CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON STRENGTHENING THE ADMINISTRATION OF TAXATION FOR CONTRACTED PROJECTS UNDERTAKEN BY FOREIGN ENTERPRISES

Circular of the State Administration of Taxation on Strengthening the Administration of Taxation for Contracted Projects Undertaken
by Foreign Enterprises

Guo Shui Fa [2006] No. 83

State and Local Taxation bureaus in all provinces, autonomous regions, municipalities directly under the Central Government and cities
separately designated in the state plan:

In accordance with the arrangements and requirements of the national work meeting on the administration of international (foreign-related)
taxation of the State Administration of Taxation, and in view of the current weak foundation of the administration of taxation of
foreign enterprises, especially issues such as tax dodges related to contracted construction projects undertaken by foreign enterprises,
the measures and requirements concerning the strengthening of administration of taxation are herby notified as follows:

Further strengthening the administration of taxation for contracted projects undertaken by foreign enterprises, enhancing responsibilities
and plugging up loopholes.

At present, the projects for which foreign enterprises come to China to contract are ever increasing and besides, foreign enterprises
are getting more and more opportunities to take part in major state construction projects, including the construction of gymnasiums
and stadiums for the Olympic Games and the World Exposition as well as the constructions of traffic and energy sources.

In order to strengthen the administration of taxation for contracted projects undertaken by foreign enterprises, the State Administration
of Taxation requires local tax departments to particularly grasp the basic work of the source of tax information by combining with
the actual local situation on the basis of fully strengthening the administration of taxation on foreign enterprises. State and local
tax departments at all levels shall tightly cooperate and coordinate with each other, actively connect with local governments and
fund settlement departments, such as commercial departments, development and reform commissions (bureaus), construction commissions,
industrial and commercial circles, the Customs, trade associations and banks, thus learning the trend of tax source as soon as possible,
perfecting internal process, clarifying liabilities and division of labor, strictly ascertaining responsibilities, and putting an
end to the phenomena of failing to levy or manage. All tax departments shall heighten and ascertain the withholding responsibilities
by steps with plans, and work hard to make the administration level of taxation for contracted construction projects undertaken by
foreign enterprises mount a new step within this year.

Intensifying the publicity of the enforcement of foreign enterprise taxation policies and agreements.

All levels of tax authorities shall, in full use of all means of publicity, carry out wide publicity about the foreign enterprise
taxation policies and relevant enforcement provisions of taxation agreements to taxpayers and withholding agents, who must know their
obligations and liabilities. The tax departments shall persevere unremittingly, pay special attention to typical cases and fan out
from a point to an area. As for those serious illegal cases, tax departments shall make decisions of punishment in accordance with
the law and lay bare the selected cases upon approval by the State Administration of Taxation. Where the tax personnel commit dereliction
of duty of management and bring about significant loss to the state taxation, they shall be investigated in accordance with relevant
provisions of the Tax Collection and Administration Law of the People’s Republic of China.

After receiving the present Circular, all levels of tax departments shall, in accordance with the above mentioned requirements and
in due time, make arrangements and carry them out as soon as possible. Any problem or difficulty encountered in the course of implementation
shall be reported to the State Administration of Taxation on a timely basis. Results of implementation shall be reported to the State
Administration of Taxation (International Department) in a written form before the end of November, 2006.

State Administration of Taxation

June 8, 2006

State Administration of Taxation
2006-06-08

GUIDELINES FOR THE INTERNAL CONTROL OF PILOT MARGIN TRADING OF SECURITIES COMPANIES

Circular of China Securities Regulatory Commission concerning Promulgating the Guidelines for the Internal Control of Pilot Margin
Trading of Securities Companies

Zheng Jian Ji Gou Zi [2006] No.124

All the securities companies:

For the purpose of guiding securities companies to establish and perfect the internal control mechanism for the pilot margin trading,
Guidelines for the Internal Control of Pilot Margin trading of Securities Companies are hereby formulated and promulgated, and shall
come into force as of August 1, 2006.

China Securities Regulatory Commission

June 30, 2006

Guidelines for the Internal Control of Pilot Margin trading of Securities Companies

Article 1

The present Guidelines are formulated for the purpose of guiding securities companies to establish and improve the internal control
mechanism for the margin trading and to prevent various risks related to the margin trading.

Article 2

Where a securities company develops the pilot margin trading, it shall establish and perfect the internal control mechanism in accordance
with the Guidelines for the Internal Control of Securities Companies and the present Guidelines.

Article 3

Where a securities company develops the pilot margin trading, it shall establish adequate management rules, operational procedures
as well as risk identification, evaluation and control systems to ensure that the risks can be monitored, controlled and endured.

Article 4

A securities company shall improve the business separation system, and ensure the separation of the margin trading from the securities
assets management, securities self-run business and investment banks etc. concerning the organization, personnel, information and
account etc.

Article 5

A securities company shall conduct a uniform administration on the margin trading. The policy decisions and major management functions
of the margin trading shall be borne by the head office of the securities company.

Article 6

A securities company shall establish the policy decisions and authorization system for the margin trading, which shall be established
and operated in principle under the structure of the board of directors – business policy decisions department – business implementation
department – branch office.

The board of directors shall be in charge of formulating basic management system for the margin trading, and shall decide the department
establishment, their respective functions and the total scale relating to the margin trading.

The business policy decisions department shall consists of relevant senior managers and person in charge of departments, and be responsible
for formulating operational procedures relating to the margin trading, choosing branch offices which are able to engage in the margin
trading, determining the credit quota to a single customer and of a single securities, the term and the interest rate (charging rate)
of the margin trading, the proportion of guaranty bonds, the minimum guaranty maintenance proportion, types and the conversion rates
of securities that can be used as guaranty bonds, as well as types of securities that can be bought or sold by the customers through
the margin trading.

The business implementation department shall take charge of substantial management and operation of the margin trading, draw up the
standard texts of margin trading contracts, determine the credit quota to specific customers, and examine and approve, cross check
and supervise the business operations of branch offices.

The branch offices shall, under the centralized supervision and control of the head office of the company and in accordance with the
uniform provisions and decisions of the company, specifically take charge of the credit investigation of customers, contracts signing,
accounts opening, guaranty bonds collection, businesses implementation and other business operations.

Article 7

The front, middle and back departments of the margin trading of a securities company shall be separated from each other and restricted
with each other, and various major links shall be in the separate charge of different departments and posts, the department and post
that is responsible for risk control and business audit shall be independent of other departments and posts, and no senior manager
in charge of the margin trading may be concurrently in charge of the risk control department or the business audit department.

Article 8

A securities company shall strengthen the control of the margin trading of its branch offices, prohibit them from providing the margin
trading to customers without approval of the head office and from deciding the contracts signing, accounts opening, credits granting,
guaranty bonds collection, or any other matter that should be determined by the head office.

Article 9

A securities company shall establish a system of customer choosing and credit granting and clearly define the procedures and power
limit for the customer choosing and credit granting:

(1)

To establish the customers choosing standards and an examination system of account opening for the margin trading, and clarify the
qualifications for customers to engaging in the margin trading and the key points and procedures for examining the account opening
application materials;

(2)

To establish the customer credit evaluating system, separate the customers into different types and levels in accordance with their
status, property and incomes, securities investment experiences, risk preference, and etc., and determine the credit quota, interest
rate or charging rate for each type or level of customers;

(3)

To clarify the contents, procedures and ways for the credit investigation of customers, assess the authenticity and accuracy of the
customer materials, know the credit status of customers, and evaluate the risk assumption ability and the possibility of breach of
contract of customers; and

(4)

To record and analyze the position varieties of customers and the business conditions, and adjust the credit ranking of customers
timely subject to the operational conditions and the modification of their credit status, and etc.

Article 10

A securities company shall print and use the standard text of the margin contract, the content of which shall pursuant to the provisions
in the Measures for the Administration of Pilot Margin Trading of Securities Companies and the Essential Clauses for the Margin Contracts.

Article 11

A securities company shall, before signing a margin contract with a customer, perform the following obligations for notifying the
customer:

(1)

To remind in written form the customer of the investment loss risk that may results from the enlargement of investment scale, the
misjudgment of market trend, the mandatory buy-in due to the failure to complement collaterals in time;

(2)

To assign a special person to explain to the customer the rules, procedures and contractual clauses for the margin trading; and

(3)

To notify the customer of the possible legal litigation risk if the customer lends the credit account to another, and remind the customer
to properly keep the credit account card, the identity certification and trading passwords.

Article 12

A securities company shall, after signing a margin trading contract with a customer, open a real name credit securities account for
the customer pursuant to the Measures for the Administration of Pilot Margin Trading of Securities Companies and the relevant provisions
of the securities depository & clearing institution.

A securities company shall entrust the third party depository bank to open real name credit securities accounts for customers.

Article 13

A securities company shall, on the basis of meeting the relevant provisions and in accordance with its own operational capital, market
situation and the credit status of customers, and etc., determine the interest rate and charging rate for the margin trading, and
publicize them in the business place.

Article 14

A securities company shall, on the basis of meeting the relevant provisions, determine the types and conversion rates of securities
that can be used for guaranty bonds, the types of securities that can be bought and sold by the customers in the margin trading,
the proportion of guaranty bonds and the minimum guaranty maintenance proportion, and publicize them in the business place.

Article 15

A securities company shall designate special persons, in real time, to supervise and control the collaterals value and the debts
value of customers, and the alteration of their proportion, and when the said proportion is lower than the minimum guaranty maintenance
proportion as reserved in the contract, the securities company shall, in a timely manner, notify the customers to complement collaterals
under a reserved means and adopt necessary measures to record down the time and contents of the notice, and etc..

Article 16

A securities company shall formulate operational rules and procedures for the mandatory buy-in, and when a customer fails to complement
collaterals subject to the relevant provisions or pay debts within the time limit, the mandatory buy-in shall be implemented immediately.
The capital from the buy-in shall first be used to make debt repayment of the customer, and the remaining capital shall be transferred
into the credit capital account of the customer.

A mandatory buy-in order shall be issued by the head office of the securities company, and the post for issuing buy-in orders and
the post for implementing buy-in orders shall not be held by a same person. The mandatory buy-in operation shall be recorded down.

Article 17

A securities company shall establish a technical system for the margin trading under the uniform administration of the head office,
and implement the automatic management to the main procedures of the margin trading.

A securities company shall establish a centralized risk supervision and control system for the margin trading, the functions of which
shall include centralized management of business data, total amount supervision and control of the margin trading, classified supervision
and control of credit accounts and automatic warning in advance, and etc.. The system shall set up necessary open functions or data
accesses so that the regulatory organ may timely know and examine the information about the margin trading.

Article 18

A securities company shall take effective measures to safeguard the safety of the assets of customers:

(1)

To enhance the administration on the operational procedures and technical systems, prevent technical obstacles, operational mistakes,
institutional and procedural omissions, moral risk of employees and other issues that may affect the safety of customers’ assets;

(2)

To establish and perfect the administration and audit system for credit accounts, and prevent the assets mixing, accounts mixing,
accounts lending, and false accounts, and etc.;

(3)

To provide reconciliation statements to customers pursuant to the reserved methods, and faithfully provide the detailed securities
and capital data to the securities depository & clearing institution and the third party depository bank for the inquiry of customers;
and

(4)

To inform the customer in a timely manner if the assets of customer are frozen, sealed up or deducted, and etc. due to the credits
or debts of the customer.

Article 19

A securities company shall strengthen the risk supervision and control and business audit in the margin trading, which shall cover
all the links of front, middle and back departments.

The risk supervision and control department shall implement the real time supervision and control and risk quantitative analysis of
the margin trading, analyze and evaluate the information about the proportion, bad debts, concentration, quota and etc. of the high
risk accounts, bring forward the control measures accordingly, and issue opinions on such serious matters as signing margin trading
contracts with customers, examination and approval of customers credit quotas, and the mandatory buy-in, and etc.

Article 20

A securities company shall establish a mechanism for supervising controlling and adjusting the scale of the margin trading with the
net capital as the core:

(1)

To determine rationally the proportion of the margin amount to all the customers, a single customer and of a single securities to
the net capital and other risk control indicators under the supervisory requirements and its own financial status;

(2)

To monitor the net capital, the fluidity, the assets, the liability and other main financial indicators, and timely adjust the scale
of margin trading in accordance with the alteration of indicators; and

(3)

To supervise and control of the scale of open interests of the margin trading of the customers through the centralized risk supervision
and control system, and making such main financial indicators as the net capital of the company subject to the supervisory requirements
through adjusting the scale of the margin trading.

Article 21

A securities company shall, pursuant to the relevant provisions and the supervisory requirements of the State, formulate the accounting
system for the margin trading, prudently evaluate the risk of bad debts that may be brought by the margin trading, sufficiently draw
the provisions for the relevant loss in the same term, and fully reveal it in the financial statements.

Article 22

A securities company shall establish an internal reporting system for the margin trading, and clarify the reporting routes and feedback
mechanism for the business operation, risk control, business audit and other relevant information.

A securities company shall establish an information submission system for the margin trading, assign special persons to be responsible
for the audit and cross check of relevant information, and ensure that the information submitted to the CSRC and the self-discipline
organization is true, accurate and complete.

Article 23

A securities company shall establish a management system for the customer archives and enhance the management of customer materials
of the margin trading. As to the customers in margin trading, the credit status of whose is not good or who have records of breach
of contract, the securities company shall record them down in the archives, and timely report them to the Securities Association
of China.

Article 24

The present Guidelines shall enter into force as of August 1, 2006.

China securities regulatory commission
2006-06-30

CIRCULAR OF THE MINISTRY OF FINANCE, THE MINISTRY OF LAND AND RESOURCES AND THE PEOPLE’S BANK OF CHINA CONCERNING THE RELATED MATTERS ON THE ADMINISTRATION OF INCOME FROM THE PURCHASE PRICE OF MINERAL PROSPECTING RIGHT AND MINING RIGHT

Circular of the Ministry of Finance, the Ministry of Land and Resources and the People’s Bank of China concerning the Related Matters
on the Administration of Income from the Purchase Price of Mineral Prospecting Right and Mining Right

Cai Jian [2006] No. 394

The public finance departments (bureaus) of each province, autonomous region, municipality directly under the Central Government,
city specially designated in the state plan, the departments (bureaus) of state land and resources, the Shanghai Headquarters of
the People’s Bank of China, each branch, business department, central sub-branch of provincial capital cities and deputy provincial
cities:

In accordance with the Circular of the State Council concerning Rectifying and Regulating the Mineral Recourse Exploration Order in
an All-around Way (Guo Fa [2005]No. 28 ) and the Decision of the State Council concerning Strengthening the Work of Geology (Guo
Fa [2006] No. 4 ), in order to further deepen the reform of the systems of paid use of mineral resources and paid acquisition of
mineral properties, rationalize the income distribution of mineral resources, and rationally determine the ratio for the sharing
of income from the purchase price of mineral prospecting right and mining right between the central and local governments, the relevant
issues concerning the administration of the income from the purchase price of mineral prospecting right and mining right are hereby
notified as follows:

The term “income from the purchase price of mineral prospecting right and mining right” herein refers to the entire income gained
by the competent departments in charge of the approval and registration of mineral prospecting right and mining right of the central
and local people’s governments by means of aliening the mineral prospecting right and mining right, which are prospected and formed
with financial contributions from the state (including those from the central finance, local finances and joint contributions by
central and local finances, the same as below), in such market ways as bidding, auction, quotation or by agreement, and the payment
made up by state-owned enterprises for their gratuitous seizure of mineral prospecting right and mining right prospected and formed
with financial contributions from the state.

As from September 1, 2006, the income derived from the purchase price of mineral prospecting right and mining right shall be shared
by the central government and local governments in light of a fixed proportion, which is 20% for the central government and 80% for
local governments. The ratio for any province, municipality or county shall be determined by the corresponding provincial people’s
government under the actual situation. Where there is any provision otherwise provided by the state, it shall prevail.

The administration on the collection of income derived from the purchase price of mineral prospecting right and mining right shall
be intensified and be timely paid into the state treasury in full amount. If it is really difficult to pay the purchase price of
mineral prospecting right and mining right in a lump sum, it is allowed to pay by installments upon the approval by registration
administrative organ; the time limit for payment of the purchase price of mineral prospecting right shall not be more than 2 years,
and that of mining right shall not be more than 10 years.

The concrete procedures of payment into the state treasury are: the registration administrative organ of mineral prospecting right
and mining right fills a circular on payment to the state treasury in light of the evaluated price or negotiated price, or the trading
price of bidding, auction and quotation for transferring mineral prospecting right and mining right, so as to inform the applicant
for mineral prospecting right and mining right of the payment which shall be made within 7 workdays upon receiving of the circular.
The income derived from the purchase price of mineral prospecting right and mining right that fall within the registration and administration
ground of the State Land and Resources Department of the State Council shall be collected according to the Circular of the Ministry
of Finance concerning Confirming the Related Matters on the Pilot Reform of the Administration System on Income Collection by the
Ministry of Land and Resources (Cai Ku [2003]No. 6 ) and the related provisions concerning the reform of collection administration
system. The collection of the income derived from the purchase price of mineral prospecting right and mining right that fall within
the registration and administration ground of local land and resources departments shall, as for the places that have implemented
the reform on the collection management system of non-tax revenues, be implemented in light of related provisions concerning the
reform stipulated by the local departments of finance; as for the places that have not implemented such reform for the moment, a
way of paying into the local treasury shall be adopted; a “general covering warrant” shall be used in handling the procedure of paying
into the treasury, the budgetary account shall be filled in accordance with the related provisions of the Classification of Accounts
of Government Budgetary Revenue and Expenditure of that year, and the ratio for sharing of each budgetary class shall be marked at
the column of “Notes”. The state treasuries at all levels shall, upon receiving of the payments, according to the stipulated ratio
for sharing, turn over 20% of the payments to the general treasury of each higher national treasury level by level, and transfer
80% of the payments to provinces, municipalities or counties based on their respective ratios for sharing as prescribed by the relevant
people’s government of each province, autonomous region, and each municipality directly under the central government.

The departments of public finance and the departments of state land and resources at all levels shall intensify the supervision and
administration over the income derived from the purchase price of mineral prospecting right and mining right. The registration administrative
organs of mineral prospecting right and mining right at all levels shall examine and verify on the basis of all the pages of the
related payment vouchers which are affixed with the transfer/receipt seal of the bank or state treasury, and related materials and
vouchers. If the purchase price of mineral prospecting right and mining right is not paid in full amount timely , the registration
of mineral prospecting right and mining right shall not be handled, and the license for mineral prospecting right or mining right
may not be issued. The departments of public finance shall ensure the necessary expenses to be enough for transacting the business
of transferring mineral prospecting right and mining right according to the requirements of the land and resources departments when
they are performing their functions and duties, and ensure that the income derived from the purchase price of mineral prospecting
right and mining right be collected in full amount and handed over to the treasury in time.

The public finance departments shall closely cooperate with the departments of the state land and resources at all levels take more
measures in the investigation and prosecution of all kinds of violations of laws and regulations that exist in the course of transferring
of mineral prospecting right and mining right; investigate and prosecute violations of laws and regulations strictly, in accordance
with law, such as reducing or exempting fees by violating laws and regulations, failing to collect fees, failing to collect the due
fees, failing to pay to the state treasury in full amount timely, retaining fees, financing expenses with revenue, embezzling fees,
and commercial bribes and so on; investigate the administrative and economic liabilities of the related leaders and persons who held
liable; If any crime is constituted, the case shall be transferred to the judicial organ for investigating the criminal liabilities.

Upon the issuance of this Circular, If there is any provision that isn’t consistent with this Circular, this Circular shall prevail.

Ministry of Finance of the People’s Republic of China

Ministry of Land and Resources of the People’s Republic of China

People’s Bank of China

August 14, 2006

the Ministry of Finance, the Ministry of Land and Resourcesthe People’s Bank of China
2006-08-14

REPLY OF THE STATE COUNCIL CONCERNING THE CONSENT WITH THE TAX PREFERENTIAL POLICIES ON THE IMPORT OF ARTICLES USED FOR SCIENTIFIC RESEARCH AND TEACHING

Reply of the State Council Concerning the Consent with the Tax Preferential Policies on the Import of Articles Used for Scientific
Research and Teaching

Guo Han [2007] No. 1

The Ministry of Finance, General Administration of Customs and State Administration of Taxation,

Your Request for Approving the Provisions on Exempting Import Duties from the Articles Used for Scientific Research and Teaching (Draft
for Examination and Approval) and the Interim Provisions on Exempting Import Duties from the Articles Used for Developing Science
and Technology (Draft for Examination and Approval) (Cai Guan Shui [2006] No. 59) have been received. A reply is hereby given as
follows:

As regards the articles to be used for scientific research and teaching that can not be manufactured in China or whose performances
can not meet the demand and which are imported by scientific research institutes, colleges and universities, as well as the articles
for developing science and technology that can not be manufactured in China or whose performances can not meet the demand and which
are imported prior to December 31, 2010 by restructured institutions for scientific and research, National Engineering (Technology)
Research Center, national important laboratories, enterprise technology centers and other scientific and technological development
institutions, the import linkage duties, import linkage value-added tax, and consumption tax are approved to be exempted. You shall,
in accordance with the Regulation on the Procedures for Formulating Ministerial Rules, jointly formulate and announce the concrete
implementation measures to be in force as of February 1, 2007. The Provisions on Exempting Import Duties from the Articles Used for
Scientific Research and Teaching as approved by the State Council on January 22, 1977 and promulgated by Decree No. 61 of the General
Administration of Customs on April 10, 1997 shall be concurrently abolished.

The State Council

January 5, 2007

The State Council
2007-01-05

SOME OPINIONS OF THE STATE COUNCIL ON PROMOTING THE REFORM, OPENING AND STEADY GROWTH OF CAPITAL MARKETS

State Council

Some Opinions of the State Council on Promoting the Reform, Opening and Steady Growth of Capital Markets

GuoFa [2004] No. 3

January 31st, 2004

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

As of the distribution of the Notice of the State Council on Further Enhancing the Macro-control of the Securities Market (GuoFa [1992]
No. 68), China’s capital markets have embraced rapid growth and rapid stunning achievements. With scale-forming on a preliminary
basis, continuous improvement of the market infrastructure, gradual perfection of the legal system, and further upgrading of market
standardization, China’s capital markets have become an important component part of the socialist market economy by contributing
greatly to the reform and development of state-owned enterprises and the financial market, to the optimization of resources allocation
and to the promotion of economic restructuring and growth. With a view to carrying out the spirit of the 16th CPC National Congress
and the 3rd Plenary Session of the 16th CPC Central Committee and vigorously promoting the reform, opening and steady growth of capital
markets around the strategic goal of building a well-off society in an all-round way, the opinions are hereby put forward as follows:

Fully Understanding the Importance of Developing Capital Markets

Developing capital markets is a task of strategic importance linked to the fulfilling of the strategic goal of quadrupling China’s
GDP within the first two decades of this century. First, it will facilitate the improvement of the socialist market economy, bring
into fuller play the role of capital markets in optimizing resources allocation, and effectively turn social capital into long-term
investment. Second, it will facilitate the restructuring and strategic transformation of the state-owned sector of the economy and
accelerate the development of the non-state-owned sectors. Third, it will facilitate the increase of the ratio of direct financing,
improve the structure and efficiency of the financial market, and maintain financial security.

China’s financial markets have been developing step by step with the course of economic restructuring. Due to the lack of coordination
during the primary stage of the restructuring as well as flaws in the system design, there remain with the capital markets some underlying
problems and structural conflicts, which have hampered the way in which market functions could be brought into effective play. These
problems arise from, thus must be solved through, the development of capital markets. The 16th CPC National Congress has put forward
the strategic goal of building a well-off society in an all-round way; the 3rd Plenary Session of the 16th CPC Central Committee
has adopted the Decision of the Central Committee of the Communist Party of China on Some Issues concerning the Improvement of the
Socialist Market Economy, which has set plans for developing capital markets and clarified the orientation towards the reform, opening
and steady growth of such markets. We should, by having a correct understanding of the current situation, seizing opportunities and
changing our mentality, vigorously develop capital markets, increase the ratio of direct financing, create and cultivate a sound
investment environment, bring into full play the role of capital markets in promoting capital formation, optimizing resources allocation,
propelling economic restructuring, improving corporate governance, etc., in an effort to make new contributions to the sustained,
coordinated and healthy development of the national economy in a fast speed and the building of a well-off society in an all-round
way.

II.

The Guidelines for and Tasks of Promoting the Reform, Opening and Steady Growth of Capital Markets

The guidelines for promoting the reform, opening and steady growth of capital markets are: taking Deng Xiaoping Theory and the important
thought of the “Three Represents” as our guidance, fully implementing the spirit of the 16th CPC National Congress and the 3rd Plenary
Session of the 16th CPC Central Committee, following the principle of openness, fairness and impartiality and the policy of the rule
of law, supervision, self-discipline and standardization, upholding the serving of the overall situation of the national economy
and its coordinated development, upholding the rule of law in the regulation of markets, and the protection of the lawful rights
and interests of investors or individual investors in particular, upholding the unleashing of market forces in capital markets and
the optimal play of the role of market, upholding the coordination of the momentum of reform, the speed of development and the sustainability
of the general public, and the correct handling of relations among reform, development and stability, upholding the development-based
solution of problems cropping up on our way forward and the correct handling of relations between development of capital markets
and prevention of market risks, and upholding the principle of progressiveness and the continuous upgrading of opening to the outside
world.

The tasks of promoting reform, opening and steady growth of capital markets are: building transparent and efficient capital markets
featuring a rational structure, a sound mechanism, perfect functions and safe operations while aiming at the expansion of direct
financing, improvement of the modern market system and the fuller play of the basic role of market in resources allocation. To fulfill
such goals, we must establish an efficient capital markets system in helping enterprises of various types raise funds and in satisfying
diverse investment needs. We must improve the market-oriented products innovation system and form a products structure of capital
markets by giving due consideration to both price discovery and risk management and by coordinating stocks financing and bonds financing.
We must cultivate a whole set of listed companies and market intermediaries featuring good faith, standardized operation and a sound
governance mechanism, and strengthen the mechanism for restraint of market players and survival of the fittest. We must improve the
market supervision and administration system featuring clearly defined duties and responsibilities, effective control of risks and
good coordination and cooperation, in a way to best protect the lawful rights and interests of investors.

III.

Further Improving the Relevant Policies and Promoting the Steady Growth of Capital Markets

Appropriate policy guidance and support are a must for the steady growth of capital markets. All departments must further improve
the relevant policies in an effort to create a sound environment for the steady growth of capital markets.

The approval system for the issuance and listing of securities must be improved. We should better the mechanism under which quality
enterprises of all types can utilize capital markets on an equal footing, thus improving the efficiency for resources allocation.

Investment returns on capital markets must be highlighted. We should take effective measures to reverse the situation in which some
listed companies focus excessively on listing and fund raising while paying inadequate attention to restructuring and investment
returns, improve the overall quality of listed companies and offer investors chances of sharing the benefits of economic growth and
increasing their wealth.

Qualified capital is encouraged to go to the market. Continuing efforts will be given to the development of securities investment
funds. We should support the multi-form direct investment of insurance funds on capital markets and gradually increase the ratios
of social security funds, enterprises supplementary pension funds, commercial insurance funds, etc. involved in capital markets.
We should cultivate a group of faithful, law-abiding and professional institutional investors, and see to it that institutional investors
mainly composed of fund management companies and insurance companies are to become the major forces on capital markets.

Financing channels of securities companies must be expanded. Continuing support will be given to the qualified companies’ efforts
in raising long-term funds through public offering of shares and bonds. We should improve the administrative measures for pledged
borrowing of securities companies as well as their entry into the inter-bank market, and formulate the review and approval standards
for acquisition and merger of securities companies as well as loans for securities underwriting. We should, on the basis of improving
the mechanism for risk control, create favorable conditions for securities companies to use loans and raise funds. Experiments will
be steadily conducted on the financing of fund management companies.

The issue of equity separation must be settled in a positive and reliable manner. We should regulate the transfer of untradeable shares
of listed companies so as to prevent the loss of state-owned assets. While steadily making tradeable the presently untradeable shares
of listed companies, we should respect the law of market, maintain the stability and growth of the market, and effectively protect
the lawful rights and interests of investors or individual investors in particular.

The tax policies towards capital markets must be refined. Tax policies shall be worked out that can encourage individuals to invest,
and improve the administrative measures for the collection of circulation tax and income tax on securities and futures companies.
Concentrated collection and administration of income tax will be adopted for qualified securities and futures companies.

IV.

Improving the System of Capital Markets and Diversifying Securities Products

A multi-layer stock market system must be established. We should, on the basis of coordinating the rational layout and the function
fixing of capital markets, gradually establish a multi-layer stock market system which can satisfy the financing needs of different
types of enterprises. We should work out the corresponding conditions for issuance and listing of securities, and establish the supporting
company selection mechanism. We should continue to regulate and develop the main board market and gradually improve the structure
of listed companies thereon. We should propel the construction of the start-up board market in steps, improve the mechanism of venture
capital investment, and expand the financing channels of small and medium-sized enterprises. The stock transfer system under unified
supervision and administration will be positively explored and improved.

The bonds market must be developed in a positive and reliable manner. We should, on the basis of tightening risk control, encourage
qualified enterprises to raise funds through the issuance of corporate bonds. We should reverse the sluggish growth of bonds financing
and diversify products on the securities market, in a way to promote the coordinated development of capital markets. We should adopt
and improve the regulations and rules concerning the issuance, trading, information disclosure, credit rating, etc. of corporate
bonds, and establish and perfect the secured loan repayment mechanism including assets mortgage and credit guarantee. We should gradually
establish a networked bonds market which is under concentrated supervision and administration.

The futures market must be developed in a reliable manner. We should, on the basis of tightening risk control, gradually introduce
commodity futures products which carry functions of price discovery and hedging for manufacturers and consumers of bulk commodities.

The market-oriented products innovation mechanism must be established. We should research and develop stocks and bonds-related new
products as well as the derivative products thereof. We should make greater efforts in developing low-risk securities products with
fixed returns and provide investors with deposit-replacing securities products. Securitized assets products will be positively explored
and developed.

Further Upgrading the Quality of Listed Companies and Promoting the Standardized Operation of Listed Companies

The quality of listed companies must be upgraded. The quality of listed companies is the source of value for securities market investment.
Board directors and senior managing personnel should take the optimization of stockholders’ interests and sustained improvement of
profitability as the starting line and standpoint for their work. Further efforts should be made to improve the administrative system
for stock issuance, promote the recommendation system for issuance and listing of securities, support companies with strong competitiveness,
standardized operation and good returns to go public, therefore upgrading the quality of listed companies at root. Listed companies
will be encouraged to conduct merger, acquisition and restructuring which are guided by market forces and can facilitate the sustained
corporate development. While further refining refinancing policies, we should encourage listed companies of excellence to utilize
capital markets in accelerating development and growing stronger.

The operation of listed companies must be standardized. We should improve the structure of corporate governance of listed companies,
and by following the requirements of the modern corporate system, form a check and balance mechanism among the power organ, the decision-making
organ, the supervisory organ and corporate managers. Board directors and senior managing personnel are urged to demonstrate greater
integrity during further improvement of the system of independent directors. We should regulate the acts of controlling shareholders
and prosecute those committing acts to damage the interests of listed companies or those of small and medium-sized shareholders.
We should burden listed companies and other entities liable for disclosing information with heavier responsibility for transparency,
so as to effectively ensure the authenticity, accuracy, integrity and timeliness of information disclosure. We should establish and
improve the incentives and restraint system for senior managing personnel of listed companies.

The market disqualification system must be improved. We should take effective measures to further improve the market disqualification
system in concert with the construction of the multi-layer market system. While ensuring the survival of the fittest among listed
companies, we should establish a mechanism for prosecuting the senior managing personnel of disqualified companies for dereliction
of duty, so as to effectively protect the lawful rights and interests of investors.

VI.

Promoting the Regulated Development of Intermediary Institutions on Capital Markets and Upgrading their Practicing Level

Securities and futures companies must be built into competitive modern financial enterprises. We should follow the principle of prudent
supervision and administration in improving the market admittance system for securities and futures companies. While urging such
companies to improve the structure of governance, we should regulate the acts of their shareholders and extract a higher level of
integrity from the directors’ board and managers. We should reform the administrative system for transaction settlement funds of
securities and futures clients, and study and improve the deposition and management mechanism for such funds. Unauthorized appropriation
of clients’ funds is strictly prohibited in a way to effectively protect the lawful rights and interests of investors. Securities
and futures companies shall improve the internal control mechanism and strengthen the unified control over their subsidiaries and
branches. While enhancing the risk monitoring index system with net capital as its core, we should urge securities and futures companies
to implement sound financial policies. Such companies are encouraged to grow stronger through merger, acquisition, restructuring
and optimized integration. The market disqualification system for securities and futures companies will be established and improved.

The administration of other intermediary institutions must be enhanced. We should regulate and develop securities and futures investment
consultancy institutions and securities credit rating institutions, enhance the administration of accounting firms, law firms and
assets assessment institutions, so that the professional services offered by intermediary institutions shall be upgraded.

VII.

Enhancing the Construction of Sound Legal and Credit Systems and Improving the Supervision and Administration of Capital Markets

The legal system for capital markets must be improved, and credit building enhanced. We should follow the overall planning for capital
markets development to improve the system of laws and regulations which can facilitate the steady growth of capital markets and the
protection of investors’ rights and interests. We should remove such administrative regulations, regional and departmental rules
and policy statements as impeding the market development, so as to create a sound legal environment for the growth of capital markets.
We should, in accordance with the requirements of improving the social credit system in the context of a modern market economy, formulate
the bona fide norms for capital markets, safeguard the bona fide order, and resolutely impose a ban of market access on institutions
and individuals in serious violation of laws and regulations or in serious loss of trustworthiness.

The rule of law in public administration must be propelled, and the supervision and administration of capital markets enhanced. We
should follow the requirements of deepening the reform of the administrative approval system and implementing the Administrative
Licensing Law to improve the personal quality and law enforcement capacity of the law enforcement personnel. We should foster the
updated concepts of supervision and administration, establish and perfect the supervisory and administrative pattern in compatibility
with the specific stage of capital markets development, and improve methods and increase efficiency, of capital markets. We should
further consolidate the supervision and administration forces, integrate the relevant resources, and cultivate a contingent of administrative
and supervisory personnel who are politically and professionally qualified. We should, through effective market supervision and administration,
ensure the market to be fairer, more transparent and efficient, lower the systemic risk of the market, and safeguard the lawful rights
and interests of market participants.

The role of guild discipline and media supervision must be brought into full play. We should give space to self-regulation through
securities and futures exchanges, registration and clearing companies, securities and futures associations, and guilds of law firms,
accounting firms, assets assessment institutions, etc., and guide and enhance the news media’s reporting and supervision of the securities
and futures market.

VIII.

Enhancing Coordination and Co-operation and Preventing and Defusing Market Risks

A sound environment for capital markets development must be created. Prevention of risks on capital markets bears on the financial
security of the nation and the healthy growth of the national economy. All localities and departments should care for and support
the regulated development of capital markets, take into full consideration the sensitivity, complexity and uniqueness of capital
markets during the formulation of capital markets-related policies and measures, and establish a coordination and co-operation mechanism
featuring sharing of information, easy communication and specified duties and responsibilities, so as to create a sound environment
and conditions for the steady growth of the market.

Market risks must be prevented and defused with common efforts. All localities and departments shall earnestly perform duties and
responsibilities specified in the relevant laws and regulations such as the Company Law, and take effective measures to prevent and
rectify in good time acts such as feigned capital contribution by initiators and encroachment on assets of listed companies by major
shareholders or de facto controllers. All localities and the administrative departments concerned shall enhance the administration
of companies disqualified from the market, and ensure the disqualification process to be smooth. For those securities and futures
companies that involve major operation risks and thus must withdraw from capital markets or are subject to other administrative disposal
measures, the local people’s governments, the financial regulatory departments and the departments of public security, justice, etc.
shall enhance coordination and co-operation, follow the laws, regulations and the relevant policies and take positive and effective
measures to do a good job on risk disposal. All localities and departments shall establish a quick reaction mechanism against capital
markets emergencies as well as a long-term mechanism for preventing and defusing risks.

Illegal acts on securities and futures markets shall be subject to harsh crackdown. All localities shall implement the State Council’s
guidelines concerning rectification and regulation of the market economic order, and strictly prohibit under their jurisdiction illegal
issuance of securities, illegal establishment of business institutions on securities and futures, illegal proxy of securities and
futures trading, illegal or disguised establishment of securities and futures exchanges, and other illegal acts connected with securities
and futures. The government departments in charge of finance, public security, audit, industry and commerce, etc. and the institutions
for the supervision and administration of state-owned assets should enhance coordination and co-operation in their efforts to sharpen
the crackdown and maintain the order of capital markets.

IX.

Earnestly Summing Up Experiences and Promoting Opening in a Positive and Reliable Manner

China will strictly carry out the commitments it has made on opening the sector of securities services during its accession to the
World Trade Organization (WTO). Qualified foreign securities institutions are encouraged to hold shares of securities companies and
fund management companies. The system of qualified foreign institutional investors will continue to be trial-operated.

Foreign capital markets should be vigorously utilized. Qualified domestic enterprises are encouraged to issue securities and get listed
overseas by following the law of market and international common practice. Qualified domestic institutions and personnel are encouraged
to conduct capital markets investment-related services and futures hedging overseas. The system of qualified domestic institutional
investors will be earnestly studied.

Exchange and cooperation should be enhanced. We should implement the Closer Economic Partnership Arrangement with Hong Kong and Macao
and further enhance ties and cooperation with the relevant international organizations and foreign securities regulatory agencies.

Developing capital markets is an important decision made by the CPC Central Committee and the State Council from an overall and strategic
perspective. All localities and departments must pay sufficient attention to capital markets development, foster concepts by having
the overall situation in view, fully understand the importance of such development, enhance confidence, seize opportunities, make
innovations in a pioneering spirit, work together to create conditions for developing capital markets, vigorously promote their reform,
opening and steady growth, and contribute to the great goal of building a well-off society in an all-round way.

State Council
2004-01-31

CIRCULAR OF THE MINISTRY OF COMMERCE, NATIONAL DEVELOPMENT AND REFORM COMMISSION, GENERAL ADMINISTRATION OF CUSTOMS AND STATE ADMINISTRATION OF FOREIGN EXCHANGE CONCERNING THE PILOT WORK OF FORMAL IMPORT AFTER FORMAL EXPORT OF REFINED OIL IN THE FORM OF PROCESSING TRADE

Circular of the Ministry of Commerce, National Development and Reform Commission, General Administration of Customs and State Administration
of Foreign Exchange concerning the Pilot Work of Formal Import after Formal Export of Refined Oil in the Form of Processing Trade

Shang Ji Dian Han [2004] No. 6
April 21, 2004

The commissions (departments and bureaus) or commerce departments (bureaus) of foreign trade and economic cooperation of all provinces,
autonomous regions, municipalities directly under the Central Government, and of cities specifically designated in the state plan,
the foreign trade and economic cooperation bureaus of Harbin, Changchun, Shenyang, Nanjing, Guangzhou, Chengdu, Xi’an and Wuhan,
Shenzhen Economic and Trade Bureau, the Commerce Bureau of Xinjiang Construction Corps, the development and reform commissions (planning
commissions, or economy and trade commissions) of all provinces, autonomous regions, municipalities directly under the Central Government,
cities specifically designated in the state plan, and of deputy provincial cities, Guangdong Branch of the General Administration
of Customs, Tianjin and Shanghai special commissioner’s offices of the General Administration of Customs, all customs offices directly
under the General Administration of Customs, foreign exchange branches and departments of the State Administration of Foreign Exchange
in all provinces, autonomous regions, and municipalities directly under the Central Government, branches of the State Administration
of Foreign Exchange in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo,

Upon discussion of the related departments, it is decided to implement the pilot work relevant to the formal import after formal export
of the refined oil of some crude oil processing trade enterprises in order to cooperate with the state to carry out macro control
on the import of refined oil, better fulfilling China’s commitments to the WTO, meet the control requirements of the customs offices
at the same time, and make sure the smooth processing trade of some large oil processing enterprises. Hereby the following items
are notified:

The refined oil produced by a pilot enterprise with imported crude oil in the form of processing trade shall be exported after processing
in principle. In case the sale of the said refined oil needs to move to the domestic market, upon the strength of the certification
of automatic import license and the Customs Clearance Form on Entry of Goods, the domestic enterprise shall first carry out the formalities
for the formal import customs declaration and for paying the duties in the competent customs office for the crude oil processing
trade enterprise according to the related provisions on the general trade, the customs office shall set up the price of the refined
oil and levy the duties in accordance with the general trade. Upon the strength of export declaration form, the crude oil processing
trade enterprise shall carry out the formal export formalities, import contract of the domestic enterprise buyer and other documents.
The commodity name, code and quality specified in the formal export customs declaration form shall be consistent with those indicated
in the formal import customs declaration form. The code of customs control form shall be filled out in accordance with “0642 (formal
import after formal export of refined oil in the form of processing trade”. Upon the strength of the export customs declaration form
and other documents, the customs office shall carry out the formalities for the verification and write-off of the processing trade
brochure for the enterprise.

In accordance with the related provisions on deep-processing-based carry-forward, the foreign exchange administrative departments
and banks shall go through the formalities for the collection, payment, verification and write-off of foreign exchange in import
and export.

Diesel oil (commodity code: 27101921), aviation coal oil (commodity code: 27101911) as well as naphtha (commodity code: 27101120)
are covered in the scope of pilot refined oil products.

The pilot enterprises include Zhenhai Oil Refining and Chemical Company, Guangzhou branch, Maoming branch and Gaoqiao branch under
China Petroleum and Chemical Corporation, as well as Dalian West Pacific Petrochemical Co., Ltd. under China National Petroleum Corporation.

The Ministry of Commerce, National Development and Reform Commission, General Administration of Customs and State Administration
of Foreign Exchange
2004-04-21

DECISION OF THE CHINA SECURITIES REGULATORY COMMISSION ON AMENDING THE INTERIM MEASURES FOR THE ADMINISTRATION OF BONDS OF SECURITIES COMPANIES

China Securities Regulatory Commission

Order of the China Securities Regulatory Commission

No. 25

The Decision on Amending the Interim Measures for the Administration of Bonds of Securities Companies, which was deliberated and adopted
at the 119th executive meeting of the chairmen of the China Securities Regulatory Commission on October 15th, 2004, is hereby promulgated
and shall be implemented as of the promulgation date.

Shang Fulin, Chairman of the China Securities Regulatory Commission

October 18th, 2004

Decision of the China Securities Regulatory Commission on Amending the Interim Measures for the Administration of Bonds of Securities
Companies

Subparagraph 3 of Article 7 shall be deleted.

Paragraph 2 of Article 12 shall be amended as: “The amount of money secured for the public issuance of bonds shall be not less than
the total amount of the principals and the interests of the bonds. With respect to the bonds issued to targeted purchasers, the amount
shall be, in principle, not less than 50% of the total amount of the principals and the interests of the bonds, and if the amount
of guarantee is less than 50% or it doesnt provide guarantee for the bonds issued to targeted purchasers, the special risks shall
be mentioned to the investors at the time of issuance and transfer of bonds, and it shall be signed by the investors.”

Article 23 shall be amended as: “The minimum period of the bonds shall be one year.”

Subparagraph 2 of Article 26 shall be amended as: “The total amount of the par value of the bonds actually issued shall be not less
than RMB 50 million yuan.”

The present Decision shall be implemented as of October 18th, 2004.

The Interim Measures for the Administration of Bonds of Securities Companies shall be re-promulgated after being amended pursuant
to the present Decision.

China Securities Regulatory Commission
2004-10-18

PROVISIONS ON THE ESTABLISHMENT OF INVESTMENT COMPANIES BY FOREIGN INVESTORS

Ministry of Commerce

Order of the Ministry of Commerce of the People’s Republic of China

No.22

The Provisions on the Establishment of Investment Companies by Foreign Investors were amended and adopted at the 12th executive meeting
of the Ministry of Commerce of the People’s Republic of China on November 13, 2004. The amended Provisions on the Establishment of
Investment Companies by Foreign Investors are hereby promulgated and shall be implemented 30 days after the date of promulgation.

Bo Xilai, Minister of the Ministry of Commerce

November 17, 2004

Provisions on the Establishment of Investment Companies by Foreign Investors

Article 1

In order to promote foreign investors to invest in China, and introduce advanced technologies and management experiences from abroad,
foreign investors are permitted to, in accordance with the relevant laws and regulations of China on foreign investments as well
as the present Provisions, establish investment companies in China.

Article 2

The term “investment company” as mentioned in the present Provisions refers to a company established by a foreign investor in the
form of either wholly-owned enterprise or Chinese-foreign joint venture to engage in direct investments. Such a company shall be
in the form of a limited liability company.

Article 3

A foreign investor who intends to establish an investment company shall meet the following conditions:

(a)

1.It is in good credit status and has necessary economic strength to establish an investment company, with its total amount of assets
during the year before the application no less than 400 million USD, and it has established a foreign-funded enterprise inside the
territory of China, with the amount of registered capital it has actually contributed being 10 million USD or more, and 3 or more
project proposals thereof on planned investment projects which have been approved, or; 2. It is in good credit status and has necessary
economic strength to establish an investment company, and has established 10 or more foreign-funded enterprises inside the territory
of China, with the amount of registered capital it has actually contributed being 30 million USD or more;

(b)

If it establishes an investment company by means of joint venture, the Chinese investor shall be in good credit status and have necessary
economic strength to establish an investment company, with its total amount of assets during the year before the application being
no less than RMB 100 million Yuan;

(c)

The investment company’s registered capital shall be no less than 30 million USD.

The foreign investor that applies to establish an investment company shall be a foreign company, enterprise or economic organization.
If there are two or more foreign investors, there shall be at least one foreign investor holding major stock rights who conforms
to Item (a) of Paragraph 1 of the present Article.

Article 4

A foreign investor who meets the conditions prescribed in Item (a) of Paragraph 1 of Article 3 of the present Provisions may invest
to establish an investment company in the name of its wholly-owned subsidiary company.

Article 5

If a foreign investor that applies to establish an investment company meets the conditions prescribed in Item (a) of Paragraph 1 of
Article 3 of the present Provisions, it must issue a letter of warranty to the examination and approval organ, guaranteeing the
contribution by the established investment company of the registered capital when investing inside the territory of China and the
technology transfer of the said foreign investor or associated company.

If a foreign investor invests to establish an investment company in the name of its wholly-owned subsidiary company, the parent company
must issue a letter of warranty to the approval organ, guaranteeing the contribution by the subsidiary company of the registered
capital of the established investment company according to the conditions approved by the approval organ, and guaranteeing the contribution
by the investment company of the registered capital when investing inside the territory of China and the technology transfer of the
parent company and its subsidiaries.

Article 6

An investor shall, when applying to establish an investment company, submit the following documents to the commercial department of
the province, autonomous region, municipality directly under the Central Government, city directly under state planning where the
investment company under planned establishment is located for verification and consent, if being consented to, which shall be submitted
to the Ministry of Commerce for examination and approval.

(a)

In the case of establishing a joint venture, an application report on the establishment of a joint venture investment company, contracts
and articles of association signed by all parties to the investment;

In the case of establishing a wholly-owned investment company, the wholly foreign-owned enterprise’s application form, feasibility
study report and articles of association signed by the foreign investor,;

(b)

The certification documents of credit status, certification documents of registration (photocopies) and certification documents of
the legal representative (photocopies) of all parties to the investment;

(c)

The approval certificate (photocopy) and business license (photocopy) of the enterprise invested by the foreign investor and the capital
verification report (photocopy) issued by Chinese CPA;

(d)

The balance sheets of all parties to the investment in the latest three years which have been audited in pursuance of law;

(e)

The letter of warranty to be submitted as required by Article 5 of the present Provisions; and

(f)

Other documents required by the Ministry of Commerce.

All the above-mentioned documents shall be formal documents unless it is indicated to be a photocopy.

If the documents are not signed by a legal representative, a power of attorney by the legal representative shall be presented.

If a lawfully established intermediary institution is authorized to file the application, a power of attorney signed by the legal
representative of the investor shall be presented.

Article 7

A foreign investor must use a convertible currency or the Renminbi profits it obtains inside the territory of China or the lawful
Renminbi proceeds it obtains due to share transfer or liquidation, etc. as the registered capital it contributes to the investment
company. A Chinese investor may invest in Renminbi. If a foreign investor uses its lawful Renminbi proceeds as the registered capital
and contributes to the investment company, it shall submit the relevant evidential documents and the tax payment receipts. The investments
shall be fully contributed within two years from the day when the business license is issued.

Article 8

In the registered capital of an investment company, there shall be at least 30 million USD which shall be regarded as investments
to the newly established foreign-funded enterprise, or be regarded as the incompletely contributed amount of investments to the foreign-funded
enterprise invested and established by the parent company or associated company (with the formalities of stock right transfer having
been lawfully completed), or the increased part of investments, or be used for establishing research and development center or other
institutions, or be used for purchasing the stock rights of a shareholder of a domestic company inside the territory of China (excluding
the stock right formed by the capital contributions already paid by the parent company or the associated companies of the investment
company).

Article 9

If the registered capital of an investment company is no less than 30 million USD, the amount of loans shall be no more than 4 times
of the contributed amount of registered capital. If the registered capital of an investment company is no less than 100 million USD,
the amount of loans shall be no more than 6 times of the contributed amount of registered capital. If the amount of loans for the
investment company is planned to exceed the above limit due to the needs in operation, it shall report to the Ministry of Commerce
for approval.

Article 10

An investment company may, after being approved by the Ministry of Commerce to be established, run the following business on the basis
of its actual needs in undertaking the business activities in China:

(a)

Investing in accordance with the law in the areas where foreign investments are permitted by the state.

(b)

Being entrusted in writing by an enterprise it invests in (unanimously adopted by the board of directors) to provide the enterprise
with the following services:

(1)

Assisting or representing the said enterprise in purchasing machinery equipment, office equipment and raw materials, components and
parts needed in production for the enterprise’s own use from both home and abroad, as well as in selling products manufactured by
the said enterprise in both domestic and overseas markets, and providing after-sale service;

(2)

Balancing foreign exchanges between the enterprises it invests in upon the consent and under the supervision of the foreign exchange
department;

(3)

Providing the enterprise it invests in with such services as technical supports in the process of production, sale and market development,
trainings for employees, and intra-enterprise personnel management, etc.;

(4)

Assisting the enterprise it invests in to seek loans, and providing guaranty.

(c)

Establishing scientific research and development centers or offices inside the territory of China, engaging in research and development
of new products and hi-techs, transferring its research and development achievements, and providing corresponding technical services.

(d)

Providing its investors with consulting services, and providing its associated companies with such consulting services including market
information related to investment and investment policies, etc.

(e)

Undertaking services contracted out by its parent company or its associated companies.

Article 11

The investment company undertaking goods import & export, or technology import & export shall be in accordance with Measures for the
Record-keeping and Registration of Foreign Trade Operators;

The investment company undertaking commission agency, wholesale, retail and franchising shall be in accordance with Measures for the
Administration on Foreign Investment in Commercial Fields and modify its business scope in accordance with the law.

Article 12

The term “an enterprise invested by an investment company “as mentioned in the present Provisions refers to an enterprise meeting
the following conditions:

(a)

An enterprise invested by an investment company either directly or jointly with any other foreign investor and/or Chinese investor,
with the proportion of the converted sole investment of the foreign investor of the investment company or the converted joint investment
with other foreign investors to the registered capital of the invested enterprise at 25% or more;

(b)

The investment company purchases part or all of the stock rights of the enterprise invested and established inside the territory of
China by its investor or associated company and other foreign investors, thus causing the proportion of the converted sole investment
of the foreign investor of the investment company or the converted joint investment with other foreign investors to the registered
capital of the invested enterprise to reach 25% or more;

(c)

The investment company’s investment amount shall be no less than 10% of the registered capital of the enterprise it invests and establishes.

Article 13

An investment company may, upon approval by the People’s Bank of China, provide financial supports to the enterprise it invests in
and establishes.

Article 14

An investment company may act as an initiator to initiate the establishment of a foreign-funded share limited company or to hold the
unlisted corporate shares of the foreign-funded share limited company. The investment company may also hold the unlisted corporate
shares of other share limited company inside the territory in accordance with the relevant provisions of the state. The investment
company shall be regarded as an overseas initiator or shareholder of the share limited company.

Article 15

If an established investment company runs its business in accordance with the law and has no record of violation of law, and its registered
capital is contributed in time as prescribed in the articles of association, and the amount of the registered capital actually contributed
by the investor is no less than 30 million USD and has been used as investment of the enterprise it invests in, the investment company
shall, after obtaining the consent of the administrative department for commerce of a province, autonomous region, municipality directly
under the Central Government, city directly under state planning at its locality, file an application to the Ministry of Commerce,
and may, if being approved, run the following business on the basis of its actual needs in undertaking business activities in China:

(a)

Being entrusted in writing by an enterprise it invests in (unanimously adopted by the board of directors) to carry out the following
business:

Selling the products manufactured by the enterprise it invests in by means of distribution in both domestic and foreign markets;

Providing the enterprise it invests in with such comprehensive services such as transport, storage, etc.

(b)

Exporting domestic commodities involving by means of agency, distribution or by establishing an export purchasing institution (including
internal institution) in accordance with the relevant provisions of the state;

(c)

Purchasing the products manufactured by the enterprise it invests and then sell them both home and abroad after system integration;
if the products manufactured by the enterprise it invests in cannot completely satisfy the needs in system integration, it is permitted
to purchase the auxiliary products for system integration both home and abroad, provided that the value of the said products shall
not exceed 50% of the value of all the products needed in the system integration;

(d)

Providing relevant technical trainings for the domestic distributors and agents of the products by the enterprise it invests, and
for the domestic companies and enterprises that have concluded technology transfer agreements with the investment company or its
parent company;

(e)

It is permitted to, before the enterprise it invests in starts production or before the new products of the enterprise it invests
in are put into production, import from its parent company the products related to those to-be-manufactured by the enterprise it
invests in for domestic trial sale for the purpose of developing the products market;

(f)

Providing the enterprise it invests in with services of operative lease of machines and office equipment;

(g)

Providing after-sale service for the imports

(h)

Participating in overseas contract projects undertaken by Chinese enterprises having the right to run overseas contract projects

(i)

selling (excluding retail) at home the imports of investment company manufactured by its parent company.

Article 16

An investment company shall, if importing the products under Paragraphs 3 and 5 of Article 15 go through the formalities in accordance
with the relevant provisions of the state. The above accumulative imported amount of each year shall not exceed the capital contributions
already paid by the company.

Article 17

An investment company shall, if applying for running the business prescribed in Article 15 of the present Provisions, submit the
following documents to the Ministry of Commerce:

(a)

An application letter signed by the legal representative of the investment company;

(b)

The resolution of the investment company’s board of directors;

(c)

The investment company’s amended articles of association;

(d)

The investment company’s approval certificate (photocopy), business license (photocopy) and its capital verification report issued
by Chinese CPA;

(e)

The capital verification report issued by Chinese CPA on the enterprise it invests in; and

(f)

Other documents as required by the Ministry of Commerce.

Article 18

The duration of an investment company shall be verified in light of the nature of the project under planned establishment by the investment
company as well as the relevant provisions of the state on foreign-funded enterprises’ duration of business operation.

Article 19

An investment company shall, if investing to establish an enterprise, separately report for approval according to the scope of approval
and procedures of examination and approval for foreign-funded enterprises.

Article 20

If an investment company invests to establish an enterprise, with the proportion of the converted sole investment by the foreign investor
of the investment company or the converted joint investment with other foreign investors to the registered capital of the enterprise
it invests and establishes at 25% or more, the invested and established enterprise may enjoy the treatments for foreign-funded enterprises,
and be issued the approval certificate of foreign-funded enterprise and the business license of foreign-funded enterprise. As for
the investment ratio below 25%, the enterprise shall, unless otherwise prescribed by laws or administrative regulations, be examined
and approved according to the present procedures for examination and registration on the establishment of foreign-funded investment
company.

Article 21

An investment company shall, if establishing a branch, report to the Ministry of Commerce for examination and approval. If the investment
company applies to establish a branch company, it must meet the following conditions:

(a)

Its registered capital has been contributed in good time as prescribed in the contract and the articles of association, and the contributed
amount of investments is no less than 30 million USD; or the investment company has invested and established or has owned 10 or more
foreign-funded enterprises;

(b)

The region where the branch company is planned to be established shall be a region with concentrative investments of the investment
company or a region with concentrative sale of the products.

Article 22

An investment company that meets the prescribed conditions may file an application for determining as the regional headquarter of
the transnational companies (hereinafter referred to as the regional headquarter), and shall go through the modification formalities
in accordance with the law.

(a)

When applying for determining as the regional headquarter, an investment company shall meet the following requirements:

(1)

The contributed investment in the registered capital is not less than 100 million USD; or the contributed investment in the registered
capital is not less than 50 million USD, the total amount of the assets of the enterprises it invests in is not less than RMB 300
million yuan during the year before the application, and the total amount of profits in not less than RMB 100 million yuan (which
shall be calculated according to the relevant provisions on consolidated statements);

(2)

Meeting the conditions as specified in Article 8 of the present Provisions;

(3)

It has established research and development institutions according to relevant regulations.

(b)

An investment company that has been determined as the regional headquarter may, in light of the actual needs of its business in China,
engage in the following business:

(1)

The business as prescribed in Articles 10 and 15;

(2)

Importing and selling transnational company and holding associated company’s products within China;

(3)

Importing the original auxiliary materials and parts necessary for providing maintenance services for products of the enterprises
invested by it or the transnational company;

(4)

Undertaking services contracted out by enterprises both at home and abroad;

(5)

It may engage in logistics and distribution services in accordance with relevant provisions;

(6)

Upon approval of the China Banking Supervision Commission, it may establish financial companies to provide relevant financial services
to investment companies and the enterprises invested by it;

(7)

Upon approval of the Ministry of Commerce, it may engage in contracting overseas projects and make investments abroad, establish financial
lease companies and provide relevant services; and

(8)

Entrust other domestic company with producing or processing its products or its parent company’s products and sell at home and abroad;

(9)

Other business upon approval.

(c)

Application procedures:

(1)

The investment company shall file an application to the local administrative department for commerce of the province, autonomous region,
municipality directly under the Central Government or city directly under state planning for preliminary examination, and then the
application shall be submitted to the Ministry of Commerce;

(2)

The Ministry of Commerce shall make a reply within 30 days from the day when it receives a complete set of application materials,
in the case of determining the applicant as the regional headquarter, it shall issue a new foreign-funded enterprise approval certificate
(with an indication of “Regional Headquarter”);

(3)

The investment company shall, within 30 days, file an application to the administrative department of industry and commerce for modifying
the registration upon the strength of the approval certificate;

(d)

Application documents:

(1)

The application signed by the legal representative of the investment company;

(2)

Resolution of the investment company or the board of directors of the transnational company;

(3)

The amended articles of association / contract of the investment company;

(4)

The approval certificate (photocopy) and business license (photocopy) of the investment enterprise and the capital verification report
(photocopy) issued by Chinese CPA;

(5)

The approval certificate (photography) and business license (photocopy) and the capital verification report (photocopy) issued by
Chinese CPA;

(6)

The invested enterprise’ capital verification report (photocopy) issued by a Chinese CPA

(7)

The main financial statements of the investment companies audited by Chinese CPA; and

(8)

Other documents required by the Ministry of Commerce.

The above-mentioned documents shall be formal ones except for those indicated as photography.

The “transnational company” as mentioned in the present Article refers to the parent company of the company group of the foreign investor
that establishes the investment company.

Article 23

The investment activities of an investment company inside the territory of China are not be limited by its registration place.

Article 24

The investment activities of an investment company inside the territory of China are not be limited by its registration place.

Article 25

An investment company shall earnestly implement its project investment plans, and shall, within 3 months before the next year, submit
the information on investment and operation of the first year to the Ministry of Commerce for archival purposes in compliance with
the prescribed contents and format. The above-mentioned material shall be regarded as one of the necessary materials for the investment
company to apply for joint annual examination.

Article 26

An investment company and the enterprise it invests and establishes are legal persons or entities independent from each other, and
their business relations shall be treated as those between independent enterprises

Article 27

An investment company and the enterprises established by it shall abide by the law, regulation and rules of China, shall not evade
administration and tax payment by any means.

Article 28

No investment company may directly engage in productive activities.

Article 29

The present Provisions shall be allowed to apply to the establishment of investment companies in the Mainland by investors from Taiwan,
Hong Kong and Macao.

Article 30

The power to interpret the present Provisions shall remain with the Ministry of Commerce.

Article 31

The present Provisions shall be implemented 30 days after the date of promulgation.

Ministry of Commerce
2004-11-17

NOTIFICATION NO.13, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

Notification No.13, 2006 of Foreign Assistance Project Bid Board of the Ministry of Commerce

Tong Gao [2006] No.13

Foreign Assistance Project Bid Board of the Ministry of Commerce held the 13th regular meeting on June 8, 2006. Matters of concern
and resolutions are notified as follows:

The tender mode of Egypt Suez Economic Zone One-step Investment Service Building Construction assistance project was discussed. Because
of the emergency of the project, the Bid Board determined to have tender discussion with China State Construction Engineering Corporation
about the t project, which has advantages and good performance in Egypt. Specific matters of concern shall be notified later.

The bid-winning enterprise of Cuba Medical Treatment and Sanitation Materials assistance project was examined and approved. The
Bid Board opened sealed tenders on June 1, 2006. In all, 9 tender enterprises including China National Electronics Import and Export
Corporation, Tianjin Machinery Import & Export Corporation, Shanghai Automobile Import & Export Co., Ltd., Suzhou Hengrun
Import & Export Corp., Ltd., China National Pharmaceutical Foreign Trade Corporation , China Meheco Corporation, Henan Cereals,
Oil & Foodstuff Imp. & Exp. Group Corp., XY Group Co., Ltd. and Suntime International Techno-Economic Cooperation (Group)
Co., Ltd. submitted the tender documents on time. The Bid Board, according to the reviewing results with best price versus performance
ratio measures after quantifying the tender price, the quantity of the goods, supply and quality assurance, packing, transport and
the quantity of tender documents, determined to confer bid to Suzhou Hengrun Import & Export Corp. Ltd.

The tender mode of Federated States of Micronesia Second Passenger-cargo Vessel assistance project was re-studied. The Bid Board
opened sealed tenders on June 6, 2006. Henan Light Industrial Products Imp. & Exp. Group Co., Ltd., Tianjin Machinery Import
& Export Corporation has submitted tender documents on time. But the tender was void after review because of the significant
deficiency. Since the Wuhan Nanhua High-speed Ship Engineering Co., Ltd. chosed by Henan Light Industrial Products Import & Export
Group Co., Ltd. has carried the task of building First Passenger-cargo Vessel assistant to Federated States of Micronesia successfully,
which has the ability to carry the task before the end of the year, and the vessel should be delivered before the end of the year,
the Bid Board determined to have tender discussion with Henan Light Industrial Products Import & Export Group Co., Ltd. about
the project and appointed Wuhan Nanhua High-speed Ship Engineering Co., Ltd. to be the supplier. Specific matters of concern shall
be notified later.

The tender mode of Vanuatu Palm Planting Technology Cooperation Project was discussed. The Bid Board determined to have tender discussion
with China National Machinery & Equipment Import & Export Corporation about the project. Specific matters of concern shall
be notified later.

Foreign Assistance Project Bid Board of the Ministry of Commerce

June 8, 2006

Foreign Assistance Project Bid Board of the Ministry of Commerce
2006-06-08

MEASURES FOR THE ADMINISTRATION OF PILOT MARGIN TRADING OF SECURITIES COMPANIES

Circular of China Securities Regulatory Commission on Promulgating the Measures for the Administration of Pilot Margin Trading of
Securities Companies

Zheng Jian Fa [2006] No.69

All the securities companies:

For the purpose of regulating the pilot margin trading of securities companies, we have formulated the Measures for the Administration
of Pilot Margin trading of Securities Companies, which are hereby promulgated and shall enter into force as of August 1, 2006.

China Securities Regulatory Commission

June 30, 2006

Measures for the Administration of Pilot Margin Trading of Securities Companies
Chapter I General Provisions

Article 1

The present Measures are formulated in order to regulate the pilot margin trading of securities companies, prevent the risks of securities
companies, safeguard the legitimate rights and interests of securities investors and the social public interests, perfect the securities
dealing mechanisms and the stable and healthy development of the securities market.

Article 2

As regards developing the pilot margin trading, a securities company shall be in compliance with the provisions of the laws, administrative
regulations and the present Measures, enhance the internal control, strictly prevent and control the risks, and earnestly maintain
the safety of customer assets.

The term “Margin trading as mentioned herein refers to such business activity whereby the securities company lends customers capital
to purchase listed securities or lends them listed securities to sell, and collects the collaterals.

Article 3

As regards developing the pilot margin trading, a securities company must be approved by China Securities Regulatory Commission (hereinafter
referred to as CSRC). No securities company can lend the capital or listed securities to its customers or provide any convenience
or services for margin trading between its customers or between its customers and any other person without approval by the CSRC.

Article 4

Under the principle of prudential surveillance, the CSRC shall approve those securities companies that meet the conditions prescribed
in the present Measures to develop the pilot margin trading; and shall, in accordance with the pilot situation and the requirements
for developing the securities market, gradually approve other securities companies meeting the prescribed conditions to engage in
the margin trading.

Article 5

The CSRC and its representative offices shall implement surveillance and administration of the pilot margin trading of securities
companies subject to the laws, administrative regulations and the present Measures.

The Securities Association of China, stock exchanges, and securities depository and clearing institutions shall conduct the self-discipline
management of the pilot margin trading of securities companies pursuant to their own articles of association and rules.

Chapter II Approval of Business Operations

Article 6

Where a securities company applies for engaging in the pilot margin trading, it shall meet the following requirements:

(1)

It has engaged in the securities brokerage business for three years or more, and has been appraised by the Securities Association
of China as an innovative pilot securities company;

(2)

It has sound corporate governance, effective internal control, and can effectively identify, control and prevent business operation
risks and internal management risks;

(3)

Neither the company nor any of its directors, supervisors or senior managers has been subjected to administrative sanctions or criminal
penalties within recent two years for illegal or irregular business operations, and none of them has been under the investigation
of the CSRC or under the rectification because of being suspected of any illegal or irregular act;

(4)

It has sound financial status, has all of its risk control indicators meeting the provisions in recent two years, and has all net
capital for each recent six months above 1.2 billion yuan or more;

(5)

It has the assets of customer to be safe and intact, has had the verification for its scheme of third party depository of customer
transaction settlement funds by the CSRC, and has made clear arrangements for the implementation of the said scheme;

(6)

It has completed the centralized management of transactions, settlements, customer accounts and risk surveillance and control, and
has specified the signs for historical irregular accounts and put them under centralized control; and

(7)

It has established practical and feasible schemes for implementing the pilot margin trading as well as internal management rules,
and has necessary professionals, technical systems, capital and securities for performing the pilot margin trading.

Article 7

Where a securities company applies for the pilot margin trading, it shall submit the following materials to the CSRC, and send a
copy thereof to the CSRC representative office at the locality of its registration:

(1)

an application form for the pilot margin trading;

(2)

the decision of the shareholders’ meeting (the general assembly of shareholders) in respect of engaging in the margin trading;

(3)

the scheme for implementing the pilot margin trading, the text rules of internal management, and the criteria for choosing customers
as formulated under Article 12 of the present Measures;

(4)

the explanations on carrying out the scheme for the third party depository of customer transaction settlement funds;

(5)

the roster and qualification certificates of senior managers and professionals responsible for the margin trading; and

(6)

other documents required to be submitted by the CSRC.

The legal representative of a securities company and its main principals for business management shall sign their names on the application
form for the pilot margin trading, and promise the truthfulness, accuracy and completeness of the application materials, and bear
corresponding legal responsibilities for the false records, misleading statements or major omissions in application materials, if
any.

Article 8

The CSRC representative office shall issue the written opinions to the CSRC concerning whether or not to approve the applicant to
implement the pilot margin trading within 10 working days as of the receipt of the application materials as prescribed in the preceding
Article.

The CSRC shall, subject to the legal procedures and the conditions prescribed in the present Measures, examine the application materials,
organize specialists to evaluate the scheme for carrying out the pilot margin trading as submitted by the applicant, make a decision
on approval or disapproval, and notify the result to the applicant in written form.

Under same conditions, the securities companies with higher net capital will be approved preferentially for the pilot margin trading.

Article 9

A securities company that has obtained the approval shall apply to the company registration department for alteration registration
of the business scope, and apply to the CSRC for re-issuing a Permit for Business Operations of Securities Business in accordance
with relevant provisions.

A securities company can implement the pilot margin trading after obtaining a Permit for Business Operations of Securities Business
as reissued by the CSRC.

Chapter III Rules for Business Operations

Article 10

Where a securities company carries out the pilot margin trading, it shall, in its own name, separately open a special securities
lending account, a customer credit transaction guaranty securities account, a credit transaction securities delivery account and
a credit transaction capital delivery account at securities depository and clearing institutions.

The special securities lending account shall be used for recording down the securities that are held by the securities company, planned
to lend to customers, and returned by the customers, and the said account can not be used for securities dealings; the customer credit
transaction guaranty securities account shall be used for recording down the securities that the customer submits to the securities
company as the guarantee to the creditor’s rights incurred from the margin trading with the customer; the credit transaction securities
delivery account shall be used for securities settlement for the margin trading of the customer; and the credit transaction capital
delivery account shall be used for capital settlement for the margin trading of the customer.

Article 11

Where a securities company carries out the pilot margin trading, it shall, in its own name, separately open a special capital financing
account and a customer credit transaction guaranty capital account at a commercial bank.

The special capital financing account shall be used for depositing the capital that the securities company plans to lend to the customer
and that the customer plans to return; and the customer credit transaction capital securities account shall be used for depositing
the capital that the customer submits to the securities company as the guarantee to the creditors’ rights incurred from the margin
trading with the customer.

Article 12

A securities company shall, before performing the margin trading with any customer, conduct the credit investigation, and know the
status, property, incomes, securities investment experiences and risk preferences of the customer, and record down and keep them
in written form or by e-mail.

A securities company shall not conduct the margin trading with those customers that fail to provide the relevant information as required,
that engage in the securities dealings in the said securities company for less than half a year, or transaction settlement funds
of whose have not been incorporated into the third party depository, or the securities investment experiences of whose are insufficient,
or who lack risk affordability or have records of serious breach of contract, or who are the shareholders or related representatives
of the said securities company.

A securities company shall formulate specific standards for choosing customers as required by provisions in the preceding Paragraph.

Article 13

A securities company shall, before conducting the margin trading with any customer, sign a margin contract including the necessary
provisions as prescribed by the Securities Association of China, and clearly stipulate the following matters:

(1)

the means for calculating the quota, term, interest rate (charging rate), and interests (expenses) of the margin trading;

(2)

the guaranty bonds proportion, the guaranty maintenance proportion, types and the conversion rates of securities that can be used
as guaranty bonds, and the scope of secured creditors’ rights;

(3)

the notification mode and the term for supplementing guaranty bonds;

(4)

the means for the customer to compensate debts, and the right of the securities company on disposing of the collaterals;

(5)

the disposal of rights and interests attached to the securities bought and sold in the margin trading; and

(6)

other relevant matters.

A customer can only sign a margin contract with one securities company and borrow the capital or securities from the same securities
company.

Article 14

A margin contract shall stipulate that the securities in the customer credit transaction guaranty securities account and the capital
in the customer credit transaction guaranty capital account of the securities company are the trust property of the securities company
for guaranteeing the creditors’ rights of the customer incurred from the margin trading.

The term of margin trading stipulated between the securities company and a customer shall not be longer than the maximum term as prescribed
by the stock exchange, and shall not be renewed. The interest rate of capital financing shall not be lower than the base interest
rate of financial institutions for the same term as prescribed by the People’s Bank of China.

Article 15

A securities company shall, before signing a margin contract with any customer, assign a special person to explain to the customer
about the operational rules and the contents of the contract, and give a risk presentation letter concerning the margin trading to
the customer for signature and confirmation.

Article 16

A securities company shall, after signing a margin contract with a customer and on the basis of the application of the customer,
open a real-name credit securities account for him in accordance with the provisions of the securities depository and clearing institution.
The credit securities account for the customer to engage in the trading of listed securities at a stock exchange can only be a same
account. The name or post_title of the account opener of the customer credit securities account shall be consistent with that of the common
securities account of the customer.

A customer credit securities account is a second-tier account of the customer credit transaction guaranty securities account of the
securities company, and can be used for recording down the detailed data for the guaranty securities that the customer entrusts the
securities company to hold.

A securities company shall entrust the securities depository and clearing institution to modify the data in the customer credit securities
account pursuant to the settlement and delivery results, and etc.

Article 17

A securities company shall sign a customer credit capital depository agreement with its customer and the commercial bank with reference
to the mode of third party depository of customer transaction settlement funds. The securities company shall, after signing a margin
contract with a customer, notify the commercial bank to open a real-name credit capital account for the customer under the customer’s
application. Only one credit capital account can be opened to a customer.

A customer credit capital account is a second-tier account of the customer credit transaction guaranty capital account of the securities
company, and can be used for recording down the detailed data of the guaranty capital given by the customer for depository.

The commercial bank shall modify the data on the customer credit capital account pursuant to the settlement and delivery results,
and etc. as provided by the securities company.

Article 18

Where a securities company lends any capital to any customer, it can only use the capital in the special capital financing account;
and where a securities company lends any securities to any customer, it can only use the securities in the special securities lending
account.

The securities bought or sold by the customer in the margin trading shall not exceed the scope as prescribed by the stock exchange.

A customer shall, when signing a margin contract with a securities company, declare all the securities accounts of himself and his
related representatives to the securities company. During the term of securities lending, if the customer or any of his related representatives
purchases the same securities as those he has borrowed, the customer shall declare it to the securities company within 3 trading
days as of the date of the said purchase. The securities company shall monthly report the information as declared by the customer
to the relevant stock exchange.

A customer, planning to sell the same securities as those it holds and has borrowed during the period of securities lending, shall
observe the provisions as prescribed by the stock exchange, and shall not manipulate the market by selling the said securities against
the provisions.

Article 19

Where a securities company implements the margin trading and sends out orders of securities trading and transfer under the customer’s
authorization, it shall ensure the truthfulness and accuracy of the said orders. Where a mistake of the securities company brings
on the wrong orders so as to the losses customer, the customer may request compensation from the securities company according to
laws, however, it shall not affect the business operations of the stock exchange or the securities depository and clearing institution
that are being performed or have been performed.

Article 20

The proportion of the margin amount of all the customers, a single customer or a single securities to the net capital and other risk
control indicators of a securities company shall be in accordance with the provisions of the CSRC.

Article 21

A customer that buys securities by financing from a securities company shall repay it with the capital from selling of the securities
or by direct repayment.

A customer that sells the securities by securities lending from a securities company shall repay it with the securities to be bought
or by direct repayment.

Article 22

Where a transaction of the securities is suspended, which is bought or sold by the customer in the margin trading, and the resumption
day of the transaction is later than the expiry date of the debts incurred from the margin trading, the term for margin trading shall
be postponed, unless it is otherwise prescribed by the margin contract.

Article 23

If the transaction of the securities is to be terminated, which is bought or sold by the customer in the margin trading, and the
last transaction day is later than the expiry date of the debts incurred from the margin trading, the term for margin trading shall
expire at the transaction day before the last one, unless it is otherwise prescribed by the margin contract.

Chapter IV Guarantee to Creditor’s Rights

Article 24

Where a securities company lends the capital or securities to the customer, it shall collect a certain proportion of guaranty bonds
from the customer, which can be substituted by the securities.

Article 25

The said guaranty bonds, all of the securities bought by the customer by financing and all of the capital acquired from the selling
of the borrowed securities shall be separately deposited into the customer credit transaction guaranty securities account and the
customer credit transaction guaranty capital account by the securities company as the collaterals for the creditor’s rights incurred
from the margin trading of the aforesaid customer.

Article 26

The proportion of the value of collaterals submitted by the customer to his debts shall be calculated day by day by the securities
company, and when the aforesaid proportion is lower than the minimum guaranty maintenance proportion, the customer shall be notified
to make up the balance within a certain term.

The securities company shall deal with the collaterals as stipulated at once, unless the customer makes up the balance or pay debts
in time.

Article 27

The proportion of guaranty bonds, the types and conversion rates of securities that can be used as guaranty bonds as prescribed by
Article 24 of the present Measures, and the minimum guaranty maintenance proportion and the term for the customer to make up the
balance as prescribed in Article 26 shall be stipulated by the stock exchange.

A securities company can formulate specific provisions on the aforesaid matters on the basis of meeting the provisions of the stock
exchange.

Article 28

The securities in the customer credit transaction guaranty securities account of the securities company or the capital in the customer
credit transaction guaranty capital account may not be used by anyone but in case of the following circumstances:

(1)

the settlement of margin trading for the customer;

(2)

the collection of the capital or securities that shall be returned by the customer;

(3)

the collection of interests, fees or taxes that shall be paid by the customer;

(4)

the disposal of collaterals subject to the provisions in the present Measures or the stipulations with the customer;

(5)

the collection of default fines that shall be paid by the customer;

(6)

the withdrawal of remaining securities or capital after the principal and interests, taxes, expenses and default fines has been paid
by the customer; or

(7)

other circumstances as prescribed by the laws, regulations or the present Measures.

Article 29

Where the proportion of the collaterals value deposited by the customer to his debts exceeds the percentage as prescribed by the
stock exchange, the collaterals can be withdrawn by the customer subject to the provisions of the stock exchange and the stipulations
in the margin contract.

Article 30

Where the judicial department adopts the measures of property preservation or compulsory implementation to the rights and interests
in the customer credit securities account or the credit capital account, the securities company shall deal with the collaterals and
fulfill the creditor’s rights incurred from the margin trading with the customer, and assist the implementation of judicial department.

Chapter V Disposal of Rights and Interests

Article 31

In accordance with the records in the customer credit transaction guaranty securities account of a securities company, the securities
depository and clearing institution shall confirm the fact that the securities company is entrusted to hold the securities, and register
the securities company in the roster of securities holders as a nominal holder.

Article 32

As regards the securities recorded in the customer credit transaction guaranty securities account, a securities company shall, in
its own name, exercise the rights of securities issuers for the interests of customers. Where a securities company exercises the
rights of securities issuers, the opinions of customers shall be first solicited and be implemented accordingly.

The term “rights of securities issuers” as mentioned in the preceding Paragraph means the rights incurred due to the holding of securities,
such as requesting to convene a securities holders’ meeting, participating in the securities holders’ meeting, submitting proposals,
voting, subscribing the allotted shares, requesting to distribute investment proceeds, etc.

Article 33

A securities depository and clearing institution entrusted by a securities issuer to distribute investment proceeds shall register
the distributed securities in the customer credit transaction guaranty securities account of the securities company, and modify the
detailed data on the said customer credit securities account accordingly.

A securities depository and clearing institution entrusted by a securities issuer to distribute investment proceeds in cash shall
register the distributed capital in the customer credit transaction guaranty capital account of the securities company, and shall
notify the commercial bank to modify the detailed data in the said customer credit capital account after the capital is transferred
to the account.

Article 34

After the customer borrows the securities but before the customer returns the securities, where a securities issuer distributes investment
proceeds, allots or gratuitously distributes securities to securities holders or issues any of the securities to which the securities
holders have the preemptive right, the customer shall, when repaying the debts, give the securities or capital equal to the interests
that may be gotten from the borrowed securities to the securities company subject to the stipulations in the margin contract.

Article 35

A securities company may not merge the stocks holding through its customer credit transaction guaranty securities account into its
self-owned stocks, and it is not required to perform such corresponding obligations as information reporting, information revealment
or tender offer for the alteration of the amount of stocks in the aforesaid account.

Where the total amount of stocks of a listed company or the rights and interests held by a customer and its coordinated actors in
the common securities accounts and the credit securities accounts amounts to the prescribed proportion, the customer shall perform
such corresponding obligations as information reporting, information revealment or tender offer.

Chapter VI Surveillance and Administration

Article 36

A stock exchange can formulate restrictive provisions on the proportion of buying or selling amount of each single security to the
market turnover and on the selling price of the borrowed securities in the margin trading.

Article 37

In accordance with the business operational rules, a stock exchange shall take measures and conduct initial-stage check of the orders
for margin trading, and it shall refuse those trading orders in which the types of securities dealings or the selling price of the
borrowed securities fails to meet the provisions.

Where the proportion of buying or selling amount of a single security in the margin trading to the market turnover reaches the prescribed
maximum percentage, the stock exchange can suspend the acceptance of the orders for buying or selling the aforesaid type of securities
in the margin trading.

Article 38

When any abnormality occurs in the margin trading, which has already harmed or may harm the market stability and it is necessary
to suspend the trading, the stock exchange shall, in accordance with the business operational rules, suspend all or part of the margin
trading and publicize the information.

Article 39

In accordance with the business operational rules, a securities depository and clearing institution shall supervise over the securities
transfer in the margin trading and the capital transfer in the credit transaction capital delivery account of the securities company.
Those orders on securities or capital transfer that violate the provisions shall be refused; and if any abnormality has been found,
the securities company shall be required to make explanations, and then relevant information shall be submitted to the CSRC and the
CSRC representative office at the locality where the said securities company is registered.

Article 40

A commercial bank that is responsible for the customer credit capital depository shall refuse those capital transfer orders of the
securities company that violate the provisions in accordance with the stipulations in the contract on customer credit capital depository;
and if any abnormality has been found, the securities company shall be required to make an explanation, and relevant information
shall be submitted to the CSRC and the CSRC representative office at the locality where the said securities company is registered.

Article 41

A securities company shall deliver reconciliation statements to the customer by the methods as stipulated in the margin contract,
and provide the inquiry services concerning the data of the credit securities account and the credit capital account to them.

A securities depository and clearing institution shall provide the inquiry services concerning data of the credit securities account
to the customer. A commercial bank that is responsible for the customer credit capital depository shall provide inquiry services
concerning data of the credit capital account to the customer subject to the stipulations in the contract on customer credit capital
depository.

Article 42

In accordance with the provisions of the stock exchange, a securities company shall submit to the stock exchange about the information
on the margin trading of the current day after the market is closed every day. The stock exchange shall collect and make statistics
of the information submitted by securities companies, and publicize before the market opens on the next trading day.

Article 43

A securities company shall submit the following information in written form for the current month to the CSRC representative office
at the locality of its registration and the stock exchange within 10 days upon conclusion of each month:

(1)

the number of accounts opened by the customers for the margin trading;

(2)

the balance of margin trading for all the customers as well as the said balance for the top ten customers;

(3)

the types and amount of collaterals submitted by the customers;

(4)

the number of the customers for mandatory buy-in, and the trading amount for mandatory buy-in;

(5)

the value of relevant risk control indicator; and

(6)

the profit status of the margin trading.

Article 44

The CSRC and its representative offices, the Securities Association of China, stock exchanges and securities depository and clearing
institutions shall perform surveillance or self-discipline administrative duties in the margin trading of securities companies subject
to relevant provisions, and can request a securities company to provide the information and materials concerning the margin trading.

Article 45

A CSRC representative office shall implement off-site and on-site inspections over the customer selection, contracts conclusion,
determination of credit-granting quota, collection and management of collaterals, notice on the supplementation of collateral and
disposal of collateral, etc, involved in the margin trading of securities companies and their branches as required by the jurisdiction
monitoring accountability system.

Article 46

Where a securities company or any of its branches violates any of the provisions in pilot margin trading, it shall be deterred and
be ordered to make corrections within a time limit by the CSRC representative office, in case of failing to make corrections or serious
circumstances, the CSRC shall, pursuant to the specific circumstances, take such surveillant measures such as giving a warning, giving
a public warning, ordering penalty to relevant persons who are held to be responsible, ordering relevant branches to stop the margin
trading, or canceling the approval on the margin trading.

A securities company or any of its branches that engages in the margin trading without approval shall be applied sanctions subject
to Article 205 of the Securities Law.

Chapter VII Supplementary Provisions

Article 47

Stock exchanges, securities depository and clearing institutions and the Securities Association of China shall formulate business
operational rules and self-discipline rules for the margin trading in accordance with the present Measures, and implement the said
rules after submit to the CSRC for approval.

Article 48

The present Measures shall enter into force as of August 1, 2006.

China Securities Regulatory Commission
2006-06-30

1...91011...14 Page 10 of 14

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CIRCULAR OF THE MINISTRY OF FINANCE, THE MINISTRY OF LAND AND RESOURCES AND THE PEOPLE’S BANK OF CHINA CONCERNING THE RELATED MATTERS ON THE ADMINISTRATION OF INCOME FROM THE PURCHASE PRICE OF MINERAL PROSPECTING RIGHT AND MINING RIGHT

REPLY OF THE STATE COUNCIL CONCERNING THE CONSENT WITH THE TAX PREFERENTIAL POLICIES ON THE IMPORT OF ARTICLES USED FOR SCIENTIFIC RESEARCH AND TEACHING

SOME OPINIONS OF THE STATE COUNCIL ON PROMOTING THE REFORM, OPENING AND STEADY GROWTH OF CAPITAL MARKETS

CIRCULAR OF THE MINISTRY OF COMMERCE, NATIONAL DEVELOPMENT AND REFORM COMMISSION, GENERAL ADMINISTRATION OF CUSTOMS AND STATE ADMINISTRATION OF FOREIGN EXCHANGE CONCERNING THE PILOT WORK OF FORMAL IMPORT AFTER FORMAL EXPORT OF REFINED OIL IN THE FORM OF PROCESSING TRADE

DECISION OF THE CHINA SECURITIES REGULATORY COMMISSION ON AMENDING THE INTERIM MEASURES FOR THE ADMINISTRATION OF BONDS OF SECURITIES COMPANIES

PROVISIONS ON THE ESTABLISHMENT OF INVESTMENT COMPANIES BY FOREIGN INVESTORS

NOTIFICATION NO.13, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

MEASURES FOR THE ADMINISTRATION OF PILOT MARGIN TRADING OF SECURITIES COMPANIES

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