OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ABOUT LEVY OF URBAN LAND USE TAX OF FOREIGN-INVESTED ENTERPRISES AND FOREIGN ENTERPRISES

Official Reply of the State Administration of Taxation about Levy of Urban Land Use Tax of Foreign-invested Enterprises and Foreign
Enterprises

Guo Shui Han [2007] No. 596

Local Taxation Bureau of Xiamen,

We have received your Request for Establishment of Transitional Period for the Levy of Land Use Tax of foreign-funded enterprises
(Xia Di Shui Fa [2007] No.50). Upon study, we hereby render a reply as follows:

“Decision of the State Council on the Modification of ‘Interim Regulations of the People’s Republic of China Governing Land Use Tax
in Cities and Towns'”, which brings foreign-invested enterprises and foreign enterprises into the levy scope of urban land use tax,
is an important measure of the country to strengthen administration of land, is conducive to give full play to taxation as an economic
leverage, guide enterprises of all types to utilize land reasonably and economically, protect land resources, and make tax burden
fair. All localities should levy urban land use tax on enterprises of all types, including foreign-invested enterprises and foreign
enterprises in strict accordance with the decision of the State Council and relevant provisions of the revised “Interim Regulations
of the People’s Republic of China Governing Land Use Tax in Cities and Towns”.

State Administration of Taxation

June 1, 2007

State Administration of Taxation
2007-06-01

CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON THE STANDARDS FOR DETERMINING THE NEWLY-ESTABLISHED ENTERPRISES THAT MAY ENJOY THE PREFERENTIAL POLICIES FOR THE ENTERPRISE INCOME TAX

Ministry of Finance, State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation on the Standards for Determining the Newly-established
Enterprises that May Enjoy the Preferential Policies for the Enterprise Income Tax

Cai Shui [2006] No. 1

The fiscal departments (bureaus), state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities
directly under the Central Government and cities under separate state planning, the Financial Bureau of the Xinjiang Production and
Construction Corps, the financial supervision commissioners’ offices dispatched by the Ministry of Finance in all provinces, autonomous
regions, municipalities directly under the Central Government and cities under separate state planning:

With the unswerving development of society and economy as well as further deepening of the reform of enterprises, a new problem that
is not clear enough occurred on the standards for determining the newly-established enterprises that may enjoy the preferential
policies for the enterprise income tax. Upon deliberation, we hereby clarify again the standards for determining the newly-established
enterprises that may enjoy the deduction or exemption of the enterprise income tax on a periodic base as follows:

Standards for Determining the Newly-established Enterprises that may enjoy the deduction or exemption of the enterprise income tax
on a periodical base

Where an new establishing enterprise has transacted the formalities of book in and registration in the administrative department
for industry and commerce according to the relevant laws, regulations and provisions of the state;

Where the accumulated contributed amount of non-monetary assets as fixed assets and intangible assets as actually contributed by
equity contributors (shareholders or any other equity investors) of a newly-established enterprise shall not be permitted to exceed
25% of its registered capital.

In particular, the registered capital of a newly-established enterprise shall be the real paid-in capital or equity that has been
registered by the administrative department for industry and commerce. The non-monetary assets include such fixed assets as buildings,
machines and equipments as well as such intangible assets as patent rights, trademark rights and non-patented technologies. Where
the non-monetary assets contributed by the equity contributor of a newly-established enterprise that have been assessed by a qualified
accountant (auditing or taxation) firm shall be the amount of capital contributions upon the value of assessment In the case of
no assessment, the same kind of assets or the market price of identical assets in the current day or in the latest month as provided
by taxpayers shall be subject to the verification of the competent tax authority.

II.

During the period when a newly-established enterprise enjoys the preferential policies of deduction or exemption of the enterprise
income tax on a periodical base, where the non-monetary assets as accumulatively purchased by the equity investors as well as the
associated parties thereof exceeded 25% of its registered capital, the enterprise may no longer enjoy any relevant preferential policies
of deduction and exemption of the enterprise income tax.

III.

The present Circular shall come into force as of the day of issuance. The specific taxation collection and administration scope of
newly-established enterprises implemented by the state taxation bureaus and local taxation bureaus shall be based on the standards
for determining the newly-established enterprises as prescribed in the present Circular. The taxation collection and administration
scope shall not be adjusted to those enterprises that have been collected and administrated by the state taxation bureaus and local
taxation bureaus before the present Circular issuance. e. For any newly-established enterprise that has obtained the approval for
enjoying the preferential policies for the enterprise income tax, the preferential treatment may continue to the expiration according
to the relevant provisions.

IV.

The term “VI. Definition of newly-established enterprises” and the conditions for determination as prescribed in the Circular of the
State Administration of Taxation on Several Specific Issues concerning the Enterprise Income Tax (No. 229 [1994] of the State Administration
of Taxation) shall be simultaneously abolished.

Ministry of Finance

State Administration of Taxation

January 9, 2006

Ministry of Finance, State Administration of Taxation
2006-01-09

MINISTRY OF COMMERCE ANNOUNCEMENT NO.123, 2005 ON FINAL ARBITRATION ON DIMETHYL CYCLOSILOXANE

Ministry of Commerce

Ministry of Commerce Announcement No.123, 2005 on Final Arbitration on Dimethyl Cyclosiloxane

[2005] No.123

On July 16, 2004, in accordance with Anti-dumping Regulations of People’ Republic of China, Ministry of Commerce issued an announcement
to start anti-dumping investigation on imported Dimethyl Cyclosiloxane originating from Japan, U.S., U.K, and Germany (hereinafter
referred to as “investigated product”).

Ministry of Commerce issued the preliminary determination on September 29, 2005, confirming that dumping of the investigated product
had taken place and it had caused material injury to China’ domestic industries, and there was a causal relationship between the
dumping and the injury.

As the final arbitration, Ministry of Commerce decided to impose anti-dumping duties on the investigated product. Customs Tariffs
Committee of the State Council will levy anti-dumping duties on the investigated product as of January 16, 2006.

The investigated product is listed under No. 29310000 and 38249090 in the Import and Export Tariffs of the People’ Republic of China.

The anti-dumping duty rates levied on the related companies are listed as follows:

Companies of Japan:

GE Toshiba Silicones Co., Ltd: 14%

All Others: 22%

Companies of the U.S,:

Dow Corning Corporation: 13%

All Others: 22%

Companies of the U. K.:

Dow Corning Limited: 13%

All Others: 22%

Companies of Germany:

Wacker-Chemie GmbH:22%

All Others: 22%

Importers shall, while importing Dimethyl Cyclosiloxane originating from Japan, U.S., U.K. and Germany as of January 16, 2006, pay
relevant anti-dumping duties to General Administration of Customs of PRC. Anti-dumping Duty= Customs Tax Payment Price * Anti-dumping
Duty Rate.

The levy of anti-dumping duties on imported Dimethyl Cyclosiloxane originating from Japan, U.S., U.K. and Germany will last 5 years
as from January 16, 2006.

The relevant interested parties could apply, in written forms, to the Ministry of Commerce for an interim review during the levy of
anti-dumping duties in accordance with Article 49 of Anti-dumping Regulations of People’ Republic of China.

The relevant interested parties, disagreed with the final arbitration or the levy of the anti-dumping duties, could apply for an administrative
reconsideration or lawsuit in accordance with Article 53 of Anti-dumping Regulations of People’ Republic of China.

Appendix: Ministry of Commerce Final Arbitration on Anti-dumping Investigation on Imported Dimethyl Cyclosiloxane Originating from
Japan, U.S., U.K. and Germany(omitted)

Ministry of Commerce of PRC

January 16, 2006

Ministry of Commerce
2006-01-16

REPLY OF THE SUPREME PEOPLE’S COURT TO THE REQUEST FOR INSTRUCTIONS CONCERNING WHETHER OR NOT TO REVOKE AN ARBITRATION AWARD MADE BY CHENGDE ARBITRATION COMMISSION

Reply of the Supreme People’s Court to the Request for Instructions concerning Whether or not to Revoke an Arbitration Award Made
by Chengde Arbitration Commission

Min Si Ta Yu [2005] No. 51
January 24, 2006

The Higher People’s Court of Hebei Province:

We have received your Request for Instructions on Revoking the Arbitration Award [2000] No. 33and the Supplementary Arbitration Award
[2000] No. 1 of Chengde Arbitration Commission (No. 89 [2005] of the Higher People’s Court of Hebei Province). Upon deliberation,
we give the following reply.

This case involves an application for revoking a foreign-related arbitration award made by an arbitration institution of China. Chengde
Arbitration Commission once made the Arbitration Award No. 33 [2000] on the dispute between Beijing Penghua Economy & Technology
Development Co., Ltd. and British Virgin Islands Haoyun Co., Ltd. on December 26, 2000 in accordance with the status reflected in
your report on request for instructions as well as the attached files, but made a Supplementary Arbitration Award [2000] No. 1 on
December 28 of the same year, which was meant to revoke the Arbitration Award [2000] No. 33. It is stipulated in Article 56 of the
Arbitration Law of the People’s Republic of China that: “An arbitration tribunal should correct the errors concerning context or
computation and matters that have been arbitrated in the arbitral segment but omitted in the arbitration award. Within 30 days after
the receipt of the arbitration award, the related parties may apply for correction with the arbitration tribunal” Paragraph 3, Article
46 of the Arbitration Rules of Chengde Arbitration Commission stipulates: “A modified or supplemented arbitration award as made
by an arbitration tribunal shall be part of the original arbitration award.” Thus, the related laws and arbitration rules just authorize
the Arbitration Commission to make a supplementary arbitration award on any procedural or omitted matters but do not authorize the
arbitration commission to revoke any arbitration award which has been made, served and entered into force. That Chengde Arbitration
Commission made a supplementary arbitration award to revoke its original arbitration award on the same dispute falls short of legal
foundation and does not accord with the provisions of the Arbitration Rules of Chengde Arbitration Commission, which is a situation
as stipulated in item (3), paragraph 1 of Article 260 of the Civil Procedure Law of the People’s Republic of China where “the composing
of the arbitration tribunal or the procedure of arbitration does not accord with rules of arbitration”, so, on the base of the provisions
of Article 70 of the Arbitration Law of the People’s Republic of China, the people’s court may revoke the arbitration awards.

Whereas the main problem in the arbitration awards of this case lies in that the arbitral procedures are in violation of the legal
procedures, this procedural violation (by making a supplementary arbitration award to revoke the original arbitration award) that
may influence the rights of the related parties could be corrected by means of informing the arbitration tribunal of re-arbitration.
On the base of the provisions of Article 61 of the Arbitration Law of the People’s Republic of China, the arbitration tribunal shall
be informed to make a re-arbitration within a certain time limit and rule to cease the procedures for revocation in accordance with
the actual situation regarding the arbitration award in this case,. If the arbitration tribunal refuses to make a re-arbitration,
a rule of resuming the procedures for revocation shall be made and both the two arbitration awards shall be revoked concurrently
under law.

Appendix:
Request for Instructions of the Higher People’s Court of Hebei Province on Revoking the Arbitration Awards Made by Chengde Arbitration
Commission [2000] No. 33 and the Supplementary Arbitration Award [2000] No. 1

Yi Li Min Han Zi [2005] No. 89
November 23, 2005

Tribunal No. 4 of the Supreme People’s Court:

In accordance with the requests of your court in Letter [2004] No. 45, the Intermediate People’s Court of Chengde Municipality accepted
and publicly heard a the case concerning the application of Beijing Penghua Economy & Technology Development Co., Ltd. (hereinafter
referred to as Penghua), the applicant, and the British Virgin Islands Haoyun Co., Ltd. (hereinafter referred to as Haoyun), the
respondent, for revocation of arbitration awards and thereby set forth the following opinions on treatment:

Haoyun did not submit any certification of its legal existence when applying with Chengde Arbitration Commission for arbitration.
The identity certification of its legal representative was not verified by the Chinese foreign representative office located in Hong
Kong either. During the hearing, it did not submit the aforesaid certification documents to this court within the time limit as provided
for by our court. Therefore, Haoyun is disqualified as a subject in an arbitration or action in accordance with the Civil Procedure
Law of the People’s Republic of China as well as the replies of the Supreme People’s Court regarding any foreign-related or Hong
Kong-related litigation documents as well as the service thereof. Moreover, Chengde Arbitration Commission made a Supplementary Arbitration
Award No. 1 [2000] in order to revoke the Arbitration Award [2000] No. 33 after Chengde Arbitration Commission made an Arbitration
Award [2000] No. 33 on the dispute between Penghua and Haoyuan, which has gone against the related provisions of the Arbitration
Law as well as the arbitration rules of Chengde Arbitration Commission, thus, the aforesaid supplementary arbitration award shall
be regarded as illegal. So, it is determined to revoke the Arbitration Award [2000] No. 33and the Supplementary Arbitration Award
[2000] No. 1.

As far as the opinions as reported by the Intermediate People’s Court of Chengde Municipality are concerned, this court holds that
the facts as confirmed are clear and the application of law is accurate and therefore consents to revoke the Arbitration Award [2000]
No. 33and the Supplementary Arbitration Award [2000] No. 1 after an earnest examination. All the aforesaid matters are hereby reported
to you for verification in light of the Circular of the Supreme People’s Court on Revoking the Foreign-related Arbitration Awards.

Please make a reply to us whether the aforesaid opinions are right or not.

The Supreme People’s Court
2006-01-24

THE TECHNICAL POLICY FOR THE RECOVERY AND UTILIZATION OF AUTOMOBILE PRODUCTS

National Development and Reform Commission, Ministry of Science and Technology, State Environmental Protection Administration

Announcement of the National Development and Reform Commission, the Ministry of Science and Technology and the State Environmental
Protection Administration

No.9

For the purpose of promoting the construction and development of the system of circular economy in China, protecting the environment,
enhancing the efficiency of resource utilization, fulfilling the scientific development concept, and realizing the sustainable development
of society and economy, the National Development and Reform Commission, the Ministry of Science and Technology and the State Environmental
Protection Administration jointly formulated the Technical Policy for the Recovery and Utilization of Automobile Products (hereinafter
referred to as this Technical Policy).

This Technical Policy is a guiding document on pushing forward the establishment of the system of discarding and recovery of automobile
products in China. It aims at guiding the production and sale of automobiles, initiation of relevant enterprises, carrying out and
promoting the design, manufacture, discarding, recovery, and recycling of automobile products, etc. The state will, in good time,
establish the relevant systems as mentioned in the Technical Policy and will start to promulgate and implement such systems in a
successive manner prior to the year of 2010.

National Development and Reform Commission

Ministry of Science and Technology

State Environmental Protection Administration

February 6, 2006

The Technical Policy for the Recovery and Utilization of Automobile Products

Chapter I General Principles

Article 1

This Technical Policy is formulated for the purposes of protecting the environment, enhancing the resource utilization efficiency,
fulfilling the scientific development concept and realizing the sustainable development of society and economy.

This Technical Policy is a guiding document on pushing forward the establishment of the system of discarding and recovery of automobile
products in China. It aims at guiding the production and sale of automobiles, and initiation of relevant enterprises, and carrying
out and promoting the discarding and recovery of automobile products. The state will, in good time, establish the relevant systems
as mentioned in this Technical Policy and will start to promulgate and implement such systems in a successive manner prior to the
year of 2010.

Article 2

The term “automobile” as mentioned in this Technical Policy refers to the Classes M and N motor vehicles as prescribed in the Classification
of Motor Vehicles and Trailers (National Standards of the People’s Republic of China GB/T15089-2001).

Article 3

This Technical Policy shall apply to the scope including design and production of new types of vehicles to be sold and registered
within the territory of China, and the repair, maintenance, discarding, dismantlement and recycling of automobiles in using , as
well as other links.

Article 4

The recycling of materials in the production, maintenance and dismantlement of automobile products shall be taken into consideration
synthetically. It is encouraged to use renewable materials in the manufacture procedure of automobiles, to use recycled component
parts in the repair of automobiles, to enhance the recycling rate of materials, to save the resources and utilize the resources
efficiently, and give an impetus to the development of circular economy.

Article 5

The rate of recovery and utilization of automobiles refers to the rate of the reutilize of discarded automobile component parts and
materials with regenerated energy, which is usually measured on the basis of the percentage of the recoverable and utilizable materials
to the complete vehicle kerb mass.

For the recoverable and utilizable rate of automobiles, please refer to the Methods for the Computation of Recyclability and Recoverability
of Road Vehicles (GB/T195152004/ISO22628: 2002) and other relevant standards.

Article 6

The state shall gradually integrate the indicator of recoverable and utilizable rate of automobiles into the licensing management
system for the market access of automobile products.

Article 7

The management of the responsibilities of automobile producers shall be intensified. A sound management system led by the automobile
manufacturing enterprises shall be established in the sectors of production, use, discarding and recovery of automobiles.

Article 8

The competent department of the government shall, in good time, formulate and amend the matching policies and standards, strengthen
the guidance and supervision management, and direct the automobile industry of China to formulate a scientific and efficient development
plan under the scientific development concept so as to promote the highly efficient utilization of materials and decrease the consumption
of energy.

A system shall be established for the classified collection and separated selection of the materials and substances of discarded automobiles,
to promote the full and reasonable utilization and innocuous disposal of automobile wastes so as to decrease until eliminate the
harm of such wastes, and incessantly to perfect the recovery, treatment and utilization system of renewable resources. By the end
of 2012, it shall establish relatively perfect systems of laws and regulations, policy support system, technological innovation system,
as well as a effective incentive and restraint mechanism for the recovery and utilization of discarded automobiles, shall establish
a system of economic evaluation indicators for the recovery and utilization and shall set forth medium and long term strategic goals
and multi-stage promotion plans.

Article 9

The state shall adopt a ratification system for the enterprises to engage in the treatment of discarded automobiles. Any entity to
engage in the collection, dismantlement, utilization and disposal of discarded automobiles shall apply for a licence. It is forbidden
to engage in the collection, dismantlement, utilization and disposal of discarded automobiles without licence.

Article 10

The development, application of new technologies and new equipment in each link of the chain of automobile industry shall be intensified
according to the “reduction-based, reuse, and resource-based” principles. An economic growth mode, of which the main features are
low consumption, low discharge and high efficiency and which is in line with the sustainable development concept, shall be carried
out so as to make the recoverability rate of the production and sale of complete vehicle products in China reach the international
advanced level.

The goal of the first stage: from 2010, the recoverable and utilizable rate of all home-made and imported vehicles in Classes M2,
M3, N2 and N3 shall reach 85% or so, of which the recyclability rate of materials shall not be less than 80%. The recoverable and
utilizable rate of all home-made and imported automobiles in Classes M1 and N2 shall reach 80%, of which the recyclability rate of
materials shall not be less than 75%. At the same time, except the lead-bearing alloys, storage batteries, lead plating, chromeplating,
additives (stabilisers), and mercury for lamps, the use of lead, mercury, cadmium and hexavalent chromium shall be controlled.

From 2008, the automobile manufacturing or distribution enterprises shall start to undertake the register and archival filing for
the recoverable and utilizable rate of automobiles, and make preparations for carrying out the multi-stage tasks.

The goal of the second stage: from 2012, the recoverable and utilizable rate of all home-made and imported automobiles shall reach
90% or so, of which the recyclability rate of materials shall not be less than 80%.

The goal of the third stage, from 2017, the recoverable and utilizable rate of all home-made and imported automobiles shall reach
95% or so, of which the recyclability rate of materials shall not be less than 85%.

The low-speed cargo automobiles, three-wheel automobiles, motorcycles and trailers shall also be governed by the provisions on motor
vehicles in the Classes M and N, but the specific goal and implementation date shall be determined separately.

Attentions shall be paid to the protection of environment in the links of production, use and discarding of automobiles. The treatment
and disposal of the wastes generated from each link shall meet the national environmental protection standards as well as the relevant
policy and regulatory requirements, and shall try to diminish and even eliminate the harm of the wastes to the living environment
of the mankind.

Chapter II Design and Production of Automobiles

Article 11

In the design and production of any automobile product to be sold in China, the dismantlability and easiness of dismantlement after
the discarding of the product shall be taken into full consideration, and the principle of being easy to sort out different kinds
of materials shall be followed. Priority shall be given to the adoption of technologies and techniques that can utilize the resources
in a highly efficient manner, produce little pollutants, and are conducive to the recovery and utilize of the product after discarding,
so as to enhance the level of technologies for the design and production of automobile products.

Article 12

A relevant enterprise shall try its best to adopt small-sized or light weight and renewable component parts or materials, shall try
its best to choose recyclable materials as the production materials, and shall incessantly reduce the varieties of materials so as
to facilitate the recovery and utilize of materials.

The recoverability rate and recyclability rate of all plastic materials of automobile products shall be raised continuously.

It is forbidden to utilize any materials that will emit toxic substances and do harm to the environment. The relevant enterprises
shall reduce and finally stop the use of non-renewable materials, or materials disadvantageous to the environmental protection.

The utilization of lead, mercury, hexavalent chromium and other heavy metals shall be controlled. The aforesaid heavy metals are allowed
to be used only in some particular circumstances according to a checklist, which is reviewed regularly.

An enterprise shall attach marks and codes to the component parts containing harmful substances.

Article 13

A supporting enterprise of automobile component parts shall provide the automobile production enterprises with the composition, structural
design or dismantlement guide, content and nature of the harmful substances, methods for the disposal of wastes, and other information
relevant to the component parts it supplies so as to help the complete automobile production enterprises calculate the recoverable
and utilizable rate of their respective products.

Article 14

Where conditions are ripe, the state will encourage the automobile production enterprises or the general agents of imported automobiles
to choose distributors and special repair shops of their respective brand to carry out revamp or re-manufacture business relating
to the used component parts. The quality of the revamped or re-manufactured component parts shall satisfy the corresponding quality
requirements, and such component parts shall be given an indication that they are revamped or re-manufactured.

Article 15

From 2010, an automobile production enterprise or general agent of imported automobiles shall be responsible for the recovery and
treatment of the automobile products it sells and their packing articles, or may entrust the relevant institutions or enterprises
to be responsible for the recovery and treatment of the automobile products that it produced or sold and their packing articles.

The design and production of packing articles for automobile products shall be in line with the provisions of the state on clean production
and shall meet the relevant standards and requirements.

An electric automobiles production enterprise (including hybrid-powered automobiles, etc.) shall be responsible for the recovery and
treatment of the storage batteries of the electric automobiles it sells.

Article 16

An automobile production enterprises or general agent of imported automobiles shall be responsible for the recovery of its products,
and treatment or disposal of its products according to the requirements for environmental protection and recovery and utilization,
or pay the relevant recovery and treatment fees.

The recovery and treatment fees for different type of automobiles shall be decided and adjusted by the relevant departments on the
basis of the technological level of recovery and treatment of discarded automobiles, recycling ability, price, entrusted treatment
business and other factors of our country during different periods of time. If the automobile price is changed due to bearing the
recovery and treatment fees, the increased part of price shall not exceed the prescribed amount or rate.

The management, incomes, expenses and purposes of the recovery and treatment fees shall be in line with the principle of openness,
impartiality and fairness and shall be subject to the supervision of the government, enterprises and the public.

Article 17

An automobile production enterprise shall, on its own initiative, cooperate with the downstream enterprises, provide the recovery,
dismantlement and breaking enterprises with a Guiding Brochure for Automobile Dismantlement, relevant technical information and relevant
technical training so as to jointly promote the incessant rise of the recoverable and utilizable rate of discarded automobiles.

Article 18

The automobile production enterprises shall closely cooperate with the enterprises engaging in the production or re-manufacturing
of component parts, recovery and dismantlement of discarded automobile, and renewal of materials, share the relevant information,
track the international advanced technologies and make concerted efforts to tackle the key problems so as to jointly enhance the
recyclability rate and recoverable and utilizable rate of automobile products.

The automobile production enterprises or general agents of imported automobiles shall actively support the governmental departments
to carry out topic research, policy formulation and other relevant tasks, shall actively carry out tackling key problems on scientific
research, technological innovation, equipment renovation and other tasks for the enhancement of the recoverable and utilizable rate
of automobile products.

Chapter III Automobile Decoration, Repair and Maintenance

Article 19

During the courses of automobile decoration, repair and maintenance, the relevant enterprises shall choose and use products with a
high recoverable and utilizable rate, safety and environment protection as the courses of automobile production..

Article 20

The disassembled and discarded component parts shall be classified into different categories and be properly kept. Where policy permits,
it is encouraged to make qualified component parts diverted from the automobiles to re-enter circulation sector as component parts
for the repair of automobiles.

The enterprises meeting the requirements for technologies, equipment and testing are encouraged to re-manufacture component parts
for the repair of automobiles by making use of the component parts diverted from the discarded automobiles as well as the used component
parts replaced in the repair.

The disassembled or discarded accessories and parts, which have lost the originally designed functions and are of no remanufacturing
value, shall be respectively delivered to the corresponding materials recycling and treatment enterprises for recycling and shall
not be disposed by dumping, spilling, burying or any other way whereby the environment will be harmed.

Article 21

The storage batteries, catalytic converter, waste oil, waste liquid, waste rubber (including tyres) and plastic items generated in
the courses of care or maintain of the automobiles shall be recovered, preserved and transported according to different categories,
and shall be delivered to the relevant enterprises for treatment, disposal, changing the purpose, or being used for energy renewal.

Article 22

The items containing any toxic substance or any substance harmful to the environment or human body, such as storage batteries, airbags,
catalyzer and refrigerants, shall be delivered to qualified enterprises for treatment.

The collection, storage, transport and treatment of hazardous wastes shall be in compliance with the Standards on the Control of Pollution
in the Storage of Hazardous Wastes, the Standards on the Control of Pollution When Burying Hazardous Wastes, the Standards on the
Control of Pollution When Burning Hazardous Wastes and other safety and environmental protection requirements.

Article 23

The enterprises engaging in the treatment of polluting wastes and toxic substances shall be subject to strict access management. The
supervision and inspection over such enterprises shall be intensified so as to diminish and avoid harm to the environment and human
health.

No entity may engage in the collection, utilization, storage, transport, treatment or any other business relating to hazardous waste
unless it has obtained a business permit from the environmental protection department.

Chapter IV Import of Used Automobiles and Their Component Parts

Article 24

Except that it is permitted to import auto generator, starter and micro-motors for remanufacturing for automobile repair, it is prohibited
to directly import any discarded or used automobile component parts for remanufacturing for automobile assembling production or repair.

The import of used motors shall meet the requirements in the Environmental Protection Control Standards on the Import of Solid Wastes
as Raw Materials- Discarded Motors (GB16487.8-2005).

Article 25

On the precondition that it does not violate the relevant environmental protection requirements, a materials production enterprise
may, according to the relevant provisions, import discarded automobiles (which have already become chipping) and component parts
as raw materials of production, but it is prohibited to assemble such imported items into vehicles and to let them enter the circulation
link.

It is prohibited to use any component parts which are diverted from any imported discarded or used automobiles, directly or upon re-manufacture,
in the assembly production or repair of automobiles.

Article 26

It is prohibited to import or process any automobile materials with high energy consumption, low efficiency, severe pollution or high
cost, or which are toxic and harmful to the environment.

Article 27

In the international trade relating to the development of resource renewal industry, the import of automobile wastes and other wastes
shall be strictly controlled.

On the precondition that the import of automobile wastes and other toxic and harmful wastes is strictly controlled, two markets,
two kinds of resources shall be fully used, and the international trade relating to the resource renewal industry shall be developed
actively.

Chapter V Recovery and Recycling of Automobiles

Article 28

During the courses of recovery, dismantlement and recycling, the relevant enterprises shall, in accordance with the principles of
scientific procedures, work-related environmental protection, highly efficient renewal, low consumption, enhance the renewal quality,
expand the renewal scope and decrease the quantities of wastes.

The relevant enterprises shall scientifically carry out the pretreatment, dismantlement, cutting, breaking, treatment of non-metal
items (substances which have been confirmed to be used for recycling, or may be used for energy renewal in the future), and shall
increase the reuse, recycling and recovery and utilization rates of the component parts and various substances of discarded automobiles.

Article 29

The enterprises manufacturing automobile materials and substances shall actively develop new materials which are recyclable and will
do no harm to the environment, especially intensify the development and application of technologies of renewable materials and substitutes,
expand the renewable fields of recovered materials, enhance the quality of renewable products and promote the rapid and sound development
of circular economy.

The recovery and dismantlement, renewal of materials, and other recovery and utilization enterprises shall incessantly enhance their
technologies and management levels and shall, jointly with the enterprises manufacturing automobile products, make concerted efforts
to realize the multi-stage goals of our country on the recovery and utilization rate to ensure the social and economic benefits.

Article 30

The discarded automobile recovery and dismantlement, and recovery and recycling enterprises shall meet the requirements of Chapter
III concerning the dismantlement of component parts, waste oil, noble metal materials and solid wastes. At the same time, the operating
rules formulated by such enterprises shall be in line with the requirements of the laws, regulations, and technical standards and
regulations of the state.

Article 31

The recovery and dismantlement enterprises shall have necessary professional technicians and shall have special equipment and places
that can meet the needs of their respective treatment capacity.

The recovery and dismantlement and renewal enterprises shall, through structural adjustment, optimization of industry, technological
renovation, and other measures, establish necessary conditions, enhance the awareness of economization and environmental protection,
improve the treatment facilities, promote the treatment capacity and gradually form professional and mass operations.

Article 32

For the purposes of preventing environmental pollution, and realizing the commitments of automobile production enterprises or general
agents of imported automobiles regarding the recovery and utilization rate, the enterprises of recovery and dismantlement of discarded
automobiles shall sign agreements with the automobile production enterprises or general agents of imported automobiles for enhancing
the ability to dismantle or reuse the discarded or used automobile products.

Where a recovery or dismantlement enterprise does not meet or no longer meets the conditions as stipulated in the recovery and treatment
agreement, the corresponding automobile production enterprise or general import agent may abolish this agreement.

Chapter VI Promotion Measures

Article 33

For the purposes of effectively realizing the recovery and utilization of discarded automobile products, the enterprises whose recovery
and utilization rate of products has reached or exceeded the current limit as provided for by the current policy in advance, or which
has utilized a certain volume of renewable materials in the production, or which has developed and adopted recovery technologies
and equipment, or which has introduced any specialized treatment technology and equipment and has developed such technology and equipment
domestically shall be given necessary preferential policies by state so as to encourage the automobile product production, and recovery
enterprises to increase the recovery and utilization rate of automobile products and to utilize renewable materials actively. ,.

Article 34

The relevant enterprises are encouraged to digest and absorb overseas advanced technologies of product design, production of new materials,
dismantlement of discarded automobiles, re-manufacture of used accessories and parts, and of materials recovery and renewal, to develop
and apply the advanced monitoring and testing devices and equipment, to establish a new and highly efficient production technology
system, and to improve their international competitive ability relating to the automobile recovery and utilization technologies and
equipment through the measures of joint venture, cooperation, technology introduction and etc..

Article 35

The competent department of the government shall organize the research, development and popularization of the production techniques
and equipment that may reduce the quantities of industrial solid wastes and shall publicize the list of backward production techniques
and equipment which bring industrial solid wastes and seriously pollute the environment and which should be eliminated within a time
limit,.

The producers, distributors, importers or users shall, within the time limit as prescribed by the comprehensive administrative department
of economy under the State Council jointly with other relevant departments of the State Council, stop using, selling, importing or
using the equipment included in the list as mentioned in the preceding paragraph. The enterprises shall stop adopting the production
techniques included in the list as mentioned in the preceding paragraph. The equipment washed out under the provisions of the preceding
paragraph shall not be transferred to others for use.

Article 36

The competent department of the government shall timely set forth a timetable for the automobile materials limited for use and direct
the enterprises to actively adopt materials, which will not do harm to the environment and are favorable for recovery.

Where any automobile production enterprise or importer fails to satisfy the requirements for recovery and utilization rate within
a certain time limit, it shall be given a corresponding punishment and be surcharged a sum of environmental protection and treatment
fee.

Article 37

The state advocates the living styles and consumption forms that are favorable to saving resources and protecting the environment,
and encourage the use of green products, such as products with environmental marks, and products with energy-efficiency marks, etc.

When the government purchases automobile products, it shall give top priority to the products with a high recovery and utilization
rate.

The discarded automobile owners and recovery and dismantlement enterprises shall, in strict compliance with the Measures for the Management
of the Recovery of Discarded Automobiles (No. 307) promulgated by the State Council in 2001 and other relevant policies and regulations,
to deliver, dismantle and dispose the discarded automobiles.

Article 38

The relevant enterprises are encouraged to remanufacture automobile engines and other discarded or used electro-mechanical products
and establish a garbage classification and selection system so as to incessantly improve the system of resource recycling, treatment
and utilization.

Article 39

The competent departments of automobile production, industry and commerce, environmental protections, etc. shall intensify the supervision
and control according to law so as to effectively enhance the actual recovery and utilization rate of automobile products of our
country.

Article 40

The recovery and utilization network of discarded automobiles shall be improved, the recovery and treatment of technical route shall
be clarified, and various regulations, policies and measures shall be formulated to promote recoverability and recyclability of discarded
automobiles.

The relevant governmental departments shall, according to the situation of recovery and utilization of automobile products in China,
organize the relevant institutions and enterprises to do deep research into the pertinent policies and regulations, formulate and
improve various supporting policies, try to realize the multi-stage goals of the recovery and utilization rate of automobile products
of our country.

Appendix:Terms and Definitions

For the terms and definitions as mentioned in this technical policy and work guide, please consult the Road Vehicles Recyclability
and Recoverability Calculation Method (GB/T19515- 2004/ISO22628: 2002)

Vehicles mass

The complete vehicle kerb mass as prescribed in GB/T 3730.2-1996

Reuse refers to the act of using the component parts of discarded vehicles on the basis of any of the designed purposes.

Recycling refers to the act of making the discarded materials satisfy the original utilization requirements or be used for other purposes
by way of re-processing, excluding the processing course to make such materials generate energy.

Recovery and utilization refers to the act of making the discarded materials satisfy the original utilization requirements or be used
for other purposes by way of re-processing, including the processing course to make such materials generate energy.

Dismantlability refers to the ability to dismantle the component parts from the vehicles.

Reusability refers to the ability of the component parts to be diverted from vehicles and to be re-utilized.

Recyclability refers to the ability of the component parts/ or materials to be diverted from vehicles and to be re-utilized.

Recyclability rate refers to the percentage (mass percentage) by mass of a new vehicle, potentially able to be reused and recycled.

Recoverability refers to the potential for recovery of component parts or materials diverted from a discarded vehicle.

10.

Recovery and utilization rate refers to the percentage by mass of a new vehicle, potentially able to be reused and recovered (mass
percentage).

11.

Hazardous wastes refer to the wastes included in National Catalogue of Hazardous Wastes or those determined as hazardous wastes under
the national standards on the identification standards and approaches.

12.

Treatment refers to the act of decomposing, cleaning, combining, processing, remanufacturing or regenerating discarded or used articles
or substances through physical, chemical and other methods so as to make such discarded or used articles and substances satisfy the
requirements for reuse, innocuity or harm diminishment and environmental protection.

13.

Disposal refers to burning solid waste and other methods that change the physical, chemical or biological characteristics of the waste
in order to reduce its volume, make its cubage shrink, reduce or eliminate its hazardous components, or refers to the final deposition
of solid wastes into the places or facilities as required by the environmental protection provisions, and never taking them back.

14.

Automobile products include the complete vehicles, component parts and other substances available for automobiles. An automobile refers
to a complete automobile.

15.

The automobile production enterprises refer to enterprises manufacturing (including refitting) complete automobiles. Enterprises manufacturing
automobile products include enterprises manufacturing complete automobiles, component parts and other substances available for automobiles.

National Development and Reform Commission, Ministry of Science and Technology, State Environmental Protection Administration
2006-02-06

REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE EXAMINATION AND APPROVAL PURVIEW RELATING TO EXPORT TAX REFUND OR EXEMPTION

State Administration of Taxation

Reply of the State Administration of Taxation on the Examination and Approval Purview Relating to Export Tax Refund or Exemption

Guo Shui Han[2006] No. 148

To the Bureau of State Taxation of Liaoning Province,

Your Request for Instructions about Transferring the Examination and Approval Power Relating to Export Tax Refund or Exemption to
Lower Levels (Liao Guo Shui Fa [2005] No. 204) has been received. Upon deliberation, we hereby give a reply as follows:

On the Examination and Approval Purview Relating to Tax Exemption, Offset and Refund for the Products Regarded as Self-made Products

As to the products that are regarded as self-made products and exported by production enterprises, the competent taxation authority
shall carry out the tax exemption, offset and refund after verification in accordance with the relevant provisions in the Notice
of the Ministry of Finance and the State Administration of Taxation on Further Promoting the Measures for Tax Exemption, Offset and
Refund for Import and Export Goods (Cai Shui [2002] No.7) and the Notice of the State Administration of Taxation on Printing and
Distributing the Operational Rules for the Administration of Tax Exemption, Offset and Refund for Goods Exported by Production Enterprises
(for Trail Implementation) (Guo Shui Fa [2002] No.11) no matter whether the quantity thereof has exceeded 50% of the export amount
of self-made products of the present month, and may not report them to the bureau of state taxation of the province, autonomous region
or municipality directly under the Central Government for examination and approval.

II.

On the Examination and Approval Purview Relating to the Tax Exemption, Offset and Refund for the Newly-established Production Enterprises

As prescribed by the Article 8 of the Notice of the State Administration of Taxation on Some Issues Concerning Tax Refund or Exemption
for Export Goods (Guo Shui Fa [2003] No. 139), where a newly established enterprise, whose total domestic and overseas sales volume
is 5 million Yuan or more, and whose overseas sales volume accounts for 50% or more of its total sales volume, really faces difficulty
in handling the tax refund within 12 months as of the date of its establishment, the tax exemption, deduction or refund thereof may
be uniformly and monthly calculated on the basis of strict control and upon the approval of the bureau of state taxation of the province,
autonomous region or municipality directly under the Central Government. We consider that these provisions would strengthen the administration
and would not add a very large workload to the bureau of state taxation of the province, autonomous region or municipality directly
under the Central Government, therefore, we do not agree to transfer the examination and approval purview relating to the tax exemption,
offset and refund for the newly established production enterprises according to the aforesaid provisions to the bureau of state taxation
at the level of city or prefecture.

III.

On the Examination and Approval Purview Relating to Whether the Verification and Writing-off Forms of Export Proceeds of Foreign Exchange
Shall Be Provided

As prescribed by the Article 3 of the Supplementary Notice of the State Administration of Taxation on Relevant Issues Concerning
the Administration of Tax Refund or Exemption of Export Goods (Guo Shui Fa [2004] No.113) , for any export enterprise that is newly
established due to reorganization, restructuring, and merger or division and that re-handles registration on export tax refund or
exemption, it need not provide the verification and writing-off form of export proceeds of foreign exchange when declaring tax refund
or exemption upon the approval of the provincial taxation authority, and the subsequent examination may be adopted in accordance
with No. 64 [2004] Document of the State Administration of Taxation if the original export enterprise is not under any circumstance
as mentioned in Guo Shui Fa [2004] No. 64. These provisions are good for strengthening the administration, therefore, we do not agree
to transfer the examination and approval purview relating to the non-providing of verification and writing-off forms of export proceeds
of foreign exchange to the bureau of state taxation at the level of city or prefecture.

State Administration of Taxation

February 13, 2006

State Administration of Taxation
2006-02-13

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 17 – BORROWING COSTS

the Ministry of Finance

Accounting Standards for Enterprises No. 17 – Borrowing Costs

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

With a view to regulating the recognition and measurement of borrowing costs, and the disclosure of relevant information, the present
Standards are formulated according to the Accounting Standards for Enterprises – Basic Standard.

Article 2

The term “borrowing costs” refers to the interest and other relevant costs, which are incurred by an enterprise in the borrowing of
loans.

The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses,
and exchange balance on foreign currency borrowings.

Article 3

The financing costs related to the financing leases shall be subject to the Accounting Standards for Enterprises No. 21 – Leases.

Chapter II Recognition and Measurement

Article 4

Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production
of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs
shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses.

The term “assets eligible for capitalization” shall refer to the fixed assets, investment real estate, inventories and other assets,
of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.

Article 5

The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:

(1)

The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest bearing debts
paid for the acquisition and construction or production activities for preparing assets eligible for capitalization;

(2)

The borrowing costs has already incurred; and

(3)

The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have
already started.

Article 6

During the period of capitalization, the to-be-capitalized amount of interests (including the amortization of discounts or premiums)
in each accounting period shall be determined according to the following provisions:

(1)

As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization, the to-be-capitalized
amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the present period
minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment.

The term “specifically borrowed loan” shall refer to a fund which is borrowed specifically for the acquisition and construction or
production activities of assets eligible for capitalization.

(2)

Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the enterprise
shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average
asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of
the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest
rate of the general borrowing.

The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs,
excluding the period of suspension of capitalization of the borrowing costs.

Article 7

Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period
shall be determined by the real interest rate method, and an adjustment shall be made to the amount of interests in each period.

Article 8

During the period of capitalization, the amount of interest capitalized during each accounting period shall not exceed the amount
of interest actually incurred to the relevant borrowings in the current period.

Article 9

During the period of capitalization, the exchange balance on foreign currency borrowings shall be capitalized, and shall be recorded
into the cost of assets eligible for capitalization.

Article 10

For the ancillary expense incurred to a specifically borrowed loan, those incurred before a qualified asset under acquisition, construction
or production is ready for the intended use or sale shall be capitalized at the incurred amount when they are incurred, and shall
be recorded into the costs of the asset eligible for capitalization; those incurred after a qualified asset under acquisition and
construction or production is ready for the intended use or sale shall be recognized as expenses on the basis of the incurred amount
when they are incurred, and shall be recorded into the profits and losses of the current period.

The ancillary expenses arising from a general borrowing shall be recognized as expenses at their incurred amount when they are incurred,
and shall be recorded into the profits and losses of the current period.

Article 11

Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts
for more than 3 months, the capitalization of the borrowing costs shall be suspended. The borrowing costs incurred during such period
shall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till the acquisition and
construction or production of the asset restarts. If the interruption is a necessary step for making the qualified asset under acquisition
and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue.

Article 12

When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the capitalization
of the borrowing costs shall be ceased. The borrowing costs incurred after the qualified asset under acquisition and construction
or production is ready for the intended use or sale shall be recognized as expenses at the incurred amount when they are incurred,
and shall be recorded into the profits and losses of the current period.

Article 13

The qualified assets under acquisition and construction or production, which have been ready for the intended use or sale, shall be
judged from the following aspects:

(1)

The substantial construction (including installation), or the production of the qualified assets has been finished completely or substantially;

(2)

The qualified assets under acquisition and construction or production meet or basically meet the design requirements, contractual
provisions or production requirements, even if there is any specific discrepancy between it and the design, contractual or production
requirements, its normal use or sale is not affected;

(3)

The amount of continuing disbursements for the qualified assets under acquisition and construction or production is very small, or
nearly no such disbursement incurs.

Where a qualified asset under acquisition and construction or production needs trial production or trial operation, it shall be deemed
to be ready for the intended use or sale, when the result of the trial production indicates that the asset is able to normally produce
qualified products, or when the trial operation result indicates that the asset is able to run or operate normally,.

Article 14

Where each part of a qualified asset under acquisition and construction or production is completed separately and is ready for use
or sale during the continuing construction of other parts, and if the acquisition and construction or production activities which
are necessary to prepare this part of the asset for the intended use or sale have already been completed substantially, the capitalization
of the borrowing costs in relation to this part of asset shall be ceased.

Where each part of a asset under acquisition and construction or production is completed separately and is ready for use or sale during
the continuing construction of other parts, but it can not be used or sold until the asset is entirely completed, the capitalization
of the borrowing costs shall be ceased when the asset is completed entirely.

Chapter III Disclosure

Article 15

An enterprise shall, in its notes, disclose the following information related to the borrowing costs:

(1)

the amount of the borrowing costs which is capitalized in the current period; and

(2)

the capitalization rate, which is used for calculating and determining the amount of the borrowing costs to be capitalized in the
current period.

the Ministry of Finance
2006-02-15

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 31 – CASH FLOW STATEMENTS

Accounting Standards for Enterprises No. 31 – Cash Flow Statements

Cai Kuai [2006] No. 3
Chapter I General Provisions

Article 1

These Standards are formulated in accordance with the Accounting Standards for Enterprises – Basic Standards for the purpose of regulating
the preparation and presentation of cash flow statements.

Article 2

The term “cash flow statement” refers to a statement which reflects the inflows and outflows of cash and cash equivalents of an enterprise
in a certain accounting period.

The term “cash” refers to cash on hand and deposits that are available for payment at any time.

The term “cash equivalents” refers to short-term and highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of change in value.

The cash as mentioned in these Standards shall include cash and cash equivalents unless the cash equivalents are mentioned simultaneously.

Article 3

The Accounting Standards for Enterprises No. 33 – Consolidated Financial Statements shall be applicable to the preparation and presentation
of consolidated cash flow statements.

Chapter II Basic Requirements

Article 4

Cash flows statements shall be reported for operating activities, investing activities and financing activities, respectively.

Article 5

Cash flows shall be presented respectively according to the total amounts of inflows and outflows of cash.

However, the following items shall be presented according to the net amounts:

(1)

Cash received or paid on behalf of customers;

(2)

Cash inflows and outflows on items which are quick in circulation, large in amounts, and short in maturity; and

(3)

Items relating to financial enterprises, including short-term loans granted and repayment of principal of such loans, the acceptance
of current deposits and the repayment of the principal of such deposits, financial institution deposits and deposits from or to other
financial institutions, funds borrowed from or lent to other financial institutions, purchase and sale of securities, etc.

Article 6

Some extraordinary items, such as a loss from a natural disaster or an insurance claim shall be classified into the cash flow of
operating activities, investing activities or financing activities respectively according to their features and shall be presented
separately.

Article 7

The exchange rate used for the translation of cash flows in a foreign currency and the cash flows of an overseas subsidiary shall
be the spot exchange rate on the date of the cash flows or shall be the rate which is determined through a systematic and reasonable
method and which is approximate to the spot exchange rate. The effect of a change in exchange rate on cash shall, as an adjustment
item, separately presented in the cash flow statement.

Chapter III Cash Flows Arising from Operating Activities

Article 8

An enterprise shall adopt the direct method to present the cash flows arising from operating activities.

The term “operating activities” refers to all transactions and events except the investing and financing activities of an enterprise.

The term “direct method” refers to a method whereby major classes of cash receipts and cash payments are presented for the cash flows
arising from operating activities.

Article 9

The relevant information about the cash flows arising from the operating activities may be acquired through either of the following
ways:

(1)

The accounting records of the enterprise.

(2)

Making adjustment on the business revenue, business costs and other items in the income statement according to the following items:

(a) The changes of inventory of current period and the changes of items of operating receivables and payables. ;

(b) The depreciation of fixed assets, amortization of intangible assets, provision for asset impairment, and other non-cash projects;
and

Article 10

The items to reflect the following information for cash flows arising from operating activities shall be presented separately at
least. :

(1)

Cash received from the sale of goods and the rendering of services;

(2)

Tax refunds received;

(3)

Cash received relating to other operating activities;

(4)

Cash paid for goods purchased and labor services received;

(5)

Cash paid to employee and for employee.

(6)

Payments of all types of taxes; and

(7)

Cash payments relating to other operating activities.

Article 11

The financial enterprises may, according to the industrial features and the actual situation of cash flows, reasonably determine
the categories of cash flows arising from operating activities.

Chapter IV Cash Flows Arising from Investing Activities

Article 12

The term “investing activities” refers to those activities of an enterprise, such as the purchase and construction of long-term assets
and the investments and disposal activity that are not considered to be cash equivalents

Article 13

At least, the items reflecting the following information for the cash flows arising from investing activities shall be presented
separately :

(1)

Cash received from returns of investments;

(2)

Cash received from returns on investments;

(3)

Net cash received from the disposal of fixed assets, intangible assets and other long term assets;

(4)

Net cash received from the disposal of subsidiaries and other business entities;

(5)

Other cash received relating to investing activities;

(6)

Cash paid for the purchase and construction of fixed assets, intangible assets and other long term assets;

(7)

Cash paid for investments;

(8)

Net cash paid for the acquisition of subsidiaries and other business entities; and

(9)

Other cash payments relating to investing activities.

Chapter V Cash Flows Arising from Financing Activities

Article 14

The term “financing activities” refers to those activities that result in changes in the scale and composition of the capital and
debts of an enterprise.

Article 15

At least, the items reflecting the following information for the cash flows arising from financing activities shall be presented
separately:

(1)

Cash received by absorbing investments;

(2)

Cash received from debts;

(3)

Cash received relating to other financing activities.

(4)

Cash paid for repayments of debts;

(5)

Cash paid for distribution of dividends or profits, or cash payments for interests; and

(6)

Cash payments relating to other financing activities.

Chapter VI Disclosure

Article 16

An enterprise shall, in its notes, disclose the information about the reconciliation of net profits to cash flows arising from operating
activities. It shall at least disclose the following items separately for the reconciliation of net profits to cash flows arising
from operating activities:

(1)

The provision for impairment losses of assets;

(2)

The depreciation of fixed assets;

(3)

The amortization of intangible assets;

(4)

The amortization of long-term deferred expenses;

(5)

The deferred expenses;

(6)

The accrued expenses;

(7)

The profit or losses on the disposal of fixed assets, intangible assets and other long-term assets;

(8)

The losses on the discard of fixed assets;

(9)

The profit and losses on the changes in fair value;

(10)

The financial expenses;

(11)

The profit or losses arising from investments;

(12)

The deferred income tax assets and the deferred income tax liabilities;

(13)

The inventories;

(14)

The item of operating receivables; and

(15)

The item of operating payables;

Article 17

An enterprise shall, in its notes, disclose the following information about the total amounts of acquisition or disposal of subsidiaries
and other business entities in the current period:

(1)

The price for acquisition or disposal;

(2)

The portion of cash paid for the acquisition or disposal;

(3)

The portion of cash received for the acquisition or disposal of subsidiaries and other business entities; and

(4)

The non-cash assets and liabilities classified according to the major categories arising from the acquisition or disposal of subsidiaries
and other business entities.

Article 18

An enterprise shall, in its notes, disclose the significant activities on investment and financing, which do not concern the cash
receipts and payments of the current period but affect its financial status or will possibly affect its future cash flows.

Article 19

An enterprise shall, in its notes, disclose the following information related to cash and cash equivalents:

(1)

The composition of cash and cash equivalents and the corresponding amounts thereof in the balance sheets; and

(2)

The large sums of cash and cash equivalents held by an enterprise that are not available for use by the parent company or by any other
subsidiary within the group.

Ministry of Finance
2006-02-15

INTERIM REGULATIONS ON GIVING PUNISHMENTS FOR ILLEGAL ACTS AND DISCIPLINARY OFFENCES IN ENVIRONMENTAL PROTECTION

Ministry of Supervision, State Environmental Protection Administration

Ministry of Supervision and State Environmental Protection Administration

No.10

The Interim Regulations on Giving Punishments for Illegal Acts and Disciplinary Offences in Environmental Protection, adopted at the
14th ministerial meeting of the Ministry of Supervision on December 31, 2005 and at the 20th executive meeting of the State Environmental
Protection Administration on October 27, is hereby promulgated and shall go into effect as of the date of promulgation.

Li Zhilun, Minister of the Ministry of Supervision

Zhou Shengxian, Director of the State Environmental Protection Administration

February 20, 2006

Interim Regulations on Giving Punishments for Illegal Acts and Disciplinary Offences in Environmental Protection

Article 1

These Regulations are formulated so as to strengthen the environmental protection, punish illegal acts and disciplinary offences in
environmental protection and promote the implementation of laws and regulations on environmental protection, subject to the Environmental
Protection Law of the People’s Republic of China, the Law of the People’s Republic of China on Administrative supervision, and other
relevant laws and regulations.

Article 2

These Regulations shall be applicable to State administrative organs and their personnel, as well as personnel appointed by State
administrative organs to work in enterprises that commit illegal acts and disciplinary offences in environmental protection, and
shall be given punishments as a result.

Where having specified provisions on giving punishments for illegal acts and disciplinary offences in environmental protection, laws
as well as administrative rules and regulations shall be observed.

Article 3

Where State administrative organs have committed illegal acts and disciplinary offences in environmental protection, the appointing
and dismissing organs or supervisory organs shall, within their limits of administrative authority, give administrative sanctions
to persons in charge who have direct responsibility and other persons with direct responsibility, and to personnel of State administrative
organs who commit illegal acts and disciplinary offences in environmental protection (hereinafter collectively referred to as persons
with direct responsibility).

Where the enterprises have committed illegal acts and disciplinary offences in environmental protection, the appointing and dismissing
organs or supervisory organs shall, within their limits of administrative authority, give disciplinary actions to personnel which
are appointed by State administrative organs to work in enterprises committing illegal acts and disciplinary offences in environmental
protection, among persons in charge of such enterprises who have direct responsibility and other persons with direct responsibility,
according to law.

Article 4

Where State administrative organs and their personnel commit any of the following acts, persons with direct responsibility shall be
given warnings, have demerits or serious demerits on their record; if circumstances are comparatively serious, they shall be degraded;
in serious cases, they shall be removed from their office:

(1)

refusing to comply with environmental protection laws and regulations, as well as decisions and orders made by people’s governments
on environmental protection;

(2)

formulating provisions or taking actions which conflict with environmental protection, laws, regulations and rules, as well as national
environmental protection policies, and still failing to make corrections after such conflicts are pointed out to be remedied;

(3)

violating pertinent State industrial policies, thus polluting the environment or disrupting ecological balance;

(4)

failing to eliminate through competition the backward production technology, processes, equipment or products, all of which seriously
pollute the environment, in accordance with provisions stipulated by the State;

(5)

failing to order enterprises and institutions, which cause serious environmental pollution, to prevent and control such pollution
within a stipulated period, or failing to outlaw the said enterprises and institutions, order the said enterprises and institutions
to close down or suspend their production, in accordance with provisions concerned; and

(6)

failing to prepare emergency plans for environmental pollution and disruption of ecological balance, pursuant to State provisions.

Article 5

(1)

practicing frauds or conducting dereliction of duty upon organizing environmental impact assessments, thus causing serious inconformity
of such assessments to facts, or giving no explanations to the compilation of environmental impact chapters not according to law,
or failing to legally submit the planning scheme of an environmental impact report for approval;

(2)

failing to conduct the examination or approval of environmental impact assessment documents for construction projects subject to legal
requirements or conducting the same examination and approval in violation of legal procedures, or collecting charges in serious cases,
upon the said examination and approval;

(3)

approving discretionarily the construction of a certain project or discretionarily and in person applying for permits of land requisition,
construction and registration, business license, production (use) permit for such project, if no due environmental impact assessment
is conducted according to law or no environmental impact assessment documents are approved;

(4)

failing to follow provisions concerned to issue a discharge permit, permit for operation of dangerous wastes, permit for operation
of units disposing medical wastes in a centralized manner, permit for nuclear and radioactive safety and other environmental protection
permits, or failing to applying for environmental protection approval documents in conformity with provisions;

(5)

violating laws by approving the reduction, exemption or delayed payment of pollutant discharges; and

(6)

committing other acts of granting licenses or conducting examination and approval in violation of provisions on environmental protection.

Article 6

(1)

canceling natural reserves or adjusting or changing the nature, range, boundary or functional division of any natural reserve, without
an approval;

(2)

carrying out visiting or tourism activities in natural reserves, without an approval;

(3)

running visiting or tourism programs which are not oriented to the protection of natural reserves; and

(4)

failing to carry out visiting or tourism activities in accordance with approved schemes.

Article 7

Where State administrative organs and their personnel that have functions and responsibilities in supervising and administering environmental
protection commit any of the following acts, persons with direct responsibility shall be given warnings, have demerits or serious
demerits on their record; if circumstances are comparatively serious, they shall be degraded; in serious cases, they shall be removed
from their office:

(1)

giving administrative sanctions for illegal acts in environmental protection not subject to legal requirements or in violation of
legal procedures;

(2)

authorizing others to exercise the right of giving administrative punishments for illegal acts in environmental protection, without
any approval;

(3)

adopting compulsory measures for protection of the environment, such as illegally sealing up, seizure and so on, thus causing citizens’
personal and property damages or losses to legal persons or other organizations; and

(4)

giving other administrative penalties or adopting other compulsory administrative measures in violation of provisions on environmental
protection.

Article 8

Where State administrative organs and their personnel that have functions and responsibilities in supervising and administering environmental
protection commit any of the following acts, persons with direct responsibility shall be given warnings, have demerits or serious
demerits on their record; if circumstances are comparatively serious, they shall be degraded or removed from their office; in serious
cases, they shall be dismissed:

(1)

failing to timely investigate and punish illegal acts in environmental protection as soon as they are found or after being reported
the same;

(2)

failing to exercise functions in supervising and administering enterprises, which have legally obtained environmental protection permits,
such as discharge permit, permit for operation of dangerous wastes, permit for nuclear and radioactive safety, etc., or environmental
protection approval documents, thus causing serious consequences;

(3)

failing to report serious environmental pollution accidents or ecological damage accidents in conformity with provisions or practicing
frauds in such reports or failing to take necessary measures according to law or delaying to take such measures or shifting such
responsibility onto others, thus aggravating accidents or delaying the handling of such accidents;

(4)

failing to transfer some cases violating laws or disciplines on environmental protection, which ought to be transferred to pertinent
organs for handling, thus providing a chance for persons contravening laws and disciplines to escape sanctions, administrative or
criminal penalties free; and

(5)

committing other acts of failing to exercise functions in supervising and administering environmental protection.

Article 9

Where State administrative organs and their personnel commit any of the following acts, persons with direct responsibility shall be
given warnings, have demerits or serious demerits on their record; if circumstances are comparatively serious, they shall be degraded
or removed from their office:; in serious cases, they shall be dismissed:

(1)

taking advantage of their office to misappropriate, steal, swindle collected fines, pollutant discharges or other properties or using
other means to keep the same for their own;

(2)

extorting properties from others with job convenience or illegally accepting others’ properties and seeking advantages for them in
return;

(3)

withholding or misappropriating special funds for environmental protection or using special funds for environmental protection for
other purposes;

(4)

using, exchanging, selling or destroying properties which have been legally sealed up or distrained; and

(5)

withholding, or privately dividing up fines or confiscated illegal proceeds or properties, or privately dividing up so in a disguised
form.

Article 10

Where State administrative organs and their personnel divulge secret information to units under inspection or harbor or connive illegal
acts and disciplinary offences in environmental protection, persons with direct responsibilities shall be degraded or removed from
their office; or in case of serious damages to legitimate rights and interests, as well as public interests of citizens, legal persons
or other organizations, or in case of group events or conflicts, thus greatly impacting the social stability, persons with direct
responsibility shall be dismissed.

Article 11

Should any of the following acts be committed by enterprises, persons appointed by State administrative organs among persons in charge
of such enterprises who have direct responsibility and other persons with direct responsibility shall be degraded; if circumstances
are comparatively serious, they shall be removed from their office or retained at their positions under observation; in serious cases,
they shall be dismissed:

(1)

commencing the construction discretionarily by failing to go through formalities for examining and approving environmental impact
assessment documents or, after being ordered to suspend the construction, still failing to effect supplementary handling of formalities
for examining and approving environmental impact assessment even if given a specified period to do so;

(2)

failing to simultaneously design, construct or place into operation the environmental protection facilities, which are proposed to
be constructed in support of construction projects, together with principal parts of such projects;

(3)

discretionarily dismantling, leaving idle or misusing facilities for prevention and control of environmental pollution or failing
to discharge pollution in a normal manner;

(4)

contravening environmental protection laws and regulations, thereby causing environmental pollution accidents in serious cases;

(5)

failing to prepare emergency plans in accordance with pertinent State provisions or failing to timely take effective control measures
upon occurrence of emergencies, thus causing serious consequences;

(6)

continuing the production as usual although after being ordered to cease doing business or close down according to law;

(7)

precluding environmental law enforcers from legally performing official functions; and

(8)

committing other acts of carrying out construction, production or business operation in violation of environmental protection laws
and regulations.

Article 12

Where illegal acts and disciplinary offences in environmental protection are committed, thus involving crimes, matters shall be referred
to judicial organs for handling in accordance with law.

Article 13

Where cases violating environmental protection laws and disciplines under investigation fall into the jurisdiction of the other party,
either a competent administrative department for environmental protection or a supervisor organ shall timely refer such cases to
the other party having jurisdiction over them.

If it is necessary to give punishments to relevant persons liable, a supervisory organ shall make a supervision decision or a supervision
recommendation of giving punishments according to law.

Article 14

Should punishments be given to organizations with a function of administering public affairs under the authorization of laws and regulations,
organizations entrusted by State administrative organs according to law and personnel thereof, as well as persons appointed by State
administrative organs to work in other institutions, for their commission of illegal acts and disciplinary offences in environmental
protection, these Regulations shall apply.

Article 15

The Ministry of Supervision and the State Environmental Protection Administration and the State Environmental Protection Administration
shall be responsible for the interpretation of these Regulations.

Article 16

These Regulations shall go into effect as of the date of promulgation.

Ministry of Supervision, State Environmental Protection Administration
2006-02-20

AUDIT LAW OF THE PEOPLE’S REPUBLIC OF CHINA

the Standing Committee of the National People’s Congress

Audit Law of the People’s Republic of China

(Adopted at the Ninth Meeting of the Standing Committee of the Eighth National People’s Congress on August 31, 1994, and amended in
accordance with the Decision on Amending the Audit Law of the People’s Republic of China at the 20th meeting of the Standing Committee
of the 10th National People’s Congress of the People’s Republic of China on February 28, 2006)

ContentsChapter I General Provisions

Chapter II Auditing Organs and Auditors

Chapter III Functions and Responsibilities of Auditing Organs

Chapter IV Limits of Power of Auditing Organs

Chapter V Audit Procedures

Chapter VI Legal Liabilities

Chapter VII Supplementary Provisions

Chapter I General Provisions

Article 1

In order to strengthen the audit supervision of the State, maintain the fiscal and economic order of the State, enhance the efficiency
in using fiscal capital, promote the construction of a clean government and ensure the sound development of national economy and
the society, this Law is formulated in the light of the Constitution.

Article 2

The State shall carry out an audit supervision system. Auditing organs shall be set up by the State Council and the local people’s
governments at or above the county level.

The government revenues and expenditures of all the departments of the State Council, of the local people’s governments at all levels
and their departments, the financial revenues and expenditures of State-owned financial institutions, enterprises and public institutions,
as well as other government revenues and expenditures and financial revenues and expenditures that should be audited in the light
of this Law shall be taken the audit supervision in the light of the provisions prescribed in this Law.

Auditing organs shall implement audit supervision over the authenticity, legality and effectiveness of the government revenues and
expenditures or financial revenues and expenditures specified in the preceding Paragraph.

Article 3

Auditing organs shall implement audit supervision in the light of the functions and procedures prescribed in the law.

An auditing organ shall make audit evaluation in accordance with the laws and regulations on government revenues and expenditures
and financial revenues and expenditures as well as other relative provisions of the State, and shall make an audit decision under
its statutory authorities.

Article 4

The State Council and the local people’s government at or above the county level shall annually put forward to the standing committee
of the people’s congress at the same level an audit work report of the auditing organ on budget implementation and other government
revenues and expenditures. An audit work report shall put stress on the audit of budget implementation. When necessary, the standing
committee of the people’s congress may make a resolution on the audit work report.

The State Council and the local people’s government at or above the county level shall hand in a report to the standing committee
of the people’s congress at the same level about the correction of the problems found out in the audit work report and the handling
results.

Article 5

Auditing organs shall independently exercise their power of audit supervision in the light of the law, and not be interfered by any
administrative organ, social organization or individual.

Article 6

When conducting audit matters, auditing organs and auditors shall be objective and fair, practical and realistic, clean and devoted,
and shall keep secrets to themselves.

Chapter II Auditing Organs and Auditors

Article 7

The National Audit Office shall be set up by the State Council to be responsible for the audit work all over the country under the
leadership of the Premier of the State Council. The Auditor-General shall be the administrative leader of the National Audit Office.

Article 8

The auditing organs of the people’s governments of the provinces, autonomous regions, municipalities directly under the Central Government,
cities divided into districts, autonomous prefectures, counties, autonomous counties, cities not divided into districts, and districts
under the jurisdiction of cities shall be responsible for the audit work in their respective administrative areas under the respective
leadership of the governor of the provinces, chairman of the autonomous regions, mayors, head of prefectures, counties and districts,
as well as under the leadership of auditing organs at the next higher levels.

Article 9

Local auditing organs at all levels shall be responsible for reporting their work to the people’s governments at the same levels and
the auditing organs at the next higher level, and their audit work shall be chiefly under the direction of the auditing organs at
the next higher level.

Article 10

In accordance with the requirements for the work, an auditing organ may, upon the approval of the people’s government at the same
level, set up dispatched offices under its audit jurisdiction.

The dispatched organs shall implement the audit work upon the strength of the authorization granted by the auditing organ.

Article 11

The funds necessary for auditing organs to implement their functions shall be included into the government budgets and be guaranteed
by the people’s government at the same level.

Article 12

Auditors shall possess the professional knowledge and ability suitable for the audit work they are engaged in.

Article 13

An auditor shall withdraw if he has interests with the entity under audit or the audited items in conducting audit matters.

Article 14

An auditor shall have the responsibility for keeping to themselves the State secrets and the business secrets of the entity being
audited he has access to when carrying out his functions.

Article 15

An auditor shall be protected by law when carrying out his functions in the light of the law.

No organization or individual may refuse or obstruct auditors’ performance of their functions in the light of the law, or retaliate
against auditors.

The persons-in-charge of the auditing organs shall be appointed or dismissed in the light of statutory procedures. None of them may
be dismissed or replaced at random unless they carry out illegal activities, neglect their duties, or are no longer qualified to
their posts.

It is necessary to solicit the opinions of the auditing organ at the next higher level before the persons in-charge of the local auditing
organ at any level are appointed or dismissed,.

Chapter III Functions and Responsibilities of Auditing Organs

Article 16

The auditing organs shall carry out audit supervision over the budget implementation, final settlement of accounts as well as other
government revenues and expenditures of all the other departments (including subordinate organs) at the same level and of the governments
at lower levels.

Article 17

Under the leadership of the Premier of the State Council, the National Audit Office shall carry out audit supervision over the implementation
of the central budget and other government revenues and expenditures, and hand in a report of audit results to the Premier.

Under the respective leadership of the governor of the province, chairman of the autonomous region, mayor, head of the county and
head of the district as well as the leadership of the auditing organ at the next higher level, the local auditing organ at any level
shall carry out audit supervision over the budget implementation and other government revenues and expenditures of the same level,
and hand in a report of audit results to the people’s government at the same level and the auditing organ at the next higher level.

Article 18

The National Audit Office shall carry out audit supervision over the financial revenues and expenditures of the Central Bank.

Auditing organs shall carry out audit supervision over the assets, liabilities, profits and losses of State-owned financial institutions.

Article 19

Auditing organs shall carry out audit supervision over the financial revenues and expenditures of public institutions of the State
and other public organizations using fiscal capital.

Article 20

Auditing organs shall carry out audit supervision over the assets, liabilities, profits and losses of the State- owned enterprises.

Article 21

The audit supervision over the enterprises and financial institutions in which the State-owned assets play a controlling or leading
role shall be formulated by the State Council.

Article 22

Auditing organs shall carry out audit supervision over the budget implementation and final settlement of accounts relating for the
construction projects invested or mainly invested by the government.

Article 23

Auditing organs shall carry out audit supervision over the financial revenues and expenditures of the social security funds, funds
from public donations and other relevant funds and capital managed by the government department or by any other entity upon authorization
of the government department.

Article 24

Auditing organs shall carry out audit supervision over the financial revenues and expenditures of projects with aids or loans offered
by international organizations or governments of other countries.

Article 25

In accordance with the relative provision of the State, auditing organs shall carry out audit supervision over the principal responsible
persons of the state organs and other entities under the audit supervision of the auditing organ for their performance of economic
liabilities of government revenues and expenditures, financial revenues and expenditures, and other economic activities for their
respective regions, departments or entities during their tenure of office.

Article 26

Other than the audit matters as prescribed in this Law, auditing organs shall, in the light of the provisions prescribed in this Law
as well as relative laws and administrative regulations, carry out audit supervision over the matters that should be audited by auditing
organs as formulated in other laws or administrative regulations.

Article 27

For particular matters relating to the State revenues and expenditures, auditing organs shall have the power to make special audit
investigations to relevant regions, departments or entities, and shall hand in a report about the audit investigation results to
the people’s governments at the same levels and the auditing organs at the next higher levels.

Article 28

Auditing organs shall make a determination on their audit jurisdiction in the light of the subordination of fiscal and financial affairs
or the State-owned asset supervisory and managerial relation of the entity under audit.

If there is any dispute over audit jurisdiction between auditing organs, the auditing organ superior to both parties shall make a
determination on the matter.

Auditing organs at higher levels may authorize auditing organs at lower levels to audit the matters under the audit jurisdiction of
the former and specified in Paragraph 2 of Article 18 through Article 25 in this Law. Auditing organs at higher levels may directly
give audits on the major matters under the jurisdiction of auditing organs at lower levels. However, unnecessary repetitive audits
shall be avoided.

Article 29

The entities under audit supervision of auditing organs shall set up and perfect their internal auditing systems in the light of the
relative provisions of the State. And their internal auditing work shall be professionally guided and supervised by the auditing
organs.

Article 30

If an entity is subject to audit supervision of a social auditing organ, the auditing organ shall have the right to examine the relative
audit reports issued by the aforesaid social auditing organ in accordance with the provisions of the State Council.

Chapter IV Limits of Power of Auditing Organs

Article 31

In accordance with the provisions of the auditing organ, the auditing organs shall have the right to order an entity under audit to
submit the budget or plan on financial revenues and expenditures, budget implementation, final settlement of accounts, financial
accounting reports, electronic data on government or financial revenues and expenditures stored and processed by computers and necessary
computer technical documents, the information about the account opening at financial institutions, the audit reports issued by the
social auditing organs as well as other materials about government or financial revenues and expenditures. The entity under audit
shall not refuse or delay to submit reports or give a false report.

The person in-charge of an entity under audit shall be responsible for the authenticity and integrity of the financial accounting
materials offered by his/her own entity.

Article 32

Auditing organs shall, during the course of audit, be enpost_titled to examine accounting vouchers, accounting books, financial accounting
reports, the electronic data system of government or financial revenues and expenditures operated by computers as well as other materials
and assets about government or financial revenues and expenditures. And the entity under audit shall not refuse to submit them.

Article 33

Auditing organs shall, when conducting audits, have the power to make investigations to relative entities or individuals concerning
audit matters and obtain relative certification materials. The entities and individuals concerned shall support and assist the auditing
organs in their work by providing them with truthful information and relative certification materials.

Auditing organs shall have the right to inquire about the account of an entity under audit at the financial institution upon the approval
of the person in-charge of the auditing organ of the people’s government at or above the county level.

If the auditing organ have any evidence that an entity under audit deposits public money in the name of individuals, it shall have
the right to make investigations on the deposits of the entity being audited in the name of individuals at the financial institution
upon the approval of the person in-charge of the auditing organ of the people’s government at or above the county level.

Article 34

When being audited by an auditing organ, the entity shall not transfer, conceal, alter or destroy any of its accounting vouchers,
accounting books, financial accounting reports and other materials about fiscal or financial revenues and expenditures, nor shall
it transfer or conceal any of the assets it obtained violating the provisions of the State.

Where an entity being audited violates the preceding Paragraph, the auditing organ shall have the right to prevent it, and, when necessary
and upon approval of the person in-charge of the auditing organ of the people’s government at or above the county level, the auditing
organ shall have the right to seal up the relative materials and the assets obtained violating the provisions of the State. If the
auditing organ needs to freeze the relative deposits at the financial institution, it shall hand in an application to the people’s
court.

Where an entity under audit is carrying out any act concerning government or financial revenues and expenditures violating the provisions
of the State, the auditing organ shall have the right to prevent it. If it is invalid to prevent, the auditing organ shall, upon
approval of the person-in-charge of the auditing organ of the people’s government at or above the county level, inform the fiscal
department and the competent authorities to suspend the allocation of money directly pertinent to the act of government or financial
revenues and expenditures violating the provisions of the State; if the aforesaid money has been allocated, the use thereof shall
be suspended.

When implementing the measures as prescribed in the preceding two paragraphs, an auditing organ shall not cause effect on the lawful
business operations or production and management activities of the entity being audited.

Article 35

If any auditing organ believes that the provisions of the competent departments at any higher levels on government revenues and expenditures
or financial revenues and expenditures carried out by the entity under audit in contradiction with any of the laws or administrative
regulations, it shall make a suggestion to the competent departments concerned to make rectifications. If the competent departments
concerned fail to make rectifications, the auditing organs shall submit the matter to the relevant organs for disposition.

Article 36

Auditing organs may notify the relative government departments of their audit results or make such results public.

When circulating or making public audit results, auditing organs shall keep to themselves on the State secrets and business secrets
of the entities being audited in the light of the law and complying with the relative provisions prescribed by the State Council.

Chapter V Audit Procedures

Article 37

When performing the duty of audit supervision, an auditing organ may request assistance from the administrative department of public
security, supervision, public finance, taxation, customs, price or industry and commerce.

Article 38

An auditing organ shall set up an audit team in accordance with the audit matters as ascertained in the plan on audit, and shall,
within 3 days before the audit implementation, send an audit notice to the entity to be audited. In the case of any special circumstance,
the auditing organ may, upon approval of the people’s government at the same level, directly implement the audit upon the strength
of the audit notice.

The entities being audited shall cooperate with the auditing organs in their work and offer necessary work conditions.

Auditing organs shall improve the efficiency of their audit work.

Article 39

The auditors shall implement their audit and obtain the certification materials by auditing accounting vouchers, accounting books
and financial accounting reports, consulting the documents and materials pertinent to audit matters, examining the cash, physical
objects and securities, and making investigations on the entities or individuals concerned.

When making investigations on entities and individuals concerned, the auditors shall show their work certificates and photocopies
of audit notices.

Article 40

After an audit to the auditing matters, an audit team shall hand in an audit report to the auditing organ. Prior to handing in the
audit report, the audit team shall solicit the opinions of the entity being audited. The entity being audited shall, within ten days
as of the receipt of the audit report of the audit team, hand in its opinions in written form to the audit team. The audit team shall
hand in the aforesaid written opinions together with the audit report to the auditing organ.

Article 41

An auditing organ shall review the audit report handed in by the audit team in accordance with the procedures prescribed by the National
Audit Office, and present an audit report of its own after concurrently studying the opinions of the entity being audited about the
audit report delivered by the audit team. It shall, under its statutory jurisdiction, make a decision on audit or give its suggestions
on disposition and punishment to the relevant competent authorities for an act of fiscal or financial revenues and expenditures violating
the provisions of the State that deserves disposition or punishment.

An auditing organ shall serve the audit report and audit decision of its own to the entity being audited and the relevant competent
organ or entity. The audit decision shall go into effect as of the date of service.

Article 42

If an auditing organ at a higher level considers that an audit decision made by an auditing organ at a lower level has violated the
relative provisions of the State, it may order the auditing organ at the lower level to make alteration or cancellation on the aforesaid
decision, and may directly make a decision on alteration or cancellation when it is necessary.

Chapter VI Legal Liabilities

Article 43

If an entity under audit violating any provisions prescribed in this Law by refusing or delaying the provision of the materials about
audit matters, providing untrue or incomplete materials, or refusing or impeding the inspection, it shall be ordered to make corrections,
given a criticism by circulating a notice and given a warning by the auditing organ. If the entity under audit refuses to make corrections,
it shall be called to account in accordance with the law.

Article 44

Where an entity being audited violating the provisions prescribed in this Law by transferring, concealing, altering or destroying
any accounting vouchers, accounting accounts, financial accounting reports or other materials pertinent to government or financial
revenues and expenditures, or transferring or concealing the assets obtained by violating the provisions of the State, and if the
auditing organ considers that the principal and other persons held to be directly responsible should be given sanctions, the auditing
organ shall give suggestions for punishment. The entity being audited or the organ at the higher level and the supervisory organ
shall make a decision in a timely manner, and notify the result to the auditing organ in written form. If a crime is constituted,
the entity being audited shall be called to account in accordance with the law.

Article 45

Where any other department (including subordinate entities) at the same level or the government at the lower level commits the acts
against the budget or other acts of government revenues and expenditures against the provisions of the State, the auditing organ,
the people’s government or the relevant competent authorities shall, under its statutory authorities and in the light of the laws
and administrative regulations, take the following measures on the basis of the specific situation:

(1)

Ordering it to pay the money that should be turned over within the time limit;

(2)

Ordering it to return the occupied state-owned assets within the time limit;

(3)

Ordering it to refund the illegal incomes within the time limit;

(4)

Ordering to handle the matter in the light of the relative provisions in the unified national accounting system; and

(5)

Other measures.

Article 46

Where an entity being audited commits the acts of financial revenues and expenditures by violating the provisions of the State, the
auditing organ, the people’s government or the relevant competent authorities shall, under its statutory jurisdiction and in the
light of the laws and administrative regulations, take measures prescribed in the preceding Article on the basis of the specific
situation, and may impose punishments on the entity being audited in the light of law.

Article 47

The entity being audited shall carry out the decision made by the auditing organ under its statutory jurisdiction.

Where the auditing organ orders an entity being audited to pay the money that should be turned over, but the entity being audited
refuses to do so, the auditing organ shall circulate a notice to the relevant competent authorities, and the relevant competent authorities
shall, in accordance with the laws and administrative regulations, withhold the aforesaid money or take other measures, and notify
the written results to the auditing organ.

Article 48

Where an entity being audited object an audit decision on financial revenues and expenditures made by the auditing organ, it may hand
in an application for administrative reconsideration or lodge an administrative lawsuit.

Where an entity being audited object an audit decision on government revenues and expenditures made by the auditing organ, it may
request the people’s government at the same level as the auditing organ for ruling, and the ruling delivered by the people’s government
at the same level shall be final.

Article 49

Where the government or financial revenues and expenditures of an entity being audited violating the provisions of the State, the
auditing organ considers it necessary to punish the principal and other persons held to be directly responsible, it shall give suggestions
for punishment, and the entity being audited, the organ at the higher level or the supervisory organ shall make a decision in a timely
manner and notify the written results to the auditing organ.

Article 50

Where the government or financial revenues and expenditures of an entity under audit violates any of the laws or administrative regulations
and a crime is constituted, the entity being audited shall be subject to criminal liabilities.

Article 51

Anyone who retaliates or makes a false charge against the auditor shall be given sanctions; and shall be subject to criminal liabilities
if any crime is constituted.

Article 52

Where an auditor abuses his authorities, conducts malpractice out of personal considerations, neglects his duties or divulges national
secrets or business secrets he has access to, he shall be punished; and if a crime is constituted, he shall be subject to criminal
liabilities.

Chapter VII Supplementary Provisions

Article 53

The provisions on audit work of Chinese People’s Liberation Army shall be formulated by the Central Military Commission in the light
of this Law.

Article 54

This Law shall go into effect as of January 1, 1995. The Audit Regulation of the People’s Republic of China promulgated by the State
Council on November 30, 1988 shall be abolished at the same time.

the Standing Committee of the National People’s Congress
2006-02-28

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German Laws

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THE TECHNICAL POLICY FOR THE RECOVERY AND UTILIZATION OF AUTOMOBILE PRODUCTS

REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE EXAMINATION AND APPROVAL PURVIEW RELATING TO EXPORT TAX REFUND OR EXEMPTION

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AUDIT LAW OF THE PEOPLE’S REPUBLIC OF CHINA

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