CIRCULAR OF STATE DEVELOPMENT AND REFORM COMMISSION AND STATE DEVELOPMENT BANK OF CHINA ABOUT THE RELATIVE ISSUES ON OFFERING MORE FINANCING SUPPORT TO KEY OVERSEAS-INVESTED PROJECTS

State Development and Reform Commission, State Development Bank of China

Circular of State Development and Reform Commission and State Development Bank of China about the Relative Issues on Offering More
Financing Support to Key Overseas-invested Projects

Fa Gai Wai Zi [2005] No.1838

The development and reform commissions and the economic commissions (economic and trade commissions) of all the provinces, autonomous
regions, municipalities directly under the Central Government, cities separately listed in the state plan, capital cities at deputy
provincial level, and Xinjiang Production and Construction Corp., all the departments of the State Council, the institutions directly
under the State Council, and the enterprises directly under the Central Government:

For the purpose of carrying out the spirits of the 16th National Congress of the CPC on accelerating the carry-out of the strategy
of “Going Global”, ensuring the implementation of the Central Government’s instructions on “offering more financial support to overseas
investments”, and encouraging and supporting domestic enterprises to further improve their financing capability, exert their predominance
and actively participate in the investments in key overseas projects, hereby the relevant matters are circulated as follows:

I.

State Development and Reform Commission and State Development Bank of China shall, in accordance with the national development plan
on overseas investments, draw up annual plans on the financing support to key overseas-invested projects, and the State Development
Bank of China shall, in its scale of annual equity loans, specially arrange a certain loan fund (hereinafter referred to as “equity
loans for overseas investments”) so as to support the capital expansion of key overseas-invested projects encouraged by the state
and improve their financing capacity.

II.

The equity loans for overseas investments shall be mainly in use of supporting the key overseas-invested projects as follows:

(1)

overseas resource exploitation projects that may make up the relative insufficiency of domestic resources;

(2)

overseas production or infrastructure projects that may boost the export of domestic technologies, products, equipment and labor services,
etc.;

(3)

projects of overseas research and development centers that may make use of international advanced technologies, management experiences
and professional talents; and

(4)

projects of overseas enterprise acquisition and merger that may promote enterprises’ internationally competitive edge and speed up
the expansion of international market.

III.

All the enterprise legal persons registered within the territory of the People’s Republic of China (hereinafter referred to as “domestic
investment entity”) may give an application for the equity loans for overseas investments, and the specific procedures are as follows:

(1)

a domestic investment entity shall submit an application with the State Development Bank of China for the equity loans, and the State
Development Bank of China shall, in accordance with the annual plans on the financing support of key overseas-invested projects jointly
drawn up together with the State Development and Reform Commission, carry out independent examination and verification and issue
a letter of commitment on equity loans;

(2)

a domestic investment entity shall submit a project application report or a project archival filing application to the State Development
and Reform Commission or the provincial development and reform commission, and enclose the letter of commitment on equity loans issued
by the State Development Bank of China to it; and

(3)

the State Development and Reform Commission or the provincial development and reform commission shall audit and verify the project
and send a copy of documents on the examination and verification or the project archival filing of to the State Development Bank
of China, and the State Development Bank of China shall make a final ascertainment for it in accordance with the conditions for offering
equity loans to projects.

IV.

For the key projects that have obtained the equity loans for overseas investments, the State Development and Reform Commission shall
strengthen policy guidance, reinforce necessary coordination, promote successful project implementation and achieve good economic
and social benefits.

V.

The State Development Bank of China shall, in accordance with the relative provisions, speed up the loan examination and verification
for key overseas-invested projects and provide a certain preferential interest rates in accordance with the actual conditions of
projects by following the risk pricing principle and making loan rates cover credit risk, market risk and state risk, etc. as possible.

VI.

The State Development Bank of China shall also provide such support and services to key overseas-invested projects as follows:

(1)

offering large and stable medium and long-termed non-equity loans to key overseas-invested projects;

(2)

strengthening the cooperation with international financial organizations or transnational companies, organizing the international
syndicated loans and foreign loans, etc., and assisting to carry out financing schemes;

(3)

offering industrial analysis and risk appraisal of infrastructure, basic industries and pillar industries and other services;

(4)

offering supporting financial services concerning letters of credit and international settlement pertinent to the projects; and

(5)

offering such financial derivative services, as foreign exchange and interest rate risk management.

State Development and Reform Commission

State Development Bank of China

September 25, 2005