Doing Business in Ningxia -- china.org.cn

I . Survey

(i) Geographical Location

Ningxia Hui Autonomous Region, is called as “ Ning ” for short. It is located in the upper reaches of the Yellow River in northwest China, and lies between north latitude 35 ° 14 ′ -39 ° 23and east longitude 104 ° 17 ′ -107 ° 39 ′ . It is bordered by Shaanxi Province to the east, Inner Mongolia Autonomous Region to the north and the west and Gansu Province to the south. Since the ancient times, it has been an area where different nationalities came and went frequently, an area linking the middle China , reaching to the foreign countries bordering on the western China and linking the northern deserts. Ningxia is one of the smallest provinces in China , with the total area of 66,400 sq. km. Its profile of territory is long in the south and the north with the distance of about 456 km , and short in the east and the west with the span of only about 250 km . In Ningxia, there are 5 cities at municipality level such as Yinchuan , Shizuishan, Wuzhong, Guyuan and Zhongwei, and 8 districts governed by the cities and 14 counties, 2 cities at county level and 1 developing zone for migrants at county level. Yinchuan is the capital of Ningxia.

(ii) Climate Features

Ningxia lies in the inland of China , with dry and half dry climate. As it is located at the west fringe of seasonal windy zone of China it is influenced by southeastern seasonal wind in summer, but the duration is short and rainfall is little. July is the hottest month there, with the average temperature at 24 ℃ . In winter, it is much influenced by northwestern seasonal wind, and the duration is long with big gap between the temperature during daytime and nighttime. In January, it undergoes the coldest period with the average temperature at -9 ℃ . The region ' s yearly rainfall is between 150 mm and 600 mm . In its southern Liupan Mountainous areas, it is shady, humid and rainy with low temperature and short frostless period. In the north, as sunshine is enough and evaporation is strong, the gap between the temperature is big during daytime and nighttime. Ningxia can enjoy 3,000 hours of sunshine one year, and its frostless period can reach some 150 days.

Therefore, it is one of the most abundant areas of China to get sunshine and sun radiation. Ningxia ' s seasonal difference is obvious. In spring, it becomes warm fast. In autumn, it becomes cool early. During May and September, its weather is pleasant and comfortable everywhere with picturesque scenery, providing tourists with a golden season.

(iii)Population and Nationalities

By the end of 2005, the total population of Ningxia had reached to 5.97 million, among whom 2.17 million had been in towns and cities and 3.8 million in the countryside, which respectively had taken up 36.4% and 63.6% of the whole population of Ningxia. There are 35 minorities in Ningxia, such as the Hui, the Maan, the Dongxiang and etc, of whom, the Hui ' s population is some 2.1million, taking up more than 1/3 of Ningxia ' s population and 1/5 of China ' s Hui minority population. Therefore, Ningxia is the biggest inhabited region of Chinese Hui minorities. Ningxia ' s Hui minorities mainly live in Guyuan City and Wuzhong City of Ningxia.

(iv)Infrastructures and Communication

Highways The density of highways in Ningxia is high in West China , which has three vertical and six horizontal road nets covering the whole region. National highways, No.25 (Dandong-Lasa) and No.35 (Qingdao- Yinchuan) are expressways. The western trunk from Yinchan to Wuhan is to open in the year 2008. Within one hour, vehicles in all counties and cities of Ningxia can drive onto expressways, all townships have had pitched roads and all administrative villages can reach to highways. And now the expressways are 670 km long. Meanwhile, the total length of highways has been up to 13,000 km .

Railways There are Bao-Lan and Zhong-Bao railways linking the north to the south and the west to the east. Passenger trains go to the cities like Beijing, Shanghai, Chongqing, Xi ' an, Lanzhou, Xining, Zhengzhou, Nanjing etc. There are various freight transports. Export goods can be directly shipped on the ports of Tianjin , Lian Yungang, Qin Huangdao. Export goods can also be transported through Huorgos Port over Eurasia Bridge . The artery railway from Taiyuan to Zhongwei ( Yinchuan ) has been under construction. When The construction work is completed, three railway arteries across the east and the west, the north and the south will appear which will make passenger and freight transportation more convenient.

Airpor Yinchuan Hedong Airport is located in Linhe Township , Lingwu City governed by Yinchuan , 19 km away from the district of Yinchuan. So far, more than 20 airlines have been opened through all the big-andmedium- sized cities in China . In 2005, cargos of 6.5187 million tons were transported by air.

Finance and Insurance

At the end of 2005, the balance of different deposits at the financial entities of Ningxia including Chinese and foreign moneys amounted for RMB 99.374 billion yuan. The region ' s balance of different items of loan including Chinese and foreign moneys reached to RMB 84.181 billion yuan. The income in cash of the financial entities was RMB 264.102 billion yuan, and the payment in cash was RMB 266.576 billion yuan. After balancing the amount between the income and thepayment, the net launch in cash was RMB2.474 billion yuan.

The insurance industry was developed stably with the gradual rising of optional items of insurance and stable increase of income from insurance. The charged premium in 2005 was up to RMB 1.574 billion yuan, of which, property insurance was RMB 458 million yuan, life insurance was RMB 835 million yuan, insurance for health RMB 224 million yuan and accident hurt insurance RMB 57 million yuan.

Telecommunication Nowadays, Ningxia has established the communication network by optical transmission together with digital and satellite transmissions. The electronic information net has covered each county and city of Ningxia . In 2005, the local users with telephone sets reached to 1.3889 million households. Newly increased amount of exchanging machines at the local telecommunication departments was 77,400 sets, reaching to 1.2339 million sets. The popularized rate of telephone sets was up to 54.44 per hundred person. The mobile phone users in Ningxia were 1.8108 million households. The popularized rate of mobile phones reached to 30.81 sets /per hundred person. The customers with internet were 591,000 households. The total business value of telecommunication in 2005 was up to RMB 4.86 billion yuan.

(v)Foreign Relation

Friendly cities, provinces or states In 2005, Ningxia set up friendly relationship with 10 counties at provincial level, provinces or states of 9 foreign countries. Through personnel ' s mutual visits, negotiation on economy and trade, exchange of talented peoples, professional training and other kinds of activities, the understanding and friendship among the peoples between Ningxia and the friendly cities were deepened, which advanced the exchange in economic cooperation and trading between them, and promoted the communication and cooperation in culture, education, science and technology and other fields.

Exhibitions and Fairs Related toForeign Countries

Ningxia Investment and Trade Fair, held in August, every year with some 2,000 businessmen from home and abroad to attend.

China (Ningxia) International Cashmere Trade Expo, held in every two years with some 1,000 Chinese and foreign businessmen to attend.

West China (Ningxia ) Special Agricultural Exhibition and Cooperation Fair, held in September every year with some 1,500 Chinese and foreign businessmen to attend.

(vi)Survey of Education at High Class and Science and Technology

Education at High Class In Ningxia, there are 13 common schools at high class. They are Ningxia University , Ningxia Medical College , Ningxia Science and Technology College , Ningxia Normal College and etc. In 2005, the entities which could offer graduated courses enrolled 662 students on MD, with 1,443 students on MD at school, 182 students finished their MD courses and

graduated. The student enrolment of the schools at high class reached to 14,775 with the total students at such schools to be 48,650 and 8,817 students who graduated from above schools. There were 44 professional and technical schools at secondary class, which had the enrolment of 29,033 students, with 63,261 students at school, and 14,312 students graduated from such schools.

Science and Technology In 2005, two engineering and technical centers at the national level were set up in Ningxia. Also there were 8 other centers at the autonomous region ' s level, 3 key laboratories set up by Ningxia and the nation ' s ministries, 4 key laboratories at the autonomous region ' s level , 5 technical center for enterprises at the state level, and 20 technical centers for enterprises at the region ' s level. In 2005, Ningxia government appraised 136 items as scientific and technical results. 516 applications for patent were dealt with, 214 cases of patent were approved. The technical market became more active with 233 technical contracts signed, reaching to the total value of RMB 140 million yuan.

(vii)Tourism

The unique tourism resource of Ningxia is created by its unique geographical location and long history of development, which includes landscape in desert, the Yellow River civilization, the West Xia Dynasty culture, the Hui ' s customs and styles in minority hometown and the scenery

like what can be seen in South China . The Sand Lake and the Shapotou are all the national scenic spots at Class 4A , which are “ the golden treasured sites ” for ecological tourism. The tourism zone at the Liupan Mountains is magnificent, where there are many scenic spots. Yinchuan City is a “ China ' s excellent tourism city ” , a good place for urban tourism, commercial tourism, conference or convention and exhibition tourism, and relaxation tourism. The Shuidonggou Relics Site is a proof of the prehistoric civilization of China . The West Xia Mausoleums are grand at scale, wizardly and special in architecture, well known as “ Orient Pyramid ” In addition,

in Ningxia, there is the Helan Mountains Carved Rock Pictures called as “ the arts corridor showing off nomadic minorities ” , an only spot where the Great Wall and the Yellow River cross, the ancient ruins of the Great Wall of Qin, Han, Sui and Ming Dynasties, which have long been called as “ the Great Wall Museum ” . In the tourism resource of folkway and local customs,

Ningxia enjoys strong and typical Hui ' s characteristics. Its mosques are unique in architecture, the local Hui ' s snack food is delicious, their folk songs and dances are beautiful and charming, attracting more and more domestic and overseas tourists.

Characteristic Merchandise Chinese Wolfberry The red wolfberry fruit is a precious Chinese medicinal herb, whose root, leaf, flower and stem are all good to human health. Ningxia is the most ideal place to produce red wolfberry in China and the best place planting wolfberry in Ningxia is Zhongning County, whose wolfberry is big and rich in flesh, with less seeds but high and multiple sugars and nutrition, and it wins high reputation from travelers of domestic and overseas. Ningxia also develops a serious wolfberry related products such as wolfberry candy, wolfberry tea, wolfberry wine, which are enjoying great popularity among consumers.

Licorice Root Licorice root can apply to many diseases in traditional Chinese Herbal Medicine. It can not only moderate the effects of other medicines, but also supply energy and release inflammation. It was a tribute to the royal court in ancient China and is called “ King of medicine ” .Ningxia has produced licorice cream and widely applied it to various fi elds including medical, industry and food.

Helan Stone Helan stone is found in Helan Mountains . It has fi ne texture and exquisite appearance, which is hard but easy to carve. It has two natural colors of deep purple and bean green. Some of the stones have the natural pictures of jade ribbon, cloud layers, eyebrow, stone eye. The finished Helan ink stone is water resistance and can preserve the ink very well. Helan inkstone is usually used to carve vivid pictures, therefore getting the title of “ one of China ' s three famous ink stones ” along with the other two from Guangdong Province and Anhui Province.

Tanyang Lamb Skin The domestic sheep in Ningxia is a fine breeding nationwide. The hair is light and tender, with snow-white color and jade like sheen. It usually has nine curves, thus getting the name of “ nine curve fur ” .

Special Foods

With a long history of food culture, Ningxia is famous for various snacks with local color and Muslim fl avor. Among them, the representatives are listed as follows: Saute lamb with chili sauce, Steamed lamb, Lamb eaten with hands, Fried mutton rib, Sliced lamb boiled in the hot pot, Lamb neck with special flavor, Lamb chop suey, Big fish head of Sand Lake, Sanzi (Deep-fried dough twists), Tea covered with lid.

II . Economy

(i)GDP

In 2005, the GDP in Ningxia was 59.94 billion yuan, among which the output value of first industry has increased 6.978 billion yuan, the secondary industry 27.782 billion yuan, and the tertiary industry 25.18 billion yuan. And their proportion in Ningxia ' s economy accounts for 11.64%, 46.35% and 42% respectively. Further, our GDP per capita in 2005 reached USD 1,242.

(ii) Resources, Industry and Agriculture

Natural Resources

LandResources Thereare 19 million hectares of arable land in Ningxia, with 3.5 hectares per capita, ranking the second in the country. There are also 10.673 million hectares of barren land ready to be cultivated, which is one of the 8 provinces having over 10 million hectares of barren land waiting for cultivation. As one of the ten pastoral areas around the country, Ningxia has 45 million hectares of grassland suitable to be developed. With more than 5.6 million hectares of land being irrigated by Yellow river, Ningxia plain is one of four gravity irrigation areas in China .

Mineral Resources Ningxia has rich mineral energy and non-metal resources such as coal, gypsum, petroleum, natural gas, potter ' s clay, quartz sandstone, barite etc., with the explored of over 50 kinds. The average potential natural resource per capita is as 1.6 times as that of the state, ranking 5th in the country. There are 31.5 billion tons of assured deposits, and 202.7 billion tons of estimated reserves that rank fifth in China . Ningxia has 9 among 10 famous coal brands around the country. Particularly, the quality of Taixi Coal is very excellent, rivaling the world-renown coal of Vietnam due to its “ three low ” and “ six high ” characteristics (i.e. low ash, low sulfur, low phosphorus; and high caloric capacity, high specific resistivity, high rate of lump coal, high chemical activity, high recovery rate of the jet, high mechanical strength), which is well received in more than 10 countries around Asia, Europe and North America. Now the coal producing capacity in Ningxia is more than 25 million tons. It should be stressed that Ningdong coalfield is one of the largest coalfields in China , with the explored reserves of 30 billion tons, which is designated as one of the 13 top coalfi elds by the state. The explored reserve of gypsum in Ningxia is more than 4.5 billion tons, with above half of them having the first grade quality. Ningxia has potentially 27 million tons of explored reserve of petroleum to be exploited. The explored natural gas reserves in the Shaanxi-Gansu-Ningxia basin is over 200 billion m 3 , which is one of the super-huge gas fi elds in the world. Ningxia is also rich in quality silicon with huge potential reserves, whose explored reserve is more than 17 million tons. In addition, other mineral resources such as phosphrite, flintstone, gold, iron ore and copper are readily available.

Water Resources The reserves of Ningxia ' s water resources are 2.054 million kw. The average discharge of Yellow river through Ningxia is 32.5 billion m 3 , with 4 billion m 3 utilized water resources readily available per annum.

Industries Ningxia has coal, electrical, metallurgical, chemical, and mechanical material industries as well as food processing, taxtile and paper making capabilities. In 2005 the industrial added value was 22.829billion yuan, taking up 38.1% of GDP.

Coal and Intensive Processing Industries The coal industry is one of the pillar industries of Ningxia Province . Backed upon the high quality Taixi Coal, Ningxia has gradually developed several industries, such as the activated charcoal, carbon, electrode paste, silicon carbide, and carburizing agent, etc. Ningxia has started constructing a coal base leveled at 100 million tons production yearly and an electricity delivery base leveled at 20 million kilowatts yearly, transmitting the power from the West to the East.

Main Industrial Products in 2005

Chemical Industry Backed on the gas field, Ningxia has established a petroleum processing base with a production of 2 million tons. The annual output of urea will amount to about 1.6 million tons after the energy expansion, and that of nature rubber tires is 5 million sets, that of calcium carbide is more than 1.5 million tons. After the establishment of the third large-scaled fertilizer installment with an annul output of 400 thousand tons of synthetic ammonia and 800 thousand tons of urea, Ningxia will be the largest natural gas fertilizer base nationwide. Besides, a project of 1.5 million sets of all steel meridian tires yearly and 10 million semi steel meridian tires is undergoing. Based on such a powerful productivity of calcium carbide, Ningxia can now produce 1 million tons of PVC through the calcium carbide approach. Ningxia will be the largest PVC production base throughout the country.

Metallurgical Industry Supported by abundant energy and resources, Ningxia has developed large-scaled metallurgical industry. Presently the productivity covers an annual output of 580 thousand tons of electrolytic aluminums, an annual output of 120 thousand tons of ferrosilicon, an annual output of 60 thousand tons of steel and iron, an annual output of 10 thousand

tons of metal magnesium and large-scaled non-ferrous metal (i.e.tantalum, niobium and beryllium), ranking the second and first nationwide respectively.

Mechanical Industry The main mechanical products in Ningxia are machine tools, bearings, hoist cranes, coal mining machinery, electrical machinery, instrument measuring appliances and farm machinery, etc. Ningxia has established the first intellectualized machine tool manufacturing company within the country — The Little Giant Machine Tool Corporation, the first-class steel casting corporation — Ningxia Changcheng Xuqi Casting Co., Ltd and Northwest Bearing Group. All the abovedmentioned companies are rather competitive both at home and abroad. Textile Industry Ningxia is the most influential cashmere circulation & distribution center and processing & export base in China. Presently Ningxia has an annual productivity of 3,000 tons of plushfree cashmere, 500 tons of cashmere strip,

300 tons of cashmere yarn and 1,200 thousand pieces of cashmere sweaters.

The nationally famous trademark St. Edenweiss has been established and a large number of cashmere processing and export enterprises have well developed, such as the representative Ningxia St. Edenweiss Stock Company, Ningxia Alpha Cashmere Company, Ningxia Master Cashmere, and Ningxia Jiayuan Cashmere Company.

Papermaking Industry Ningxia has abundant resources of wheat straw and reed, and cheap industrial chemicals used for papermaking. With the expansion of fast-growing poplars and silkworm bases and the increase of forestry, wood-pulp raw materials will be richer. Presently the annual output of paper-making capacity has reached 380 thousand tons, and will have been 1,600 thousand tons by 2010.

Building Materials Industry The proven reserves of cement limestone in Ningxia have been 520 million tons, the estimated amount being 44.7 billion tons. The gypsum reserves reach an amount of 4.5 billion tons. The proven reserves of quartz sand have been 15 million tons, and the estimated amount is 1.6 billion tons. The potential of the building material industry is huge backed by its energy superiority. Therefore, Ningxia becomes an important base for building materials, with an annual cement production of 6 million tons.

Distinctive Local Pharmaceutical Industry Ningxia has rich TCM resources. Above 50 kinds of TCM berbs are commonly used such as fruit of Chinese wolfberry, licorice root, bitter bean, Chinese ephedrine, Trigonenella feonum-gracum, Astragalus mongholicus, radix stellariae, Cistanche salsa, cynomorium songaricum, scabish etc. Ningxia has formed a distinctive pharmaceutical industry system, including health products of Chinese wolfberry and bitter bean etc.Ningxia has become one of important bases for producing raw materials of antibiotics due to its dry climate, rich materials, low cost of labor and advanced fermentation technology. Currently, Ningxia can produces hydrochloric acid tetracycline, erythromycin, tylosin, salinomycin and Vb12.

New Material Industry It is the most competitive and promising hi-tech industry in Ningxia. Based on the existing new materials and their related industries, Ningxia places emphasis on developing four large-scale distinctive new material industries such as rare metals (tantalum, niobium, beryllium), magnesium and magnesium alloy, aluminum and aluminum alloy and carbon-based materials.

Agriculture Resources Ningxia is privileged with rich land resources, convenient conditions of irrigation and good sunshine and heat, which are benefi cial to the growth of melon and fruit, wolfberry, licorice root and mahuang; moreover, they are also benefi cial to the planting of the vintage grapes and potatoes, and the raising of silkworms, cows and sheep. The eastern foot of Helanshan Mountain located in the Yinchuan plain is the best grape-growing area in China . The area irrigated with Yellow River grows high quality crops, grapes, melons and fruits, and sugar content of its watermelons, apples and grapes is 15%-20% higher than Central China . The yield of single crop rice per mu amounts to 700 kilograms. Ningxia is one of the twelve commodity grain bases and one of ten demonstration farmlands in China . 29% products are from livestock farming in agriculture. There is 1,230,000 mu water area in Ningxia, among which 150,000 mu of water area is suitable for aquiculture. With increased varieties of high-quality aquatic products as grass carp, silver carp, crucian carp, carp, freshwater shrimp and crab, Ningxia has great potential in aquiculture.

(iii) Business Data

Import and Export In 2005, the import and export volume has reached 970 million dollars, among which sum of export has reached 690 million dollars. By the end of 2005, there are 671 enterprises approved to import and export goods, 21 enterprises with export sum over 10 million dollars. There are 800 kinds of products exported to the foreign countries and areas, among which the products with export sum over 10 million dollars include ferrosilicon, megnesium, cashmere, tantalum, primary aluminum lingot, garment, tire, intensive casting, cyanogens dicyanogen, carborundum, cashmere sweater, high purity silver, hydrochloric acid tetracycline, activated carbon, carbon additive, erythromycin thiocyanate, tylosin and so on. According to Catalogue of High-Tech Products of Export in China , the export sum of high-tech products reached 228 million dollars, which amounted to 33.1% of total export value; the export sum of mechanical and electrical products reached 63.85 million dollars, which amounted to 9.3% of total export value.

Output of Major Agricutural Products in Ningxia

Structure of Exported Commodity of Ningxia in 2005

Export Market Structure of Ningxia in 2005

Structure of Imported Commodity of Ningxia in 2005

Import Market Structure of Ningxia in 2005

Utilizing Foreign Funds In 2005 the actual utilization of foreign funds has reached 141 million dollars, there are 32 new approved projects with direct foreign investment with the contractual value reaching 191 million dollars, among which 24 projects of manufacture industry directly invested by foreign investor has contracted with contractual value of 162 million dollars; the contractual value of 16 million dollars are directly invested by the foreign enterprises. The actual investment of foreign funds has reached 67.12 million dollars.

Foreign Cooperation In 2005, the turnover of international project contract and labor service cooperation has reached 4.19 million dollars; the Number of labors sent to foreign countries has reached 229. There are 9 foreign aid projects implemented in Ningxia in 2005. The actual foreign aid funds in position reached 7. 15 million dollars.

Import Technology In 2005, Ningxia has finished 12projects by importing foreign technology, the import foreign funds reached 48 million dollars. The import technology mainly involved technology of consultation service in the past, and changed into advanced technologies with patent, for instance, coal chemical industry, wind and electricity power, bearing and so on.

Commodity Circulation

Retail Volume of Social Consumer Goods in Ningxia in 2005

III . Investment

(i)Policy and Administrative Rules

Catalogue of Related Laws

Foreign Trade Law of the People ' s Republic of China

Customs Law of the People ' s Republic of China

Law of the People ' s Republic of China on Import and Export Commodity Inspection

Law of the People ' s Republic of China on Chinese-Foreign Equity Joint Ventures

Law of the People ' s Republic of China on Chinese-Foreign Contractual Joint Ventures

Law of the People ' s Republic of China on Foreign-Capital Enterprises

Company Law of the People ' s Republic of China

Law of the People ' s Republic of China on the Entry and Exit Animal and Plant Quarantine

Law of the People ' s Republic of China on Control of the Entry and Exit of Aliens

Law of the People ' s Republic of China on the Control of the Exit and Entry of Citizens

Securities Law of the People ' s Republic of China

Income Tax Law of the People ' s Republic of China for Enterprises with Foreign Investment and Foreign Enterprises

Individual Income Tax Law of the People ' s Republic of China

Law of the People ' s Republic of China on the Administration of Tax Collection

Environmental Protection Law of the People ' s Republic of China

Law of the People ' s Republic of China on Evaluation of Environmental Effects

Law of the People ' s Republic of China on Promotion of Cleaner Production

Law of the People ' s Republic of China on Prevention and Control of Desertifi cation

Marine Environment Protection Law of the People ' s Republic of China

Law of the People ' s Republic of China on the Prevention and Control of Atmospheric Pollution

Law of the People ' s Republic of China on Prevention and Control of Environmental Pollution by Solid Waste

Law of the People ' s Republic of China on Prevention and Control of Water Pollution

Law of the People ' s Republic of China on Prevention and Control of Environmental Noise Pollution

Law of the People ' s Republic of China on Prevention and Control of Radioactive Pollution

Frontier Health and Quarantine Law of the People ' s Republic of China

Labour Law of the People ' s Republic of China

Trade Union Law of the People ' s Republic of China

Searching Website for the Related Laws

1 . Searching System of Law sand Regulations of China (website of National People ' s Congress of China)

http://law.npc.gov.cn:87/home/begin1. cbs

2. China Legislative Information Network System

http://www.chinalaw.gov.cn/jsp/jalor/index.jsp

3. Ministry of Commerce

http://www.mofcom.gov.cn

the above-mentioned websites are for reference only.

List of Dominant Industries in Middle and Western Areas, Ningxia Autonomous Region Section

The following is the list of dominant industries of attracting foreign investment in Ningxia approved by the State Council in the List of Dominant Industries of Attracting Foreign Investment in Middle and Western Areas(State Council Letter No.[2004]43):

1. The planting of wolfberry and its deep processing;

2. The development of follow-up industries of national key ecological projects, such as converting the cultivated land for forest and grass land, protecting the natural forest, ect;

3. The development and application of the techniques of water-saving irrigation;

4. The development of applied technique of processing coal and its production;

5. The production of carbon materials;

6. The building of high-quality grape wine base and grape wine making;

7. The deep processing of products made of potatoes;

8. The production and development of downstream chemical products of natural gas;

9. The production of polyvinyl chloride resin;

10. The production of meridian tyre;

11. The production of solid chip tantalum electrolytic condenser;

12. The construction and operation of the supply of gas, heat, and water and drainage network( the Chinese parties are the holding companies in the bigand medium-sized cities);

13. The development of the tourist areas and spots and the construction,

maintainance and operation of their facilities;

14. Highway passenger transportation.

(ii)Procedure for Establishing Enterprises

Procedure to set up foreign-invested enterprise

Required Documents for Joint Venture and Cooperative Enterprises

1. Application by joint venture (cooperative enterprise).

2. Application of joint venture (cooperative project) and the documents issued by the department concerned after examination and approval.

3. Contract and constitution of joint venture (cooperative enterprise) signed by the members of rights and its authorized representatives from the joint venture (cooperative enterprise).

4. List of the chairman of the board, the vice chairman of the board and the directors of the board designated by the joint venture (cooperative enterprise).

5. Designation documents of the chairman of the board, the vice chairman of the board and the directors of the board designated by the joint venture (cooperative enterprise).

6. Copies of ID cards of the chairman of the board, the vice chairman of the board and the directors of the board designated by the joint venture (cooperative enterprise).

7. Business certificate and enrollment attestation of the joint venture (cooperative enterprise) among which the enrollment attestation or ID certificate of the foreign cooperative investor must be notarized by the notary office in his/her own country and authenticated by Chinese Embassy (consulate) in the country that the foreign cooperative investor comes from. Notarization document approved by the notary office is reguired for the certification of the qualifications and ID of the cooperative investor from Hong Kong , Macao and Taiwan .

8. Trust Deed of Authorization for Delivering Legal Documents signed between the foreign investor and the person who accepted the documents from Chinese Mainland.

9. Credit attestation and valid attestation documents of the members as of right of the joint venture (cooperative enterprise).

10. List of planned exported facilities and offi ce supplies

11. Attestation from the department of land is required for large-scale expropriation.

12. Checking list of the name of the joint venture (cooperative enterprise) in advance (from the Industrial and Commercial Department).

13. Code number of enterprise obtained in advance ( from the technology supervision department).

Required Documents for Exclusively Foreign-owned Enterprises 1. Application by exclusively foreign-owned enterprise.

2. Application of exclusively foreign-owned enterprise and the documents issued by the department concerned after examination and approval.

3. Written reply from People's Goverment of county level or above county level where the enterprise is located.

4. Enterprise constitution signed by the member of right or the authorized member of right.

5. Registration and enrollment attestation of the foreign investor or other legal attestation documents. The enrollment attestation or ID certificate of the foreign investor must be notarizated by the notary office in his/her own country and authenticated by Chinese Embassy (consulate) in the country where the foreign investor comes from; Notarization document approved by the notary office is required for the certificate of the qualify- cations and ID of the investor from Hong Kong, Macao and Taiwan.

6. Trust Deed of Authorization for Delivering Legal Documents signed between the foreign investor and the person who accepted the documents from Chinese Mainland.

7. Credit attestation of the foreign investors and valid attestation document of its legal representatives.

8. Name list of the directors designated by exclusively foreign-owned enterprise.

9. Designation document of directors of the board of exclusively foreign-owned enterprise.

10. Copies of ID cards of members of the board designated by exclusively foreign-owned enterprise.

11. List of planned exported facilities and office supplies.

12. Checking list of the name of exclusively foreign-owned enterprise in advance (from the Industrial and Commercial Department).

13. Code number of enterprise obtained in advance (from the technology supervision department).

(iii)Residence Environment

Urban Living Environment

Yinchuan , capital city of Ningxia , one of the most well known historic cities in China , is appointed as the major city along the Longhai economic zone of Euro- Asia continental bridge and central city of economic zone of Huhe-Baotou-Yinchuan-Lanzhou. At present,Yinchuan takes its goal to build “ central city of modern area ” with its brand of “ shopping in Yinchuan ” , “ living in Yinchuan ” , “ educating in Yinchuan ” , “ traveling in Yinchuan ” and “ honoring Yinchuan , ” etc, and it has turned into one of the “ China 50 honorable and safety zones of investment environment ” and the beautiful and functional and most available for careers and living city in northwest area.

Medical & Sanitation By the end of 2005,Ningxia has 1,463 clinics of all kinds with 17,802 beds involving in 22,817 medical technicians, among which,10,586 are certified doctors and certified assistant doctors,7,376 registered nurses. It has built up 35 epidemic prevention organizations with 1,530 staff, 21 maternal and child health organizations with 1,336 staff,266 rural sanitary hospitals with 3,434 staff.

(iv)Reference Prices of Basic Elements

Price of Power, Water, Heat and Gas

Market Price of Labor in Yinchuan 2006

IV. Development Zones

At present ,Ningxia has 1 state-level economic development zone and 16 regional level economic development zones Ningxia, adhering to the principle of “ Focusing on dominant industries with unique characteristics ” .

The industrial zones are well-equipped with basic facilities, benefi ting from high effi ciency and enjoying innovative preferential policies of various kinds, therefore the ideal places for outside investors to start business.

(i) State-Level Development Zone

Yinchuan Economic Technology Development Zone (of state-level)

It is the only national economic technology development zone of Ningxia. The planned total area is 32 sq.km and 4 sq.km has been developed. The development zone has established technological incubation bases of Overseas Career Making Park , Software Park , Technology Park , High-tech Career Making Service Center of National Level. It has been planned to build four major parks: New Material Industrial Park, Special Medicine Industrial Park , Mechanical and Electronic Intergration Industrial Park , and Comprehensive Industrial Park . At Present, 1,300 enterprises have settled down in the zone, amorng them 135 are industrial enterprises, 23 are foreign-funded enterprises and 35 are high-tech enterprises, accounting 67% of high and new technology enterprise in Ningxia. An industrial structure centering on oil and gas chemicals, machinery and electrics making, high energy-bearing and new materials, feature medicine, information technology has came into being.

(ii)Provincial-level Development Zones

Regional-level Development Zone

Ningdong Chemical Industry Park It is a large-scale regional industrial zone with coal, power, chemicals and oil, which was approved to set up by the government. The planning area of the zone is about 260 sq.km covering 3 chemical industrial districts, 5 power stations, 8 coal mines, Yazidang reservoir, Baijitan nature reserve, several residential districts.

Shizuishan Economic Development Zone It specialized in the materials of tantalum, niobium, beryllium, magnesium and its alloy neodymium, rare earth, super powder of carborundum, electronic components, coal chemicals, fi ne chemicals and machine tool processing.

Shizuishan Industrial Zone The planning area of the zone is 28 sq.km and the construction area is 22 sq.km. The zone includes Power Industry Park , Steel Industry Park , Chloro-alkali Industrial Park , Mechanic Industrial Park and Coal Chemical industrials etc.

Zhongwei Industrial Zone With a planning area of 15,000 mu, the zone adheres to the principle of centering on paper-making, along with improving relevant industries, including Chloro-alkali industry,heat and power producing industry, as well as many other industries.

Helan Industrial Zone With a planning area of 20,000 mu, it focuses on industries consisting of biological pharmacy, medical devices, by-product

reprocessing, mechanical and electronic integration, packaging, new materials, Muslim food and circulation of materials etc.

Yongning Industrial Zone With planning area of 5,000 mu,it focuses on industries like biological pharmacy, electric devices production, new materials and primary products.

Lingwu Cashmere Industrial Park With a planned area of 3,000 mu, among which 1,800 mu have been explored in the first period, the zone mainly attracts enterprises processing refined cashmere and other products without production pollution. Now there are 73 projects contracted to enter with a total investment of 1.68 billion yuan. Wuzhong Jinji Industry Park It was planned to cover an area of 10 sq.km Now it has built up the construction with 4 squ km with more than 180 enterprises specialized in biological medicine, food processing, building materials, and high technology.

Guyuan Economic Development Zone It is planned that the controllable area is 5 sq.kms. The construction area is 2.5 sq.kms. About 10 sq.kms are for future construction development. There are four prop industries in the zone, which are starch industry, medicine industry, grass industry, and building materials industry.

Pingluo Taisha Industrial Park The planing area is 96 sq.km. The exploited acre is 20 sq.km. The Park is divided into districts like high-consumed district, coal-based chemicals, machinerymaking district, high and new technology district, light industry district and Taisha wetland construction district. More than 260 kinds of enterprises has settled down in the Park.Its pillar industries are high-consumed materials, chemicals, coal deep-processing, metallurgy and machinery making, light industry, farm and sideline products deepprocessing.

Zhongning Industry Park The planned area is 24 sq.km. Nineteen enterprises have moved into the Park and exploited 112 hectares field. It is a modem industry park centering on trades like cement and construction materials, calcium carbide chemicals, machinery making, farm sideline products deep-processing during 5-10 years.

(iii)Service Organizations

Commercial Organizations