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REAL RIGHT LAW OF THE PEOPLE’S REPUBLIC OF CHINA






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

No. 62

The Real Right Law of the People’s Republic of China has been adopted at the 5th session of the Tenth National People’s Congress on
March 16, 2007. It is hereby promulgated and shall go into effect as of October 1, 2007.
President of the People’s Republic of China Hu Jintao

March 16, 2007

Real Right Law of the People’s Republic of China

(Adopted at the 5th session of the Tenth National People’s Congress on March 16, 2007)

Contents
Part I General Rules

Chapter I Basic Principles

Chapter II Creation, Alternation, Alienation and Termination of Real Right

Section 1 Reality Registration

Section 2 Chattel Delivery

Section 3 Other Rules

Chapter III Protection of Real Right

Part II Ownership

Chapter IV General Rules

Chapter V State Ownership, Collective Ownership and Private Ownership

Chapter VI Owners’ Partitioned Ownership of Building Areas

Chapter VII Neighboring Relationship

Chapter VIII Common Ownership

Chapter IX Special Rules on Acquiring Ownership

Part III Usufructuary Rights

Chapter X General Rules

Chapter XI Right to the Contracted Management of Land

Chapter XII Right to Use Construction Land

Chapter XIII Right to Use House Sites

Chapter XIV Easement

Part IV Real Rights for Security

Chapter XV General Rules

Chapter XVI Mortgage Right

Section 1 General Mortgage Right

Section 2 Mortgage Right at Maximum Amount

Chapter XVII Pledge Right

Section 1 Chattel Pledge

Section 2 Right Pledge

Chapter XVIII Lien

Part V Possession

Chapter XIX Possession

Supplementary Rules
Part I General Rules

Chapter I Basic Principles

Article 1

In accordance with the Constitution Law, the present Law is enacted with a view to maintaining the basic economic system of the state,
protecting the socialist market economic order, clearly defining the attribution of the res, bringing into play the utilities of
the res and safeguarding the real right of the right holder.

Article 2

The civil relationships incurred from the attribution and utilization of the res shall be governed by the present Law.

The term “res” as mentioned in the present Law means realties and chattels. Where it is prescribed in any provision that certain right
shall be taken as an object of real right, such provision shall be applicable.

The term “real right” as mentioned in the present Law means the exclusive right of direct control over a specific res enjoyed by the
holder in accordance with law, including ownership, usufractuary right and real rights for security.

Article 3

In the primary phase of socialism, the state adheres to the basic economic system with the public ownership playing a dominant role
and diverse forms of ownership developing side by side.

The public economy shall be consolidated and developed by the state, and the development of the nonpublic economy shall be encouraged,
supported and guided.

The socialist market economy system shall be practiced by the state as well as the equal legal status and development rights of all
market subjects shall be protected.

Article 4

The real right of the state, collective, individual or any other right holder shall be protected by law, and may not be damaged by
any entity or individual.

Article 5

The varieties and contents of real rights shall be prescribed by law.

Article 6

The creation, alteration, alienation or termination of the real right of a realty shall be subject to registration in accordance
with law. The creation or alienation of the real right of a chattel shall be delivered in accordance with law.

Article 7

One shall, when acquiring or exercising a real right, comply with the law, respect social morals and may not infringe upon the public
interests or the lawful rights and interests of any other person.

Article 8

In case there exists any other special provision in respect of real right in any other law, such special provision shall prevail.

Chapter II Creation, Alteration, Alienation and Termination of Real Right

Section 1 Reality Registration

Article 9

Until it is registered in accordance with law, the creation, alteration, alienation or termination of the real right of a realty
shall come into effect; unless it is otherwise prescribed by any law, it shall have no effect if it is not registered in accordance
with law.

As regards the ownership of the natural resources owned by the state in accordance with law, the registration is not required.

Article 10

The registration of a realty shall be handled by the registration organ at the locality of the realty.

A uniform registration system over realties shall be practiced by the state. The scope, organ and measures of uniform registration
shall be specified by the related laws and administrative regulations.

Article 11

In light of the different registration items, an applicant shall, when applying for the registration of a realty, provide the ownership
certificate of the realty and such necessary materials as the location and area of the realty.

Article 12

A registration organ shall perform the duties as follows:

(1)

to examine the ownership certificate and other necessary materials as provided by the applicant;

(2)

to inquire the applicant about the registration items concerned;

(3)

to register the related items in accordance with the facts and in a timely manner; and

(4)

other duties as provided for in any law or administrative regulation.

In case the related situation of the realty under application for registration needs further proving, the registration organ may request
the applicant to provide supplementary materials and conduct on-the-spot inspection where necessary.

Article 13

No registration organ may commit any of the behaviors as follows:

(1)

to ask for an evaluation of a realty;

(2)

to repeatedly register registration in the name of annual inspection; or

(3)

other behaviors conducted beyond its scope of registration duties.

Article 14

As regards the creation, alteration, alienation or termination of the real right of a realty, it shall go into effect since the date
when it is recorded in the realty register in case the registration thereof is required by law.

Article 15

As regards a contract entered into by the related parties concerned on the creation, alteration, alienation or termination of the
real right of a realty, it shall go into effect upon the conclusion of the contract, unless it is otherwise prescribed by any law;
and the validity of the contract is not affected, whether the real right has been registered or not.

Article 16

The realty register shall be the basis for deciding the ownership and contents of a realty and shall be under the management of the
registration organ.

Article 17

The realty ownership certificate shall be the evidence for the holder’s ownership of a realty. The items recorded in the realty ownership
certificate shall accord with those recorded in the realty register; unless it is proved that there is anything wrong in the realty
register, the one recorded therein shall prevail in the case of any inconsistence.

Article 18

Any right holder or interested party may file an application for consulting or copying the registration materials, and the registration
organ may not reject.

Article 19

In case any right holder or interested party holds that there is anything wrong in any item recorded in the realty register, it/he
may apply for a correction of the registration. The registration organ shall revise the registration accordingly, in case the holder
recorded in the realty register agrees to revise the registration in written form or there is evidence to prove that the registration
is wrong.

The interested party may apply for dissidence registration, in case the holder recorded in the realty register does not agree to the
alteration. Where the registration organ grants the dissidence registration but the applicant fails to lodge an action within 15
days as of the date of dissidence registration, the dissidence registration shall lose its effect. In case the dissidence registration
is improper and bring into damages to the right holder, the holder may require the applicant to compensate for damages.

Article 20

In case the related parties entered into a purchase agreement on a premise or the real right of any other realty, they may apply
for advance notice registration to the registration organ so as to ensure the realization of the real right in the future. Without
the consent of the holder in the advance notice registration, any disposal of the realty, after the advance notice registration,
may not produce effect of real right.

In case the obligee’s right is terminated after the advance notice registration is made, or the application for the registration of
the realty is not filed within 3 months as of the date when it can be registered, the advance notice registration shall lose its
effect.

Article 21

In case any related party provides false materials for applying for registration and causes damages to any other person, it/he shall
assume the liability for compensation.

In case any registration organ causes damages to any other person by virtue of any mistake in registration, it shall assume the liability
for compensation. The registration organ may, after making the compensation, recover the amount from the person who causes the registration
mistake.

Article 22

Realty registration fees shall be charged on each piece, and may not be charged on the basis of the size, volume or certain proportion
of the realty’s value. The concrete charging rates shall be formulated by the related departments in the State Council in collaboration
with the competent pricing department.

Section 2 Chattel Delivery

Article 23

Unless it is otherwise prescribed by any law, the creation or alienation of the real right of a chattel shall come into effect upon
delivery.

Article 24

The creation, alteration, alienation or termination of the real right of any vessel, aircraft or motor vehicle and so on may not
challenge any bona fide third party if it is not registered.

Article 25

In case the right holder has legally possessed the chattel prior to the establishment or alienation of a chattel’s real right, the
real right shall come into effect upon the effectiveness of the legal act.

Article 26

In case a third party has legally possessed the chattel prior to the establishment or alienation of a chattel’s real right, the person
assuming the obligation of delivery may, instead of delivery, alien the right to request the third party to return the original object.

Article 27

In case both parties agree to let the alienator continuously possess the chattel when the real right of a chattel is alienated, the
real right shall go into effect upon the effectiveness of the agreement.

Section 3 Other Rules

Article 28

In case the creation, alteration, alienation or termination of a real right is resulted from a legal document of the people’s court
or arbitration committee or a requisition decision of the people’s government, etc, the real right shall come into effect upon the
effectiveness of the legal document or the requisition decision of the people’s government.

Article 29

In case real right is acquired through inheritance or bequest, it shall go into effect as of the beginning time of the inheritance
or bequest.

Article 30

In case a real right is created or terminated as a result of such factual behaviors as the legal construction or premise demolition,
it shall come into effect upon the accomplishment of the factual behavior.

Article 31

As regards a real right of realty enjoyed according to the provisions of Articles 28 through 30 of the present Law, any disposal
thereof may not produce effect of real right until it is registered as required by law.

Chapter III Protection of Real Right

Article 32

Where a real right is damaged, the right holder may settle the problem by means of conciliation, mediation or arbitration, etc.

Article 33

Where any dispute over the ownership or content of real right arises, the interested parties may require the confirmation of the
right.

Article 34

Where a realty or chattel is under an unauthorized possession, the right holder may require the returning of the original object.

Article 35

In case a real right is under obstruction or may be obstructed, the right holder may require the removing of the impediment or the
termination of the danger.

Article 36

In case a realty or chattel is damaged, the right holder may require the repairing, remaking, changing or the restoration of the
original state.

Article 37

In case the infringement upon a real right causes losses to the right holder, the right holder may require the compensation for the
losses or the assuming of any other civil liability.

Article 38

The ways for protecting real right as prescribed in the present Law may apply either independently or jointly in light of the specific
situation of an injury of real right.

In addition to assuming civil liabilities, any entity or individual infringing upon a real right shall assume the administrative liabilities
where it/he violates any provision on administrative regulation; in case any crime is established, it/he shall assume the criminal
liabilities.

Part II Ownership

Chapter IV General Rules

Article 39

The owner of a realty or chattel is enpost_titled to possess, utilize, seek profits from and dispose of the realty or chattel in accordance
with law.

Article 40

The owner of a realty or chattel is enpost_titled to establish a usufructuary right or real right for security over the realty or chattel.
The holder of usufructuary right or the holder of real right for security may, when exercising the right, not injure the owner ￿￿s
rights and interests.

Article 41

As regards a realty or chattel that is exclusively owned by the state as prescribed by law, its ownership may not be acquired by
any entity or individual.

Article 42

In order to meet the demands of public interests, it is allowed to requisition lands owned collectively, premises owned by entities
and individuals or other realties according to the statutory power limit and procedures.

When requisitioning land owned collectively, it is required to, in accordance with law and in full amount, pay land compensation fees,
placement subsidies, compensations for the above-ground fixtures of the lands and seedlings and other fees, arrange for social security
fees for the farmers with land requisitioned, guarantee their livelihood and protect their lawful rights and interests.

When requisitioning the premises owned by entities and individuals or other realties, it is required to compensate for demolishment
and relocation in accordance with law and protect the lawful rights and interests of the owners of the requisitioned realties; when
requisitioning the individuals’ residential houses, it is required to guarantee the housing conditions of the owners of the requisitioned
houses.

The compensation fees for requisition and other fees may not be embezzled, misappropriated, privately shared, detained or delayed
in the payment of by any entity or individual.

Article 43

Special protections are provided by the state for farm lands, the conversion of farm lands into construction lands is strictly restricted
and the aggregate quantity of construction lands is under control. No one may requisition any land owned collectively with violation
of the statutory power limit and procedures.

Article 44

For meeting needs of emergent dangers or disasters, it is allowed for one to use the realties or chattels owned by entities and individuals
according to the statutory power limit and procedures. Such realties or chattels shall, after the emergent use, be returned to the
owners. In case any realty or chattel owned by any entity or individual is used or damaged or lost after being used, corresponding
compensation shall be made.

Chapter V State Ownership, Collective Ownership and Private Ownership

Article 45

As regards the properties that shall be owned by the state as provided for by law, they shall be in the ownership of the state, that
is, owned by all the people.

The State Council shall exercise the ownership of state-owned properties on behalf of the state; in case there is any otherwise provision
in any law, such provision shall prevail.

Article 46

Mineral deposits, waters and sea areas shall be in the ownership of the state.

Article 47

Urban lands shall be in the ownership of the state. As regards lands in the rural areas and suburban areas that shall be owned by
the state as prescribed by law, they shall be in the ownership of the state.

Article 48

Such natural resources as forests, mountains, grasslands, waste lands and tidal flats shall be in the ownership of the state, except
for those that shall be in the ownership of collective as provided for by law.

Article 49

As regards the wildlife resources that shall be owned by the state as provisioned by law, they shall be in the ownership of the state.

Article 50

Radio frequency spectrum resources shall be in the ownership of the state.

Article 51

As regards the cultural relics that shall be owned by the state as provisioned by law, they shall be in the ownership of the state.

Article 52

National defense assets shall be in the ownership of the state.

As regards such infrastructures as railways, highways, electric power facilities, telecommunication facilities, and petrol and gas
pipelines that shall be owned by the state as provisioned by law, they shall be in the ownership of the state.

Article 53

State organs have the power, in accordance with the laws and the relevant provisions of the State Council, to possess, utilize and
dispose of any realty or chattel directly controlled by them.

Article 54

The public institutions held by the state have the power to possess, utilize, as well as, according to the laws and the relevant
provisions of the State Council, seek profits from and dispose of any realty or chattel directly controlled by them.

Article 55

As regards the enterprises set up with the funds invested in by the state, the State Council and the local people’s governments shall
perform and enjoy the contributor’s duties as well as rights and interests on behalf of the state in accordance with the relevant
laws and administrative regulations.

Article 56

The state-owned properties shall be protected by law, and no entity or individual may encroach, plunder, privately distribute, hold
back or damage them.

Article 57

The institutions and working personnel thereof in charge of performing the duties of managing and supervising state-owned assets
shall, according to law, strengthen the management and supervision of state-owned assets so as to promote the value maintenance and
appreciation prevent the losses thereof; in case any entity or individual causes any loss of state-owned assets by misusing authority
or neglecting duty, it/he shall assume legal liabilities in accordance with law.

In case any entity or individual, in the process of enterprise restructuring, merger, division or affiliated transactions, causes
losses of state-owned assets by way of transferring at a low price, conspiring to distribute them secretly, providing guarantee with
them without authorization or any other way with violation of the provisions on the management of state-owned assets, it/he shall
assume legal liabilities in accordance with law.

Article 58

The collectively-owned realties and chattels shall contain:

(1)

Lands, forests, mountains, grasslands, wastelands and tidal flats that shall be in the ownership of collective as provided for by
law;

(2)

Buildings, production facilities, farmland, and water conservancy facilities that are in the ownership of collective;

(3)

Facilities for education, science, culture, sanitation and sports, etc that are in the ownership of collective;

(4)

Other realties and chattels that are in the ownership of collective.

Article 59

The realties and chattels that are in the ownership of a farmers’ collective shall be collectively owned by all the members of this
collective.

The following issues shall be determined by the members of the collective according to the statutory procedures:

(1)

land contracting plan and whether to contract out a land to an entity or individual not included in the collective;

(2)

adjustment of the contracted lands among the right holders of the contracted management of land;

(3)

methods for using and distributing such fees as land compensation fees;

(4)

the alteration of ownership or any other related issue of an enterprise set up with the funds invested in by the collective; and

(5)

other issues provided for by any law.

Article 60

As regards any collectively-owned land, forest, mountain, grassland, wasteland or tidal flat, the ownership thereof shall be exercised
according to the provisions as follows:

(1)

In case it is owned by a farmers’ collective of a village, a collective economic organization or the villagers’ committee of the village
shall exercise the ownership on behalf of the collective;

(2)

In case it is owned by two farmers’ collectives or more, all the collective economic organizations or villagers’ groups of the village
shall exercise the ownership on behalf of the collective; and

(3)

In case it is owned by a farmers’ collective of a town, a collective economic organization of the town shall exercise the ownership
on behalf of the collective.

Article 61

As regards any realty or chattel owned by an urban collective, this urban collective has the rights to possess, use, seek profits
from and dispose of it according to the related laws and administrative regulations.

Article 62

The collective economic organization, villager’s committee or villagers’ group shall, in accordance with the relevant laws, administrative
regulations, articles of association and village regulations and villagers’ pledges, publicize the situation of the properties owned
by a collective to the members of the collective.

Article 63

Collectively-owned properties shall be protected by law, and any entity or individual may not encroach, plunder, privately distribute,
hold back or destroy them.

Where the legitimate rights and interests of any member of the collective are infringed upon by any decision made by a collective
economic organization, villagers’ committee or the principle thereof, such member may require the people’s court to cancel the decision.

Article 64

An individual has the right to own his legal income, premise, household goods, production instruments, raw materials as well as other
realties and chattels.

Article 65

The legal savings, investments and the proceeds therefrom of an individual shall be protected by law.

An individual’s right of inheritance as well as other legal rights and interests shall be protected by the state in accordance with
law.

Article 66

An individual’s legal properties shall be protected by law, any entity or individual may not encroach, plunder or destroy them.

Article 67

The state, any collective or individual may invest to set up a limited liability company, a company limited by shares or any other
form of enterprise. In case the state, a collective or an individual invest the realties or chattels it owns in an enterprise, the
contributor shall, in accordance with the agreement or on the basis of his proportion of investment, enjoy rights such as obtaining
asset returns, making important decisions and selecting operators and managers and perform their duties.

Article 68

In accordance with the laws, administrative regulations and its articles of association, An enterprise legal person is enpost_titled
to possess, utilize, seek profits from and dispose of any realty or chattel it owns.

As regards the rights over the realties and chattels owned by a legal person other than an enterprise legal person, the provisions
of the related laws, administrative regulations and its articles of associations shall apply.

Article 69

The realties and chattels owned by social organizations in accordance with law shall be protected by law.

Chapter VI Owners’ Partitioned Ownership of Building Areas

Article 70

As regards such exclusive parts within the buildings as the residential houses or the houses used for business purposes, an owner
shall enjoy the ownership thereof, while as regards the common parts other than the exclusive parts, the owner shall have common
ownership and the common management right thereof.

Article 71

An owner is enpost_titled to possess utilize, seek profits from and dispose of the exclusive parts of the building. Any owner may not
endanger the safety of the building or infringe upon the lawful rights and interests of any other owner when exercising his or its
rights.

Article 72

An owner enjoys the rights and assumes the obligations over the common parts other than the exclusive parts of the building, and
may not reject performing the obligations under the pretext of abandoning rights.

In case an owner alienates his residential house or the house used for business purposes within the building, the common ownership
and the common management right enjoyed by him/her over the common parts shall be alienated at the same time.

Article 73

The roads within the building zone, except for the public roads of cities and towns, shall be commonly owned by the owners. The green
lands within the building area, except for the public green lands of cities and towns or those which are definitely ascribed to individuals,
shall be commonly owned by all the owners. The other public places, common facilities and houses used for realty services within
the building zone shall be commonly owned by all the owners.

Article 74

The parking places and garages within the building area planned for parking cars shall be used to meet the needs of the owners above
all else.

The ownership of the parking places and garages shall be agreed upon by the related parties in the manners of selling, complementary
using or leasing, etc.

The parking places, which occupy the roads or other fields commonly owned by all owners, shall be in the common ownership of all the
owners.

Article 75

The owners may set up an owners’ assembly and vote for an owners’ committee.

For the establishment of the owners’ assembly and the vote of the owners’ committee, the related departments under the local people’s
governments shall provide guidance and assistance.

Article 76

The following matters shall be commonly determined by all owners:

(1)

to formulate and revise the rules of procedure for the owners’ assembly;

(2)

to formulate and revise the stipulations on managing the building and affiliated facilities thereof;

(3)

to vote for the owners’ committee or alter the members thereof t;

(4)

to hire or fire the realty service enterprise or any other manager;

(5)

to raise or use the funds for maintaining the building and affiliated facilities thereof;

(6)

to rebuild the building or any of its affiliated facilities;

(7)

other important matters on the common ownership and the common management right.

For making a decision on matters prescribed in Item (5) or (6) of the preceding paragraph, the consent of the 2/3 or more of the total
owners with exclusive parts accounting for 2/3 or more of the total area of the building shall be obtained. For making a decision
on any other issue prescribed in the preceding paragraph, the consent of half of the total owners with exclusive parts accounting
for half of the total area of the building shall be obtained.

Article 77

Any owner may not alter a residential house into a house used for business purposes with violation of any law, regulation or management
stipulation. An owner shall, when changing a residential house into a house used for business purposes, obtain the consent of the
interested owners, in addition to complying with the laws, regulations and management stipulations.

Article 78

Decisions made by the owners’ assembly or the owners’ committee are binding to each owner.

In case the legitimate rights and interests of any owner has been injured by any decision made by the owners’ assembly or the owners’
committee, the injured owner may require the people’s court to cancel the decision.

Article 79

The funds for maintaining a building and affiliated facilities thereof shall be commonly owned by the owners of the building. The
funds may, upon the codetermination of the owners, be used for maintaining such common parts as elevators and water tanks. The circumstance
about the raise and use of the maintenance funds shall be released to the owners.

Article 80

As regards such matters as the expenses allocation and the proceeds distribution of a building or any of its affiliated facilities,
in case there exists any stipulation for these, such stipulation shall apply; in the case of no stipulation or unclear stipulation,
these matters shall be determined in accordance with the proportion of each owner’s exclusive parts to the total area of the building.

Article 81

The owners of a building may manage the building and affiliated facilities thereof by themselves or they may entrust a realty service
enterprise or any other manager to conduct the management.

As regards the realty service enterprise or any other manager hired by the construction entity, the owners are enpost_titled to alter it
in accordance with law.

Article 82

The realty service enterprise or any other manager shall, upon the strength of the owners’ entrustment, manage the building and affiliated
facilities thereof within the building area and accept the owners’ supervision.

Article 83

The owners shall comply with the laws, regulations and management stipulations.

As regards any act infringing upon the lawful rights and interests of other persons, such as discarding wastes at will, discharging
atmospheric pollutants and noise, breeding animals with violation of the related regulations, illegally building shelters, occupying
passages or rejecting paying realty management fees, etc, the owners’ assembly and the owners’ committee have the right, in accordance
with the relevant laws, regulations a

ANNOUNCEMENT NO.11, 2007 OF MINISTRY OF COMMERCE ON PROMULGATING FINAL ARBITRATION ON ANTI-DUMPING INVESTIGATION ON NONYL PHENOL ORIGINATED FROM INDIA AND TAIWAN REGION

Announcement No.11, 2007 of Ministry of Commerce on Promulgating Final Arbitration on Anti-dumping Investigation on Nonyl Phenol Originated
from India and Taiwan Region

[2007] No.11

In accordance with Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce of the People’s Republic of China
released announcement on Dec 29, 2005, deciding to carry out anti-dumping investigation on nonyl pheno originated from India and
Taiwan Region.

In line with investigation, Ministry of Commerce finally verdicts dumping of the investigated commodities, injures the domestic nonyl
pheno industry, and the existence of causality between dumping of the investigated commodities and the injury of domestic industry.

In accordance with Anti-dumping Regulations of the People’s Republic of China, Tariff Committee of the State Council decides to impose
anti-dumping duties on nonyl pheno originated from India and Taiwan region as from Mar 29, 2007, the tariff codes of which is 29071310
in Import and Export Tariff of the People’s Republic of China.

Rate of Anti-dumping Duties on Different Companies:

Companies in India

SI GROUP-INDIA LIMITED 12.22 %

All Others 20.38%

Companies in Taiwan region:

Formosan Union Chemical Corporation 6.87 %

China Man-Made Fiber Corporation 4.08 %

All others 20.38%

The duration of the anti-dumping duties on nonyl pheno originating from India and Taiwan region is 5 years as from Mar 29, 2007.

This announcement shall take effect as from Mar 29, 2007.

Appendix: Ministry of Commerce’s Final Arbitration on Anti-dumping Investigation on Nonyl Pheno Originated from India and Taiwan Region.

Ministry of Commerce

Mar 28, 2007

 
Ministry of Commerce
2007-03-28

 




INTERIM MEASURES FOR THE ADMINISTRATION OF FUTURES INVESTOR SAFEGUARD FUNDS

Decree No.38 of China Securities Regulatory Commission

No.38

The Interim Measures for the Administration of Futures Investor Safeguard Funds have been deliberated and adopted by China Securities
Regulatory Commission and the Ministry of Finance. They are hereby promulgated and shall enter into force as of August 1, 2007.

Chairman of China Securities Regulatory Commission Shang Fulin

Minister of Ministry of Finance of the People’s Republic of China Jin Renqing

April 19, 2007

Interim Measures for the Administration of Futures Investor Safeguard Funds
Chapter I General Rules

Article 1

In accordance with the Regulation on the Administration of Futures Trading, the present measures are formulated in order to protect
the legitimate rights and interests of futures investors.

Article 2

Futures investor safeguard fund (hereinafter referred to as safeguard fund) is a fund that is exclusively used for compensating investors’
losses of guaranty money when futures companies are in serious violation of related laws or rules, or fail to do well in risk control,
which may lead to a shortfall of guaranty money and severely endangers social stability and the safety of the futures market.

Article 3

Performing futures trading activities shall observe the principles of openness, fairness, justice and that investors shall make investment
decisions independently and assume responsibility for investment risks on their own.

In case any investor suffers losses from the fluctuation of the futures market or the change of the value of the product he/it invests
in, he shall assume the losses independently.

Article 4

Safeguard funds shall be raised according to the principle of taking from the market and being used for the market.

Article 5

Safeguard funds shall be uniformly managed and planned as a whole by China Securities Regulatory Commission.

Article 6

Management and operation of safeguard funds shall be implemented observing the principles of openness, reasonableness and effectiveness.

Article 7

The use of safeguard funds shall be performed observing the principles of ensuring the legitimate rights and interests of investors,
fair aid and making compensations on a pro ratio basis.

Chapter II Raise of Safeguard Funds

Article 8

The administrative organ of safeguard funds shall set up an exclusive account in the name of safeguard fund, and this account shall
be exclusively used for depositing safeguard funds.

Article 9

The start-up capital of safeguard funds shall be formed by a futures exchange with 15 percent of the total amount of risk reserves
as accumulated up to December 31st, 2006. The follow-up capital of a safeguard fund shall include:

(1)

Payment of 3 percent of the transaction commission charges as collected by the futures exchange against the futures company members;

(2)

Payment of 0.0005 percent to 0.0010 percent of the vicegerent trading volume made by futures companies out of their transaction commission
charges;

(3)

Other legal property recovered or accepted by the administrative organ of safeguard funds.

As for a futures company that has higher risks because of the deterioration of financial condition thereof or its failure to do well
in risk control, it shall pay the safeguard funds at a proportion whichever is higher, and the specific payment proportion of each
futures company shall be determined by China Securities Regulatory Commission according to the risk status of the company respectively.
All futures exchanges or futures companies shall list the safeguard funds as paid by themselves under its business cost.

Article 10

A futures exchange shall transfer the start-up capital that it shall pay into the exclusive account of safeguard funds within one
month as of the implementation of the present measures.

Futures exchanges and futures companies shall pay follow-up capital on quarterly manner. A futures exchange shall pay its due safeguard
funds of the previous season within 15 workdays as of the end of each season, and withhold and remit the safeguard funds that shall
be paid by futures companies at the proportion as prescribed of Article 9 in the present measures.

Article 11

In the case of any of the following circumstances, futures exchanges or futures companies may temporarily suspend the payment of
safeguard funds upon the approval of China Securities Regulatory Commission and the Ministry of Finance:

(1)

The total amount of safeguard funds reaches RMB 800 million;

(2)

It is suffering from a gross unexpected market risk or force majeure.

The scale, payment proportion and payment mode of safeguard funds shall be determined and adjusted by China Securities Regulatory
Commission according to the status of the futures market development and the market risk level, etc.

Article 12

Sources of safeguard funds may be diversified. Safeguard funds may accept private donations or any other legal property. The interests
as incurred from the safeguard funds and various kinds of incomes gained from operations thereof as well as other fruits incurred
shall fall into the safeguard fund.

Chapter III Management and Supervision of Safeguard Funds

Article 13

China Securities Regulatory Commission and the Ministry of Finance may designate a related organ to serve as the administrative organ
of safeguard funds, which manage safeguard funds on their behalf.

Article 14

The management of safeguard funds shall be performed in light of the principles of safety, stability and soundness to ensure the
safety of safeguard funds.

Safeguard funds may only be used for bank deposit, purchasing national bonds, bonds of the central bank (including instruments of
the central bank) and financial bonds as issued by central banking institutions, and in any other method as approved by China Securities
Regulatory Commission and the Ministry of Finance.

Article 15

Safeguard funds shall be used under independent management and separate accounts and be effectively isolated from other assets that
are under the management of the administrative organ of safeguard funds.

The administrative organ of safeguard fund shall prepare reports relating to the raising, management and use of safeguard funds on
regular manner, and shall submit the said reports to China Securities Regulatory Commission and the Ministry of Finance after audited
by an accounting firm.

Article 16

The administrative organ of safeguard funds, futures exchanges and futures companies shall appropriately keep the accounting vouchers,
account books, financial statements and other materials concerning the safeguard funds and ensure the integrity and genuineness of
the related accounting records and files.

Article 17

The Ministry of Finance shall take the responsibility of surveilling the financial affairs of safeguard funds. The annual revenue
and expenditure plan and final settlement of the account of safeguard funds shall be reported to the Ministry of Finance for approval.

Article 18

China Securities Regulatory Commission shall take the responsibility of surveilling the business operations of safeguard funds, and
shall make examination and inspection concerning the raising, management and use of safeguard funds regularly. China Securities Regulatory
Commission shall regularly report the general risk status of futures companies to the administrative organ of safeguard funds. A
futures company with moderately high risks shall submit its financial surveillance statements to the administrative organ of safeguard
funds on a monthly basis.

Chapter IV Use of Safeguard Funds

Article 19

In case a futures company is in serious violation of related laws and rules or fails to do well in risk control leading to shortfall
of any guarantee money, China Securities Regulatory Commission may make a decision on using the safeguard funds thereof to compensate
for the undischarged losses of guarantee money suffered by the investor in accordance with the present measures.

Article 20

With respect to the losses of guarantee money as suffered by a futures investor, it shall be compensated with the safeguard funds
thereof subject to the principles as follows:

(1)

As for the losses suffered by an individual investor, the part below RMB 100,000(including RMB 100,000) shall be compensated in full
amount, while the part exceeding RMB 100,000 shall be compensated at the rate of 90 percent;

(2)

As for the losses suffered by an institutional investor, the part below RMB 100,000 shall be compensated in full amount, while the
part exceeding RMB 100,000 shall be compensated at the rate of 80 percent.

If the current safeguard fund is not enough to make the compensation, the follow-up capital of safeguard funds shall be used to make
the compensation.

Article 21

China Securities Regulatory Commission and the administrative organ of safeguard funds shall surveil the related futures company
to verify the investors’ rights and interests and losses of guarantee money, actively liquidate its assets and convert them into
cash, and shall make up the shortfall of guarantee money firstly with its self-owned capital and the cash as converted from assets
liquidation before using any safeguard fund. It may make a decision of using the safeguard funds only when its own capital is not
enough to make up the shortfall or in the case of any emergency.

Article 22

As for the losses of guarantee money as suffered by an investor for his/its participation in illegal futures trading, it may not
be compensated with safeguard funds. In the case of any participation of an institutional investor in futures trading in the name
of an individual, the losses it suffered shall be compensated in accordance with the rules relating to compensation for institutional
investors.

Article 23

The administrative organ of safeguard fund shall acquire the right to be compensated accordingly after any safeguard fund is used
for compensating the losses of guarantee money as suffered by a futures investor, and may participate in the liquidation of futures
companies in accordance with related laws.

Article 24

The administrative organ of safeguard fund shall timely report the circumstances concerning the use, compensation and recovery of
safeguard funds to China Securities Regulatory Commission and the Ministry of Finance.

Chapter V Penalty Rules

Article 25

In case any futures company is in serious violation of related laws or fails to do well in risk control leading to any shortfall
of guarantee money, China Securities Regulatory Commission shall impose a punishment on it and revoke its futures business license
in accordance with Articles 70 and 71 of the Regulation on the Administration of Futures Trading. If it is suspected of being involved
in any crime, it shall be transferred to the judicial authorities.

Article 26

In case any futures exchange or futures company is in violation of the present measures by way of deferring the payment or refusing
to make payment of its safeguard funds or failing to keep and file the related information and materials as requested, it shall be
punished by China Securities Regulatory Commission in accordance with Articles 68 and 70 of the Regulation on the Administration
of Futures Trading.

Article 27

As for any individual or entity committing misappropriating, encroaching or defrauding safeguard funds or any other illegal behavior,
it shall be subject to liabilities accordingly, the related personnel neglecting their duties shall be subject to legal liabilities
in accordance with related laws, and anyone as suspected of being involved in any crime shall be transferred to the judicial authorities.

Chapter VI Supplementary Rules

Article 28

The present measures shall enter into force as of August 1, 2007.



 
China Securities Regulatory Commission, Ministry of Finance
2007-04-19

 







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

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

Guo Shui Han [2007] No. 596

Local Taxation Bureau of Xiamen,

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

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

State Administration of Taxation

June 1, 2007



 
State Administration of Taxation
2007-06-01

 







CIRCULAR OF THE MINISTRY OF FINANCE AND THE MINISTRY OF COMMERCE ON RELEVANT ISSUES CONCERNING FINANCIAL INTEREST SUBSIDY TO LOANS FOR FOREIGN CONTRACTED PROJECTS IN 2005






Ministry of Finance, Ministry of Commerce

Circular of the Ministry of Finance and the Ministry of Commerce on Relevant Issues concerning Financial Interest Subsidy to Loans
for Foreign Contracted Projects in 2005

Cai Qi [2006] No.5

Departments (Bureaus) of Finance, Commerce Authorities in Charge in all provinces, autonomous regions, and municipalities directly
under the Central Government, and cities specially designated in the state plan, Bureau of Finance and Bureau of Commerce of the
Xinjiang Production and Construction Corps, all the enterprises administered by the Central Government, and all the economic and
commercial authorities stationed in foreign countries:

In order to support and encourage the enterprises with comparative advantages to “go global”, and to further expand the business of
foreign contracted projects, and in accordance with the budget arrangement of the Central Government, interest subsidy will be granted
to commercial loans acquired from the domestic banks to fulfill the foreign contracted projects of Chinese enterprises. And a circular
on relevant issues are hereby given as follows:

I.

Required Qualifications for the Enterprise and Project Applying for Interest Subsidy

(i)

These qualifications as follows are required for the enterprise applying for interest subsidy:

1.

Legally registered and having an independent status of a legal person;

2.

Having the qualification approved by the Ministry of Commerce in foreign economic cooperation business;

3.

Having not committed such activities as falling into arrears of and misappropriating fund for joint venture or cooperation program
of foreign aid; and

4.

Accepting the guidance and coordination from the finance and commerce authorities in charge and the Chinese economic and commercial
authorities stationed in foreign countries

(ii)

The program applying for interest subsidy shall meet these conditions as follows:

1.

Submitting the statistical materials in accordance with the provisions in the Statistical System on Foreign Contracted Projects, Labor
Service Cooperation, Designing and Consulting; and

2.

The program contract shall be valid within the period from January 1, 2005 to December 31, 2005, and the contracted value of each
program shall be not less than $5 million USD (or equivalent in other currencies); and

3.

The loan contract of a program shall be valid within the period of from January 1, 2005 to December 31, 2005, and the amount of each
loan shall be not less than RMB10 million Yuan (or equivalent in other currencies); and

4.

The contract-signing enterprise shall be identical with the loan enterprise; and

5.

According with China’s policies in foreign trade and economic cooperation.

II.

The Application Document and Procedure

(i)

An enterprise applying for interest subsidy shall provide these documents as follows:

1.

An application letter for interest subsidy;

2.

A specification of the enterprise’s application (refer to Annex I for details);

3.

Basic information of the foreign contracted project and a list of interest payment for bank loans in 2005 (refer to Annex II for details);

4.

A copy of the duplicate of Business License for Enterprises as Legal Persons;

5.

A copy of the commerce part of the program contract (Chinese version or a translated version in Chinese);

6.

The written opinions concerning the implementation of contract from the Chinese economic and commercial authorities stationed in foreign
countries, including the contracted value, date of starting construction, progress of implementation, and expected date of completion
etc.;

7.

A copy of the loan contract from the bank; and

8.

A duplicated copy of the voucher of clearing for bank loan, interest payment and loan repayment.

(ii)

Procedure of Application

1.

The enterprise administered by the local government shall, before February 28, 2006, submit the aforesaid documents to the local provincial
finance and commerce authorities in charge respectively, who then shall conduct a first-instance examination on the programs applying
for interest subsidy in accordance the provisions in this Circular, fill in the Summary Statement of the First-instance Examination
on Interest Subsidy for Loan of Foreign Contracted Project (refer to Annex IV for details), and together submit them to the Ministry
of Finance and the Ministry of Commerce before March, 31 2006;

2.

The enterprise administered by the central government shall submit, together with other relevant application documents, the Summary
Statement of the First-instance Examination on Interest Subsidy for Loan of Foreign Contracted Project to the Ministry of Finance
and the Ministry of Commerce respectively before March, 31 2006;

3.

The Ministry of Finance and the Ministry of Commerce shall together release the documents on funds subject to interest subsidy, after
they entrust the intermediary institutions to examine the applied programs. And the Ministry of Commerce shall, within 15 days as
of the date of the release of these documents concerned, directly appropriate the funds subject to interest subsidy to the applicant
enterprise.

III.

Standard for Interest Subsidy

(i)

The interest subsidy rate per year for the RMB loan shall be no more than the benchmark interest rate of the corresponding period
promulgated by the People’s Bank of China, and the one for the foreign currency loan no more than 3%;

(ii)

The term limit of interest subsidy shall be calculated in accordance with the actual loan term limit on month of the Gregorian calendar;

(iii)

The time of interest subsidy for a program shall be no more than 3 years;

(iv)

Interest subsidy shall not be granted to interest increase and interest penalty outside normal loans;

(v)

Interest subsidy shall only be granted to one loan for each foreign contracted project; and

(vi)

The amount of interest subsidy shall be calculated in RMB.

IV.

The economic and commercial authorities stationed in foreign countries shall, in accordance with the requirements in item 6, paragraph
I, Article II of this Circular, issue written opinions for the applicant enterprises (refer to Annex III for details).

V.

In order to do well the work of financial interest subsidy in 2005 and to enhance the efficiency, all the enterprises are required
to prepare the application documents concerning interest subsidy and bind up them into volumes, and to compile catalogues upon program
in accordance with the provisions in this Circular.

VI.

The enterprise, upon receiving funds subject to interest subsidy, shall utilize them to subtract the financial expense of the year
concerned. Any unit may not defraud and withhold the funds subject to interest subsidy in any form or with any reason. With regard
to those in violation of the provisions, the Ministry of Finance and the Ministry of Commerce shall draw back all the funds subject
to interest subsidy and revoke their qualifications for interest subsidy, and give them serious treatment in accordance with the
Penalty Regulations on Financial Offences against the Law,

Annexes:

1.

The Specification of the Enterprise’s Application

2.

Basic Information of the Foreign Contracted Project and List of Interest Payment for Bank Loans in 2005

3.

Opinions of Office of Economic and Commercial Counselor Stationed in

4.

Summary Statement of the First-instance Examination on Interest Subsidy for Loan of Foreign Contracted Project

Ministry of Finance, Ministry of Commerce

January 9, 2006 htm/e04740.htmAnnex I

￿￿

￿￿

Annex I.

Specification of Enterprise￿￿s Application

￿￿

Name of Applicant Enterprise

 

Name of Legal Representative

 

Registration Place of Enterprise

Province,              City

Address

 

Postal Code

 

￿￿￿￿The applicant solemnly declares that:

￿￿￿￿1. The applicant applies interest subsidy for loans of              program(s) this time, and submits                application document(s);

￿￿￿￿2. The applicant has been legally registered, has a status of legal person, and conducts lawful operations;

￿￿￿￿3. All the documents, licenses and materials submitted by the applicant are exact, authentic, complete and effective;

￿￿￿￿4. All the copy documents and duplicated documentations submitted by the applicant are identical with the original ones
after checked.

￿￿￿￿5. The applicant promises to accept all the necessary examinations for screening this application by relevant authorities
in charge.

 Legal Representative of Applicant Enterprise or His/Her Entrustee  (Signature)

 Seal of Applicant Enterprise:

    Date;                    (mm/dd/yy)

Bank Account Number

 

Name of Bank Account

 

Name of Account Bank

 

Address of Account Bank

 

Contact Person of Enterprise

 

Contact Telephone

 

E-mail

 

Mobile Telephone

 

Fax

 

 

 

￿￿￿￿Notes:

￿￿￿￿1. The legal representative or his/her entrustee shall sign his/her name in hand, and personal seal is invalid.

￿￿￿￿2. In case that an entrustee signs, the original copy of the certificate of entrust signed in hand by the legal representative and
attached with the company￿￿s seal is required;

￿￿￿￿3. The bank account used for appropriated funds subject to interest subsidy shall be the company￿￿s, and it shall be correctly filled
in.

 

Annex II.

Basic Information of the Foreign Contracted Project and List of Interest Payment for Bank Loans in 2005

 






Name of Applicant Enterprise

 

Name of Borrowing Enterprise

(Seal)

Name of Program

 

Loan Bank

 

Contracted Value of Program

 

Serial Number of Loan Contract

 

Date of Signing of Program Contract

 

Amount of Loans

 

Date of Execution of Program Contract

 

The Loan is from   (mm/dd/yy) to   (mm/dd/yy)

 

Date of Starting Construction of Program

 

Loan Interest Rate

 

Expected Date of Completion of Program

 

 

 

Drawings

 

Time of Drawing

Amount of Drawing

Index Number of Duplicated Copy of Drawing Voucher

Remarks

First Time

 

 

 

 

￿￿

ANNOUNCEMENT NO. 117, 2005 OF MINISTRY OF COMMERCE, GENERAL ADMINISTRATION OF CUSTOMS, GENERAL ADMINISTRATION OF QUALITY SUPERVISION, INSPECTION AND QUARANTINE, AND STATE ENVIRONMENTAL PROTECTION ADMINISTRATION

Ministry of Commerce, General Administration of Customs, General Administration of Quality Supervision, Inspection and Quarantine,
and State Environmental Protection Administration

Announcement No. 117, 2005 of Ministry of Commerce, General Administration of Customs, General Administration of Quality Supervision,
Inspection and Quarantine, and State Environmental Protection Administration

[2005] No. 117

In order to implement international obligation of protecting Ozone Layer, carry out Vienna Convention on the Protection of Ozone Layer
and Montreal Protocol on Substances that Deplete the Ozone Layer (Adjusted and Amended), in accordance with regulations of Country
Programme of China to Phase Out Substances that Deplete the Ozone Layer and Administrative Measures on Imports and Exports of Substances
that Deplete the Ozone Layer, the Announcement notifies as follows:

1.

As from March 1, 2006, compressor for industrial or commercial use with CFCS, listed in the Appendix of this Announcement, as refrigerating
fluid shall be prohibited from imports or exports.

2.

As from March 1, 2006, compressor listed in the Appendix of this Announcement shall be subject to Commodity Catalogue for Import and
Export Inspection. While importing or exporting compressor for industrial or commercial use without CFCS, as refrigerating fluid,
the importers or exporters shall provide written certificate, which shall be based on for transacting Clearance Form of the Entry-Exit
Commodities. While importing the above-mentioned products that are subject to Administrative Measures on Commodity Automatic Import
License shall also transact Commodity Automatic Import License.

Appendix: List of Compressor for Industrial or Commercial Use with CFCS as Refrigerating Fluid (omitted)

Ministry of Commerce

General Administration of Customs

General Administration of Quality Supervision, Inspection and Quarantine

State Environmental Protection Administration

January 13, 2006

 
Ministry of Commerce, General Administration of Customs, General Administration of Quality Supervision, Inspection
and Quarantine, and State Environmental Protection Administration
2006-01-13

 




NOTICE OF THE MINISTRY OF STATE LAND AND RESOURCES CONCERNING FURTHER REGULATING THE MANAGEMENT OF REMISING OF MINING INDUSTRY RIGHTS

Ministry of State Land and Resources

Notice of the Ministry of State Land and Resources concerning Further Regulating the Management of Remising of Mining Industry Rights

Guo Tu Zi Fa [2006] No. 12

The departments of state land and resources (departments of state land, environment and resources, bureaus of state land and resources,
bureaus of state land, resources and housing, bureaus of housing, land and resources) of all provinces, autonomous regions, and municipalities
directly under the Central Government, and the Bureau of State Land and Resources of Xinjiang Production and Construction Corps:

Since the Measures for the Administration of Invitation to Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining
Rights (For Trial Implementation) (Guo Tu Zi Fa [2003] No. 197) were issued in 2003, the national mining industry right market construction
has been made an active progress. In light of the laws and regulations on mineral resources, and according to the requirement
of the Notice of the State Council concerning Rectifying and Regulating the Mineral Recourse Exploration Order in an All-around Way
(Guo Fa [2005] No. 28), a supplementary Notice on perfecting relevant matters as mentioned in the Measures for the Administration
of Invitation to Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining Rights is hereby given as follows:

I.

Classification and ways of remising of mining industry rights

In accordance with the statutory power issued prospecting permits or mining permits, the competent department of state land and
resources of the people’s governments at the county level and above shall take charge of the remising of mining industry rights
in light of the law.

(1)

Under the prospecting of Class 1 minerals listed in the Classified Catalogue for the Prospecting and Exploitation of Minerals (hereinafter
refers to as the Classified Catalogue, see appendix) and lies in the blank area of mineral prospecting work or in areas where mineral
prospecting has been carried out but further mineral prospecting place has not been obtained, the mineral prospecting right shall
be remised in light of the principle of “he who applies first gets registered first”.

(2)

The mineral prospecting rights shall be remised by bidding, auction or quotation in any of the situations as follows.

(a)

Class II minerals listed in the Classified Catalogue; or

(b)

For Class I mineral listed in the Classified Catalogue, mineral prospecting has been carried out and ore-field has been obtained for
further prospecting or prior mining activities shows there exists ore-field for further prospecting.

(3)

Prospecting right may not be created, the mining right shall be remised directly by bidding, auction or quotation in any of the situations
as follows.

(a)

Class III minerals listed in the Classified Catalogue;

(b)

For an ore-field with Class I and Class II mineral listed in the Classified Catalogue, the prospecting right has not been existed,
but the mineral prospecting has reached the extent of sifting prospecting or higher level, and the ore-field meets the exploitation
design requirements; or

(c)

For an ore-field with Class I and Class II mineral listed in the Classified Catalogue, the prospecting right has not been existed
, or prospecting activities have ever been carried out therein, and it is found upon verification that exist the mineral deposit
amount for mining or mineral resource with economic value.

(4)

The prospecting and exploitation of oil, natural gas, coal-bed gas, uranium and thorium mineral resources shall be managed and be
gradually consummated according to the prevailing provisions.

(5)

Where the remising of a prospecting right or mining right by bidding, auction or quotation is in the any of situations as follows,
the remising shall be effected by the way of the agreement after approval is obtained.

(a)

An ore-field of important mineral resource development projects approved by the State Council or an ore-field that provides matching
resources for important construction projects approved by the State Council;

(b)

The adjacent areas where it is needed to integrate the already established mining rights or to expand the prospecting and exploitation
circle by use of the original production system;

(c)

A large-scale mineral resource development project which is approved by the people’s government of the province (district or city)
and a formal document has been submitted to the Ministry of State Land and Resources for approval; or

(d)

A project financed by the state in order to search for an ore-field as a resource substitute for a mine in crisis.

The remising of prospecting right or mining right under the agreement shall be subjected to collective review and control in a rigorous
manner. The price of a prospecting right or mining right remised under the agreement shall not be lower than the market price in
similar conditions.

(6)

A prospecting right or mining right shall be remised by biding in any of situations as follows.

(a)

According to laws or regulations or the state policies, an area for which a new mineral prospecting right or mining right may be established
because it is environmentally sensitive or does not meet the environment and quality standards prescribed by the state;

(b)

The ore-field has many joint or associated compositions and the technical level requirement for comprehensive development and utilization
is high; or

(c)

Other situations prescribed in the plan on mineral resources.

II.

Other provisions

(1)

In case a prospecting right holder applies for the mining right in its prospecting area, it shall be approved if it meets the relevant
provision and its legitimate rights and interests shall be protected s.

(2)

If the prospecting application and mining application simultaneously for a same area, and it is found upon examination that the conditions
for setting a mining right are met, when an competent department of state land and resources handle the applications for any mining
industry right, a mining right shall be set according to the provisions of this Notice.

(3)

The competent department of state land and resources of each province (district or city) shall clear up and announce those ore-fields
that have been carried out mineral prospecting and mining activities and do not meet the provisions of this Notice on the remising
of the prospecting rights to the ore-fields subject to priority in application, and report the relevant information to the Ministry
of State Land and Resources for archival purposes.

(4)

In accordance with the actual situation of the area as well as the depth, geological structure and other considerations of the local
minerals prospect, the competent department of state land and resources of each province (district or city) may properly adjust
the way of remising of mining industry rights, formulate detailed administrative measures and report them to the Ministry of State
Land and Resources for archival purposes. In case it is necessary to formulate separate provisions on other special situations,
such provisions shall be implemented until they are approved by the Ministry of State Land and Resources.

(5)

The provisions of this Notice shall be more powerful than the contents in Articles 7 through 9 of the Measures for the Administration
of Invitation to Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining Rights (For Trial Implementation).
The competent departments of state land and resources of each province (district or city) shall clear up all former relevant provisions
according to the requirements of this Notice.

Appendix: Classified Catalogue for the Prospecting and Exploitation of Minerals(Omitted)

Ministry of State Land and Resources

January 24, 2006

 
Ministry of State Land and Resources
2006-01-24

 




MINISTRY OF COMMERCE ANNOUNCEMENT NO.4, 2006 ON INVESTIGATION OF POTATO STARCH ANTI-DUMPING REGISTRATION

Ministry of Commerce

Ministry of Commerce Announcement No.4, 2006 on Investigation of Potato Starch Anti-dumping Registration

[2006] No. 4

On Dec 29, 2005, Ministry of Commerce received applications of 7 companies including Inner Mongolia Nailun Agricultural Science and
Technology Co., LTD., Heilongjiang Wohua Potato Starch Products Co., LTD., Great Xing’an Mountains Lixue Refined Starch Company,
and so on, who represent China domestic potato starch industry to apply for anti-dumping investigation on Potato Starch originating
from European Union.

In accordance with relevant regulations of Anti-dumping Measures of the People’s Republic of China, Ministry of Commerce carried out
relevant investigations on applicant qualifications, related conditions of investigated products, related conditions of same category
products of Chinese mainland as well as influences of investigated commodities on domestic industry. In addition, Ministry of Commerce
examined and approved evidences listed in applications such as dumping, injuries, and causality between dumping and injuries. Preliminary
evidences indicated applicants were qualified to apply for anti-dumping investigation on related domestic industries in accordance
with Article 11 , Article 13 and Article 17 of Anti-dumping Measures of the People’s Republic of China. The applications also contain
required contents and related evidences of Article 14 and Article 15 of Anti-dumping Measures of the People’s Republic of China
on anti-dumping investigation registration.

In accordance with above investigation results and Article 16 of Anti-dumping Measures of the People’s Republic of China, Ministry
of Commerce decides to carry out investigations on anti-dumping registration of Potato Starch originating from European Union. Relevant
matters are now announced as follows:

The investigation period is from Jan 1, 2005 to Dec 31, 2005 and the industry injury investigation period is from Jan 1, 2002 to Dec
31, 2005.

The scope of the commodities is potato starch originating from European Union, which is under item 11081300 in Import and Export Tariff
of Customs of the People’s Republic of China.

This investigation starts on Feb 6, 2006, and usually will be ended before Feb 6, 2007. It may be prolonged to Aug 6, 2007 in case
of particularity.

Contact:

Ministry of Commerce Bureau of Fair Trade for Import and Export

Address: No.2 Dong Chang’an Avenue, Beijing, China

Zip code: 100731

Tel: 86-10-65197354, 65198497, 65198194

Fax￿￿86-10-65198172￿￿651988418

Ministry of Commerce Bureau of Industry Injury Investigation

Tel: 86-10-85226863, 85226859

Fax￿￿86-10-85226864

Ministry of Commerce

Feb 6, 2006



 
Ministry of Commerce
2006-02-06

 







CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION AND THE MINISTRY OF COMMERCE ON FURTHER REGULATING THE BUSINESS ORDER IN FOREIGN TRADE EXPORT AND BETTER STRENGTHENING THE ADMINISTRATION OF EXPORT REBATES (EXEMPTION) FOR EXPORT GOODS

State Administration of Taxation, Ministry of Commerce

Circular of the State Administration of Taxation and the Ministry of Commerce on Further Regulating the Business Order in Foreign
Trade Export and Better Strengthening the Administration of Export Rebates (Exemption) for Export Goods

Guo Shui Fa [2006] No.24

Bureaus of State Taxes and Commerce Authorities in Charge in all provinces, autonomous regions, municipalities directly under the
Central Government, and cities specially designated in the state plan:

This Circular on relevant issues is hereby given in order to guarantee a constant, healthy and stable development for China’s foreign
trade export, to further regulate the business order in foreign trade export, to prohibit the export enterprises from engaging in
such nonstandard export operations as “Four Selfs and Three Nos ( the Four Selfs are the investor or intermediary’s bringing clients
itself, bringing supply of goods itself, bringing the bill of exchange itself and declaring at the customs itself, and the Three
Nos are the export enterprise’s having no export goods, no suppliers of goods and no foreign businessmen)” etc., to tighten the administration
of export rebates (exemption) for export goods, and to prevent and crack down such illegal and criminal activities as gaining tax
rebates by cheat.

I.

The export enterprise shall regulate its export operations, further establish and improve its internal management system, strengthen
its training on its employees, and conduct export operations strictly in accordance with the normal trade procedures. The export
enterprise shall substantively engage in the export trade activities, guarantee the authenticity of its export operations, and abide
by strictly relevant laws and regulations concerning export rebates.

II.

In order to maintain the normal business order of China’s foreign trade, to guarantee the stable operation of the national export
rebates regime, and to avoid a loss of the national property, and in case that any of these circumstances occurs in the self-support
or entrusted export operation, the export enterprise shall not apply this operation concerned to the taxation authorities for the
handling of formalities of export rebates (exemption):

1.

The export enterprise gives such documents for export rebates (exemption) as the vacant customs declaration bill for export goods,
verifying and writing-off instrument for export proceeds etc. to the freight forwarding company and customs broker without a contract
of entrust, or to other unit or individual for use except the freight forwarding company designated by the foreign importer; and

2.

The export enterprise pretends to conduct export operations in the name of self-support, while its export operations are really conducted
by other operators (enterprise, self-employed individual or other individuals) rather than the export enterprise itself or its invested
enterprises in the name of this export enterprise itself; and

3.

Where the export enterprise conduct export operations in the name of self-support, its export goods of the same batch have both purchase
contract and export brokerage contract;

4.

After the check and clearance of the customs authorities, the export enterprise itself or its entrusted freight forwarding carrier
alters the contents of such items as “name of article”, “specification” etc. in the maritime bill of lading (if transported by other
means, the transport document given by the carrier to the deliverer shall be referred to, the same hereinafter), as result of which
conflicts occur in the contents of between the customs declaration bill for export goods and the maritime bill of lading;

5.

Where the export enterprise conduct export operations in the name of self-support, it, however, fails to assume the risks of quality
of exported goods, exchange settlement or export rebates, i.e. it fails to assume the liabilities of compensation claimed by foreign
parties in case that quality problem of the exported goods occurs (except that liability-assumption concerning quality problem is
already agreed in the contract); fails to assume the liabilities of verifying and writing-off unable to be conducted due to the unscheduled
exchange settlement (except that liability-assumption concerning exchange settlement is already agreed in the contract); and fails
to assume the liabilities of export rebates unable to be conducted due to the problems in the submitted documents of export rebates;

6.

The export enterprise fails to substantively engage in the export operations, and accepts and engage in other export operations introduced
by intermediaries while conducting export operations in the name of self-support; and

7.

Other activities in violation of relevant national laws and regulations concerning export rebates.

III.

In case that the export enterprise applies for export rebates (exemption) while engaging in any of such activities as mentioned in
Article II of this Circular and once detected, the rebated (exempted) tax payment shall be recovered, and unhandled application for
export rebates (exemption) shall not be handled. With regard to those gain export rebates by cheat, the taxation authorities shall
recover their cheated tax payment, impose on them a fine of more than one time and less than five times the cheated tax payment,
and cease, with approvals from the taxation authorities of above-provincial (included) level, their rights to export rebates for
more than half a year. During the period of ceased rights to export rebates, any application of this enterprise for export rebates
(exemption) may not be handled with regard to this enterprise’s export goods in the forms of self-support, entrustment or proxy.
In case that a crime is constituted, it shall be transferred to the judicial authorities to investigate criminal liabilities.

IV.

The taxation authorities and commerce authorities in charge at all levels shall further enhance cooperation between them, do well
the work of policy publicities, guide actively the export enterprises to engage in normal export trades, regulate the business order
in foreign trade, and strengthen the administration on export rebates (exemption) for export goods. The taxation authorities in charge
of export rebates (exemption) shall do well the administration work of export rebates (exemption) application, examination, and approval
in accordance with the currently-prescribed requirements of application, examination and approval. Meanwhile, the taxation authorities
and commerce authorities in charge shall strengthen communications between them, pay close attention to the new tendencies in tax
fraudulence, and strictly treat the found activities in violation of laws and regulations, and shall not appease or connive the export
enterprises at engaging in export operations in violation of relevant national provisions and normal procedures for export operation.

V.

This Circular shall enter into force as of the date of March 1, 2006 (the date of export specified on the customs declaration bill
for export goods (exclusively used for export rebates) shall prevail).

State Administration of Taxation

Ministry of Commerce

February 13, 2006



 
State Administration of Taxation, Ministry of Commerce
2006-02-13

 







ACCOUNTING STANDARDS FOR ENTERPRISES NO. 17 – BORROWING COSTS

the Ministry of Finance

Accounting Standards for Enterprises No. 17 – Borrowing Costs

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

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

Article 2

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

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

Article 3

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

Chapter II Recognition and Measurement

Article 4

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

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

Article 5

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

(1)

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

(2)

The borrowing costs has already incurred; and

(3)

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

Article 6

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

(1)

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

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

(2)

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

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

Article 7

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

Article 8

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

Article 9

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

Article 10

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

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

Article 11

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

Article 12

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

Article 13

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

(1)

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

(2)

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

(3)

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

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

Article 14

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

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

Chapter III Disclosure

Article 15

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

(1)

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

(2)

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



 
the Ministry of Finance
2006-02-15

 







CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...