ACCOUNTING STANDARDS FOR ENTERPRISES NO. 19 – FOREIGN CURRENCY TRANSLATION

the Ministry of Finance

Accounting Standards for Enterprises No. 19 – Foreign Currency Translation

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

With a view to regulating the accounting treatment for the foreign currency transactions, conversion of foreign currency financial
statements and disclosure of relevant information, the present Standards are formulated according to the Accounting Standards for
Enterprises – Basic Standards.

Article 2

The “foreign currency transaction” refers to transactions which are valuated and settled in foreign currency. The “foreign currency”
refers to a currency other than the functional currency of an enterprise. The foreign currency transactions include:

(1)

the purchase or sale of goods or services valuated in foreign currency;

(2)

foreign currency funds that are borrowed or lent; and

(3)

other transactions which are valuated or settled in foreign currency.

Article 3

The following items shall be subjected to other relevant accounting standards:

(1)

The balance of exchange arising from foreign currency borrowings for the purchase and construction or production of qualified assets
shall be subject to the Accounting Standards for Business Enterprises No. 17 – Borrowing Costs;

(2)

The hedge of foreign currency items shall be subject to the Accounting Standards for Enterprise No. 24 – Hedging; and

(3)

The translation of foreign currency in the cash flow statement shall be subject to the Accounting Standards for Business Enterprises
No. 31- Cash Flow Statement.

Chapter II Determination of Functional Currency

Article 4

The “functional currency” refers to the currency of the primary economic environment in which the enterprise is operated.

An enterprise shall, in general, choose RMB as its functional currency. For an enterprise of which the incomes and expenses are mainly
valuated in the currency other than RMB, it may choose a currency as its functional currency according to Article 5 of the present
Standards. However, the financial statements shall be translated into the ones RMB.

Article 5

When an enterprise chooses a functional currency, it shall take account of the following factors:

(1)

This currency mainly affects the selling prices of goods and services, and generally the goods and services are valuated and settled
in this currency;

(2)

This currency mainly affects the labor, materials and other costs for the goods and services, and generally the goods and services
are valuated and settled in this currency; and

(3)

The currency acquired in financing activities as well as the currency utilized to preserve the money charged in the business operation.

Article 6

When an enterprise chooses the functional currency for its overseas business, it shall taking account of the following factors as
well:

(1)

Whether or not the overseas businesses are quite independent from the activities in which it is engaged;

(2)

Whether or not the transactions with the enterprise in overseas business operations account for a relatively large proportion in oversea
business operations;

(3)

Whether or not the cash flow incurred in overseas business operations directly affect the cash flow of the enterprise, and whether
or not the cash may be remitted back at any time;

(4)

Whether or not the cash flow incurred in overseas business operations is sufficient to settle its current liabilities and predictable
liabilities.

Article 7

The “overseas business operation” refers to the enterprise’ overseas subsidiary companies, joint ventures, associated enterprises
and branches.

Where the domestic subsidiary company, joint enterprise, associated enterprise or branch of an enterprise adopts a functional currency
which is difference from that of the enterprise, it shall be deemed as overseas business.

Article 8

Once the functional currency of an enterprise is determined, it shall not be modified at will, unless the main economic environment
in which the enterprise is operated has greatly changed.

Where it is really necessary to modify the functional currency because the primary economic environment in which the enterprise is
operated has greatly changed, the enterprise shall translate all items into the post-change functional currency at the spot exchange
rate of the current date of the change.

Chapter III Accounting Treatment for Foreign Currency Transactions

Article 9

As for a foreign currency transaction, the enterprise shall translate the amount in a foreign currency into amount in its functional
currency.

Article 10

At the time of initial recognition of a foreign currency transaction, the amount in the foreign currency shall be translated into
the amount in the functional currency at the spot exchange rate of the transaction date, or at an exchange rate which is determined
through a systematic and reasonable method and is approximate to the spot exchange rate of the transaction date.

Article 11

An enterprise shall, on the balance sheet date, treat the foreign currency monetary items and foreign currency non-monetary items
in accordance with the following provisions:

(1)

The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The balance of exchange
arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial
recognition or prior to the balance sheet date shall be recorded into the profits and losses at the current period.

(2)

The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the
transaction date, of which the amount of functional currency shall not be changed.

The “monetary item” shall refer to the money held by an enterprise and the assets and liabilities to be received or paid in fixed
or determinable amounts of money.

The “non-monetary item” shall refer to the items other than the monetary ones.

Chapter IV Translation of Foreign Currency Financial Statements

Article 12

When translating the financial statements on the overseas businesses, an enterprise shall comply with the following provisions:

(1)

The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
owner’s equity items, except the ones as “undistributed profits”, others shall be translated at the spot exchange rate at the time
when they are incurred.

(2)

The income and expense items in the profit statements shall be translated at the spot exchange rate of the transaction date, or at
a spot exchange rate which is determined through a systematic and reasonable method and is approximate to the spot exchange rate
of the transaction date.

The balance arisen from the translation of foreign currency financial statements in compliance with the aforesaid Items (1) and (2)
shall be presented separately under the owner’s equity item of the balance sheets.

The translation of comparable financial statements shall be subject to the aforesaid provisions.

Article 13

An enterprise shall translate the financial statements of overseas business as situated in a hyperinflationary economy in accordance
with the following provisions:

It shall restate the balance sheet items by adopting the general price index, restate the items of the profit statement by adopting
the changes of the general price index, and then translate them at the spot exchange rate on the recent balance sheet date.

If an overseas business is no longer situated in the hyperinflationary economy, it shall stop the restatement, and shall translate
the restated financial statements at the price of the cessation date.

Article 14

When disposing an overseas business, an enterprise shall shift the balance, which is presented under the items of the owner’s equities
in the balance sheet and arises from the translation of foreign currency financial statements related to this oversea business, into
the disposal profits and losses of the current period. If the overseas business is disposed of partially, the enterprise shall calculate
the balance arising from the translation of foreign currency statements of the part of disposal based on the disposal rate and shall
shift them into the profits and losses of the current period.

Article 15

Where an enterprise does not choose RMB as its functional currency, it shall translate its financial statements into RMB financial
statements according to Article 12 of the present Standard.

Chapter V Disclosure

Article 16

An enterprise shall, in its notes, disclose the following information related to the translation of foreign currencies:

(1)

The functional currency chosen by an enterprise and its overseas businesses and the reasons for such choice; if the functional currency
is changed, the grounds for the change shall be given;

(2)

If an approximate exchange rate is adopted, the method for the determination of the approximate exchange rate shall be given;

(3)

The balance of exchange which shall be recorded into the profits and losses of the current period; and

(4)

The effects of disposal of any overseas business on the balance arising from the translation of foreign currency financial statements.

the Ministry of Finance
2006-02-15

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 34 – EARNINGS PER SHARE

Accounting Standards for Enterprises No. 34 – Earnings Per Share

Cai Kuai [2006] No.3
February 15, 2006
Chapter I General Provisions

Article 1

In order to regulate the methods for the calculation of the earnings per share and the presentation thereof, these Standards are
formulated according to the Basic Standards of Accounting Standards for Enterprises.

Article 2

This Standards applies to enterprises whose ordinary shares or potential ordinary shares have been traded publicly, and those that
are going on a public offering of ordinary stocks or potential ordinary shares.

The term “potential ordinary stock” refers to a financial instrument or other contract that could endow its holder ordinary with ordinary
share rights within reporting term or the following term, such as convertible corporate bonds, share warrants, share options and
etc.

Article 3

In the consolidated financial statements, an enterprise shall calculate and present the earnings per share based on the consolidated
financial statements.

Chapter II Basic Earnings Per Share

Article 4

For an enterprise, the basic earnings per share shall be calculated by dividing the current net profits belonging to the shareholders
of ordinary shares by the weighted average number of ordinary shares issued to the public.

Article 5

The weighted average number of ordinary shares which are issued to the public shall be calculated in the light of the formulas as
follows:

The weighted average number of ordinary shares issued to the public = the number of ordinary shares issued to the public at the beginning
of the period + the number of shares newly issued in the current period the lapsed time after issuance the time during the
reporting period – the number of ordinary shares repurchased in the current period the lapsed time after repurchase the time
during the reporting period The lapsed time after issuance, the time during the reporting period as well as the time after the repurchase
shall be calculated by days. On the precondition of not affecting the reasonableness of calculation result, a simplified calculation
method may be employed.

Article 6

In accordance with the specific terms and clauses of the issuance contract, the number of newly issued ordinary shares shall be calculated
and decided as of the date of receivable consideration (generally the date of issuance of stocks), consisting of the circumstances
as follows:

(1)

The number of ordinary shares issued for cash collection shall be calculated as of the date of cash receivable;

(2)

The number of ordinary shares issued as a result of conversion of debt to capital shall be calculated as of the date of cessation
of calculation of debt interest or the settlement date;

(3)

As to a business combination not under the same control, the number of ordinary shares issued as a consideration shall be calculated
as of the purchase date. As to a business combination under the same control, the number of ordinary shares issued as a consideration
shall be charged to the weighted average number of ordinary shares presented during each reporting period; and

(4)

The number of ordinary shares issued for buying non-cash assets shall be calculated as of the date of recognition of the purchase.

Chapter III Diluted Earnings Per Share

Article 7

If an enterprise has any diluted potential ordinary shares, it shall modulate the current net profits belonging to the shareholder
of ordinary shares, and the weighted average number of ordinary shares issued to the public in a separately way, and then calculate
the diluted earnings per share according to the adjusted results.

The term “diluted potential ordinary shares” refers to the potential ordinary shares of which the earnings per share shall be reduced
on supposing they would be converted to ordinary shares in the current period.

Article 8

When calculating the diluted earnings per share, an enterprise shall modulate the current net profits belonging to the shareholders
of ordinary shares in accordance with the items as follows:

(1)

The interests of the diluted potential ordinary shares determined to be expenses in the current period; and

(2)

The gains or expenses to be resulted from the conversion of the diluted potential ordinary shares.

The effects of the income tax on the aforesaid modulation shall be taken into consideration.

Article 9

When calculating the diluted earnings per share, the weighted average number of the ordinary shares issued to the public in the current
period shall be the sum of the weighted average number of ordinary shares in calculating the basic earnings per share and the weighted
average number of increased ordinary shares on supposing that the diluted potential ordinary shares convert into ordinary shares
already issued.

When calculating the weighted average number of increased ordinary shares resulted from that the diluted potential ordinary shares
convert into ordinary shares already issued, the diluted potential ordinary shares issued in prior periods shall be supposed to be
converted at the beginning of the current period. The diluted potential ordinary shares issued in the current period shall be supposed
to be converted on the date of issuance.

Article 10

In case the exercise prices of the share warrants and share options are lower than the average market price of the ordinary shares
of the current period, the dilution shall be taken into consideration. When calculating the diluted earnings per share, an enterprise
shall calculate the number of the ordinary shares increased in accordance with the formula as follows:

The number of ordinary shares increased = the number of ordinary shares to be converted in the exercise of warrants – the exercise
price the number of ordinary shares to be converted in the exercise of warrants the average market price of ordinary shares
in the current period

Article 11

The dilution shall be taken into consideration when an enterprise promises that the price for the repurchase of its shares provided
in the contract is higher than the average market price of the current period. When calculating the diluted earnings per share, an
enterprise shall calculate the number of the ordinary shares increased in accordance with the formula as follows:

The number of ordinary shares increased = the repurchase price the number of ordinary shares promised to repurchase the average
market price of the current period – the number of ordinary shares promised to repurchase

Article 12

The diluted potential ordinary shares shall be charged to the diluted earnings per share based on the extent of dilution according
to the sequential order from the big to the small, until the diluted earnings per share to be the minimum.

Chapter IV Presentation

Article 13

If the number of ordinary shares issued to the public or of potential ordinary shares is increased because of the distribution of
stocks or dividends, the increase of capital converted by accumulation fund or share split-up, or is reduced because of reverse split-up,
but causing no affect on the amount of the owner’s equities, an enterprise shall recalculate the earnings per share in each presentation
period in accordance with the number of post-adjustment shares.

In case the aforesaid changes occur during the period from the balance sheet date to the date on which the financial reports are authorized
for issue, the earnings per share in each presentation period shall be recalculated in the light of the number of post-modulation
shares.

In case any of the profits and losses of any previous year are retroactively modulated or restated in the light of the Accounting
Standards for Enterprises No. 28 – Changes of Accounting Policies, Estimates and Corrections of Errors, the earnings per share during
the period of presentation shall be recalculated.

Article 14

The basic earnings per share and the diluted earnings per share shall be respectively shown in the profit statements of an enterprise.

Article 15

The information related to the earnings per share as follows shall be brought into the open by an enterprise in its notes:

(1)

The calculating process of the numerators and denominators on the basic earnings per share and diluted earnings per share;

(2)

The potential ordinary that not possessing dilution during the presentation period but likely to possess dilution in the subsequent
periods; and

(3)

The information about the great changes on the number of the ordinary shares issued by the enterprise to the public or the potential
ordinary shares during the period from the balance sheet date to the date on which the financial reports are authorized for issue.

The Ministry of Finance
2006-02-15

NOTICE OF THE STATE ADMINISTRATION OF TAXATION ON THE EFFECTIVENESS AND IMPLEMENTATION OF THE AGREEMENT ON THE AVOIDANCE OF DOUBLE TAXATION BETWEEN THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA AND THE GOVERNMENT OF UNITED MEXICAN STATES

State Administration of Taxation

Notice of the State Administration of Taxation on the Effectiveness and Implementation of the Agreement on the Avoidance of Double
Taxation between the Government of the People’s Republic of China and the Government of United Mexican States

No. 26 [2006] of the State Administration of Taxation

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central
Government and the cities under separate state planning, Yangzhou Institute of Taxation and all entities within the taxation bureau:

As to the agreement concluded between the government of the People’s Republic of China and the government of United Mexican States
on the avoidance of double taxation and prevention of tax evasion on September 12, 2005 in Beijing, the foreign affairs departments
of China and Mexico exchanged notes on January 27, 2006 and January 30, 2006, respectively, to confirm that the relevant statutory
legal procedures have been concluded for its effectiveness. According to the provisions of Article 28 of this Agreement, it shall
come into force as of March 1, 2006 and shall be implemented as of January 1, 2007. The State Administration of Taxation has printed
and issued to you the text of the aforesaid Agreement by Document No. 1045 [2005] on November 4, 2005 for implementation.

State Administration of Taxation

February 20, 2006

State Administration of Taxation
2006-02-20

CIRCULAR OF THE MOFCOM, MOF, GAC, SAT, SAIC AND SAFE ON THE WORK OF ANNUAL JOINT EXAMINATION OF FOREIGN-FUNDED ENTERPRISES OF 2006

Ministry of Commerce, Ministry of Finance, General Administration of Customs, State Administration of Taxation, State Administration
for Industry and Commerce, State Administration of Foreign Exchange

Circular of the MOFCOM, MOF, GAC, SAT, SAIC and SAFE on the Work of Annual Joint Examination of Foreign-funded Enterprises of 2006

Shang Zi Han [2005] No.861

etent departments of commerce, finance departments (bureaus) of the provinces, autonomous regions and municipalities directly under
the Central Government, cities specifically designated in the state plan and Xinjiang Production and Construction Corps, all customs
directly under the General Administration of Customs, local taxation bureaus, industry and commerce bureaus, foreign exchange bureaus:

The annual joint examination to foreign-funded enterprises is a significant measure to change the management mode of government and
perfect the investment environment of the state. For the purpose of carrying out and implementing earnestly the Implementation Scheme
on Annual Joint Examination of Foreign-funded Enterprises (No.938 [1998] Wai-Jin-Mao-Zi-Fa, hereinafter referred to as the Circular),
and successful progress of the annual joint examination of foreign-funded enterprises of the whole country in 2006, the relevant
issues are hereby notified as follows:

The departments of all localities shall put the work of annual joint examination into the important order of the day, make arrangements
thoroughly, organize carefully, and take real effective measures, Intensify the publicity of annual joint examination to foreign-funded
enterprises, and strive to have more enterprises participate in the examination. For those failing to declare for annual examination,
failing to make faithful reports in the annual examination or committing law-breaking or rule-breaking acts in production or business
operations, the departments of annual joint examination shall dealt with the punish the offenders pursuant to the laws and regulations.

The period between March 1 and April 30, 2006 is the work time of the annual joint examination of foreign-funded enterprises. All
localities shall organize the annual joint examination of foreign-funded enterprises strictly in accordance with the requirements
of the Circular, all departments of annual joint examination shall strengthen the work on coordination and cooperation between themselves,
make sure only one identical window to the public, and supply the convenience to the enterprise at the same time when strengthen
the management.

The online annual examination shall be pushed forward in an all-round way. All departments of annual joint examination shall reinforce
the leadership, create the condition actively, and organize the implementation orderly.

The unified new edition of the annual joint examination of foreign-funded enterprises shall be adopted in 2006 (annexed thereafter).
Please the relevant departments guide the enterprises to fill it correctly.

All departments of annual joint examination shall strengthen the direction for basic-level annual joint examination, inspect the progress
of the examination work and the implementation of the Circular, get to know and coordinate the settlement of the problems arising
in the examination in a timely manner, and guarantee the successful progress of the annual joint examination of their respective
localities. The departments shall firmly correct the action of that, in violation of the provisions, increasing the enterprises’
burden by taking arbitrary charges or imposing random examinations by the chance of annual joint examination.

All departments of annual joint examination shall strengthen the administration of intermediary agencies of accounting firms and etc.
The specific regulations on service items provided by intermediary agencies when required in annual joint examination shall be formulated,
impose heavier punishment on those intermediary agencies with rule-breaking operations and other problems, and transmit to the competent
departments when necessary, and adopt corresponding management measures of the industry.

All departments of annual joint examination shall cooperate closely between themselves, sort out, nullify and revoke the enterprises
that have no capital, site and structure timely.

All departments of annual joint examination shall strengthen the training of the functionaries from government and enterprises on
annual joint examination, enhance their level of operation assuredly, and guarantee the work of online annual examination favorably
and efficiently.

Annex: The report form of annual joint examination to foreign-funded enterprises (new edition) (omitted)

ommerce

Ministry of Finance

General Administration of Customs

State Administration of Taxation

State Administration for Industry and Commerce

State Administration of Foreign Exchange

February 28, 2006

Ministry of Commerce, Ministry of Finance, General Administration of Customs, State Administration of Taxation, State
Administration for Industry and Commerce, State Administration of Foreign Exchange
2006-02-28

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON SOME ISSUES CONCERNING LAND VALUE-ADDED TAXES

Notice of the Ministry of Finance and the State Administration of Taxation on Some Issues concerning Land Value-added Taxes

Cai Shui [2006] No. 21
March 2, 2006

The public finance departments or bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly
under the Central Government and cities specifically designed in the state plan, and the finance bureau of Xinjiang Production and
Construction Corps.:

In pursuance of the spirit as embodied in the Interim Regulations of the People’s Republic of China on Land Value-added Taxes (hereinafter
referred to as the Regulations) and the detailed rules for the implementation thereof as well as relevant provisions, we hereby clarify
the relevant issues concerning land value-added taxes as follows:

As for issues concerning the tax collection and exemption in the sale of residential houses of ordinary standard as built by taxpayers
as well as in the transfer of ordinary residential houses by individual residents

The “residential houses of ordinary standard” as mentioned in Article 8 of the Regulations and the “ordinary residential houses”
as mentioned in Article 3 of the Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Tax
Policies for the Real Estate Market (Cai Shui Zi [1999] No. 210) shall be recognized all according to the standards for the “small
or medium-sized ordinary residential houses at moderate and low prices” as formulated and publicized to the general public by the
people’s governments of each province, autonomous region or municipality directly under the Central Government in accordance with
the Notice of the General Office of the State Council transmitting the Opinions on Doing a Good Job in Stabilizing the Real Estate
Price of the Ministry of Construction and Other Departments (Guo Ban Fa [2005] No. 26). Where any taxpayer builds ordinary residential
houses as well as other commercial houses, the amount of land added values shall be verified respectively.

As for ordinary standard residential houses, for which, before the day when this document is publicized, an application for tax exemption
has been filed to the tax authority at the locality of the real estate and has been given the treatment of exemption from land value-added
taxes upon examination in accordance with the standards for ordinary standard residential houses as determined by the people’s governments
of a province, autonomous region or municipality directly under the Central Government, adjustment shall be retroactively made to
the exempted land value-added taxes.

II.

As for Issues concerning the Calculation under the Item of Deduction in the Transfer of Old Houses

Where any taxpayer transfers any old house or building, if he fails to obtain the assessed price but is able to provide the house
purchase invoice, the amount under the item of deduction as provided for in items (1) and (3) of Article 6 of the Regulations may,
upon the recognition of the local tax authority, be calculated in light of an increased interest rate of 5% on an annual basis of
the amount held on it for a term spanning from the year of purchase to the year of transfer. As for the deed tax by a taxpayer when
purchasing a house, if the relevant deed tax payment certificate can be presented, it may be deducted as “tax relating to the transfer
of real estate” and shall not be included into the base corresponding to the interest rate of 5%.

As to the transfer of any old house or building, in the case of no relevant assessed price or house purchase invoice, the local tax
authority may conduct tax collection upon verification in accordance with the provisions of Article 35 of the Law of the People’s
Republic of China on Tax Collection and Administration (hereinafter referred to as the Tax Collection and Administration Law).

III.

As for issues concerning the advance collection of land value-added taxes as well as the settlement thereof

All regions shall further improve the measures on the advance collection of land value-added taxes, and decide the advance collection
rate in a scientific and reasonable manner and adjust it at a proper time in light of the value addition level of the real estate
as well as the market development condition within the respective regions and on the basis of the different house categories such
as ordinary houses, non-ordinary houses and commercial houses. After a project is completed, the relevant settlement shall be made
in a timely manner, with any overpayment refunded or any underpayment supplemented.

In case any tax fails to be paid in advance during the advance collection term, the late fees shall be collected additionally as of
the day next to the expiration of the prescribed advance collection term in accordance with the relevant provisions of the Tax Collection
and Administration Law as well as the detailed rules for its implementation.

As for any real estate project that has been finished and has gone through the check and acceptance, where the building area of the
real estate as transferred makes up 85% or more of the salable building area, the tax authority may require the relevant taxpayer
to conduct settlement of land value-added taxes on the transferred real estate in light of the matching principles regarding the
proportion between the income as generated from the transfer of real estate and the amount under the item of deduction. The specific
settlement methods shall be provided for by the local tax authority of a province, autonomous region, municipality directly under
the Central Government and city specifically designed in the state plan.

IV.

As for issues concerning the tax collection and exemption for the real estate as transferred by a taxpayer himself due to the relocation
as required for the implementation of urban planning and state construction

In Paragraph 4 of Article 11 of the Detailed Rules for Implementing the Interim Regulations of the People’s Republic of China on
Land Value-added Taxes, it prescribes that the relocation due to “the implementation of urban planning” refers to the relocation
since that the reconstruction of an old city or enterprise pollution or disturbing the residents (producing so excessive waste gases,
waste water, waste residues and noises, that the life of urban residents is affected to a certain degree) and thus the government
or the relevant administrative departments of the government decides and thereafter carries out the relocation in light of the urban
planning that has been examined and approved; the “relocation as required by state construction” refers to a situation under which
relocation is required for the purpose of implementing any construction project that has been approved by the State Council, a provincial
people’s government, or the relevant ministry or commission of the State Council.

As for Issues concerning the tax collection and exemption for the investment or joint management with real estate

As for any investment or association by using land (real estate) as payment for the purchase of shares, where an enterprise involved
in the investment or joint management engages in the real estate development or where any other real estate development enterprise
makes investment or conducts joint management with the commercial houses built by itself, it shall not be subject to Article 1 of
the Notice of the Ministry of Finance and the State Administration of Taxation on the Provisions on Some Specific Issues regarding
Land Value-added Taxes (Cai Shui Zi [1995] No. 048) on the interim exemption of land value-added taxes.

VI.

The present Notice shall go into effect as of March 2, 2006.

Ministry of Finance, State Administration of Taxation
2006-03-02

CIRCULAR OF THE MINISTRY OF FINANCE ON THE RELEVANT ISSUES CONCERNING ENTERPRISE ACCOUNTING TREATMENTS AFTER THE EFFECT OF THE COMPANY LAW

Ministry of Finance

Circular of the Ministry of Finance on the Relevant Issues concerning Enterprise Accounting Treatments after the effect of the Company
Law

No. 67 [2006] of the Ministry of Finance

March 15, 2006

To the departments (bureaus) of finance of all provinces, autonomous regions, municipalities directly under the Central Government
and cities under separate state planning, and the bureau of finance of Xinjiang Production and Construction Corp., all the relevant
ministries and commissions of and the relevant institutions directly under the State Council, and all the enterprises directly under
the Central Government,

The Company Law of our country amended and adopted for the third time has come into force as of January 1, 2006, and we hereby circulate
a notice on the enterprise accounting treatments as follows:

On the Appraisal of Capital Contributions in the form of In-kind Capital

According to Article 27 of the Company Law, where an enterprise establishes a company by the capital contributions of substance,
intellectual property right, land use right or other non monetary assets, the aforesaid capital contributions shall be subject to
appraisal and pricing to verify the assets. Where a state-owned or state holding enterprise makes capital contributions in non monetary
assets or accepts the capital contributions in non monetary assets from other enterprises, it shall entrust a qualified asset appraisal
institution for asset appraisal in accordance with the relevant state provisions on asset appraisal; and the appraisal of capital
contributions in other non monetary assets shall be conducted by referring to the aforesaid provisions.

II.

On the Disposal of the Balance of Public Welfare Funds

An enterprise established according to the Company Law shall not draw public welfare funds when it distributes profits according to
Article 167 of the Company Law after January 1, 2006. At the same time, the State-owned enterprises and other enterprises shall
abolish the system of public welfare funds simultaneously in order to keep the coherence between the accounting policies of the enterprises.
With respect to the balance of public welfare funds before December 31, 2005, the enterprise shall put it under the management and
use of the surplus reserves; the deficit of public welfare funds shall be made up by the surplus reserves, capital reserves and the
undistributed profits of the previous year in sequence, and it shall be carried forward to the account of undistributed profits and
be made up by the after-tax profits realized in the later years where there still remains deficits.

Where an enterprise carries out the reform of housing system upon approval, it shall abide by the Notice on the Relevant Accounting
Treatments in the Reform of Enterprise Housing System (Cai Qi [2000] No.295) and the Supplementary Notice on the Relevant Accounting
Treatments in the Reform of Enterprise Housing System (Cai Qi [2000] No. 878) in the process of implementation. An enterprise shall
not purchase or build houses for its employees any more and shall not arrange the relevant expenses in surplus reserves after carrying
out the housing monetization reform according to the uniform State provisions.

With respect to the expenses for purchasing fixed assets necessary for the staff canteen, infirmary, nursery and other welfare institutions
originally operated by the public welfare funds, an enterprise that has not peeled the social functions from itself or has not implemented
the segmentation between main and supplementary businesses and restructuring of the latter shall be subject to examination and approval
in strict accordance with the procedures and privilege prescribed in the internal accounting system of the enterprise, and shall
implement the relevant management system regarding the production and operational assets of the enterprise.

After an enterprise abolishes the system of public welfare funds, if the board of directors of a foreign-funded enterprise decides
to continuously draw the staff bonus and welfare fund, it shall be subject to the liability management, with the purposes, conditions
and procedures for the use thereof being specified.

III.

On the Issue of Accounting Treatments After a Joint-stock Limited Company Purchase its Own Stocks

Where a joint-stock limited company repurchases its own stocks in light of Article 143 of the Company Law, it shall carry out the
accounting treatments according to the following requirements:

The stocks repurchased by a company shall be subject to the management of treasury stocks before cancellation or transfer, and all
the expenses in the stock repurchase shall be transferred into the cost of treasury stocks. However, in case of the stock repurchase
resulted from the merger with any other company that holds its stocks, the cost of treasury bonds shall be determined on the basis
of the book value of the relevant investments of its stocks held by the other company provided that both participants of the merger
are ultimately controlled by a same shareholder both before and after the merger; and if they are not ultimately controlled by a
same shareholder, the cost of treasury stocks shall be determined on the basis of the fair value of the relevant investments of its
stocks held by the other company.

When the treasury stocks are cancelled, the capital stocks shall be correspondingly reduced on the basis of the amount of the stocks
that are cancelled, and the surplus of the cost of treasury stocks over the corresponding capital stocks shall be used to write off
the capital reserves, surplus reserves and the undistributed profits of the previous year in sequence; and the capital reserves shall
be increased for the deficit of the cost of treasury stocks over the corresponding capital stocks.

When the treasury stocks are transferred, the surplus of incomes incurred from the transfer over the cost of treasury stocks shall
be used to increase the capital reserves; and the deficit over the cost of treasury stocks shall be used to write off the capital
reserves, surplus reserves and the undistributed profits of the previous year in sequence.

ii.

With respect to the stocks repurchased due to the implementation of employee equity incentive plans, the stocks to be repurchased
shall not be more than 5% of the total amount of the stocks the company issues, and the required capital shall be within the amount
of profits that can be distributed to the investors in the current term.

Where the date when the general assembly of shareholders adopts the employee equity incentive plans and the date of stock repurchase
do not fall in the same year, the company shall preserve the expense for the planned repurchase in the profits that can be distributed
to the investors in the current term, and the preserved profits shall not be distributed any more when the employee equity incentive
plans are adopted.

When the company repurchases the stocks, it shall transfer all the expenses for stock repurchase into the cost of treasury stocks,
and simultaneously transfer the profits to be distributed to investors into the capital reserves in light of the amount of expenses
for the repurchase.

iii.

The treasury stocks shall not be used in the profit distribution of the company, and a joint-stock limited company shall reflect it
as the deduction item of ownership rights and interests.

IV.

This Notice shall come into force as of April 1, 2006. In case of any problem encountered in the implementation thereof, please timely
report it to this Ministry.

Ministry of Finance
2006-03-15

ANNOUNCEMENT NO.44, 2006 OF THE GENERAL ADMINISTRATION OF QUALITY SUPERVISION, INSPECTION AND QUARANTINE OF THE PEOPLE’S REPUBLIC OF CHINA, ON ADJUSTING THE EXAMINING AND APPROVING OF THE LABEL SYSTEM ON IMPORT AND EXPORT FOODSTUFF AND COSMETICS

General Administration of Quality Supervision, Inspection and Quarantine

Announcement No.44, 2006 of the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic
of China, on Adjusting the Examining and Approving of the Label System on Import and Export Foodstuff and Cosmetics

[2006] No. 44

March 24, 2006

Announcement on Adjusting the Examining and Approving of the Label System on Import and Export Foodstuff and Cosmetics In order to
act in the spirit of the State Council of reforming administrative examination and approval, simplify procedures, make things convenient
for import and export, after studying, it is decided to adjust the examining and approving of label system on import and export foodstuff
and cosmetics and it is hereby announced:

The label for import foodstuff and cosmetics must accord with the provisions of Chinese laws regulations and coercive standards
(corresponding laws regulations and standards may be downloaded from www.aqsiq.gov.cn /safety of import & export foodstuff and
cosmetics /label management of foodstuff and cosmetics). The label of export foodstuff and cosmetics must meet the requirements of
the import country /region.

As of April 1, 2006, the label of import and export foodstuff and cosmetics will be examined and approved together with the inspection
and quarantine of import and export foodstuff and cosmetics and will not be applied for pre-examination and approval. The authorities
concerned at all levels will not accept and handle the application for pre-examination and approval of the label of import and export
foodstuff and cosmetics. The exit and entry inspection and quarantine authority shall not ask for the application for coercive inspection
by Label Examination and Approval Certificate of Import and Export Foodstuff and Cosmetics.

Local exit and entry inspection and quarantine authorities shall, while carrying out inspection and quarantine of import and export
foodstuff and cosmetics, examine whether the content of the label meet the requirements of laws, regulations and standards and examine
the truthfulness and accuracy of the content relating to quality. To the label passing the examination, “Label Passing the Examination”
shall be indicated in the inspection certificate provided according to rules.

The label of import foodstuff and cosmetics that does not accord with the provisions of national laws, regulations and coercive standards
before October 1, 2006 may be altered under the supervision of exit and entry inspection and quarantine authority and shall be granted
clearance according to rules.

As of October 1, 2006, any label of import foodstuff and cosmetics that does not accord with the provisions of relative laws, regulations
and standards of our country shall be handled according to the provision of Article 19 of Implementation Regulations of Inspection
Law for Import and Export Goods of the People’s Republic of China, and any label of export foodstuff and cosmetics that does not
accord with the regulations of import country/ region shall be handled according to the provision of Article 27 of Implementation
Regulations of Inspection Law for Import and Export Goods of the People’s Republic of China.

The Label Approval Certificate for Import (Export) Foodstuff and Cosmetics that has already been obtained is still valid. The label
of import and export foodstuff may be exempted from label examination if the content of it accords with the content indicated in
the approval certificate.

If it needs to change a new certificate because of the changes of new requirements in General Standard for Label of Prepackaged Food
of the People’s Republic of China (GB7718-2004), General Standard for Label of Prepackaged Special Foods of the People’s Republic
of China (GB13432-2004) and other new standards, the certificate shall be changed in accordance with the provisions of the Announcement
of Examining and Changing the Label Approval Certificate for Import Foodstuff. The closing date for changing the certificate is May
1, 2006. Hereafter, any certificate that does not accord with new requirements due to the changes of the requirements of laws, regulations
or standards shall become invalid automatically.

The inspection and quarantine authorities shall, while inspecting and quarantining import and export foodstuff and cosmetics, including
label examination and approving, testing and checking, collect the charges uniformly according to the standard for inspection and
quarantine charges, shall not collect any charges for label examination.

General Administration of Quality Supervision, Inspection and Quarantine

March 24, 2006

General Administration of Quality Supervision, Inspection and Quarantine
2006-03-24

MEASURES FOR THE LICENSING FOR PRODUCTION AND OPERATION OF NON-PHARMACEUTICAL PRECURSOR CHEMICALS

the State Administration of Work Safety

Order of the State Administration of Work Safety of the People’s Republic of China

No. 5

The Measures for the Licensing for Production and Operation of Non-pharmaceutical Precursor Chemicals, which were deliberated and
adopted at the director general’s executive meeting of the State Administration of Work Safety on March 21, 2006, are hereby promulgated,
and shall come into force as of April 15, 2006.

Director General Li Yizhong

April 5, 2006

Measures for the Licensing for Production and Operation of Non-pharmaceutical Precursor Chemicals

Chapter I General Provisions

Article 1

For the purpose of strengthening the administration on non-pharmaceutical precursor chemicals, regulating the production and operation
of non-pharmaceutical precursor chemicals, preventing non-pharmaceutical precursor chemicals from being used to manufacture drugs
and maintaining economic and social order, the present Measures are formulated in accordance with the Regulation on the Administration
of Precursor Chemicals (hereinafter referred to as the Regulation) as well as other relevant laws and administrative regulations.

Article 2

The term “non-pharmaceutical precursor chemicals” as mentioned in the present Measures shall refer to the non-pharmaceutical major
materials and chemical auxiliary substances which are prescribed in the Attached Table of the Regulation and may be used to produce
drugs.

As for the classes and varieties of non-pharmaceutical precursor chemicals, please see the Attached Table of the present Measures,
the Catalogue of Classes and Varieties of Non-pharmaceutical Precursor Chemicals.

When the adjustment to the Attached Table of the Regulation, the Catalogue of Classes and Varieties of Precursor Chemicals or to the
Catalogue of Hazardous Chemicals involves the Attached Table of the present Measures, the Catalogue of Classes and Varieties of Non-pharmaceutical
Precursor Chemicals shall be adjusted accordingly and promulgated.

Article 3

The state adopts a license system for the production and operation of non-pharmaceutical precursor chemicals. The production and operation
of non-pharmaceutical precursor chemicals of Class I shall be subject to the license-based administration, while the production and
operation of precursor chemicals of Class II and Class III shall be subject to the archival certificate-based administration.

The administrative departments of work safety of the people’s government of all provinces, autonomous regions, or municipalities directly
under the Central Government shall take charge of the examination and approval of the production and operation of non-pharmaceutical
precursor chemicals of Class I within their respective jurisdictions and the issuance of the licenses thereof.

The administrative departments of work safety of the people’s government in cities divided into districts shall take charge of the
issuance of archival certificates for production and operation of non-pharmaceutical precursor chemicals of Class II or for production
of non-pharmaceutical precursor chemicals of Class III within their respective jurisdictions.

The administrative departments of work safety of the people’s government at the county level shall take charge of the issuance of
archival certificates for operation of non-pharmaceutical precursor chemicals of Class III within their respective jurisdictions.

Article 4

The State Administration of Work Safety shall supervise and guide the licensing for production and operation of non-pharmaceutical
precursor chemicals all over the country and the archival filing administration thereof.

The administrative departments of work safety of the people’s government at the county level or above shall take charge of implementing
the supervision and administration of the system of licensing for production and operation of non-pharmaceutical precursor chemicals
within their respective jurisdictions.

Chapter II Licensing for Production and Operation

Article 5

Whoever intends to produce or operate a non-pharmaceutical precursor chemical of Class I shall not engage in the production or business
activities until having obtained the license for production or operation of the non-pharmaceutical precursor chemicals.

Article 6

Whoever intends to produce or operate a non-pharmaceutical precursor chemical of Class I shall meet the conditions as prescribed in
Article 7 and Article 9 of the Regulation.

Article 7

Where a producer applies for a license for the production of a non-pharmaceutical precursor chemical, it shall submit the following
documents and materials to the administrative department of work safety of the local people’s government at the provincial level,
and shall be responsible for the authenticity thereof:

(1)

A letter of application for the license for production of the non-pharmaceutical precursor chemical (in duplicates);

(2)

Introduction materials of the production equipment, warehousing facilities and pollutant treatment facilities;

(3)

Precursor chemical management rules and plan on responding to environmental emergencies;

(4)

Work safety management rules;

(5)

Materials proving that its legal representative or principal person-in-charge, as well as its technicians and managers have corresponding
knowledge on work safety;

(6)

Materials proving that its legal representative or principal person-in-charge, as well as its technicians and managers have corresponding
knowledge on precursor chemicals and have no records on drug-involved crimes;

(7)

A counterpart of its industrial and commercial business license (photocopy); and

(8)

Directions of the product package and the directions to use chemicals.

Where a producer belongs to hazardous chemical-producing entities, it shall, in addition, submit its work safety license of hazardous
chemical production enterprise, and the hazardous chemical registration certificate (photocopies), without having to submit the documents
and materials as required by Items (4), (5) and (7) of the present article.

Article 8

When applying for a license for operation of a non-pharmaceutical precursor chemical, a business entity shall submit the following
documents and materials to the administrative department of work safety of the local people’s government at the provincial level,
and shall be responsible for the authenticity thereof:

(1)

A letter of application for the license for operation of the non-pharmaceutical precursor chemical (in duplicates);

(2)

Introduction materials of the production site and the warehousing facilities;

(3)

Precursor chemical management rules and the sales network documents containing the contents such as sales institutions, sales agencies
and users, etc.;

(4)

Materials proving that its legal representative or principal person-in-charge and its sales staff and managers have corresponding
knowledge on precursor chemicals and have no records on drug-involved crimes;

(5)

A counterpart of its industrial and commercial business license (the photocopy); and

(6)

Directions of the product package and the directions to use chemicals.

Where a producer belongs to hazardous chemical-producing enterprises, it shall, in addition, submit its license for operation of hazardous
chemicals (photocopy), without having to submit the documents and materials as required by Item (5) of the present article.

Article 9

The administrative departments of work safety of the people’s governments of all provinces, autonomous regions, or municipalities
directly under the Central Government shall handle the letters of application as well as the documents and materials submitted by
applicants respectively according to the following:

(1)

Where the issues in the application do not fall within its purview, it shall immediately issue a written document on refusing to accept
the application;

(2)

Where the application materials contain any error that may be corrected on the spot, it shall permit or require the applicant to correct
the aforesaid error on the spot;

(3)

Where the application materials are incomplete or fail to meet the requirements, it shall inform the applicant in written form once
for all of the contents to be supplemented either on the spot or within 5 working days. And it shall be deemed to have accepted the
application as of receipt of the application materials, if it fails to inform the applicant within the time limit; or

(4)

Where the application materials are complete, meet the requirements or are supplemented and corrected completely as required, it shall
be deemed to have accepted the application as of receipt of the application materials or as of full supplement and correction of
the materials.

Article 10

The administrative departments of work safety of the people’s governments of all provinces, autonomous regions, or municipalities
directly under the Central Government shall examine the accepted application materials, and may make on-site checks when necessary.

Article 11

As of the date of acceptance, the administrative departments of work safety of the people’s governments of all provinces, autonomous
regions, or municipalities directly under the Central Government shall make a decision on issuing or refusing to issue the license
within 60 working days in case of an application for the license for production of a non-pharmaceutical precursor chemical, or within
30 working days in case of an application for the license for operation of such a chemical.

Where an issuance is granted, it shall deliver the license to the applicant or notify the applicant to fetch the license within 10
working days as of making the decision; where an issuance is not granted, it shall notify the applicant in written form and explain
the reasons thereof within 10 working days.

Article 12

The valid term of a license for production or operation of a non-pharmaceutical precursor chemical shall be 3 years. Where the producer
or operator needs to continue producing or operating a non-pharmaceutical precursor chemical of Class I after the expiry of the valid
term of the license, it shall file an application for replacement of the license to the original administrative department that has
issued its license, and submit the corresponding materials within 3 months prior to the expiry of the valid term of the license,
and obtain a new license after examination to be qualified.

Article 13

Where a producer or operator of a non-pharmaceutical precursor chemical of Class I is under any of the following circumstances within
the valid term of its license for production or operation of the non-pharmaceutical precursor chemical, it shall apply for modification
of its license to the original administrative department that has issued its license:

(1)

Its legal representative or principal person-in-charge is changed;

(2)

Its name is changed;

(3)

The main flow of the licensed varieties is changed; or

(4)

Any variety needs to be added or the quantity needs to be increased.

As for the modification under Item (1) or (3) of the present article, the application shall be filed within 20 working days as of
the time of alteration; while for the modification under Item (2) of the present article, the application shall be filed after the
industrial and commercial business license is modified.

The producer or operator concerned shall provide the relevant materials which proves that the modified legal representative or principal
person-in-charge meets the requirements in Item (5) or (6) of Article 7 or Item (4) of Article 8 of the present Measures to apply
for the modification under Item (1) of the present article. The producer or operator concerned shall provide a counterpart of the
modified industrial and commercial business license (photocopy) to apply for the modification under Item (2) of the present article.
The producer or operator concerned shall separately provide the statement on the change of the main flow or the relevant information
required by Item (3) of Article 8 to apply for the modification under Item (3) of the present article. The producer or operator
concerned shall provide the relevant information required by Items (2), (3) and (8) of Article 7 or Items (2), (3) and (6) of Article
8 of the present Measures to apply for the modification under Item (4) of the present article.

Article 14

With respect to an accepted application for modification under Item (1), (2) or (3) of Article 13 of the present Measures, the administrative
department for the issuance of licenses may go through the procedures for modification of the license for production or operation
of the non-pharmaceutical precursor chemical concerned after checking the documents and materials submitted by the applicant.

With respect to an accepted application for modification under Item (4) of Article 13 of the present Measures, the administrative
department for issuance of licenses shall go through the procedures for modification of the license for production or operation of
the non-pharmaceutical precursor chemical in accordance with Article 10 and Article 11 of the present Measures.

Article 15

Where any of the original technicians, sales staff or managers of the producer or operator of a non-pharmaceutical precursor chemical
is changed, the newly appointed person shall have corresponding knowledge on work safety and precursor chemicals.

Article 16

Where the producer or operator of a non-pharmaceutical precursor chemical of Class I no longer produces or operates the non-pharmaceutical
precursor chemical, it shall go through the procedures for nullification of the license within 3 months after stopping the production
or operation.

Chapter III Archival Filing of Production and Operation

Article 17

Whoever produces or operates a non-pharmaceutical precursor chemical of Class II or Class III shall go through the archival filing
of production or operation of the non-pharmaceutical precursor chemical.

Article 18

Whoever produces a non-pharmaceutical precursor chemical of Class II or Class III shall report the varieties under production, the
quantity and etc. to the administrative department of work safety of the local people’s government at the districted city level for
archival filing within 30 working days as of the day of production.

Whoever operates a non-pharmaceutical precursor chemical of Class II shall report the varieties under operation, the quantity, the
main flow and etc. to the administrative department of work safety of the local people’s government at the districted city level
for archival filing within 30 working days as of starting operation.

Whoever operates a non-pharmaceutical precursor chemical of Class III shall report the varieties under operation, the quantity, the
main flow and etc. to the administrative department of work safety of the local people’s government at the county level for archival
filing within 30 working days as of starting operation.

Article 19

The producer of a non-pharmaceutical precursor chemical of Class II or Class III shall submit the following materials for archival
filing:

(1)

A letter of application for archival filing of the varieties, quantity, sales volume and etc. of the non-pharmaceutical precursor
chemical;

(2)

Precursor chemical management rules;

(3)

Directions of the product package and the directions to use chemicals; and

(4)

A counterpart of its industrial and commercial business license (photocopy).

Where a producer belongs to hazardous chemical-producing enterprises, it shall, in addition, submit its work safety license of hazardous
chemical production enterprise and its hazardous chemical registration certificate (photocopies), without having to submit the documents
and materials required by Item (4) of the present article.

Article 20

The operator of a non-pharmaceutical precursor chemical of Class II or Class III shall submit the following materials for archival
filing:

(1)

A letter of application for archival filing of the varieties for sale, sales volume, main flow and etc. of the non-pharmaceutical
precursor chemical;

(2)

Precursor chemical management rules;

(3)

Directions of the product package and the directions to use chemicals; and

(4)

A counterpart of its industrial and commercial business license (photocopy).

Where a producer belongs to hazardous chemical-producing enterprises, it shall, in addition, submit its license for operation of hazardous
chemicals, without having to submit the documents and materials required by Item (4) of the present article.

Article 21

The competent department for archival filing of production and operation of a non-pharmaceutical precursor chemical of Class II or
Class III shall issue the archival certificate on the same day of the receipt of the materials as prescribed in Article 19 or Article
20 of the present Measures for archival filing.

Article 22

The valid term of a certificate on archival filing of production and operation of a non-pharmaceutical precursor chemical of Class
II or Class III shall be three years. Where the producer or operator needs to continue the production or operation after the expiry
of the valid term, it shall go through the archival filing procedures once again within 3 months prior to the expiry of the valid
term of the archival certificate.

Article 23

Where the legal representative or principal person-in-charge, the name or the address of the producer or operator of a non-pharmaceutical
precursor chemical of Class II or Class III is changed, the producer or operator shall go through the archival filing procedures
once again within 30 working days as of modification of the industrial and commercial business license; while where any archived
variety for production or operation is added or the main flow is changed, the producer or operator shall go through the archival
filing procedures once again within 30 working days as of such change or addition.

Article 24

Where the producer or operator of a non-pharmaceutical precursor chemical of Class II or Class III no longer produces or operates
the non-pharmaceutical precursor chemical, it shall go through the procedures for nullification of the archival filing within 3 months
as of terminating the production or operation.

Chapter IV Supervision and Administration

Article 25

The administrative departments of work safety of the people’s government at the county level or above shall strengthen the supervision
and inspection over the production and operation of non-pharmaceutical precursor chemicals.

The administrative departments of work safety of a people’s government at the county level or above may check the scene, consult and
photocopy the relevant materials, record the relevant information, detain the relevant evidential materials and illegal articles
when supervising or inspecting the activities of producing or operating non-pharmaceutical precursor chemicals; and they may temporarily
seal up the relevant sites when necessary.

The entities or individuals under inspection shall truthfully provide the relevant information and articles, and shall not refuse
to provide or conceal them.

Article 26

A producer or operator shall report the information such as the varieties, quantity, main flow and etc. of the non-pharmaceutical
precursor chemical it produced or operated the last year to the administrative department of work safety that has granted the license
or handled the archival filing by March 31 of each year.

The administrative departments of work safety shall report the gathered information on the non-pharmaceutical precursor chemicals
produced and operated last year within their respective jurisdictions to the administrative departments of work safety at the higher
level within 10 working days as of receipt of a report.

Article 27

The administrative departments of work safety at each level shall set up archives on license and archival filing of non-pharmaceutical
precursor chemicals, and shall strengthen information management.

Article 28

An administrative department of work safety shall timely report the information on the licensing for production and operation of non-pharmaceutical
precursor chemicals as well as on the revocation of licenses and etc. to the public security organ or administrative department for
industry and commerce at the same level, and report the relevant information on issuance of licenses and archival certificates to
the administrative department of commerce.

Chapter V Penalty Provisions

Article 29

In case of any of the following acts, the administrative departments of work safety of the people’s government at the county level
or above may stop accepting the producer’s or operator’s application for licensing for production or operation of or for archival
filing of its non-pharmaceutical precursor chemical for 3 years as of the time when the department prescribed in Article 38 of the
Regulation makes the administrative penalty decision:

(1)

Unlawfully producing or operating non-pharmaceutical precursor chemicals without being licensed or archived;

(2)

Forging application materials to obtain the license for production or operation of or the certificate for archival filing of a non-pharmaceutical
precursor chemical by fraud;

(3)

Using others’ license for production or operation of or certificate for archival filing of a non-pharmaceutical precursor chemical;
or

(4)

Using a forged, altered or invalidated license for production or operation of or certificate for archival filing of a non-pharmaceutical
precursor chemical.

Article 30

In case of any of the following acts, the administrative departments of work safety of the people’s government at the county level
or above shall make a warning to the producer or operator, order it to make corrections within a time limit, and impose on it/him
a fine of 10,000 Yuan up to 50,000 Yuan; and the non-pharmaceutical precursor chemical which is produced or operated in violation
of provisions may be confiscated. Where the producer or operator fails to make corrections within the time limit, it shall be ordered
to stop production or operation within a time limit for rectification. Where it remains to be unqualified after the rectification
within the time limit, its corresponding license shall be revoked:

(1)

The producer or operator of a precursor chemical fails to accord with the provisions to establish precursor chemical management rules
or safety management rules;

(2)

It lends the license or archival certificate to others for use;

(3)

It produces or operates a non-pharmaceutical precursor chemical that exceeds the licensed varieties and quantity;

(4)

The directions of the package of the precursor chemicals and the directions to use such chemicals fail to meet the requirements as
prescribed in the Regulation; or

(5)

The producer or operator of a non-pharmaceutical precursor chemical fails to truthfully or timely report the information on annual
production or operation, etc. to the administrative department of work safety.

Article 31

Where an entity or individual who produces or operates a non-pharmaceutical precursor chemical refuses to accept the supervision and
inspection by the administrative departments of work safety, the administrative departments of work safety of the people’s government
at the county level or above shall order it to make corrections, and make a warning to the directly responsible person-in-charge
and other persons directly liable. Where the case is serious, the entity shall be imposed upon a fine of 10,000 Yuan up to 50,000
Yuan, while the directly responsible person-in-charge and the persons directly liable shall be imposed upon a fine of 1,000 Yuan
up to 5,000 Yuan.

Article 32

Where any of the working staff of an administrative department of work safety abuses his powers, neglects his duties, practices favoritism
for himself or his relatives or divulges an enterprise’s commercial secret during the administrative work, he shall be imposed upon
administrative sanctions according to law; where any crime is constituted, he shall be subject to criminal liabilities according
to law.

Chapter VI Supplementary Provisions

Article 33

The licenses for production or operation of non-pharmaceutical precursor chemicals and the certificates for archival filing thereof
shall be produced under the supervision of the State Administration of Work Safety.

The pattern and format of the annual report on non-pharmaceutical precursor chemicals and that of the letter of application for licensing,
archival filing or modification shall be prescribed by the State Administration of Work Safety.

Article 34

The present Measures shall come into force as of April 15, 2006. Attached Table:Catalogue of Classes and Varieties of Non-pharmaceutical Precursor Chemicals

Class I

1-Phenyl-2-Propanone

3, 4-Methylenedioxyphenyl-2-Propanone

Piperonal

Safrole

Sassafras oil

Isosafrole

N-acetylanthranilic acid

Anthranilic acid

Class II

Penylacetic acid

Acetic anhydride> 3.

Trichloromethane> 4.

Aether> 5.

Piperidine>

Class III

Toluene> 2.

Acetone> 3.

Methyl ethyl ketone> 4.

Potassium permanganate> 5.

Sulfuric acid

Hydrochloric acid>Notes:

The salts that might contain the substances of Class I and Class II shall also be under control.

The varieties marked with ‘are hazardous chemicals.

the State Administration of Work Safety
2006-04-05

CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON DISTRIBUTING OPERATING INSTRUCTIONS FOR CURRENT FOREIGN EXCHANGE ACCOUNTS AND THE PURCHASE OF FOREIGN EXCHANGE BY DOMESTIC RESIDENTS

Circular of the State Administration of Foreign Exchange on Distributing Operating Instructions for Current Foreign Exchange Accounts
and the Purchase of Foreign Exchange by Domestic Residents

Hui Zong Fa [2006] No. 32
April 19, 2006

All branches and foreign exchange administration departments of the State Administration of Foreign Exchange (the SAFE) in all provinces,
autonomous regions, and municipalities directly under the Central Government, the branches in Shenzhen, Dalian, Qingdao, Xiamen and
Ningbo, and all designated Chinese-funded foreign exchange banks:

For the purpose of earnestly carrying out Announcement No. 5 [2006] of the People’s Bank of China and the Circular of the State Administration
of Foreign Exchange on Adjusting the Policies Concerning the Administration of Current Foreign Exchange Accounts (Hui Fa [2006] No.
19), improving the administration of current accounts of foreign exchange and standardizing the operating, the State Administration
of Foreign Exchange formulated Operating Instructions for Current Foreign Exchange Accounts and the Purchase of Foreign Exchange
by Domestic Residents (see the Appendix, hereafter referred to as Operating Instructions) which specify relevant policies and requirements,
clarify all provisions in the course of conducting transactions by administrations of foreign exchange and banks and thus contribute
to facilitating the conduct of relevant transactions by domestic institutions and individuals.

The Operating Instructions are hereby distributed to you. The present Operating Instructions shall come into force as of May 1, 2006.
In case of any problem encountered in the implementation of the present Circular, please report it on a timely basis to the SAFE.

Appendix:

1. Operating Instructions for Current Foreign Exchange Accounts and the Purchase of Foreign Exchange by Domestic Residents (Omitted)

State Administration of Foreign Exchange
2006-04-19

CIRCULAR OF THE MINISTRY OF COMMERCE ON RELEVANT MATTERS CONCERNING THE HANDLING OF THE CONFIRMATION LETTER FOR DOMESTIC-FUNDED OR FOREIGN-FUNDED PROJECTS ENCOURAGED BY THE STATE FOR DEVELOPMENT FOR FOREIGN-FUNDED ENTERPRISES

Circular of the Ministry of Commerce on Relevant Matters Concerning the Handling of the Confirmation Letter for Domestic-funded or
Foreign-funded Projects Encouraged by the State for Development for Foreign-funded Enterprises

Shang Zi Fa [2006] No. 201

The competent commercial departments in all provinces, autonomous regions, municipalities directly under the Central Government and
cities specifically designated in the state plan, and that of Xinjiang Production and Construction Corps.,

As to the questions as recently encountered by many local competent departments of commerce in issuing confirmation letter of tax
exemption, this Ministry has made a clear reply in the Reply Letter of the Ministry of Commerce on Relevant Matters Concerning the
Handling of the Confirmation Letter of Tax Exemption for Foreign-Funded Enterprises in the Encouraged Category (Shang Zi Han [2006]
No. 41).

In order to further regulate the operating procedures of tax exemption of import equipment for foreign-funded enterprises and clarify
the specific requirements for foreign-funded enterprises to handle the procedure of obtaining the Confirmation Letter for Domestic-Funded
or Foreign-Funded Projects Encouraged by the State for Development and the Certificate for Importation, by Foreign Investment Enterprises,
of Renewal Equipment, Technology, Fittings and Spare Parts (hereinafter referred to as “Confirmation Letter” and “Import Certificate”
respectively), the circular concerning relevant matters are hereby specified as follows in the light of the Law on Chinese-foreign
Equity Joint Ventures, the Law on Chinese-foreign Contractual Joint Ventures, the Law on Foreign-capital Enterprises, Circular of
the State Council On the Adjustment of Taxation Policy On Import equipment (Guo Fa [1999] No. 37, hereinafter referred to as Document
No. 37), Circular on the Implementation of Adjustment of Taxation Policy On Import equipment (Ji Gui Hua [1998] No. 250) and other
related documents.

Basic Principles

Since the State Council decided to issue the Confirmation Letter to the encouraged projects for foreign investment in 1998 and to
issue Import Certificate to qualified foreign-funded enterprises in 1999, relevant departments of the State Council have issued a
series of documents (see Reply Letter of the Ministry of Commerce on Relevant Matters Concerning the Handling of the Confirmation
Letter of Tax Exemption for Foreign-Funded Enterprises in the Encouraged Category (Shang Zi Han [2006] No. 41), prescribing clearly
the departments issuing the Confirmation Letter and Import Certificate, procedures, basis and operational measures in the implementation.

In principle, the Confirmation Letter for foreign-funded projects in the encouraged category shall be issued respectively by departments
of development & plan, trade & economic cooperation and foreign trade & economic cooperation, of which, the Confirmation
Letters for foreign-funded projects in the encouraged category above the upper limit shall be issued by the National Development
and Reform Commission and the Ministry of Commerce respectively; those below the upper limit shall be issued by relevant departments
of the provincial people’s government in light of the present division of duty and limit of power.

Each locality shall continuously comply with the aforesaid regulations and operational measures to ensure that the work of issuing
the Confirmation Letter and Import Certificate and operational procedures run in a steady way.

II.

The Scope of the Confirmation Letter and Import Certificate issued by commercial departments

The Confirmation Letter for Foreign-Funded Enterprises in the Encouraged Category as examined and approved once for all by the Ministry
of Commerce or local competent departments of commerce (or foreign trade & economic cooperation) in accordance with the Law on
Foreign-capital Enterprises and the detailed rules thereof

ii.

The Confirmation Letter of capital increase projects for Foreign-Funded Enterprises in the Encouraged Category as examined and approved
by competent departments of commerce (or foreign trade & economic cooperation) in accordance with the Law on Chinese-foreign
Equity Joint Ventures, the Law on Chinese-foreign Contractual Joint Ventures, the Law on Foreign-capital Enterprises, the detailed
rules thereof and other relevant regulations

iii.

The Confirmation Letter for Foreign-Funded Joint Stock Limited Companies in the Encouraged Category

iv.

The Confirmation Letter for Foreign-Funded Enterprises in the Encouraged Category in the field of service trade

The Confirmation Letter for Foreign-Funded Enterprises in the Encouraged Category as established by foreign investors through merger
and acquisition

vi.

The Confirmation Letter of self-use equipment and supporting technologies, fittings and spare parts that cannot be produced by an
import country at home or the performance of which cannot meet the needs within the total amount of investment for research and development
center set up with foreign investment

vii.

The Confirmation Letter for Foreign-Funded Enterprises in the Encouraged Category as determined on its own initiative in light of
local characteristics and uniformly examined and approved by the Ministry of Commerce in order to improve the investment environment
and simplify the approval procedures

viii.

The Confirmation Letter that should be issued by commercial departments as prescribed in other laws and regulations

ix.

Import Certificate of self-use equipment and supporting technologies, fittings and spare parts that cannot be produced by an import
country at home or the performance of which cannot meet the needs for the established foreign-funded enterprises in the Encouraged
Category and Restrictive Category B, foreign-funded research and development centers, foreign-funded enterprises of advanced technology
and export-oriented foreign-funded enterprises (hereinafter referred to as “Enterprises within the five categories” for short) for
technological reform, within the scope of production and operation originally approved and with self-possessed funds beyond the total
amount of investment

III.

The procedure of the Ministry of Commerce issuing the Confirmation Letter and Import Certificate

For the foreign-funded enterprises for which the Ministry of Commerce shall issue the Confirmation Letter (hereinafter referred to
as “enterprises above the limit”), a written application shall be transferred to the Ministry of Commerce through the people’s governments
at the provincial level.

Local commercial departments and enterprises above the limit shall provide the following materials:

(1) The request for instruction of the Confirmation Letter and Import Certificate reported by local competent departments of commerce

(2) The explanation of enterprises above the limit that file the application for the Confirmation Letter and Import Certificate

(3) The document of approval based on which an enterprise above the limit is set up, photocopies of certificate of approval and business
license, and the record of passing the joint annual inspections

(4) The photocopy of the report of asset appraisal

(5) The list of import equipment in triplicate under the seal of the competent departments of commerce at the provincial level and
enterprises above the limit

(6) Other materials as required by the Ministry of Commerce

For the enterprises within the five categories that apply for the issuing of Import Certificate for the first time, they shall submit
the audit report of the previous year or the photocopy thereof bearing the official seal of the enterprises and other documents,
and give explanations on the total amount of “self-possessed funds” (to be specific, the reserve funds, development funds, depreciations
and post-tax profits of the enterprises) beyond the total amount of investment.

Competent departments of commerce at the provincial level shall make a preliminary examination on the amount of foreign exchange,
execution term (which may not exceed the enterprise construction term in principle), list of import equipment, industrial policy
items to be applied and the total amount of “self-possessed funds” of enterprises above the limit.

The Ministry of Commerce shall review the written applications filed by competent departments of commerce at the provincial level
within 10 workdays after receiving them. For those complying with the state laws, the Ministry of Commerce shall issue the Confirmation
Letter or Import Certificate in triplicate and a sealed list of import equipment, and send copies of them to the General Administration
of Customs and local customs houses simultaneously. For those failing to comply with the state laws, the Ministry of Commerce shall
issue written opinions and explain the reasons.

Enterprises above the limit shall, before importing equipments, go through the formalities of archival filing of tax reduction and
exemption at the customs offices directly under the General Administration of Customs of the place where the enterprises are located
upon the strength of the Confirmation Letter or Import Certificate and other relevant documents.

ii.

The change procedures of the Confirmation Letter for enterprises above the limit

Where the Ministry of Commerce has issued the Confirmation Letter but the investment indeed needs to be changed in the process of
execution

Where the major items like the total amount, amount of foreign exchange and execution term need to be changed, the competent departments
of commerce at the provincial level shall make a preliminary examination on the changed items and the reasons, and file an application
of change with the Ministry of Commerce, attaching the following materials:

(1) Originals of the Confirmation Letter issued and the record of passing the joint annual inspections,

(2) Explanative materials on changed items (the comparison table shall be attached),

(3) The photocopy of the report of asset appraisal,

(4) Other materials as required by the Ministry of Commerce.

The Ministry of Commerce shall review the written applications within 5 workdays after receiving them. For those complying with the
state laws, the Ministry of Commerce shall issue changed Confirmation Letter in triplicate, and send copies to the General Administration
of Customs and local customs houses simultaneously. If the Ministry of Commerce disagrees with the change, it shall issue written
opinions and explain the reasons.

Enterprises above the limit shall go through the formalities of relevant change at the customs offices directly under the General
Administration of Customs of the place where the projects are located on the strength of the Confirmation Letter and other relevant
documents.

iii.

Principles for Examining the List of Import Equipment

In principle, the list of import equipment of a foreign-funded enterprise shall be issued together with the Confirmation Letter or
Import Certificate, and the Ministry of Commerce shall affix a special seal for the import equipment thereto. The equipment mentioned
in the list of the import equipment attached to the Confirmation Letter shall be the self-use equipment imported by the foreign-funded
enterprise within the total amount of investment, as well as the technologies, fittings and spare parts attached to such equipment
in accordance with the contract. The equipment mentioned in the list of the import equipment attached to the Import Certificate shall
be the self-use equipment as well as the technologies, fittings and spare parts attached to such equipments that cannot be produced
at home or the performance of which cannot meet the needs.

Where the import scale is large and the construction period is long, and all the import equipment can not be determined by the foreign-funded
enterprise when the Confirmation Letter is issued, the written application may be filed by the local commercial department to the
Ministry of Commerce by batches, and the Ministry of Commerce may affirm them by batches and affix a special seal for the import
equipment.

IV.

Procedures for the Local Commercial Department to Issue Confirmation Letters and Import Certificates

The competent department of commerce at the provincial level shall be responsible for issuing Confirmation Letters and Import Certificates
for the foreign-funded enterprises as approved by the local commercial department (hereinafter referred to as the “enterprises under
the limit”).

ii.

The competent department of commerce at the provincial level shall issue Confirmation Letters and Import Certificates by reference
to the procedures prescribed in this Circular. The Confirmation Letters and Import Certificates issued by the competent department
of commerce at the provincial level shall be reported to the Ministry of Commerce for archival filing within one month.

Relevant Principles for Issuing Confirmation Letters and Import Certificates

The following principles shall be followed in issuing Confirmation Letters:

Where an enterprise which does not meet the production requirement applies for a Confirmation Letter, the amount of tax exemption
shall be: the total amount of investment (the amount of the increased capital) the amount of the investment in infrastructurethe
amount for purchasing domestic equipment and otherthe fluid capital of the enterprisethe non-cash capital contribution of both
Chinese and foreign parties (except for the capital contributions by equipment).

Where the business scope of a foreign-funded enterprise covers not only the category of encouragement but also the category of permission
or the category of restriction, its application for a Confirmation Letter and the list of the import equipment attached thereto shall
only include the self-use equipment imported for the business scope in the Encouraged Category and the technologies, fittings and
spare parts attached to such equipment in light of the contract, while the import equipment under the business scope of the permitted
category or the restrictive category shall not be listed into the application or the list.

ii.

The following principles shall be followed in issuing Import Certificates:

Each locality shall issue Import Certificates for the “enterprises within the five categories” in strict accordance with the requirements
in the Circular of the former Ministry of Foreign Trade and Economic Cooperation on the Relevant Issues Concerning the Import Equipment
of Foreign-funded Enterprises (Wai Jing Mao Zi Fa [2000] No. 478) and the Circular of the General Administration of Customs on the
Relevant Taxation Policies for Further Encouraging Foreign Investment (Shu Shui [1999] No. 791).

Each local commercial department shall set up a database of “self-possessed funds”, and deduct the amount of “self-possessed funds”
correspondingly after issuing Import Certificates to the enterprises.

Where any “enterprise within the five categories” applies for issuing an Import Certificate again, the amount of tax exemption shall
not exceed the amount of “self-possessed funds” after deduction. After the Import Certificate is issued to an enterprise, the newly
added “self-possessed funds” can be included into the amount of “self-possessed funds”, and the enterprise shall provide corresponding
certificates when he files an application.

iii.

Where a foreign-funded enterprise is created by means of merger, the following principles shall be followed when a Confirmation Letter
or Import Certificate is issued thereto:

If the merged enterprise meets the production requirement, no Confirmation Letter may be issued in principle;

If the foreign investor mergers an enterprise within the territory of China by means of capital increase and newly increases its
production capacity and enlarges its production scale, the commercial department shall issue a Confirmation Letter in light of the
principles as prescribed in Paragraph 1 of Article 5 ; and

If the foreign-funded enterprise established by means of merger falls within “enterprises within the five categories”, it shall apply
for issuing an Import Certificate in accordance with the relevant provisions on the “self-possessed funds” beyond the total amount
of investment of the “enterprises within the five categories”, and the aforesaid “self-possessed funds” shall be newly added after
merger by the foreign-funded enterprise, and the foreign-funded enterprise shall provide corresponding certificates and explanations
to the commercial department.

iv.

Each commercial department at the provincial level shall strictly enforce the relevant provisions, and may not enlarge the application
scope of the clauses and items on the category of encouragement at will or illegally issue Confirmation Letters or Import Certificates,
and may not issue Confirmation Letters or Import Certificates to the enterprises that fail to conform to the requirements of environmental
protection as prescribed by the State.

The Ministry of Commerce shall strengthen its supervision over and guidance of the work on issuing Confirmation Letters to the “enterprises
under the limit”, and shall order the Confirmation Letters or Import Certificates for which the archival filing formalities have
not been handled in time or issued against the provisions to be corrected or cancelled; and shall suspend the qualifications for
issuing Confirmation Letters or Import Certificates if the circumstance is serious, and also notify the relevant customs houses in
combination with the General Administration of Customs for suspending the relevant tax exemption at the import link.

VI.

The enterprises invested by the residents in Taiwan, Hong Kong and Macao shall be governed by this Circular by analogy.

VII.

This Circular shall be implemented as of the promulgation date, and the power to interpret it shall remain with the Ministry of Commerce.
When encountering any problem in the course of implementation, please contact this Ministry (to be exact, the Department of Foreign
Investment) in a timely way.

Attachment: List of the Import Equipment of Foreign-funded Enterprises

(Seal of) the Ministry of Commerce

April 29, 2006

Annex

Annex:

List
of the Import Equipment of Foreign-funded Enterprises

Shang Zi Que Zi [200 ] Attached Form No.

(Seal of) the Company

List
of the Import Equipment for the Project

Unit: 10,000 US Dollars

Serial Number	Name	Specifications and Models	Quantity(Tai /Set)	Unit Price	Amount of Foreign Exchange to Be Used	Name of the Import Country	Comments






Sum

Date
Contact
Person
Telephone

1...373839...83 Page 38 of 83

German Laws

Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction

Act on Occupational Physicians, Safety Engineers and Other Occupational Safety Specialists

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 19 – FOREIGN CURRENCY TRANSLATION

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CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON DISTRIBUTING OPERATING INSTRUCTIONS FOR CURRENT FOREIGN EXCHANGE ACCOUNTS AND THE PURCHASE OF FOREIGN EXCHANGE BY DOMESTIC RESIDENTS

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CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

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CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7