(Adopted by the 34th Executive Meeting of Ningxia Hui Autonomous Region People’s Government, promulgated by Decree No. 61 (2004) of Ningxia Hui Autonomous Region People’s Government, and effective on May 26, 2004)

To further implement the Western Region Development Program, broaden opening up to the outside world and cooperation between the Eastern and Western Region, expand the scope of foreign investment, and promote a leap-forward development of the Region’s economy and society, the Policies have been made in accordance with the Law on Regional Autonomy of Ethnic Minorities and Circular on Policies and Measures Pertaining to the Development of the Western Region issued by Order No. 33 (2000) of the State Council, Suggestions on the Implementation of Policies and Measures Pertaining to the Development of the Western Region distributed by Order No. 73 (2001) of the State Council’s General Office, and other documents released by the ministries concerned. Based on the principle of exploiting the Regional particular advantages for mutual benefit and development, in light of the regional actual conditions, the policies and regulations have been worked out in details as follows:

Part One Market Access and Registration

Article 1 The domestic and foreign enterprises and personal investors, excluding those restricted explicitly by the State laws and regulations and policies, are all welcome to have access to the market and investment in Ningxia Hui Autonomous Region. As for the scope of business, the administrative management departments for industry and commerce shall verify that, in accordance with the relevant laws and regulations, operations in the prohibited areas are not permitted; operations in the areas where examinations and approval are required are not permitted before getting approval; and operations in the areas where no examinations and approval are required are permitted to make independent decisions on their target items.

Article 2 In case the enterprises are verified to meet the requirements for corporate business, but their operation items are still in the process of getting approval, they shall be given business permits effective in a year, and be permitted to have a bank account, and a cachet and a cachet specific for financial affairs. Besides, their business scope shall be verified only as Preparing to Construct rather than any specific descriptions before all the procedures for examinations and approval are well complete.

Article 3 Registered capital shall be paid within an extended period. For the newly founded domestic capital enterprises, the registered capital shall be paid by instalments within 1 or 2 years with a down payment accounting for 10% of the total. Both the total and the amount paid of the registered capital shall be indicated in the business permits given.

Article 4 Fewer restrictions on the set-up of enterprise groups are required. In case the enterprises comprise a core enterprise with the registered capital amounting to RMB￥ 20 million and three controlling subsidiary companies as well, they shall be registered as Group.

Article 5 Fewer restrictions on the name registration of enterprises are required. For the enterprises with the registered capital amounting to over RMB￥ 1 million, Ningxia or Ningxia Hui Autonomous Region shall be involved. Based on the principle of neither repetition nor confusion, the application is verified and approved according to the stipulated procedures.

Article 6 For the investment projects which meet all the requirements of the State policies on industries and environmental protection, raise all the capital on their own and have no need for balancing the local resources, the on-file system shall be implemented. Approval and initiation and examinations by the departments concerned are not required any more. But the enterprises have to submit evaluation documents on construction projects’ influence on environment to the departments of environmental protection for examinations and approval by law; and project proposals, research reports and other documents to the administrative management departments for industry and commerce and the departments for commercial affairs for registration by law. For the projects with foreign investment, within the authority of local governments of Ningxia, the procedures shall be simplified as the verification and approval system, for examinations and approval of project proposals and research reports are not required any more. And other departments concerned shall offer supporting services.

Part Two Taxation

Section A Preferential Policies for Domestic Capital Enterprises

Article 7 For the newly founded industrial enterprises, their enterprise income tax is, commencing from the day on which their production and operation start, exempted from the first to the third year, and levied with a 50 per cent reduction in the forth and fifth year. For the newly founded enterprises dealing in commerce and trade and services, their enterprise income tax is, commencing from the day on which their production and operation start, exempted in 3 years.

Article 8 The enterprises encouraged by the State shall be subject to the enterprise income tax at a reduced rate of 15% by 2010. For those which enjoy such a preferential 15 per cent reduction, their enterprise income tax, when it is levied with a 50 per cent reduction, shall be calculated by cutting in half the payable amount of enterprise income tax at a rate of 15%.

Article 9 For the industrial enterprises newly set up in the south mountainous areas of the Region (including parts of Guyuan City such as Yuanzhou District, Xiji County, Longde County, Jingyuan County and Pengyang County, and parts of Wuzhong City such as Tongxin County, Yanchi County and Hongsipu County, and Haiyuan County of Zhongwei City), their enterprise income tax is, commencing from the day on which their production and operation start, exempted in 5 years. Especially, for those engaging in farm and sideline product processing, after the expiration of the period of treatment on the tax exemption, their enterprise income tax shall be levied with a 50 per cent reduction in 2 years. For the farm and sideline product processing enterprises initiated by the villagers immigrating to the plain areas, this Article shall be observed for reference.

Article 10 The industrialized agricultural enterprises, certified as the State key leading enterprise by the Ministry of Agriculture and other departments concerned, shall provisionally enjoy the enterprise income tax exemption upon the application submitted by the Leading Group for coordination of the Regional agricultural industrialization.

Article 11 The existing enterprises (excluding those engaging in finance, insurance, post and communication, construction industry, entertainment business, real estate selling business and land-use right transference, in services such as advertising, sauna, massage, the Internet bars and oxygen bars, and in commerce and trade including wholesale, a mixed business of wholesale and retail, and other non-retail enterprises), commencing from the year in which the laid-off, unemployed, and job-waiting people employed are more than (or as many as) 50% of their existing employees, shall enjoy the enterprise income tax exemption in 3 years; Those which employ laid-off, unemployed, and job-waiting people more than (or as many as) 30% of their existing employees shall enjoy the enterprise income tax exemption in 2 years.

Article 12 The enterprises served by scientific research institutions and colleges and universities, shall enjoy the enterprise income tax exemption for the businesses in technology transfer, technical training, technological consultation, technical services, and technology contract. For the economic entities specially engaging in technology popularizing and technical services, consultation and training, their income tax is exempted in 5 years commencing from the day when business starts; after the expiration of the period of treatment on the tax exemption, they shall continue to enjoy the income tax exemption in case their annual net income amounts to less than RMB￥ 300 thousand; otherwise, the income tax shall be paid by law based on the amount in excess.

Article 13 In case the enterprises which scientific research institutions are transformed into or join into use a piece of land for technological development purposes, by the end of 2006, their urban land use tax shall be exempted together with housing tax, enterprise income tax, and business tax for so called “Four Technical Services”. For the scientific research institutions mentioned above as well as the enterprises responsible for trial production, income tax shall be exempted during the test marketing period of their trial products.

Article 14 For the enterprises initiated by the designated specialists of science and technology or serving agricultural production before, during or after it, income tax is exempted on the income from their technical and other services.

Article 15 In case the domestic enterprises of other provinces participate in merger and/or acquisition of the Regional enterprises insolvent or running under deficit for long, enterprise income tax shall be exempted in 3 years commencing from the next year after completion of merger and/or acquisition; and after the expiration of the period of treatment on the tax exemption, a 50 per cent reduction shall be levied in 2 years. In case merger and/or acquisition occur between the Regional enterprises, this Article shall be observed for reference.

Article 16 The enterprises engaging in software and integrated circuitry, in case their income from the dominant business accounts for over 70%, shall enjoy the enterprise income tax exemption in 5 years commencing from the year in which they start to profit.

Article 17 The State or Regional high tech enterprises, certified by the State or Regional competent departments of science and technology, shall enjoy the enterprise income tax exemption in 5 years commencing from the year of certification.

Article 18 Enterprises are encouraged to raise the proportion of expenditure on technological development. The expenditures on research and development of new products, technologies and techniques, or on introduction of advanced technologies home and abroad to localization development are involved in administration expenses with no restriction of proportions. In case such expenditures actually increase by no less than 10% compared with those in the previous year, 50% of their actually occurring amount shall be deducted from the taxable income amount of the year.

Article 19 The projects on animal husbandry shall enjoy the animal husbandry tax and grassland-use fees exemption in 5 years commencing from the year in which they start to profit.

Article 20 In case the enterprises make use of the wasted resources listed in Resource Comprehensive Utilization Catalogue (Revised in 2003) as dominant raw materials for production and the rate of utilization amounts to over 30%, income tax is exempted in 5 years.

Section B Preferential Policies on Income Tax of Enterprises with Foreign Investment

Article 21 Enterprises with foreign investment shall enjoy the 3 per cent local income tax exemption.

Article 22 The productive enterprises with foreign investment founded in the administrative coverage of Yinchuan City shall be subject to the enterprise income tax at a reduced rate of 24 per cent.

Article 23 The productive enterprises with foreign investment founded in the State economic and technological development zone of Yinchuan (including Yinchuan high tech industry development zone) shall be subject to the enterprise income tax at a reduced rate of 15 per cent.

Article 24 The projects with a foreign investment of over US$30 million and with a longer payback period, the projects on energy and transportation infrastructure, and the technology-intensive and knowledge-intensive projects, upon approval from the State Administration of Taxation, shall be subject to the enterprise income tax at a reduced rate of 15 per cent.

Article 25 The enterprises with foreign investment belonging to the State encouraged industries shall be subject to the enterprise income tax at a reduced rate of 15 per cent by 2010.

Article 26 The export-oriented enterprises with foreign investment, after the expiration of the period of treatment on tax exemption and reduction by law, shall be subject to the enterprise income tax at a reduced rate of 15 per cent (the Yinchuan-based enterprises, 12 per cent) in the year in which their export volume accounts for over 70% of their production value; those founded in Yinchuan economic and technological development zone and those which have enjoyed the reduced tax rate of 15 per cent, shall be subject to the enterprise income tax at a reduced rate of 10 per cent in case they meet the requirement for the proportion of export volume mentioned above.

Article 27 For the productive enterprises with a foreign investment of over US$30 million, in addition to the income tax exemption in 2 years from the year when they start to profit and the 50 per cent income tax reduction in 3 years by law, income tax (the local retention portion) payable for 3 years shall be involved in the local fiscal expense at the same administrative level as a support given.

Article 28 For the productive enterprises with foreign investment with the operation period more than a decade, enterprise income tax shall, commencing from the year in which they start to profit, be exempted in the first and second year; and levied at a 50 per cent reduction from the third to fifth year. In case the advanced technology enterprises certified by the Regional departments for commercial affairs and of science and technology remain in the certification after the expiration of the period of treatment on income tax exemption and reduction by law, 50 per cent of the local retention portion of enterprise income tax shall be refunded at the stipulated tax rate in 3 years.

Article 29 In case the enterprises with foreign investment make use of the resources listed in the Resource Comprehensive Utilization Catalogue (revised in 2003) for production, after they, as productive enterprises, have enjoyed the preferential treatment on income tax exemption for 2 years and the 50 per cent tax reduction for 3 years, the amount of the local retention portion of their payable income tax shall be refunded in 2 years.

Article 30 For the enterprises with foreign investment certified as the Regional high tech enterprises by the Regional competent department of science and technology, which have enjoyed the preferential treatment on income tax exemption for 2 years and the 50 per cent tax reduction for 3 years, the amount of the local retention portion of their payable income tax shall be refunded in 3 years.

Article 31 For the enterprises with foreign investment dealing in technological development, in case their expenses on technological development occurring in the territory of China actually increase by no less than 10% compared with those in the previous year, upon examinations and verification and approval by the tax authority, 50% of their actually occurring amount shall be deducted from the taxable income amount of the year.

Article 32 For the project invested by the enterprises with foreign investment belonging to the State encouraged industries, within its total investment, the imported self-used machinery and equipment, excluding the commodities explicitly prohibited to be duty-free by the State, shall be exempted from tariff and value-added tax on import.

Article 33 In case the enterprises with foreign investment founded in Ningxia purchase home machinery and equipment within their total investment, which meet the requirements for the encouraged and/or Restriction B investment projects defined in the foreign investment directory of a circular on adjusting the taxation policies on the imported machinery and equipment issued by Order No. 37 (1997) of the State Council and the State Administration of Taxation, excluding the items involved in the non-duty-free imported commodities directory for foreign investment projects of the circular, 40% of the investment amount for the purchase of home machinery and equipment shall be deducted from the added amount of enterprise income tax compared with that in the previous year. For the enterprises with foreign investment and foreign enterprises, the annual amount deducted of enterprise income tax cannot exceed the added amount of enterprise income tax in the year when machinery and equipment are purchased compared with that in the previous year. If such added amount is not sufficient to deduct that amount of investment, the investment amount in surplus may be deducted from the added amount of enterprise income tax in the continuing and consecutive tax years compared with that in the year previous to the purchase of machinery and equipment, however, the maximum term may not exceed 5 years. (For enterprises with domestic investment, this Article shall be observed as reference).

Article 34 Enterprises with foreign investment founded in other parts of China are encouraged to reinvest in Ningxia. In case the amount of foreign reinvestment (the actual contributed capital of no less than RMB￥ 2 million) takes the percentage of no less than 25 of the registered capital, the reinvested enterprise shall enjoy the treatments for enterprises with foreign investment.

Article 35 For a foreign investor of an enterprise with foreign investment, its profits earned from the enterprise shall be exempted from income tax. Where he uses such profits directly to reinvest into the enterprise for increasing its registered capital, or as capital to invest and establish other enterprises with foreign investment with the operating period not less than 5 years, 40 per cent of the income tax amount already paid for the reinvested portion shall, upon the application of the investor and approval by the tax authority, be refunded; in case the reinvestment has been withdrawn before the expiration of five full years, the amount of refunded tax shall be paid back.

Article 36 For the enterprises founded in Ningxia invested by enterprises with foreign investment (including investors of other provinces), which can play a supportive and leading role of vital importance in the Regional social and economic development by utilizing advanced technology with larger amount of investment (over RMB￥ 200 million) within a longer term of investment (over 2 decades), the Regional Government shall, based on the preferential policies provided in the preceding paragraphs, grant supportive treatment of policies like discount interests on a financial loan individually.

Article 37 For the management personnel of foreign enterprises, the pre-tax items exempted from the individual income tax shall be observed and implemented at a rate 5 to 10 times as much as that indicated in the relevant terms of a circular on deduction of pre-tax items from the individual income tax issued by Order No. 86 (1999) of Ningxia Hui Autonomous Region People’s Government.

Section C Preferential Policies on Value Added Tax

Article 38 For the products, including nitrogen fertilizer (excluding farming films and urea), phosphate fertilizer (excluding di-ammonium phosphate), potash fertilizer and compound and mixed fertilizer by using duty-free chemical fertilizer as primary raw material, and pesticides and fodders permitted to be produced and sold by the State, their production and selling shall be exempted from value added tax.

Article 39 For the building material products, in case no less than 30% of raw materials for their production are residual solid waste such as powder coal ash and cinder from coal boiler (excluding liquid slag from blast furnace), the value added tax shall be refunded while levied.

Article 40 For the shale oil and other products by using the abandoned shales produced in the process of coal mining, the value added tax shall be refunded while levied.

Article 41 For software and integrated circuit products, the amount that exceeds 3 per cent of the burden rate of the value added tax shall provisionally be refunded while levied by 2010.

Article 42 For electricity generated by using urban living waste, the value added tax shall be refunded while levied; in case of electricity generated by wind power, the value added tax shall be levied at a reduced rate of 50 per cent.

Article 43 For individually-owned business, the value added tax shall be levied in accordance with the regulations promulgated by the State, that is, the monthly sales amount of goods of RMB￥ 5,000, the monthly sales amount of taxable services of RMB￥ 3,000, and for a business which can make a regular payment, the sales amount of RMB￥ 200 each time (day).

Article 44 For a State-level new product in 3 years commencing from its production-start year, or a Region-level new product in 2 years commencing from its production-start year, the newly added amount of value added tax shall be refunded by the local finance to the enterprise for the purpose of the reinvestment in the commercialization of research findings.

Article 45 For the projects on industrialization of farm, forestry, and animal husbandry products, in the form of foreign-owned enterprises or joint ventures cooperative with rural collective economic units and/or rural cooperative economic units, dealing in production, processing or distribution of farm, forestry, and animal husbandry products, in addition to the relevant preferential policies on income tax, commencing from the day when production and business start, the amount of value added tax actually paid by the enterprises to the local government in a tax year shall be involved in the local fiscal expense as a support given in 3 years.

Article 46 For the advantageous industries, new and high technological trial products, and the products with great development potential and powerful drive force, cultivated by the Region as priority, in case business is in poor situation at the beginning of production, upon approval by the local government, the amount of value added tax paid by the enterprises to the local government in a tax year shall be involved in the local fiscal expense as a support given during a given period.

Article 47 The local governments at the levels of county, city and province shall be responsible for the local fiscal support given to the enterprises with domestic and foreign investment at the same levels respectively.

Part Three Introduction of Talents and Technologies

Article 48 Production factors such as technicals and management capital shall be involved in benefit distribution depending on their contribution. Enterprises are encouraged to introduce the talents on technology and management by means of bonus that shall be taken as part of their cost. Research findings concerned with intellectual property such as patents and trademarks shall be evaluated to buy shares or to be involved in benefit distribution and in either of the ways the proportion shall be worked out through the discussion between enterprises and the intellectual property right owners.

Article 49 For scientific and technological results to be evaluated for shares, generally the evaluated amount shall take 20 percent of the total investment, and that of high tech results shall take 35 percent. In case high technological results have intellectual property rights and show great potential to develop large sized industries, or the proportion of their evaluated amount in the registered capital has been agreed on by all the parties, there shall be no restriction of the percentage of 35.

Article 50 In case high tech results are converted into shares as investment, the result makers shall earn income from their shares. For the projects totally financed by the government, commencing from the day when the implementation of project results starts, depending on the proportion of the converted amount of the results in the registered capital, the result makers shall earn income from their shares not less than 60 percent of the proportion in 3 years; and after that, not less than 40 percent. For the high tech results developed by the enterprises on their own to be converted into shares as investment, depending on the proportion of the evaluated amount of the results in the registered capital, the result makers shall earn income from their shares not less than 30 percent of the proportion in the first 3 years; and in the next 3-year, not less than 20 percent.

Article 51 For the implementation of commercialization of on-duty research findings, those who complete a technological result through research and development and who have made important contribution to the commercialization of the result shall be rewarded by law. In case the technology transfer is implemented by providing the result for others, 25 percent of the net income after tax from the technology transfer shall be given as a nonrecurring award. In case the technology transfer is implemented by the result makers themselves or through the cooperation with others, in consecutive 5 years after production successfully starts, not less than 8 percent of the net income after tax from the technology transfer shall be given as award. The award for those who have made important contribution to the commercialization of the result shall amount to not less than 50 percent of the total amount of awards.

Article 52 Encouragement and attraction shall be given to the returned researchers and the researchers of other provinces of China to do research on the development of high tech projects, or bring high tech results to implement their transfer or to start business in Ningxia. Upon the verification by the departments concerned, support shall be given by the governmental departments and the industrial gardens where business is located in the forms of research outlay and discount interest for the project loans. Guarantee Centers for Small and Medium Sized Enterprises with the governments at each level holding shares shall give priority and offer guarantee services for such loans.

Article 53 The technical and managerial professionals who have made important contribution to the commercialization of high tech results shall be awarded titles of honor along with prizes, which shall be exempt from individual income tax. In case products are made with trade marks or brands well known all around the country, Ningxia Hui Autonomous Region People’s Government shall give an award of not more than RMB￥ 2 million to the enterprises or personnel with great contribution.

Article 54 Attraction shall be given to the marketing and planning professional home and abroad to serve the enterprises of the Region. The local retention portion of payable amount of individual income tax as natural person shall be levied and then totally involved in the local fiscal expense as awards in 3 years.

Article 55 For the companies or individuals who provide new techniques and products and transfer technological results to the Regional productive enterprises, the beneficial shall, in addition to pay the nonrecurring transfer fee according to the contract, be given an award of 10 percent of the added profit after tax annually in 3 to 5 years after production starts. In case high tech or well known brand products are introduced, depending on how advanced or famous they are and what economic benefits they make, the beneficial shall give the middleman a nonrecurring award of 1 to 2 percent of the added profit after tax of the year, which shall be involved in the enterprise cost. The local retention portion of individual income tax of the rewarded shall be levied and then involved in the local fiscal expense as an award.

Article 56 The middlemen (excluding the public servants of the Region) who introduce funds and projects home and abroad shall be rewarded by the local government or the beneficial depending on the invested project after capital has arrived and the project construction has been completed. Details shall be worked out by the local governments.

Part Four Exploitation of Mine Resources and Use of Land

Article 57 For those engaged in prospecting for and exploiting mine resources in Ningxia, within the extent of Regional authority for examination and approval, the prospecting right and mining right shall be acquired not only by means of bidding, auction and listing etc. according to the relevant State regulations, but also acquired with compensation through application for approval by law. The prospecting right owner has priority to acquire the mining right by law.

Article 58 Enterprises shall be permitted to make their prospecting expense financed by themselves involved in their deferred assets by means of amortization during the mining period.

Article 59 In case enterprises prospect and mine the mine resources encouraged by the State and the Region, they shall enjoy reduction or exemption of the charge for use of the prospecting right and/or the mining right. They shall be exempt from the charge for use of the prospecting right in the first prospecting year and enjoy a 50 percent reduction in the second and third year and a 25 percent reduction from the forth till seventh year. They shall be exempt from the charge for use of the mining right during the mine construction and in the first year when production starts and enjoy a 50 percent reduction in the second and third year and a 25 percent reduction from the forth till seventh year; besides, the exemption shall be available in the year when the mine pits close.

Article 60 In case productive investment projects demand to use State-owned land and meet the requirements of Land Use Transfer Catalogue issued by the State, the land use right shall be provided by means of transfer.

Article 61 The land use right shall, depending on the actual conditions of the investment and running of enterprises, be provided in a variety of ways such as State-owned land use right transfer, State-owned land lease and State-owned land use right evaluation and purchase.

Article 62 In case productive projects acquire the land use right with compensation and surely have difficulties, the charge for land transfer shall be paid by stages. In case the invested enterprises make use of the not-used land, they shall first pay 30 percent of the charge for the added land use for construction purposes with compensation that should be turned over to the State but delay the payment of the rest 70 percent collected by the Regional government.

Article 63 In case enterprises are engaged in the land comprehensive development within the cultivatable area defined in the overall plan of land utilization of Ningxia, they shall be exempt from agricultural tax and charge for land use as well.

Part Five Investment in Basic, Non-Profit and Catering Industry

Article 64 Enterprises and individuals home and abroad shall be encouraged to participate in construction of infrastructures for traffic, water conservancy, post operation and broadcasting and television operation, and urban public facilities for water supply, heat supply, gas supply, environmental protection, garbage treatment, sewage treatment, gardens and parks and environmental greening; to invest in educational, scientific and technological, cultural, health and sports undertakings; to participate in developing catering industry as well as the organization and service ways of chain-store operations, licensed operations, logistic distribution and multimodal transport system; to develop services as broker agent and as middleman and set up multimodal enterprise loan guarantee companies and risk investment companies; to exploit tourism resources and initiate tourism and hotel services; and to initiate enterprises or companies dealing with estate management and community services. Business in urban water supply, gas supply, heat supply, public traffic, and garbage and sewage treatment shall be subject to licensed operation granting mechanism, which means the government shall select the operation enterprises through public bidding and sign licensed operation contracts with them.

Article 65 In case the projects in the areas mentioned in the previous article are newly-established or restructured after purchase and are subject to the charge standard for administrative and public institutions, the licensed operation right shall be granted by the government at the same level and collection shall meet the charge standard set by the Regional Department of Finance and Price Bureau. In all the other cases, operation shall be opened and charges shall be fixed by market.

Article 66 Commercial banks of other provinces and non-banking financial institutions shall, upon approval, be encouraged to set up their branches independently or jointly in Ningxia, engaged in financial businesses such as deposit, loan, balance accounts, trust, stock transactions and investment funds.

Article 67 In case the projects engaged in infrastructure construction and social non-profit construction meet the requirements of the State provisions on the use of State-owned transferred land, land shall be provided through transfer upon approval of people’s governments at the level with the approval authority.

Article 68 Any person of insight from the Region or other parts shall be encouraged to deeply explore the Regional tourism resources of history, culture, landscape and resorts and make use of his latest concepts to develop and manage cultural tourism items. The intangible assets shall be acknowledged and upon verification and approval by the departments concerned to initiate a project, he shall be permitted to buy shares by means of evaluation of his intellectual property right and participate in income distribution, the proportion of which shall be fixed though discussion between the intellectual property right owner and the investor themselves.

Article 69 In case of developing tourism resources or setting up three-star hotels in the south mountainous areas of Ningxia (including Hongsipu), and investing in key tourism development projects or setting up at least four-star hotels in the plain areas, land shall, upon approval of the Regional People’s Government, be provided by means of transfer and preferential support shall be given in business tax and income tax.

Part Six Other Preferential Support

Article 70 For equipment employed in the production and operation process by the enterprises with domestic investment in the State or Regional encouraged industries and fixed assets employed in the production and operation process by the enterprises engaged in comprehensive exploitation and utilization of resources, depreciation allowance shall, upon approval, be calculated by the method of accelerating depreciation. It shall also be the case of enterprises with foreign investment upon approval by the State Administration of Taxation.

Article 71 Industrial investment projects shall, in principle, be required to locate in the approved industrial parks of different sorts. Distinctive preferential policies for industry of a certain sort shall be enjoyed only if a project is categorized to be located into a park of the sort. Details for implementation will be available somewhere else.

Article 72 It shall be given positive support to the enterprises with registered capital of not less than RMB￥ 2 million (research institutes, high tech enterprises and enterprises engaged in mechanical and electrical production with registered capital of not less than RMB￥ 1 million ) which apply for import and export self-operation right.

Article 73 In case the enterprises with foreign investment and productive enterprises through cooperation between the east and west China engaged in exporting mechanical and electrical products, high tech products and key pillar products earn foreign exchange through exports accounting for at least 50 percent of the total sale, allowance shall be granted by the local government at a rate of not more than RMB￥ 0.05 per dollar.

Article 74 Enterprises located in the high energy carrying industrial park defined by the Region shall enjoy preferential supportive policies on power supply regularly issued by the Region. Those engaged in energy conservation and environmental protection shall be supported by means of discount interest for technological transformation purposes and have priority while participating in allocation of the Regional special fund for environmental protection. It shall be encouraged and supported in the park to apply for projects with State or local allowance for environmental protection for pollution control purposes.

Article 75 Enterprises of other provinces with scale and strength shall be encouraged to participate in the restructuring of the Regional State-owned enterprises. A new or modified labor contract shall be signed between a restructured enterprise and the retained employees; compensation for terminating contract shall be paid by law to the unemployed; and social insurance premium shall be totally paid at a time for the unemployed handed over to the social insurance institution. All the capital needed shall be deducted from the enterprise net assets before restructuring, or paid prior to any other payment items by the State property right owner using the income from transfer of the State property right. The exceeding amount shall be supported by the financial sectors at each level to some extent.

Article 76 Enterprises engaged in ethnic goods production and ethnic trade network shall be supported through discount loans for technological transformation purposes, for which the State and Regional finance shall bear 50 percent respectively.

Article 77 Enterprises investing and engaged in ethnic trade and ethnic goods production in Ningxia shall be subject to preferential policies on interest rates of working funds. A one-year working fund loan shall, upon examination and verification by the major lending bank, be subject to a reduced interest rate by 2.88 percent and the interest difference shall be refunded to enterprises by the bank every quarter of a year to make up the free working fund. Those designated for ethnic trade and ethnic goods shall be examined and verified by the Regional Ethnic Affairs Commission and submitted to the State Ethnic Affairs Commission for approval.

Article 78 Convenience shall be provided for entrance and residence of the investors of foreign nationality, high tech talents and senior managerial personnel. In case those who meet the requirements of the State provisions need multiple entry-exit in a short term, a multiple entry-exit visa shall be granted with expiration from 1 year to 5 years depending on their actual needs; a residence permit for foreigners shall be granted to the resident ones with expiration from 1 year to 5 years depending on their actual needs and a multiple entry-exit visa shall also be granted with the same expiration as that of the residence permit. Special care shall be offered to those who need to work in Ningxia for long in such aspects as their mates’ employment and children’s schooling.

Part Seven Simplified Examination and Approval Procedures and Improved Efficiency of Affairs Handling

Article 79 Organs in charge of examination and approval at each administrative level shall be subject to systems for service and promises and for accountability in being first inquired with full understanding of the well defined service criteria and time limits promised for affairs handling.

Article 80 For the items to be examined and approved by a single administrative organ, service shall be offered at a counter. The ones of a single content with complete necessary documents shall be handled in time while those of a complex content with no way to be handled in time shall be replied in 2 months.

Article 81 A coordinated service process shall be offered. If possible, a local government shall centralize a variety of examination and approval affairs to be handled by its different organs in a coordinated administration hall and offer services in time with efficiency.

Article 82 A parallel examination and approval system shall be set up, which means the final organ will take the applications, be responsible for coordination with other organs concerned and terminate each of the procedures in 15 work days even though multiple organs share the responsibility for examination and approval. In case the final organ coordinates with other organs concerned but no reply is given, it shall be regarded as no disagreement.

Article 83 Time limits stipulated by laws and regulations for examination and approval shall be obeyed. Requirements at a phase by the State and Regional decisions on macro adjustment and control measures shall be met. In case no agreement is reached on the affairs of great importance, the leading group of the Regional investment attraction shall make decision through discussion.

Article 84 The Policies shall enter into force on the day issued. The previous preferential policies promulgated by the Region inconsistent with the Polices shall stop being implemented, but implementation shall continue if the previous preferential treatments haven’t reach the time limits. The affairs not covered in the Policies shall abide by the Regional existing relevant regulations. The special projects of great importance shall be turned over to the leading group of the Regional investment attraction for discussion by means of one discussion for one case.

Article 85 The Regional People’s Government shall take responsibility for timely modification and improvement with the changes of the relevant State policies.

Article 86 The General Office of People’s Government of Ningxia Hui Autonomous Region is responsible for the interpretation of the Polices. The Regional Foreign Investment Bureau is responsible for the verification of foreign investment enterprises. The Regional competent authority shall formulate the detailed rules for implementing the Policies and the service and promise system as well.