PRICING LAW

(Issued on December 29, 1997 and by President’s decree of PRC (No. 92). Adopted at the 29th Meeting of the Standing Committee of
the Eighth National People’s Congress and implementation as of May 1, 1998.)

CHAPTER TWO PRICE BEHAVIOR OF BUSINESS OPERATORS

CHAPTER FOUR CONTROL AND ADJUSTMENT TO GENERAL PRICE LEVEL

CHAPTER SIX LEGAL LIABILITIES

   Article 1 This law is formulated with a view to standardizing price behavior so as to strengthen their role in rational disposition of resources,
stabilize the general price level of the market, protect the lawful rights and interests of consumers and business operators and
then promote the healthy development of the socialist market economy.

   Article 2 The law is applicable to all the price behaviors that occur within the territory of the People’s Republic of China.

The term “price” used in the law includes prices of all kinds of merchandise and prices of all kinds of services.

The term “price of merchandise” refers to the prices of all kinds of tangible and non-tangible assets.

The term “price of services” refers to fees collected for services rendered.

   Article 3 The State shall introduce and gradually improve the mechanism of regulation of prices mainly through market force and under a kind
of macroeconomic control. Under such a mechanism, pricing should be made to accord with the value law with most of the merchandises
and services to adopt market regulated prices while only a few of them to be put under government-set or guided prices.

Market-regulated prices refer to prices fixed independently by business operators through market competition.

“Business operator” used in this law refers to legal persons, other organizations or individuals that engage in production or marketing
of merchandises or provide paid services.

Government-guided prices refer to prices as fixed by business operators according to benchmark prices and range of the prices as set
by the government department in charge of price or other related departments within their term of reference.

Government-set prices as fixed by the government department in charge of prices or related departments within their term of reference
according to the provisions of this law.

   Article 4 The State shall support and prompt fair, open and legal market competition, maintain normal price order and exercise administration,
regulation and necessary control over conduct of prices.

   Article 5 The State Council department in charge of prices shall be responsible for the administration of the work related to prices in the
whole country and other related departments shall be responsible for such work within their terms of reference.

Price departments of the people’s governments at and above the county level shall be responsible for the work related to prices within
the regions under their jurisdiction. Price departments of the people’s governments at and above the county level shall be responsible
for the work related to prices within their terms of reference.

   Article 6 Prices of all merchandises and services, except those as set in Article 18 of this law to adopt government-set or guided prices,
shall be subject to market regulation to be fixed by business operators independently according to the provisions of this law.

   Article 7 In fixing prices, business operators should follow the principle of fairness, lawfulness, honesty and trustworthiness.

   Article 8 Prices should be fixed by business operators basing on the cost of production or operation and market supply and demand.

   Article 9 Business operators should strive for a better management to their own production and business operations so as to lower cost and
provide consumers with merchandises and services at reasonable prices while obtaining lawful profits in market competition.

   Article 10 Business operators should establish and improve their system of internal price management, accurately record and verify the cost
of production or operations for their merchandise or services, in which any deception or forgery is not allowed.

   Article 11 Operators shall enjoy the following rights in pricing:

1. To fix prices that are subject to market regulation;

2. To fix prices within the guided range as set by the government;

3. To fix prices for new products which are subject to government-set or guided prices, except special products for trial sales; and

4. To report or claim against actions that have infringe upon their rights of independent pricing.

   Article 12 In their work related to prices, business operators should strictly keep up with laws, regulations, government guided-prices, government-set
prices, legal price intervention measures and emergency measures adopted by the government according to law.

   Article 13 In marketing and purchasing merchandises or providing services, business operators should clearly tap the related prices, specify
names, places of origin, specifications, grades, price units, prices or items, fee collection standards and other related information
according to the government’s regulations.

Business operators must not sell merchandises at prices above the marked prices or collect fees not specified.

   Article 14 Business operators must not act whatsoever in the following ways to effect abnormal price behaviors:

1. To work collaboratively with others to control market prices to great detriments to the lawful rights and interests of other business
operators or consumers;

2. To engage in dumping sales (except the cases of sales of fresh and live merchandises, seasonal merchandises and stockpiled merchandises
at discount) at belowcost prices in order to attain an upper hand over rivals or dominate the market and disrupt the normal production
and operation order to great detriments to the interests of the State or the lawful rights and interests of other business operators;

3. To fabricate and spread price rise information for pushing up the prices to excessively high level;

4. To resort to deceitful or misleading means in terms of prices to entice consumers or other business operators into trading in
terms of prices;

5. To discriminate in terms of prices same kinds of merchandises or services offered by certain business operators under same trading
conditions;

6. To disguisely raise or lower prices at irrational ranges by artificially raising or lowering grades of merchandises or services;

7. To seek exorbitant profits in violation of laws and regulations; and

8. To effect other illicit price behaviors that are forbidden by law or administrative decrees.

   Article 15 In collecting fees for services rendered, all intermediary organizations should abide by the provisions of this law, except otherwise
provided by other laws.

   Article 16 In a bid to keep the domestic market order, business operators must observe related provisions of this chapter in selling imported
merchandises or purchasing export merchandises.

   Article 17 Organizations of various sectors should abide by laws and regulations governing prices, persist in self-discipline with regard to
prices and accept guidance from government price departments.

   Article 18 The government shall issue government-set or guided prices for the following merchandises and services if necessary:

1. The few merchandises that are of great importance to development of the national economy and the people’s livelihood;

2. The few merchandises that are in shortage of resources;

3. Merchandises of monopoly in nature;

4. Important public utilities;

5. Important services of public welfare in nature.

   Article 19 Scope of specific items and uses for government-set or guided prices shall depend on the price catalogs issued by the central and
local governments.

Catalogs of central government-set prices shall be fixed and revised by the price department of the State Council an published after
the approval of the State Council.

Catalogs of prices to be set by departments of the people’s governments of privinces, autonomous regions and municipalities within
their power according to scope of specific items and uses as set in the central price catalog and be published with the examination
and approval of the people’s governments at the same level.

Local people’s governments below the provincial, autonomous regional and municipal level shall not make their own price catalogs.

   Article 20 State Council price department and other related departments shall fix government-set and guided prices according to scope of items
and uses as set in the central prices and the government-set and guided prices for major merchandises and services shall get the
approval from the State Council.

Price departments and other related departments of the people’s governments of provinces, autonomous regions and municipalities shall
fix indicative local government-set and guided prices within their respective power according to scope of items and uses as set in
the local price catalogs.

People’s governments of cities and counties may fix government-set and guided prices for their localities within their own power according
to scope of items and uses as prescribed in the local price catalogs.

   Article 21 Government-set and guided prices shall be fixed according to the average cost and market supply and demand of related marchandises
or services, the economic and social development and the affordance of the people, allowing rational price differentials between
buying and selling, between wholesale and retail sale, among different regions and different seasons.

   Article 22 In fixing government-set and guided prices, price departments and other related departments shall carry out investigations into prices
and costs and hear views from consumers, business operators and other quarters.

Upon investigated by government price departments and related departments in terms of prices and costs, related units should provide
true fact and necessary books, documents and other materials.

   Article 23 In fixing government-set and guided prices for public utitities services of public welfare in nature and the prices for merchandises
of monopoly in nature that are important to immediate interest of people public hearings presided over by government price department
should be conveyed to solicit views from consumers, business operators and other quarters to explore the necessity and feasibility.

   Article 24 After the government-set and guided prices are determinded, they shall be made public by the price departments.

   Article 25 The scope and level of the government-set and guided prices shall properly be adjusted in the light of the operation of the national
economy.

Consumers and business operators may put forward their recommendations with regard to the adjustment of the government-set and guided
prices.

   Article 26 To stabilize the general price level is one of the major objectives of macro-economic policy. The State shall set targets for the
monitoring and adjustment of general price level in the light of the requirements of the development of the national economy and
the endurance of the people, list them into the national economic and social development programs and help their realization through
means of monetary, fiscal, investment and import and export policies and measures.

   Article 27 The government shall build a major merchandise reserve system and establish a price regulation fund to control prices and stabilize
the market.

   Article 28 In order to better control prices, government price departments shall establish a price monitoring system to monitor changes in the
prices of major merchandises and services.

   Article 29 Whereas the selling prices of grain and other major farm produce are too low on the market, the government shall introduce protective
prices and adopt corresponding measures to ensure the protective prices be put into effect.

   Article 30 Whereas prices of major merchandises or services rise sharply or are likely to rise sharply, the State Council and the people’s governments
of provinces, autonomous regions and municipalities may set limit at disparity of prices or rate of profitability for part of the
merchandises, fix price ceilings or introduce other measures for intervention such as a system for announcing or recording price
rises.

After adoption of above-mentioned intervention measures, provincial, autonomous regional and municipal people’s governments should
report to the State Council for the record.

   Article 31 When such abnormalities as violent fluctuation in the general price level occur nationwide, the State Council shall introduce power
for the concentrated fixation of prices in the whole country or part of the regions for the time being or adopt such emergency measures
as freezing part or all prices.

   Article 32 The intervention or emergency measures introduced according to the provisions of Article 30 and Article 31 shall be removed or lifted
in time when the situations that call for such measures disappear.

   Article 33 The price departments of the people’s governments at and above the county level exercise monitoring and checking over pricing activities
according to law and mete out administrative punishments on acts that violate the law.

   Article 34 In exercising monitoring and checking of prices, government price departments shall exercise the following powers:

1. To inquire into people concerned or related personnel and demand for evidences or other materials relating to law-violating acts;

2. To look into and duplicate account books, bills, vouchers, documents or other materias related to price law violating acts and
verify banking materials associated with price law violating acts.

3. To check property related to the price law violating acts and, if necessary, order the people concerned to stop business operation.

4. To register and keep some evidences that are liable to be destroyed or kept out of hand or is hard to obtain for which people
concerned or related personnel must not in any case remove, hide or destroy.

   Article 35 In accepting the monitoring and checking by government price departments, business operators should provide their account books,
bills and vouchers, documents or other materials needed for such monitoring and checking.

   Article 36 The personnel of government prices departments are wholly prohabited to use materials or information obtained according to law for
purposes other than price control or reveal business secrets of the people concerned.

   Article 37 Consumer organizations, workers’ price monitoring organizations, neighborhood committees, village committees and consumers have the
right to exercise monitoring over price activities. Government price departments should give a full play to the monitoring roles
of the people.

Medias have the right to mobilize public opinion for the monitoring of prices.

   Article 38 Government price departments shall establish a system for reporting acts of violation of the price law.

Any unit or individual has the right to report acts of violation of price law and the government price departments shall encourage
such reporting and undertake to keep secret what concerns concerning the reporters.

   Article 39 Business operators who refuse to implement the government-set or guided prices, legal price intervention measures or emergency measures
shall be ordered to correct, have their illegal proceeds confiscated and be fined concurrently for an amount less than five times
the illegal proceeds. In cases of no illegal proceeds involved, a fine may still be imposed. For serious cases, they shall be ordered
to stop business operation and make correction.

   Article 40 Business operators who have violated one of the acts listed in Article 14 of this law shall be ordered to correct, have their illegal
proceeds confiscated and be fined concurrently for an amount less than five times the illegal proceeds. In cases of no illegal proceeds
involved, a warning shall be issued, together with a fine. For serious cases, they shall be ordered to stop operation for correction
or have their business licenses revoked. If other laws have stipulations concerning the punishments for acts listed in Article 14
of this law, the related laws shall prevail.

Whether acts listed in 1, 2 of Article 14 and are of national in nature shall be upon the judgment of the State Council price department
and whether the acts are regional in nature, they shall be confirmed by price departments of provincial, autonomous regional and
municipal people’s governments.

   Article 41 Whereas business operators have caused overpayment by consumers or other business operators in violation of price law, the part in
excess of the due payment shall be returned. If damages are done, the business operators shall undertake to compensate for the losses.

   Article 42 Whereas business operators violate the provisions about price marking, they shall be ordered to correct, have their proceeds confiscated
and be fined concurrently for an amount of less than RMB5,000.

   Article 43 For business operators who refuse to stop operation for correction as ordered or remove, hide or destroy things recorded for keeping
according to law, a fine ranging from over one time to less than three times the value of the things removed, hidden or destroyed
shall be imposed.

   Article 44 Business operators who refuse to provide materials needed for price monitoring and checking or provide false materials shall be ordered
to correct, with a warning. Whereas they refuse to correct within the prescribed time limit, a fine shall be imposed.

   Article 45 Whereas local people’s governments at all levels or related government departments at all levels fix or adjust prices beyond their
terms of reference or refuse to implement price intervention measures or emergency measures shall be ordered to correct and may be
criticized by issuing circulars. People in charge or related people directly responsible shall be given administrative punishments
according to law.

   Article 46 Whereas government personnel in charge of prices have leaked State secrets, commercial secrets or abused their power, resort to deception
for personal gains, commit dereliction of duty or accept bribes and the cases are serious enough as to constitute crimes, criminal
responsibilities shall be affixed. If a case is not serious enough to constitute a crime, an administrative punishment shall be meted
out.

   Article 47 State administrative organs shall collect fees strictly according to law, limit fee collection items and scope and standards of fee
collection. Specific administration methods for such fee collection shall be provided for separately by the State Council.

Interest rates, exchange rates, insurance premium rates, securities and futures prices shall be subject to related laws or administrative
decrees instead of this law.