it shall be the departments prescribed by the local people’s governments at and above the county level;

3.

in case that the woods are to be mortgaged, it shall be the forestry administration departments at and above the county level;

4.

in case that aircraft, vessels or vehicles are to be mortgaged, it shall be the registration departments for transportation means;
or

5.

in case that the equipment or other movables of a enterprise are to be mortgaged, it shall be the administrations of industry and
commerce where the properties are located.

Article 43

Where the party takes other properties to mortgage, he may go through the gage registration on a voluntary basis, the mortgage contract
shall be effective as the date of registration.

The party who has not handled the gage registration shall not be opposed to a third party. If the party goes through the gage registration,
the registration department is to be the notary department of the area where the mortgagor is located.

Article 44

When the gage registration is to be handled, the following documents or their copies shall be produced to the registration department:

1.

the master contract and the mortgage contract; and

2.

the certificate of ownership of or right to the use of the gage.

Article 45

The information registered by the registration department shall be allowed to inquire and read, copy by hand and copy.

Section 3 Effect of Mortgage

Article 46

Within the guaranteed scope of a mortgage shall be the master obligatory and its interest, contractual fine, damage compensation and
expense of realization of mortgage. If there is an agreement otherwise in the mortgage contract, it shall be complied with.

Article 47

At the date of expiration of the debt performance period, if the debtor has not performed the debt so that the gage has been distrained
by the people’s court, from the date of distraining the mortgagee shall be enpost_titled to collect the natural fruits separated from
the gage and the legal fruits that the mortgagee may collect on the gage. If the mortgagee has not informed the fact of the distraining
of the gage to the obligatory person who shall satisfy the claim out of proceeds for the legal fruits, the effect of mortgage shall
not extend to the said fruits.

The fruits of the proceeding paragraph shall eliminate in advance the expense of collecting the fruits.

Article 48

If the mortgagor wants to mortgage a property that has been leased, he shall notify the leased in writing, and the original lease
contract continues to be effective.

Article 49

During the period of mortgage, if the mortgagor assigns the gage registered, he shall inform the mortgagee and also notify the assignee
of the situation that the grant has been mortgaged; if the mortgagor does not inform the mortgagee or notify the assignee, the assigning
behavior shall be invalid.

If the value amount of the gage assigned is obviously lower than its value, the mortgagee may demand the mortgagor to offer the equivalent
guarantee; if the mortgagor does not offer, the gage shall not be assigned.

The value amount from assigning the gage by the mortgagor shall satisfy in advance the mortgagee for the claim out of the proceeds
on the obligatory right guaranteed or be deposited to the third party he agreed with the mortgagee. The part exceeding the amount
of the obligatory right, shall be owned by the mortgagor, while the short part shall be satisfied by the debtor.

Article 50

The mortgage right shall not be separated from the obligatory right so that it is assigned solely or as a guarantee of other obligatory
rights.

Article 51

If the behavior of the mortgagor causes the value of the gage to decrease, the mortgagee shall be enpost_titled to have right to demand
the mortgagor to stop his behavior. When the value of the gage decreases, the mortgagee shall be enpost_titled to have right to demand
the mortgagor to restore the value of the gage, or offer a guarantee equivalent to the value decreased.

If the mortgagor has no fault for the decrease of the value of the gage the mortgagee shall demand the mortgagee to be offered only
within the extent of compensation for the damage obtained by the mortgagor. The part of the gage of which the value does not decrease,
shall still be the guarantee of the obligatory right.

Article 52

The mortgage shall exist simultaneously with the obligatory right it guarantees, where the obligatory right is extinct, the mortgage
shall be extinct as well.

Section 4 Realization of Mortgage

Article 53

At the date of expiration of the debt performance period if the mortgagee has not been satisfied with the claim out of proceeds, he
may make an agreement with the mortgagor to keep the said property to offset the gage or satisfies his claim out of proceeds from
the auction, sale of the said gage; if failing to make an agreement, the mortgagor may file a case to the People’s Court.

After the gage is set off, auctioned or sold, the part of the value amount exceeding the amount of the obligatory right shall be owned
by the mortgagor, the short part shall be satisfied by the debtor.

Article 54

If there are two or more creditors who have a mortgage on the same property, the value amount obtained from the auction, sale of the
gage shall be satisfied pursuant to the following provisions:

1.

where the mortgage contract is effective through registration, it shall be satisfied in the registration sequence of the gage; if
equal in sequence, then it shall be satisfied according to the proportion of the obligatory right; or

2.

where the mortgage contract is effective as the date of signing, and the said gage has been registered, it shall be satisfied according
to the item 1 of this Article; if the gage has not registered, it shall be satisfied in the sequence of the effective date of the
contracts, and if equal in sequence, it shall be satisfied according to the proportion of the obligatory right. The registered gage
has priority to the unregistered gage.

Article 55

After the signing of the city real estates mortgage contract, the houses built lately upon the land shall not belong to the gage.
When the said mortgaged real estates is needed to be auctioned, the lately built houses upon the land may be auctioned together with
the gage, but as for the amount from the auction of the lately built houses, the mortgagee shall not be enpost_titled to have priority
in satisfying the claim out of proceeds.

Where the right to the use of land of the unreclaimed land contracted for management according to this Law is to be mortgaged, or
the right to the use of the land within the extent occupied by the buildings of the township (town) or village enterprises such as
a plant is to be mortgaged, after the realization of mortgage, the collective ownership and purpose of the land shall not be changed
without the legal procedure is gone through.

Article 56

The value amount obtained from the auction of the right to the use of the stated-owned land appropriated, after paying the amount
equivalent to the transfer fee of the right to the use of land which shall be paid, the mortgagee shall be enpost_titled to have right
in priority for the claim out of proceeds.

Article 57

The third party who offers guarantee of a mortgage on behalf of the debtor, after the realization of the mortgage by the mortgagee,
shall be enpost_titled to have right to claim repayment from the debtor.

Article 58

The mortgage right extinguishes with the extinction of the gage. The compensation for the extinction shall be as the mortgaged property.

Section 5 Mortgage of the Maximum Amount

Article 59

The mortgage of the maximum amount prescribed in this Law, means that the mortgagor and the mortgagee agree, within the extent of
maximum amount of the obligatory right, to take the gage as the guarantee of the obligatory right occurred continuously during a
certain period.

Article 60

A loan contract may be attached with a mortgage contract of maximum amount.

The contract signed by the creditor and debtor on a certain item commodity with which the trade occurs continuously during a certain
period, may be attached with a mortgage contract of maximum amount.

Article 61

The obligatory right of the master contract with the mortgage of maximum amount shall not be assigned.

Article 62

The mortgage of maximum amount shall, besides that it is applied to the provisions of this section, be applied to other provisions
of this Chapter.

Chapter IV Pledge

Section 1 Pledge of Movables

Article 63

The pledge of movables described in this Law, means that the debtor or the party delivers his movables to the creditor for possession,
and takes the said movables as the guarantee of the obligatory right. When the debtor does not perform the debt, the creditor shall
be enpost_titled to have right to keep the said movables to offset or have priority in satisfying in the claim out of proceeds from the
value amount of the auction or sale of the said movables.

The debtor or the third party prescribed in the proceeding paragraph shall be a pledgor, the creditor shall be a pledgee, the movables
delivered shall be the pledgings.

Article 64

The pledgor and the pledgee shall enter into a pledge contract in writing.

A pledge contract shall be effective as the date of remitting the pledgings to the pledgee.

Article 65

A pledge contract shall contain the following contents:

1.

the categories and amount of the master obligation right guaranteed;

2.

the time period to perform the debt by the debtor;

3.

the name, quantity, quality and situation of the pledgings;

4.

the extent guaranteed by the pledge;

5.

the time to deliver the pledgings; and

6.

other items which the parties consider necessary to agree.

If a pledge contract has the contents incompletely prescribed in the proceeding paragraph, it may be supplemented.

Article 66

The pledgor and the pledgee shall not agree that, when the pledgee is not satisfied at date of expiration of the time limitation for
the debt performance, the ownership of the pledgings is to be transferred to the pledgee.

Article 67

The guaranteed scope of a pledge shall conclude the master obligatory right and its interest, contractual fine, damage compensation,
expense for keeping the pledgings and expense for realization of pledge. If there is an agreement otherwise in the pledge contract,
it shall be complied with.

Article 68

The pledgee shall be enpost_titled to have right to collect the fruits produced by the pledgings. If there is an agreement otherwise in
the pledge contract, it shall be complied with.

The fruits of the proceeding paragraph shall eliminate in advance the expense of collecting the fruits.

Article 69

The pledgee shall bear the obligation to keep the pledgings properly. If he does not keep the pledgings properly so that the pledgings
are extinct or damaged, the pledgee shall bear the civil liability.

If the pledgee cannot keep the pledgings properly which probably cause the extinction or damage of the pledgings, the pledgor may
demand the pledgee to have the pledgings to be deposited, or demand to satisfy the obligatory right before the date of expiration
in order that the pledgings can be returned.

Article 70

If there is a probability of damage of or obvious deduction of the value of the pledgings that is enough to hurt the rights of the
pledgee, the pledgee may demand the pledgor to offer the relevant guarantee. If the pledgor does not offer the guarantee, the pledgee
may auction or sell the pledgings, and make an agreement with the pledgor that the value amount obtained from the auction or sale
is used to satisfy the obligatory right guaranteed before the date of expiration or to be deposited to the third party whom he agrees
with the pledgor.

Article 71

At the date of expiration of the debt performance time limitation if the debtor has performed the debt, or the pledgor has satisfied
the obligatory right guaranteed before the date of expiration, the pledgee shall return the pledgings.

At the date of expiration of the debt performance time limitation if the pledgee has not been satisfied, he may make an agreement
with the pledgor to keep the pledgings to offset, or to auction, sell the pledgings.

After the pledgings are kept to offset or auctioned, sold, the part that the value amount exceeds the amount of the obligatory right
shall be owned by the pledgor, the short part shall be satisfied by the debtor.

Article 72

The third party who offers the guarantee of a pledge on behalf of the debtor shall, after the realization of the pledge by the pledgee,
be enpost_titled to have right to claim repayment from the debtor.

Article 73

The right of the pledge extinguishes with the extinction of the pledgings. The compensation for the extinction shall be as the pledged
property.

Article 74

The pledge shall be existed simultaneously with the obligatory right it guarantees, where the obligatory right is extinct, the pledge
is extinct as well.

Section 2 Pledge of Rights

Article 75

The following rights may be pledged:

1.

a bill of exchange, check, promissory note, bond, deposit receipt, bill of lading or warehouse receipt;

2.

the share or share paper which may be assigned according to the law;

3.

the property right of the exclusive right to use trademark, patent right, copyright which may be assigned according to the law; or

4.

other rights which may be pledged

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