Catalogue for the Guidance of Foreign In­vestment Industries (Attachment)

I. Notes for Catalogue of Encouraged Indus­tries:

1. Prospecting and exploitation of oil and natu­ral gas: In cooperation with Chinese partner only.

2.  Exploitation of oil deposits (fields) with low osmosis: In cooperation with Chinese partner only.

3.  Development and application of new tech­nologies that can increase recovery factor of crude oil: In cooperation with Chinese partner only.

4.  Development and application of new tech­nologies for prospecting and exploitation of petroleum, such as geophysical prospecting, well-drilling, well-logging and downhole opera­tion, etc.: In cooperation with Chinese partner only.

5. Manufacturing of automobile and motorcycle: The proportion of foreign investments shall not exceed 50%.

6. International liner and tramp maritime trans­portation business: The proportion of foreign investments shall not exceed 49%.

7. International container multi-modal transpor­tation: The proportion of foreign investments shall not exceed 50%. Foreign majority owner­ship will be permitted no later than Dec. 11, 2002. Wholly foreign ownership will be permit­ted no later than Dec. 11, 2005.

8.  Road freight transportation companies: Foreign majority ownership will be permitted no later than Dec. 11, 2002. Wholly foreign own­ership will be permitted no later than Dec. 11, 2004.

9. Wholesale, retail and logistic distribution of general goods: As described in No. 5 of Notes for Catalogue of Restricted Industries of the Attachment,

10 Accounting and auditing: In cooperation with Chinese partner and in the form of partnership only.

II. Notes for Catalogue of Restricted Indus­tries:

1. Cross-border automobile transportation com­panies: Foreign majority ownership will be per­mitted no later than Dec. 11. 2002. Wholly for­eign owned enterprises will be permitted no later than Dec. 11, 2004.

2.  Water transportation companies.: The pro­portion of foreign investment shall not exceed 49%.

3.  Rail freight transportation companies: The proportion of foreign investment shall not ex­ceed 49%. Foreign majority ownership will he permitted no later than Dec. 11. 2004. Wholly foreign owned enterprises will be permitted no later than Dec, 11. 2007.

4. Telecommunication Companies

4.1 Value-added services and paging services in basic telecommunication services: Foreign investments are permitted no later than Dec. 11, 2001 with the proportion of foreign invest­ment not exceeding 30%. The proportion of for­eign investment in joint venture shall not ex­ceed 49% no later than Dec. 11. 2002, and shall be allowed to reach 50% no later than Dec. 11, 2003.

4.2 Mobile voice and data services in basic tele­communication services: Foreign investments are permitted no later than Dec. 11, 2001 with the proportion of foreign investment not exceed­ing 25%. The proportion of foreign investment in joint venture shall not exceed 35% no later than Dec. 11, 2002, and shall be allowed to reach 49% no later than Dec. 11, 2004.

4.3 Domestic and international services in ba­sic telecommunication services: Foreign invest­ments will be permitted no later than Dec. 11, 2004 with the proportion of foreign investment not exceeding 25%. The proportion of foreign investment in joint venture shall not exceed 35% no later than Dec. 11, 2006 and shall be allowed to reach 49% no later than Dec. 11, 2007.

5. Commodities trade, direct selling, mail-order selling. Internet selling, sales agent, franchis­ing, commercial management; whole sale, re­tail and logistic distribution of grain, cotton, veg­etable oil, sugar, pharmaceutical products, to­bacco, automobile, crude oil, capital goods for agricultural production; whole sale and retail of books, newspapers, periodicals; whole sale of product oil, construction and operation of gaso­line station

5.1 Commission agents services and wholesale trade services (excluding salt, tobacco): For­eign invested enterprises are permitted no later than Dec. 11, 2002 with foreign investment not exceeding 50%, but can not engage in the dis­tribution of books, newspapers, magazines, pharmaceutical products, pesticides, mulching films, chemical fertilizers, processed oil and crude oil. Foreign majority ownership will be per­mitted no later than Dec. 11, 2003. And wholly foreign-owned enterprises will be permitted no later than Dec. 11, 2004, and can engage in the distribution of books, newspapers, maga­zines, pharmaceutical products, pesticides, mulching films. The distribution of chemical fer­tilizers, processed oil and crude oil are permit­ted no later than Dec. 11,2006.

5.2 Retailing services (excluding tobacco): For­eign invested enterprises are permitted but can not engage in the distribution of books, news­papers, magazines, pharmaceutical products, pesticides, mulching films, chemical fertilizers, processed oil. The proportion of foreign invest­ment can reach 50% no later than Dec. 11, 2002, and can engage in the distribution of books, newspapers and magazines. Foreign majority ownership will be permitted no later than Dec. 11, 2003. And wholly foreign-owned enterprises will be permitted no later than Dec. 11, 2004, and can engage in the distribution of pharmaceutical products, pesticides, mulching films, and processed oil. The distribution of chemical fertilizers are permitted no later than Dec. 11, 2006. Foreign investors can not take majority ownership of a Chain-store that has over 30 branch stores and engages in the dis­tribution of automobiles (the limitation will be lift no later than Dec. 11, 2006), books, news­papers, magazines, pharmaceutical products, pesticides, mulching films, processed oil, chemi­cal fertilizers, grain, vegetable oil, sugar, to­bacco, cotton.

5.3  Franchising and wholesale or retail trade services away from a fixed location: Foreign invested enterprises are permitted no later than Dec. 11,2004.

6. The distribution of audiovisual products (ex­cluding movies): Foreign investments shall be permitted no later than Dec.11, 2004.

7.  Goods leasing companies: Foreign majority ownership shall be permitted no later than Dec. 11,2002. Wholly foreign owned enterprises shall be permitted no later than Dec. 11,2004.

8. Agencies

8.1  Ship agencies: The proportion of foreign in­vestment shall not exceed 49%.

8.2  Freight forwarding agencies (excluding those services specially reserved for Chinese postal authorities): The proportion of foreign investment shall not exceed 50% (not exceed 49% in the case of courier services). Foreign majority ownership shall be permitted no later than Dec. 11, 2002. Wholly foreign owned en­terprises shall be permitted no later than Dec. 11,2005.

8.3 Cargo handling for foreign vessels: In forms of equity joint ventures or contractual joint ven­tures only

8.4 Advertising agencies: Tile proportion of for­eign investment shall not exceed 49%. Foreign majority ownership shall be permitted no later than Dec. 11, 2003. Wholly foreign owned en­terprises shall be permitted no later than Dec. 11,2005.

9.  Insurance

9.1  Non-life insurance companies: The propor­tion of foreign investments shall not exceed 51%. Wholly foreign owned enterprises shall be permitted no later than Dec. 11, 2003.

9.2 Life insurance companies: The proportion of foreign investments shall not exceed 50%.

10.  Securities company, securities investment fund management companies

10.1  Securities companies: Foreign invest­ments shall be permitted no later than Dec. 11, 2004 with the proportion of foreign investment not exceeding 1/3.

10.2 Securities investment fund management companies: The proportion of foreign invest­ment shall not exceed 33%. The proportion of foreign investment shall be allowed to reach 49% no later than Dec. 1 1, 2004.

11. Insurance brokage companies: The propor­tion of foreign investment shall not exceed 50%. The proportion shall be allowed to reach 51% no later than Dec. 11, 2004. Wholly foreign owned enterprises shall be permitted no later than Dec. 11,2006.

12. Companies of inspection, verification, at­testation for imported and exported goods: For­eign majority ownership shall be permitted no later than Dec. 11, 2003. Wholly foreign owned enterprises shall be permitted no later than Dec. 11,2005.

Promulgated by the State Development Plan­ning Commission, the State Economy and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation on Mar. 11, 2002.