OPINIONS OF THE MINISTRY OF EDUCATION ON RELEVANT ISSUES CONCERNING CURRENT SINO-FOREIGN COOPERATIVE EDUCATION

Opinions of the Ministry of Education on Relevant Issues concerning Current Sino-foreign Cooperative Education

Jiao Wai Zong [2006] No.5
February 7,2006

The education offices or commissions of all the provinces, autonomous regions, and municipalities directly under the Central Government,

Since the promulgation and implementation of the Regulation on Sino-foreign Cooperative Education and its detailed implementation
measures, the Sino-foreign cooperative education has been going into the path of development regularly step by step under the direction
of the state guidelines for expanding the opening up, regulating the education, administrating in accordance with the law, and promoting
the development. For the purpose of promoting the development of Sino-foreign cooperative education in a steady and healthy way,
and aiming at the existing prominent problems in the current Sino-foreign cooperative education we hereby put forward opinions specifically
as follows: :

Insisting on the principle of public welfare nature of Sino-foreign cooperative education. Education is a glorious social public
welfare undertaking with the ultimate goal of talent training. Education service is not trade in goods, and it is also different
from common service trade. We shall acquire a good understanding of the tenet and nature of Sino-foreign cooperative education, and
strictly restrain the acts of arbitrary charges and high charges in the name of Sino-foreign cooperative education, and prevent the
tendency of educational industrialization.

II.

Running schools in accordance with the law, and regulating the administration. We shall enhance political sensitivity and build up
the consciousness of educational sovereign firmly, so as to maintain national security, social stability, and normal educational
order. We shall protect the lawful rights and interests of the operators running Sino-foreign cooperative schools, Sino-foreign cooperative
educational institutions, and the teachers and students thereof according to law. During the process of Sino-foreign cooperative
education, we shall pay attention to strengthening the predominant position of Chinese educational institutions in accordance with
the law, and firmly implement the educational policies of the state.

III.

Insisting on the guidance of the policy of introduction of high quality educational resources, and strengthening capability construction.
When developing Sino-foreign cooperative education, we shall, inosculating with the demand for various talents in the economic development
of state, local, and regional and the requirements of schools for subject development, encourage cooperative education to be carried
out with overseas universities with high level and universities with comparative advantage in subject and fields which are badly
needed, weak, and vacant in China, and direct the Sino-foreign cooperative education to develop toward to the middle west areas step
by step. Chinese educational institutions shall develop Sino-foreign cooperative education in accordance with their own orientations
and aims, to prevent the phenomenon of blindly comparison, rushing into mass action regardless of objective conditions, and low-level
repetition. The universities and colleges under the key construction of the state shall pay more attention to do a good work on selecting
partners, selecting cooperation models and contents of cooperation, so as to supply the service for improving the whole level and
comprehensive strength of the schools in an overall way.

IV.

Strengthening the quality control over Sino-foreign cooperative education. At present, we shall do a good work of putting emphasis
on quality control mainly over Sino-foreign cooperative education in the field of higher education, and maintain the reputation of
Sino-foreign cooperative education, and do well the work in the sectors as follows:

Strengthening the management on enrollment and admission. The higher diploma education in a Chinese-foreign cooperative education
institution or a project shall be subordinate to the enrollment plan of universities and colleges as established by the state, and
shall be separately listed and administered according to the catalogue of enrollment for different specialities within the annual
enrollment scale of the universities and colleges, and shall meet the requirements for admission of the same batch of admission at
the same region. If the admission plan cannot be fulfilled in the same batch of admission, it shall not be shifted to the next batch.
If it is at the postgraduate level, it shall accord with the provisions and procedures of the state for enrollment and admission
of postgraduate diploma education. As to the diploma and degree education of a foreign education institution in a Sino-foreign cooperative
education institution or project, its admission criterion shall not be inferior to the admission criterion of the foreign educational
institution in its native country.

Strengthening management on the fostering process. As to the higher diploma education at or above a bachelor’s degree in a Sino-foreign
cooperative education institution or a project,, its educational and teaching plan, fostering plan, and length of schooling shall
be formulated and implemented in accordance with the relevant state provisions, and a special code of specialities shall be set up
for its bachelor’s degree. As to the diploma education at or above a bachelor’s degree of a foreign educational institution in a
Sino-foreign cooperative education institution or a project,, the educational and teaching plan, fostering plan, curriculum provision,
and contents of teaching formulated by them jointly shall not be inferior to the criteria and academic requirements of the foreign
education institution in its native country. As to implementing both Chinese higher degree education and degree education of a foreign
diploma, and issuing Chinese degree and diploma certificates and the degree and diploma certificates of a foreign educational institution
in a Sino-foreign cooperative education institution or a project, its fostering aims, fostering requirements, curriculum provision,
and contents of teaching shall meet the academic requirements of both parties. Specially for the postgraduate education courses of
a foreign educational institution in a Sino-foreign cooperative education institution or a project, all sectors during the process
of fostering shall be strict managed so as to guarantee the quality.

Strengthening planning and policy guide to subjects and specialities. We shall study and make guidance catalogue of subjects and
specialities for Sino-foreign cooperative education, so as to clarify the subjects and specialities which are encouraged, allowed,
restricted, and prohibited by the state.

Strengthening management on the issuance of certificates. As to implementing higher degree education and issuing Chinese degree and
diploma certificates in a Sino-foreign cooperative education institution or a project, it shall be implemented strictly in accordance
with the relevant state provisions. As to implementing diploma or degree education at or above a bachelor’s degree of a foreign educational
institution and issuing degree and diploma certificates of a foreign educational institution in a Sino-foreign cooperative education
institution or a project, the Chinese educational institution shall have the qualification for carrying out the degree education
and diploma granting for the corresponding level and category. The principle of truthfulness and validity shall be followed for the
degree and diploma certificates issued by the foreign educational institution, and the degree and diploma certificates shall be the
same as those issued by the educational institution in its native country, and admitted in its country.

Strengthening management on adopting the educational model of “double campus” by Sino-foreign cooperative education projects.. A
complete or main educational and teaching process for a Sino-foreign cooperative education project shall be implemented within a
Chinese educational institution. Where there is real necessity to adopt the educational model of “double campus” to run a Sino-foreign
cooperative education project, an administrative license shall be obtained in accordance with law. A Chinese educational institution
shall earnestly strengthen the introduction of foreign educational resources in the implementation of such kinds of projects, and
make evaluation seriously on the introduced courses of a foreign educational institution, especially the courses replacing those
of Chinese degree education. The introduced foreign courses and the core courses of specialities shall be more than one third of
the whole courses and the core courses of the Sino-foreign cooperative education project. The number of the core courses of specialities
by teachers from the foreign educational institution and the relevant teaching hours, shall be more than one third of all the courses
numbers and teaching hours of the Sino-foreign cooperative education project. For any teacher who is employed internationally in
the name of the foreign educational institution, his/her level shall be recognized by the foreign educational institution and the
Chinese educational institution.

VI.

Strengthening management on charges for Sino-foreign cooperative education. The operators of Sino-foreign cooperative education shall
have corresponding capital investment for establishing or running Sino-foreign cooperative educational institutions or projects.
The operators who run Sino-foreign cooperative educational institutions or projects shall evaluate the average costs of the Sino-foreign
cooperative institutions or projects for fostering a student in a careful and reasonable way, and shall, in accordance with the principle
of cost compensation, report to the relevant departments for determination of the charging items and criteria in light of the principle
of government pricing. The level of the local economic and social development and the endurance of those being educated shall also
be taken into full consideration in the charging criteria, and the proper balance between public education and private education
shall also be kept properly. Charges for activities of students exchange conducted only in the form of mutual recognition of credit
shall be collected in the light of the normal charging items and criteria of Chinese higher education as the students are studying
at domestic schools. Before the state promulgates a uniform policy, each locality shall try to do well in managing the charges of
Sino-foreign cooperative education in light of the current administration measures.

The Sino-foreign cooperative education is a component part of the educational undertaking of our country. The administrative department
of education at each locality shall earnestly study the new circumstances and new problems occurred in the development of Sino-foreign
cooperative education, enrich and perfect the environment of legal and policy constantly, strengthen the overall planning, comprehensive
coordination, and micro-management of Sino-foreign cooperative education of its own administrative region, and ensure the Sino-foreign
cooperative education so as to provide the service for promotion of the development and reform of education of our country, and enhance
international competitiveness of education of our country.

Ministry of Education
2006-02-07

NOTICE OF CHINA SECURITIES DEPOSITORY AND CLEARING CORPORATION LIMITED ON THE RELEVANT ISSUES ABOUT THE OPENING OF A-SHARE SECURITIES ACCOUNT BY FOREIGN STRATEGIC INVESTORS

China Securities Depository and Clearing Corporation Limited

Notice of China Securities Depository and Clearing Corporation Limited on the Relevant Issues about the Opening of A-share Securities
Account by Foreign Strategic Investors

For carrying into effect the relevant provisions of the Measures for the Administration of Strategic Investment in Listed Companies
by Foreign Investors as jointly promulgated by the Ministry of Commerce, China Securities Regulatory Commission (CSRC), State Administration
of Taxation, State Administration for Industry and Commerce and State Administration of Foreign Exchange, regarding the relevant
issues on the acquisition of A-shares through strategic investment in listed companies, the relevant formalities for opening A-share
securities accounts (hereinafter refers to as the securities accounts) and the registration of stocks by an investor from a foreign
country or from the Hong Kong SAR, Macao SAR or Taiwan Region ( hereinafter refers to as an investor), this Notice is hereby announced
as follows:

An investor who legally holds A-share stock of a listed company shall apply directly to either Shanghai branch or Shenzhen branch
of the China Securities Depository and Clearing Corporation Limited for opening a securities account, for which the materials shall
be submitted as follows:

A certification document of effective business registration of an investor and a photocopy thereof or other document that could certify
the establishment of relevant institution and has the same legal force as the document of business registration and a photocopy
thereof ;

A power of attorney as granted to the relevant handler by the board of directors or any director thereof, major shareholder or any
other competent person the document that can certify that the grantor has a right of authorization, as well as a photocopy of effective
identity certification of the grantor;

An effective identity certification of the relevant handler and a photocopy thereof;

The relevant approval documents as produced by the Ministry of Commerce and the China Securities Regulatory Commission on approving
the strategic investment made by the relevant investor in a listed company and the relevant photocopies thereof or a certification
document on shareholding as produced by the relevant listed company;

An Application Form for the Registration of Securities Account; and

A Commitment on Self-disciplinary Administration of Securities Account (see the appendix for the format).

If the investor who holds the shares of a listed company before the listed company’s initial public offering (IPO) is a natural person,
except his effective identity certification as well as a photocopy thereof, those materials prescribed in items (4) through (6) in
paragraph 1 of this Article shall be provided.

The foregoing material is provided in any foreign language, a Chinese version is required.

II.

The approval documents and shareholding certification as mentioned in the preceding paragraph shall include the situations as follows:

Where the investment is made by means of directional offering conducted by a listed company, the relevant approval documents shall
be provided by the relevant investor, which is produced by the Ministry of Commerce on approving the strategic investment made by
the relevant investor in the listed company and the verification document as produced by the China Securities Regulatory Commission
on directional offering;

Where investment is made by means of agreement-based transfer, the approval documents produced by the Ministry of Commerce shall be
provided by investor. If any acquisition of a listed company is involved, the verification approval as produced by the China Securities
Regulatory Commission shall be provided as well;

As to the investor that holds shares before the relevant listed company makes its initial public offering, the relevant certification
issued by the listed company on shareholding before the said IPO shall be provided; or

Other circumstances as prescribed by the law or regulation of the state or by the provision of the China Securities Regulatory Commission
.

III.

Where the investor opens a securities account, the China Securities Depository and Clearing Corporation Limited may according to
the certification documents certifying that the investor legally holds A-shares stock of a listed company and in accordance with
the relevant operating rules for stock registration, handle the formalities for stock registration and shall, according to the relevant
provisions, handle the formalities for sale prohibition on the A-shares stock as held by the investor,.

IV.

Upon the expiration of sale prohibition term on the A-shares stock held by an investor, the investor may apply for releasing from
the sale prohibition on shares through the relevant listed company and, upon the relevant verification conducted by the Stock Exchange,
, the China Securities Depository and Clearing Corporation Limited may handle the formalities for releasing from the sale prohibition
on A-shares stock in accordance with the documents as confirmed by the Stock Exchange. .

Before the expiration of sale prohibition term on the A-shares stock , the investor requires to transfer the shares due to such special
reasons as bankruptcy, liquidation and pledge, the relevant approval documents as produced by such competent authorities as the Ministry
of Commerce shall be provided and handled the relevant formalities for transfer and registration in accordance with the relevant
provisions on shares transfer..

VI.

The investor who has opened a securities account shall not open any securities account any more unless it is otherwise prescribed
by any law or regulation of the state or any provision of the China Securities Regulatory Commission .

VII.

The matter that hasn’t been prescribed in this Notice shall be governed by the relevant provisions of the China Securities Depository
& Clearing Corporation Limited on the administration of securities accounts and stock registration.

VIII.

The term “investors” as mentioned in this Notice shall not include the qualified foreign institutional investor. The application
of the qualified foreign institutional investor for opening any securities account shall be handled in accordance with the relevant
provisions on qualified foreign institutional investors.

IX.

This Notice shall enter into effect as of the day of promulgation.

China Securities Depository and Clearing Corporation Limited

February 14, 2006 Appendix:Commitment on Self-disciplinary Administration of Securities Account

Branches of China Securities Depository and Clearing Corporation Limited:

The investor commits that: the securities account as opened in your Company shall only be used to apply to the A-shares stock of listed
companies that have been lawfully obtained as well as the sale of aforesaid shares upon the expiration of sale prohibition term.
Unless it’s otherwise prescribed by the law or regulation, no other securities may be transacted in the secondary market.

(Seal/Signature)

(Date)

China Securities Depository and Clearing Corporation Limited
2006-02-14

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 2 – LONG-TERM EQUITY INVESTMENTS

the Ministry of Finance

Accounting Standards for Enterprises No. 2 – Long-term Equity Investments

Cai Kuai [2006] No.3

February 15, 2006

Chapter I General Provisions

Article 1

In order to regulate the recognition and measurement of long-term equity investments, and disclosure of relevant information, these
Standards are formulated in the light of the Accounting Standards for Enterprises – Basic Standards.

Article 2

Other relevant accounting standards shall apply to such items as follows:

(1)

The Accounting Standards for Enterprises No. 19 – Foreign Currency Translation shall apply to the translation of long term equity
investments in foreign currencies; and(2The Accounting Standards for Enterprises No. 22 – Recognition and measurement of Financial
Instruments shall apply to the long term investments which haven’t been dealt with by the present standards..

Chapter II Initial Measurement

Article 3

The initial cost of the long-term equity investment formed in the merger of an enterprise shall be ascertained in accordance with
the following provisions:

(1)

For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes payment in cash,
transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value of the owner’s equity
of the merged enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term
equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard
the share of the book value of the owner’s equity of the merged enterprise as the initial cost of the long-term equity investment.
The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of
the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital
reserve is insufficient to dilute, the retained earnings shall be adjusted.

(2)

For the merger under different control, the merging party shall, on the date of merger, regard the merger costs ascertained in accordance
with the Accounting Standards for Enterprises No. 20 – Merger of Enterprises as the initial cost of the long-term equity investment.

Article 4

Besides the long-term equity investments formed by the merger of enterprises, the initial cost of a long-term equity investment obtained
by other means shall be ascertained in accordance with the provisions as follows:

(1)

The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually
paid. The initial cost consists of the expenses directly relevant to the obtainment of the long-term equity investment, taxes and
other necessary expenses.

(2)

The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the
equity securities issued.

(3)

The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement
except the unfair value stipulated in the contract or agreement.

(4)

The initial cost of a long-term investment obtained by the exchange of non-monetary assets shall be ascertained in accordance with
the Accounting Standards for Enterprises No. 7 – Exchange of Non-monetary Assets.

(5)

The initial cost of a long-term equity investment obtained by recombination of liabilities shall be ascertained in accordance with
Accounting Standards for Enterprises No. 12 – Debt Restructuring.

Chapter III Subsequent Measurement

Article 5

The following long-term equity investments shall, in accordance with Article 7 of these Standards, be measured by employing the cost
method:

(1)

A long-term equity investment of an investing enterprise that is able to control the invested enterprise. The term “control” refers
to the power to determine the financial and operating polices of an enterprise and obtain benefits from its operating activities
of the enterprise. If the investing enterprise can control an invested entity, the invested entity as its subsidiary company shall
be included in the consolidation range of the consolidated financial statements. For a long term equity investment on the subsidiary
company of an investing enterprise, the investing enterprise shall accounted by employing the cost method as prescribed by these
Standards, and shall make an adjustment by employing the equity method when it works out consolidated financial statements.

(2)

A long-term equity investmentofinvestment of the investing enterprise that does not do joint control or does not have significant
influences on the invested entity,andentity, and has no offer in the active market and its fair value cannot be reliably measured.
The term “joint control” refers to the control over an economic activity in accordance with the contracts and agreements, which does
not exist unless the investing parties of the economic activity with one an assent on sharing the control power over the relevant
important financial and operating decisions. Where an investing enterprise and other parties do joint control over an invested entity,
the invested entity shall be their joint enterprise. The term “significant influences” refers to the power to participate in making
decisions on the financial and operating policies of an enterprise, but not to control or do joint control together with other parties
over the formulation of these policies. Where an investing enterprise is able to have significant influences on an invested entity,
the invested entity shall be its associated entity.

Article 6

When ascertaining whether or not it is able to control or have significant influences on an invested entity, an enterprise shall take
into consideration the invested enterprises’ current convertible corporate bonds and current executable warrants held by the investing
enterprise and other parties, as well as other potential factors concerning the voting rights.

Article 7

The price of a long-term equity investment measured by employing the cost method shall be included at its initial investment cost.
If there are additional investments or disinvestments, the cost of the long-term equity investment shall be adjusted. The dividends
or profits declared to distribute by the invested entity shall be recognized as the current investment income. The investment income
recognized by the investing enterprise shall be limited to the amount received from the accumulative net profits that arise after
the invested entity has accepted the investment. Where the amount of profits or cash dividends obtained by the investing entity exceeds
the aforesaid amount, it shall be regarded as recovery of initial investment cost.

Article 8

A long-term equity investment of the investing enterprise that does joint control or significant influences over the invested entity
shall, in accordance with Articles 9 through 13 of these Standards, be measured by employing the equity method.

Article 9

If the initial cost of a long-term equity investment is more than the investing enterprise’ attributable share of the fair value of
the invested entity’s identifiable net assets for the investment, the initial cost of the long-term equity investment may not be
adjusted. If the initial cost of a long-term equity investment is less than the investing enterprise’ attributable share of the fair
value of the invested entity’s identifiable net assets for the investment, the difference shall beincludedbe included in the current
profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously. The fair value of the identifiable
net assets of the invested entity shall be ascertained by referring to the relevant provisions of the Accounting Standards for Enterprises
No. 20 – Merger of Enterprises.

Article 10

After an investing enterprise obtains a long-term equity investment, it shall, in accordance with the attributable share of the net
profits or losses of the invested entity, recognize the investment profits or losses and adjust the book value of the long-term equity
investment. The investing enterprise shall, in the light of the profits or cash dividends declared to distribute by the invested
entity, calculate the proportion it shall obtain, and shall reduce the book value of the long-term equity investment correspondingly.

Article 11

An investing enterprise shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment
and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero,
unless the investing enterprise has the obligation to undertake extra losses. If the invested entity realizes any net profits later,
the investing enterprise shall, after the amount of its attributable share of profits offsets against its attributable share of the
un-recognized losses, resume to recognize its attributable share of profits.

Article 12

The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains
the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits
of the invested entity. If the accounting policies and accounting periods adopted by the invested entity are different from those
adopted by the investing enterprise, an adjustment shall be made to the financial statements of the invested entity in accordance
with the accounting policies and accounting periods of the investing enterprise and recognize the investment profits or losses.

Article 13

Where any change is made to the owner’s equity other than the net profits and losses of the invested entity, the book value of the
long-term equity investment shall be adjusted and be included in the owner’s equity.

Article 14

For a long-term equity investment for which there is no offer in the active market and of which the fair value cannot be reliably
measured, if the investing enterprise has not joint control or significant influence over the invested entity any more as a result
of the decrease of investment or other reasons, the cost method shall be employed in the measurement, and the book value of the long-term
equity investment employing the equity method shall be regarded as the initial investment cost to be measured by employing the cost
method. If an enterprise is able to do joint control or significant influence, which does not constitute control, over the invested
entity as a result of additional investment or other reasons, the equity method shall be employed in the measurement, and the book
value of the long-term equity investment measured by employing the cost method or the book value of investment ascertained in accordance
with the Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments shall be regarded as
initial investment cost measured by employing the cost method.

Article 15

The impairment of a long-term equity investment which is measured by employing the cost method as prescribed in these Standards, for
which there is no offer in the active market and of which the fair value cannot be reliably measured, its impairment shall be disposed
in accordance with the Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments. The impairment
of any other long-term equity investment measured in accordance with these Standards shall be disposed in accordance with the Accounting
Standards for Enterprises No. 8 – Asset Impairment.

Article 16

When disposing of a long-term equity investment, the difference between its book value and the actual purchase price shall be included
in the current profits and losses. If any change other than the net profits and losses of the invested entity occurs and is included
in the owner’s equity, the portion previously included in the owner’s equity shall, when disposing of a long-term equity investment
measured by employing the equity method, be transferred to the current profits and losses according to a certain proportion.

Chapter IV Disclosure

Article 17

An investing enterprise shall, in the notes, disclose the information concerning long-term equity investments as follows:

(1)

The name list of its subsidiary companies, joint ventures and associated enterprises, consisting of the names, registration places,
and business nature, proportions of shares and proportions of voting rights of the investing enterprises;

(2)

The main financial information of the joint ventures and associated enterprises, consisting of the aggregate amounts of assets, liabilities,
incomes, expenses, etc.;

(3)

The information about the restriction of the invested entity’ s capacity of transferring funds to the investing entity;

(4)

The current period and accumulative amounts of unrecognized investment losses; and

(5)

The contingent liabilities or the investments in the subsidiary companies, joint ventures and associated enterprises.

the Ministry of Finance
2006-02-15

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 38 – INITIAL IMPLEMENTATION OF ACCOUNTING STANDARDS FOR ENTERPRISES

Accounting Standards for Enterprises No. 38 – Initial Implementation of Accounting Standards for Enterprises

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

Article 1

According to the Accounting Standards for Enterprises – Basic Standards, this Standards is formulated in order to regulate the recognition
and measurement of accounting elements, as well as the presentation of financial statements governed by the Initial Implementation
of Accounting Standards for Enterprises, when the Accounting Standards for Enterprises is initially carried out.

Article 2

The phrase “initially implementing accounting standards for enterprises” means that the system of accounting standards for enterprises
is first carried out, consisting of the basic standards, specific standards and guidelines on the application of accounting standards.

Article 3

The Accounting Standards for Enterprises No. 28 – Changes in Accounting Policies and Estimates? and Corrections of Errors shall apply
to the alteration of accounting policies occurring after initially carrying out accounting standards for enterprises.

Chapter II Recognition and Measurement

Article 4

On the date of initial implementation, according to the Accounting Standards for Enterprises, an enterprise shall make classification,
recognition and measurement on all assets, liabilities and the owner’s equities again, as well as shall make a balance sheet for
the initial period.

As making a balance sheet for the initial period, the enterprise shall make no retroactive modulation to any item except for those
to which retroactive modulations shall be made according to Articles 5 through 19 of this Standards.

Article 5

A long-term equity investment on the date of initial implementation shall be respectively conducted according to the circumstances
as follows:

(1)

In accordance with the Accounting Standards for Enterprises No. 20 – Business Combination, if a long-term equity investment is generated
from a business combination under common control, the unamortized equity investment difference shall be entirely sterilized, the
retained earnings shall be modulated, and the book balance of the long-term equity investment after the sterilization of the equity
investment difference shall be considered as the cost recognition on the date of initial implementation.

(2)

For any other long-term equity investment calculated by equity method except that mentioned in Item (1), in case there is any equity
investment difference on the credit side, it shall sterilize the credit balance, the retained earnings shall be modulated, and the
book balance of the long-term equity investment after the sterilization on the credit side shall be considered as the cost recognition
on the date of initial implementation. in case there is any equity investment difference on the debit side, the book value of the
long-term equity investment shall be considered as the cost recognition on the date of initial implementation.

Article 6

In case any conclusive evidence indicates that an investment real estate may be measured at fair value, it may be measured at fair
value on the date of initial implementation and the retained earnings shall be modulated based on the difference between its book
value and its fair value.

Article 7

On the date of initial implementation, for the discard expenses which meet the conditions for the recognition of expected liabilities
but have not been charged to the asset costs prior to this date, the asset costs shall be increased and the related liabilities shall
be recognized. Simultaneously, the retained earnings shall be modulated based on the depreciation (depletion) drawn complementarily.

Article 8

As to a plan on terminating the labor relationship with an employee which is already existing on the date of initial implementation,
in case it meets the conditions described in the Accounting Standards for Enterprises No. 9 – Wages and Salaries of Employees for
the recognition of expected liabilities, the liability resulting from the compensation made for the cancellation of the labor relationship
with the employee shall be recognized as well as the retained earnings shall be modulated.

Article 9

As to an investment formed in the operation of the enterprise annuities fund, it shall be measured at a fair value on the date of
initial implementation and the retained earnings shall be modulated based on the difference between its book amount and the fair
value.

Article 10

As to a share-based payment of which the vesting date is on or after the date of initial implementation, upon the provisions of the
Accounting Standards for Enterprises No. 11 – Share-based Payment, the retained earnings shall, in accordance with the fair value
of the equity instrument, or service provided by any other party or liability assumed by any other party which is calculated and
determined based on the equity instrument, be modulated at the amount of cost incurred during the vesting period before the date
of initial implementation, and the owner’s equities or liabilities shall be increased accordingly.

Any retroactive modulation may be not made to any share-based payment made for any exercisable right before the date of initial implementation.

Article 11

On the date of initial implementation, according to the Accounting Standards for Enterprises No. 13 – Contingencies, an enterprise
shall recognize those restructuring obligations meeting the conditions for the recognition of expected liabilities as liabilities,
and shall modulate the retained earnings.

Article 12

On the date of initial implementation, in accordance with the provisions of the Accounting Standards for Enterprises No. 18 – Income
Tax, an enterprise shall make a retroactive modulation to the effect of the temporary difference between the carrying amount of an
asset or liability and its tax base on income tax, and shall modulate the retained earnings based on the affected amount.

Article 13

Other than the items as follows, any retroactive modulation may not be made to the business combinations occurring before the date
of initial implementation:

(1)

As to a business combination under common control as prescribed in the Accounting Standards for Enterprises No. 20 – Business Combination,
the amortized value of the originally recognized business reputation shall be entirely sterilized and the retained earnings shall
be modulated.

As to a business combination not under common control as described in this Standards, the amortized value of the business reputation
on the date of initial implementation shall be recognized as cost, and it shall not be amortized any more.

(2)

As to the business combination occurring before the date of initial implementation, in case it is stipulated in the combination contract
or agreement that the combination cost should be modulated in accordance with the occurrence of future events, and the future events
expected on the date of initial implementation are likely to occur and their effects on the combination cost can be measured reliably,
the carrying amount of the already recognized business reputation shall be modulated based on the affected amount.

(3)

According to the Accounting Standards for Enterprises No. 8 – Asset Impairment, an enterprise shall have an impairment test for the
business reputation on the date of initial implementation, if impaired, it shall be recognized with the amount after the impairment
provision is made as well as the retained earnings shall be modulated.

Article 14

On the date of initial implementation, an enterprise shall divide the financial assets (excluding the investments under the Accounting
Standards for Enterprises No. 2 – Long-term Equity Investments) into financial assets, held-to-maturity investments, loans, receivables
and financial assets available for sale measured at their fair value and of which the alterations charged to the profits and losses
in the current period.

(1)

As to those classified as financial assets measured at their fair value and of which the alterations charged to the profits and losses
in the current period or available for sale, they shall be measured at their fair value on the initial date of implementation, as
well as the retained earnings shall be modulated based on the difference between the carrying amount and the fair value.

(2)

As to those classified as held-to-maturity investments, loans and receivables, they shall, as of the date of initial implementation,
be measured at their amortized cost in the subsequent accounting periods employing the actual interest rate method.

Article 15

As to a financial liability which on the date of first implementation is designated to be measured at its fair value and of which
the alterations are charged to the profits and losses in the current period, it shall be measured at its fair value on the date of
initial implementation as well as the retained earnings shall be modulated based on its carrying amount and fair value.

Article 16

As to a derivative financial instrument (excluding hedging instruments) which has not been recognized in the balance sheet or which
has been measured at its cost, it shall be measured at its fair value on the date of initial implementation and the retained earnings
shall be modulated.

Article 17

As to an embedded financial instrument which shall be separated from the mixed instrument according to the Accounting Standards for
Enterprises No. 22 – Recognition and Measurement of Financial Instruments, on the date of initial implementation, it shall be separated
from the mixed instrument and shall be conducted respectively, however, unless it is difficult to make a reasonable determination
on the fair value of the embedded derivative financial instrument.

As to a non-derivative financial instrument with liability and equity components which is issued by an enterprise, on the date of
initial implementation, the liability component shall be separated from equity component according to the Accounting Standards for
Enterprises No. 37 – Presentation of Financial Instruments, unless it is difficult to make a reasonable determination on the fair
value of the liability component.

Article 18

On the date of initial implementation, as to the hedges which do not meet the conditions for employing the hedge accounting methods
described in the Accounting Standards for Enterprises No. 24 – Hedging, the implementation of the original hedge accounting methods
shall be brought to an end and shall be conducted according to the Accounting Standards for Enterprises No. 24 – Hedging.

Article 19

On the date of initial implementation, a cession enterprise of reinsurance businesses shall recognize the related provisions which
should be allocated back to the reinsurance acceptors as assets according to the Accounting Standards for Enterprises No. 26 – Reinsurance
Contracts as well as modulate the carrying amount of each provision.

Chapter III Presentation

Article 20

During the period of preparation of the first annual financial statements after the date of initial implementation (referred to as
the first annual financial statements hereinafter)according to the Accounting Standards for Enterprises, an enterprise shall make
a balance sheet, profit statement, cash flow statement, statement on alternations of the owner’s equities and the notes in the light
of the Accounting Standards for Enterprises No. 30 – Presentation of Financial Statements and the Accounting Standards for Enterprises
No. 31 – Cash Flow Statements.

As to the enterprise which provides consolidated financial statements to outsiders, it shall be governed by the provisions in the
Accounting Standards for Enterprises No. 33 – Consolidated Financial Statements.

As to the enterprise which provides interim financial reports during the period covered by the first annual financial statements,
it shall be governed by the provisions in the Accounting Standards for Enterprises No. 32 – Interim Financial Reports.

An enterprise shall throw daylight on the alternations in the amount of the items of the financial statements upon initial implementation
of the Accounting Standards for Enterprises in its notes.

Article 21

The first annual financial statements shall at least consist of comparative information of the previous year presented according
to the Accounting Standards for Enterprises. In case the presentation of the items of financial statements alters, the comparative
figures of the previous year shall be modulated as required by the Accounting Standards for Enterprises concerning the presentation,
unless it is impractical.

As to a subsidiary company which was not included into the scope of consolidation, but should have been included into therein according
to the Accounting Standards for Enterprises No. 33 – Consolidated Financial Statements, the enterprise shall list it under the scope
of consolidation for the comparative consolidated financial statements of the previous year. As to a subsidiary company which was
included into the scope of consolidation, but should have not been included into therein according to this Standards, the enterprise
shall not list the subsidiary company under the scope of consolidation for the comparative consolidated financial statements of the
previous year. The minority shareholders’ interests presented in the comparative financial statements of the previous year shall
be listed under the category of the owner’s equities according to these Standards.

As to an enterprise that shall list the earnings per share, it shall calculate and list the earnings per share of the previous year
in the comparative financial statements according to the Accounting Standards for Enterprises No. 34 – Earnings Per Share.

As to an enterprise that shall publish the segment information, it shall publish the segment information of the previous year in the
comparative financial statements according to the Accounting Standards for Enterprises No. 35 – Segment Reports.

The Ministry of Finance
2006-02-15

REPLY OF STATE ADMINISTRATION OF TAXATION ON APPLICABLE TAX RATE OF REFUND FOR ALL KINDS OF EGG POWDER EXPORTED BY THE SUN FOOD (TIANJIN) CO., LTD

State Administration of Taxation

Reply of State Administration of Taxation on Applicable Tax Rate of Refund for All Kinds of Egg Powder Exported by the Sun Food (Tianjin)
Co., Ltd

Guo Shui Han [2005] No. 1175

Tianjin Municipality State Tax Bureau:

We have received the Request of the Sun Food (Tianjin) Co., Ltd for Applicable Tax Refund Rates for Various Kinds of Egg Powder (Jin
Guo Shui Jin [2005] No.23) submitted by your Bureau and hereby replied as follows after study:

Considering the value-added tax shall, judging from the process technique, be levied on whole egg powder, albumen powder and yolk
powder by 17%, the extended code may, without the change of the current customs classification, be adopted to resolve the problems
concerning tax refund applicable to various egg powder, namely, extending the commodity code 04089100 “other dry peeled egg” to 040891001
“other dry peeled egg” with its taxation rate 13% and tax refund rate 5%; 040891002 “egg powder (whole egg powder, dried egg white
and dried yolk powder)”, with its taxation rate 17% and tax refund rate 13%.

The local tax authorities of all regions are required to log on the server program of Import and Export Tax Department of the State
Administration on Taxation to download new important and export rebates program and install it in import and export rebates verification
system for use.

State Administration of Taxation

December 13, 2005

State Administration of Taxation
2006-02-20

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON AMENDING THE AUDIT LAW OF THE PEOPLE’S REPUBLIC OF CHINA

Standing Committee of the National People’s Congress

Order of the President of the People’s Republic of China

No. 48

The Decision of the Standing Committee of the National People’s Congress on Amending the Audit Law of the People’s Republic of China,
which was adopted at the 20th meeting of the Standing Committee of the 10th National People’s Congress of the People’s Republic of
China on February 28, 2006, is hereby promulgated and shall come into force as of June 1, 2006.

President of the People’s Republic of China, Hu Jintao

February 28, 2006

Decision of the Standing Committee of the National People’s Congress on Amending the Audit Law of the People’s Republic of China

(Adopted at the 20th meeting of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on
February 28, 2006)

It is decided at the 20th meeting of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China
to amend the Audit Law of the People’s Republic of China as follows:

Article 1 shall be amended as: “This Law is formulated in accordance with the Constitution for the purpose of strengthening the
audit supervision of the State, maintaining the fiscal and economic order of the State, enhancing the efficiency in using fiscal
capital, promoting the building of a clean government and ensuring the sound development of national economy and society.”

A new paragraph shall be added to Article 3 as Paragraph 2: “An auditing organ shall carry out audit evaluation according to the
laws and regulations on fiscal revenues and expenditures and financial revenues and expenditures as well as other relevant provisions
of the State, and shall make an audit decision within the scope of its statutory authorities.”

Article 4 shall be amended as: “The State Council and the local people’s government at or above the county level shall annually present
to the standing committee of the people’s congress at the corresponding level with an audit work report of the auditing organ on
budget implementation and other fiscal revenues and expenditures. An audit work report shall give emphasis to the audit of budget
implementation. When necessary, the standing committee of the people’s congress may make a resolution on the audit work report.

“The State Council and the local people’s government at or above the county level shall report the conditions on the correction circumstance
of the problems pointed out in the audit work report and the handling results to the standing committee of the people’s congress
at the same level.”

Article 10 shall be amended as: “An auditing organ may, according to the requirements for the work and upon approval of the people’s
government at the same level, establish dispatched offices within its audit jurisdiction.

“The dispatched offices shall carry out the audit work according to law based on the strength of the authorization by the auditing
organ.”

A new paragraph shall be added to Article 15 as Paragraph 4: “For the appointment and dismissal of the person in-charge of the local
auditing organ at any level, it is necessary to seek the opinions of the auditing organ at the next higher level in advance.”

Article 16 shall be amended as: “The auditing organ shall exercise audit supervision over the budget implementation, final settlement
of accounts as well as other fiscal revenues and expenditures of all the other departments (including subordinate organs) at the
corresponding level and the governments at lower levels.”

Article 17 shall be amended as: “The National Audit Office shall, under the leadership of the Premier of the State Council, exercise
audit supervision over the implementation of central budget and other fiscal revenues and expenditures, and submit reports on audit
results to the Premier of the State Council.

“The local auditing organ at any level shall, under the respective leadership of the governor of the province, chairmen of the autonomous
region, mayor, prefect, head of the county and head of the district as well as the leadership of the auditing organ at the next higher
level, exercise audit supervision over the budget implementation and other fiscal revenues and expenditures of the corresponding
level, and submit reports on audit results to the people’s government at the corresponding level and the auditing organ at the next
higher level.”

Article 19 shall be amended as: “The auditing organ shall exercise audit supervision over the financial revenues and expenditures
to the public institutions and organizations of the State and other public institutions and organizations that use fiscal capital.”

Article 21 shall be deleted.

10.

Article 22 shall be changed into Article 21 and amended as: “The audit supervision over the enterprises and financial institutions
in which the State-owned capital play a controlling or leading role shall be prescribed by the State Council.”

11.

Article 23 shall be changed into Article 22 and amended as: “The auditing organ shall exercise audit supervision over the budget
implementation and final settlement of accounts relating to the construction projects that are invested or mainly invested by the
government.”

12.

Article 24 shall be changed into Article 23 and amended as: “An auditing organ shall exercise audit supervision over the financial
revenues and expenditures of the social security funds, funds from public donations and other relevant funds and capital managed
by the government department or by any other entity commissioned by government “

13.

A new article shall be added as Article 25 : “An auditing organ shall, according to the relevant provision of the State, exercise
audit supervision over the main principals of state organs and other entities belonging to the audit supervision object of the auditing
organ according to law for their fulfillment of economic liabilities of fiscal revenues and expenditures, financial revenues and
expenditures and other economic activities for their respective regions, departments or entities during the course of holding posts.”

14.

Article 29 shall be amended as: “The entities subject to audit supervision object of the auditing organ according to law shall establish
and improve their internal auditing systems in accordance with the relevant provisions of the State, and their internal auditing
work shall be subject to the professional guidance and supervision of the auditing organ.”

15.

Article 30 shall be amended as: “If an entity under audit by a social audit institution is an object of audit supervision of the
auditing organ according to law, the auditing organ shall be enpost_titled to check the relevant audit report as issued by the aforesaid
social audit institution in the light of the provisions of the State Council.”

16.

Article 31 shall be amended as: “The auditing organ shall be enpost_titled to require an entity under audit to submit, in accordance with
the provisions of the auditing organ, the budget or plan on financial revenues and expenditures, budget implementation, final settlement
of accounts, financial accounting reports, electronic data on fiscal or financial revenues and expenditures stored and disposed
by computers and necessary computer technical documents, the conditions about the account opening at the financial institution, the
audit report issued by the social audit institution as well as other materials about fiscal or financial revenues and expenditures.
And the entity under audit shall not refuse or delay the submission or give a false report.

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

17.

Article 32 shall be amended as: “The auditing organ shall, during the course of audit, be enpost_titled to examine accounting vouchers,
accounting books, financial accounting reports, the electronic data system of fiscal or financial revenues and expenditures operated
and managed by computers as well as other materials and assets related to fiscal or financial revenues and expenditures. And the
entity under audit shall not refuse to submit them.”

18.

A new paragraph shall be added to Article 33 as Paragraph 2: “The auditing organ shall be enpost_titled to inquiry the account of an entity
under audit at the financial institution upon approval of the person in-charge of the auditing organ of the people’s government at
or above the county level.”

And a new paragraph shall be added as Paragraph 3: “If the auditing organ can prove that an entity under audit deposits public money
in the name of individuals, it shall be enpost_titled to inquire about the deposits of the entity under audit in the name of individuals
at the financial institution upon approval of the person in-charge of the auditing organ of the people’s government at or above the
county level.”

19.

Paragraph 1 of Article 34 shall be amended as: “When an auditing organ carries out an audit, the entity under audit shall not transfer,
conceal, alter or destroy its accounting vouchers, accounting books, financial accounting reports and other materials about fiscal
or financial revenues and expenditures, nor may it transfer or conceal the assets it obtained in violation of the provisions of the
State.”

A new paragraph shall be added as Paragraph 2: “Where an entity under audit has the action to violates the preceding Paragraph, the
auditing organ shall be enpost_titled to deter it, and when necessary and upon approval of the person in-charge of the auditing organ
of the people’s government at or above the county level, the auditing organ may have the right to seal up the relevant materials
and the assets obtained in violation of the provisions of the State. If the auditing organ needs to freeze the relevant deposits
at the financial institution, it shall file an application to the people’s court.”

Paragraph 2 shall be changed into two paragraphs as Paragraphs 3 and 4 and be amended as: “Where an entity under audit is carrying
out any act relating to fiscal or financial revenues and expenditures in violation of the provisions of the State, the auditing
organ shall be enpost_titled to deter it. If the determent fails, the auditing organ shall, upon approval of the person-in-charge of the
auditing organ of the people’s government at or above the county level, notify the fiscal department and the relevant competent authorities
to suspend the allotment of money directly related to the act of fiscal or financial revenues and expenditures in violation of the
provisions of the State; if the aforesaid money has been allotted, the use thereof shall be suspended.

“The measures adopted by auditing organ as prescribed by the preceding two paragraphs shall not affect the lawful business operations
or production and management activities of the entity under audit.”

20.

A new article shall be added as Article 37 : “The auditing organ may, when performing the duty of audit supervision, request the administrative
department of public security, supervision, public finance, taxation, customs, price or industry and commerce to offer assistance.”

21.

Article 37 shall be changed into Article 38 , and Paragraph 1 shall be amended as: “The auditing organ shall form an audit team in
light of the audit matters as determined in the plan on the audit, and shall, within 3 days before the audit implementation, serve
an audit notice to the entity under audit. In the case of any special circumstance, the auditing organ may, upon approval of the
people’s government at the same level, directly carry out the audit with the audit notice.”

A new paragraph shall be added as Paragraph 3: “The auditing organ shall enhance the efficiency of audit work.”

22.

Article 38 shall be changed into Article 39 , and Paragraph 1 shall be amended as: “The auditors shall carry out their audit and
obtain the prove materials through the way of examining accounting vouchers, accounting books and financial accounting reports, consulting
the documents and materials about audit matters, inspecting the cash, physical objects and securities and making investigations
to the relevant entities or individuals.”

23.

Article 39 shall be changed into Article 40 and be amended as: “An audit team shall, after carrying out the audit of matters, submit
an audit report to the auditing organ. However, the audit team shall, prior to the submission of the audit report to the auditing
organ, solicit the opinions of the entity under audit. The entity under audit shall, within ten days upon receipt of the audit report
of the audit team, submit its written opinions to the audit team. The audit team shall submit the aforesaid written opinions together
with the audit report to the auditing organ.”

24.

Article 40 shall be changed into Article 41 and be amended as: “The auditing organ shall deliberate the audit report submitted by
the audit team according to the procedures as set down by the National Audit Office, and present an audit report of its own after
concurrently studying the opinions of the entity under audit about the audit report delivered by the audit team. It shall, within
the scope of its statutory authorities, make an audit decision or put forward the opinions for disposition and punishment to the
competent authorities in case the disposition or punishment should be imposed according to law on an act of fiscal or financial revenues
and expenditures in violation of the provisions of the State.

“The auditing organ shall serve the audit report and audit decision of its own to the entity under audit and the relevant competent
organ or entity. The audit decision shall enter into force as of the date of service.”

25.

A new article shall be added as Article 42 : “If the auditing organ at the higher level considers that an audit decision made by an
auditing organ at the lower level has violated the relevant provisions of the State, it may order the auditing organ at the lower
level to alter or cancel the aforesaid decision, and may directly make a decision on alteration or cancellation when necessary.”

26.

Article 41 shall be changed into Article 43 and be amended as: “If an entity under audit violates any provisions in this Law by
refusing or delaying to provide the materials about audit matters, or providing untrue or incomplete materials, or refusing or impeding
the inspection, the auditing organ may order it to make corrections, and may circulate a notice of criticism and give a warning.
If the entity under audit refuses to make corrections, it shall be subject to liabilities according to law.”

27.

Articles 42 and 43 shall be incorporated into one article as Article 44 and be amended as: “Where an entity under audit violates
the provisions in this Law by transferring, concealing, altering or destroying accounting vouchers, accounting accounts, financial
accounting reports or other materials related to fiscal or financial revenues and expenditures, or transferring or concealing the
assets obtained by violation of the provisions of the State, and if the auditing organ considers that the principal and other persons
held to be directly responsible should be given sanctions according to law, the auditing organ shall put forward the suggestions
for punishment, and the entity under audit or the organ at the higher level and the supervisory organ shall make a timely decision
according to law, and notify the result to the auditing organ in written form; and if a crime is constituted, the entity under audit
shall be subject to criminal liabilities according to law.”

28.

Article 44 shall be changed into Article 45 and be amended as: “Where any other department (including subordinate entities) at the
corresponding level or the government at the lower level commits the acts against the budget or other acts of fiscal revenues and
expenditures against the provisions of the State, the auditing organ, the people’s government or the competent authorities shall,
within the scope of its statutory authorities and in accordance with the laws and administrative regulations, take the following
measures in light of the specific situation:

(1)

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

(2)

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

(3)

Ordering it to refund the unlawful proceeds within the time limit;

(4)

Ordering to dispose the matter in accordance with the relevant provisions on the unified national accounting system; and

(5)

Other disposal measures.

29.

Article 45 shall be changed into Article 46 and be amended as: “Where an entity under audit commits the acts of financial revenues
and expenditures in violation of the provisions of the State, the auditing organ, the people’s government or the competent authorities
shall, within the scope of its statutory authorities and in accordance with the laws and administrative regulations, take measures
as prescribed in the preceding Article in light of the specific situation, and may impose punishments on the entity under audit according
to law.”

30.

A new article shall be added as Article 47 : “The auditing organ shall make an audit decision within the scope of its statutory authorities,
and the entity under audit shall implement the aforesaid decision.

“Where the auditing organ orders an entity under audit to turn over a sum of money that should be turned over according to law, but
the entity under audit refuses to do so, the auditing organ shall circulate a notice to the competent authorities, and the competent
authorities shall, according to the laws and administrative regulations, withhold the aforesaid money or take other disposal measures,
and notify the results to the auditing organ in written form.”

31.

A new article shall be added as Article 48 : “Where an entity under audit holds objection to an audit decision on financial revenues
and expenditures made by the auditing organ, it may file an application for administrative reconsideration or lodge an administrative
lawsuit according to law.

“Where an entity under audit holds objection to an audit decision on fiscal revenues and expenditures made by the auditing organ,
it may request the people’s government at the same level with the auditing organ for ruling, and the ruling made by the people’s
government at the same level shall be the final decision.”

32.

Article 46 shall be changed into Article 49 and be amended as: “Where the fiscal or financial revenues and expenditures of an entity
under audit break the provisions of the State and the auditing organ considers it necessary to punish the principal and other persons
held to be directly responsible, it shall put forward the suggestions for punishment, and the entity under audit, the organ at the
higher level or the supervisory organ shall timely make a decision according to law and notify the results to the auditing organ
in written form.

33.

Article 48 shall be changed into Article 51 and be amended as: “Anyone who retaliates or makes a false charge against the auditor
shall be given sanctions according to law; and shall be subject to criminal liabilities according to law if any crime is constituted
.”

34.

Article 49 shall be changed into Article 52 and be amended as: “Where an auditor abuses his authorities, resorts to frauds for personal
ends, neglects his duties or divulges national secrets or business secrets he has learnt about, he shall be punished according to
law; and if a crime is constituted, he shall be subject to criminal liabilities according to law.”

This Decision shall come into force as of June 1, 2006.

The Audit Law of the People’s Republic of China shall be re-promulgated after the amendments have been made and the sequential numbers
of the articles are correspondingly adjusted according to this Decision.

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

NOTIFICATION NO.3, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

Notification No.3, 2006 of Foreign Assistance Project Bid Board of the Ministry of Commerce

Tong Gao [2006] No.3

Foreign Assistance Project Bid Board of the Ministry of Commerce held the 3rd regular meeting on February 24, 2006. Matters of concern
and resolution are notified as follows:

The bid-winning enterprise of three projects including Dormitory for President’s Armed Escort in Guinea-Bissau assistance project
was discussed. The Bid Board opened sealed tenders on February 20, 2006. In all, 12 tender enterprises including Jiangsu Construction
Engineering Corp., Guangsha Chongqing Construction (Group) Co., Ltd., Weihai International Economic & Technical Cooperative Co.,
Ltd., Hainan Construction Engineering General Co., China Railway 23BG Group Corporation Co., Ltd., China Jiangsu International Economic
Technical Cooperation Corp., Gansu Foreign Engineering Corporation, China Shandong Foreign Economic Technical Cooperation Corp.,
China Chongqing International Corporation For Econ. & Tech. Cooperation, Guangdong Xinguang International Group Co., Ltd., China
Railway Wuju Group Corporation and Xinjiang International Economic Technical Cooperation Corp. submitted the tender documents on
time. China SFECO Group Co., Ltd. and Hubei Construction Engineering Group Corporation gave up. The Bid Board, in accordance with
“the Measures for Tender Assessment of Undertaking Foreign Assistance Complete Plant Projects” which was revised in 2005 by the Ministry
of Commerce of the People’ Republic of China, for Trial Implementation and the principles of “competing with no minimum bid ” and
“biding with reasonable lower price “,, determined to confer bid to Hainan Construction Engineering General Corporation after two
steps of tender review with technical measures and integrated quantity measures.

The tender mode of Bahamas Stadium assistance project was discussed. Bid Board adopted limited invitation tender mode, and 19 enterprises
including Anhui Foreign Economic Construction Corporation (group) Co., Ltd., Qilu Construction Group Corporation, Shanxi Construction
Engineering (group) Co., Shanghai Construction Group General Co., Beijing Construction Engineering Group Co., Ltd., Qingdao Construction
Group Corporation, Hunan Construction Engineering Group Corporation, Fujian Construction Engineering Group General Co., China State
Construction Engineering Corp., Yanjian Group Co., Ltd., China Civil Engineering Construction Corporation, China National Overseas
Engineering Corporation, Guangdong Xinguang International Group Co.Ltd., Guangdong Construction Engineering Group Co., Ltd., Jiangsu
Construction Group Corp., China Ershisanye Construction Group Co., Ltd., Chongqing Foreign Construction Corporation Beijing Urban
Construction Group Co., Ltd. and Zhejiang Electric Power Construction Corp. will be invited to participate in the bid. Specific matters
of concern shall be notified later.

The tender mode of Container Inspection Equipment of Ecuador assistance project was discussed. The Bid Board determined to have
tender discussion with NUCTECH Company Limited about the project. Specific matters of concern shall be notified later.

The tender mode of an area in Madagascar about 150000 geochemistry measure assistance project. The Bid Board determined to have
tender discussion with China Seismological Bureau about the project. Specific matters of concern shall be notified later.

Foreign Assistance Project Bid Board of the Ministry of Commerce

March 2, 2006

Foreign Assistance Project Bid Board of the Ministry of Commerce
2006-03-02

DECISION OF THE STATE COUNCIL ON THE COLLECTION OF SPECIAL PETROLEUM INCOMES

The State Council

Decision of the State Council on the Collection of Special Petroleum Incomes

Guo Fa [2006] No. 13

The people’s governments of all provinces, autonomous regions, and municipalities directly under the Central Government, all the ministries
and commissions of the State Council, and the institutions directly under the State Council:

Petroleum is an important strategic resource in the national economic and social development. Since 2004, the profits of the crude
oil exploitation industry in China have increased a lot as a result of the continuous and significant rise of the oil price in the
international market, which has increased the costs of other industries and the society for using the oil, caused the unbalance of
the distribution of benefits among various industries, and affected the smooth running of the economy. For the purpose of properly
balancing the interests of different sides, promoting the reform of oil price forming mechanism, reinforcing the state adjustment
and control, and promoting the national economy to develop in a continuous, sound and coordinative way, the State Council has decided
to collect special incomes of petroleum on the excessive incomes obtained by petroleum exploitation enterprises from selling domestically
produced crude oil as a result of the rise of oil price.

The special petroleum proceeds are non-tax incomes of the central treasury and shall be included into the budget management of the
central treasury. The specific measures on the collection administration shall be formulated and promulgated for implementation by
the Ministry of Finance.

The State Council

March 15, 2006

The State Council
2006-03-15

MEASURES FOR THE ADMINISTRATION OF ADMINISTRATIVE LAW ENFORCEMENT IN CULTURAL MARKET

Ministry of Culture

Decree of the Ministry of Culture

No.36

The Measures for the Administration of Administrative Law Enforcement in Cultural Market adopted through deliberation at the executive
meeting of the Ministry of Culture on June 16, 2005, are hereby promulgated, and shall enter into effect as of the day of July 1,
2006.

Ministry of Culture

March 24, 2006

Measures for the Administration of Administrative Law Enforcement in Cultural Market

Chapter I General Provisions

Article 1

In order to regulate acts of administrative law enforcement in cultural market, strengthen administration on cultural market, maintain
the order of cultural market administration, and protect the lawful rights and interests of citizens, legal persons, and other organizations,
as well as promote the healthy development of cultural market, these Measures are formulated according to the relevant state laws
and regulations .

Article 2

The administrative law enforcement in cultural market as mentioned in these Measures shall refer to the administrative departments
of culture of the people’s governments at all levels or other law enforcement organizations authorized by the laws or regulations
(hereinafter referred to as the law enforcement organizations), the operational activities of culture of citizens, legal persons,
or other organizations shall be supervised and inspected, and their illegal acts shall be punished according to the provisions of
relevant state laws, regulations, and rules.

Article 3

The range of administrative law enforcement in cultural market mentioned in these Measures shall include:

Business performance activities;

Importation, wholesale, retail, lease, and projection of audio-video products;

Operational activities in places of entertainment;

Operational activities of artwork;

Operational activities of issuance and projection of films;

Operational activities of culture of the business places for internet access services and internet; and

Other operational activities of culture under the control of the administration of the administrative departments of culture.

Article 4

The principle of fairness, justness, and openness shall be followed for the administrative law enforcement in cultural market, and
an administrative law enforcement system of well defined power and responsibility, standardized behaviors, effective supervision,
and strong safeguards shall be established.

Article 5

According to the division of work of responsibility, the Ministry of Culture shall guide the work of law enforcement in cultural market
countrywide, formulate bylaw on administrative law enforcement and the plan for training of administrative law enforcement personnel
in cultural market, and guide and harmonize the local law enforcement organizations to investigate the major and serious cases,
and supervise the administrative law enforcement of the local law enforcement organizations.

The local law enforcement organizations in or above the county level shall take charge of the work of administrative law enforcement
in cultural market within their own administrative regions according to their divisions of work of responsibility.

Article 6

According to the provisions of state laws and regulations and the procedures determined by these Measures, the law enforcement organizations
and the administrative law enforcement personnel in cultural market (hereinafter referred to as the law enforcers) shall enforce
laws and accept the law enforcement supervision of the relevant departments.

Article 7

The law enforcement organizations and the law enforcers that have remarkable performances in their work shall be given honors and
encouragements by the administrative departments of culture.

Chapter II Law Enforcement Organizations and Law Enforcers

Article 8

The construction of law enforcement contingent shall be strengthened, the various regulations shall be improved, and law enforcement
mechanisms shall be perfected by the administrative departments of culture.

Article 9

The functions of a law enforcement organization shall be:

Publicizing and carrying out the policies and laws and regulations on the management of cultural market;

In light of the law, within their own administrative regions, making supervision and inspection on operational activities of culture
of citizens, legal persons, and other organizations, and punishing their illegal acts;

Organizing the training and examination of law enforcers;

Supervising and guiding the work of the law enforcement organizations of the lower level; and

Bringing forward advices to the legislatures and the administrative organizations on improving the relevant laws, regulations, and
rules about cultural market management.

Article 10

The law enforcement organizations shall perfect the tip off system about cultural market, publicize the tip off telephone and e-mails,
and improve tip off networks, accept and deal with the tip offs in time according to the law.

Article 11

The routine inspection and regular inspection system of cultural market shall be established and improved by the law enforcement organizations.

Article 12

The system of archival filing and the system of sending a copy of major punishment decisions shall be used to administrative law enforcement
in cultural market.

If the law enforcement organization makes the decision of administrative punishments which is ordering to stop business operations
for rectification, suspending license or giving a larger amount of fines, and so on, it shall report to the admission organization
and the law enforcement organization of the upper level for archival filing within 15 days from the day of making the decision on
administrative punishment.

If the law enforcement organization makes the decision of administrative punishments , which is ordering to stop business operations
for rectification, or suspending licenses, it shall send a copy of the punishment decision to the departments of public security
and industry and commerce, and other relevant departments in time.

Article 13

The system of reporting major cases shall be carried out for administrative law enforcement in cultural market.

The local law enforcement organization shall report the information of the case to the law enforcement organization of the upper level
within 24 hours if a major case occurs.

Article 14

The system of regular report on law enforcement data shall be carried out in the administrative law enforcement in cultural market.

Article 15

The law enforcement organizations shall be equipped with establishments and equipments like vehicles, communications, testing, and
evidence obtaining, which are necessary for administrative law enforcement.

Article 16

When enrolling law enforcers, the law enforcement organizations shall make recruitment and examination openly and enroll the best
by selection in light of the state provisions.

Article 17

The law enforcers shall meet the requirements as follows:

Having firm political standpoint and a fine style of work, submitting disciplines, and being physically healthy;

Before undertaking the work of administrative law enforcement in cultural market, having no criminal records; and

Knowing well the laws, regulations, and rules on the administration of cultural market, and mastering the professional knowledge and
skill, which are necessary for the administration of cultural market.

Article 18

After having passed on-the-job training and the examination, the law enforcers shall obtain the certificate of administrative law
enforcement in cultural market . The contents of training to law enforcers and the examination standard shall be determined uniformly
by the Ministry of Culture, and shall be organized and carried out by the administrative departments of culture at the provincial
level.

Article 19

The law enforcement organizations shall examine professional competence of law enforcers each year, and after the assessment the law
enforcers who are not qualified shall not continue to take charge of administrative law enforcement work.

Article 20

The law enforcers shall take part in the training of professional knowledge and skill in cultural market no less than 40 hours each
year. The law enforcers shall be encouraged and supported by the law enforcement organizations to take part in the various in-service
further study activities.

Article 21

The system of regular post-shift on law enforcers shall be carried out, and in general, a law enforcer shall not take one job position
for more than five years.

Chapter III Law Enforcement Procedures

Article 22

The illegal administrative cases in cultural market shall be under the control of the law enforcement organizations at or above the
level of the counties at the places where the illegal acts occur. Unless there are different provisions by the law or administrative
regulation, such provisions shall be followed.

If law enforcement organization discovers that the case under investigating is not under its jurisdiction, it shall be transferred
to the administrative department of culture that has jurisdiction or other administrative organizations in time. If the illegal act
has constituted a crime, it shall be transferred to the judicial department subject to criminal liabilities according to the law.

Article 23

Administrative law enforcement activities shall be implemented strictly according to the procedures prescribed in laws, regulations
and these Measures, and law enforcement documents shall be made in the light of the law.

Article 24

When executing public affairs, the law enforcers shall show the law enforcement certificates to the parties or the relevant personnel
according to law.

Article 25

As any act of any citizen, legal person, or other organization breaks the regulations on the management of cultural market, which
shall be given administrative punishment in the light of the law, the law enforcement organizations shall make the facts clearly;
if the illegal facts are not clear, the administrative punishment shall not be given by the law enforcement organizations.

Article 26

Before making an administrative punishment, the parties shall be notified the facts, the reasons and the basis of the administrative
punishment decision and the rights they shall enjoy thereof.

Article 27

The parties shall have the right to make statements and averments. The opinions of the parties shall be sufficiently heard and written
records shall be made by the law enforcers, and review the facts, reasons, and evidence brought forward by the parties, and if they
can be proved, adopt them after review.

Article 28

If the illegal facts are authentic and have legal basis, a decision may be made on the spot on giving an administrative punishment
of a fine of less than 50 Yuan to a citizen or a fine of less than 1,000 Yuan to legal person or other organization or a warning,
and the law enforcers shall fill in the decision on administrative punishment with the predetermined format and compiled with numbers,
and deliver it to the parties on the spot.

The decisions shall be reported to the subordinate law enforcement organizations and put them on archives within 3 days from the day
when they have made on-site punishment decisions.

Article 29

If the law enforcement organization discovers that any citizen, legal person, or other organization has any act that shall be given
administrative punishment except the administrative punishment that may be made on spot in the light of the law, it shall make registration
on it and put it on records, and make investigation in time, overall, objective, and fair manner, and collect the relevant evidence,
and may make inspection according to the relevant provisions of the laws or regulations if it is necessary.

The evidence shall be included documentary evidence, material evidence, testimony of witnesses, audio-video materials, statements
of the parties, expert conclusions, records of inquests and records made on the scene, or other relevant evidence. After it has been
ascertained to be truthful, the evidence can be taken as the basis for determining facts.

Article 30

When making investigation or inspection, there shall be no less than two enforcers. The parties and the relevant personnel shall answer
the inquiries in the light of the facts, and assist in the investigation or inspection, and shall not obstruct it. The law enforcers
shall make written records on the inquiry or the inspection, and hand them to the parties or the relevant personnel for checking,
the parties or the relevant personnel shall sign their names or seals if there is no fault after checking. The two or more law enforcers
shall indicate the conditions in the written records and sign their names if the parties or the relevant personnel refuse to sign
their names or seals.

Article 31

When collecting evidence, the law enforcers may use the method of sampling to obtain evidence; if the evidence may be lost or difficult
to obtain afterwards, after the approval of the person who takes charge of the law enforcement organization, such measures as preservation
through prior registration may be taken .

The parties shall be at present when obtaining evidence by sampling or preserving it through registration,; if the parties are not
at present or refuse to be at present, other personnel on the scene may be asked to give witness and indicated it.

A list of the evidence obtained by sampling or articles preserved through registration shall be made, and in the light of the circumstances,
credence of obtaining evidence through sampling or list of preservation through registration shall be made, and the name, quantity,
and unit price of the articles, and other matters concerned shall be indicated. The law enforcers and the parties shall sign their
names or seals on it, and the law enforcers shall hand it to the parties. If the parties refuse to sign their names seal, or accept
it, the two or more law enforcers shall indicate the conditions on the credence or the list and sign their names.

When preserving articles through registration, they may be preserved at a different place if it may disturb public order or public
security to preserve them at the original place.

Article 32

The handling decisions shall be made as follows within 7 days on the evidence preserved through prior registration:

If it is necessity to make technical inspection or authentication, it shall be submitted for inspection or authentication;

If the articles need not to be confiscated according to the law, they shall be returned to the parties;

If the articles shall be devolved on the relevant departments for disposal, they shall be devolved on the relevant departments; and

If there are different provisions in other law or regulation, such provisions shall be followed.

Article 33

After the conclusion of an investigation, the person in charge of a law enforcement organization shall examine the investigation results,
and in the light of the circumstances, make a decision of giving administrative punishment, not giving administrative punishment,
or transferring to the judicial department for disposal .

Before making an administrative punishment decision, a law enforcement organization shall make a notice on the administrative punishment
and serve it on the parties, informing them of the contents, facts, the reasons and the basis of the administrative punishment to
be made thereof. If administrative punishment decisions such as ordering to stop business operations for rectification, suspending
license, or giving a large amount of fine, and etc. will be made, it shall indicate in the notice on the administrative punishment
that the parties shall have the right to request holding a hearing within 3 days after receiving the notice; if the parties request
a hearing, the hearing shall be organized by the law enforcement organization which will make the administrative punishment decision.

Article 34

A hearing shall be carried out in light of the procedures as follows:

The chairperson announces the beginning of the hearing, the reason of the case and the hearing disciplines, rights and obligations
of the parties, and announces and checks the name list of the participants in the hearing;

The illegal facts of the parties, the evidence, basis for punishment, and the reasons for the administrative punishment shall be brought
forward by the investigators;

The parties may put forward evidence, make statements and averments, and make cross-examinations on the evidence brought forward by
the investigators;

The chairperson inquires to the parties, investigators, witnesses, and the relevant personnel;

The parties make final statements; and

The chairperson announces the end of the hearing.

Article 35

Written records about the hearing shall be made , and be handed to the parties for checking, if there is no fault therein, the parties
shall sign their names or seals.

The chairperson shall make a written report in the light of the hearing, and submit it to the law enforcement organizations along
with the written records.

The following contents shall be included in the report: reason of the case, time and place for the hearing, name or post_title of the participants
in the hearing, matters of averment and cross-examination, authentication on the evidence, and cognizance of facts.

Article 36

After it is announced, the letter of decision on administrative punishment shall be handed to the parties on the spot. The parties
shall indicate the date of acceptance in the proof of service, sign their names or seals.

If the parties are not present, according to the relevant provisions of the Civil Procedure Law, the law enforcement organization
shall serve the letter of decision on administrative punishment on the party within 7 days.

Article 37

The confiscated properties in the light of the law shall be auctioned openly or dealt with in light of the relevant provisions of
the state.

Goods that shall be destroyed in the light of the law shall be destroyed under the supervision of two or more law enforcers after
the approval of the person in charge of the law enforcement organization, and a destruction record shall be made thereof.

Article 38

The law enforcement documents and the relevant materials shall be compiled and bound, and be put on archives according to the provisions
of relevant laws and regulations.

Chapter IV Supervision over Law Enforcement and Prosecution of Liabilities

Article 39

The law enforcement acts of the law enforcement organizations at the lower level and the law enforcers shall be supervised by the
law enforcement organizations at the upper level thereof.

Article 40

The following contents shall be included in the law enforcement supervision:

Subjects of law enforcement;

Procedures for law enforcement;

Application of laws, regulations, and rules;

The situations of performance of legal obligations;

Internal management system of law enforcement organizations;

Disposal of the confiscated properties and goods; and

OFFICIAL REPLY OF MINISTRY OF COMMERCE ON RELATED ISSUES OF TRANSACTING CONFIRMATION LETTER OF EXEMPTION OF FOREIGN-FUNDED ENTERPRISES OF ENCOURAGED CATEGORIES

Ministry of Commerce

Official Reply of Ministry of Commerce on Related Issues of Transacting Confirmation Letter of Exemption of Foreign-funded Enterprises
of Encouraged Categories

Ministry of Commerce

April 6, 2006

Departments of commercial administration of all provinces, autonomous regions, municipalities, separately listed cities in plan and
Xinjiang Production and Construction Corps:

Since no adjustment has been made to regulations of “confirmation letter” and “import certification” and the formality procedures,
all departments should continue to implement the current regulations strictly.

In accordance with above formality procedures and specific operating measures, functions, authorities and related requirements of
commercial departments of transacting “confirmation letter” and “import certification” remain unchanged. Please all commercial departments
continue to well accomplish tasks strictly in line with related regulations.

All departments of commercial administration should strictly follow related regulations, go thorough formalities of exemption for
imported facilities of qualified foreign-funded enterprises and enhance overseas cooperation, reporting situations of transaction
to Ministry of Commerce for registration timely.

Ministry of Commerce will strengthen supervision and instruction on formalities of “confirmation letter” and “import certification”
below limitation, those unregistered or falling short of related regulations will be corrected or canceled. For cases of gross violation,
Ministry of Commerce will suspend releasing qualification of “confirmation letter” and “import certification”, and inform related
customs of suspending formalities of export exemption together with General Administration of Customs.

If encountering any problem, please report to Ministry of Commerce (Department of Foreign Investment Administration).

Ministry of Commerce

Apr 6, 2006

Ministry of Commerce
2006-04-06

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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

OPINIONS OF THE MINISTRY OF EDUCATION ON RELEVANT ISSUES CONCERNING CURRENT SINO-FOREIGN COOPERATIVE EDUCATION

NOTICE OF CHINA SECURITIES DEPOSITORY AND CLEARING CORPORATION LIMITED ON THE RELEVANT ISSUES ABOUT THE OPENING OF A-SHARE SECURITIES ACCOUNT BY FOREIGN STRATEGIC INVESTORS

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 2 – LONG-TERM EQUITY INVESTMENTS

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 38 – INITIAL IMPLEMENTATION OF ACCOUNTING STANDARDS FOR ENTERPRISES

REPLY OF STATE ADMINISTRATION OF TAXATION ON APPLICABLE TAX RATE OF REFUND FOR ALL KINDS OF EGG POWDER EXPORTED BY THE SUN FOOD (TIANJIN) CO., LTD

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON AMENDING THE AUDIT LAW OF THE PEOPLE’S REPUBLIC OF CHINA

NOTIFICATION NO.3, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

DECISION OF THE STATE COUNCIL ON THE COLLECTION OF SPECIAL PETROLEUM INCOMES

MEASURES FOR THE ADMINISTRATION OF ADMINISTRATIVE LAW ENFORCEMENT IN CULTURAL MARKET

OFFICIAL REPLY OF MINISTRY OF COMMERCE ON RELATED ISSUES OF TRANSACTING CONFIRMATION LETTER OF EXEMPTION OF FOREIGN-FUNDED ENTERPRISES OF ENCOURAGED CATEGORIES

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7