Tentative Provisions for the Administration of Overseas Investments by the National Social Security Fund

Article 3: The National Council for Social Security Fund (the National Council) shall be responsible for arranging for and making the overseas investments by the NSSF.

Article 4: The Ministry of Finance (the MOF) together with the Ministry of Labour and Social Security (the MLSS) and the State Administration of Foreign Exchange (SAFE) shall formulate the relevant policies for the management and operation of the overseas investments of the NSSF and monitor the overseas investment operations of the NSSF.

The China Securities Regulatory Commission (the CSRC) and the China Banking Regulatory Commission (the CBRC) shall monitor matters relating to the overseas investments of the NSSF within their respective purviews.

PART TWO: NSSF OVERSEAS INVESTMENT MANAGERS

Article 5: The NSSF shall engage overseas investment managers that satisfy the conditions of Article 6 hereof to make its overseas investments.

Article 6: An overseas investment manager of the NSSF (Manager) shall satisfy the following conditions:

(1) having stable finances, good creditworthiness and risk control norms that comply with the laws, and the requirements of the regulatory authorities, of the country or region where it is located;

(2) having six or more years of experience in the asset management business and assets under its management in the most recent financial year of not less than US$5 billion (or the equivalent in another currency);

(3) having professional personnel that meet the requirements in respect of their professional qualifications of the country or region where it is located;

(4) having a sound governance structure and internal controls, and legally compliant operations;

(5) not having been subjected to a heavy penalty during the most recent three years by the regulatory authorities of the country or region where it is located; and

(6) being established and incorporated outside China, the country or region where it is located having sound laws and a sound financial regulatory system and the regulatory authorities having signed a memorandum of understanding on cooperation and maintaining an effective regulatory cooperation relationship with the CSRC.

Article 7: The National Council shall arrange for the evaluation and determination of Managers by making reference to internationally accepted principles. The outcomes shall be reported to the MOF, MLSS, CSRC and SAFE within 10 days of completion of such evaluations.

Article 8: The National Council shall execute an entrusted asset management contract with a Manager. Such contract shall, in addition to complying with normal practice for entrusted operations, comply with the following provisions:

(1) the Chinese language version of the Contract shall prevail, however, if the foreign language version is to prevail in line with the requirements of the contract, or actual market conditions or practice, a Chinese language translation thereof shall be included;

(2) it shall expressly specify that the entrusted party is required to comply with the principle of conflict of interest avoidance;

(3) it shall expressly specify the entrusted party's responsibilities and its obligation of faithfulness;

(4) it shall expressly specify the restrictions on the products and instruments that can be invested in;

(5) it shall expressly specify the limit on the total amount that can be invested in any one listed company's shares, bonds or other negotiable instruments;

(6) it shall expressly specify the limit on the percentage of the total outstanding number of shares of any one listed company that can be invested in;

(7) it shall expressly specify the method of calculating the net value of the entrusted assets of the NSSF and the rate of return thereon;

(8) it shall expressly specify that the National Council may engage an accounting firm to audit the NSSF assets managed by the Manager;

(9) it shall expressly specify matters relating to the termination of the contract; and

(10) other matters that need to be expressly specified.

Before the National Council executes an NSSF entrusted asset management contract, an unqualified legal opinion issued by a lawyer practising in the field for at least five years shall be required.

Within 15 days of the date of execution of an NSSF entrusted asset management contract, the National Council shall report the same together with the legal opinion to the MOF, MLSS, CSRC and SAFE.

PART THREE: NSSF OVERSEAS ASSET CUSTODIANS

Article 9: The National Council shall engage overseas asset custodians that comply with the provisions of Article 10 hereof to be responsible for custody of the overseas assets of the NSSF.

Article 10: An overseas asset custodian of the NSSF (Custodian) shall satisfy the following conditions:

(1) having paid in capital of not less than US$5 billion (or the equivalent in another currency) during the most recent financial year or assets in its custody of not less than US$500 billion (or the equivalent in another currency);

(2) a long-term credit rating of A or above or the equivalent of A or above for the most recent three years as rated by an internationally recognized rating agency;

(3) having a sufficient number of full time personnel familiar with the custody business;

(4) having secure and effective clearing and delivery capabilities;

(5) having business premises, security facilities and other facilities related to the NSSF custody business that comply with requirements;

(6) having a sound internal auditing and monitoring system and risk control system;

(7) not having been subjected to a heavy penalty during the most recent three years by the regulatory authorities of the country or region where it is located; and

(8) being established and incorporated outside China, the country or region where it is located having sound laws and a sound financial regulatory system and the regulatory authorities having signed a memorandum of understanding on cooperation and maintaining an effective regulatory cooperation relationship with the CBRC.

Article 11: The National Council shall arrange for the evaluation and determination of Custodians by making reference to internationally accepted principles. The outcomes shall be reported to the MOF, MLSS, CBRC, CSRC and SAFE within 10 days of completion of such evaluations.

Article 12: The National Council shall execute an NSSF overseas asset custodian contract with a Custodian. Such contract shall, in addition to complying with normal practice for custodian contracts, comply with the following provisions:

(1) the Chinese language version of the Contract shall prevail, however, if the foreign language version is to prevail in line with the requirements of the contract, or actual market conditions or practice, a Chinese language translation thereof shall be included;

(2) it shall expressly specify the Custodian's responsibilities and its obligation of faithfulness;

(3) it shall expressly specify that the National Council may engage an accounting firm to audit the NSSF assets in the custody of the Custodian;

(4) it shall expressly specify matters relating to the termination of the contract; and

(5) other matters that need to be expressly specified.

Before the National Council executes an NSSF entrusted asset custodian contract, an unqualified legal opinion issued by a lawyer practising in the field for at least five years shall be required.

Within 15 days of the date of execution of an NSSF entrusted asset custodian contract, the National Council shall report the same together with the legal opinion to the MOF, MLSS, CBRC, CSRC and SAFE.

Article 13: The Custodian shall give the National Council a written undertaking in respect of the following matters:

(1) it will comply with the provisions of Articles 22 and 23 of Part Five hereof on the scope of the income of and expenditures from the NSSF's overseas foreign exchange fund account;

(2) it will perform its information reporting obligations specified in Article 25 of Part Five hereof; and

(3) it will monitor the investment operations of the Manager and, if it discovers a violation by the Manager of the provisions of Article 22 or 23 of Part Five hereof on the scope of the income of and expenditures from the NSSF's overseas foreign exchange fund account, it shall promptly report the same to the National Council and SAFE.

If the Custodian breaches any of the foregoing obligations without just cause, the MOF, MLSS and SAFE shall recommend to the National Council that it terminate the NSSF overseas asset custodian contract.

PART FOUR: OVERSEAS INVESTMENTS OF THE NSSF

Article 14: The source of the funds for the overseas investments of the NSSF shall be proceeds denominated in foreign exchange obtained from the reduction in the holding of state-owned shares overseas and paid into the NSSF. The percentage of the overseas investments of the NSSF may not exceed 20% of the total assets of the NSSF as calculated at cost.

Article 15: Overseas investments of the NSSF shall be restricted to the following investment products or instruments:

(1) bank deposits;

(2) foreign government bonds, bonds of international financial organizations, bonds of foreign institutions and foreign corporate bonds;

(3) bonds issued overseas by the Chinese government or enterprises;

(4) money market products such as bankers' drafts, large negotiable certificates of deposit, etc.;

(5) shares;

(6) funds;

(7) derivatives, such as swaps, forwards, etc.; and

(8) other investment products and instruments approved by the MOF together with the MLSS.

For the purposes of Item (1) above, the term 'bank' means a Chinese-invested bank overseas or a foreign bank with a long-term credit rating of A or higher or the equivalent of A or higher during the most recent three years as rated by an internationally recognized rating agency.

For the purposes of Item (2) above, the term 'bond' means a bond with a rating of BBB or higher or the equivalent of BBB or higher as rated by an internationally recognized rating agency.

For the purposes of Item (4) above, the term 'money market product' means a money market product with a rating of AAA or the equivalent of AAA as rated by an internationally recognized rating agency.

For the purposes of Item (5) above, the term 'shares' means shares listed on an overseas stock market.

For the purposes of Item (6) above, the term 'fund' means a fund publicly issued on a stock market. The scope of investment of a fund shall comply with the provisions of this Article on other investment products and instruments.

For the purposes of Item (7) above, the phrase "derivatives, such as swaps, forwards, etc." means derivatives traded in the financial market. The NSSF may only invest in derivatives for the purpose of risk management. The use thereof for speculation or amplification of transactions is strictly forbidden.

Article 16: The investment of NSSF entrusted assets under the management of a single Manager in a security or fund issued by an organization may not exceed 10% of the outstanding shares of such security or fund, or, as calculated at cost, 20% of the total NSSF overseas entrusted assets under its management.

The percentage limitations specified in the preceding paragraph shall not apply if:

(1) the National Council appoints a Manager to participate in an overseas listed rights issue or private placement as an institutional investor; or

(2) the National Council entrusts the investment operations for the shares that it holds to a Manager.

Article 17: Based on the state of the overseas investment operations of the NSSF, the MOF together with the MLSS may revise the products in which the NSSF may invest overseas and the percentages.

Article 18: The National Council shall entrust investment operations to Managers in accordance with the principle of diversification.

The assets that the National Council entrusts to the management of a single Manager may not exceed 50% of the total value of the NSSF's entrusted assets invested overseas.

Article 19: The management fees and custodial fees shall be determined in line with the international fee rates for the same kind of products and reported to the MOF and MLSS.

PART FIVE: FOREIGN EXCHANGE CONTROL WITH RESPECT TO THE OVERSEAS INVESTMENTS OF THE NSSF

Article 20: The overseas investments of the NSSF shall be carried out in compliance with state provisions on foreign exchange control.

Article 21: In line with international practice and overseas investment requirements, the National Council shall open an NSSF overseas foreign exchange fund account (Account) with the Custodian. The National Council shall report the opening of such Account to SAFE for the record within five working days of opening of the same.

Article 22: The scope of the income of an Account shall be:

(1) funds remitted in from a foreign exchange deposit account in China;

(2) proceeds from the sale of investment products;

(3) returns on overseas investments; and

(4) overseas investment related income and other income approved by SAFE.

Article 23: The scope of the expenditures from an Account shall be:

(1) funds remitted back to a foreign exchange deposit account in China;

(2) funds expended to purchase investment products; and

(3) overseas investment related expenditures (including relevant taxes and fees) and other expenditures approved by SAFE.

Article 24: If the National Council wishes to remit out, or remit in, principal or returns exceeding US$50 million (or the equivalent in another currency), it shall report the same to SAFE for the record three working days in advance.

Subject to the approval of the State National Council, SAFE may, based on the state of the international balance of payments, require the National Council to revise the time at which it is to remit out, or remit in, the principal or returns.

Article 25: The National Council shall require, in NSSF overseas asset custodian contracts, that the Custodian submit the following relevant information to SAFE:

(1) details of the remittance out or in of foreign exchange funds within two working days of the remittance out or in of the same by the National Council;

(2) within five working days of the beginning of each month, information on the overseas investments of the NSSF during the preceding month; and

(3) within three months of the beginning of each financial year, the accounting statements for the overseas investments of the NSSF during the preceding financial year.

For the purposes of this Article, the term 'working day' means a working day in the country or region where the Custodian is located.

PART SIX: REPORTING SYSTEM

Article 26: The National Council shall monitor, inspect and evaluate the management of, and custody matters relating to, the overseas investments of the NSSF and report relevant information to the MOF and MLSS on a quarterly, semi-annual and annual basis. If a material event occurs in respect of an overseas investment of the NSSF, the National Council shall report the same to the MOF, MLSS and SAFE forthwith.

Article 27: The National Council shall include the overseas entrusted assets in the uniformly prepared financial accounting reports for the total assets of the NSSF, which shall be disclosed and reported in accordance with the Tentative Measures for the Administration of Investments by the National Social Security Fund.

Article 28: The MOF, MLSS and SAFE have the authority to require the National Council to submit reports on matters relating to the overseas investments of the NSSF, and, in the event that the National Council commits any violations of these Provisions, shall, ex officio, order it to rectify the matter and impose penalties in accordance with relevant provisions.

PART SEVEN: SUPPLEMENTARY PROVISIONS

Article 29: These Provisions shall apply to investments by the NSSF in the Hong Kong Special Administrative Region and the Macao Special Administrative Region.

Article 30: These Provisions shall be effective as of May 1 2006.