China Laws

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON WATER AND SOIL CONSERVATION

The Standing Committee of the National People’s Congress

Law of the People’s Republic of China on Water and Soil Conservation

Order No. 49 [1991] of President

June 29, 1991

(Adopted at the 20th Meeting of the Standing Committee of the Seventh National People’s Congress on June 29, 1991 , Promulgated by
Order No. 49 of the President of the People’s Republic of China on June 29, 1991)

ContentsChapter I General Provisions

Chapter II Prevention

Chapter III Rehabilitation

Chapter IV Supervision

Chapter V Legal Responsibility

Chapter VI Supplementary Provisions

Chapter I General Provisions

Article 1

This Law is formulated for the purpose of the prevention and control of soil erosion, the protection and rational utilization of water
and soil resources, the mitigation of disasters of flood, drought and sandstorm, the improvement of ecological environment and the
development of production.

Article 2

As used in this Law, the term ” water and soil conservation ” means preventive and rehabilitative measures taken against soil erosion
which is caused by natural factors or human activities.

Article 3

All units and individuals shall have the obligation to protect water and soil resources, prevent and control soil erosion, and also
have the right to report against any unit or individual that damages water and soil resources and causes soil erosion.

Article 4

The state shall, in relation to the work of water and soil conservation, implement the policy of prevention first, overall planning,
comprehensive prevention and control, adoption of measures suited to local conditions, strengthening management and stress on beneficial
results.

Article 5

The State Council and the local people’s governments at various levels shall regard the work of water and soil conservation as an
important duty, and adopt measures to ensure the prevention and control of soil erosion.

Article 6

The department of water administration under the State Council shall be in charge of the work of water and soil conservation throughout
the country. The departments of water administration under the local people’s governments at or above the county level shall be in
charge of the work of water and soil conservation in areas under their respective jurisdiction.

Article 7

The department of water administration under the State Council and those under the local people’s governments at or above the county
level shall, on the basis of investigation and assessment of water and soil resources, draw up water and soil conservation plans
in conjunction with other departments concerned. Such water and soil conservation plans shall be subject to the approval by the people’s
governments at the corresponding levels. Any water and soil conservation plan approved by the local people’s government at or above
the county level shall be submitted to the department of water administration under the people’s government at the next higher level
for the record. Any modification to be made to an approved water and soil conservation plan shall be re-submitted for approval to
the original approving department.

The people’s governments at or above the county level shall incorporate the tasks specified in the water and soil conservation plans
into their respective plans for national economic and social development, allocate special funds therefor and organize the implementation
thereof.

The people’s governments at or above the county level shall, in line with the actual conditions of soil erosion, designate key areas
on which preventive and rehabilitative efforts against soil erosion shall be focused.

Article 8

Units and individuals engaged in production and construction activities which may cause soil erosion must adopt measures to protect
the water and soil resources, and shall be responsible to take rehabilitative measures against the soil erosion resulted from their
production and construction activities.

Article 9

The people’s governments at various levels shall intensify the publicity of and education in water and soil conservation, and popularize
scientific knowledge concerning water and soil conservation.

Article 10

The state shall encourage the research in and raise the level of science and technology of water and soil conservation, popularize
the advanced technology in water and soil conservation, and train in a planned way scientific and technological personnel in the
field of water and soil conservation.

Article 11

Units and individuals that have made outstanding achievements in the prevention and control of soil erosion shall be awarded by the
people’s government.

Chapter II Prevention

Article 12

The people’s governments at various levels shall organize every citizen to engage in afforestation and encourage the planting of grass,
thereby enlarging forest-covered areas and increasing vegetation.

Article 13

The local people’s governments at various levels shall, in light of respective actual conditions, organize agricultural collective
economic organizations as well as state-owned agricultural, forest, and livestock farms to plant firewood forests, forage and green
manure crops, and to conduct in a planned way the closing of hillsides for facilitating afforestation and growing grass and the rotation
of closing and grazing periods, so as to check winds, fix drifting sand and preserve vegetation. Destroying forest or burning vegetation
for land reclamation and stripping vegetation and digging up tree stumps on steep hill slopes or in arid regions shall be prohibited.

Article 14

Reclamation of hillsides with a slope of over 25 degrees for cultivation of crops shall be prohibited.

The people’s governments of provinces, autonomous regions and municipalities directly under the Central Government may, in line with
the actual conditions of the areas under their respective jurisdiction, prescribe the reclamation-forbidden slope of below 25 degrees.

The specific area of the reclamation-forbidden slope shall be determined and announced by the local people’s government at the county
level.

Anyone who has conducted reclamation for cultivation of crops on the reclamation-forbidden slopes before the entry into force of this
Law shall, on the basis of capital farming construction and in the light of the actual conditions, gradually stop the cultivation
and, instead, plant trees, grow grass and restore the vegetation, or build terraced fields thereon.

Article 15

Anyone who reclaims waste hillsides with a slope of above 5 degrees but under the prescribed reclamation-forbidden degrees must obtain
prior approval from the department of water administration under the people’s government at the county level; anyone who intends
to reclaim waste hills lopes owned by the state may apply to the people’s government at or above the county level for going through
the procedures for land reclamation only after obtaining approval from the department of water administration under the people’s
government at the county level.

Article 16

Felling of forest trees must be carried out in a rational manner and in line with the local conditions, and clear felling shall be
strictly controlled. Preventive measures against soil erosion shall be adopted in the felling areas and on skid trails, and reforestation
shall be accomplished in good time after the felling. With respect to protective forests such as those for water supply conservation,
water and soil conservation, windbreak and sand-fixation, felling shall only be permitted for tending and regeneration of forests.

For and felling in a forest area, water and soil conservation measures, for the felling area, worked out in accordance with the provisions
of the preceding paragraph, must be included in the felling plan thereof. After the felling plan is approved by the department of
forestry administration, the water and soil conservation measures for the felling area shall be implemented under the supervision
of the departments of water administration and forestry administration.

Article 17

Water and soil conservation measures must be adopted to prevent soil erosion when preparations for afforestation, tending of young
growth, and cultivation of commodity trees such as oil-tea camellia and tung tree are done on hillsides with a slope of above 5 degrees.

Article 18

In the construction of a railway, highway or water project, the disturbance of vegetation shall be minimized; waste sand, rocks and
earth thus created must be disposed of in an area specially designated for the purpose, and shall not be dumped out into any river,
lake, reservoir or any ditch or canal other than the specially designated area; slope protection must be built or other land management
measures adopted on hillslopes within the frontage of the railway and highway; after the project is completed, trees must be planted
and grass grown on the earth-fetching area, excavated land surface and the exposed land surface for the disposition of waste sand,
rock and earth, in order to prevent soil erosion.

In the establishment of a mining or electrical power enterprise or any other large or medium-sized industrial enterprise, the abandoned
stripped topsoil, waste rock, tailings and residues must be disposed of in a specially designated area, and shall not be dumped out
into any river, lake, reservoir or any ditch or canal other than the specially designated area. If the vegetation is damaged on account
of the mining or construction, measures must be taken to rehabilitate the topsoil and vegetation, thereby preventing soil erosion.

Article 19

When the construction of a railway, highway or a water project is carried out, a mining or electrical power enterprise or any other
large or medium-sized industrial enterprise is established in a mountainous, hilly or sandstorm area, the environmental impact statement
for the project must include a water and soil conservation programme approved by the department of water administration. The water
and soil conservation programme shall be drawn up in accordance with the provisions of Article 18 of this Law.

Where a township collective mining enterprise is to be set up or an individual is to apply for mining, in accordance with the provisions
of the Law on Mineral Resources, in a mountainous, hilly or sandstorm area, a water and soil conservation programme approved by the
department of water administration under the people’s government at or above the county level must be submitted before the application
for going through the approving procedures for mining operation is made.

Water and soil conservation facilities in a construction project must be designed, constructed and put into operation simultaneously
with the principal part of the project. When a construction project is completed and checked for acceptance, the water and soil conservation
facilities shall be checked for acceptance at the same time, with personnel from the department of water administration participating.

Article 20

The local people’s governments at various levels shall take measures to strengthen the control over such production activities as
mining, earth-fetching, sand-digging and quarrying, so as to prevent soil erosion.

Earth-fetching, sand-digging and quarrying shall be prohibited in areas in danger of land-collapsing or land-sliding or where mudrock
flow is liable to occur. The scope of such areas shall be determined and announced by the local people’s governments at or above
the county level.

Chapter III Rehabilitation

Article 21

The people’s governments at or above the county level shall, in accordance with the water and soil conservation plans, organize competent
administrative departments and units concerned to engage in a planned way in the rehabilitation of soil erosion.

Article 22

In a water-eroded region, by taking a small river basin comprising the natural ravines and flanking hillslopes as a unit, a comprehensive
system for the prevention and control of soil erosion shall be set up on the basis of overall planning and comprehensive rehabilitation.

In a wind-eroded region, such measures as exploitation of water resources, water diversion for sand removal, planting of trees and
growing of grass, installation of artificial sandbreak and forest network shall be adopted to build a protective system for windbreak
and sand-fixation, thereby controlling hazards of sand storms.

Article 23

The state shall encourage the agricultural collective economic organizations and farmers in soil-eroded regions to carry out rehabilitation
of soil erosion, and shall also practice a policy of giving support as to fund, energy, grain, taxation, etc.; the specific measures
thereof shall be prescribed by the State Council.

Article 24

The local people’s governments at various levels shall organize agricultural collective economic organizations and farmers to manage
in a planned way the cultivated land with a slope of above 5 degrees but under the reclamation-forbidden degrees, by taking in line
with different conditions such water and soil conservation measures as regulating drainage systems, building terraced fields, and
practicing a method of cultivation conducive to water and soil conservation.

Article 25

In soil-eroded regions, any individual who contracts for the use of land owned by the collective shall include the responsibility
of rehabilitating soil erosion in the contract.

Article 26

The rehabilitation of soil erosion on barren hills, waste valleys, barren hillocks and desolated beaches may be contracted to agricultural
collective economic organizations, individual farmers or leaseholding household groups.

Where the rehabilitation of soil erosion on barren hills, waste valleys, barren hillocks or desolated beaches are contracted out,
contracts for the rehabilitation of soil erosion shall be concluded according to the principle of the benefits derived therefrom
to be enjoyed by the contractors for the rehabilitation.

The trees planted on account of the contracted rehabilitation and the fruits yielded therefrom shall belong to the contractors; and
the land expanded as a result of the contracted rehabilitation shall be used by the contractors.

The state shall protect the lawful rights and interests of the parties to a contract for rehabilitation. Within the term of the contracted
rehabilitation, if a contractor dies, his or her successor (s) may, in accordance with the agreements stipulated in the contract,
continue to undertake the contract.

Article 27

Any enterprise or institution must, in the course of construction or production, adopt water and soil conservation measures, and shall
be responsible for the rehabilitation of the soil eroded. If an enterprise or institution is unable to carry out the rehabilitation,
the department of water administration shall undertake the task, and the cost thus entailed shall be borne by the enterprise or institution
that has caused the soil erosion.

The expenses for the prevention and control of soil erosion arising in the course of construction shall be allocated from the capital
construction investment; the expenses for the prevention and control of soil erosion arising in the course of production shall be
allocated from the production cost.

Article 28

The people’s governments at or above the county level shall organize departments concerned to inspect for acceptance the water and
soil conservation facilities built and the trees and grass planted in soil-eroded regions.

The management and protection of water and soil conservation facilities, experimental sites, trees and grass planted and other rehabilitation
achievements shall be strengthened.

Chapter IV Supervision

Article 29

The department of water administration under the State Council shall establish a monitoring network for water and soil conservation,
so as to conduct monitoring and prediction of the nation- wide soil erosion developments and publicly announce the results thereof.

Article 30

Personnel in charge of supervision over water and soil conservation in the departments of water administration under the people’s
governments at or above the county level shall have the right to carry out on-the-spot inspection on the situations of soil erosion
and the prevention and control thereof in areas under their respective jurisdiction. Units and individuals that are being inspected
must truthfully report the situations and provide necessary working conditions for the inspection.

Article 31

Any dispute arising among regions over the prevention and control of soil erosion shall be solved through consultation; if no settlement
is reached through consultation, the case shall be handled by the people’s government at the next higher level.

Chapter V Legal Responsibility

Article 32

In the case of any violation of the provisions in Article 14 of this Law by cultivation crops on reclamation-forbidden hillslopes,
the department of water administration under the people’s government at the county level shall order the cessation of the reclamation
and the adoption of remedial measures, and may also impose a fine.

Article 33

Where any enterprise, institution, or agricultural collective economic organization, without approval of the department of water administration
under the people’s government at the county level, reclaims waste hillsides with a slope of above 5 degrees but under the reclamation-forbidden
degrees, the department of water administration under the people’s government at the county level shall order the cessation of the
reclamation and the adoption of remedial measures, and may also impose a fine.

Article 34

In the case of earth-fetching, sand-digging or quarrying in areas in danger of land-collapsing or land-sliding or where mud-rock flow
is liable to occur, as designated by the local people’s government at or above the county level, the department of water administration
under the people’s government at or above the county level shall order the cessation of the above law-breaking acts and the adoption
of remedial measures, and shall also impose a fine.

Article 35

In the case of tree-felling in forest areas without adopting water and soil conservation measures, thus causing serious soil erosion,
the department of water administration shall report thereon to the people’s government at or above the county level for a decision
to order a rectification within a fixed period of time and the adoption of remedial measures, and shall also impose a fine

Article 36

Any enterprise or institution that causes soil erosion in the course of construction or production and fails to carry out rehabilitation
may, in light of the harmful consequences thus entailed, be punishable with a fine or be instructed to suspend its business for rehabilitation;
the responsible persons concerned shall be subjected to administrative sanctions by the unit where they work or by the competent
departments at higher levels.

The imposition of a fine shall be subject to a decision by the people’s government at the county level on a report submitted by the
department of water administration under the people’s government at the county level. The decision on ordering the suspension of
business for rehabilitation shall be made by the people’s government at the municipal or county level; the suspension of business
for rehabilitation for an enterprise or institution directly under the Central Government or a people’s government at the provincial
level shall be reported to the State Council or the provision people’s government for approval.

Any individual who engages in mining causes soil erosion and fails to carry out rehabilitation shall be punished in accordance with
the provisions of the preceding two paragraphs.

Article 37

Whoever hinders, by use of violence or threat, the performance of duty according to Law by personnel in charge of supervision over
water and soil conservation shall be investigated for criminal responsibility according to law; those who refuse to accept or hinders
the performance of duty by personnel in charge of supervision over water and soil conservation, but without resorting to violence
or use of threat, shall be punished by the public security organ in accordance with the Regulations on Administrative Penalties for
Public Security.

Article 38

If any party is not satisfied with the decision on administrative sanctions, it may, within 15 days after the receipt of the notice
of sanctions, apply for reconsideration to the organ at the next higher level over the one that has made the decision. The party
may also directly bring a suit in a people’s court within 15 days after the receipt of the said notice.

The reconsideration organ shall, within 60 days after the receipt of the application for reconsideration, make a reconsideration decision.
If the party concerned is not satisfied with the reconsideration decision, it may, within 15 days after the receipt of the reconsideration
decision, bring a suit in a people’s court. If the reconsideration organ fails to make a reconsideration decision within the time
limit, the party may, within 15 days after the expiration of the term for reconsideration, bring a suit in a people’s court.

If a party neither applies for reconsideration, nor brings a suit in a people’s court within the time limit, nor complies with the
decision on sanctions, the organ that has made the decision may apply to a people’s court for compulsory execution.

Article 39

Any individual or unit that causes damage from soil erosion shall bear the responsibility of removing the damage, and shall compensate
the units and individuals that have directly suffered the damage.

Any dispute over the liability or amount of compensation may, upon the request by a party, be dealt with by the department of water
administration; if the party is not satisfied with the decision thus made, it may bring a suit in a people’s court. The party may
also directly bring a suit in a people’s court.

In case of irresistible natural disasters, if damage from soil erosion cannot be avoided despite of taking reasonable measures promptly,
the individual or unit concerned shall be exempted from responsibility.

Article 40

In case a person in charge of supervision over water and soil conservation derelicts his or her duty or abuses his or her power and
thus brings losses to the public property or the interests of the state and the people, administrative sanctions shall be enforced
by the unit to which the offender belongs or by the competent department at a higher level; if the offence constitutes a crime, the
offender shall be investigated for criminal responsibility according to law.

Chapter VI Supplementary Provisions

Article 41

The State Council shall for mutate the implementing regulations in accordance with this Law.

The standing committees of the people’s congresses of the provinces, autonomous regions and municipalities directly under the Central
Government may, in accordance with this Law and in the light of the respective actual conditions, formulate measures of implementation.

Article 42

This Law shall enter into force as of the date of promulgation. The Regulations on the Work of Water and Soil Conservation promulgated
by the State Council on June 30, 1982 shall be annulled on the same date.

The Standing Committee of the National People’s Congress
1991-06-29

OFFICIAL REPLY OF THE STATE COUNCIL CONCERNING THE ABSORPTION OF FOREIGN INVESTMENT FOR THE DEVELOPMENT OF THE YANGPU AREA IN HAINAN PROVINCE

Category	SPECIAL ECONOMIC ZONES AND COASTAL ECONOMIC DEVELOPMENT ZONES	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1992-03-09	Effective Date	1992-03-09

Official Reply of the State Council Concerning the Absorption of Foreign Investment for the Development of the Yangpu Area in Hainan Province

(March 9, 1992)

People’s Government of Hainan Province:

The Report on the Project Proposal for the Foreign-Invested Development
and Management of Thirty Square Kilometers of Land in the Yangpu Development
Zone, submitted by your Province, has been received. An official reply is
hereby made as follows:

1. We have agreed in principle with your Province to absorb foreign
investment for the development and management of about thirty kilometers of
land in the Yangpu area and build the area into the Yangpu Economic
Development Zone. You are allowed to negotiate with foreign investors
according to the provisions of the Interim Measures for the Administration of
the Foreign-Invested Development and Management of Tracts of Land.

2. We have agreed in principle that your Province may assign to foreign
developers the right to the use of all about thirty square kilometers of land
in the Yangpu area at a time. You are allowed to negotiate with foreign
investors and conclude contracts for the assignment of land use rights under
the Interim Regulations of the People’s Republic of China Concerning the
Assignment and Transfer of the Right to Use of State-Owned Land in the Urban
Areas. The contracts shall expressly provide detailed conditions and terms of
development and exploitation of land, assignment, lease and mortgage of land
use rights, and land-use fees. The contracts shall take effect with the
approval of the State Council.

After the right to the use of State-owned land has been assigned, the
ownership of resources and objects buried thereunder shall be reserved by the
State. If it is necessary to exploit and utilize them, the relevant laws and
administrative regulations of the State shall apply. The exploitation of
underground water resources in the Yangpu area shall be planned and controlled
in a rational way.

3. The development of land may be conducted by a single foreign investor,
or jointly by several foreign investors, or by a Sino-foreign joint venture.
For the purpose of the development and management of land, development
enterprises shall be established according to the laws. Under the jurisdiction
and protection of laws of the State, such enterprises must observe laws and
regulations of the State in engaging in any activity.

4. The Yangpu Economic Development Zone should be built into an
export-oriented industrial area, with advanced technology industries as its
leading sector and with the third industry developed correspondingly.
Development enterprises shall, according to this principle, draw up their
overall planning for the development and construction in the Yangpu Economic
Development Zone, which shall specify the main targets of the development and
construction, and its respective targets in different stages, the details and
requirements for achieving the development target, as well as the plans for
using the developed land.

5. The projects for the construction in the Yangpu Economic Development
Zone shall reflect the State industrial policies and meet the requirements for
economic development in Hainan, and shall be subject to the approval of the
Chinese Government. With regard to the authorities for examination and
approval of these projects, the relevant provisions of the Circular Concerning
the Summary of a Forum on Further Opening up and Quickening Economic
Development and Construction on Hainan Island, approved and transmitted by the
State Council in 1988, shall apply. Projects with foreign investment within
the Development Zone shall, if they don’t depend on the domestic market in
terms of finance, energy resources, raw materials and the sale of products, be
subject to the examination and approval of your Province. However, for those
of them beyond the approved quota, the project proposals shall obtain the
consent of the State Planning Commission before you examine and approve them.
Projects for infrastructure constructed within the Development Zone according
to planning may be examined and approved by your Province.

With the approval of the People’s Bank of China, banks or other financial
institutions with foreign investment may be established within the Development
Zone.

6. We have agreed in principle that the Yangpu Economic Development Zone
shall be administered as a closed or separate area. The detailed separation
and supervision measures shall be formulated by the General Customs
Administration and the Special Economic Zone Office under the State Council in
consultation with other relevant departments, and shall be enforced upon
approval.

7. Subject to the effective separation and supervision measures, policies
for bonded areas shall apply in the Yangpu Economic Development Zone to the
import and export control, collection and exemption of import and export
duties, product tax and value-added tax levied on behalf of the tax
authorities, but not to the administration of consumer goods imported for
market supplies. Before the enforcement of such measures, policies and
measures described in the Circular Concerning the Summary of a Forum on
Further Opening up and Quickening Economic Development and Construction on
Hainan Island, approved and transmitted by the State Council in 1988, and the
Provisions of the State Council Concerning the Encouragement of Investment in
Developing Hainan Island in 1988, shall continue to apply in the Yangpu area.

Other tax policies in the Yangpu Economic Development Zone shall refer in
principle to the tax policies of the Hainan Special Economic Zone laid down by
the State. The reduction and exemption of taxes under the central authorities
shall be subject to the approval of the Ministry of Finance and the State
Administration of Taxation. Taxes under the local authorities shall be
adjusted in the light of the actual situations in different industries and
nobody may reduce and exempt all of them at a time.

8. We have agreed in principle to your Province’s preliminary plan for
infrastructure construction with regard to facilities for water supply,
electricity supply, post and telecommunications, and means of transport in the
Yangpu Economic Development Zone. If the linking up of facilities and the
division of management work involves institutions outside the Development
Zone, you shall invite the institutions concerned to sign an agreement or a
contract with development enterprises so as to specify the detailed
requirements and measures. The issue on the building of a small-scale airstrip
in Yangpu shall be referred to the competent authority for special discussion.

9. The overall planning for allocating shorelines for ports in Yangpu Bay
shall be drawn up by the traffic departments, in which consideration shall be
given to reserve the land extension in depth from shorelines according to the
actual needs for planned ports or piers. The contracts for the assignment of
land use rights and the overall planning for the development and construction
shall specify such consideration. Subject to the planning, Chinese and foreign
parties may jointly invest in the construction and management of ports and
piers, and foreign investors may build and operate piers for the use of
enterprises. Ports and navigation affairs shall be under the unified
administration of the traffic departments.

10. We have agreed to your Province’s guideline on environmental
protection and measures for controlling the total quantity of pollutants
charged in the Yangpu Economic Development Zone. You should lose no time in
completing the assessment of regional environmental impact and doing other
preparatory work before the development and construction of the land is
started. Construction projects shall be in strict conformity with the
requirements of environmental protection. Facilities for the prevention and
control of pollution shall be designed, built and put into operation
simultaneously with the main project.

11. We have agreed in principle to your Province’s conception about the
administrative organ to be set up in the Yangpu Economic Development Zone. You
must make the administrative staff simple and efficient, divide functions
among them clearly, and intensify the effective administration as a government
department.

CIRCULAR OF THE STATE COUNCIL REGARDING THE FURTHER OPENING OF NANNING, KUNMING, PINGXIANG AND OTHER FOUR BORDER CITIES (OR COUNTIES OR TOWNS)

Category	SPECIAL ECONOMIC ZONES AND COASTAL ECONOMIC DEVELOPMENT ZONES	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1992-06-09	Effective Date	1992-06-09

Circular of the State Council Regarding the Further Opening of Nanning, Kunming, Pingxiang and Other Four Border Cities (or Counties or Towns)

(June 9, 1992)

The State Council has resolved to further open such places as
Nanning (city), Kunming (city), Pingxiang (city), Dongxing (town),
Wanting (city), Ruili (county) and Hekou (county).

1. The policies for costal open cities shall be implemented in the cities
of Nanning and Kunming.

2. The following policies shall be implemented in some cities (or counties
or towns)–Pingxiang, Dongxing, Wanting, Ruili, and Hekou:

(1) Border trade and economic cooperation with foreign companies shall
be carried out in accordance with relevant regulations approved by the State
Council. The people’s governments of Guangxi Zhuang Autonomous Region and
Yunnan Province within the limit of their authority, may grant certain
authority to the governments of the five cities (or counties or towns)
concerning the administration of border trade and economic cooperation so
that they may have the right to examine and approve some economic contracts
concerning border trade, product processing, and labor service cooperation
without asking a superior department for instructions. The five cities (or
counties or towns) may, with the approval of the Ministry of Foreign Trade
and Economic Cooperation, increase the number of companies dealing with border
trade by one or two.

(2) The development of processing trades and foreign-exchange-earning
agriculture shall be encouraged in these regions. During the Eighth Five-Year
Plan period, the five cities (or counties or towns) shall be exempt from
import duties and product taxes (value-added taxes) for imported seeds, seed
plants, breeding stocks, fodder, related technical equipment for developing
the export of agricultural products, and imported machinery and other
materials for processing and export of agricultural products and for
technological reform of enterprises.

(3) Both domestic and foreign investment should be actively absorbed to
promote development of the economy. The governments of Guangxi Zhuang
Autonomous Region and Yunnan Province, within the limit of their authority,
may extend the authority of the governments of the five cities (or counties or
towns) to examine and approve foreign-funded projects. Income taxes shall be
levied on foreign-funded enterprises in the five cities (or counties or towns)
at a reduced rate of 24 percent.

(4) Investors from neighboring countries may include the means of
production or other materials and equipment in the total amount of their
investment. These goods may be sold in accordance with the regulations
concerned, and the import duties and the consolidated industrial and
commercial tax shall be reduced by half.

(5) Qualified cities (or counties or towns) are allowed to establish
border economic cooperation zones, and set up export-oriented processing
enterprises and relevant tertiaries. The specific scope of border economic
cooperation zones shall be examined and approved by the Special Economic
Zones Office of the State Council in conjunction with relevant departments.
The imported machines, equipment, and other materials, as well as office
articles within a reasonable quantity, so long as they are used for
infrastructure construction of border economic cooperation zones, shall be
exempt from import duties and product taxes (value-added taxes). During the
Eighth Five-Year Plan period, the newly-earned financial income of the
economic cooperation zones should be reserved for the construction of local
infrastructure.

(6) If the scale of production and export of export-oriented productive
enterprises which have links with the inland areas in the border economic
cooperation zones reaches a certain volume, they shall be granted the right
to import from and export to the neighboring countries with the approval of
the Ministry of Foreign Trade and Economic Cooperation. The income taxes of
the inland-associated enterprises shall be levied at a reduced rate of 24
percent supposing the profits remain in the locality, but an additional amount
of nine percent shall be collected by the region in which the inland investors
are if they transfer the profits to inland areas. Until the end of the Eighth
Five-Year Plan period, the above-mentioned enterprises shall be exempt from
regulation tax on investment orientation.

(7) The commodities received through barter by inland-associated
enterprises and foreign-funded enterprises in the border economic cooperation
zones may be sold by enterprises themselves, and import duties and
consolidated industrial and commercial tax shall be reduced by half for these
commodities. For importing commodities on which the state has placed
restrictions, the formalities of import examination and approval should be
handled in accordance with the relevant regulations of the state.

(8) The state shall grant appropriate subsidies to assist construction of
customs and other port facilities in these five cities (or counties or towns).
The specific amount and means of subsidization shall be appraised and decided
by the Ministry of Finance.

The five cities (or counties or towns) are allowed to collect managerial
fees (0.6 yuan/ton) on goods passing through the ports. These fees shall be
used for maintenance and construction of the port facilities and cities.

(9) Every year during the Eighth Five-Year Plan period, the People’s Bank
shall allocate to Wanting and Ruili 10 million yuan each, and to Pingxiang,
Dongxing, and Hekou 20 million yuan each as credit for fixed assets. These
allocations shall be used for the construction of the border cities and the
border economic cooperation zones and shall be included in the state’s credit
and investment plan.

(10) From this year to the end of the Eighth Five-Year Plan period, each
of the five cities (or counties or towns) shall be allowed to import 30 items
of transportation for their own use, which shall be exempt from import duties,
value-added taxes and special consumption taxes. These vehicles are to be used
only within the local region, and resale or conveyance outside is forbidden.
This shall be strictly supervised by the local customs offices. The authority
to check and issue import licences shall be granted to the department of
economy and trade of the Guangxi Zhuang Autonomous Region and Yunnan Province.

(11) Investment and establishment of overseas enterprises in peripheral
countries shall be permitted. According to Document No.13 issued by the State
Council in 1991, the projects with a total investment volume below US$1
million shall be examined and approved by the Guangxi Zhuang Autonomous Region
and Yunnan Province, and licences shall be issued after authority is granted
by the Ministry of Foreign Trade and Economic Cooperation.

The governments of the Guangxi Zhuang Autonomous Region and the Yunnan
Province should reinforce their leading role over the further-opened cities
and border towns and help them make overall plans for construction and
development. The scale of construction for land development should be suited
to the practical conditions of the localities. While expanding opening up and
speeding up economic construction, the two regions should strengthen
construction of the legal system and socialist spiritual civilization, tighten
macro-control over the economy, take strong measures against crimes such as
smuggling and narcotics trafficking so as to guarantee the security and
stability of the borders and the sound development of all undertakings.

MEASURES FOR THE ADMINISTRATION OF REGISTRATION OF ENTERPRISES FROM FOREIGN COUNTRIES (REGIONS) ENGAGING IN PRODUCTION AND BUSINESS WITHIN THE TERRITORY OF CHINA

Measures for the Administration of Registration of Enterprises from Foreign Countries (Regions) Engaging in Production and Business
within the Territory of China

Decree No.10, 1992 of State Administration for Industry and Commerce
August 15, 1992

(Promulgated by Decree No. 10 of State Administration for Industry and Commerce on August, 15, 1992)

Article 1

These Measures are formulated in accordance with laws and regulations with a view to promoting economic cooperation with foreign
countries, strengthening administration of enterprises from foreign countries (regions) (hereinafter referred to as foreign enterprises)
that are engaged in production and business within the territory of China, protecting their legitimate rights and interests, and
maintaining economic order.

Article 2

According to relevant laws and regulations, foreign enterprises, approved by the State Council and administrative authorities authorized
by the State Council (hereinafter referred to as examination and approval authorities) and engaged in production and business with
the territory of China, shall register with the State Administration for Industry and Commerce or the local administrations for industry
and commerce authorized by the State Administration for Industry and Commerce (hereinafter referred to as the administrative departments
of registration). Foreign enterprises may start production and business only when their applications for registration have been examined
and approved by administrative departments of registration and they are given Business Licenses of People Republic of China (hereinafter
referred to as Business Licenses. Foreign enterprises, who fail to be approved by the examination and approval authorities and whose
applications for registration fail to be examined and approved by administrative departments of registration, may not be engaged
in production and business within the territory of China.

Article 3

According to the state’s laws and regulations in force, foreign enterprises shall apply for registration if they are engaged in the
following production and business:

(1)

Exploration and exploitation of onshore and offshore oil and other mineral resources,

(2)

Contract projects for the construction and decoration of houses and civil engineering, or the installation of circuit pipelines and
equipment,

(3)

Operation and management of foreign-invested enterprises by contracts or authorization,

(4)

Branches established in China by foreign banks, and

(5)

Other production and business permitted by the State.

Article 4

When the projects for production and business conducted by foreign enterprises are approved by the examination and approval authorities,
the foreign enterprises shall register with the administration departments of registration within 30 days of approval.

Article 5

When the foreign enterprises apply for registration, they shall submit the following documents or certificates:

(1)

Applications signed by the chairperson of the board of directors or general manager, and

(2)

Documents and certificates approved by the examination and approval authorities.

Those engaged in the exploration and exploitation of onshore and offshore oil and other mineral resources shall submit documents approved
by the Ministry of Foreign Trade and Economic Cooperation; those engaged in contract projects for offshore oil shall submit approval
letter issued by China National Offshore Oil Corporation; those engaged in contract projects for onshore oil shall submit approval
letter issued by China National Petroleum Corporation or the entities authorized by it; those foreign banks that establish branches
shall submit approval documents issued by People’s Bank of China; those engaged in contract projects for the construction and decoration
of houses and civil engineering, or the installation of circuit pipelines and equipment shall submit Qualification Certificate for
Foreign-Owned Enterprises to Contract Projects issued by the Ministry of Construction; those engaged in operation and management
of foreign-invested enterprises by contracts or authorization shall submit approval document issued by authorities in charge of the
examination and approval of the contracts and articles of association of the foreign enterprises; those engaged in other production
and business shall submit approval documents issued by administrative authorities concerned in accordance with the industry which
their production and business belong to.

(3)

Contract for the production and business that foreign enterprises are engaged in (branches established in China by foreign banks are
not subject to this item).

(4)

Legitimate certificate of operation for enterprises issued by the governments of the countries (regions) where the foreign enterprises
are from,

(5)

Certificate of capital creditability of foreign enterprises,

(6)

Authorization letter issued by the China project person in-charge designated by the chairperson of the board of directors or the general
manager of the foreign enterprises, his/her resume, and ID card, and

(7)

CIRCULAR OF THE STATE COUNCIL REGARDING FURTHER REFORM OF THE ADMINISTRATION OF INTERNATIONAL OCEAN SHIPPING INDUSTRY

Category	COMMUNICATIONS AND TRANSPORT	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1992-11-10	Effective Date	1992-11-10

Circular of the State Council Regarding Further Reform of the Administration of International Ocean Shipping Industry

(November 10, 1992)

In order to meet the needs of developing foreign economic
relations and trade, a set of reform measures have been drawn up
which concern the administration of the international ocean shipping
industry in China, and which have played an active role in
enlivening foreign trade shipping and promoting the development
of the international ocean shipping industry. However, non-
separation between enterprises and administrative departments,
too much administrative interference and the inactivity of some
reform measures have restricted the management of goods shipping
agencies (hereinafter referred to as cargo agencies), shipping
agencies and the international ocean shipping enterprises
(hereinafter referred to as shipping companies), have caused a lack
of vigor in enterprises and affected the international ocean
shipping industry in China. Thus, further reform in the
administration of the international ocean shipping industry in
China must be undertaken. The following are to be especially
noted:

1. Free up cargo agencies and shipping agencies, allow more
managers, and encourage competition in order to improve service
quality. Those enterprises, including branches which have
obtained business licenses, which meet business operational
conditions and legally conduct business activities, may engage in
cargo agency and shipping agency activities after approval; cargo
owners and shipping companies shall have the right to freely
select cargo agencies or shipping agencies, and carriers and
cargo owners may establish direct carriage and consignment
relationships; no department may undertake to interfere with
them.

2. Every positive factor should be brought into play to
develop international ocean shipping. Those enterprises,
including large scale enterprise groups and specialized import
and export companies, which meet business operational conditions
and legally conduct business activities may establish shipping
companies after being approved for engaging in international
ocean shipping.

3. Freedom in management of the shipping companies shall be
enlarged in accordance with the provisions of the Regulations on
the Transformation of the Mechanisms of the Industrial
Enterprises Owned by the Whole People. Shipping companies may, in
light of state macro requirements, freely determine route
management, ship allocation, increases or decreases in shipping
and ship renewal.

4. Those routes which domestic shipping companies are not
able to open or those routes for which shipping densities are
insufficient may, on the principle of reciprocity, absorb
foreign-funded regular shipping vessels or overseas Chinese-
funded regular shipping vessels staying at ports in China, but
shipping may not be carried out along the coast. Foreign shipping
companies are allowed to run foreign-funded or Chinese-foreign
joint shipping ventures in a proper manner, and may canvass cargo
business, sign bills, convert foreign exchange and conclude
contracts for their own ships after approval.

5. The management functions of government departments shall
be conscientiously transferred. The Ministry of Communications
and the Ministry of Foreign Economic Relations and Trade shall,
on the principle of simpler administration and loosened control,
decrease the approval and administrative interference of the
specific routines of enterprises. The Ministry of Foreign Economic
Relations and Trade shall be in charge of the policy, guidelines,
regulations and statistical surveys concerning the administration
of cargo agencies; the Ministry of Communications shall be in charge
of the policies, guidelines, regulations and statistical surveys
concerning the administration of shipping companies and shipping
agencies. Henceforth the two ministries shall, through macroscopic
regulation and economic and legal measures, carry out macro
management of shipping companies, cargo agencies and shipping
agencies engaged in international shipping. Moreover, they shall,
in line with international invention and on the basis of China’s
national conditions, formulate just and reasonable operational
qualification standards and administrative approval measures for
the shipping companies, shipping and cargo agencies, and provide a
fair competitive market environment for enterprises. The two
ministries shall strengthen industrial administration of those
enterprises which participate in competition, without any
discrimination, and shall not treat them differently because they
are subject to different ministries. Each local government shall
also simplify administration, loosen control, and prevent local
protectionism.

6. The Ministry of Communications shall study the measures
taken by foreign countries in developing the shipping industry
and, through consultation with the relevant departments, formulate
specific policies for promoting the development of the ocean freight
industry in China, which shall be effective after being submitted to
and approved by the State Council.

The Ministry of Communications, the Ministry of Foreign Economic
Relations and Trade and other departments shall conduct research on
and formulate specific policies for the following items: fair
competition in taxation and management between state-owned shipping
agency enterprises, cargo agency enterprises, shipping companies
and foreign-funded or joint shipping agency enterprises, cargo
agency enterprises or shipping companies; improved supervisory and
restraint mechanisms; getting rid of barriers between different
levels or departments; preventing monopolies; and implementing
measures for the banning of illegal businesses and other activities
concerning the ocean shipping market. These measures shall be
effective after being submitted to and approved by the State Council.

7. The enterprises subject to the Ministry of Communications
and the Ministry of Foreign Economic Relations and Trade shall
bring into play their respective superiorities and develop a
horizontal integration by adopting joint operation and stock
purchasing measures.

8. The Ministry of Foreign Economic Relations and Trade and
the Ministry of Communications shall strengthen unity, cooperate
closely and consult with each other in administering
international ocean shipping. In case of problems involving other
departments concerned, agreement must be reached from such
departments or a joint document must be issued; no document with
which the relevant departments do not agree shall be promulgated.
Major issues which do not have the agreement of the relevant
departments through consultation may be submitted to and decided
by the State Council.

9. The China Ocean Shipping Company and the China National
Foreign Trade Transportation Corporation are the two largest
foreign trade shipping enterprises in China, and shall share the
same policy treatment by the state. The relevant departments shall
support them, improve their competitive power with foreign
companies, and promote the development of the international ocean
shipping industry in China.

10. Every relevant department shall, in the spirit of this
Circular, check up on the documents promulgated earlier by this
department; in case of any discrepancy with this Circular, former
documents shall be amended in accordance with the provisions of
this Circular and submitted for implementation.

This Circular shall be implemented as of the date of
promulgation.

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.

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE QUESTIONS CONCERNING THE APPLICABLE TAX RATE AND DEDUCTION OF CALCULATED TAX AMOUNT RELATED TO INCOME OF ENTERPRISES WITH FOREIGN INVESTMENT FROM OUTSIDE CHINA

The State Administration of Taxation

Circular of the State Administration of Taxation on the Questions Concerning the Applicable Tax Rate and Deduction of Calculated Tax
Amount Related to Income of Enterprises with Foreign Investment from Outside China

GuoShuiFa [1993] No.39

July 14,1993

In accordance with the related stipulations of the Income Tax Law on Enterprises with Foreign Investment and Foreign Enterprises and
its Rules for the Implementation (hereinafter referred to as the Tax Law and Rules), we hereby clarify the question concerning the
applicable tax rate related to the income gained by an enterprise with foreign investment from outside China and the question concerning
calculation of deduction of the income tax already paid outside China:

In accordance with Article 71 of the Rules, the reduced tax rate as stipulated in the Tax Law is applicable only to the income gained
by a enterprise with foreign investment from production and operation carried out in appropriate districts. Therefore, with regard
to the income gained by a enterprise with foreign investment from outside China, enterprise income tax and 1ocal income tax shall
be calculated and levied without exception in accordance with the stipulations of Article 5 of the Tax Law.

II.

As regards the item which states “the total amount of payable tax calculated in accordance with the Tax Law on incomes gained from
inside and outside China” as set in the formula for calculating the quota of overseas tax payment to be deducted as listed in Article
84 of the Rules, the total amount of income gained from inside and outside China shall be calculated in accordance with the enterprise
income tax rate and local income tax rate as stipulated in Article 5 of the Tax Law.

III.

This Circular shall enter into force as of the day of receipt of the document.

The State Administration of Taxation
1993-07-14

PROTECTION OF RIGHTS AND INTERESTS OF THE AGED

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	1996-08-29	Effective Date	1996-10-01

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

Contents
Chapter I  General Provisions
Chapter II  Maintenance and Support by the Family
Chapter III  Safeguarding by the Society
Chapter IV  Participation in Social Development
Chapter V  Legal Liability
Chapter VI  Supplementary Provisions

(Adopted at the 21st Meeting of the Standing Committee of the Eighth

National People’s Congress on August 29, 1996 and promulgated by Order No.73
of the President of the People’s Republic of China on August 29, 1996)
Contents

Chapter I General Provisions

Chapter II Maintenance and Support by the Family

Chapter III Safeguarding by the Society

Chapter IV Participation in Social Development

Chapter V Legal Liability

Chapter VI Supplementary Provisions
Chapter I General Provisions

Article 1 This Law is enacted in accordance with the Constitution for the
purpose of protecting the lawful rights and interests of the aged, developing
the undertakings for them and carrying forward the virtue of the Chinese
nation with respect to respecting and supporting the aged.

Article 2 The aged mentioned in this Law refer to citizens over the age
of sixty.

Article 3 The state and society should take measures to perfect the
social security system for the aged and gradually improve the conditions of
ensuring their lives and health and their participation in social development
in order to provide the aged with living support, medical services, working
conditions, educational opportunities and recreational facilities.

Article 4 The state protects the statutory rights and interests enjoyed
by the aged.

The aged have the right to material assistance from the state and society
and to benefit from achievements in social development.

Discrimination against, insult of, maltreatment of or desertion of the
aged shall be prohibited.

Article 5 People’s governments at various levels should incorporate the
undertakings for the aged into their plans for national economy and social
development, gradually increase the financial input and encourage social
investments in order to ensure that the undertakings for the aged develop in
coordination with economic and social progress.

The State Council and the people’s governments of provinces, autonomous
regions and municipalities directly under the central government shall take
organizational measures to coordinate relevant departments in ensuring the
protection of rights and interests of the aged. The specific organs shall be
designated by the State Council and the people’s governments of provinces,
autonomous regions and municipalities directly under the central government.

Article 6 The protection of lawful rights and interests of the aged is a
common responsibility of the whole society.

State organs, public organizations, enterprises and institutions should,
within the scope of their respective duties and responsibilities, ensure the
protection of rights and interests of the aged.

Residents committees, villagers committees and other organizations
established for the aged according to law should serve the aged by conveying
their demands and safeguarding their lawful rights and interests.

Article 7 The whole society should widely launch a publicity campaign for
respecting and supporting the aged in order to form a social mode of
respecting, caring for and assisting the aged.

Youth organizations, schools and kindergartens should educate youths and
children in ethics of respecting and supporting the aged as well as in legal
systems for safeguarding lawful rights and interests of the aged.

Voluntary service for the aged shall be advocated.

Article 8 People’s governments at various levels shall give commendations
and rewards to units, families and individuals that have made outstanding
achievements in safeguarding lawful rights and interests of the aged and
respecting and supporting the aged.

Article 9 The aged should observe laws and disciplines and should perform
statutory duties.
Chapter II Maintenance and Support by the Family

Article 10 Families are the chief support for the aged to live their
lives. Family members should care for the aged.

Article 11 A supporter should perform the duty to pay the aged person
living expenses, look after him and comfort him mentally and should give
consideration to his special requirements.

A supporter refers to a child of the aged person or a person having the
duty to support him according to law.

The spouse of a supporter should assist him in performing the duty to
support the aged person.

Article 12 A supporter should provide medical expenses and nursing
service for the aged person suffering from illness.

Article 13 A supporter should provide proper accommodation for the aged
person. He shall not force the aged person to remove to a poor house.

Children and other relatives of an aged person shall not seize the house
possessed or leased by the aged person and shall not change the ownership or
the lease without authorization.

A supporter has the duty to maintain the house possessed by the aged
person.

Article 14 A supporter has the duty to cultivate farmland contracted for
management by the aged person and take charge of his forest trees and
livestock. Proceeds derived therefrom shall belong to the aged person.

Article 15 A supporter shall not refuse to perform his duty to support
the aged person on the grounds of waiving the right to inheritance or for
other reasons.

If a supporter fails to perform his duty, the aged person has the right to
demand support payments from the supporter.

A supporter shall not require the aged person to do physical labour beyond
his strength.

Article 16 The aged and their spouses have the duty to maintain each
other.

Younger brothers or sisters who are brought up by their elder brothers or
sisters, if they can afford it after coming of age, have the duty to maintain
their elder brothers or sisters who are old and have no any supporter.

Article 17 Supporters may, with the consent of the aged person, sign an
agreement on performance of their duties to support the aged person. Residents
committees, villagers committees or the organizations to which the supporters
belong shall supervise over the performance of the agreement.

Article 18 The freedom of marriage of the aged shall be protected by law.
Children and other relatives shall not interfere with the divorce, remarriage
and married lives of the aged.

The duties of a supporter shall not terminate with the change of the
marriage of the aged person.

Article 19 The aged have the right to dispose of their own property
according to law. Their children or other relatives shall neither interfere
with the disposal of property nor extort money and gifts from them.

The aged have the right to inherit property from their parents, spouses,
children or other relatives according to law and have the right to accept
donation.
Chapter III Safeguarding by the Society

Article 20 The state establishes an old-age insurance system to safeguard
the basic living standard of the aged.

Article 21 Pensions and other treatment enjoyed by the aged according to
law shall be guaranteed. Organizations concerned must pay pensions in full on
time and shall nether delay without justification and nor appropriate them for
other purpose.

The state increases pensions on the basis of economic development, living
improvement of the people and wage rise of workers and staff members.

Article 22 In addition to an old-age insurance system suitable for actual
conditions in rural areas, bases for providing for the aged may, if possible,
be established in part of mountains, forests, water surfaces, beaches and so
on, which are owed by collectives and management of which are not yet
contracted by individuals. Proceeds derived therefrom shall be provided for
the aged.

Article 23 For the aged in cities and towns who are unable to work and
have no financial sources, if they have no supporter or their supporters have
really no ability to support or maintain them, the local people’s governments
shall provide relief for them.

For the aged in rural areas who are unable to work and have no financial
sources, if they have no supporter or their supporters have really no ability
to maintain or support them, the rural collective economic organizations shall
guarantee them food, clothing, housing, medical care and burial expenses.
People’s governments of townships, nationality townships or towns shall be
responsible for the implementation of the five guarantees.

Article 24 Citizens or organizations are encouraged to sign support
agreements or other assistance agreements with the aged.

Article 25 The state establishes the medical insurance systems in various
forms to ensure the aged the basic medical care.

Departments concerned should give special consideration to the aged in
formulating the procedures for medical insurance.

Medical treatment enjoyed by the aged according to law shall be guaranteed.

Article 26 If an aged person and his supporter are really unable to pay
medical expenses for his illness, the local people’s government may lend
proper assistance according to the circumstances and may advocate social
assistance.

Article 27 Medical institutions should provide conveniences for the aged
who seek medical treatment and should give priority to the aged who have
reached the age of seventy. Hospital beds in families and mobile medical
service may, if possible in some localities, be provided for aged patients.

Free medical care for the aged is advocated.

Article 28 The state takes measures to ensure geriatric research and
train geriatricians in order to raise the prevention and cure level of senile
illnesses as well as the scientific research level in this regard.

Hygienic education shall be given in various forms in order to popularize
knowledge of health care in old age and enhance the awareness of health
protection by the aged.

Article 29 An organization to which an aged person belongs should, in the
light of the actual conditions and relevant standards, give special
consideration to his requirements in assigning, changing and selling its
houses.

Article 30 The construction and reconstruction of public facilities,
residential areas and houses should, according to special requirements of the
aged, include the construction of supporting facilities suitable for lives and
activities of the aged.

Article 31 The aged have the right to continue education.

The state develops education for the aged and encourages social forces to
establish schools of various types for the aged.

People’s governments at various levels should step up leadership on
education for the aged and should make unified planning.

Article 32 The state and society take measures to launch mass activities
in culture, sports and recreation in order to enrich spiritual and cultural
lives of the aged.

Article 33 The state encourages and helps social organizations and
individuals to establish facilities such as welfare centres, home of respect,
apartment houses, medical care centres and cultural and sports centres for the
aged.

Local people’s governments at various levels should, in the light of
economic development in their localities, gradually increase their
appropriations for welfare undertakings for the aged and establish welfare
facilities for them.

Article 34 People’s governments at various levels should guide
enterprises in development, production and marketing of daily necessities for
the aged in order to satisfy their requirements.

Article 35 Community service shall be developed in order to establish
gradually facilities and networks for living service, cultural and sports
activities, nursing and recovery as required by the aged.

By carrying forward the tradition of mutual aid, the neighbourhood is
advocated to care for and help the aged with difficulties.

Social volunteers are encouraged and supported to serve the aged.

Article 36 Local people’s governments at various levels may, in the light
of their conditions, give preferential treatment and special consideration to
the aged who travel as visitors or tourists or take public transport vehicles.

Article 37 The aged in rural areas need not do obligatory labour and
accumulative labour.

Article 38 Broadcasting, films, televisions and periodicals should serve
the aged by reflecting their lives and spreading propaganda on safeguarding
their lawful rights and interests.

Article 39 The aged who have real difficulties in paying litigation costs
when bringing lawsuits for infringement of their lawful rights and interests
may be allowed a deferment, a reduction of the payment or its exemption. The
aged who are unable to pay lawyer’s fees when lawyers are required may receive
legal assistance.
Chapter IV Participation in Social Development

Article 40 The state and society should value knowledge and skills of the
aged as well as their experience from revolution and construction, respect
their virtues and give full play to their ability and role.

Article 41 The state should create conditions for the aged to participate
in socialist construction for material growth and cultural and ideological
progress. In the light of social requirements and actual conditions, the aged
are encouraged to engage in any of the following activities based on
valuntariness and capability.

(1) educating youths and children in socialism, patriotism and
collectivism as well as in traditional virtues such as hard struggle and plain
living;

(2) teaching knowledge of culture and science and technology;

(3) providing consultancy service;

(4) engaging in scientific and technological development and application
according to law;

(5) engaging in business operations and production according to law;

(6) establishing public welfare institutions;

(7) helping maintain public order and mediate civil disputes; and

(8) engaging in other social activities.

Article 42 Income earned lawfully through labour by the aged shall be
protected by law.
Chapter V Legal Liability

Article 43 Where the lawful rights and interests of an aged person are
infringed upon, the infringed or his agent has the right to appeal to the
competent authorities for disposition, or bring a lawsuit at a people’s court
according to law.

The people’s court and the competent authorities shall promptly dispose of
a complaint, a charge or an exposure regarding an infringement upon the lawful
rights and interests of an aged person according to law, and shall not evade
or delay the disposition.

Article 44 Departments or organizations failing to perform the duty to
safeguard the lawful rights and interests of the aged shall be admonished and
criticized, and be ordered to make corrections by the competent departments at
higher levels.

Where state functionaries neglect their duties, in violation of law, and
infringe upon the lawful rights and interests of the aged, the units to which
they belong or their higher authorities shall order them to make corrections
or impose disciplinary sanctions upon them; if a crime has been constituted,
criminal liability shall be investigated according law.

Article 45 Where an aged person involves in disputes with his family
member over the performance of duty to support him or over housing or property
issues, he may appeal to the organization to which the family member belongs,
or the residents committee or villagers committee for mediation, or may
directly bring a lawsuit at a people’s court.

When the disputes mentioned in the preceding paragraph are dealt with by
mediation, the erring family member shall be admonished and criticized and
ordered to make corrections.

The people’s court may order advance execution of cases involving the
claims for support payments by an aged person.

Article 46 Whoever, by violence or other means, publicly insults an aged
person, or fabricates facts to defame him, or maltreats him, if the
circumstances are relatively minor, shall be punished in accordance with the
relevant provisions of the Regulations on Administrative Penalties for Public
Security, and, if a crime has been instituted, be investigated for criminal
liability according to law.

Article 47 Whoever forcibly interferes with the freedom of marriage of an
aged person, or refuses to perform his duty of supporting an aged person, if
the circumstances are serious and a crime has been instituted, shall be
investigated for criminal liability according to law.

Article 48 Where a family member steals, swindles, forcibly seizes,
extorts or intentionally destroys property of an aged person, if the
circumstances are relatively minor, he shall be punished in accordance with
the relevant provisions of the Regulations on Administrative Penalties for
Public Security, and if a crime has been instituted, be investigated for
criminal liability according to law.
Chapter VI Supplementary Provisions

Article 49 The people’s congresses of national autonomous areas may
formulate regulations with appropriate adaptations or supplements in
accordance with the principles laid down in this Law and in light of the
specific conditions of folkways and customs of the local nationalities.

Article 50 This Law comes into force on August 1, 1996.

INTERIM MEASURES FOR EXEMPTION FROM THE IMPORT DUTIES ON THE SPECIAL-PURPOSE ARTICLES FOR THE DISABLED

Category	CUSTOMS	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1997-04-10	Effective Date	1997-04-10

Interim Measures for Exemption From the Import Duties on the Special-purpose Articles for the Disabled

(Approved by the State Council on January 22, 1997 and promulgated by

Decree No.61 of the General Customs Administration on April 10, 1997)

Article 1 These Measures are formulated with a view to supporting
the work of recovery of the disabled, facilitating the import of the
special-purpose articles for the disabled.

Article 2 Customs import duties and value-added taxes or consumption
taxes in import links shall be exempted from on the following import
special-purpose articles for the disabled:

(1) The propping and auxiliary utensils, artificial limbs and relevant
parts, artificial eyes, artificial noses, supporting belts for internal
organs, orthopedic appliances, orthopedic shoes, non-motorized walking-aids,
means of transport instead of walk(not including cars, motors), self-help
living appliances, or special sanitary materials for the mutilated persons;

(2) Walking-sticks for the persons disabled in eyes, guided glasses for
the blind, sight-aids, reading appliances for the blind;

(3) Language training appliances for the lingually or aurally disabled;

(4) Action training appliances and living ability training articles for
the intellectually disabled.

When importing the special-purpose articles for the disabled as
prescribed in the proceeding paragraph, the duty payers shall go through
the formalities of exemption from Customs duties directly at the Customs
authorities.

Article 3 The following special-purpose articles for the disabled which
are imported by relevant units and can not be made in China shall, upon the
approval of the Ministry of Civil Affairs or the Chinese Federation for the
disabled according to subordinate relations and after examination of
the General Customs Administration, be exempted from Customs import duties
and value-adding taxes or consumption taxes:

(1) Recovery equipments and special-purpose equipments for the disabled,
including guarding equipments of beds or wards of hospitals, central guarding
equipments, biochemical analysing instruments and ultrasonic diagnosing
instruments;

(2) Specific educational equipments and professional educational
equipments for the disabled;

(3) Instruments of assessing and gauging of professional ability for the
disabled;

(4) Special-purpose working instruments and working protection instruments
for the disabled;

(5) Special-purpose instruments for the cultural and sports acts of the
disabled;

(6) Special-purpose equipments for producing assembling and testing
artificial limbs,including special-purpose milling and polishing machines,
special-purpose vacuum forming machines, special-purpose flat hearing
machines and comprehensively testing instruments employed in artificial
limbs production;

(7) Hearing aids used by persons disabled in ears.

Article 4 The term “relevant units” stipulated in Article 3 of these
Measures denotes:

(1) Enterprises and institutions directly under the Ministry of Civil
Affairs, and welfare institutions, artificial limbs factories and recovery
hospitals for disabled disaled soldiers(including various kinds of sanitariums
for disabled revolutionary soldiers, hospitals and recovery hospitals for
disabled disaled soldiers directly under provinces, autonomous regions and
municipalities directly under the Central Government;

(2) Institutions directly under the Chinese Federation for the Disabled
(the Chinese Welfare Foundation for the Disabled), welfare institutes
and recovery institutes directly under the Federation for the Disabled(the
Welfare Foundation for the Disabled) of provinces, autonomous regions and
municipalities directly under the Central Government;

Article 5 The import special-purpose articles for the disabled with
duties exemption according to These Measures shall not be used for other
purposes.

Where anyone, in violation of the provisions of the proceeding paragraph,
use the import articles with duties exemption for other purposes, and such
an act constitutes a smuggling crime, he shall be investigated for criminal
responsibilities in accordance with law; Where such an act does not
constitutes a crime, the case shall be treated as a smuggling act or an act
violating Regulations on Customs control.

Article 6 Provisions for implementation shall be formulated by the
General Customs Administration in accordance with These Measures.

Article 7 These Measures shall come into effect as of the date of
promulgation.

MEASURES FOR ADMINISTRATION OF BORROWING INTERNATIONAL COMMERCIAL LOANS BY DOMESTIC INSTITUTIONS

19970908the People’s Bank of China

The State Administration of Foreign Exchange

Measures for Administration of Borrowing International Commercial Loans by Domestic Institutions

(Approved by the People’s Bank of China on September 8, 1997, promulgated by the State Administration of Foreign Exchange on September
24, 1997)

Chapter I General Provisions

Article 1

These Measures are formulated in accordance with the Regulations of the People’s Republic of China on Foreign Exchange Control and
other relevant provisions of the State Council for the purpose of improving the administration of the borrowing international commercial
loans

Article 2

The term “international commercial loans” mentioned in these Measures refers to funds raised and borrowed by domestic institutions
from financial institutions, enterprises, individuals or other economic organizations outside the Chinese territory or from financial
institutions with foreign investment within the Chinese territory, which are subject to contractual obligations for repayment in
foreign currency. Export credits, international financial leases, compensation trade repaid in foreign exchange, foreign exchange
deposits of institutions and individuals out of the territory (excluding foreign exchange deposits in banks which are approved to
conduct offshore banking business), project financing, financing under trade with the minimum term of 90 days and other types of
foreign exchange loans shall be regarded and administered as international commercial loans.

Article 3

The People’s Bank of China shall be the examination and approval organ of borrowing international commercial loans by domestic institutions.

The People’s Bank of China shall authorize the State Administration of Foreign Exchange and its branches offices (hereinafter referred
to as the foreign exchange bureaus) to be responsible for the examination, approval, supervision and administration of borrowing
international commercial loans by domestic institutions.

Article 4

A domestic institution must obtain approval from the foreign exchange bureau for borrowing an international commercial loan. An international
commercial loan agreement signed without the approval from the foreign exchange bureau shall be invalid. The foreign exchange bureau
shall not undertake foreign debt registration. The bank shall not open a foreign debt special account for it and the loan principals
and interests shall not be remitted abroad without authorization.

Article 5

Domestic institutions borrowing international commercial loans from foreign parties shall be restricted to:

(1)

Chinese-funded financial institutions authorized by the State Administration of Foreign Exchange to engage in foreign exchange loan
business operations;

(2)

non-financial enterprise legal persons approved by the departments authorized by the State Council.

Article 6

A financial institution borrowing an international commercial loan shall conform to the provisions of the People’s Bank of China on
the administration of the ratio of foreign exchange equity-debt of financial institutions.

Article 7

A non-financial enterprise legal person directly borrowing an international commercial loan from a foreign party shall meet the following
requirements:

(1)

having successively made profits over the previous three years, possessing an import-export business licence and engaging in an industry
encouraged by the State;

(2)

possessing a sound and complete financial management system;

(3)

for a trade-type non-financial enterprise legal person, its net assets shall account for not less than 15 per cent of its total assets;
for a non-trade-type non-financial enterprise legal person, its net assets shall account for not less than 30 per cent of its total
assets;

(4)

the sum of the international commercial loan borrowed and the surplus of the guaranty provided to a foreign party shall not exceed
50 per cent of the equivalent foreign exchange of its net assets;

(5)

the sum of the foreign exchange loan and the surplus of foreign exchange guaranty shall not exceed the foreign exchange revenue created
in the last financial year.

Article 8

A domestic institution shall borrow an international commercial loan on the basis of its own creditworthiness, and shall bear repayment
responsibility of its own accord.

Article 9

In the borrowing of an international commercial loan from a foreign party, a domestic institution shall strengthen the control of
cost. The total cost of its loan shall not exceed the total cost of a loan at the same period from a loan institution of the same
credit grading on the international financial market.

The foreign exchange bureaus shall supervise and direct the cost control in the borrowing of international commercial loans by domestic
institutions.

Article 10

A domestic institution borrowing an international commercial loan from a foreign party shall, in accordance with the provisions of
the State Administration of Foreign Exchange, submit the foreign loan statement for the previous quarter and the annual report on
the use of the international commercial loan to the foreign exchange bureau within the first ten days of each quarter.

Article 11

Foreign Exchange bureaus shall have the right to inspect the situations of the raising, using and repayment of international commercial
loans by domestic institutions. Loan institutions shall provide cooperation and submit the relevant documents and data.

Article 12

Without the approval of a foreign exchange bureau, a domestic institution shall not have the international commercial loan it has
borrowed deposited or directly paid out of the territory or converted into Renminbi for use.

Chapter II Medium-and-long-term International Commercial Loans

Article 13

The term “a medium-and-long-term international commercial loan” mentioned in these Measures refers to an international commercial
loan with a term of more than one year (not including one year), including a usance letter of credit with a term of more than one
year.

Article 14

The borrowing of a medium-and-long-term international commercial loan by a domestic institution shall be listed into the State plan
for the use of foreign capital.

Article 15

When borrowing a medium-and-long-term international commercial loan, a domestic institution shall apply to the foreign exchange bureau
by submitting all or part of the following data:

(1)

documents certifying that the borrowing is listed into the State plan for the use of foreign capital;

(2)

a document of project establishment approval for the loan;

(3)

a letter of intent on loan conditions, which shall include the name of the creditor, currency of the loan, amount, term and grace
period, interest rate, charges, early repayment intents and other financial conditions;

(4)

the source of repayment funds, repayment plan and the foreign exchange guaranty;

(5)

balance sheets in foreign exchange or Renminbi for the previous three years and other financial statements which have been verified
by a public accounting firm;

(6)

other relevant data as required by the foreign exchange bureau.

In addition to the provisions of the preceding paragraph, a branch of a financial institution borrowing a medium-and-long-term international
commercial loan from a foreign party shall also submit the relevant document of authorization from its head office (head company).

Article 16

The borrowing of an international commercial loan by a national institution resided in Beijing from a foreign party shall be directly
submitted to the State Administration of Foreign Exchange for examination and approval;

The borrowing of a loan from a foreign party by a national institution not resided in Beijing or by a local institution shall, after
being verified by the local foreign exchange bureau of the place where it is located, be submitted to the State Administration of
Foreign Exchange for examination and approval.

The branches of national and local financial institutions may make an application for approval only after they have been authorized
by their head offices (head companies).

Chapter III Short-term International Commercial Loans

Article 17

The term “a short-term international commercial loan” mentioned in these Measures refers to an international commercial loan with
a maximum term of one year (including one year), including inter-bank foreign exchange call loans, outward documentary bills, packing
loans and usance letter of credit with a term of more than 90 days but less than 365 days, etc..

Article 18

A short-term international commercial loan shall not be used for investment into long-term projects, fixed assets loans or other inappropriate
purposes.

Article 19

The foreign exchange bureaus shall implement administration of balance in respect of short-term international commercial loans borrowed
by domestic institutions.

Article 20

The balance control quota applied to short-term international commercial loans of domestic institutions (hereinafter referred to as
“the short-term loan quota”) shall be verified by the foreign exchange bureaus annually.

The balance of a short-term international commercial loan borrowed by a domestic institution shall not exceed the verified quota.

Article 21

The short-term loan quota of national financial institutions and non-financial enterprise legal persons shall be verified and made
known to lower levels by the State Administration of Foreign Exchange.

The short-term loan quota of local financial institutions and non-financial enterprise legal persons shall be examined and approved
by the foreign exchange bureaus of the place where they are located within the short-term loan quota verified and made known to lower
levels by the State Administration of Foreign Exchange.

Article 22

A Chinese-funded financial institution approved by the State Administration of Foreign Exchange to engage in international account
settlement businesses shall formulate the measures for the administration of usance letter of credit which shall be submitted to
the foreign exchange bureau for verification.

A Chinese-funded financial institution shall open usance letter of credit in accordance with the measures for the administration of
usance letter of credit that have been verified by the foreign exchange bureau.

A usance letter of credit with a term of more than 90 days but less than 365 days opened by a Chinese-funded financial institution
shall not use its short-term loan quota.

Article 23

If a non-financial enterprise legal person applies to a domestic financial institution with foreign investment to open a usance letter
of credit with a term of more than 90 days but less than 365 days, it shall be use its short-term loan quota.

Article 24

When applying to the foreign exchange bureau for a short-term loan quota, a domestic institution shall submit all or part of the following
data:

(1)

an application (including such contents as fund demand, situations of its credit-worthiness, purposes of the funds, etc.);

(2)

the previous year’s balance sheets and profit and loss statements verified by a public accounting firm;

(3)

a loan commitment letter of intention issued by the credit agency;

(4)

the foreign exchange receipts and expenditures in the previous year;

(5)

other data required by the foreign exchange bureau to be submitted.

Article 25

When borrowing a short-term international commercial loan, a non-financial enterprise legal person which does not implement the administration
of short-term loan quota balance shall have it reported case by case to the foreign exchange bureau, and shall have it included in
the short-term loan quota of the place where it is located.

Chapter IV Project Financing

Article 26

The term “project financing” mentioned in these Measures refers to the method of raising foreign exchange funds out of the territory
in the name of a domestic construction project, with the debt prepayment obligation to the foreign party by the project’s own expected
income and assets. It shall possess the following natures:

(1)

The creditor has no right of recourse over any assets and income other than the construction project;

(2)

The domestic institution is not required to mortgage, pledge or pay debts by using any assets, rights and interests as well as income
other than the construction project;

(3)

The domestic institution is not required to provide any forms of financial guaranty.

Article 27

The scale of financing with a foreign party in respect of project financing shall be incorporated into the State guidelines for borrowing
international commercial loan.

Article 28

The conditions for project financing shall be competitive and shall be examined and approved or examined and verified by the State
Administration of Foreign Exchange. With regard to the conditions for financing of project financing submitted to higher levels by
local authorities, after being preliminarily examined by the local foreign exchange bureau of the places where they are located,
they shall be reported to the State Administration of Foreign Exchange for examination and approval or examination and verification.

Article 29

When reporting the conditions for project financing to the State Administration of Foreign Exchange for examination and approval or
examination and verification, the project company shall submit the following documents:

(1)

an application, which shall include the methods for project financing, amount of money, market, as well as the term and interest rate
of the loan, the various charges and other financing conditions;

(2)

the project feasibility study report or other documents approved by the State Planning Commission;

(3)

documents certifying the incorporation of this project financing into the State guidelines for international commercial loans borrowed;

(4)

a project financing agreement;

(5)

documents with a nature of guaranty related to the project financing;

(6)

China Laws

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS CONCERNING THE SUPPRESSION OF THE FALSIFICATION, COUNTERFEITING, AND ILLEGAL...

CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL CONCERNING HALTING THE DEVELOPMENT OF PYRAMID RETAILING

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON WATER AND SOIL CONSERVATION

OFFICIAL REPLY OF THE STATE COUNCIL CONCERNING THE ABSORPTION OF FOREIGN INVESTMENT FOR THE DEVELOPMENT OF THE YANGPU AREA IN HAINAN PROVINCE

CIRCULAR OF THE STATE COUNCIL REGARDING THE FURTHER OPENING OF NANNING, KUNMING, PINGXIANG AND OTHER FOUR BORDER CITIES (OR COUNTIES OR TOWNS)

MEASURES FOR THE ADMINISTRATION OF REGISTRATION OF ENTERPRISES FROM FOREIGN COUNTRIES (REGIONS) ENGAGING IN PRODUCTION AND BUSINESS WITHIN THE TERRITORY OF CHINA

CIRCULAR OF THE STATE COUNCIL REGARDING FURTHER REFORM OF THE ADMINISTRATION OF INTERNATIONAL OCEAN SHIPPING INDUSTRY

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

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE QUESTIONS CONCERNING THE APPLICABLE TAX RATE AND DEDUCTION OF CALCULATED TAX AMOUNT RELATED TO INCOME OF ENTERPRISES WITH FOREIGN INVESTMENT FROM OUTSIDE CHINA

PROTECTION OF RIGHTS AND INTERESTS OF THE AGED

INTERIM MEASURES FOR EXEMPTION FROM THE IMPORT DUTIES ON THE SPECIAL-PURPOSE ARTICLES FOR THE DISABLED

MEASURES FOR ADMINISTRATION OF BORROWING INTERNATIONAL COMMERCIAL LOANS BY DOMESTIC INSTITUTIONS

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7