CIRCULAR OF CHINA SECURITIES REGULATORY COMMISSION ON THE RELEASING OF STANDARDS CONCERNING THE CONTENTS AND FORMATS OF INFORMATION DISCLOSURE REQUIRED FOR SECURITIES INVESTMENT FUNDS – NO.7 (CONTENTS AND FORMATS OF CUSTODIAN AGREEMENTS)

China Securities Regulatory Commission

Circular of China Securities Regulatory Commission on the Releasing of Standards concerning the Contents and Formats of Information
Disclosure Required for Securities Investment Funds – No.7 (Contents and Formats of Custodian Agreements)

Ref: No. 203 [2005] CSRC Fund

Management Companies and the Fund Custodian Banks:

In order to accommodate the developments in the market of securities investment fund, the Standards concerning the Contents and Formats
of Information Disclosure Required for Securities Investment Funds – No.7 (Contents and Formats of Custodian Agreements) is hereby
released, and it shall enter into force as of the date of promulgation. And the Rules for the Implementation of the Interim Measures
for the Administration of Securities Investment Funds-No.2 (Contents and Formats of the Custodian Agreements for Securities Investment
Funds (for Trial Implementation)) (Ref: No.3 [1997] CSRC Fund) shall be abolished simultaneously.

atory Commission

December 21, 2005

China Securities Regulatory Commission
2005-12-21

CIRCULAR ON ISSUING ADMINISTRATIVE PROVISIONS ON CARRYING OUT PREFERENTIAL IMPORT DUTY POLICIES ON DOMESTIC AVIATION COMPANIES OPERATING INTERNATIONAL AND HK AND MACAO AIRLINES FOR IMPORTING AVIATION MATERIALS FOR MAINTENANCE

the General Administration of Customs

Circular on Issuing Administrative Provisions on Carrying Out Preferential Import Duty Policies on Domestic Aviation Companies Operating
International and HK and Macao Airlines for Importing Aviation Materials for Maintenance

Shu Shui Fa [2005] No.479

December 21, 2005

Guangdong Branch of the General Administration of Customs, special commissioners’ offices in Tianjin and Shanghai, and each customs
office directly under the General Administration of Customs,

Upon the approval of the State Council, as of January 1, 2005, preferential policies of import duty shall be carried out on import
aviation materials (including components and parts sent abroad for maintenance) used by domestic aviation companies for the maintenance
use of the airplanes in international airlines and Hong Kong and Macao airlines. Together with the General Administration of Customs,
the Ministry of Finance has constituted the Interim Provisions on the Import Duty on Aviation Materials for Maintenance Use Imported
by Domestic Aviation Companies Operating International Airlines and Hong Kong and Macao Airlines (hereinafter referred to as the
Interim Provisions, see Annex II for detail). In accordance with the Interim Provisions, the General Administration of Customs has,
upon discussion with the Civil Aviation Administration of China and soliciting the opinions of the relative customs houses and aviation
enterprises, constituted the Administrative Provisions of the General Administration of Customs on Carrying Out Preferential Policies
of Import Taxation on Domestic Aviation Companies Operating International and Hong Kong and Macao Airlines for their Import of Aviation
Materials for Maintenance Use (hereinafter referred to as the Administrative Provisions, see Annex I for detail), which are hereby
printed and issued to you. It also makes the circular on relative issues as follows:

In accordance with the Circular of the Ministry of Finance on the Issue of Taxation in 2005 on Domestic Aviation Companies Operating
International Airlines and Hong Kong and Macao Airlines for their Import of Aviation Materials for Maintenance Use (Cai Guan Shui
[2004] No.63 ), 10 aviation companies have been approved to enjoy the preferential policies of tax exemption on import aviation materials
used for maintenance use of airplanes in international airlines and Hong Kong and Macao airlines. The name list of the 10 aviation
companies, tax reduction rate, and the name list of the customs taking in charge, shall be seen in Annex III for detail.

II.

For the import aviation materials for maintenance use, the quantity is great, the batch is large, and the time of import is urgent.
For the purpose of simplifying the formalities and accelerating the speed of customs clearance, the Administrative Provisions have
prescribed such ways for the management on them as follows: firstly, the customs house at the place of import performs the formalities
for clearance on the relative import goods in the light of the full amount of tax deposit, then the customs house taking in charge
issues the Certificate of Tax Collection and Exemption on Import & Export Goods to the relevant customs house at the place of import
in the light of the relevant import documentations and agency import agreement submitted by the aviation companies under its jurisdiction
on a quarterly basis, and the customs house at the place of import performs the formalities for tax deduction on this basis.

Each relevant customs house shall pay attention to strengthening cooperation and management so as to ensure that the relative policies
and provisions be implemented smoothly.

III.

From January 1, 2005 till the promulgation of this Circular, the tax deposit or tax money collected on the aviation materials imported
for maintenance use in the light of the import tax deposit or by means of direct tax collection and in accordance with the provisions
are allowed to be refunded after the formalities for the examination and approval of tax deduction have been gone through on the
basis of the relative requirements of the Administrative Provisions.

IV.

The General Administration of Customs shall make another circular on the aviation companies that enjoy the aforesaid preferential
tax policies annually in the future and the tax deduction rate thereof. Before the said circular is issued, the relative import goods
shall still be discharged in the light of the full amount of import tax deposit, but the relative formalities for the examination
and approval of tax deduction shall not be performed before the issuance of the said circular.

When confronting any problem in the implementation, please contact the Tariff Department of the General Administration of Customs
in time.

Annex I:Administrative Provisions of the General Administration of Customs on Carrying Out Preferential Policies of Import Duty on Domestic
Aviation Companies Operating International and Hong Kong and Macao Airlines for their Import of Aviation Materials for Maintenance
Use

The present Provisions are formulated in the light of the preferential policies of tax exemption on import duty and import linkage
value-added tax on import aviation materials used by domestic aviation companies for the maintenance of airplanes and their engines
in international airlines and Hong Kong and Macao airlines upon the approval of the State Council, and the Interim Provisions formulated
by the Ministry of Finance together with the General Administration of Customs.

II.

The basic method for carrying out the aforesaid preferential policies of import duty shall be: For the domestic aviation companies
operating international airlines and Hong Kong and Macao airlines approved by the Civil Aviation Administration of China (CAAC)(hereinafter
referred to as the approved aviation companies), the Ministry of Finance shall, in accordance with the flight mileage of the aviation
companies in operating international and Hong Kong and Macao airlines and the total flight mileage as confirmed by the CAAC, ascertain
the tax deduction rate on all the aviation materials for maintenance use imported by the aviation companies after making business
accounting as a whole. The customs houses shall perform formalities for tax deduction on import aviation materials for maintenance
use in accordance with the tax deduction rate specified by the Ministry of Finance.

III.

The import aviation materials for maintenance use as mentioned in this provision refer to the aviation materials imported for the
maintenance of airborne equipment and the components and parts thereof, as well as the consumption materials necessary for the maintenance
of airplanes, including:

Engines and their components and parts, and accessories;

Accessory Power Units (APU) and their components and parts, and accessories;

Undercarriages and their components and parts, and accessories;

Other components and parts, and accessories of the airplanes;

Lubricating oil and paints necessary for the maintenance of airplanes; and

Components and parts and accessories for the purpose of replacement for the maintenance of the aforesaid equipment, installations,
and accessories abroad.

IV.

The principle for calculation of the deducted tax on aviation materials for maintenance use imported by the approved aviation companies
shall be: The amount of import duty and import linkage value-added tax on the aviation materials shall be calculated in accordance
with statutory tariff rate, and then the amount of tax actually collected shall be calculated in accordance with the verified tax
deduction rate on the aviation materials for maintenance use imported by the aviation companies. The basic formula for calculation
shall be as follows:

Amount of customs duty actually collected = amount of statutory customs duty1-tax deduction rate)

Amount of value-added tax actually collected = amount of statutory value-added tax1-tax deduction rate)

The formalities for the examination and approval of tax deduction on aviation materials for maintenance use imported by the approved
aviation companies (including import aviation materials operated by aviation materials bonded warehouses) shall be included in the
customs’ Tax Deduction and Exemption Management System for management. At the time of concrete operation, the import aviation materials
for maintenance use shall be released by the customs houses at the place of import in accordance with the full amount of import deposit,
and then the formalities for tax deduction shall be performed in accordance with the Certificate of Tax Collection and Deduction
on Import & Export Goods issued by the customs house taking in charge on quarterly basis.

VI.

The approved aviation companies declaring the import aviation materials for maintenance use to the customs houses, the ways of supervision
over import shall consist of: General Trade (Code No.0110), Goods for Maintenance (Code No. 1300). The nature of collection and exemption
shall be “Deduction and Exemption on Aviation Materials” (Code No.888); and the means of tax collection, deduction, and exemption
shall be “Special Cases” (Code No.4).

VII.

The approved aviation companies may import by themselves the aviation materials or entrust their own aviation materials import & export
companies and China Aviation Materials Import Export Group Corporation (CASGC) to import aviation materials as agents. The two
parties shall sign an entrusted agency import agreement with legal effect, but the entities that take delivery of the goods declaration
for importation shall be the approved aviation companies.

VIII.

For urgent maintenance of airplanes, upon the approval of the customs house taking in charge, the approved aviation companies may
temporarily borrow aviation materials imported after tax deduction for maintenance use among them, and may return such materials
in time after using them.

IX.

Taxes shall be levied as required on the aviation materials rented or borrowed by the approved aviation companies from abroad, or
on the aviation materials imported by the approved aviation companies and other aviation companies by means of cooperation or capital
contribution together for sharing or exchange specifically.

Tax shall be levied as required on the aviation materials for maintenance use imported by airplane maintenance enterprises. In case
the aforesaid aviation materials are used for maintaining the airplanes of the approved aviation companies after they are imported,
the relative aviation companies may give an explanation on the situation and offer the relative documents in the next year when handing
in the relative tax exemption application materials to the Ministry of Finance and the CAAC.

XI.

Tax shall be levied as required on the equipment, supplies, and components and parts installed or substituted in a whole aircraft
for the maintenance and reassemble of the aircraft abroad.

XII.

The approved aviation companies shall enhance administration on the aviation materials for maintenance use imported after tax deduction,
and declare to the customs houses in accordance with the facts. The aviation materials without approval of the customs house and
whose tax due hasn’t been paid within the customs supervision period, shall not be mortgaged, pledged, transferred, appropriated,
or made other disposal. Any violation of the provisions shall be punished by the customs house in the light of the Customs Law of
the People’s Republic of China, Regulation of the People’s Republic of China on the Implementation of Customs Administrative Punishment,
and the relative state laws and regulations.

XIII.

The present Provisions shall go into effect on conducting aviation materials for maintenance use imported by the approved aviation
companies as of January 1, 2005.

Annex II:Interim Provisions on the Import Duty on Aviation Materials for Maintenance Use Imported by Domestic Aviation Companies Operating
International Airlines and Hong Kong and Macao Airlines

The present Provisions are formulated in the light of the relative letter of reply of the State Council about the adjustment on the
policies of civil aviation import duty.

II.

The present Provisions shall apply to the domestic aviation companies operating regular international airlines and Hong Kong and Macao
airlines approved by the CAAC.

The international airlines in the present Provisions refer to the airlines in which at least any one of the departure place, the destination
or the agreed-upon stop place is located outside the territory of the People’s Republic of China. Hong Kong and Macao airlines refer
to the airlines between the Mainland and Hong Kong or Macao Special Administrative Region. The domestic sector through which the
international airliners pass and the Mainland sectors through which Hong Kong and Macao airliners pass shall be included in the aforesaid
airlines.

The aviation companies satisfying the applicable conditions in the present Provisions shall submit an application to the CAAC, and
then shall be reported to the Ministry of Finance by the CAAC after its confirming the name list uniformly.

III.

The aviation materials as mentioned in the present Provisions refer to the import materials used for maintenance of airplanes and
engines, consisting of engines, APU, undercarriages, other airplanes, accessories of engines (including the components and parts
of the aforesaid contents for maintenance abroad, but excluding the whole aircrafts maintained or reassembled abroad), as well as
the consumption equipment used for maintenance. The scope of aviation materials is only in the limit of the airborne equipment of
the aircrafts and the components and parts thereof, excluding the equipment and components and parts used in ground service system.

IV.

For domestic aviation companies, upon the approval of the State Council, import duty and import linkage value-added tax on the import
aviation materials (including components and parts sent abroad for maintenance) used for maintenance of airplanes and engines in
international airlines and Hong Kong and Macao airlines shall be exempted. This tax policy shall be managed in accordance with the
ways as follows, and its procedures shall be:

Before November 15 each year, the aviation companies satisfying the conditions listed in Article 2 of the present Provisions shall
hand in the Tax Exemption Application Report (hereinafter referred to as the Report) of the ensuing year to the Ministry of Finance
and the CAAC, and the Report shall include the contents as follows:

(1)

The implementation on the aviation materials actually imported by the companies during the period of the Report (the period shall
be from November 1 of the previous year to October 31 of the current year, hereinafter the same): including the actual import amount
and the statistics on the amount of customs duties and the amount of value-added tax paid and exempted on aviation engines, APU,
undercarriages, other airplanes and accessories of engines, as well as the consumption equipment used for maintenance by such two
ways as direct import and maintenance abroad. And the relative financial statements and explanations enclosed in addition.

(2)

The maintenance business of airplanes of the companies during the period of Report: including airplane repair & overhaul (at home),
engine repair & overhaul, APU repair & overhaul, repair of accessories, volume of business for airline maintenance (including type
and quantity of the airplanes or engines being repaired, total maintenance expenses, and the expenses for aviation materials, and
other contents, the statistics shall be made in accordance with the uniform standard for the in-kinds to enter into the warehouses).

(3)

The planned sum for import aviation materials of the companies in the following year (from January to December) to be declared by
large categories. In case there is great difference between the declared overall planned import sum of the following year and the
actual import sum during the period of Report, the specific reasons shall be indicated in the Report.

(4)

The flight mileage of international airlines and the total flight mileage of the company during the period of the Report (including
the flight mileage on schedule, overtime flight mileage, and flight mileage of chartered flights).

In accordance with the transportation production statements of the domestic aviation companies, the CAAC shall examine and confirm
the flight mileage of international airlines and the total flight mileage during the period of the Report submitted by each aviation
company, and then report the result of confirmation to the Ministry of Finance before December 1.

In accordance with the confirmation result of the CAAC, the Ministry of Finance shall regard the ratio of the flight mileage of international
airlines to the whole flight mileage during the period of the Report of each aviation company as the base tax deduction rate for
the import of aviation materials in the following whole year (from January to December) of the company, and shall, based on this
and combined with the balance on the implementation of tax deduction policies within the period of the Report of the current year
and the total import quota of the next year declared by the aviation companies, ascertain the tax deduction rate of part of import
duties and amount of import linkage value-added tax by taking into consideration all the import aviation materials of each company
(including the aviation materials needed for the maintenance of all the airplanes in domestic airlines and international airlines).

The customs houses shall conduct formalities for tax collection, deduction, and exemption on import aviation materials in accordance
with the tax deduction rate verified by the Ministry of Finance. The General Administration of Customs shall constitute the specific
measures for operation separately.

All the aviation companies enjoying the aforesaid policies shall earnestly do a good job on planning, statistics, and management pertinent
to the Report, and each company shall be responsible for the truthfulness and accuracy of the contents of the Report. For the purpose
of ensuring the truthfulness of the financial accounting information on the amount of import aviation materials provided by the Report,
the department of finance shall organize regular or special financial inspection correspondingly.

VI.

If any aviation company is found out to make false report or disguise the report in the finance inspection, it shall be disqualified
for tax deduction and exemption for one to three years in accordance with the circumstances, and shall be given relevant punishment
in accordance with the relative provisions.

VII.

The present Provisions shall go into effect as of January 1, 2005.

the General Administration of Customs
2005-12-21

INTERIM MEASURES ON LOANS GRANTED BY THE CHINA DEVELOPMENT BANK TO TAIWAN-FUNDED ENTERPRISES

the Taiwan Affairs Office of the State Council, China Development Bank

Interim Measures on Loans Granted by the China Development Bank to Taiwan-funded Enterprises

the Taiwan Affairs Office of the State Council, China Development Bank

December 21, 2005

Chapter I General Provisions

Article 1

These Measures are formulated according to the Agreement on Financial Cooperation in Exploration as concluded between the Taiwan Affairs
Office of the State Council (hereinafter referred to as the ” TAOSC”) and China Development Bank (hereinafter referred to as the
Development Bank).

Article 2

Loans granted by the Development Bank to a Taiwan-funded enterprise shall be governed by the laws and regulations as promulgated by
the state. The relevant bylaws of the Development Bank on loan management shall be carried out accordingly.

Article 3

The application filed by a Taiwan-funded enterprise for the Development Bank’s loan shall comply with the existing state industrial
policies and regional development policies, and shall meet the requirements of the Development Bank for capital proportion and credit
construction.

Chapter II Objects, Scope, Variety and Interest Rate of Loans

Article 4

Objects of Loans

(1)

The cooperative enterprises, joint venture enterprises and solely Taiwan-funded enterprises which are registered by Taiwan businessmen
in the Mainland, including large enterprises and small and medium-sized enterprises.

(2)

The infrastructure construction projects of Taiwan investment zones as approved by the State Council and the cross-straits agricultural
cooperation exemplary zones and cross-straits technical and industrial parks as approved by the relevant ministries and commissions
of the State Council.

Article 5

Scope of Loans

(1)

Industrial projects concerning energy, communication, electronics, raw materials or agriculture, and the projects of park construction;

(2)

Industrialization projects of High-tech, especially the projects which involve self-owned intellectual property;

(3)

Projects of infrastructure construction of export bases that meet the demand of the international market;

(4)

Projects involved in resource development and comprehensive utilization of renewable resources;

(5)

Projects propitious to regional economic construction and social development such as the development of the western regions, the revitalization
of Northeast China and other old industrial bases, and the rise of the central region; and

(6)

Other projects, to which the TAOSC and the Development Bank believe necessary to grant support.

Article 6

Variety and Interest Rate of Loans

Loans granted by the Development Bank to Taiwan-funded enterprises are classified into mid/long-term loans and short-term loans and
are as well classified into RMB loans and foreign exchange loans by currency. The loan interest rate shall be in line with the policies
of interest rate as publicized by the People’s Bank of China.

Chapter III Application for Loans

Article 7

The relevant application materials as submitted by a Taiwan-funded enterprise for loans shall be reported in triplicate to the Taiwan
Affairs Office at the provincial level of the place where it is located. The Taiwan Affairs Office at the provincial level shall
examine the application materials and then report them to the TAOSC. A large Taiwan-funded enterprise group may directly report its
application materials to the TAOSC with a copy of the relevant documents and materials reported to the branch of the Development
Bank at its locality (including the business department of the headquarters of the Development Bank, hereinafter the same).

Article 8

Application Materials

(1)

Letter of Application for Loans;

(2)

Feasibility research reports on the relevant loan project (or project proposal);

(3)

Examination and approval documents (for verification or archival filing) issued by the competent departments on projects, land, environmental
protection and planning are required, with an exception of special projects;

(4)

The statement on the production and operation as well as the financial statements of the enterprise; and

(5)

Other relevant materials.

Chapter IV Preliminary Appraisal of Loans

Article 9

The TAOSC shall conduct preliminary examination on the reported projects, for which loans are applied, and shall recommend to the
business development board of the Development Bank the projects that have been verified through an official letter of the economic
bureau of the TAOSC.

Article 10

The business development board of the Development Bank shall notify the relevant departments of the headquarters of the Development
Bank as well as its branch of the loan project as recommended by the TAOSC, and shall conduct appraisal on the relevant Taiwan-funded
enterprise as well as the loan project in the aspect of creditworthiness and liabilities.

Chapter V Examination of Loans and Decision-making

Article 11

The Development Bank shall adopt the dual appraisal method of “separating credit appraisal from liabilities appraisal and giving priority
to credit appraisal” in the appraisal of loans. The Development Bank shall conduct appraisal on the legal-person and construction
project of a Taiwan-funded enterprises, and may make loan commitment to a Taiwan-funded enterprise that satisfies the relevant requirements.

Article 12

According to the existing measures of the Development Bank for the administration of appraisal, a project, for which a loan of more
than RMB 30 million Yuan is applied, shall be subject to the decision of the headquarters of the Development Bank. A project, for
which a loan of no more than RMB 30 million Yuan is applied, shall be subject to the appraisal and decision of the relevant branch
of the Development Bank.

Chapter VI Conclusion of Credit Contract and Administration of Loans

Article 13

Where a loan commitment is made, a credit contract shall be concluded between the local branch of the Development Bank at the place
where a Taiwan-funded enterprise is registered and the Taiwan-funded enterprise as well as the relevant guarantor. The Taiwan-funded
enterprise shall, within 5 workdays as of the date of conclusion of contract, report the duplicate of the contract to the Taiwan
Affairs Office at the provincial level or to the TAOSC.

Article 14

After the credit contract is concluded, the relevant Taiwan-funded enterprise shall open a loan account and deposit account in the
relevant branch of the Development Bank.

Article 15

The Development Bank shall, according to the stipulations of the credit contract, grant a loan to the Taiwan-funded enterprise and
collect the principal and interest of the loan on schedule.

Article 16

Loans granted by the Development Bank shall be earmarked for every specified purpose only. Where a Taiwan-funded enterprise occupies
or embezzles any loan, fails to contribute capital according to schedule or in the case of any material risk resulting from the enterprise
management, the Development Bank is enpost_titled to stop granting the loan and collect the principal and interest of the granted loan
ahead of schedule.

Article 17

A Taiwan-funded enterprise shall report to the branch of the Development Bank at its locality the project construction and enterprise
production and operation which are required to be reported under the relevant contract. The Development Bank is enpost_titled to carry
out special examinations on the loans it has granted.

Article 18

A branch of the Development Bank shall intensify the management of loans and shall, according to the provisions of its headquarters,
report to the parent bank of the Development Bank the loan commitment, contract conclusion, issuance of loans, collection of principals
and interest, asset quality as well as after-loaning management on a quarterly basis. The comprehensive planning board of the Development
Bank shall carry out independent statistical work on loans granted to a Taiwan-funded enterprise. The business development board
of the Development Bank shall report to the economic bureau of the TAOSC all the information it has collected.

Article 19

The economic bureau of the TAOSC shall timely report the feedback to the relevant Taiwan Affairs Offices at the provincial level so
as to facilitate the Taiwan Affairs Offices at all levels to do a good job in the relevant follow-up service and work.

Article 20

The Taiwan Affairs Offices at the provincial level shall follow up the projects that have been reported to the TAOSC. The Taiwan Office
Affairs at the provincial level and branches of the Development Bank shall timely report any major problem as discovered to the TAOSC
and the headquarters of the Development Bank. The TAOSC and the Development Bank shall negotiate jointly to solve the problem.

Chapter VII Other Matters

Article 21

The TAOSC and the Development Bank shall be responsible for the interpretation and revision of these Measures.

Article 22

These Measures shall go into effect as of the day of printing and distribution.

the Taiwan Affairs Office of the State Council, China Development Bank
2005-12-21

CIRCULAR ON RELEVANT ISSUES IN IMPLEMENTING THE CATALOGUE PROHIBITED FOR PROCESSING TRADE

General Office of the Ministry of Commerce, the General Office of the General Administration of Customs, the General Office of the
General Administration of Quality Supervision, Inspection and Quarantine

Circular on Relevant Issues in Implementing the Catalogue Prohibited for Processing Trade

Shang Ban Jidian Han [2005] No.63

The responsible commercial sections in all the provinces, autonomous regions, municipalities, separately listed cities, Xinjiang Production
and Construction CorpsHarbin, Changchun, Shenyang, Nanjing, Guangzhou, Chengdu, Xi’an and Wuhan, and other related departments
of Customs and Quality Supervision, Inspection and Quarantine Bureau:

In accordance with Announcement No. 134, 2005 jointly issued by 8 ministries and commissions, and Announcement No. 105, 2005 on Catalogue
Prohibited for Processing Trade issued by Ministry of Commerce, General Administration of Customs and State Environmental Protection
Administration, and by considering the business operation of the processing trade and management of electronic data, the related
departments decided to stop the declaration and inspection procedure on the Catalogue Prohibited Commodity for Processing Trade transported
from abroad after December 31, 2005.

General Office of the Ministry of Commerce

General Office of the General Administration of Customs

General Office of the General Administration of Quality Supervision, Inspection and Quarantine

December 23, 2005

General Office of the Ministry of Commerce, the General Office of the General Administration of Customs, the General
Office of the General Administration of Quality Supervision, Inspection and Quarantine
2005-12-23

INTERIM MEASURES FOR THE ADMINISTRATION OF WITHHOLDING AND DECLARATION OF INDIVIDUAL INCOME LAW FOR ALL TAXPAYERS AND IN FULL AMOUNT

the State Administration of Taxation

Circular of the State Administration of Taxation on Printing and Distributing the Interim Measures for the Administration of Withholding
and Declaration of Individual Income Tax for All Taxpayers and in Full Amount

Guo Shui Fa [2005] No. 205

With a view to strengthening the collection and administration of individual income tax, regulating the withholding acts of withholding
agents and maintaining the legitimate rights and interests of taxpayers and withholding agents, and in accordance with the Individual
Income Tax Law of the People’s Republic of China and the Regulations on the Implementation thereof, the Law of the People’s Republic
of China on the Administration of Tax Collection and the Detailed Rules for the Implementation thereof and other tax-related provisions,
the Interim Measures for the Administration of Withholding and Declaration of Individual Income Tax for All Taxpayers and in Full
Amount are formulated The present Measures are hereby printed and distributed to you, please implement them earnestly. The Circular
on the relevant issues concerning the implementation thereof is given as follows:

Being fully aware of the significance of implementing the policy of withholding and declaration of individual income tax for all taxpayers
and in full amount

The withholding and declaration for all taxpayers and in full amount is a breakthrough for enhancing the administration of individual
income tax in the new situation, as well as the tendency for the construction of tax system and the reform of collection of individual
income tax. The tax authorities at all levels should further change their mind, seek unity in thinking and fully recognize the significance
of withholding and declaration for all taxpayers and in full amount for the purposes of constructing a harmonious society, carrying
out scientific concept of development, improving tax payment services, and building up the public consciousness of tax payment.

II.

Improving the supporting measures and promoting the withholding and declaration for all taxpayers and in full amount in an active,
steady and progressive manner

The withholding and declaration for all taxpayers and in full amount involves a lot of data and information about withholding agents
and taxpayers and also means a heavy workload. So the tax authorities in all regions should actively create conditions, improve and
perfect the system, thoroughly utilize all kinds of computerized means for their management, and in light of the principle of giving
more priority to the key industries and enterprises than to the common ones as well as the principle of incorporation into management
prior to regulation, take effective measures according to the actual situation, so as to promote the management work relating to
withholding and declaration for all taxpayers and in full amount in a planned, progressive, active and steady way.

III.

Intensifying the propaganda, tutorship and training of tax-related laws and laying a foundation for the management work relating to
the withholding and declaration for all taxpayers and in full amount

All regions should, in various forms and by various means, strengthen propaganda, do a good job in tutorship and training, and further
enhance the professional abilities and levels of the withholding agents, the tax personnel and tax officials. Special efforts should
be made according to the withholding agents’ specific conditions to do a good job in the target-oriented propaganda and tutorship
of emphasis, and special prominence should be given to the publicity of legal liabilities that shall be borne by the withholding
agents due to their default of obligations, and to the tutorship about the specific withholding work of the tax personnel. For those
withholding agents that do not carry out the detailed declaration for all taxpayers and in full amount, the taxation authorities
at all levels shall intensify propaganda and urge them to carry out withholding and declaration for all taxpayers and in full amount
as soon as possible.

During the course of implementation of these Measures, all regions shall timely find out the existing problems, take effective solutions,
and timely report them to the State Administration of Taxation.

State Administration of Taxation

December 23, 2005

Interim Measures for the Administration of Withholding and Declaration of Individual Income Law for All Taxpayers and in Full Amount

Article 1

With a view to strengthening the collection and administration of individual income tax, regulating the withholding acts of the withholding
agents, and maintaining the legitimate rights and interests of taxpayers and withholding agents, and in accordance with the Individual
Income Tax Law of the People’s Republic of China and the Regulations on the Implementation thereof, the Law of the People’s Republic
of China on the Administration of Tax Collection and the Detailed Rules for the Implementation thereof and other laws and regulations,
the present Measures are formulated.

Article 2

A withholding agent shall fulfill the obligation of withholding and declaration of individual income law for all taxpayers and in
full amount.

Article 3

The expression “withholding and declaration of individual income tax for all taxpayers and in full amount” (hereinafter referred to
as “withholding and declaration”) as mentioned in the present Measures shall mean that a withholding agent shall, within the next
month after the taxes are withheld, report to the competent tax authority the basic information on the individuals to whom it pays
taxable incomes (hereinafter referred to as “individuals”), items and amounts of taxable incomes, amount of the withheld taxes and
other tax-related information when it pays taxable incomes to individuals, whether the individuals are its staff members, or whether
the taxable incomes to be paid have amounted to the tax payment standards.

The term “withholding agents” as mentioned in the present Measures shall refer to the entities and individuals that pay taxable incomes
to individuals.

Article 4

The taxable incomes subject to withholding and declaration shall include:

(1)

Income from wages and salaries;

(2)

Income from remuneration for labor services;

(3)

Income from contribution fees;

(4)

Income from royalties;

(5)

Income from interests, dividends and bonuses;

(6)

Income from lease of property;

(7)

Income from transfer of property;

(8)

Occasional incomes; and

(9)

Other income as prescribed by the financial department of the State Council.

Article 5

A withholding agent shall report to the competent tax authority the following basic information about individuals, such as name, type
and number of identity card, position, place of domicile, effective phone number, effective address and postal code.

A withholding agent shall additionally report the relevant information about the following individuals:

(1)

Non-employees (excluding shareholders and investors): name of work place, etc.;

(2)

Shareholders and investors: total amount of corporate shares (investment), and amount of individual shares (investment), etc.; and

(3)

Individuals without domiciles in China (including employees and non-employees): foreign name, nationality or region, place of birth
(both in Chinese and foreign language), approval number of residence (or number of the certificate of Taiwanese compatriots or the
Home Visit Permit), number of employment certificate, occupation, domestic position, overseas position, time of entry, period of
employment, estimated time for staying in China, estimated departure time , name, number of taxation registration, address, postal
code and phone number of domestic employer, name (both in Chinese and foreign language) and address (both in Chinese and foreign
language) of the overseas dispatching entity, and place of payment (including domestic and overseas payment), etc.

Where a thrift institution pays the income from interest on saving deposits to depositors, a securities redemption institution pays
the income from interest on enterprise bonds to holders thereof, or a listed company pays the income from dividends and bonuses to
shareholders, the following information may be reported for the time being: name, type and number of identity card, income from the
paid interest (dividends or bonuses), and withheld taxes , etc.

All regions shall, on the basis of these basic information and the requirements of management work, create the Registration Form of
Basic Individual Information, and require the withholding agents to fill out it.

Article 6

A withholding agent shall, when carrying out withholding and declaration for the first time, submit the basic individual information
as prescribed in Article 5 . Where any individual or his basic information is changed, the withholding agent shall report the altered
information to the competent tax authority within the next month after the taxes are withheld.

Article 7

A withholding agent shall, when withholding taxes, fill out a Report Form of Withheld Individual Income Tax (see Annex I) and a Detailed
Payment Form of Individual Incomes (see Annex II) for each person item by item.

The Report Form of Withheld Individual Income Tax is used to fill out the information about the individual who has actually paid individual
income tax. The Detailed Payment Form of Individual Incomes is used to fill out the information about the individual whose taxable
income has been paid but such income has not amounted to the tax payment standards.

Where the computerized management of withholding and declaration has been carried out, the Detailed Payment Form of Individual Incomes
may be incorporated into the Report Form for Withheld Individual Income Tax.

Article 8

When turning over the withheld taxes within the time limit as prescribed in the tax law, a withholding agent shall submit to the competent
tax authority the Report Form of Withheld Individual Income Tax, Detailed Payment Form of Individual Incomes and basic individual
information. If it is difficult to submit all of them at one time, they shall be submitted before the end of the next month after
the taxes are withheld.

Article 9

A withholding agent shall set up a reference book on the withholding and declaration of individual income tax to correctly reflect
the situation of the withheld individual income tax.

Article 10

The competent tax authority shall examine and verify vigorously the materials about withholding and declaration submitted by a withholding
agent, and shall require the withholding agent to re-fill out the Report Form of Withheld Individual Income Tax or the Detailed Payment
Form of Individual Incomes if he fails to fill them out person by person and item by item, or fails to fill them out correctly.

Article 11

A withholding agent may conduct withholding and declaration directly with the tax authority, or may conduct withholding and declaration
according to the provisions by mail, data message or any other means.

Article 12

Where a withholding agent cannot submit the Report Form of Withheld Individual Income Tax, the Detailed Payment Form of Individual
Incomes or basic individual information on time and requests for delay in declaration, the relevant provisions on tax collection
shall be followed.

Article 13

When a withholding agent withholds taxes and the taxpayer requires the withholding agent to issue a voucher on withheld taxes, the
withholding agent shall do issue such a voucher. A withholding agent shall submit the bottom copy of the voucher on withholding taxes
to the competent tax authority when it/he conducts withholding and declaration in the next month after the voucher on withholding
taxes is issued.

Article 14

The competent tax authority shall, according to the requirements of “uniform account” administration, establish an archive for each
withholding agent, which shall include the following contents:

(1)

the withholding agent’s code, name, type of registration certificate, number of tax registration certificate, phone number, e-mail
address, industry, economic mode, address, postal code, legal representative (principal), chief accountant’s name and phone number,
tax registration organ, date of tax registration and competent tax authority; and

(2)

The numbers of employees and taxpayers, aggregate amount of taxable incomes (which shall be classified and aggregated by the category
of income), tax-free incomes, payable taxes (which shall be classified and aggregated by the category of income), taxes to be reduced
and exempted, deducted taxes, taxes to be made up (refunded), surcharges for overdue payment and fines, etc. of the whole year.

Article 15

The competent tax authority shall take the identity card number and the code of tax payment of an individual as the indicator to gather
up the basic information and incomes of the individual and the information on tax payment and gradually set up the archives of individual
incomes and tax payment.

Article 16

The tax authority shall, within three months after the end of a year, issue a Tax Payment Proof for Individual Income Tax of the People’s
Republic of China in the amount of individual income tax that has been actually paid in the whole year to the individual for whom
the withholding and declaration are implemented.

Article 17

The tax authority shall, according to the tax-related information it has gathered, regularly conduct cross-auditing, analysis and
appraisal of the information about the withholding and declaration conducted by withholding agents and tax returns files by individuals
themselves.

Article 18

Where a withholding agent fails to set up or preserve the account books on withheld taxes or preserve the vouchers on withheld taxes
or the relevant materials as required, it shall be punished in accordance with Article 61 of the Law on the Administration of Tax
Collection.

Article 19

Where a withholding agent fails to submit to the competent tax authority, the Report Form of Withheld Individual Income Tax, the Detailed
Payment Form of Individual Incomes or the basic individual information as required, it shall be punished in accordance with Article
62 of the Law on the Administration of Tax Collection.

Article 20

The tax authority shall keep secret of the information on the withholding agents and individuals. If it fails to do so, the principal
and any other person held directly responsible for that shall be subject to administrative punishment by the tax authority or the
relevant department.

Article 21

Any other tax-related violation shall be dealt with in accordance with the relevant provisions of laws and regulations.

Article 22

The competent tax authority shall intensify the publicity of tax law, tutorship of policies and consultation services to withholding
agents and individuals.

Article 23

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central
Government and cities as specifically designated in the state plan may, according to the present Measures and in light of their local
situation, formulate specific implementation measures and report them to the State Administration of Taxation for record.

Article 24

The power to interpret the present Measures shall remain with the State Administration of Taxation.

Article 25

The present Measures shall go into effect as of January 1, 2006. Where any of those provisions promulgated prior to the said date
conflicts with or is inconsistent with the present Measures, the present Measures shall prevail.

the State Administration of Taxation
2005-12-23

REGULATION ON CUSTOMS STATISTICS OF THE PEOPLE’S REPUBLIC OF CHINA

State Council

Order of the State Council of the People’s Republic of China

No. 454

The Regulation on Customs Statistics of the People’s Republic of China is hereby promulgated, and shall come into force as of March
1, 2006.

Premier of State Council, Wen Jiabao

December 25, 2005

Regulation on Customs Statistics of the People’s Republic of China

Article 1

The present Regulation is formulated in accordance with the relevant provisions of the Customs Law of the People’s Republic of China
and the Statistics Law of the People’s Republic of China. for the purpose of carrying out the work of customs statistics in a scientific
and effective way, and ensuring the accuracy, timeliness, and completeness of the customs statistics.

Article 2

The customs statistics is the statistics made by the customs on the trade of import and export goods according to law, and is the
component part of the national economic statistics.

The task of the customs statistics is to make statistical investigation, statistical analysis, and statistical supervision over the
trade of import and export goods, and to make monitoring and early warning compile, manage, and publicize the customs statistical
materials on import and export, and provide statistical services.

Article 3

The General Administration of Customs shall be responsible for organizing and administering the customs statistical work countrywide.

The customs statistical institutions and statistical personnel shall perform their duties in accordance with the Statistics Law of
the People’s Republic of China, Detailed Rules for the Implementation of the Statistics Law of the People’s Republic of China, and
the provisions of the present Regulation.

Article 4

The goods that actually enter and exit the territory and result in the increase or decrease of the stock of goods within the territory
shall be listed into the customs statistics.

The goods of entry and exit the territory that exceed the reasonable amount for self use shall be listed into the customs statistics.

Article 5

The following import and export goods shall not be listed into the customs statistics:

Transit goods, transshipment goods, and through goods;

Goods imported and exported temporarily;

Currency and gold used as currency;

Leased import and export goods with the lease term for less than one year;

Import and export goods compensated without payment or altered due to defects or damages, shortage, bad quality, or nonconformance
of specifications; and

Other goods that shall not be listed into the customs statistics as prescribed by the General Administration of Customs.

Article 6

The statistical items of import and export goods shall include:

Name of the goods and the code;

Quantity and price;

Operating entities;

Ways of trade;

Ways of transportation;

Country (place) of origin, country (place) of shipment, and domestic destination of the import goods;

Final country (place) of destination, country (place) of shipment destination, and domestic place of sources of the export goods;

Date of import and export;

Customs type; and

10.

Other statistical items as prescribed by the General Administration of Customs.

The General Administration of Customs may make adjustment on the statistical items on basis of the requirement for national economic
development and customs supervision.

Article 7

The name and code of import and export goods shall be made classified statistics in accordance with the Catalogue of Commodities
under Customs Statistics of the People’s Republic of China.

The quantity of the import and export goods shall be made into statistics in light of the unit of measurement prescribed in the Catalogue
of Commodities under Customs Statistics of the People’s Republic of China.

The Catalogue of Commodities under Customs Statistics of the People’s Republic of China shall be publicized by the General Administration
of Customs.

Article 8

The price of import goods shall be made into statistics in light of the aggregate of the goods price, the transportation fees before
the goods are shipped to the import place within the territory of the People’s Republic of China and unloaded there, and the relevant
fees, as well as the insurance fees.

The price of export goods shall be made statistics in light of the aggregate of the goods price, the transportation fees before the
goods are shipped to the export place within the territory of the People’s Republic of China and loaded there, and the relevant
fees, as well as the insurance fees, the amount of export tariff included in it shall be deducted.

Article 9

For import goods, the statistics on the country (place) of origin, and country (place) of shipment, and the domestic destination shall
be made respectively.

For export goods, the statistics on the final country (place) of destination, country (place) of shipment destination, and domestic
place of goods sources shall be made respectively.

Article 10

The operating entities of import and export goods shall be made statistics based on the legal persons, other organizations, or individuals
that are registered in the customs and undertake import and export operating activities.

Article 11

Classified statistics shall be made on the basis of the trade mode of import and export goods according to the requirements of customs
supervision.

Article 12

The statistics on basis of the transport modes of import and export goods shall be made in light of the transport mode of goods when
the goods entry and exit, including water transport, railway transport, road transport, aviation transport, and other transport modes.

Article 13

The statistics on the date for importing goods shall be made on the basis of the date when the goods are discharged by the customs;
the statistics on the date for exporting goods shall be made on the basis of the date when the customs formalities have been gone
through.

Article 14

The statistic on import and export goods shall be made by the customs that accepted the declaration of them..

Article 15

The customs statistical materials shall include the original customs statistical materials and the relevant statistical information
collected and rectified based on the original materials.

The original customs statistical materials as mentioned in the preceding paragraph shall refer to the import and export goods declaration
forms and other relevant documentations confirmed by the customs.

Article 16

The General Administration of Customs shall gratuitous provide the relevant comprehensive statistical materials to the relevant departments
of the State Council regularly. .

The customs houses directly under the General Administration of Customs shall gratuitous provide the relevant comprehensive statistical
materials regularly to the relevant departments of the people’s governments at the provinces, autonomous regions, or municipalities
directly under the Central Government at the places where they are located.

Article 17

The customs shall establish the system of regular announcement of statistics materials to publicize customs statistical information
to the society.

The customs may provide statistical services upon the need of the general public of the society.

Article 18

The statistical personnel of the customs shall be obliged to keep confidential for the national secrets and business secrets acquired
during the process of making statistics.

Article 19

The parties shall be enpost_titled to inquire about the original customs statistical materials and the relevant information declared by
themselves within the time limit of preservation, if they have any question on the result of inquiry, they may apply to the customs
for verification, the customs shall make verification and answer the relevant questions.

Article 20

In case the customs has any question about the items declared by the parties according to law, it may put forward the inquiry to the
parties, and the parties shall give reply in a timely manner.

Article 21

In case any item that shall be declared according to law fails to be declared or the declaration on the item is untruthful, which
affects the accuracy of the customs statistics, the customs shall order the parties to make correction, if there is necessity to
give an administrative punishment, the customs shall give it a punishment in accordance with the provisions of the Regulation of
the People’s Republic of China on the Implesmentation of Customs Administrative Punishment.

Article 22

The present Regulation shall be implemented as of March 1, 2006.

State Council
2005-12-25

CIRCULAR OF THE MINISTRY OF COMMERCE OF THE PEOPLES REPUBLIC OF CHINA, ON RELEVANT ISSUES OF ISSUING THE EXPORT QUOTAS OF SOME AGRICULTURAL PRODUCTS IN 2006

Ministry of Commerce

Circular of the Ministry of Commerce of the Peoples Republic of China, on Relevant Issues of Issuing the Export Quotas of some Agricultural
Products in 2006

Shang Mao Han [2005] No.108

Commercial administrative sections in all provinces, autonomous regions, municipalities, separately listed cities in plan and Xinjiang
Production and Construction Corps, and enterprises under administration of the central government:

In accordance with the related regulations of Administrative Regulations on Commodity Import and Export of the Peoples Republic
of China as well as the Administrative Measures on Quota of Export Commodities, Ministry of Commerce draws up the Distributing Scheme
on Export Quota of Partial Agricultural Products in 2006 (refer to the appendix) in line with the supply and demand of the international
markets and the implementation of the export quota in different regions and enterprises, which is now announced to all departments
concerned to implement.

All local commercial administrative sections should get done with task of the second distribution, examination and feedback in time
strictly with the relevant regulations. Enterprises with high utilization ratio, great operation capacity, supply of adequate quality
and outstanding reputation should have the priority to others. The second distribution scheme should be reported to Ministry of Commerce
(department of foreign trade) for examination, approval and record. The office of quota license affairs, China international e-commerce
center and relevant export license issuing institution should also get a copy of it at the same time.

Appendix: Distributing Scheme on Export Quota of Partial Agricultural Products in 2006 (omitted)

Ministry of Commerce

Dec 26, 2005

Ministry of Commerce
2005-12-26

MINISTRY OF COMMERCE ANNOUNCEMENT NO. 63, 2005 ON NATIONAL DISTRIBUTION GROSS OF 10 CATEGORIES OF TEXTILE EXPORTED TO EU FOR THE FIRST TIME IN 2006

Ministry of Commercec

Ministry of Commerce Announcement No. 63, 2005 on National Distribution Gross of 10 Categories of Textile Exported to EU for the First
Time in 2006

[2005] No. 63

In accordance with the regulations in Provisional Administration Measures on Textile Export, National Gross of 10 Categories of Textile
Exported to EU for the First Time in 2006, listed in Provisional Administration Commodity Catalogue of Textile Export (Announcement
No. 45, 2005), is publicized as follows: htm/e04335.htmCategory Number

Category Number. exported to EU	Unit	Amount of Agreement	Proportion of borrowed amount from 2006 Amount of Agreement	Available amount in 2006 (eliminate borrowed amount)	2006 distribution gross (70% of available in 2006)	2006 biding gross (30% of available amount in 2006)
Category 2	Kg	61,948,000		61,948,000	43,363,600	18,584,400
Category 4	Piece	540,204,000		540,240,000	378,142,800	162,061,200
Category 5	Piece	199,704,000	5%	189,719,000	132,803,300	56,915,700
Category 6	Piece	348,072,000	2.63%	338,923,000	237,246,100	101,676,900
Category 7	Piece	80,493,000		80,493,000	56,345,100	24,147,900
Category 20	Kg	15,795,000		15,795,000	11,056,500	4,738,500
Category 26	Piece	27,001,000		27,001,000	18,900,700	8,100,300
Category 31	Piece	225,692,000	2.57%	219,882,000	153,917,400	65,964,600
Category 39	Kg	12,349,000		12,349,000	8,644,300	3,704,700
Category 115	Kg	4,740,000		4,740,000	3,318,000	1,422,000

Ministry of Commerce

September 21, 2005

MINISTRY OF COMMERCE ANNOUNCEMENT NO.57 ON PRELIMINARY ARBITRATION ON EPICHLOROHYDRIN

Ministry of Commerce

Ministry of Commerce Announcement No.57 on Preliminary Arbitration on Epichlorohydrin

[2005] No.57

In accordance with Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce released announcement on Dec 28,
2004, deciding to carry out anti-dumping investigation on Epichlorohydrin originating from Russia, the Republic of Korea, Japan and
United States.

Ministry of Commerce carried out investigation on dumping and dumping profit margin as well as injury and injury extent, according
to the results of which as well as tem No. 24 of the Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce
release preliminary attribution (please refer appendix). Relevant matters are now announced as follows:

Preliminary Attribution:

In accordance with investigation results, Ministry of Commerce confirms the dumping of Epichlorohydrin originating from Russia, the
Republic of Korea, Japan and United States, and injuries of mainland Epichlorohydrin industry as well as the causality between dumping
and real injuries.

Deposit:

In accordance with tem No. 28 and 29 of the Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce decides
to carry out anti-dumping measures in means of deposit. As from Sep 21, importers need to provide relevant deposits to Customs of
the People’s Republic of China for the importing of Epichlorohydrin originating from Russia, the Republic of Korea, Japan and United
States. The tariff codes of the investigated commodities are: 29103000.

Deposit rates of different Companies:

Russian Companies

The Joint Stock Company Kaustik 23.0%

Limited Liability Company “Usoliekhimprom” 8.6%

All Others 71.5%

Companies of the Republic of Korea

HAN WHA CHEMICAL CORPORATION 4.5%

Samsung Fine Chemicals Co., LTD 4.3%

All Others 71.5%

Japanese Companies

Kashima Chemical Co., Ltd. 7.8%

All Others 71.5%

DAISO CO., LTD. 0%

American Companies

The Dow Chemical Company 4.3%

All Others 71.5%

All interested parties may submit comments in written form as well as relevant evidences to Ministry of Commerce in 20 days for consideration
as from release of this announcement.

Appendix:

Ministry of Commerce Preliminary Attribution on Epichlorohydrin originating from Russia, the Republic of Korea, Japan and United States

Ministry of Commerce

Sep 21, 2005

Ministry of Commerce
2005-09-21

TEMPORARY PROVISIONS ON PROMOTING INDUSTRIAL STRUCTURE ADJUSTMENT

State Council

Decision of the State Council on Promulgating and Implementing the “Temporary Provisions on Promoting Industrial Structure Adjustment”

No. 40 [2005] of the State Council

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

The “Temporary Provisions on Promoting Industrial Structure Adjustment” (hereinafter referred to as the “Temporary Provisions”), which
were deliberated and adopted at 112th executive meeting of the State Council on November 9, 2005, are hereby promulgated.

The formulation and implementation of the “Temporary Provisions” is an important measure to carry out the spirit of the fifth plenary
session of the 16th CPC Central Committee, to achieve the objective of the “Eleventh Five-year” planning, and has great significance
to ensure the all-round implementation of the scientific view of development, to strengthen and improve macro-control, to further
transform the ways of economic growth, to propel industrial structure adjustment, optimization and upgrading, and to keep the stable
and fast development of the national economy. The people’s governments of all provinces, autonomous regions, and municipalities directly
under the Central Government shall take the promotion of industrial structure adjustment as an important reform and development task
at present and within a period in the future, establish the liability system, lay emphasis on implementation, and shall, in accordance
with the “Temporary Provisions” and in light of the local situation on industrial development, formulate specific measures, rationally
guide the investment directions, encourage and support the development of advanced production capacities, restrict and eliminate
outdated production capacities, prevent blind investments and low-level redundant construction, and effectively propel industrial
structure optimization and upgrading. All relevant administrative departments shall speed up the formulation and amendment of policies
on public finance, taxation, credit, land, import and export, etc., effectively intensify the coordination and cooperation with industrial
policies, and further improve and promote the policy system on industrial structure adjustment. The people’s governments of all provinces,
autonomous regions, and municipalities directly under the Central Government, the relevant administrative departments of the state
for development and reform, public finance, taxation, state land resources, environmental protection, industry and commerce, quality
inspection, banking supervision, electric power supervision, work safety supervision, as well as the administrative departments of
all industries, etc. shall establish and improve the mechanism of organization and coordination, supervision and inspection for
the industrial structure adjustment work, perform their respective duties, cooperate with each other closely, form a resultant force,
and effectively intensify the effectiveness of implementing industrial policies. The relevant governments and departments shall,
when implementing the “Temporary Provisions”, correctly deal with the relationship between government guidance and market regulation,
give full play to the fundamental role of the market in allocating resources, correctly deal with the relationship between development
and stability, partial interests and overall interests, and immediate interests and long-term interests, so as to keep the stable
and fast development of the economy.

The State Council

December 2, 2005

Temporary Provisions on Promoting Industrial Structure Adjustment

Chapter I General Provisions

Article 1

The present Provisions are formulated in accordance with the relevant laws and administrative regulations of the state for the purpose
of ensuring the all-round implementation of the scientific view of development, strengthening and improving the macro-control policy,
guiding social investments, and promoting industrial structure optimization and upgrading.

Article 2

Objectives of Industrial Structure Adjustment:

We shall propel industrial structure optimization and upgrading, to promote the healthy and harmonious development of the first, second
and third industries, gradually to form the industry pattern with agriculture as the base, hi-tech industry as the forerunner, and
basic industry and manufacturing industry as the support, and the service industry developed in an all-round way, to realize sustainable
development by adhere economize development, clean development and safe development..

Article 3

Principles of Industrial Structure Adjustment:

We shall adhere to combine market regulation with government guidance. We shall give full play to the fundamental role of the market
in allocating resources, to strengthen the reasonable guidance of state industrial policies, and to realize optimized allocation
of resource.

Improving the industrial technological level through independent innovation. We shall regard the enhancement of independent innovation
capabilities as the central element of adjusting the industrial structure, establishing a technical innovation system combining
the production, study and research which the enterprises as the principal part and the market as the guidance,. We shall make great
efforts to enhance the original innovation capabilities, integrated innovation capabilities, and the capabilities of import, digestion,
absorption and re-innovation, and shall improve the overall industrial technological level.

Adhering to walking a new road to industrialization. We shall drive industrialization with informatization, and promote informatization
with industrialization; walk a safeguarded development road with high scientific and technological contents, promising economic benefits,
low consumption of resources, little environmental pollution, and full human resource advantages, and endeavor to propel the fundamental
transformation of the way of economic growth.

Promoting coordinated and healthy development of industries. We shall develop advanced manufacturing industry, increase the proportion
and the level of the service industry, strengthen infrastructural construction, optimize industrial structure and layout of urban
and rural region, optimize the structure of foreign trade and foreign capital utilization, maintain the lawful rights and interests
of the masses, endeavor to boost employment, and propel the harmonious economic and social development.

Chapter II Directions and Key Points of Industrial Structure Adjustment

Article 4

Consolidating and strengthening the basic status of agriculture, and speeding up the transformation of traditional agriculture into
modern agriculture. We shall speed up agricultural S&T progress, strengthen the construction of agricultural facilities, adjust
the agricultural production structure, transform the way of agricultural growth, and enhance the comprehensive agricultural production
capacities. We shall stabilize and develop grain production, speed up the implementation of high-quality grain industry projects,
build large commodity grain production bases, and guarantee the grain safety. We shall optimize the agricultural production layout,
propel industrialized operation of agricultural, , speed up agricultural standardization, promote the value adding on processing
conversion of agricultural product , and develop high-yield, high-quality, high-efficiency, ecological and safe agriculture. We shall
make great efforts to develop animal husbandry, improve the level of scale production, intensification and standardization, protect
natural grasslands, and build forage grassland bases. We shall actively develop aquaculture, protect and reasonably utilize fishery
resources, extend green fishery breeding modes, develop high-efficiency ecological breeding industry. We shall develop the bases
of raw materials forests and timber forest in light of local circumstances, and increase the rate of comprehensive utilization of
timbers. We shall strengthen water conservancy construction of farmlands, improve low and medium-yielding fields, and do a good job
in land rehabilitation. We shall improve the level of agricultural mechanization, and improve the agricultural technology extension,
agricultural product markets, agricultural product quality safety, and the animal and plant disease and pest prevention and control
system. We shall actively adopt water saving irrigation, scientifically use fertilizers and pesticides, and promote sustainable development
of agriculture.

Article 5

Strengthening the construction of infrastructures such as energy, traffic, water conservancy and information network, etc., and enhancing
the guaranteeing capacities for economic and social development.

We shall adhere to the principles of giving priority to economize, base on domestic, coal resources to be the basic, diversified
development, optimize the energy structure, and establish a energy supply system on stable, economic and clean . We shall optimize
and develop coal electricity by stressing large-type high-efficiency sets, orderly develop hydro-electric power on the basis of
ecological protection, actively develop nuclear power, strengthen electric power network construction, optimize the structure of
electric power network, and enlarge the scale of West-to-East power transmission. We shall build large-type coal bases, adjust and
transform medium and small coal mines, firmly eliminate the small coal mines failing to meet work safety conditions and wasting or
destroying resources, speed up comprehensive utilization of such resources as coal waste rocks, coal bed gas, mine drainage, etc.,
and encourage coal-electricity joint operation. We shall develop both petroleum and gas industry simultaneously, make greater efforts
to explore, develop and utilize petroleum and natural gas resources, enlarge overseas cooperation and development, and speed up infrastructural
construction in the areas of petroleum and natural gas. We shall actively support and develop new energy and renewable energy industries,
encourage the development and utilization of substitute resources for petroleum and clean energy, and actively propel the industrialization
of clean coal technology, and speed up the development of wind power, solar energy, and biomass energy, etc.

We shall, by stressing network enlargement, form a convenient, expedite, high-efficiency, safe comprehensive traffic and transport
system. We shall, by adhering to the overall planning and reasonable layout, realize mutual complement of advantages of the transporting
modes and connection each other by railway, highway, water carriage, civil aviation, and pipeline, etc., and exert the combination
efficiency and holistic advantage We shall speed up the development of railways and urban track traffic network, emphatically build
special passenger transport avenues, coal transport channels, regional channels , and railways in Western Regions. We shall perfect
the major arterial of national highways and arterial highways in Western Regions, build national expressway network, and make great
efforts to propel the construction of rural highways. We shall give priority to the development of urban public traffic, strengthen
the construction of deepwater harbors for containers, energy resources materials and ores, and develop inland water navigation. We
shall enlarge large-scale airports, improve medium-scale airports, increase small-scale airports, and build up a harmoniously developing
airport system with reasonable layout, appropriate scale and complete functions. We shall strengthen the construction of pipeline
transport.

We shall strengthen water conservancy construction, and optimize water resource allocation. We shall make a unified planning to distribute
the water resources on upriver and downriver, surface r and underground, control the exploitation of underground water, and actively
develop seawater desalting. We shall strengthen flood prevention and drought-resistant project construction, intensify the construction
to lessen the weak points in flood prevention and disaster reduction by stressing the reinforcement of embankment, key controlling
water conservancy projects and other flood prevention systems, continue reinforcing the backbone engineering construction for trunk
embanking of big rivers, flood passage or storage basins, eliminating the dangers and establishing of dangerous reservoirs, and
urban flood prevention. and construct the South-North Water Diversion Project. We shall intensify our efforts in constructing and
transforming drinking water projects for both people and stock and the auxiliary projects in irrigation areas.

We shall strengthen the construction of information infrastructures such as wide band communication network, digital television network
and the next generation of Internet, etc., propel the integration of the three kinds of networks, and improve the information safeguarding
system.

Article 6

Developing advanced manufacturing industry as the keystone for vitalizing equipment manufacturing industry, and exerting its important
supporting function to the economic development.

The equipment manufacturing industry shall depend on major construction projects, improve the localization level on important technical
equipment through independent innovation, technology import, cooperative development, combined manufacturing, etc., break through
especially in the areas such as high-efficiency clean power generation and power transmission and transformation, large petroleum
chemical and advanced applicable transport equipment, high-class numerical control machine tools, automation control and integrated
circuit equipment, advanced power equipment, energy conservative and consumption reducing equipment, etc., improve the overall level
of research and development design, supply, processing, manufacturing, and systematic integration of core elements and parts.

We shall adhere to driving industrialization with informatization, encourage the adoption of hi-techs and advanced applicable technologies
to transform and enhance the manufacturing industry, and increase the proportions of independent intellectual property rights, independent
brands and high-end products. We shall, in light of the energy and resource conditions as well as environmental capacity, emphatically
adjust the product structure in the raw material industry, enterprise organization structure and industry layout, and improve product
quality and technical content. We shall support the development of cold rolled stainless steel sheets, cold rolled silicon steel,
high-density phosphate fertilizer, high-efficiency low-toxic and less-persistent pesticides, ethylene, fine chemical industry, and
high-performance differentiated fibers. We shall urge the industries of oil refining, ethylene, steel, cement and paper making to
develop towards bases and large scale. We shall strengthen the geological survey of important resources such as iron, copper and
aluminum, etc., increase the geological reserve of resources, and practice rational exploitation and comprehensive utilization.

Article 7

Speeding up the development of hi-tech industry, and further strengthening the driving function of hi-tech industry to economic growth.

We shall enhance independent innovation capabilities, endeavor to grasp core and key technologies, make great efforts to develop the
hi-techs which are of great importance to driving economic and social development, support and develop major industry technologies,
formulate important technical standards, build technical bases for independent innovations, speed up the extension of hi-tech industry
from processing and assembling mainly to independent research and development. We shall, in light of the requirements on industry
gathering, scale development and enlargement of international cooperation, make great efforts to develop industries in the areas
of information, biology, new materials, new energy, aviation and spaceflight, etc., and cultivate more new economic growth points.
We shall give priority to developing information industry, make great efforts to develop core industries of integrated circuits and
software, etc., emphatically cultivate information industry clusters in respect of digital audio and video frequency, the new generation
of mobile communication, high-performance computer and network equipment, etc., strengthen information resource development and sharing,
and propel the dissemination and application of information technologies. We shall exert fully to China’s special resource advantages
and technical advantages, emphatically develop biologic industries such as bio-agriculture, bio-medicine, bio-energy, bio-chemical
industry, etc. We shall speed up the development of civil aviation and space industry, propel the development and industrialization
of civil aircrafts, aeroengines and airborne systems, and further develop civil space technologies and satellite technologies. We
shall actively develop new materials industry, support and develop the photoelectron materials which have technical characteristics
and may exert the comparative advantages in China, as well as products such as materials with high-performance structure and special
new functions.

Article 8

Increasing the proportion of the service industry, optimizing the structure of the service industry, and promoting the all-round and
rapid development of the service industry. We shall adhere to the directions towards market, industrialization and socialization,
strengthen the classified guidance and effective supervision, further innovate and improve the systems and mechanisms for service
industry development, and establish a public, equal and regular industry access system. We shall develop large service enterprise
groups with strong competitive strength, the big cities shall put the development of the service industries on a prior status, and
the conditioned big cities shall gradually form an industrial structure mainly composed of service economy. We shall increase service
varieties, improve the service level, and enhance the employment capacity and industrial quality. We shall make great efforts to
develop modern service industries on finance, insurance, logistics, information and legal services, accounting, intellectual property
rights, technology, design, consulting service and etc. , actively develop the industries with big potential demands such as cultural,
tourism, and community service, etc., and speed up the reform and development in the areas of education, training, services provide
for the aged, medical treatment, health care, etc. We shall regulate and enhance traditional service industries such as commercial
trade, catering and accommodation, etc., propel such organizational forms and service modes as chained operation, franchise, agency
system, multi-modal transport, and electronic commerce, etc.

Article 9

Making great efforts to develop circular economy, building a resource saving and environment-friendly society, and realizing the harmony
of economic growth and population resource environment. We shall adhere to the guidelines of stressing both development and economize
but giving priority to the latter, and in compliance with the reduction-based, re-utilization, resource-based principles, make great
efforts to propel the economize of energy, water, land and materials, strengthen comprehensive utilization of resources, promote
all-round clean production, improve a renewable resource recycling and utilization system, and form a low-cost, low-consumption,
low-discharge and high-efficiency economize way of growth. We shall actively develop and spread resource economizing , substitutive
and circular utilization technologies and products, emphatically propel the transformation of energy economizing and consumption
reducing technologies in the industries of steel, non-ferrous metal, electric power, petroleum chemistry, construction, coal, building
materials, paper making, etc., develop energy economizing and land saving buildings, applying mandatory elimination system to the
techniques and products with high energy consumption, serious pollution, work safety endangering, and outdated technologies, and
lawfully close up enterprises that destroy environment and fail to meet work safety conditions. We shall adjust the scale of industries
with high energy consumption and serious pollution, and decrease the proportion of such industries. We shall encourage the production
and use of various consumables with good economizing performance, and form a consumption mode of economizing resources. We shall
make great efforts to develop the environmental protection industry, and intensify the ecological protection of water resources,
land, forests, grasslands, and sea, etc. by stressing the control of unreasonable resource development.

Article 10

Optimizing the industrial organizational structure, and adjusting the regional industrial layout. We shall improve the enterprises’
level of economy of scale and the extent of their industrial concentration, speed up the development of large enterprises, and form
a group of large companies and enterprise groups with independent intellectual property rights, prominence on main professional work
, and strong core competitive capacity. We shall give full play to the functions of medium and small enterprises, propel medium
and small enterprises to form the work division and coordination relationship with large enterprises, improve their professional
level of production, and promote the technical progress and industry upgrading of medium and small enterprises. We shall fully exert
the comparative advantages, actively propel rational flow and allocation of production factors, and guide clustered development
of industries. The Western Regions shall strengthen infrastructural construction and ecological environmental protection, improve
public services, develop characteristic industries and enhance their self-development capabilities in light of local resource advantages.
The Northeastern Regions shall speed up the industrial structure adjustment and state-owned enterprise reform and restructuring,
develop modern agriculture, emphatically promote the equipment manufacturing industry, and promote the transformation of resource-exhausted
cities. The Middle Regions shall do a good job in the construction of main grain-producing areas, develop energy and manufacturing
industries with comparative advantages, strengthen infrastructural construction, and speed up building a modern market system. The
Eastern Regions shall endeavor to improve independent innovation capabilities, speed up realizing the optimization and upgrading
of structure and the transformation of the way of growth, improve the level of global-market-oriented economy, and enhance the international
competitive capability and sustainable development capacity. They shall, by starting from the overall strategy layout of regional
development, and on the basis of the bearing capacities of resources and environment as well as the development potentiality, adopt
different regional industry layouts of optimized development, key development, restricted development and prohibited development,
etc.

Article 11

Implementing the mutual-benefit and win-win opening strategy, improving the level of opening up, and promoting domestic industrial
structure upgrading. We shall speed up transforming the way of foreign trade growth, enlarge the export of commodities with independent
intellectual property rights and independent brands, control the export of products with high energy consumption and high pollution,
and encourage the import of advanced technologies, equipment and resources in short supply in China. We shall support conditioned
enterprises to “Go Global”, and to develop and grow up in international market competition, and drive the development of domestic
industries. We shall improve the industrial level of processing trade, and enhance the domestic capacity of coordinated production.
We shall make great efforts to develop service trade, continue opening service markets, and orderly undertake the transfer of international
modern service industries. We shall improve the quality and level of utilization of foreign capital, emphatically import advanced
technologies, management experiences and high-quality talents, and pay attention to the digestion, absorption, innovation and improvement
of the imported technologies. The regions and development zones which have strong capacities of absorbing foreign investments shall
emphatically improve the level of production and manufacture, and actively extend to the areas of research, development, and modern
logistics, etc.

Chapter III Guidance Catalogue for the Industrial Structure Adjustment

Article 12

The “Guidance Catalogue for the Industrial Structure Adjustment” is the important basis for guiding investment directions, and for
the governments to administer investment projects, to formulate and enforce policies on public finance, taxation, credit, land, import
and export, etc.

The “Guidance Catalogue for the Industrial Structure Adjustment” shall be formulated in accordance with the relevant laws and regulations
of the state by the State Development and Reform Commission jointly with the relevant administrative departments of the State Council,
and be promulgated upon approval of the State Council. If, when required by the actual situation, the “Guidance Catalogue for the
Industrial Structure Adjustment” needs to be partially adjusted, it shall be timely amended and promulgated by the State Development
and Reform Commission jointly with the relevant administrative departments of the State Council.

In principle, the “Guidance Catalogue for the Industrial Structure Adjustment” shall apply to various types of enterprises inside
China. The foreign funded enterprises shall be governed by the “Guidance Catalogue for the Foreign Investment Industries”. The
“Guidance Catalogue for the Industrial Structure Adjustment” is the one of main basis for amending the “Guidance Catalogue for the
Foreign Investment Industries”. The industries of the eliminated category under the “Guidance Catalogue for the Industrial Structure
Adjustment” shall apply to the foreign-funded enterprises. The policy connection problem in implementing between the “Guidance Catalogue
for the Industrial Structure Adjustment” and the “Guidance Catalogue for the Foreign Investment Industries” shall be subject to
the investigation and deliberation by the State Development and Reform Commission and the Ministry of Commerce.

Article 13

The “Guidance Catalogue for the Industrial Structure Adjustment” is composed of three categories of industries, namely, the encouraged
category, the restricted category and the eliminated category. The industries not belonging to the encouraged category, the restricted
category or the eliminated category, but conforming to the relevant laws, regulations and policies of the state, shall belong to
the permitted category. The permitted category shall not be listed into the “Guidance Catalogue for the Industrial Structure Adjustment”.

Article 14

The encouraged category mainly include the key technologies, equipment and products to have important promoting functions to economic
and social development, to conducive to resource saving, environmental protection, and industrial structure optimization and upgrading,
and require to be encouraged and supported by policies and measures,. The following principles shall be applied to determine the
guidance catalogue for the encouraged industries:

(1)

Having technical base for research, development and industrialization in China, and being conducive to technical innovations and forming
a new economic growth point;

(2)

Having large market demands and a wide development prospect at present and within a period in the future, and being conducive to improving
the capacity of supplying commodities in short supply, and conducive to developing domestic and overseas markets;

(3)

Having high technical content, and being conducive to promoting industrial technical progress and improving the industrial competitive
strength;

(4)

Meeting the requirements of the sustainable development strategy, being conducive to the work safety, conducive to economize and
comprehensive utilization of resources, conducive to the development and utilization of new energy and renewable energy, conducive
to improving energy efficiency, and conducive to protecting and improving ecological environment;

(5)

Being conducive to exert China’s comparative advantages, especially the advantages of energy, mineral resources and labor resources,
etc. at the old industrial bases in the Middle and Western Regions and the Northeastern Regions. ;

(6)

Being conducive to boosting employment, and increasing job positions; and

(7)

Other circumstances prescribed in laws and administrative regulations.

Article 15

The restricted category mainly include the production capacities, industrial arts and techniques, equipment and products which have
outdated industrial arts and techniques, do not meet the admittance conditions of industry or the relevant provisions, are unconducive
to industrial structure optimization and upgrading, and need to be transformed under press or prohibited from being newly built.
The guidance catalogue for the restricted industries shall be determined in compliance with the following principles:

(1)

Not conforming to the admittance conditions of industry , with outdated industrial arts and techniques, and of no use to improve the
industrial structure;

(2)

Being unconducive to work safety;

(3)

Being unconducive to economize of resources or energy;

(4)

Being unconducive to environmental protection or resumption of the ecological system;

(5)

Being under serious low-level redundant construction, and with obviously surplus production capacities; and

(6)

Other circumstances prescribed in laws and administrative regulations.

Article 16

The eliminated category mainly include the outdated industrial arts and techniques, equipment and products which do not conform to
the relevant laws and regulations, seriously waste resources, pollute environment, do not meet the work safety conditions, and need
to be eliminated. The guidance catalogue for the eliminated industries shall be determined in compliance with the following principles:

(1)

Endangering production and personal safety, and not meeting the work safety conditions;

(2)

Seriously polluting the environment or seriously destroying the ecological environment;

(3)

The product quality is lower than the minimum standard prescribed by the state or the industry;

(4)

Seriously wasting resources or energy; and

(5)

Other circumstances prescribed in laws and administrative regulations.

Article 17

The encouraged investment projects shall be examined, approved, ratified or archived in accordance with the relevant provisions of
the state on investment administration. All financial institutions shall provide credit supports in compliance with credit principles.
The equipment imported within the total amount of investments for self use, except for the commodities listed in the “Catalogue of
Non-tax Free Imported Commodities for Domestic Investment Projects (Amended in 2000)” promulgated by the Ministry of Finance, shall
still be exempted from customs duties and import value-added tax, and shall, after the new provisions such as the catalogue of investment
projects on non-exempted tax have been promulgated, be governed by such new provisions. As for oth

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