Laws of the People's Republic of China

Reply of the People's Bank of China concerning the Rules for Settling Security Transactions by China Government Securities Depository Trust & Clearing Co. Ltd.

China Government Securities Depository Trust & Clearing Co. Ltd.,

We have received your Request for Instructions on the Promulgation of the Rules for Settling Security Transactions by China Government Securities Depository Trust & Clearing Co. Ltd. (Zhong Zhai Zi [2005] No. 64). Your Company is hereby approved to promulgate the Rules for the Settlement of Security Transactions by China Government Securities Depository Trust & Clearing Co. Ltd in accordance with such relevant provisions as the Measures for Administrating Security Transactions in the National Inter-Bank Securities Market (Yin Fa [2000] No. 2) and the Circular on Such Relevant Issues on the Establishment of Proxy Security Settlement Business (Yin Fa [2000] No. 325).

In accordance with the relevant provisions of the People's Bank of China in respect of the inter-bank securities market, your Company shall formulate relevant business rules and operating procedures, intensify the establishment of the internal control system, handle the security settlement affairs strictly according to the relevant provisions, improve the internal system of the inspection and examination for settlement business and prevent settlement risks effectively.

Your Company shall constantly improve the system and the relevant operating procedures, supply market members with convenient and highly-effective account check services and effectively safeguard the legitimate rights and interests of the market members.

In formulating fee charging measures for the relevant business operations, your Company shall adhere to the principle of no profit making and shall fully and publicly solicit the market members' opinions. The charging of relevant operational fees shall be implemented after being reported to the People's Bank for archival.

It is hereby replied.

The People's Bank of China

August 16, 2005