CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON READJUSTING THE EXPORT REBATES RATE FOR SUCH PRODUCTS AS COAL TAR ETC.

Ministry of Finance, State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation on Readjusting the Export Rebates Rate for such Products
as Coal Tar etc.

Cai Shui [2005] No.184

December 23, 2005

Departments (Bureaus) of Finance, Bureaus of State Taxes in all provinces, autonomous regions, and municipalities directly under the
Central Government, and cities specially designated in the state plan, and Bureau of Finance of the Xinjiang Production and Construction
Corps:

With the approval from the State Council, the export rebates rate for these products as follows shall be readjusted as of the date
of January 1, 2006:

Export rebates policy for coal tar, peltry, wet blue hides, wet leather and dry leather shall be abolished. Please see Annex I for
details.

II.

The export rebates rate for the 25 kinds of pesticides, disperse dye, mercury, tungsten, zinc, tin, antimony and their products, magnesium
metal and its primary products, disodium sulphate and paraffin wax as listed in the Rotterdam Convention on the Prior Informed Consent
Procedure for Certain Hazardous Chemicals and Pesticides in International Trade (PIC Convention), and the Stockholm Convention on
Persistent Organic Pollutants (POPS Convention) shall be readjusted to 5%. Please see Annex II for details.

This circular is hereby given.

Annexes:

Catalogue for Export-rebates-abolished Commodities

Catalogue for Commodities with a Readjusted Export Rebates Rate of 5% htm/e04659.htmNew Page 1

Annex I.

Catalogue for Export-Rebates-Abolished Commodities

Serial Number	Tariff Heading	Name of Commodity
1	2706	Tar and other mineral tar distilled from coal, lignite or peat, whether or not dehydrated or partly distilled, including refined tar
2	4101 4102 4103	Peltry subject to the antecedent tariff heading
3	4104 4105 4106	Leather subject to the antecedent tariff heading
4	4301	Raw fur

Annex II.

Catalogue for Commodities with a Readjusted Export Rebates Rate of 5%

Serial Number	Tariff Heading	Name of Commodity
1	28331100	Disodium sulphate
2	27122000 27101994	Paraffin wax
3	32041100	Disperse dyes and its essential
4	28054000	Mercury
5	81041100 81041900 81042000 81043000	Magnesium metal subject to the antecedent tariff heading
6	28418010 28418040 28259012 28259019.10 28259011 28418020 28418030 28499020 81011000.11 81011000.19 81011000.90 81019400 28259019.90	Tungsten and tungsten products subject to the antecedent tariff heading
7	80011000.10 80011000.90 80012020 80012010 80012090 80030000 80040000 80060000 80020000	All tins, tin products and waste tin particles subject to the antecedent tariff heading
8	79011100 79011200 79012000 79020000	Zinc, zinc alloy and waste zinc particles subject to the antecedent tariff heading
9	81101010 81101020 81109000 28258000 81102000	Antimony, antimony products and waste antimony particles subject to the antecedent tariff heading
		Pesticide
10	2918900010	2,4,5-Trichlorophenoxyacetic acid
11	2903590010	Aldrin , Heptachlor and Chlordane
12	2930909029	captafol and methamidophos
13	2918199020	Acaraben
14	2910900010	Dieldrin and endrin
15	2908909010	Dinitro-ortho-cresol (DNOC) and its salts
16	2903309020	Dibromoethane
17	2924199020	Fluoroacetamide subject to the antecedent tariff heading
18	2903510010 29035100101 29035100102	Lindane
19	2903510090	1,2,3,4,5,6-HCH
20	29036200	Hexachlorobenzene and DDT
21	2921430030	Chlordimeform
22	2924199010	Monocrotophos and Phosphamidon
23	2920100010	Methyl-parathion and Parathion
24	2908109010	Pentachlorophenol
25	2903590020	Camphechlor
26	2903590030	Dodecachloropentacyclo
27	2931000012	Chloroethane Benzene subject to the antecedent tariff heading
28	28429000	Mercury Arsenide and Mercury Rhodanate subject to the antecedent tariff heading
29	2851009090	Mercury Arsenide subject to the antecedent tariff heading
30	28342990	Mercuric Nitrate, Mercurous Nitrate and Mercuric Sulphate subject to the antecedent tariff heading
31	2826190090	Mercuric fluoride subject to the antecedent tariff heading
32	28121049	Mercuric chloride subject to the antecedent tariff heading
33	2812900090	Mercuric Iodide subject to the antecedent tariff heading
34	2931000029	Mercuric acetate and other organic mercury subject to the antecedent tariff heading
35	28380000	Mercuric thiocyanate, potassium mercuric thiocyanate and ammonium mercuric thiocyanate subject to the antecedent tariff heading
36	28274900	Mercury amide chloride and Mercurate-tetrachloro-dipotassium subject to the antecedent tariff heading
37	28275900	Mercuric bromide and mercuric iodide subject to the antecedent tariff heading
38	28259090	Mercuric oxide and mercurous oxide subject to the antecedent tariff heading

CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL ON DOING WELL RELATED WORKS OF CARRYING OUT AND IMPLEMENTING THE AMENDED COMPANY LAW AND SECURITIES LAW

General Office of the State Council

Circular of the General Office of the State Council on Doing Well Related Works of Carrying out and Implementing the Amended Company
Law and Securities Law

Guo Ban Fa [2005] No.62

People’s Governments in all provinces, autonomous regions, and municipalities directly under the Central Government, ministries and
commissions of the State Council, and organs directly under the State Council:

The amended Company Law of the People’s Republic of China and Securities Law of the People’s Republic of China has been adopted at
the 18th session of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on October 27,
2005, and will enter into force as of the date of January 1, 2006. The Company Law and Securities Law are important laws in building
and improving the socialist market economy system, and also fundamental laws in regulating the running of the capital market. In
order to guarantee the smooth implementation of these two Laws and with the approval from the State Council, this circular is hereby
formulated on relevant issues as follows:

It is imperative to fully understand the significance of implementing the amended Company Law and Securities Law. Based on the summarization
of the practices in recent years and in accordance with the change and operation rules in China’s current economic life, the amended
Company Law and Securities Law make relatively big readjustments, supplements and revisions on the former legal regimes for company
and securities, and conduct improvements and innovations on relevant regimes. Accommodating the objective requirements of the reality,
the amendment of these two laws is beneficial for the deepening of the economic system reform and the promotion of economic development,
and for the improvement of the socialist market economy system. A good implementation of these two amended Laws will play important
roles in the fostering of mature and perfect market subjects, in the regulation and promotion of the development of companies, in
the protection of lawful rights and interests of companies, shareholders, creditors, employees etc., in the enhancement of the quality
of the listed companies, and in the promotion of the stable and healthy development of the capital market. People’s Governments at
all levels in all places and relevant authorities of the State Council shall fully understand the significance of implementing the
amended Company Law and Securities Law and do well relevant works.

II.

It is imperative to deeply carry out the works of study and publicity, and strengthen the training of affairs. The amended Company
Law and Securities Law make relatively complete revisions on the registered capital system of the company, the management structure
of the company, the protection of the rights of the shareholders, the financial and accounting system, the merger and divide system
etc., adding up provisions on such fields as the negation of juristic personality, the norms on the association relations, the cumulative
voting, the independent director etc. The amended Securities Law strengthens the internal control system of the securities company,
consolidates the regulatory power of the securities supervisory and managerial authorities, improves the legal responsibilities for
activities in violation of securities laws and regulations, adds up such new mechanisms as the securities issuing and listing recommendation,
the protective funds for securities investors, the pre-disclosure of securities issuing and transactions etc., so as to create conditions
for the stable advance of diversified operation in the financial industry, for the creation of securities derivatives, for the advance
of futures trading of securities, for the widening of channels for capital’s entering into the market as stipulated, and for the
gradual carrying-out of securities financing etc. These innovations in the system need wide and deep studies and publicities so that
the whole society can understand and master them. The Legislative Affairs Office shall, in cooperation with other authorities, formulate
concrete programs for study and publicity, and strengthen, by means of organizing various kinds of lectures and symposiums etc.,
the training of relevant personnel so as to change the functions and working styles of the governments to administering according
to law. The press and media shall conduct publicities on the backgrounds, the main contents, and the significance of implementation
of the amended Company Law and Securities Law and on the various authorities’ effective measures for carrying out and implementing
these two Laws so as to make positive guidance on the hotspot issues in the society.

III.

It is imperative to earnestly do well the linkage of relevant works before and after the amendment of the Company Law and Securities
Law. The amendment of these two Laws concerns the readjustment of relevant managerial systems and of duties among authorities, and
the linkage work shall be well done so as to prevent the disjointing of relevant managerial works.

First, the work of company registration and record shall be timely readjusted. In accordance with the amended Company Law and Securities
Law, the establishment of incorporated companies needs no longer the approvals from the authorities authorized by the State Council
or the provincial people’s governments, while in case that the public distribution of shares is concerned, the approval from the
China Securities Regulatory Commission is required. And the State Administration for Industry and Commerce shall, targeting on the
aforesaid changes, revise the provisions for company registration and record and strengthen the administration of registration and
record.

Second, the administration on the distribution of securities shall be strict. In accordance with the provision in the amended Securities
Law that public distribution of securities shall all and singular need the examination and approval from the securities regulatory
authorities of the State Council or the authorities authorized by the State Council, the China Securities Regulatory Commission and
the authorities authorized by the State Council shall, targeting on the present actual situations, accelerate the study and making
of relevant provisions, specify the conditions and procedures for examination and approval, and establish relevant systems on the
registration, custody and settlement of securities. And the rush for overissuing securities shall be prevented before the promulgation
of relevant match-up provisions. The China Securities Regulatory Commission shall temporarily deny other applications for the public
distribution of securities except the existing ones, and the authorities for industry and commerce at all levels shall also deny
the related applications for registration and record. With regard to those who illegally purchase and sell the illegally-distributed
securities or who provide services of transaction through agent, transfer, and custody etc. to the illegally-distributed securities,
such authorities as the China Securities Regulatory Commission, the Ministry of Public Security, the State Administration for Industry
and Commerce etc. shall, in cooperation with the local people’s governments, investigate and prosecute them according to law.

Third, the administration on securities exchange shall be strengthened. In accordance with the amended Securities Law, the publicly
issued securities according to law may be transferred at other stock exchanges approved by the State Council besides being listed
for transactions at the Shanghai Stock Exchange and Shenzhen Stock Exchange. In light of the previous experiences and lessons, the
advance of the building of multilevel capital markets shall be promoted under the unified leadership of the State Council in an organized
and gradual way. Without the approval from the State Council, the local people’s governments at all levels and relevant authorities
of the State Councils shall not establish stock exchanges or provide the service of securities transfer utilizing the existing transaction
platforms. The China Securities Regulatory Commission shall, in cooperation with relevant authorities of the State Council, accelerate
the studies on the programs for building a multilevel capital market system, and submit them to State Council for implementation
after approval.

IV.

The organizational leadership for the implementation work shall be strengthened, and relevant administrative laws and regulations
shall be timely formulated or cleared. The local people’s governments at all levels and relevant authorities of the State Council
shall strengthen their organizational leadership for the implementation work, enforce strictly the provisions in the amended Company
Law and Securities Law, do well works of their own and enhance the coordination and cooperation among them. The China Securities
Regulatory Commission shall enhance its cooperation with relevant authorities of the State Council, carry out its law-enforcing powers
and measures entrusted by the law, strengthen supervision and administration on the capital markets together with relevant authorities,
and adopt effective measures to prevent and reduce market risks so as to construct a good environment for the development of capital
markets. The State-owned Assets Supervision and Administration Commission of the State Council and other authorities in charge of
the supervision and administration of the state-owned assets shall, in accordance with the provisions in the amended Company Law,
further improve the management structures of the wholly state-owned companies and the state-owned holding companies and actively
advance the shareholding reform of the state-owned enterprises.

Relevant authorities of the State Council shall, in accordance with the amended Company Law and Securities Law, accelerate the drafting
of administrative laws and regulations concerning the supervision and administration of the listed companies, securities companies
and the financial holding companies, and the risk treatment of the securities companies, and submit them to the State Council for
examination and deliberation as soon as possible; and they shall advance relevant programs for the securities credit exchange system
in a proper time, so as to create conditions for the capital’s entering into the market as stipulated. The Legislative Affaires Office
shall organize relevant authorities to conduct special screening of the existing administrative regulations and rules related to
the Company Law and Securities Law, and the administrative regulations and rules, if conflicting with the amended Company Law and
Securities Law, shall be revised or cancelled. The State Administration for Industry and Commerce and other relevant authorities
shall accelerate the revision on the Administrative Regulation of the People’s Republic of China on the Registration of Companies
and other administrative regulations and rules, and conduct a comprehensive clearance of the administrative regulations and rules
related to the registration of companies. The Ministry of Finance shall further revise and improve the financial system of the enterprises
and the national accounting system. The National Development and Reform Commission shall, in cooperation with the People’s Bank of
China, the China Securities Regulatory Commission and other authorities, study and improve the legal system concerning the enterprise
bond. The Legislative Affaires Office, the Ministry of Public Security, the State Administration for Industry and Commerce, the China
Securities Regulatory Commission and other authorities shall actively communicate with relevant authorities, and cooperate with them
in the relevant revisions or legislations and judicial interpretations on the provisions in the Criminal Code related to companies
and securities crimes, so as to readjust the provisions related to the prosecution against the economic crimes as soon as possible.
People’s governments in all provinces, autonomous regions, and municipalities under direct control of the Central Government shall
also improve relevant governmental regulations in accordance with the relevant provisions in the amended Company Law and Securities
Law.

All the authorities in all places, after receiving this Circular and in accordance with their actual circumstances, shall formulate
concrete measures and implement it earnestly. And the important issues and problems occurring in the process of implementation shall
be timely reported to the State Council.

The General Office of the State Council

December 23, 2005

General Office of the State Council
2005-12-23

CIRCULAR OF CHINA SECURITIES REGULATORY COMMISSION AND CHINA BANKING REGULATORY COMMISSION ON REGULATING THE EXTERNAL GUARANTIES PROVIDED BY LISTED COMPANIES

China Securities Regulatory Commission, China Banking Regulatory Commission

Circular of China Securities Regulatory Commission and China Banking Regulatory Commission on Regulating the External Guaranties Provided
by Listed Companies

Zheng Jian Fa [2005] No.120

Listed companies and financial institutions in the banking sector,

With a view to regulating the external guaranties provided by listed companies as well as the examination and approval of financial
institutions in the banking sector on the loans as guaranteed by listed companies and effectively preventing the risks arising from
the external guaranty of listed companies and the credit risks of financial institutions, and in accordance with the provisions of
such laws and regulations as the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China,
the Law of the People’s Republic of China on Banking Regulation and Supervision, and the Guaranty Law of the People’s Republic of
China, relevant issues concerning the external guaranty as provided by listed companies are hereby notified as follows:

We should regulate the external guaranty as provided by listed companies and strictly control the risks arising therefrom.

(1)

Any guaranty as provided by a listed company shall be subject to the deliberation of the board of directors or the shareholders’ meeting;

(2)

The authority of the shareholders’ meeting or the board of directors regarding the examination and approval of an external guaranty
as well as the responsibility assuming system in the case of any violation of the said authority of examination and approval or the
procedures for examination and deliberation shall be stated in the articles of association of a listed company;

(3)

A external guaranty subject to the examination and approval of the shareholders’ meeting may not be submitted to the shareholders’
meeting for examination and approval until the board of directors has reviewed the external guaranty. A external guaranty that shall
be subject to the examination and approval of the shareholders’ meeting shall include but not be limited to the following circumstances:

Any guaranty as provided after the total amount of guaranties provided by a listed company and its controlling subsidiaries exceeds
50% of the net assets upon the latest auditing;

A guaranty as provided to a guaranteed party whose asset-liability ratio is higher than 70%;

A guaranty, the amount of which exceeds 10% of the net asset upon the latest auditing; and

A guaranty as provided to the shareholder, actual controller or the related party.

Where the shareholders’ meeting deliberates on a guaranty to be provided to a shareholder, or an actual controller or a related party,
the shareholder, actual controller or related associated party may not take part in the voting. A resolution on the external guaranty
shall be subject to approval of shareholders with half or more of the voting rights held by shareholders present at the meeting.

(4)

As to a external guaranty subject to the examination and approval of the board of directors, it shall be subject to approval of 2/3
of the directors present at the meeting of the board of directors upon deliberation, and a resolution shall be made thereafter;

(5)

A guaranty subject to the examination and approval of the board of directors or the shareholders’ meeting of a listed company shall
be timely disclosed in a newspaper for information disclosure as designated by China Securities Regulatory Commission. The content
as disclosed shall include the resolution of the board of directors or the shareholders’ meeting as well as the total amount of external
guaranty of a listed company and its controlling subsidiaries to other parties and the total amount of guaranties provided by the
listed company to its controlling subsidiaries until the day when the information is disclosed.

(6)

Where a listed company undertakes the provision of loan guaranty , it shall submit such materials as the articles of association,
the original of the resolution of the board of directors or the shareholders’ meeting with respect to the guaranty and the designated
newspaper, on which the relevant issues concerning the guaranty are published.

(7)

As to the guaranty provided by a controlling subsidiary of a listed company, the aforesaid provisions shall be referred to. The controlling
subsidiary shall timely inform the listed company of performing the information disclosure obligations after its board of directors
or its shareholders’ meeting makes the relevant resolution.

We should regulate the examination and approval of loan guaranties by financial institutions in the banking sector and effectively
prevent the credit risks arising from the loans guaranteed by listed companies and granted by financial institutions.

(1)

All the financial institutions in the banking sector shall, in strict compliance with such laws and regulations as the Guaranty Law
of the People’s Republic of China, the Company Law of the People’s Republic of China, and the Interpretation of the Supreme People’s
Court on Some Issues Concerning the Application of the Guaranty Law of the People’s Republic of China, reinforce the examination
of the application for loan as guaranteed by a listed company, effectively prevent the relevant credit risks and shall timely upload
the information on loans and guaranties into the credit management system.

(2)

All financial institutions in the banking sector shall, according to this Circular, the articles of association of the listed company
concerned as well as other relevant provisions, seriously examine the following matters:

Completeness and compliance with relevant laws and regulations of the application materials submitted by the listed company for the
loan it guarantees;

Performance of the listed company in respect of the procedures for the examination and approval of the board of directors or the shareholders’
meeting on its external guaranty;

Performance of information disclosure obligations of the listed company;

Guaranty capability of the listed company; and

Other matter concerning the accommodator’s creditworthiness and payment capability.

(3)

Financial institutions in the banking sector shall, according to such provisions as the Guidance for Commercial Banks on the Fulfillment
of Credit Authorization Work, improve the internal control system so as to control credit risks.

(4)

As to application for loans as guaranteed by a controlling subsidiary of a listed company, the above provisions shall be referred
to.

We should strengthen the supervision and coordination and intensify the responsibility prosecution for any rule-breaking provision
of external guaranty by listed companies.

(1)

The China Securities Regulatory Commission and branches thereof and the China Banking Regulatory Commission and the branches thereof
shall strengthen supervision and coordination, share information with each other, jointly establish a supervision and coordination
mechanism, jointly intensify the prosecution of the violation of an listed company by concealing information on guaranty or providing
a guaranty illegally or the violation of a financial institution in the banking sector by unlawfully granting a loan, and affix legal
liabilities to the parties concerned according to law.

(2)

A listed company or any senior manager thereof such as director, supervisor or manager which violates the provisions of this Circular,
shall be ordered to make rectification and correction by the China Securities Regulatory Commission, and shall be punished according
to law. If a suspected crime is involved in the case, it shall be transferred to the judicial organ.

(3)

Where a financial institution in the banking sector violates laws or regulations, the relevant institution and the parties concerned
shall be punished by the China Banking Regulatory Commission. If a suspected crime is in the case, they shall be subjected to legal
liabilities by means of transferring the case to the judicial organ.

Other Matters

(1)

All listed companies shall revise and improve their articles of association according to the aforesaid provisions. All financial institutions
in the banking sector shall incorporate the guaranty provided by the listed companies into the uniform credit granting system, and
shall, in strict accordance with the relevant provisions, carry out examination and approval as well as administration with respect
to guaranties.

(2)

The term “financial institutions in the banking sector” as mentioned in the present Circular shall be defined according to that as
used in the Law of the People’s Republic of China on Banking Regulation and Supervision. The term “external guaranty” as mentioned
herein shall mean the guaranty provided by a listed company to others, including the guaranty provided by a listed company to its
controlling subsidiary. The term “the total amount of the external guaranty of a listed company and its controlling subsidiaries”
as mentioned herein shall mean the sum of the total amount of guaranties provided by a listed company to other parties and the total
amount of guaranty provided by its controlling subsidiaries to other parties, including the guaranty provided by a listed company
to its controlling subsidiaries.

(3)

This Circular shall apply to all listed financial companies.

(4)

Where the Circular on the Relevant Issues concerning the Provision of Guaranty by Listed Companies to Other Parties( Zheng Jian Gong
Si Zi [2000] No. 61 ) and the Circular on Some Issues concerning the Fund Flow Between a Listed Company and its Associated Parties
as well as the Guaranties Provided by a Listed Company (Zheng Jian Fa [2000] No. 56 ) has any conflict with the provisions of this
Circular, this Circular shall prevail.

(5)

The present Circular shall go into effect as of January 1, 2006.

China Securities Regulatory Commission, China Banking Regulatory Commission
2005-12-23

MINISTRY OF COMMERCE ANNOUNCEMENT NO. 58, 2005 ON STARTING ANTI-DUMPING INVESTIGATION ON IMPORTED OCTANOL

Ministry of Commerce Announcement No. 58, 2005 on Starting Anti-dumping Investigation on Imported Octanol

Announcement [2005] No.58 of the Ministry of Commerce

Ministry of Commerce announced an anti-dumping investigation on imported Octanol (octyl alcohol) originating in ROK, Saudi Arabia,
Japan, EU and Indonesia (hereinafter referred to as “investigated product “) on September 15, 2005.

In respond to an appeal from domestic industry on July 15, 2005, Ministry of Commerce examined related issues and evidence. Since
the examination shows the appeal is in line with Article 11 , 13 and 17 and includes related contents and evidence of Article 14
and 15 of Anti-dumping Regulations of the People’s Republic of China, Ministry of Commerce decided to start an anti-dumping investigation
on the investigated product as of September 15, 2005.

The period of investigation on dumping is from March 31, 2004 to March 31, 2005. The investigation on injury to domestic industry
is from January 1, 2001 to March 31, 2005.

The investigated product is classified under Code 29051600 in Import and Export Tariffs of General Administration of Customs of the
People’s Republic of China.

Interested parties can apply to Bureau of Fair Trade for Imports and Exports or Bureau of Industry Injury Investigation of Ministry
of Commerce for responding to charges within 20 days as of the date the Announcement is issued.

At the same time, the related exporters and producers should provide the quantity and amount of the product exported to mainland China
during March, 2004 to March, 2005. Registration Form on Dumping Investigation can be downloaded from http//gpj.mofcom.gov.cn.

Besides, the interested parties should provide explanation materials on production capacity, output, storage, construction plans,
and quantity and amount of the product exported to mainland China during the period of investigation on injury to domestic industry.
Registration form on Industry Injury Investigation can be downloaded from http//www.cacs.gov.cn.

If the interested parties are not registered responding to charges within the fixed time, Ministry of Commerce shall have the right
to refuse their materials and make adjudication according to the available materials.

Interested parties can submit their written opinions to Ministry of Commerce in 20 days as of the date when the Announcement is issued
if they have objections to the production margin, qualification of the applicants, investigated countries and other issues.

Interested parties can look up the unclassified version of the application handed in by the applicants at Open Information Look-up
Office of Ministry of Commerce during the above-mentioned period.

Investigation measures can be conducted by questionnaire, sampling, hearing and examination on the spot.

The investigation begins on September 15, 2005 and last 1 year normally. In case of special situation, it could be extended to March
15, 2007.

Address of Ministry of Commerce:

Address: No. 2, DongChangAn St., Beijing

Postcode: 100731

Bureau of Fair Trade for Imports and Exports:

Tel86-10-65198747, 65198740, 65197354

Fax: 86-10-65198164, 65198497

Address: No. 82, DongAnMen St. Beijing

Postcode: 100747

Bureau of Industry Injury Investigation:

Tel86-10-85226852, 85226855, 85226853

Fax: 86-10-85226854

Ministry of Commerce

September 15, 2005

Ministry of Commerce
2005-09-15

REPLY OF THE PEOPLE’S BANK OF CHINA CONCERNING ISSUING FINANCIAL SECURITIES BY CHINA MERCHANTS BANK

Reply of the People’s Bank of China Concerning Issuing Financial Securities by China Merchants Bank

Yin Fu [2005] No. 75

The China Merchants Bank:

We have received your Request for Instructions on Issuing Financial Securities by China Merchants Bank (Zhao Yin Fa [2005] No. 434).
In accordance with the Provisions on Issuing Financial Securities in the Nationwide Inter-bank Securities Market (Zhong Guo Ren Min
Yin Hang Ling [2005] No. 1, hereinafter referred to as the Management Measures), we hereby reply as follows:

We approve you to issue 15 billion Yuan of financial securities in the nationwide inter-bank securities market. 10 billion Yuan shall
be issued in the first period, of which, 5 billion Yuan is of 3-year term and 5 billion Yuan is of 5-year term. The issuance of all
financial securities shall be concluded before June 30, 2006.

In line with the relevant provisions of the Management Measures, your Bank shall file the relevant documents with the People’s Bank
for archival within 5 workdays before the issuance of financial securities of each period and shall do a good job in the security
issuance of each period as well as the relevant information disclosure according to the requirements of the People’s Bank of China.

Your Bank shall report the security issuance to the People’s Bank of China within 10 workdays as of the date of the conclusion of
each period of financial security issuance.

After your financial security issuance is concluded, the securities shall, in accordance with the relevant provisions of the People’s
Bank of China, be allowed to circulate and be traded in the nationwide inter-bank securities market.

The People’s Bank of China

October 9, 2005

The People’s Bank of China
2005-10-09

CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON EXEMPTING THE HONG KONG OR MACAO HOUSING SUBSIDIES RECEIVED BY FOREIGN INDIVIDUALS FROM INDIVIDUAL INCOME TAX

Ministry of Finance, State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation on Exempting the Hong Kong or Macao Housing Subsidies
Received by Foreign Individuals from Individual Income Tax

Caishui [2004] No. 29

January 29th, 2004

The finance departments and the bureaus of local taxation of Guangdong province, the finance bureaus and the bureau of local taxation
of Shenzhen city:

On account of Hong Kong and Macao geographically adjacent to China Mainland and of the convenient traffic, some foreigners working
in Mainland enterprises choose to live in Hong Kong or Macao, come and go between the Mainland and Hong Kong or Macao every working
day. With regard to the question whether the housing, food and laundry subsidies given by the companies to the foreign individuals
in non-cash form or in the form of actual reimbursement for actual costs shall be exempted from the individual income tax in pursuance
of relevant provisions, we hereby clarify it as follows upon deliberation:

With respect to the foreign individuals employed by enterprises within China (excluding individual residents of Hong Kong or Macao)
who live in Hong Kong or Macao for family or any other reason, come and go between the Mainland and Hong Kong or Macao, the housing,
food, laundry and move subsidies given to them by the enterprises within China (including their affiliated enterprises) in non-cash
form or in the form of actual reimbursement for actual costs may, if supported by valid voucher, and upon examination and confirmation
of the competent tax organ, be exempted from the individual income tax according to Article 2 of the Notice of the Ministry of Finance
and the State Administration of Taxation on Several Issues concerning the Policy on Individual Income (CaiShuiZi [94] No. 020) and
Articles 1 and 2 of the Notice of the State Administration of Taxation on Several Issues concerning the Implementation of Exempting
the Relevant Subsidies Received by Foreign Individuals from the Individual Income Tax (GuoShuiFa [1997] No. 54.).

With respect to the subsidies obtained by any of the foreign individuals as mentioned in Article 1 for the expenses of his (her)
language training and children education in Hong Kong or Macao, if they can provide valid payment voucher and other materials, the
subsidies determined as reasonable by the competent tax organ upon examination and confirmation shall be exempted from the individual
income tax according to Article 2 of the aforesaid Notice of CaiShuiZi [94] No. 020 and Article 5 of the Notice of GuoShuiFa [1997]
No. 54.

The present Circular shall come into force as of January 1st, 2004.

Ministry of Finance, State Administration of Taxation
2004-01-29

CIRCULAR OF MINISTRY OF FINANCETHE CUSTOMS GENERAL ADMINISTRATIONTHE STATE ADMINISTRATION OF TAXATION FOR PROVISIONS ON ISSUES CONCERNING TAX POLICY OF THE CUSTOMS AS REPRESENTATIVE LEVYING IMPORTS TAX ON IMPORTED GOODS

Ministry of Financethe General Administration of CustomsThe State Administration of Taxation

Circular of Ministry of Financethe Customs General AdministrationThe State Administration of Taxation for provisions on issues
concerning tax policy of the customs as representative levying imports tax on imported goods

No. 7 [2004] issued by Ministry of Financethe Customs General AdministrationThe State Administration of Taxation

March 16, 2004

Every province, autonomous region and municipality directly under the Central Government , every Office or bureau of Finance of the
city under direct planning by the state , State Taxation Administration, the branch customs administration in Guangdong , special
appointed office of General Administration of Customs in Tianjin , Shanghai and every customs directly under the General administration
of customs:

Provisions on issues concerning tax policy of the customs as representative levying imports tax on imported goods have been approved
by the State Council. It is issued to you now, and you shall act in accordance with it conscientiously.

Annex: provisions on issues concerning tax policy of the customs as representative levying imports tax on imported goods

Annex:provisions on issues concerning tax policy of the customs as representative levying imports tax on imported goods

The taxpayer pays funds equivalent to the deposit or offers other guarantees to the customs for the interim entry goods as followed
through approval of customs while entry shall not pay imports value-added tax and consumption tax temporarily, and shall return to
exit in six months from the date of entry; the customs can lengthen the term of returning to exit according to the stipulations of
General Administration of Customs:

(1)

The goods shown or used during the exhibition, fair, meeting and similar activity;

(2)

The articles used in performance, competition that used in communication activity of culture, sports.

(3)

The instrument, equipment and articles used in news report or making films, TV program.

(4)

The instrument, equipment and articles used in scientific research, teaching, medical activity;

(5)

The transports and special vehicles used in the listed activities of subparagraph 1 to subparagraph 4 of the article.

(6)

Samples

(7)

The instruments, implements used while installing, debugging, checking the equipment.

(8)

The containers of holding the goods;

(9)

Other goods used for non-commercial purpose.

If the aforesaid listed goods that have been approved for entry temporarily would not return to exit in designate term, the customs
shall levy imports value-added tax and consumption tax according to the law

Other entry goods approved temporarily apart from the aforesaid listed goods exempt for imports value-added tax and consumption tax
shall calculate and levy imports value-added tax and consumption tax respectively according to the forming taxing tariff of the goods
and the term proportion of detention in territory and depreciation of the goods.

By virtue of incompleteness, deficiency, bad quality or incompatible specification, the goods of same type that consignor , carrier
or insurance company compensate and replace free of charge shall not be levied imports value-added tax and consumption tax while
importing. If the original imported goods that were replaced free of charge without return to exit, the customs shall re-levy imports
value-added tax and consumption tax on the original imported goods according to the regulations.

A batch of goods fewer than 50 Yuan of amount of imports value-added tax are exempt from imports value-added tax, a batch of goods
fewer than 50 Yuan of amount of consumption tax are exempt from imports consumption tax.

The advertising products and samples without commercial value are exempt from imports value-added tax and consumption tax.

The goods and materials donated free of charge by foreign government and international organization are exempt from imports value-added
tax and consumption tax.

The loss of imported goods are exempt from imports value-added tax and consumption tax before the customs release; As for the loss
of imported goods before the customs release, it may confirm the tax payment price of customs duties and tariff in the formula of
imports value-added tax and consumption tax forming taxing tariff according to real value of imported goods after being damaged that
customs assert, and levy imports value- added tax and consumption tax in accordance with the law.

The necessary fuel, supplies and diet articles that transports load during the trip are exempt from imports value-added tax and consumption
tax.

The relevant laws and administrative statutes stipulate that the imported goods are allowed to reduce or exempt from the imports tax
levied by the customs as representative, the customs shall practice according to the regulations.

The provisions shall come into force as of January 1, 2004.

Ministry of Financethe General Administration of CustomsThe State Administration of Taxation
2004-03-16

MEASURES FOR THE MANAGEMENT OF AUTO LOANS

the People’s Bank of China, China Banking Regulatory Commission

Order of the People’s Bank of China, China Banking Regulatory Commission

No. 2

The Measures for the Management of Auto Loans, adopted at the fifth president’s working meeting of the People’s Bank of China on March
22, 2004 and at the chairman’s meeting of China Banking Regulatory Commission on August 9, 2004, are hereby promulgated and shall
come into force as of October 1, 2004.

Zhou Xiaochuan, the President of the People’s Bank of China

Liu Mingkang, the Chairman of the China Banking Regulatory Commission

August 16, 2004

Measures for the Management of Auto Loans

Chapter I General Provisions

Article 1

With the view of standardizing the management of auto loans, preventing risks in auto loan business and promoting the sound development
of auto loan business, the present Measures are formulated in accordance with the Law of the People’s Republic of China on the People’s
Bank of China, Law of the People’s Republic of China on Commercial Banks and Law of the People’s Republic of China on Banking Regulation
and Supervision.

Article 2

The term “auto loan” as mentioned in the present Measures refers to a loan granted by a lender to the borrower for the purchase of
an auto (including a second-hand auto), including auto loans granted to individuals, dealers and institutions.

Article 3

The term “a lender” as mentioned in the present Measures refers to a commercial bank or an urban and rural credit cooperative set
up lawfully within the People’s Republic of China with the approval of China Banking Regulatory Commission (CBRC) and its agency
for engaging in Renminbi loan business, or refers to a non-bank financial institution with the approval for engaging in auto loan
business.

Article 4

The term “a personal auto” as mentioned in the present Measures refers to an auto purchased by a borrower through an auto loan not
for the purpose of profit making; “a business auto” refers to an auto purchased by a borrower through an auto loan for the purpose
of profit making; “a second-hand auto” refers to an auto whose ownership is changed, with the formalities for ownership transfer
handled according to law, during the period from the completion of motor vehicle registration formalities to the day that is one
year before its scrapping as specified.

Article 5

The interest rate on auto loans shall comply with the provisions on loan interest rates as promulgated by the People’s Bank of China,
and the methods for the calculation and settlement of interests shall be determined by the borrower and lender through consultation.

Article 6

The terms of auto loans (including the extension periods) may not be longer than five years, of which, the terms of loans for second-hand
autos (including the extension periods) may not be longer than three years, and the terms of loans to dealers may not be longer than
one year.

Article 7

Both the borrower and the lender shall abide by the principles of equality, voluntariness, honesty and faith-keeping.

Chapter II Auto Loans to Individuals

Article 8

The term “an auto loan to an individual” as mentioned in the present Measures refers to the loan granted by a lender to an individual
borrower for the purchase of an auto.

Article 9

When applying for an auto loan, an individual must meet the following requirements:

(1)

being a citizen of the People’s Republic of China, or a resident of Hong Kong, Macao or Taiwan or a foreigner who has successively
resided in China for at least one year;

(2)

having a valid ID certificate, settled and particular dwelling place and full capacity for civil conduct;

(3)

having stable source of legitimate income or legal personal assets sufficient to pay off the principal and interests of the loan;

(4)

having a good personal credit,

(5)

being able to make the down payment as provided herein; and

(6)

other requirements as specified by the lender.

Article 10

When granting an auto loan to an individual, the lender shall synthetically take following factors into account and decide the amount
and term of, interest rate on, and methods of repayment of the principal and interests of the loan:

(1)

the borrower’s credit grade as assessed by the lender;

(2)

the guarantee of the loan;

(3)

the performance and purpose of the auto purchased; and

(4)

the development and the supply and demand situation of the auto industry and market.

Article 11

The lender shall establish a credit record on each borrower which shall contain:

(1)

the name, address, valid ID certificate and effective contact details of the borrower;

(2)

the certificate certifying the income level and the credit of the borrower;

(3)

the auto purchase agreement, and the type, engine number, frame number, price and purpose of the auto;

(4)

the amount, term and method of payment of, the interest rate on and guarantee for the loan;

(5)

records of urging the payment; and

(6)

other materials as may be necessary for credit risk prevention.

Article 12

In the case of a loan to individuals granted for the purchase of a business auto, the borrower’s credit record shall, besides the
items provided in Article 11 herein, contain the annual reviews on the operation license, depreciation and insurance of the business
auto.

Chapter III Auto Loans to Dealers

Article 13

The term “auto loan to a dealer” as mentioned in the present Measures refers to the loan granted by a lender to an auto dealer for
the purchase of autos and/or auto parts and components.

Article 14

When applying for an auto loan, the auto dealer must meet the following requirements:

(1)

having an enterprise juridical person business license and annual review certificate checked up and issued by the administrative department
for industry and commerce;

(2)

having an auto sale agent certificate issued by the auto manufacturer;

(3)

not exceeding 80% of the balance sheet ratio;

(4)

having stable and legitimate income or lawful assets sufficient to pay off the principal and interests of the loan;

(5)

there being no major acts of non-compliance or no records of bad credit on the part of either the dealer, its senior officials or
its customers of whom the dealer handles the application for the loan on behalf; and

(6)

other requirement as may be specified by the lender.

Article 15

The lender shall establish and promptly update the separate credit record on each dealer borrower, which shall contain:

(1)

the post_title, legal representative and business place of the dealer;

(2)

copies of business licenses and certificates;

(3)

the conditions concerning the insurances bought by the dealer and the commercial credit and finance it;

(4)

its loan card (number) issued by the People’ Bank of China;

(5)

the type, price and purpose of the purchased auto, auto parts and components;

(6)

the loan guarantee; and

(7)

other materials as may be necessary for credit risk prevention.

Article 16

The amount of a loan granted by a lender to an auto dealer for the purchase of autos and/or auto parts and components shall be determined
on the basis of the average inventory of the dealer in a certain period which shall be determined in the light of the turnover condition
of the dealer’s inventory.

Article 17

The lender shall regularly inspect the dealer’s credit by regularly checking the dealer’s inventory of autos and auto parts and components
and analyzing the dealer’s financing statements, and adjust the dealer’s credit grade and the inventory-checking frequency in the
light of the result of such inspection.

Chapter IV Auto Loans to Institutions

Article 18

The term “auto loan to an institution” as mentioned in the present Measures refers to the loan granted by a lender to a juridical
person and other entity (hereinafter referred to as an “institution borrower”) who is not an auto dealer for such institution’s purchase
of autos.

Article 19

When applying for an auto loan, the institution must meet the following requirements:

(1)

having an enterprise juridical person business license or an institution juridical person certificate or any other legal certificate,
as issued by the authorities in charge of enterprise or institution registration, certifying the qualification of the borrower to
be a juridical person:

(2)

having legitimate and stable income or lawful assets sufficient to pay off the principal and interests of the loan;

(3)

being able to make the down payment as provided herein;

(4)

there being no major acts of non-compliance and no records of bad credit; and

(5)

other requirements as may be specified by the lender.

Article 20

The lender shall establish a separate credit record on each institution borrower pursuant to the provisions of Article 15 herein
and strengthen the tracking monitoring on credit risk.

Article 21

In the case of a business auto loan granted to an institution engaging in auto leasehold operation, the lender shall supervise the
assessment manner of residual value by the borrower and prevent the risk to the lender caused by over-valuation of the residual value.

Chapter V Risk Management

Article 22

The amount of an auto loan granted by the lender for purchase of a personal auto may not exceed 80% of the price of the auto purchased
by the borrower; that for purchase of a business auto may not exceed 70% of the auto purchased by the borrower; that for purchase
of a second-hand auto may not exceed 50% of the auto purchased by the borrower.

The price of an auto referred to as in the preceding paragraph means, in the case of a new auto, the actual transacted price of the
auto (excluding various surtaxes, charges and insurance premiums) or the price published by the auto manufacturer, whichever is lower;
in the case of a second-hand auto, the actual transacted price of the auto (excluding various surtaxes, charges and insurance premiums)
or the price estimated by the lender, whichever is lower.

Article 23

The lender shall set up a borrowers’ credit rating system and determine each borrower’s credit grade with great caution. The credit
grade of an individual borrower shall be determined on the basis of his occupation, income level, ability to pay, records of credit
and etc.; the credit grade of a dealer or institution borrower shall be determined on the basis of their credit record, their senior
officials’ credit qualities, financial positions and records of credit.

Article 24

When granting an auto loan, the lender shall require the borrower to provide mortgage for the auto purchased or to provide other effective
guarantee.

Article 25

The lender shall either directly accept applications for auto loans or entrust such acceptance to a designated dealer, perfect the
system for separation of credit examination and granting, and strengthen the examination before granting and the tracking and payment-demanding
after granting.

Article 26

The lender shall set up an information database on the second-hand auto market and a residual value assessment system of second-hand
autos.

Article 27

The lender shall establish an auto loan classification monitoring system in the light of loan amounts, distributing areas of the loans,
borrowers’ financial positions, auto brands, mortgages and guarantees, make regular inspection and assessment on risks of different
types of auto loans and promptly adjust the risk grades of different types of auto loans according to the results of such inspection
and assessment.

Article 28

The lender shall establish a warning and monitoring system on auto loans, and formulate warning standards and, in the case of any
dissatisfaction of these standards, adopt measures such as reappraisal of the credit examination and approval system.

Article 29

The lender shall establish a classification disposal system on bad loans and a loss provision system on deliberate loans and make
corresponding loan loss provisions.

Article 30

When granting a mortgage loan, the lender shall assess the value of the mortgage with great caution, pay full attention to possible
depreciation of the mortgage and fix the upper limit for the mortgage rate.

Article 31

The lender shall promptly incorporate the information on auto loans into its credit registration and consulting system and establish
a system for information exchange with other lenders.

Chapter VI Supplementary Provisions

Article 32

Where any lender violates any provision of the present Measures when conducting auto loan business, China Banking Regulatory Commission
and its agencies detached have the right to impose punishment on the lender and persons concerned according to the provisions of
the Law of the People’s Republic of China on Banking Regulation and Supervision and other relevant provisions. The People’s Bank
of China and its branches may make suggestions to China Banking Regulatory Commission and its agencies that they conduct supervision
and inspection over irregular acts of lenders engaging in auto loan business.

Article 33

Loans granted by the lender for purchase of engineering vehicles, such as bulldozers, excavators, mixers and pumps, shall be handled
by applying these Measures mutatis mutandis.

Article 34

The power to interpret the present Measures shall be remain with the People’s Bank of China and China Banking Regulatory Commission.

Article 35

The present Measures shall come into force as of October 1, 2004. The Measures for Management of Loans for Auto Consumption as issued
by the People’s Bank of China in 1998 shall be annulled as of the same date.

the People’s Bank of China, China Banking Regulatory Commission
2004-08-16

PROMOTION OF AGRICULTURAL MECHANIZATION LAW

Law of the People’s Republic of China on Promotion of Agricultural Mechanization



	(Adopted at the 10th Meeting of the Standing Committee of the Tenth National People’s Congress on June 25, 2004 and promulgated by Order No.16 of the President of the People’s Republic of China on June 25,2004) Contents Chapter I General Provisions Chapter II Scientific Research and Development Chapter III Quality Safeguards Chapter IV Widespread Use Chapter V Commercialized Services Chapter VI Support Measures Chapter VII Legal Responsibility Chapter VIII Supplementary Provisions Chapter I General Provisions Article 1 This Law is enacted with a view to encouraging and supporting peasants and agricultural production and operation organizations to use advanced and applicable agricultural machines, promoting the mechanization of agriculture and developing modern agriculture. Article 2 For purposes of this Law, mechanization of agriculture means the process of improving the conditions of agricultural production and operation and continually raising the technological level of agricultural production and increasing the economic and ecological benefits of agriculture by equipping agriculture with advanced and applicable agricultural machines. For purposes of this Law, agricultural machines mean the machines and equipment used for agricultural production, primary processing of agricultural products and other activities relating to farming. Article 3 People’s governments at or above the county level shall incorporate the promotion of agricultural mechanization into their plans of national economic and social development, and take such measures as financial support, preferential taxation policy as prescribed by the State and financial aid, in order to gradually increase capital input into the mechanization of agriculture, give full play to the role of market mechanism, and promote the development of agricultural mechanization in compliance with the principles of adapting to local conditions, ensuring economic results, guaranteeing safety and protecting the environment. Article 4 The State provides guidance and support to peasants and agricultural production and operation organizations in their efforts to select advanced and applicable agricultural machines on their own. No units or individuals shall compel peasants and agricultural production and operation organizations to purchase agricultural machines they designate. Article 5 The State takes measures to publicize and disseminate scientific and technological knowledge about agricultural mechanization, to train people in professional skills needed for such mechanization, to promote information services for and to raise the level of such mechanization. Article 6 The administrative departments for agriculture under the State Council and other departments in charge of the work of agricultural mechanization shall, in accordance with the division of their respective duties, closely cooperate with each other, joining the efforts in successfully promoting agricultural mechanization. The departments in charge of the work of agricultural mechanization under the local people’s governments at or above the county level and other departments concerned shall, in accordance with the division of their respective duties, closely cooperate with each other, joining efforts in successfully promoting agricultural mechanization within their own administrative areas. Chapter II Scientific Research and Development Article 7 People’s governments at or above the provincial level and the relevant departments under them shall make arrangements for the units concerned to take such measures as tackling key technical problems and making experiments and demonstrations for the purpose of promoting basic and key scientific researches in agricultural machinery for the public good and the wide use of advanced and applicable agricultural machines. Article 8 The State supports the scientific research institutions, colleges and universities concerned to redouble their efforts in scientific and technological research in agricultural mechanization and, based on the different conditions of agricultural production and different needs of peasants, to make research and develop advanced and applicable agricultural machines; and it supports the efforts made to combine scientific research and teaching of agricultural machinery with their manufacturing and the promotion of their wide use in order that agricultural machinery will be geared to the needs of the technological development of agricultural production. Article 9 The State supports the manufactures of agricultural machines in their efforts to develop advanced and applicable agricultural machines and, by adopting advanced technologies, techniques and materials, to enhance the quality and raise the technological level of their products, reduce their costs of production and provide serialized and standardized agricultural machines characterized by multifunction, high quality, energy saving and reasonable price. Article 10 The State supports the introduction and use of advanced agricultural machines, their key spare parts and technology, and encourages the efforts to absorb foreign funds for purpose of conducting research in, developing, manufacturing and dealing in agricultural machines. Chapter III Quality Safeguards Article 11 The State strengthens the establishment of a standard system for agricultural mechanization, formulates and improves the standards for the quality of the agricultural machines manufactured, the quality of their repairs and maintenance and the quality of their operation. In respect of the technical requirements for the agricultural machines manufactured relating to personal safety, quality and safety of agricultural products and protection of the environment, mandatory technological standards shall be formulated in accordance with the provisions of relevant laws and administrative regulations. Article 12 Supervisory departments for product quality shall, according to law, be in charge of supervision over and spotcheck of the quality of the agricultural machines manufactured. Administrative departments for industry and commerce shall, according to law, tighten supervision and control over the markets of the agricultural machines manufactured. The administrative departments for agriculture under the State Council and the departments in charge of the work of agricultural mechanization under the people’s governments at the provincial level may, based on the complaints by the users of agricultural machines and on the actual need of agricultural production, arrange surveys of the applicability, safety, reliability and after-sale services of a particular type of the manufactured agricultural machines that are in use, and publish the results of the surveys. Article 13 Manufacturers and sellers of agricultural machines shall be responsible for the quality of the machines manufactured or sold by them, and shall , in accordance with relevant State regulations, be responsible for such after-sale services as the supply of spare parts and training. Manufacturers of agricultural machines shall, in accordance with State standards, industrial standards and the requirements of ensuring personal safety, install safety and protection devices on, and attach warning signs and warning in Chinese to, the agricultural machines manufactured by them. Articles 14 Where agricultural machines manufactured do not meet the quality requirements, the manufacturers or sellers of the machines shall be responsible for their repairs, replacement or return; and where losses in agricultural output or other losses are caused to the users of the agricultural machines, they shall compensate the users for the losses according to law. The users of the machines shall have the right to demand that the sellers of the machines make the compensation first. After the compensation is made by the sellers of the machines, if the responsibility rests with the manufacturers of the machines, the said sellers shall have the right to demand recovery from the said manufacturers. Where personal injuries or property losses are caused due to defects in agricultural machines, the manufacturers and sellers of machineries shall make compensations according to law. Article 15 Manufactured agricultural machines included in the catalogue of the products the certification of which is required by law but which are not certified or attached with the signs of certification are prohibited from leaving the factory, being sold or imported. Agricultural machines which do not meet the mandatory requirements of the technological standards of the State are prohibited from being manufactured and sold. Assembling of agricultural machines with defective or substandard spare parts or with spare parts of scrapped machines are prohibited. Chapter IV Widespread Use Article 16 The State supports efforts to promote the wide use of advanced and applicable agricultural machines among peasants and agricultural production and operation organizations. The agricultural machines the wide use of which is promoted shall meet the need of local agricultural development and, according to the provisions of the Law on Popularization of Agricultural Technology, the machines shall have to be proved to be advanced and applicable through experiment in the areas where their wide use is promoted. Manufacturers or sellers of agricultural machines may entrust institutions for experiment and verification of agricultural machines to test the applicability, safety and reliability of the agricultural machines of a finalized design manufactured or sold by them, and to make a technical appraisal. The said institutions shall publish the testing results of the agricultural machines in respect of their applicability, safety and reliability, providing information to peasants and agricultural production and operation organizations in their purchase of advanced and applicable agricultural machines. Article 17 People’s governments at or above the county level may, based on actual conditions, set up demonstration bases for agricultural mechanization in different agricultural areas, and encourage manufacturers of, dealers in agricultural machines, etc. to set up demonstration points for agricultural machines and guide peasants and agricultural production and operation organizations in their use of advanced and applicable agricultural machines. Article 18 The administrative department for agriculture under the State Council together with the department of finance and the department for comprehensive macro-economic control under the State Council shall, on the principles of promoting agricultural restructuring, protecting the natural resources and ecological environment, promoting the wide use of new agricultural technologies and speeding up the updating of agricultural machines and tools, determine and publish the catalogue of the advanced and applicable agricultural machines the wide use of which is supported by that the State, and make adjustment to the catalogue regularly. The departments in charge of the work of agricultural mechanization under the people’s governments at the provincial level together with the department of finance and the department for comprehensive macro-economic control at the corresponding level shall, on the principles mentioned above, determine and publish the catalogue of the advanced, applicable agricultural machines the wide use of which is supported by the people’s governments at the provincial level, and make adjustment to the catalogue regularly. To have their products included in the catalogue mentioned in the preceding paragraph, the manufacturers of agricultural machines shall, on a voluntary basis, submit an application and their products shall be subject to verification, by institutions for experiment and verification of agricultural machines in respect of their advancedness, applicability, safety and reliability. Article 19 The State encourages and supports peasants to cooperate in the use of agricultural machines, in order to raise the utilization ratio and operational efficiency of agricultural machines and to reduce operational cost. The State supports and protects peasants, while adhering to household contractual management, to engage in regional and standardized planting on a voluntary basis in order to raise the operational level of agricultural machines. No units or individuals shall, on the pretext of regional or standardized planting, encroach upon the peasants’ right of contractual management of land. Article 20 The administrative department for agriculture under the State Council and the departments in charge of the work of agricultural mechanization under the local people’s governments at or above the county level shall, upholding the principles of safe production and putting prevention first, improving the publicity of and education in the safe use of agricultural machines and control of such machines. When users of agricultural machines operate the machines, they shall do so in accordance with the safe operation regulations, and shall put up the protective devices or warning signs at the dangerous parts of the machines and at the place of operation. Chapter V Commercialized Services Article 21 Peasants and agricultural machines operation organizations may, on the principles of mutual voluntariness and consultation on an equal footing, provide local or nonlocal peasants and agricultural production and operation organizations with various kinds of compensated services of agricultural machinery operation. Compensated agricultural machinery operation shall be in conformity with the State and local standards for the quality of such operation. The State encourages the provision of agricultural machinery operation among different administrative regions. People’s governments at various levels and the relevant departments under them shall support such inter-regional agricultural machinery operation, maintain the order of such operation, provide conveniences and services, and exercise supervision over safety according to law. Article 22 People’s governments at various levels shall take measures to encourage and assist the development of multiforms of agricultural machinery service organizations, to facilitate the establishment of an information network for agricultural mechanization and improve the service system of agricultural mechanization. Agricultural machinery service organizations shall, based on the needs of peasants and agricultural production and operation organizations, provide such commercialized services as demonstration and promotion of the use of agricultural machines, training in practicable technologies, maintenance and repairs, information, and intermediary service. Article 23 Institutions for promotion of agricultural machinery technologies at the grassroots level established by the State shall rely on the experiment and demonstration bases in providing, without compensation, peasants and agricultural production and operation organizations with such public welfare services as promotion of and training in agricultural machinery technologies. Article 24 Any unit or individual engaged in agricultural machinery maintenance and repairs shall have the instruments and equipment needed for maintenance and repairs as well as the technicians with the professional skills for agricultural machinery maintenance and repairs, in order to guarantee quality. If the quality of repair is not up to standards, the repairer shall do the repairs again free of charge; and if personal injuries or property losses are caused, the repairer shall bear the responsibility for compensation according to law. Article 25 Manufacturers, dealers in and repairers of agricultural machines may, in accordance with the provisions of laws and administrative regulations and on a voluntary basis, establish industrial associations, practice self-discipline within the industry, provide services to the members of their associations and preserve lawful rights and interests of their members. Chapter VI Support Measures Article 26 The State takes measures to encourage and support the manufacturers of agricultural machines to increase their input in research and development of new products, new technologies and new techniques, and executes a preferential tax policy for scientific research in, and development and manufacture of agricultural machines. A certain amount of the funds for scientific and technological development arranged in the central or local budgets shall be used in support of technical innovation of the agricultural machinery industry. Article 27 The central and the provincial governments shall respectively allocate special funds to subsidize the peasants and agricultural production and operation organizations for their purchase of the advanced and applicable agricultural machines supported and promoted by the State. The funds for subsidies shall be used in accordance with the principles of openness, impartiality, timeliness and effectiveness. Such funds may be distributed to the peasants and agricultural production and operation organizations, and may also be used as a discount for the loans provided by banking institutions in support of the peasants and agricultural production and operation organizations that purchase advanced and applicable agricultural machines. The specific measures in this regard shall be formulated by the State Council. Article 28 Incomes from providing services in production with agricultural machines shall enjoy preferential taxation policy in accordance with State regulations. The State, based on the needs of agricultural and rural economic development, appropriates financial subsidies for the fuel oil used in agricultural production with agricultural machines. Such subsidies shall be given directly to the peasants and agricultural production and operation organizations that are engaged in operations with agricultural machines. The specific measures in this regard shall be formulated by the State Council. Article 29 Local people’s governments at various levels shall take measures to make greater efforts in the construction and maintenance of the infrastructure in respect of agricultural mechanization, such as rural roads for farm machines, in order to create the conditions for agricultural mechanization. Departments in charge of the work of agricultural mechanization under the local people’s governments at or above the county level shall establish the system of information gathering, sorting and issuing for agricultural mechanization, in order to provide peasants and agricultural production and operation organizations with information services free of charge. Chapter VII Legal Responsibility Article 30 Violations of the provisions in Article 15 of this Law shall be penalized in accordance with the relevant provisions in the Law on Product Quality; and if a crime is constituted, criminal responsibility shall be investigated according to law. Article 31 Where the driver or operator of agricultural machine violates the State procedures for safe operation and relevant regulations in his work, he shall be instructed to rectify and be penalized in accordance with the provisions of relevant laws and administrative regulations; and if a crime is constituted, criminal responsibility shall be investigated according to law. Article 32 When an institution for experiment and verification of agricultural machines fails to make verification for the manufacturers or sellers of agricultural machines in accordance with relevant regulations, forges the results of verification, or produces false certificates, thus causing losses to the users of agricultural machines, it shall bear the responsibility for compensation according to law. Article 33 Where the administrative department for agriculture under the State Council or the department in charge of the work of agricultural mechanization under a local people’s government at or above the county level, in violation of the provisions of this Law, compels, or does so in disguised form, the manufacturers or sellers of agricultural machines to have the agricultural machines they manufacture or sell verified, the competent department at the higher level or the supervisory organ shall instruct it to rectify within a time limit, and give administrative sanctions to the persons who are directly in charge and the other persons who are directly responsible. Article 34 Any unit or individuals that, in violation of the provisions in Articles 27 and 28 of this Law, withholds or misappropriates the funds for subsidies, shall be instructed by the competent organ at the higher level to return the funds withheld or misappropriated within a time limit, its/ his unlawful gains shall be confiscated; and the competent organ at the higher level, the supervisory organ or the entity it/ he belongs to shall give administrative sanctions to the persons who are directly in charge and the other persons who are directly responsible. If a crime is constituted, criminal responsibility shall be investigated according to law. Chapter VIII Supplementary Provisions Article 35 This Law shall go into effect as of November 1, 2004.

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 34 – EARNINGS PER SHARE

Accounting Standards for Enterprises No. 34 – Earnings Per Share

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

Article 1

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

Article 2

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

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

Article 3

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

Chapter II Basic Earnings Per Share

Article 4

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

Article 5

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

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

Article 6

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

(1)

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

(2)

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

(3)

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

(4)

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

Chapter III Diluted Earnings Per Share

Article 7

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

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

Article 8

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

(1)

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

(2)

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

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

Article 9

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

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

Article 10

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

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

Article 11

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

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

Article 12

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

Chapter IV Presentation

Article 13

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

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

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

Article 14

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

Article 15

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

(1)

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

(2)

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

(3)

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

The Ministry of Finance
2006-02-15

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