Exhibit 1



                            Articles of Association

                                      Of

                    China Petroleum & Chemical Corporation


           Amended and adopted at the Annual General Meeting for the
        Year 2005 on 24 May 2006 Approved by the SASAC on 25 July 2006


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                         CHAPTER 1 GENERAL PROVISIONS

Article 1      These Articles of Association are drawn up in accordance with
               the "Company Law of the People's Republic of China" (the
               "Company Law"), "Special regulations of the State Council
               regarding the issue of shares overseas and the listing of
               shares overseas by companies limited by share" (the "Special
               Regulations"), "Mandatory provisions for the Articles of
               Association of the Company to be Listed Overseas" ("Mandatory
               Provisions"), "Guidelines for Articles of Association of Listed
               Companies", "Standards for the Governance of Listed Companies"
               and other relevant laws and regulations to maintain the
               legitimate interests of China Petroleum & Chemical Corporation
               (the "Company") and its shareholders and creditors, and to
               regulate the organization and conducts of the Company.

Article 2      These Articles of Association of the Company are effective on
               the date of incorporation of the Company. Any amendment to
               these Articles of Association involving the Mandatory
               Provisions shall be effective upon being passed by the
               shareholders in a general meeting and examined and approved by
               the company authorized by the State Council.
               From the date on which the Company's Articles of Association
               come into effect, the Company's Articles of Association shall
               constitute a legally binding document regulating the Company's
               organization and activities, and the rights and obligations
               between the Company and its shareholders and among the
               shareholders inter se.

Article 3      These Articles of Association are binding on the Company, its
               shareholders and directors, supervisors, president,
               vice-president, Chief Financial Officer and secretary of the
               board of directors; all of whom are entitled, according to
               these Articles of Association, to make claims concerning the
               affairs of the Company. A shareholder may take action against
               the Company and the Company may take action against a
               shareholder or a director, a supervisor, the president, the
               vice-president, the Chief Financial Officer or the secretary of
               the board of directors pursuant to these Articles of
               Association. A shareholder may also take action against another
               shareholder or directors, supervisors, president,
               vice-president, Chief Financial Officer and the secretary of
               the board of directors of the Company pursuant to these
               Articles of Association. The actions referred to in the
               preceding paragraph include court proceedings and arbitration
               proceedings.

Article 4      The Company is a joint stock limited company established in
               accordance with the Company Law, the Special Regulations and
               other relevant laws and administrative regulations of the
               State. The Company was established by way of promotion with the
               approval of the State Economic and Trade Commission of the
               People's Republic of China ("PRC"), as evidenced by approval
               document Guo Jing Mao Qi Gai [2000] No. 154. It is registered
               with and has obtained a business license from China's State
               Administration Bureau of Industry and Commerce on 25 February
               2000. The Company's business license number is: 1000001003298.
               The promoter of the Company is: China Petrochemical
               Corporation.

Article 5      The registered name of the Company:

               In Chinese:                [Chinese characters omitted]

               Abbreviation:              [Chinese characters omitted]

               In English:                China Petroleum & Chemical Corporation

               Abbreviation:              SINOPEC Corp.

Article 6      The address                A6, Huixindong Street,
               of the Company:            Chaoyang District, Beijing, China.

               Zip:                       100029

               Tel:                       (010) 64999295


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               Fax:                       (010) 64999294

               Website:                   www.sinopec.com.cn

Article 7      The Company's legal representative is the Chairman of the board
               of directors of the Company.

Article 8      The Company is a joint stock limited company which has
               perpetual existence.

               The capital of the Company is divided into shares of equal
               value. The rights and responsibilities of the Company's
               shareholders shall only be limited to the proportion of the
               shares as held by them; the Company shall be responsible for
               the Company's debts by all of its assets.

               The Company is an independent legal person, subject to the
               jurisdiction and under the protection of the laws and
               administrative rules of the PRC.

Article 9      The Company may set up wholly-owned or holding branch
               organizations such as subsidiaries, branches, representative
               offices and offices according to its business development
               needs. The wholly-owned or holding subsidiary may be named with
               China Petroleum & Chemical Corporation's abbreviation
               "SINOPEC". The branches, representative offices and offices are
               non-legal person branch organizations and shall be named with
               the full name of China Petroleum & Chemical Corporation.

               The Company may set up branch organizations (whether or not
               wholly-owned) outside the PRC and in the Hong Kong SAR, Macau
               SAR and Taiwan according to its business development needs and
               upon the approval of the relevant government body.

Article 10     The Company may invest in other limited liability companies
               or joint stock limited companies. The Company's liabilities to
               an invested company shall be limited to the amount of its
               capital contribution to the invested company.

               The Company shall not become the unlimited liability
               shareholder of other profit-making organizations.

               Upon approval of the companies approving department authorized
               by the State Council, the Company may, according to its
               operating and management needs, operate as a holding company as
               prescribed in Article 12(2) of the Company Law.

           CHAPTER 2 THE COMPANY'S OBJECTIVES AND SCOPE OF BUSINESS

Article 11     The operation objectives of the Company are: maximization of
               the Company's profits, maximization of shareholders' return.

Article 12     The Company's scope of business shall be consistent with and
               subject to the scope of business approved by the authority
               responsible for the registration of the Company.

               The Company's scope of business includes: the exploration,
               exploitation and sales of oil and natural gas; pipeline
               transportation of oil and natural gas; oil refining; the
               production, sales and storage of oil, petrochemical products,
               chemical fiber products and other chemical products;
               wholesaling, retailing and storage of oil and other oil
               products; operation of 24-hour stores; power generation;
               manufacturing and installation of machinery; purchase and sales
               of raw materials, charcoal, equipment and parts; supervision of
               manufacturing of equipment; research, development and
               application of technology and information; import and export;
               and provision of technology and labour.

                    CHAPTER 3 SHARES AND REGISTERED CAPITAL

Article 13     There must, at all times, be ordinary shares in the Company,
               which include the "domestic-invested shares" and the
               "foreign-invested shares". Subject to the approval of the
               companies approving department authorized by the State Council,
               the Company may, according to its requirements, create
               different classes of shares.

Article 14     The shares issued by the Company shall each have a par value
               of Renminbi one yuan.

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"Renminbi" as mentioned above means the legal currency of the PRC.

Article 15     Shares of the Company are in the form of share certificates.
               Subject to the approval of the securities authority of the State
               Council, the Company may issue shares to Domestic Investors and
               Foreign Investors. The issue of shares by the Company shall
               adhere to the principle of openness and fairness. "Foreign
               Investors" means those investors who subscribe for the Company's
               shares and who are located in foreign countries and in the
               regions of Hong Kong, Macau and Taiwan. "Domestic Investors"
               means those investors who subscribe for the Company's shares and
               who are located within the territory of the PRC (except the
               areas referred to above).

Article 16     Shares which the Company issues to domestic investors for
               subscription in Renminbi are called "Domestic-Invested Shares".
               Domestic-invested shares listed domestically are called
               "Domestic-Listed Domestic-Invested shares" whilst other kinds of
               domestic-invested shares are called "Non-Listed
               Domestic-Invested Shares".

               Shares which the Company issues to foreign investors for
               subscription in foreign currencies are called "Foreign-Invested
               Shares". Foreign-invested shares which are listed overseas are
               called "Overseas-Listed Foreign-Invested Shares".

               "Foreign currencies" means the legal currencies of countries or
               districts outside the PRC which are recognized by the foreign
               exchange authority of the State and which can be used to pay the
               share price to the Company.

               The shareholders of "Domestic-Invested Shares" and the
               shareholders of "Overseas-Listed Foreign-Invested Shares" shall
               be shareholders of ordinary shares, possessing the same rights
               and undertaking the same obligations.

Article 17     Foreign-Invested Shares issued by the Company and which are
               listed in Hong Kong shall be referred to as "H Shares". "H
               Shares" means the shares which have been admitted for listing
               on The Stock Exchange of Hong Kong Limited (the "Stock
               Exchange"), the par value of which is denominated in Renminbi
               and which are subscribed for and traded in Hong Kong dollars.

Article 18     The Company's domestic-invested shares are held on trust by the
               Shanghai branch of the China Securities Registration and
               Clearing Company Limited. The Company's H shares are mainly held
               by the Hong Kong Securities Clearing Company Limited.

Article 19     The Company has at the time of its establishment issued to the
               promoter, China Petrochemical Corporation, 6,880,000 ordinary
               shares, representing 100% of the issued ordinary shares of the
               Company at that time.

Article 20     After the establishment of the Company and upon the approval of
               the companies approving department authorized by the State
               Council, the promoter, China Petrochemical Corporation,
               transferred 19,379,390,000 domestic-invested shares to holders
               of other non-listed domestic-invested shares; the Company issued
               16,780,488,000 H shares (out of these, 15,102,439,000 shares are
               new issue shares of the Company and 1,678,049,000 shares are
               stock shares sold by the promoter, China Petrochemical
               Corporation). Upon completion of the H share issuance, the
               Company issued 2,800,000,000 domestic-listed domestic-invested
               shares.

               The existing structure of the Company's share capital is as
               follows: the total number of issued ordinary shares of the
               Company is 86,702,439,000 shares, out of these, 61,757,324,776
               shares representing 71.23% of the total number of issued
               ordinary shares of the Company are held by the promoter, China
               Petrochemical Corporation; 5,364,626,224 shares representing
               6.19% are held by other non-listed domestic-invested
               shareholders; 2,800,000,000 shares representing 3.23% are held
               by domestic-listed domestic-invested shareholders; and
               16,780,488,000 shares representing 19.35% are held by
               foreign-listed foreign-invested shareholders.

Article 21     The Company's board of directors may take all necessary
               action for the respective issuance of the Overseas-Listed
               Foreign-Invested Shares and Domestic-Invested Shares after the
               proposals for issuance of the same have been approved by the
               securities authority of the State Council.

               The Company may implement its proposal to issue Overseas-Listed
               Foreign-Invested Shares and Domestic-Invested Shares pursuant
               to the preceding paragraph within fifteen (15) months from the
               date of approval by the securities regulatory organ of the
               State Council.


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Article 22     Where the total number of shares stated in the proposal for
               the issuance of shares include Overseas-Listed Foreign-Invested
               Shares and Domestic-Invested Shares, such shares should be
               fully subscribed for at their respective offerings. If the
               shares cannot be fully subscribed for all at once due to
               special circumstances, the shares may, subject to the approval
               of the securities regulatory organ of the State Council, be
               issued on separate occasions.

Article 23     The registered capital of the Company is RMB86,702,439,000.

Article 24     The Company may, based on its operating and development needs,
               authorize the increase of its capital pursuant to the Company's
               Articles of Association.

               The Company may increase its capital in the following ways:

               (1)    by offering new shares for subscription by unspecified
                      investors;

               (2)    by placing new shares to its existing shareholders;

               (3)    by allotting bonus shares to its existing shareholders;

               (4)    to increase the share capital with common reserve fund;

               (5)    by any other means which is permitted by the laws,
                      administrative regulations and the competent department
                      under the securities authority of the State Council.

               After the Company's increase of share capital by means of the
               issuance of new shares has been approved in accordance with the
               provisions of the Company's Articles of Association, the
               issuance thereof should be made in accordance with the
               procedures set out in the relevant laws and administrative
               regulations of the State.

Article 25     Unless otherwise stipulated in the relevant laws or
               administrative regulations, shares in the Company shall be
               freely transferable and are not subject to any lien.

            CHAPTER 4 REDUCTION OF CAPITAL AND REPURCHASE OF SHARES

Article 26     According to the provisions of the Company's Articles of
               Association, the Company may reduce its registered capital. In
               so doing, it shall act according to the Company Law, other
               relevant provisions and these Articles of Association.

Article 27     The Company must prepare a balance sheet and an inventory of
               assets when it reduces its registered capital.

               The Company shall notify its creditors within ten (10) days of
               the date of the Company's resolution for reduction of capital
               and shall publish an announcement in a newspaper at least three
               (3) times within thirty (30) days of the date of such
               resolution. A creditor has the right within thirty (30) days of
               receipt of the notice from the Company or, in the case of a
               creditor who does not receive such notice, within ninety (90)
               days of the date of the first public announcement, to require
               the Company to repay its debts or to provide a corresponding
               guarantee for such debt.

               The Company's registered capital may not, after the reduction in
               capital, be less than the minimum amount prescribed by law.

Article 28     The Company may, in accordance with the procedures set out
               in the Company's Articles of Association and with the approval
               of the relevant governing authority of the State, repurchase
               its outstanding shares under the following circumstances:

               (1)    cancellation of shares for the purposes of reducing its
                      capital;

               (2)    merging with another company that holds shares in the
                      Company;


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               (3)    other circumstances permitted by laws and administrative
                      regulations.

               The Company shall repurchase its outstanding shares in
               accordance with the stipulations of Article 29 to Article 32.

Article 29     The Company may repurchase shares in one of the following
               ways, with the approval of the relevant governing authority of
               the State:

               (1)    by making an offer for the repurchase of shares to all
                      its shareholders on a pro rata basis;

               (2)    by repurchasing shares through public dealing on a stock
                      exchange;

               (3)    by repurchasing shares outside of the stock exchange by
                      means of an off-market agreement;

               (4)    by any other means which is permitted by the laws,
                      administrative regulations and the securities regulatory
                      organ of the State Council.

Article 30     The Company must obtain the prior approval of the
               shareholders in a general meeting in the manner stipulated in
               the Company's Articles of Association before it can repurchase
               shares outside the stock exchange by means of an off-market
               agreement. The Company may, by obtaining the prior approval of
               the shareholders in a general meeting (in the same manner),
               rescind or vary any contract which has been so entered into or
               waive any right thereof.

               A contract for the repurchase of shares referred to in the
               preceding paragraph includes (without limitation) an agreement
               to become liable to repurchase shares or an agreement to have
               the right to repurchase shares.

               The Company may not assign any contract for the repurchase of
               its shares or any right contained in such contract.

Article 31     Shares which have been legally repurchased by the Company
               shall be cancelled within 10 days of completion of the
               repurchase (or such other shorter period as required by law or
               administrative regulations), and the Company shall apply to the
               original companies registration authority for registration of
               the change in its registered capital.

               The aggregate par value of the cancelled shares shall be
               deducted from the Company's registered share capital.

Article 32     Unless the Company is in the course of liquidation, it must
               comply with the following provisions in relation to repurchase
               of its outstanding shares:

               (1)    where the Company repurchases shares at par value,
                      payment shall be made out of book surplus distributable
                      profits of the Company or out of proceeds of a new issue
                      of shares made for that purpose;

               (2)    where the Company repurchases shares of the Company at a
                      premium to its par value, payment up to the par value may
                      be made out of the book surplus of distributable profits
                      of the Company or out of the proceeds of a new issue of
                      shares made for that purpose. Payment of the portion in
                      excess of the par value shall be effected as follows:

                      1.    if the shares being repurchased were issued at par
                            value, payment shall be made out of the book
                            surplus of distributable profits of the Company;

                      2.    if the shares being repurchased were issued at a
                            premium to its par value, payment shall be made out
                            of the book surplus of distributable profits of the
                            Company or out of the proceeds of a new issue of
                            shares made for that purpose, provided that the
                            amount paid out of the proceeds of the new issue
                            shall not exceed the aggregate amount of premiums
                            received by the Company on the issue of the shares
                            repurchased nor shall it exceed the book value of
                            the Company's capital common reserve fund account
                            (including the premiums on the new issue) at the
                            time of the repurchase;

               (3)    the Company shall make the following payments out of the
                      Company's distributable profits:

                      1.    payment for the acquisition of the right to
                            repurchase its own shares;


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                      2.    payment for variation of any contract for the
                            repurchase of its shares;

                      3.    payment for the release of its obligation(s) under
                            any contract for the repurchase of shares;

               (4)    after the Company's registered capital has been reduced
                      by the aggregate par value of the cancelled shares in
                      accordance with the relevant provisions, the amount
                      deducted from the distributable profits of the Company
                      for payment of the par value of shares which have been
                      repurchased shall be transferred to the Company's capital
                      common reserve fund account.

            CHAPTER 5 FINANCIAL ASSISTANCE FOR ACQUISITION OF SHARES

Article 33     The Company and its subsidiaries shall not, at any time,
               provide any form of financial assistance to a person who is
               acquiring or is proposing to acquire shares in the Company.
               This includes any person who directly or indirectly incurs any
               obligations as a result of the acquisition of shares in the
               Company. The Company and its subsidiaries shall not, at any
               time, provide any form of financial assistance to the Obligor
               for the purposes of reducing or discharging the obligations
               assumed by such person. This Article shall not apply to the
               circumstances specified in Article 35 of this Chapter.

Article 34     For the purposes of this Chapter, "financial assistance"
               includes (without limitation) the following:

               (1)    gift;

               (2)    guarantee (including the assumption of liability by the
                      guarantor or the provision of assets by the guarantor to
                      secure the performance of obligations by the Obligor),
                      compensation (other than compensation in respect of the
                      Company's own default) or release or waiver of any
                      rights;

               (3)    provision of loan or the making of any other agreement
                      under which the obligations of the Company are to be
                      fulfilled before the obligations of another party, or the
                      change in parties to, or the assignment of rights under,
                      such loan or contract;

               (4)    any other form of financial assistance given by the
                      Company when the Company is insolvent or has no net
                      assets or when its net assets would thereby be reduced to
                      a material extent.

               For the purposes of this Chapter, "assumption of obligations"
               includes the assumption of obligations by way of contract or by
               way of arrangement (irrespective of whether such contract or
               arrangement is enforceable or not and irrespective of whether
               such obligation is to be borne solely by the Obligor or jointly
               with other persons) or by any other means which results in a
               change in his financial position.

Article 35     The following acts shall not be deemed to be acts prohibited
               by Article 33 of this Chapter:

               (1)    the provision of financial assistance by the Company
                      where the financial assistance is given in good faith in
                      the interests of the Company, and the principal purpose
                      of which is not for the acquisition of shares in the
                      Company, or the giving of the financial assistance is an
                      incidental part of a master plan of the Company;

               (2)    the lawful distribution of the Company's assets as
                      dividend;

               (3)    the distribution of dividends in the form of shares;

               (4)    a reduction of registered capital, a repurchase of shares
                      of the Company or a reorganization of the share holding
                      structure of the Company effected in accordance with the
                      Company's Articles of Association;


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               (5)    the provision of loans by the Company within its scope of
                      business and in the ordinary course of its business,
                      where the provision of loans falls within part of the
                      scope of business of the Company (provided that the net
                      assets of the Company are not thereby reduced or that, to
                      the extent that the assets are thereby reduced, the
                      financial assistance is provided out of distributable
                      profits);

               (6)    contributions made by the Company to the employee share
                      ownership schemes (provided that the net assets of the
                      Company are not thereby reduced or that, to the extent
                      that the assets are thereby reduced, the financial
                      assistance is provided out of distributable profits).

           CHAPTER 6 SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS

Article 36     Share certificates of the Company shall be in registered
               form.

               The shares of the Company shall bear the following main items:

               (1)    Name of the Company;

               (2)    Date of registration and establishment of the Company;

               (3)    Type of shares, par value and the number of shares it
                      represents;

               (4)    Code of share certificates;

               (5)    Other matters as required by the Company Law, Special
                      Regulations and the stock exchange on which the shares of
                      the Company are listed.

Article 37     The shares of the Company may be transferred, donated, inherited
               and pledged in accordance with the relevant laws, administrative
               rules, regulations of the competent department(s) as well as
               these Articles of Association. The transfer of shares shall be
               registered with the share registration organization appointed by
               the Company.

Article 38     The Company does not accept the pledging of its shares.

Article 39     The directors, supervisors, president, vice-president, Chief
               Financial Officer and secretary of the board of directors of the
               Company shall, during their term of office, declare to the
               Company regularly the Company's shares held by them. During
               their term of office and within 6 months of their leaving, they
               may not transfer the Company's shares held by them.

Article 40     If a shareholder who holds 5% or above of voting shares sells
               his shares in the Company within 6 months of his purchase or
               purchases again within 6 months of the sale, the profits thus
               made shall belong to the Company.

               The preceding provision shall apply to senior officers
               prescribed in the articles of association of a legal person
               shareholder holding 5% or above of the voting shares in the
               Company, including but without limitation to its directors,
               supervisors and the president.

Article 41     Share certificates of H-shares of the Company shall be signed by
               the Chairman of the Company's board of directors. Where the
               stock exchange(s) on which the Company's shares are listed
               require other directors and/or supervisors, president,
               vice-president, Chief Financial Officer and the secretary of the
               board of directors of the Company to sign on the share
               certificates, the share certificates shall also be signed by
               such officer(s). The share certificates shall take effect after
               being sealed or imprinted with the seal of the Company (or the
               Company chop for securities). The share certificate shall only
               be sealed with the Company's seal or securities chop under the
               authorization of the board of directors. The signatures of the
               Chairman of the board of directors or other officer(s) of the
               Company may be printed in printed form.

Article 42     The Company shall keep a register of shareholders which shall
               contain the following particulars:


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               (1)    the name (title) and address (residence), the occupation
                      or nature of each shareholder;

               (2)    the class and quantity of shares held by each
                      shareholder;

               (3)    the amount paid-up on or agreed to be paid-up on the
                      shares held by each shareholder;

               (4)    the share certificate number(s) of the shares held by
                      each shareholder;

               (5)    the date on which each person was registered as a
                      shareholder;

               (6)    the date on which any shareholder ceased to be a
                      shareholder.

               Unless there is evidence to the contrary, the register of
               shareholders shall be sufficient evidence of the shareholders'
               shareholdings in the Company.

Article 43     The Company may, in accordance with the mutual understanding and
               agreements made between the securities regulatory organ of the
               State Council and overseas securities regulatory organizations,
               maintain the register of shareholders of Overseas-Listed
               Foreign-Invested Shares overseas and appoint overseas agent(s)
               to manage such register of shareholders. The original register
               of shareholders for holders of H Shares shall be maintained in
               Hong Kong.

               A duplicate register of shareholders for the holders of
               Overseas-Listed Foreign-Invested Shares shall be maintained at
               the Company's residence. The appointed overseas agent(s) shall
               ensure consistency between the original and the duplicate
               register of shareholders at all times.

               If there is any inconsistency between the original and the
               duplicate register of shareholders for the holders of
               Overseas-Listed Foreign-Invested Shares, the original register
               of shareholders shall prevail.

Article 44     The Company shall have a complete register of shareholders
               which shall comprise the following parts:

               (1)    the register of shareholders which is maintained at the
                      Company's residence (other than those share registers
                      which are described in sub-paragraphs (2) and (3) of this
                      Article);

               (2)    the register of shareholders in respect of the holders of
                      Overseas-Listed Foreign-Invested Shares of the Company
                      which is maintained in the same place as the overseas
                      stock exchange on which the shares are listed; and

               (3)    the register of shareholders which is maintained in such
                      other place as the board of directors may consider
                      necessary for the purposes of the listing of the
                      Company's shares.

Article 45     Different parts of the register of shareholders shall not
               overlap. No transfer of any shares registered in any part of
               the register shall, during the continuance of that
               registration, be registered in any other part of the register.

               All Overseas-Listed Foreign-Invested Shares listed in Hong Kong
               which have been fully paid-up may be freely transferred in
               accordance with the Company's Articles of Association. However,
               unless such transfer complies with the following requirements,
               the board of directors may refuse to recognize any instrument of
               transfer and would not need to provide any reason therefor:

               (1)    a fee of HK$2.50 per instrument of transfer or such
                      higher amount agreed by the Stock Exchange has been paid
                      to the Company for registration of the instrument of
                      transfer and other documents relating to or which will
                      affect the right of ownership of the shares;

               (2)    the instrument of transfer only relates to
                      Overseas-Listed Foreign-Invested Shares listed in Hong
                      Kong;

               (3)    the stamp duty which is chargeable on the instrument of
                      transfer has already been paid;

               (4)    the relevant share certificate(s) and any other evidence
                      which the board of directors may reasonably require to
                      show that the transferor has the right to transfer the
                      shares have been provided;


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               (5)    if it is intended that the shares be transferred to joint
                      owners, the maximum number of joint owners shall not be
                      more than four (4); and

               (6)    the Company does not have any lien on the relevant
                      shares.

               All Overseas-Listed Foreign-Invested Shares listed in Hong Kong
               shall be transferred by an instrument in writing in any usual or
               common form or any other form which the directors may approve.
               The instrument of transfer of any share may only be executed by
               hand without seal, or if the assignor or the assignee is the
               recognized clearing house or its nominee, the share transfer
               form may be executed by hand or in mechanically-printed form.
               All instruments of transfer must be placed at the legal address
               of the Company or in other places as the Board of Directors may
               be specified at any time.

               Amendments or rectification of the register of shareholders
               shall be made in accordance with the laws of the place where the
               register of shareholders is maintained.

Article 46     No change may be made in the register of shareholders as a
               result of a transfer of shares within thirty (30) days prior to
               the date of a shareholders' general meeting or within five (5)
               days before the determination date for the Company's
               distribution of dividends.

Article 47     When the Company needs to convene a shareholders' meeting
               for the purposes of determination, dividend distribution, for
               liquidation or for any other purpose which need to determine
               shareholdings, the board of directors shall determine a record
               date for the determination of shareholdings. The shareholders
               of the Company shall be such persons who appear in the register
               of shareholders at the close of such record date.

Article 48     Any person who disputes the register of shareholders and
               asks for inclusion of his name in or removal of his name from
               the register of shareholders may apply to a court of competent
               jurisdiction for rectification of the register.

Article 49     For any person who is a registered shareholder or who claims
               to be entitled to have his name (title) entered in the register
               of shareholders in respect of shares in the Company may, if his
               share certificate (the "original certificate") relating to the
               shares is lost, he may apply to the Company for a replacement
               share certificate in respect of such shares (the "Relevant
               Shares").

               Application by a holder of Domestic-Invested Shares, who has
               lost his share certificate, for a replacement share certificate
               shall be dealt with in accordance with Article 150 of the
               Company Law.

               Application by a holder of Overseas-Listed Foreign-Invested
               Shares, who has lost his share certificate, for a replacement
               share certificate may be dealt with in accordance with the law
               of the place where the original register of shareholders of
               holders of Overseas-Listed Foreign-Invested Shares is
               maintained, the rules of the stock exchange or other relevant
               regulations.

               The issue of a replacement share certificate to a holder of H
               Shares, who has lost his share certificate, shall comply with
               the following requirements:

               (1)    The applicant shall submit an application to the Company
                      in a prescribed form accompanied by a notarial
                      certificate or a statutory declaration, of which the
                      contents shall include the grounds upon which the
                      application is made and the circumstances and evidence of
                      the loss, and the declaration showing that no other
                      person is entitled to have his name entered in the
                      register of shareholders in respect of the Relevant
                      Shares.

               (2)    The Company has not received any declaration made by any
                      person other than the applicant declaring that his name
                      shall be entered in the register of shareholders in
                      respect of such shares before it decides to issue a
                      replacement share certificate to the applicant.

               (3)    The Company shall, if it intends to issue a replacement
                      share certificate, publish a notice of its intention to
                      do so at least once every thirty (30) days within a
                      period of ninety (90) consecutive days in such newspapers
                      as may be prescribed by the board of directors.

               (4)    The Company shall, prior to publication of its intention
                      to issue a replacement share certificate, deliver to the
                      stock exchange on which its shares are listed, a copy of
                      the notice to be published and may publish the notice


                                       9
<PAGE>

                      upon receipt of confirmation from such stock exchange
                      that the notice has been exhibited in the premises of the
                      stock exchange. Such notice shall be exhibited in the
                      premises of the stock exchange for a period of ninety
                      (90) days.

                      In the case of an application which is made without the
                      consent of the registered holder of the Relevant Shares,
                      the Company shall deliver by mail to such registered
                      shareholder a copy of the notice to be published.

               (5)    If, by the expiration of the 90-day period referred to in
                      paragraphs (3) and (4) of this Article, the Company has
                      not received any objection from any person in respect of
                      the issuance of the replacement share certificate, it may
                      issue a replacement share certificate to the applicant
                      pursuant to his application.

               (6)    Where the Company issues a replacement share certificate
                      pursuant to this Article, it shall forthwith cancel the
                      original share certificate and document the cancellation
                      of the original share certificate and issuance of a
                      replacement share certificate in the register of
                      shareholders accordingly.

               (7)    All expenses relating to the cancellation of an original
                      share certificate and the issuance of a replacement share
                      certificate shall be borne by the applicant and the
                      Company is entitled to refuse to take any action until
                      reasonable guarantee is provided by the applicant
                      therefor.

Article 50     Where the Company issues a replacement share certificate
               pursuant to the Company's Articles of Association, as for a bona
               fide purchaser obtaining new share certificates referred to
               above or a shareholder registered as a owner of the shares (in
               case of a bona fide purchaser), his name (title) shall not be
               removed from the register of shareholders.

Article 51     The Company shall not be liable for any damages sustained by any
               person by reason of the cancellation of the original share
               certificate or the issuance of the replacement share certificate
               unless the claimant is able to prove that the Company has acted
               in a deceitful manner.

                 CHAPTER 7 SHAREHOLDERS' RIGHTS AND OBLIGATIONS

Article 52     A shareholder of the Company is a person who lawfully holds
               shares in the Company and whose name (title) is entered in the
               register of shareholders.

               A shareholder shall enjoy rights and assume obligations
               according to the class and amount of shares held by him;
               shareholders who hold shares of the same class shall enjoy the
               same rights and assume the same obligations.

               For the joint shareholders, if one of the joint shareholders has
               passed away, the surviving shareholder shall be deemed by the
               Company to have the ownership of the related shares, but the
               Board of Directors is entitled to ask for the provision of the
               suitable death certificate for the purpose of revision of the
               shareholders' register. For the joint shareholders, only the
               first named shareholder in the shareholders' register has the
               right to receive the share certificates of the related shares,
               receive the notice of the Company, attend the shareholders'
               general meeting and exercise his voting right; while, any notice
               delivered to the said shareholder shall be deemed as if the
               notice has been delivered to all of the joint shareholder of the
               related shares.

Article 53     The shareholders of ordinary shares of the Company shall
               enjoy the following rights:

               (1)    the right to receive dividends and other distributions in
                      proportion to their shareholdings;

               (2)    the right to attend or appoint a proxy to attend
                      shareholders' general meetings and to vote thereat
                      according to their shareholdings;

               (3)    the right to supervise the Company's business operations,
                      the right to present proposals or to raise queries;

               (4)    the right to transfer, donate and pledge shares in
                      accordance with laws, administrative regulations and
                      provisions of the Company's Articles of Association;


                                      10
<PAGE>

               (5)    subject to production of the relevant proofs of the type
                      and quantity of shares that they are holding to the
                      Company and verification of their identities of
                      shareholders by the Company, the right to obtain relevant
                      information in accordance with laws, administrative
                      regulations and provisions of these Articles of
                      Association, which information includes:

                      i.    the right to obtain a copy of the Company's
                            Articles of Association, subject to payment of
                            costs;

                      ii.   the right to inspect and copy, subject to payment
                            of a reasonable fee:

                            (i)    all parts of the register of shareholders;

                            (ii)   personal particulars of each of the
                                   Company's directors, supervisors, president,
                                   vice-president, Chief Financial Officer and
                                   secretary of the board of directors,
                                   including:

                                   (a)  present and former name and alias;

                                   (b)  principal address (place of residence);

                                   (c)  nationality;

                                   (d)  primary and all other part-time
                                        occupations and duties;

                                   (e)  identification documents and the
                                        numbers thereof;

                            (iii)  report on the state of the Company's share
                                   capital;

                            (iv)   reports showing the aggregate par value,
                                   quantity, highest and lowest price paid in
                                   respect of each class of shares repurchased
                                   by the Company since the last accounting
                                   year and the aggregate amount paid by the
                                   Company for this purpose;

                            (v)    minutes of shareholders' general meetings;

                            (vi)   regular reports and interim reports of the
                                   Company.

               (6)    in the event of the termination or liquidation of the
                      Company, the right to participate in the distribution of
                      remaining assets of the Company in accordance with the
                      number of shares held;

               (7)    in the event that the resolution of a shareholders'
                      general meeting or board meeting is against the law or
                      administrative rules and has infringed the legitimate
                      interest of a shareholder, the shareholder shall have the
                      right to commence legal proceedings to stop the illegal
                      or infringing act and to ask the Company to bring a claim
                      for compensation;

               (8)    other rights conferred by laws, administrative
                      regulations and these Articles of Association.

Article 54     The shareholders of ordinary shares of the Company shall assume
               the following obligations:

               (1)    to comply with these Articles of Association;

               (2)    to pay subscription money according to the number of
                      shares subscribed and the method of subscription;

               (3)    not to retire from being a shareholder unless required by
                      law or administrative regulations;

               (4)    other obligations imposed by laws, administrative
                      regulations and these Articles of Association.

               Shareholders are not liable to make any further contribution to
               the share capital other than according to the terms which were
               agreed by the subscriber of the relevant shares at the time of
               subscription.


                                      11
<PAGE>

Article 55     In addition to the obligations imposed by laws and
               administrative regulations or required by the listing rules of
               the stock exchange on which the Company's shares are listed, a
               controlling shareholder shall not exercise his voting rights in
               respect of the following matters in a manner prejudicial to the
               interests of all or part of the shareholders of the Company:

               (1)    act honestly in the best interests of the Company in
                      removing a director or supervisor;

               (2)    to approve the expropriation by a director or supervisor
                      (for his own benefit or for the benefit of another
                      person) of the Company's assets in any way, including
                      (without limitation to) opportunities which are
                      beneficial to the Company;

               (3)    to approve the expropriation by a director or supervisor
                      (for his own benefit or for the benefit of another
                      person) of the individual interest of other shareholders,
                      including (but without limitation to) rights to
                      distributions and voting rights (excluding a
                      restructuring which has been submitted for approval by
                      the shareholders in a general meeting in accordance with
                      the Company's Articles of Association).

Article 56     For the purpose of the foregoing Article, a "controlling
               shareholder" means a person who satisfies any one of the
               following conditions:

               (1)    a person who, acting alone or in concert with others, has
                      the power to elect more than half of the board of
                      directors;

               (2)    a person who, acting alone or in concert with others, has
                      the power to exercise 30% or more or has power to control
                      the exercise of 30% or more of the voting rights in the
                      Company;

               (3)    a person who, acting alone or in concert with others,
                      holds 30% or more of the issued and outstanding shares of
                      the Company;

               (4)    a person who, acting alone or in concert with others, has
                      de facto control of the Company in any other way.

               "Acting in concert" referred to above means the acting of two or
               more persons by agreement (whether verbal or in writing) so as
               to gain or strengthen the control of the Company through the
               acquisition of voting rights in the Company by either of them.

                    CHAPTER 8 SHAREHOLDERS' GENERAL MEETINGS

Article 57     The shareholders' general meeting is the organ of authority
               of the Company and shall exercise its functions and powers in
               accordance with law.

               The Company shall draw up "Rules and Procedures for the
               Shareholders' General Meetings" for implementation after being
               approved by the shareholders in a general meeting. The Rules and
               Procedures for the Shareholders' General Meetings shall include
               the followings:

               (1)    functions and powers of the shareholders general
                      meetings;

               (2)    authorities given by the shareholders' general meetings
                      to the board of directors;

               (3)    procedures for the convening of a shareholders' general
                      meeting, which include the putting forward, collection
                      and approval of motions and notices of meetings and any
                      change thereto, registration of the meeting, convening
                      of, voting and resolutions made in the meeting,
                      adjournments, past-session matters and announcements,
                      etc.;

               (4)    other matters deemed necessary by the shareholders'
                      general meeting.

               The Rules and Procedures for the Shareholders' General Meetings
               is an integral part of and has the same legal effect as these
               Articles of Association.


                                      12
<PAGE>

Article 58     The shareholders' general meeting shall have the following
               functions and powers:

               (1)    to decide on the Company's operational policies and
                      investment plans;

               (2)    to elect and replace directors and to decide on matters
                      relating to the remuneration and liability insurance of
                      directors;

               (3)    to elect and replace supervisors who are shareholder
                      representatives and to decide on matters relating to the
                      remuneration and liability insurance of supervisors;

               (4)    to examine and approve the board of directors' reports;

               (5)    to examine and approve the supervisory committee's
                      reports;

               (6)    to examine and approve the Company's profit distribution
                      plans and loss recovery plans;

               (7)    to examine and approve the Company's proposed annual
                      preliminary and final financial budgets;

               (8)    to pass resolutions on the increase or reduction of the
                      Company's registered capital;

               (9)    to pass resolutions on matters such as merger, division,
                      dissolution and liquidation of the Company;

               (10)   to pass resolutions on the issue of debentures by the
                      Company;

               (11)   to pass resolutions on the appointment, dismissal and
                      non-reappointment of the accountants of the Company;

               (12)   to amend the Company's Articles of Association and its
                      appendices (including the Rules and Procedures for the
                      Shareholders' General Meetings, Rules and Procedures for
                      the Board of Directors' Meetings and Rules and Procedures
                      for the Supervisors' Meetings);

               (13)   to consider motions raised by the supervisory committee
                      or shareholders who represent 5% or more of the total
                      number of voting shares of the Company at annual general
                      meetings;

               (14)   to decide on other matters which, according to laws,
                      administrative regulations, regulations of the competent
                      department(s) or these Articles of Association, need to
                      be approved by shareholders in general meetings;

Article 59     Matters which shall be determined by the shareholders in a
               general meeting according to the laws, administrative
               regulations, regulations of the competent departments or these
               Articles of Association must be discussed by the shareholders in
               a general meeting in order to protect the shareholders' right of
               decision on those matters. Where necessary and reasonable, the
               board of directors or its secretary may be appointed in a
               shareholders' general meeting to determine (if so authorized in
               the general meeting) specific matters which are related to the
               matters to be resolved and are not possible or not necessary to
               be determined in that general meeting. Please see the Rules and
               Procedures for the Shareholders' General Meetings for the form
               of authorization by shareholders to the board of directors in a
               shareholders' general meeting to determine major matters of the
               Company.

               If the shareholders authorize the board of directors or its
               secretary in a general meeting to determine matters which shall
               be determined by ordinary resolutions, the matter should be
               resolved by more than one-half of the attending shareholders
               (including their proxy) who have voting rights; if the
               authorization relates to matters which shall be determined by
               special resolutions, the matter should be resolved by more than
               two-thirds of the attending shareholders (including their proxy)
               who have voting rights. The authorization should be clear and
               specific.

Article 60     Unless prior approval of shareholders in the form of a
               special resolution is obtained in a general meeting, the
               Company shall not enter into any contract with any person other
               than the directors, supervisors, president, vice-president,
               Chief Financial Officer and secretary of the board of directors
               of the Company pursuant to which such person shall be
               responsible for the management and administration of the whole
               or any substantial part of the Company's business.


                                      13
<PAGE>

Article 61     Shareholders' general meetings are divided into annual general
               meetings ("AGM") and extraordinary general meetings ("EGM").
               Unless otherwise provided in these Articles of Association and
               the Rules and Procedures for the Shareholders' General Meetings,
               shareholders' general meetings shall be convened by the board of
               directors.

Article 62     AGMs are held once every year and within six (6) months from the
               end of the preceding accounting year. At least the following
               matters should be resolved in an AGM:

               (1)    examination of the board of directors' annual report;

               (2)    examination of the supervisory committee's annual report;

               (3)    examination of the Company's profit distribution
                      proposal;

               (4)    examination of the Company's audited final budgets for
                      the preceding year;

               (5)    engagement, removal or non-renewal of the appointment of
                      the accounting firm by the Company and determination of
                      the remuneration of the accounting firm so engaged.

               Matters to be considered in an AGM including but without
               limitation to the above matters, and any matter that could be
               considered in a general meeting may be considered in an AGM.

               In an AGM, the supervisory committee and shareholders who
               individually or jointly hold 5% or more of the Company's voting
               shares shall have the right to put forward provisional motions.

Article 63     The board of directors shall convene an EGM within two (2)
               months after the occurrence of any one of the following events:

               (1)    where the number of directors is less than the number
                      stipulated in the Company Law or two-thirds of the number
                      specified in the Company's Articles of Association;

               (2)    where the unrecovered losses of the Company amount to
                      one-third of the total amount of its share capital;

               (3)    where shareholder(s) who individually or jointly hold 10%
                      or more of the Company's issued and outstanding voting
                      shares (not including voting by proxy) request(s) in
                      writing for the convening of an EGM;

               (4)    whenever the board of directors deems necessary or the
                      supervisory committee so requests;

               (5)    other circumstances provided by these Articles of
                      Association.

               The shareholdings referred to in item (3) above shall be
               calculated as at the date of written request of the
               shareholders.

Article 64     Any request for the board of directors to hold an AGM or class
               meeting made by the supervisory committee or shareholders who
               individually or jointly hold 10% of the Company's voting shares
               entitling them to vote in that proposed meeting shall be dealt
               with according to the provisions of the Rules and Procedures for
               the Shareholders' General Meetings.

               If a meeting is convened by the shareholders themselves where
               the board of directors has not given the required consent under
               the Rules and Procedures for the Shareholders' General Meetings
               to the same, the reasonable expenses thus incurred shall be
               borne by the Company and paid out of the money payable by the
               Company to the negligent director(s).

Article 65     If the number of members of the board of directors falls short
               of the number prescribed by the Company Law or is less than
               two-thirds of the number prescribed in these Articles of
               Association, or if the Company's non-recovered loss has amounted
               to one third of the share capital and the board of directors has
               failed to call for an EGM in the prescribed time, shareholders
               may call for an EGM on their own according to the prescribed


                                      14
<PAGE>

               procedures of the Rules and Procedures for the Shareholders'
               General Meetings.

Article 66     Any shareholders who individually or jointly hold 10% or
               more of the voting shares entitling them to vote in the
               proposed meeting have any dispute as to the board of directors'
               non-inclusion of their motion into the agenda may, according to
               the prescribed procedures of the Rules and Procedures for the
               Shareholders' General Meetings, ask for the convening of an
               EGM.

Article 67     A motion of a shareholders' general meeting is a discussion
               paper of a matter which should be discussed in a general
               meeting and shareholders should resolve on the specific motion
               in a general meeting. The contents, form and issuing procedures
               of a motion shall comply with the requirements of the Rules and
               Procedures for the Shareholders' General Meetings.

Article 68     When the Company convenes a shareholders' general meeting,
               written notice of the meeting shall be given forty-five (45)
               days (including the date of the meeting) before the date of the
               meeting to notify all of the shareholders whose names appear in
               the share register of the matters to be considered and the date
               and place of the meeting. The contents, form and issuing
               procedures of the notice shall comply with the requirements of
               the Rules and Procedures for the Shareholders' General
               Meetings.

Article 69     Any shareholder who is entitled to attend and vote at a
               general meeting of the Company shall be entitled to appoint one
               (1) or more persons (whether such person is a shareholder or
               not) as his proxy or proxies to attend and vote on his behalf,
               and a proxy so appointed shall be entitled to exercise the
               following rights pursuant to the authorization from that
               shareholder:

               (1)    the shareholders' right to speak at the meeting;

               (2)    the right to demand or join in demanding a poll;

               (3)    the right to vote by hand or on a poll, but a proxy of a
                      shareholder who has appointed more than one (1) proxy may
                      only vote on a poll.

               If the said shareholder is a recognized clearing house as
               defined by Securities and Futures (Clearing House) Ordinance
               (Chapter 420 of Hong Kong Law) or the Securities and Futures
               Ordinance, the shareholder may authorize one or more suitable
               person to act as its representative at any shareholders' general
               meeting or any kinds of shareholders' general meeting; however,
               if more than one person are authorized, the power of attorney
               shall clearly indicate the number and types of the stocks
               involved by way of the said authorization. The persons after
               such authorization may represent the recognized clearing house
               (or its "proxy") to exercise the rights, as if they were the
               individual shareholders of the Company.

Article 70     The instrument appointing a proxy to attend the general meeting
               shall be in writing clearly indicating the number of shares of
               the appointor represented by the proxy and shall be under the
               hand of the appointor or his attorney duly authorized in
               writing, or if the appointor is a legal person, either under
               seal or under the hand of a director or a duly authorized
               attorney. If several proxies are appointed, such written
               instrument shall clearly indicate the number of shares of the
               appointor represented by each proxy. The remaining contents and
               form of the instrument shall comply with the requirements of the
               Rules and Procedures for the Shareholders' General Meetings.

Article 71     Any form given to a shareholder by the directors for use by
               such shareholder for the appointment of a proxy to attend and
               vote at meetings of the Company shall be such as to enable the
               shareholder to freely instruct the proxy to vote in favour of
               or against the motions, such instructions being given in
               respect of each individual matter to be voted on at the
               meeting. Such a form shall contain a statement that, in the
               absence of specific instructions from the shareholder, the
               proxy may vote as he thinks fit.

Article 72     A vote made in accordance with the terms of a proxy shall be
               valid notwithstanding the death or loss of capacity of the
               appointor or revocation of the proxy or the authority under
               which the proxy was executed, or the transfer of the shares in
               respect of which the proxy is given, provided that the Company
               did not receive any written notice in respect of such matters
               before the commencement of the relevant meeting.

Article 73     Apart from the independent directors, the Company's board of
               directors and shareholders who meet the relevant requirements
               may also collect from other shareholders of the Company the
               rights to vote in a shareholders' general meeting. The
               collection of voting rights shall be without consideration with


                                      15
<PAGE>

               sufficient disclosure of information to the shareholders from
               whom voting rights are being collected.

Article 74     When a connected transaction is discussed in a shareholders'
               general meeting, the connected shareholders shall not take part
               in the voting and the number of voting shares represented by
               him will not be counted in. Announcements of resolutions made
               in the shareholders in a general meeting shall make full
               disclosure of the votes cast by non-connected shareholders.

               If any shareholder are required to abstain from voting or may
               only vote for or against a matter according to the Rules
               Governing the Listing of Securities of the Hong Kong Stock
               Exchange Limited, any vote by such shareholder or his proxy in
               violation of the relevant rules or restrictions referred to
               above shall not be counted in the voting results.

Article 75     A shareholder (including a proxy), when voting at a
               shareholders' general meeting, may exercise such voting rights
               as are attached to the number of voting shares which he
               represents except when the accumulated voting system under
               Article 103 hereof regarding election of directors is adopted in
               which case one (1) vote is attached to each share. Please refer
               to the Rules and Procedures for the Shareholders' General
               Meetings for the implementation of the accumulated voting
               system.

Article 76     At any shareholders' general meeting, a resolution shall be
               decided on a show of hands unless a poll is demanded or
               otherwise required by the listing rules of the stock exchanges
               on which the Company's shares are listed:

               (1)    by the chairman of the meeting;

               (2)    by at least two (2) shareholders present in person or by
                      proxy entitled to vote thereat;

               (3)    by one (1) or more shareholders present in person or by
                      proxy and representing 10 % or more of all shares
                      carrying the right to vote at the meeting singly or in
                      aggregate, before or after a vote is carried out by a
                      show of hands.

               Unless a poll is demanded, a declaration by the chairman that a
               resolution has been passed on a show of hands and the record of
               such in the minutes of the meeting shall be conclusive evidence
               of the fact that such resolution has been passed. There is no
               need to provide evidence of the number or proportion of votes in
               favour of or against such resolution.

               The demand for a poll may be withdrawn by the person who demands
               the same.

Article 77     A poll demanded on the election of the chairman of the
               meeting, or on a question of adjournment of the meeting, shall
               be taken forthwith. A poll demanded on any other question shall
               be taken at such time as the chairman of the meeting directs,
               and any business other than that upon which a poll has been
               demanded may be proceeded with, pending the taking of the poll.
               The result of the poll shall be deemed to be a resolution of
               the meeting at which the poll was demanded.

Article 78     On a poll taken at a meeting, a shareholder (including a proxy)
               entitled to two (2) or more votes need not cast all his votes in
               the same way.

Article 79     In the case of an equality of votes, whether on a show of
               hands or on a poll, the chairman of the meeting at which the
               show of hands takes place or at which the poll is demanded
               shall have a casting vote.

Article 80     Resolutions of shareholders' general meetings shall be divided
               into ordinary resolutions and special resolutions.

               An ordinary resolution must be passed by votes representing more
               than one-half of the voting rights represented by the
               shareholders (including their proxy) present at the meeting.

               A special resolution must be passed by votes representing more
               than two-thirds of the voting rights represented by the
               shareholders (including their proxy) present at the meeting.

               The shareholders (including their proxy) attending the meeting
               shall clearly show approval or objection to every matter to be
               voted on. As for the unpolled vote or abstention, the Company


                                      16
<PAGE>

               will not treat it as the vote with voting right when calculating
               the voting result of this matter.

Article 81     The following matters shall be resolved by an ordinary
               resolution at a shareholders' general meeting:

               (1)    work reports of the board of directors and the
                      supervisory committee;

               (2)    profit distribution plans and loss recovery plans
                      formulated by the board of directors;

               (3)    removal of members of the board of directors and members
                      of the supervisory committee who are shareholders'
                      representatives, their remuneration and manner of payment
                      and their liability insurance;

               (4)    annual preliminary and final budgets, balance sheets and
                      profit and loss accounts and other financial statements
                      of the Company;

               (5)    matters other than those which are required by the laws
                      and administrative regulations or by the Company's
                      Articles of Association to be adopted by special
                      resolution.

Article 82     The following matters shall be resolved by a special
               resolution at a shareholders' general meeting:

               (1)    the increase or reduction in share capital and the issue
                      of shares of any class, warrants and other similar
                      securities;

               (2)    the issue of debentures of the Company;

               (3)    the division, merger, dissolution and liquidation of the
                      Company;

               (4)    amendment of the Company's Articles of Association;

               (5)    repurchase of the Company's shares;

               (6)    any other matters considered by the shareholders in
                      general meeting, and resolved by way of an ordinary
                      resolution, to be of a nature which may have a material
                      impact on the Company and should be adopted by special
                      resolutions.

Article 83     The chairman of the meeting shall be responsible for
               determining whether a resolution has been passed. His decision,
               which shall be final and conclusive, shall be announced at the
               meeting and recorded in the minutes.

Article 84     If the chairman of the meeting has any doubt as to the
               result of a resolution which has been put to vote at a
               shareholders' meeting, he may have the votes counted. If the
               chairman of the meeting has not counted the votes, any
               shareholder who is present in person or by proxy and who
               objects to the result announced by the chairman of the meeting
               may, immediately after the declaration of the result, demand
               that the votes be counted and the chairman of the meeting shall
               have the votes counted immediately.

Article 85     If votes are counted at a shareholders' general meeting, the
               result of the count shall be recorded in the minutes.

Article 86     Records of Meetings shall be prepared for shareholders'
               general meetings and signed by attending directors and the
               recording person. If there is no director attending in the
               general meeting, the records of meeting shall be signed by the
               shareholder or proxy of shareholder chairing the meeting and
               the recording person. The contents and form of the records of
               meeting shall comply with the requirements of the Rules and
               Procedures for the Shareholders' General Meetings.

               The minutes of meeting shall be prepared for all resolutions
               adopted at shareholders' general meetings. The records and
               minutes of the meeting shall be made in Chinese. The minutes,
               together with the shareholders' attendance lists and proxy forms
               shall be treated as a Company file and kept by the secretary of
               the board of directors at the Company's place of residence.

Article 87     Copies of the minutes of proceedings of any shareholders'
               meeting shall, during business hours of the Company, be open
               for inspection by any shareholder without charge. If a
               shareholder requests for a copy of such minutes from the
               Company, the Company shall send a copy of such minutes to him
               within seven (7) days after receipt of reasonable fees
               therefor.


                                      17
<PAGE>

       CHAPTER 9 SPECIAL PROCEDURES FOR VOTING BY A CLASS OF SHAREHOLDERS

Article 88     Those shareholders who hold different classes of shares are
               class shareholders.

               Class shareholders shall enjoy rights and assume obligations in
               accordance with laws, administrative regulations and the
               Company's Articles of Association.

Article 89     Rights conferred on any class of shareholders ("class
               rights") may not be varied or abrogated save with the approval
               of a special resolution of shareholders in a general meeting
               and by holders of shares of that class at a separate meeting
               conducted in accordance with Articles 91 to 95 hereof.

Article 90     The following circumstances shall be deemed to be variation or
               abrogation of the rights attaching to a particular class of
               shares:

               (1)    to increase or decrease the number of shares of that
                      class, or to increase or decrease the number of shares of
                      a class having voting or equity rights or privileges
                      distribution or superior to those of shares of that
                      class;

               (2)    to exchange all or part of the shares of that class for
                      shares of another class or to exchange or to create a
                      right to exchange all or part of the shares of another
                      class for shares of that class;

               (3)    to remove or reduce rights to accrued dividends or rights
                      to cumulative dividends attached to shares of that class;

               (4)    to reduce or remove preferential rights attached to
                      shares of that class to receive dividends or to the
                      distribution of assets in the event that the Company is
                      liquidated;

               (5)    to add, remove or reduce conversion privileges, options,
                      voting rights, transfer or pre-emptive rights, or rights
                      to acquire securities of the Company attached to shares
                      of that class;

               (6)    to remove or reduce rights to receive payment payable by
                      the Company in specific currencies attached to shares of
                      that class;

               (7)    to create a new class of shares having voting or
                      distribution rights or privileges equal or superior to
                      those of the shares of that class;

               (8)    to restrict the transfer or ownership of shares of that
                      class or to increase the types of restrictions attaching
                      thereto;

               (9)    to issue rights to subscribe for, or to convert the
                      existing shares into, shares in the Company of that class
                      or another class;

               (10)   to increase the rights or privileges of shares of another
                      class;

               (11)   to restructure the Company in such a way so as to result
                      in the disproportionate distribution of obligations
                      between the various classes of shareholders;

               (12)   to vary or abrogate the provisions of this Chapter.

Article 91     Affected class shareholders, whether or not otherwise having the
               right to vote at shareholders' general meetings, have the right
               to vote at class meetings in respect of matters concerning
               sub-paragraphs (2) to (8), (11) and (12) of Article 90 hereof,
               but interested shareholder(s) shall not be entitled to vote at
               such class meetings.

               "(An) interested shareholder(s)", as such term is used in the
               preceding paragraph, means:

               (1)    in the case of a repurchase of shares by way of a general
                      offer to all shareholders of the Company or by way of
                      public dealing on a stock exchange pursuant to Article 29


                                      18
<PAGE>

                      hereof, an interested shareholder is a "controlling
                      shareholder" within the meaning of Article 56 hereof;

               (2)    in the case of a repurchase of shares by an off-market
                      agreement pursuant to Article 29 hereof, a holder of the
                      shares to which the proposed agreement relates;

               (3)    in the case of a restructuring of the Company, a
                      shareholder who assumes a relatively lower proportion of
                      obligation than the obligations imposed on shareholders
                      of that class under the proposed restructuring or who has
                      an interest in the proposed restructuring different from
                      the general interests of the shareholders of that class.

Article 92     Resolutions of a class of shareholders shall be passed by votes
               representing more than two-thirds of the voting rights of
               shareholders of that class represented at the relevant meeting
               who, according to Article 91, are entitled to vote thereat.

Article 93     A written notice of a class meeting shall be given to all
               shareholders who are registered as holders of that class in the
               register of shareholders forty-five (45) days before the date of
               the class meeting (not including the date of meeting). Such
               notice shall give such shareholders notice of the matters to be
               considered at such meeting, the date and the place of the class
               meeting. A shareholder who intends to attend the class meeting
               shall deliver his written reply in respect thereof to the
               Company twenty (20) days before the date of the class meeting.

               If the shareholders who intend to attend such class meeting
               represent more than half of the total number of shares of that
               class which have the right to vote at such meeting, the Company
               may hold the class meeting; if not, the Company shall within
               five (5) days give the shareholders further notice of the
               matters to be considered, the date and the place of the class
               meeting by way of public announcement. The Company may then hold
               the class meeting after such public announcement has been made.

Article 94     Notice of class meetings need only be served on shareholders
               entitled to vote thereat.

               Class meetings shall be conducted in a manner which is as
               similar as possible to that of shareholders' general meetings.
               The provisions of the Company's Articles of Association relating
               to the manner for the conduct of shareholders' general meetings
               are also applicable to class meetings.

Article 95     Apart from the holders of other classes of shares, the
               holders of the Domestic-Invested Shares and holders of
               Overseas-Listed Foreign-Invested Shares shall be deemed to be
               holders of different classes of shares.

               The special procedures for approval by a class of shareholders
               shall not apply in the following circumstances:

               (1)    where the Company issues, upon the approval by special
                      resolution of its shareholders in a general meeting,
                      either separately or concurrently once every twelve (12)
                      months, not more than 20% of each of its existing issued
                      Domestic-Invested Shares and Overseas-Listed
                      Foreign-Invested Shares; or

               (2)    where the Company's plan to issue Domestic-Invested
                      Shares and Overseas-Listed Foreign-Invested Shares at the
                      time of its establishment is carried out within fifteen
                      (15) months from the date of approval of the securities
                      regulatory organ of the State Council.

                         CHAPTER 10 BOARD OF DIRECTORS

Article 96     The Company shall have a board of directors which is accountable
               to shareholders.

               The Company shall draw up Rules and Procedures for the Board of
               Directors' Meetings for implementation after being approved by
               the shareholders in a general meeting. The Rules and Procedures
               for the Board of Directors' Meetings shall include the following
               items:

               (1)    functions and powers and authorizations of the board of
                      directors;

               (2)    establishment of the board of directors and its
                      subordinated offices;


                                      19
<PAGE>

               (3)    secretary of the board of directors;

               (4)    discussion system of a board meeting;

               (5)    discussion procedures of a board meeting;

               (6)    disclosure of information of a board meeting;

               (7)    implementation and feedback of resolutions of a board
                      meeting;

               (8)    other matters deemed necessary by the shareholders'
                      general meeting.

               The Rules and Procedures for the Board of Directors' Meetings is
               an integral part of and shall have the same legal effect as
               these Articles of Association.

Article 97     The board of directors shall consist of twelve (12) directors
               and there shall be one (1) Chairman and one (1) Vice-chairman.

Article 98     Directors of the Company shall be natural persons and they are
               not required to hold any shares in the Company.

               Directors shall be elected at the shareholders' general meeting
               each for a term of three (3) years. The term of office of a
               director shall be calculated from the date of the passing of the
               resolution approving the appointment of such director at the
               shareholders' general meeting until the expiry of the term of
               the present session of the board of directors. At the expiry of
               the term of office of a director, the term is renewable upon
               re-election. A director may not be removed by the shareholders
               in a general meeting without any reason before his term of
               office expires. The term of office of any independent director
               may not be renewed for more than 6 years.

Article 99     The list of candidates for directors shall be submitted to the
               shareholders' general meeting in the form of motion for
               approval.

               Candidates other than those for independent directors shall be
               nominated by the board of directors, the supervisory committee
               or shareholders who individually or jointly hold 5% or more of
               the Company's voting shares and be elected by the shareholders
               in a general meeting.

               Candidates for independent directors of the Company shall be
               nominated by the Company's board of directors, the supervisory
               committee or shareholders who individually or jointly hold 1% or
               more of the Company's voting shares and be elected by the
               shareholders in a general meeting.

Article 100    Independent directors shall be elected in the following manner:

               (1)    the nominator of a candidate for independent director
                      shall seek the consent of the nominee, find out the
                      occupation, academic qualification, rank and detailed
                      working experience including all part-time jobs of the
                      nominee and provide written proofs of the same to the
                      Company before making the nomination. The candidate shall
                      give a written undertaking to the Company agreeing to be
                      nominated, undertaking the truthfulness and completeness
                      of his particulars disclosed and guaranteeing the
                      performance of a director's duties after being elected.

               (2)    the nominator of an independent director shall give
                      opinion on the qualification and independence of the
                      nominee to act as an independent director. The nominee
                      shall make an open announcement as to the absence of any
                      relation between the Company and him which would affect
                      his independent and objective judgment.

               (3)    if the nomination of candidates for independent directors
                      is made before the Company's convening of a board
                      meeting, the written proofs of the nominee referred to in
                      sub-paragraphs (1) and (2) above shall be disclosed
                      together with the board resolution.

               (4)    if the shareholders who individually or jointly hold 5%
                      or more of the Company's voting shares or the supervisory
                      committee puts forward a provisional motion in a general
                      meeting of the Company according to law for election of
                      independent directors, a written notice stating their


                                      20
<PAGE>

                      intention to nominate a candidate for directors and the
                      nominee's consent to be nominated together with the
                      written proofs and undertaking of the nominee referred to
                      in sub-paragraphs (1) and (2) above shall be delivered to
                      the Company not less than seven (7) days before the
                      general meeting, and the period granted by the Company
                      for lodging the above notice and documents by the
                      relevant nominator (such period shall commence from the
                      date after the issue of the notice of the general
                      meeting) shall not be less than seven (7) days

               (5)    before the shareholders' general meeting for election of
                      independent directors is convened, the Company shall
                      submit the relevant information of all nominees to the
                      securities regulatory authority of the State Council, the
                      organ appointed by the securities regulatory authority of
                      the State Council in the place of residence of the
                      Company and the stock exchange on which the Company's
                      shares are listed. The written opinions of the board of
                      directors shall also be submitted in case the Company's
                      board has any dispute as to the particulars of the
                      nominee. If the securities regulatory authority of the
                      State Council opposes to the nomination of any nominee,
                      this nominee may not be included as a candidate for
                      independent directors. In convening a general meeting to
                      elect independent directors, the Company's board shall
                      specify if the securities regulatory authority of the
                      State Council has any dispute as to the candidates for
                      independent directors.

Article 101    Non-independent directors shall be elected in the following
               manner:

               (1)    the nominator of a candidate for non-independent director
                      shall seek the consent of the nominee, find out the
                      occupation, academic qualification, rank and detailed
                      working experience including all part-time jobs of the
                      nominee and provide written proofs of the same to the
                      Company before making the nomination. The candidate shall
                      give a written undertaking to the Company agreeing to be
                      nominated, undertaking the truthfulness and completeness
                      of his particulars disclosed and guaranteeing the
                      performance of a director's duties after being elected.

               (2)    if the nomination of candidates for non-independent
                      directors is made before the Company's convening of a
                      board meeting, the written proofs of the nominee referred
                      to in sub-paragraph (1) above shall be disclosed together
                      with the board resolution.

               (3)    if the shareholders who individually or jointly hold 5%
                      or more of the Company's voting shares or the supervisory
                      committee puts forward a provisional motion in a general
                      meeting of the Company according to law for election of
                      non-independent directors, a written notice stating their
                      intention to nominate a candidate for directors and the
                      nominee's consent to be nominated together with the
                      written proofs and undertaking of the nominee referred to
                      in sub-paragraph (1) above shall be delivered to the
                      Company not less than seven (7) days before the general
                      meeting, and the period granted by the Company for
                      lodging the above notice and documents by the relevant
                      nominator (such period shall commence from the date after
                      the issue of the notice of the general meeting) shall not
                      be less than seven (7) days".

Article 102    The following basic requirements shall be met in order to be an
               independent director:

               (1)    qualified to be a director of a listed company under the
                      laws, administrative regulations and other relevant
                      provisions;

               (2)    has the independence required by these Articles of
                      Association;

               (3)    has basic knowledge of the operation of a listed company,
                      familiar with the relevant laws, administrative rules,
                      regulations and rules;

               (4)    has 5 years or more of legal or financial experience or
                      other experience in performing the duties of an
                      independent director;

               (5)    other requirements stipulated in these Articles of
                      Association.

Article 103    If the controlling shareholders of the Company control 30% or
               more of the Company's shares, the accumulative voting system
               shall be adopted when voting on the election of directors in a
               shareholders' general meeting, that is, in electing two or more
               directors in a shareholders' general meeting, the number of
               votes attached to each share held by a participating shareholder
               shall be equal to the number of candidates, in which case the
               shareholder may cast his votes for one candidate or for several
               candidates. Please refer to the Rules and Procedures for the


                                      21
<PAGE>

               Shareholders' General Meetings for details of implementation of
               the accumulative voting system.

Article 104    Provided that the relevant laws and administrative rules are
               observed, a director whose term of office has not yet been
               expired may be removed in a general meeting by way of ordinary
               resolution (but the right to lodge a claim under a contract is
               not affected).

               If a director has failed to attend a board meeting personally
               nor appoint a proxy to attend on his behalf on two consecutive
               occasions, it shall be treated as a failure to discharge his
               duties. The board of directors shall propose in a shareholders'
               general meeting to remove and replace this director.

               If an independent director has failed to attend a board meeting
               personally on three consecutive occasions, the board of
               directors shall propose in a shareholders' general meeting to
               remove and replace this director. Unless in the above
               circumstances and in circumstances as provided in the Company
               Law where a person is prohibited from acting as a director, no
               independent director may be removed before his term of office
               expires. In case of early removal, the Company shall disclose it
               by way of special disclosure. If the removed independent
               director considers that he is removed by the Company improperly,
               he may make an open declaration.

Article 105    A director may resign before his term of office expires. In
               resigning his duties, a director shall tender a resignation to
               the board in writing and in the case of an independent director,
               he shall also specify any matter which is related to his
               resignation or which he considers necessary to bring to the
               attention of the Company's shareholders and creditors.

Article 106    If the resignation of a director causes the board members of the
               Company to fall below the minimum number of members to form a
               quorum, the resignation of this director shall be effective only
               after the succeeding director has filled his vacancy. The board
               shall call an EGM as soon as possible to elect a director to
               fill the vacancy caused by his resignation. Before a resolution
               is made in a shareholders' general meeting in relation to the
               election of directors, the functions and powers of this
               resigning director and other remaining directors shall be
               subject to reasonable restrictions.

               If the resignation of an independent director causes the
               proportion of independent directors in the board of the Company
               to fall below the minimum requirements of the relevant
               regulatory authorities, the resignation of this independent
               director shall be effective only after the succeeding
               independent director has filled his vacancy.

Article 107    The board of directors shall exercise the following functions
               and powers:

               (1)    to be responsible for the convening of the shareholders'
                      general meeting and to report on its work to the
                      shareholders in general meetings;

               (2)    to implement the resolutions passed by the shareholders
                      in general meetings;

               (3)    to determine the Company's business plans and investment
                      proposals;

               (4)    to formulate the Company's annual preliminary and final
                      financial budgets;

               (5)    to formulate the Company's profit distribution proposal
                      and loss recovery proposal;

               (6)    to formulate proposals for the credit and financial
                      policies of the Company, the increase or reduction of the
                      Company's registered capital and for the issue of any
                      kind of securities of the Company's (including but
                      without limitation to the Company's debentures) and
                      proposals for listing and repurchase of the Company's
                      shares;

               (7)    to draw up plans for significant acquisition or disposal
                      proposals, the merger, division or dissolution of the
                      Company;

               (8)    to determine the risks investments of the Company
                      according to the authority given in the shareholders'
                      general meeting;


                                      22
<PAGE>

               (9)    to determine external guarantees (including pledging of
                      assets) of the Company according to the authority given
                      in the shareholder's general meeting

               (10)   to decide on the Company's internal management structure;

               (11)   to appoint or remove the Company's president and to
                      appoint or remove the vice-president and Chief Financial
                      Officer of the Company according to the recommendations
                      of the president; to appoint or remove the secretary of
                      the board of directors and to decide on their
                      remuneration;

               (12)   to appoint or replace the members of the board of
                      directors and the supervisory committee of its
                      wholly-owned subsidiary, appoint, replace or recommend
                      the shareholders' proxies, directors (candidates) and
                      supervisors (candidates) of its subsidiary(ies) which are
                      controlled or invested by the Company;

               (13)   to determine the establishment of Company's branch
                      offices;

               (14)   to formulate proposals for any amendment of the Company's
                      Articles of Association and its appendices;

               (15)   to formulate the Company's basic management system;

               (16)   to manage the disclosure of information of the Company;

               (17)   to propose in a shareholders' general meeting to engage
                      or replace the accounting firm which undertakes auditing
                      work of the Company;

               (18)   to listen to the president's work report and check the
                      president's work;

               (19)   to determine important matters and administrative matters
                      of the Company other than those which should be
                      determined by resolution of a shareholders' general
                      meeting of the Company except for the matters as
                      specified by law, administrative rules, regulations of
                      the competent department(s) and these Articles of
                      Association, and to sign other important agreements;

               (20)   to exercise any other powers stipulated by laws,
                      administrative rules, regulations of the competent
                      department(s) or these Articles of Association and
                      conferred by the shareholders in a general meeting.

               Other than the board of directors' resolutions in respect of the
               matters specified in sub-paragraphs (6), (7), (9) and (14) of
               this Article which shall be passed by the affirmative vote of
               more than two-thirds of all the directors, the board of
               directors' resolutions in respect of all other matters may be
               passed by the affirmative vote of a simple majority of the
               directors.

Article 108    The above functions and powers of board meetings may be
               authorized to one or more directors upon the agreement of all
               directors, but matters concerning material interests of the
               Company shall be determined by the board collectively. The
               authorization of the board shall be clear and specific.

Article 109    An independent director shall have the following special
               functions and powers in addition to those conferred by the
               Company Law, other relevant laws, administrative rules and these
               Articles of Association:

               (1)    material connected transactions (determined according to
                      the standards issued from time to time by the relevant
                      regulatory authorities in the place where the Company's
                      shares are listed) which should be approved by the board
                      of directors or the shareholders' general meeting
                      according to law shall, upon the recognition of
                      independent directors, be submitted to the board of
                      directors for discussion. Any resolution made by the
                      board of directors regarding the Company's connected
                      transactions must only be effective after it has been
                      signed by the independent directors. The independent
                      directors may, before making a judgment, engage an
                      intermediary to issue an independent financial report for
                      them to rely upon in making the judgment;

               (2)    to propose to the board of directors to engage or remove
                      an accounting firm;

               (3)    two or more than one-half of the independent directors
                      may propose to the board of directors to convene an EGM;


                                      23
<PAGE>

               (4)    to propose the calling of a board meeting;

               (5)    to engage an external auditing or advisory organ
                      independently;

               (6)    to collect voting rights from shareholders prior to the
                      convening of a shareholders' general meeting;

               (7)    to report directly to the shareholders' general meetings,
                      securities regulatory organ under the State Council and
                      other relevant departments.

               The independent directors shall seek the consent of more than
               half of the independent directors in exercising their functions
               and powers other than sub-paragraphs (1) and (3) above.

               If the above proposal is not accepted or the above functions and
               powers are not exercised properly, the Company shall disclose
               the same.

Article 110    When the board of directors make the decisions in respect of
               market development, mergers and acquisitions and the investment
               in new areas etc., in case the investment amount or the asset
               value thus merged and acquired exceeds more than 10 (ten)
               percent of total assets of the Company, the board of directors
               shall invite the consulting organizations for their professional
               opinions, these opinions shall serve as the important basis for
               decision-making by the board of directors.

               The board of directors shall lay down strict procedures to
               inspect and decide on risks investments. For major investment
               projects in excess of the approval limit of the board of
               directors, the board of directors shall organize the relevant
               experts and professional officers to conduct assessment for
               approval of the shareholders in a general meeting. Matters
               regarding risks investments have been provided explicitly in the
               Rules and Procedures for the Board of Directors' Meetings.

Article 111    The Chairman and the Vice-Chairman shall be directors of the
               Company and be appointed and removed by affirmative vote of a
               simple majority of all directors. The term of office of the
               Chairman or the Vice-Chairman shall be three (3) years which
               term is renewable upon re-election.

Article 112    The Chairman of the board of directors shall exercise the
               following functions and powers:

               (1)    to preside over shareholders' general meetings and to
                      convene and preside over meetings of the board of
                      directors;

               (2)    to co-ordinate and perform the responsibilities of the
                      board of directors and review on the implementation of
                      resolutions passed by the board of directors at
                      directors' meetings;

               (3)    to sign the certificates of shares, debentures and other
                      valuable securities issued by the Company;

               (4)    to sign important documents of the board and other
                      documents which should be signed by the Company's legal
                      representative;

               (5)    to exercise the functions and powers of a legal
                      representative;

               (6)    where it is lawful and in the interest of the Company, to
                      exercise the special right to deal with the Company's
                      affairs during emergency such as the occurrence of
                      natural disasters, and to report to the Company's board
                      of directors and general meetings thereafter;

               (7)    to exercise other powers conferred by the board of
                      directors.

               Whenever the Chairman is unable to exercise his powers, such
               powers shall be exercised by the Vice-Chairman or other
               directors who have been designated by the Chairman to exercise
               such powers on his behalf.

Article 113    Board meetings shall be convened regularly at least four times a
               year. An EGM shall be called for on occurrence of any of the
               events set out in the Rules and Procedures for the Board of
               Directors' Meetings.


                                      24
<PAGE>

               In convening a regular board meeting or an EGM, a notice shall
               be given to all directors 10 days before the meeting. The
               calling for a board meeting, and the contents and form of a
               notice of meeting shall comply with the requirements of the
               Rules and Procedures for the Board of Directors' Meetings.

Article 114    Meetings of the board of directors shall be held only if more
               than half of the directors (including any alternate director
               appointed) are present. Each director shall have one (1) vote.
               Where there is an equality of votes cast both for and against a
               resolution, the Chairman of the board of directors shall have an
               additional vote.

Article 115    Directors shall attend the meetings of the board of directors in
               person. Where a director is unable to attend a meeting for any
               reason, he may by a written power of attorney appoint another
               director to attend the meeting on his behalf. The power of
               attorney shall set out the scope of authorization.

               A director appointed as a representative of another director to
               attend the meeting shall exercise the rights of a director
               within the scope of authority conferred by the appointing
               director. Where a director is unable to attend a meeting of the
               board of directors and has not appointed a representative to
               attend the meeting on his behalf, he shall be deemed to have
               waived his right to vote at the meeting.

               All expenses incurred by the directors for attending the board
               meeting shall be borne by the Company, including the traffic
               expense from the place where the director is located to the
               place where the meeting is convened, as well as the board and
               lodging expenses during the term of meeting. The miscellaneous
               expenses such as the rental of meeting room and the local
               traffic expenses etc. shall also be borne by the Company.

Article 116    The board of directors may accept the preparation of
               a written resolution instead of convening a board meeting
               provided that the contents and form of the written resolution
               are in compliance with the Rules and Procedures for the Board of
               Directors' Meetings.

Article 117    Matters determined in a board meeting shall be recorded in
               Chinese in the form of Records of Meeting. The contents and form
               of Records of Board Meetings shall comply with the Rules and
               Procedures for the Board of Directors' Meetings.

Article 118    If a written motion of a board meeting is not prepared in
               accordance with the stipulated procedures, it will not have the
               effect of a board resolution even if each director has expressed
               his view thereto. Directors shall be liable for board
               resolutions. If a board resolution is against the law,
               administrative rules or these Articles of Association and thus
               causes the Company to suffer any loss, the directors who cast an
               affirmative vote for the motion shall assume direct liability
               (including the liability to compensate); directors who are
               proved to have cast a dissenting vote against the motion during
               the voting as recorded in the records of meeting shall be
               exempted from liability; directors who abstained from voting or
               failed to attend nor appoint a proxy to attend the board meeting
               shall not be exempted from liability; and directors who opposed
               to the motion but did not cast a dissenting vote against it in
               the voting shall not be exempted from liability either.

                 CHAPTER 11 SECRETARY OF THE BOARD OF DIRECTORS

Article 119    The Company shall have one (1) secretary of the board of
               directors. The secretary shall be a senior officer of the
               Company accountable to the Company. The Company shall formulate
               regulations in relation to the work of the Secretary of the
               Board to promote the management of the Company and make
               provisions for disclosure of information and investor relations.

               The board of directors may establish its secretarial department
               when necessary.

Article 120    A director or the president, vice-president, Chief Financial
               Officer of the Company may concurrently act as the secretary of
               the Company's board of directors. No accountant of the
               accounting firm or solicitor of the solicitors' firm engaged by
               the Company may concurrently act as the secretary of the
               Company's board of directors.

               The secretary of the Company's board of directors shall be a
               natural person who has the requisite professional knowledge and
               experience, and shall be nominated by the Chairman of the Board
               and appointed or removed by the board of directors. In the case
               of a director acting concurrently as the secretary of the board,


                                      25
<PAGE>

               if an act has to be performed by a director and the secretary of
               the board respectively, this director acting concurrently as the
               secretary of the board may not act in both identities.

Article 121    The main duties of the secretary of the board of directors
               include:

               (1)    to assist directors to deal with the daily matters of the
                      board of directors, continuously provide, remind and
                      ensure directors and the president, etc. to be well
                      informed of the laws, regulations, policies and
                      requirements of both domestic and overseas regulatory
                      organizations concerning the operation of the Company,
                      and assist directors and managers to practically
                      implement the domestic and foreign laws, regulations,
                      Company's Articles of Association and other regulations
                      when performing their duties and powers;

               (2)    to be responsible for the organization and preparation of
                      the documents of the board of directors and shareholders'
                      general meeting, well prepare the meeting record work,
                      ensure the meeting policies in conformity with the legal
                      procedures, and to keep abreast of the execution of the
                      resolutions of the board of directors;

               (3)    to be responsible for the organization and coordination
                      of information disclosure, to ensure of a timely,
                      accurate, lawful, true and complete disclosure of
                      information, coordination of the relationship with the
                      investors, and enhancement of the transparency of the
                      Company;

               (4)    to participate in and organize the financing in capital
                      market;

               (5)    to deal with the relationships with the intermediary
                      organs, regulatory authorities and the media, and
                      maintain a good public relationship.

Article 122    The secretary of the board of directors shall discharge his
               duties diligently according to these Articles of Association.

               The secretary of the board of directors shall assist the Company
               to comply with the relevant PRC law and regulations of the
               securities regulatory organ of the place where the Company's
               shares are listed.

                              CHAPTER 12 PRESIDENT

Article 123    The Company shall have a president who is accountable to the
               board of directors. The president shall be nominated by the
               Chairman of the board of directors and appointed or removed by
               the board of directors.

               The Company shall have several vice-presidents, and one Chief
               Financial Officer who shall assist the president in work. The
               vice-presidents and the Chief Financial Officer shall be
               nominated by the president and appointed or removed by the board
               of directors.

               A director may also be engaged to act concurrently as the
               president, vice-president, Chief Financial Officer or secretary
               of the board of directors, but the number of directors acting
               concurrently as the president, vice-president, Chief Financial
               Officer or secretary of the board of directors may not exceed
               one-half of the total number of directors of the Company.

Article 124    The president shall exercise the following duties and powers:

               (1)    to be in charge of the Company's production, operation
                      and management, to co-ordinate the implementation of the
                      resolutions of the board of directors and to report his
                      work to the board of directors;

               (2)    to organize the implementation of the Company's annual
                      business plan and investment proposal;

               (3)    to draft plans for the establishment of the Company's
                      internal management structure;

               (4)    to draft plans for the establishment of the branch
                      company of the Company;


                                      26
<PAGE>

               (5)    to draft the Company's basic management system;

               (6)    to formulate specific rules and regulations for the
                      Company;

               (7)    to propose the appointment or dismissal of the Company's
                      vice-president(s) and Chief Financial Officer;

               (8)    to appoint or dismiss management personnel other than
                      those required to be appointed or dismissed by the board
                      of directors;

               (9)    to determine the wages, fringe benefits, rewards and
                      punishments of the Company's staff, to determine the
                      appointment and dismissal of the Company's staff;

               (10)   to propose the convening of extraordinary meetings of
                      directors;

               (11)   other powers conferred by the Company's Articles of
                      Association and the board of directors.

Article 125    The president or vice-president who is not a director shall have
               the right to attend board meetings and to receive notices of
               meetings and other relevant documents but does not have any
               voting rights at board meetings.

Article 126    The president shall at the request of the board of directors or
               the supervisory committee make report of the signing and
               performance of major contracts, use of funds and profit and loss
               of the Company. The president must ensure the truthfulness of
               the report.

Article 127    The president shall seek the opinions of the staff members in
               determining matters which are closely related to staff members
               such as the wages, fringe benefits, safe production and work,
               labour insurance, dismissal (or discharge) of staff members of
               the Company.

Article 128    The president shall draw up "Work Regulations for the President"
               for implementation upon the approval of the board of directors.

               The Work Regulations for the President shall include:

               (1)    requirements and procedures for the convening of a
                      presidents' meeting and the officers attending;

               (2)    the president, vice-presidents and Chief Financial
                      Officer shall divide their duties among themselves and
                      perform their own duties;

               (3)    use of the Company's funds and assets, authority to sign
                      major contracts and the system to report to the board of
                      directors and to the supervisory committee at the request
                      of the supervisory committee;

               (4)    other matters as the board of directors may consider
                      necessary.

Article 129    In performing their functions and powers, the president,
               vice-presidents and the Chief Financial Officer shall act
               honestly and diligently and in accordance with laws,
               administrative regulations and these Articles of Association.
               They may not alter the resolutions of a shareholders' general
               meeting or of a board meeting nor act ultra vires.

Article 130    In retiring from their office, the president, vice-president or
               Chief Financial Officer shall, as required by the relevant
               labour contract between the above personnel and the Company,
               give prior notice to the Company and shall adhere to the
               relevant procedures and methods of resignation provided in the
               labour contract.

                        CHAPTER 13 SUPERVISORY COMMITTEE

Article 131    The Company shall have a supervisory committee which is
               accountable to the shareholders' general meetings.

               The Company shall draw up "Rules and Procedures for the
               Supervisors' Meetings" for implementation upon being approved by


                                      27
<PAGE>

               the shareholders in a general meeting. The Rules and Procedures
               for the Supervisors' Meetings shall include the followings:

               (1)    the formation and business system of the supervisory
                      committee;

               (2)    the functions and powers of the supervisory committee;

               (3)    the system of discussion of the supervisors' meetings;

               (4)    the procedures of discussion of the supervisory
                      committee;

               (5)    the disclosure of information of the supervisors'
                      meetings;

               (6)    implementation and feedback of resolutions of the
                      supervisory committee;

               (7)    other matters as the shareholders' general meetings may
                      consider necessary.

               The Rules and Procedures for the Supervisors' Meetings shall be
               an integral part of and have the same legal effect as these
               Articles of Association.

Article 132    The supervisory committee shall compose of ten (10) supervisors.
               Of which, six (6) of them shall be shareholder representatives
               (including those who are eligible to be external supervisors);
               four (4) of them shall be representatives of workers and staff
               of the Company.

               Each supervisor shall serve for a term of three (3) years, which
               term is renewable upon re-election and re-appointment.

               The supervisory committee shall have one (1) Chairman who shall
               be a supervisor. The election or removal of the Chairman of the
               supervisory committee shall be determined by two-thirds or more
               of the members of the supervisory committee.

               The Chairman of the supervisory committee shall co-ordinate and
               exercise the duties and powers of the supervisory committee.

Article 133    If necessary, the supervisory committee may establish its
               offices responsible for daily affairs of the supervisory
               committee.

Article 134    A director, president, vice-president or Chief Financial Officer
               may not act concurrently as a supervisor.

Article 135    The list of candidates for the supervisors who are shareholder
               representatives shall be submitted to the shareholders' general
               meeting in the form of motion for approval.

               Amongst the candidates for supervisors who are shareholder
               representatives, candidates other than those for independent
               supervisors shall be nominated by the Company's board of
               directors, the supervisory committee or shareholders who
               individually or jointly hold 5% or more of the Company's voting
               shares and be elected by the shareholders in a general meeting.

               Amongst the candidates for supervisors who are shareholder
               representative, candidates for independent supervisors shall be
               nominated by the Company's board of directors, the supervisory
               committee or shareholders who individually or jointly hold 1% or
               more of the Company's voting shares and be elected by the
               shareholders in a general meeting.

Article 136    Independent directors shall be elected in the following manner:

               (1)    the nominator of a candidate for supervisor who is a
                      shareholder representative shall seek the consent of the
                      nominee, find out the occupation, academic qualification,
                      rank and detailed working experience including all
                      part-time jobs of the nominee and provide written proofs
                      of the same to the Company before making the nomination.
                      The candidate shall give a written undertaking to the
                      Company agreeing to be nominated, undertaking the
                      truthfulness and completeness of his particulars

                                      28
<PAGE>

                      disclosed and guaranteeing the performance of a
                      director's duties after being elected.

               (2)    If the nomination of a candidate for supervisor who is a
                      shareholder representative is made before the Company's
                      convening of a board meeting, the written proofs of the
                      nominee referred to in sub-paragraphs (1) above shall be
                      disclosed together with the board resolution.

               (3)    If the shareholders who individually or jointly hold 5%
                      or more of the Company's voting shares or the supervisory
                      committee puts forward a provisional motion in an AGM of
                      the Company for election of a supervisor who is a
                      shareholder representative, a written notice stating
                      their intention to nominate a candidate for a supervisor
                      and the nominee's consent to be nominated together with
                      the written proofs and undertaking of the nominee
                      referred to in sub-paragraph (1) above shall be delivered
                      to the Company seven (7) days before the AGM.

Article 137    Any supervisor who fails to attend a supervisors' meeting
               personally on two consecutive occasions shall be treated as a
               failure to discharge his duties. In that case he shall be
               removed and replaced in a shareholders' general meeting or staff
               representatives' meeting. A supervisor may resign before his
               term expires and Chapter 10 hereof regarding resignation of
               directors shall also be applicable to supervisors.

Article 138    Supervisors' meetings shall be convened regularly at least four
               times a year. An extraordinary supervisors' meeting shall be
               convened on occurrence of any of the events specified in the
               Rules and Procedures for the Supervisors' Meetings.

               A 10 days' prior notice shall be given to all supervisors for
               the convening of a regular or extraordinary supervisors'
               meeting. The convening of a supervisors' meeting and the
               contents and form of the notice of meeting shall comply with the
               Rules and Procedures for the Supervisors' Meetings.

Article 139    The supervisory committee shall exercise the following functions
               and powers in accordance with law:

               (1)    to review the Company's financial position; to appoint
                      another accounting firm in the name of the Company to
                      review the Company's financial condition independently;

               (2)    to supervise the directors, president, vice-presidents,
                      Chief Financial Officer and secretary of the board to
                      ensure that they do not act in contravention of any law,
                      regulation or these Articles of Association;

               (3)    to demand the directors, president, vice-presidents,
                      Chief Financial Officer or secretary of the board to
                      rectify their error or even to report it in a
                      shareholders' general meeting or to the competent State
                      organ if they have acted in a harmful manner to the
                      Company's interest;

               (4)    to check and inspect the financial information such as
                      the financial report, business report and plans for
                      distribution of profits to be submitted by the board of
                      directors to the shareholders' general meetings and to
                      authorize, in the Company's name, publicly certified and
                      practicing accountants to assist in the review on such
                      information should any doubt arise in respect thereof;

               (5)    to make recommendations of accounting firms for
                      engagement by the Company;

               (6)    to make provisional motions in an AGM;

               (7)    to propose to convene an EGM;

               (8)    to propose to convene an extraordinary board meeting;

               (9)    to represent the Company in negotiations with or in
                      bringing actions against a director;

               (10)   other duties and powers as may be specified by law,
                      administrative rules, regulations of the competent
                      department and these Articles of Association and
                      conferred by the general meeting.


                                      29
<PAGE>

               Supervisors shall attend meetings of the board of directors.

Article 140    The supervisory committee may require the directors, president,
               vice-president, Chief Financial Officer, secretary of the board
               of directors of the Company, internal and external auditors to
               attend supervisors' meetings and answer any question that the
               supervisory committee may have regarding matter it cares about.

Article 141    Resolutions of the supervisory committee shall be passed by the
               affirmative vote of more than two-thirds of all of its members.

Article 142    Records shall be made for all supervisors' meetings and be
               signed by all attending supervisors and the recording person.
               Supervisors shall have the right to ask for the making of a
               descriptive record of what he speaks in the meeting. Records of
               supervisors' meetings shall be treated as the Company's files
               and kept permanently in the business system of the supervisory
               committee.

Article 143    All reasonable fees incurred in respect of the employment of
               professionals (such as, lawyers, certified public accountants or
               practicing auditors) which are required by the supervisory
               committee in the exercise of its functions and powers shall be
               borne by the Company.

Article 144    A supervisor shall carry out his duties faithfully and bona fide
               in accordance with laws, administrative regulations and the
               Company's Articles of Association.

          CHAPTER 14 QUALIFICATIONS AND OBLIGATIONS OF THE DIRECTORS,
                     SUPERVISORS, PRESIDENT, VICE-PRESIDENT, CHIEF FINANCIAL
                     OFFICER AND SECRETARY OF THE BOARD OF DIRECTORS OF THE
                     COMPANY

Article 145    A person may not serve as a director, supervisor, president,
               vice-president, Chief Financial Officer and secretary of the
               board of directors of the Company if any of the following
               circumstances apply:

               (1)    a person who does not have or who has limited capacity
                      for civil conduct;

               (2)    a person who has been found guilty of for corruption,
                      bribery, infringement of property or misappropriation of
                      property or other crimes which destroy the social
                      economic order, and the sentence is enforced for less
                      than five (5) years or a person who has been deprived of
                      his political rights and not more than five (5) years
                      have lapsed since the sentence was served;

               (3)    a person who is a former director, factory manager or
                      president of a company or enterprise which has been
                      dissolved or put into liquidation as a result of
                      mismanagement and who was personally liable for the
                      winding up of such company or enterprise, where less than
                      three (3) years have elapsed since the date of completion
                      of the insolvent liquidation of the company or
                      enterprise;

               (4)    a person who is a former legal representative of a
                      company or enterprise the business licence of which was
                      revoked due to violation of law and who are personally
                      liable therefor, where less than three (3) years have
                      elapsed since the date of the cancellation of the
                      business licence;

               (5)    a person who has a relatively large amount of debts which
                      have become due and outstanding;

               (6)    a government servant of the country;

               (7)    a person who is currently under investigation by the
                      judicial authorities for violation of criminal law;

               (8)    a person who, according to laws and administrative
                      regulations, cannot act as a leader of an enterprise;

               (9)    a person other than a natural person;

               (10)   a person who has been adjudged by the competent authority
                      for violation of relevant securities regulations and such
                      conviction involves a finding that such person has acted
                      fraudulently or dishonestly, where not more than five (5)
                      years have lapsed from the date of such conviction;


                                      30
<PAGE>

               (11)   a person who has been prohibited by the securities
                      regulatory authority of the State Council to participate
                      in market activities and the prohibition has still not
                      been uplifted.

Article 146    The chairman, vice-chairman and directors of the Company's
               controlling shareholder acting concurrently as the chairman,
               vice-chairman or director of the Company may not exceed two in
               number. Managers of the Company's controlling shareholder may
               not act concurrently as the Company's president, vice-president,
               Chief Financial Officer, sales supervisor or secretary of the
               board.

Article 147    The following people may not act as an independent director of
               the Company:

               (1)    persons employed by the Company or its subsidiaries and
                      their immediate family members and major social
                      connections (immediate family members shall mean spouse,
                      parents and issues, etc. and major social connections
                      shall mean siblings, parents-in-law,
                      sons/daughters-in-law, spouse of siblings, siblings of
                      spouse, etc.);

               (2)    natural person shareholders who directly or indirectly
                      hold 1% or more of the Company's issued shares or who are
                      top ten shareholders and their immediate family members;

               (3)    persons employed by the shareholder company which
                      directly or indirectly holds 1% or more of the Company's
                      issued shares or by the top five shareholder companies of
                      the Company and their immediate family members;

               (4)    persons who once belonged to categories (1) to (3) above
                      in the past 3 years;

               (5)    persons who provide financial or legal advice to the
                      Company or its subsidiaries;

               (6)    any independent director who is already the director of
                      five listed companies;

               (7)    other persons determined by the securities regulatory
                      authority of the State Counsel.

Article 148    The validity of an act carried out by a director, a supervisor,
               the president, vice-president, Chief Financial Officer or
               secretary of the board of directors of the Company on its behalf
               shall, as against a bona fide third party, not be affected by
               any irregularity in his office, election or any defect in his
               qualification.

Article 149    Without the lawful authorization of these Articles of
               Association or the board of directors, a director of the Company
               may not act personally on behalf of the Company or the board of
               directors. If he acts personally, he shall declare his own
               position and identity in advance where the acting would cause a
               third party to believe reasonably that he is acting on behalf of
               the Company or the board of directors.

Article 150    In addition to the obligations imposed by laws, administrative
               regulations or the listing rules of the stock exchange on which
               shares of the Company are listed, each of the Company's
               directors, supervisors, president, vice-president, Chief
               Financial Officer and secretary of the board of directors owes a
               duty to each shareholder, in the exercise of the duties and
               powers of the Company entrusted to him:

               (1)    not to procure the Company to do anything ultra vires to
                      the scope of business as stipulated in its business
                      licence;

               (2)    to act honestly and in the best interests of the Company;

               (3)    not to expropriate the Company's property in any way,
                      including (without limitation to) usurpation of
                      opportunities which may benefit the Company;

               (4)    not to deprive of the individual interest of
                      shareholders, including (without limitation to) rights to
                      distribution and voting rights, save and except pursuant
                      to a restructuring of the Company which has been
                      submitted to the shareholders in general meeting for
                      approval in accordance with the Company's Articles of
                      Association.

Article 151    Each of the Company's directors, supervisors, president,
               vice-president, Chief Financial Officer and secretary of the
               board of directors owes a duty, in the exercise of his powers
               and in the discharge of his duties, to exercise the care,


                                      31
<PAGE>

               diligence and skill that a reasonably prudent person would
               exercise in comparable circumstances.

Article 152    Each of the Company's directors, supervisors, president,
               vice-president, Chief Financial Officer and secretary of the
               board of directors shall exercise his powers or perform his
               duties in accordance with the fiduciary principle, and shall not
               put himself in a position where his duty and his interest may
               conflict. This principle includes (without limitation to)
               discharging of the following obligations:

               (1)    to act bona fide in the best interests of the Company;

               (2)    to act within the scope of his powers and not to exceed
                      such powers;

               (3)    to exercise the discretion vested in him personally and
                      not to allow himself to act under the control of another
                      and, unless and to the extent permitted by laws,
                      administrative regulations or with the informed consent
                      of shareholders given in a general meeting, not to
                      transfer the exercise of his discretion;

               (4)    to treat shareholders of the same class equally and to
                      treat shareholders of different classes fairly;

               (5)    unless otherwise provided for in the Company's Articles
                      of Association or except with the informed consent of the
                      shareholders given in a general meeting, not to enter
                      into any contract, transaction or arrangement with the
                      Company;

               (6)    not to use the Company's property for his own benefit,
                      without the informed consent of the shareholders given in
                      a general meeting;

               (7)    not to abuse his position to accept bribes or other
                      illegal income or expropriate the Company's property in
                      any way, including (without limitation to) opportunities
                      which benefit the Company;

               (8)    not to accept commissions in connection with the
                      Company's transactions, without the informed consent of
                      the shareholders given in a general meeting;

               (9)    to comply with the Company's Articles of Association, to
                      perform his official duties faithfully, to protect the
                      Company's interests and not to exploit his position and
                      power in the Company to advance his own interests;

               (10)   not to compete with the Company in any way, save with the
                      informed consent of the shareholders given in a general
                      meeting;

               (11)   not to misappropriate the Company's funds or to lend such
                      funds to any other person, not to use the Company's
                      assets to set up deposit accounts in his own name or in
                      the any other name or to use such assets to guarantee the
                      debts of a shareholder of the Company or any other
                      personal liabilities;

               (12)   not to divulge any confidential information which he has
                      obtained during his term of office, without the informed
                      consent of the shareholders in a general meeting; nor
                      shall he use such information otherwise than for the
                      Company's benefit, unless disclosure of such information
                      to the court or other governmental authorities is made in
                      the following circumstances:

                      1.    disclosure is required by law;

                      2.    public interests so warrants;

                      3.    the interests of the relevant director, supervisor,
                            president, vice-president, Chief Financial Officer
                            and secretary of the board of directors so
                            requires.

Article 153    Each director, supervisor, president, vice-president, Chief
               Financial Officer and secretary of the board of directors of
               the Company shall not direct the following persons or
               institutions ("associates") to act in a manner which he is
               prohibited from so acting:


                                      32
<PAGE>

               (1)    the spouse or minor children of the director, supervisor,
                      president, vice-president, Chief Financial Officer or
                      secretary of the board of directors;

               (2)    the trustee of the director, supervisor, president,
                      vice-president, Chief Financial Officer or secretary of
                      the board of directors or of any person described in
                      sub-paragraph (1) above;

               (3)    partners of directors, supervisors, president,
                      vice-president, Chief Financial Officer or secretary of
                      the board of directors of the Company or any person
                      referred to in sub-paragraphs (1) and (2) of this
                      Article;

               (4)    a company in which a director, supervisor, the president,
                      vice-president, Chief Financial Officer or secretary of
                      the board of directors, whether alone or jointly with one
                      (1) or more of the persons referred to in sub-paragraphs
                      (l), (2) and (3) of this Article and other directors,
                      supervisors, president, vice-president, Chief Financial
                      Officer and secretary of the board of directors, has de
                      facto controlling interest;

               (5)    the senior officers of a company which is being
                      controlled in the manner set out in sub-paragraph (4)
                      above, including but without limitation to directors,
                      supervisors and president.

Article 154    On submission of a resignation or termination of the tenure of a
               director, supervisor, the president, vice-president, Chief
               Financial Officer or secretary of the board of directors of the
               Company, the fiduciary duties owed by this senior officer to the
               Company and its shareholders do not necessarily cease when his
               resignation has not yet been effective or within a reasonable
               period of the resignation and within a reasonable period of the
               termination of tenure. His duty of confidentiality in respect of
               trade secrets of the Company survives the termination of his
               tenure until the same has become open information. Other duties
               may continue for such period as the principle of fairness may
               require depending on the length of time which has lapsed between
               the termination and the act concerned and on the circumstances
               and the terms under which the relationship between the relevant
               director, supervisor, manager and the senior officer on the on
               hand and the Company on the other hand was terminated.

Article 155    Any serving director, supervisor, the president, vice-president,
               Chief Financial Officer or secretary of the board of directors
               of the Company who leaves his post without permission thereby
               causing loss to the Company shall be liable for compensation.

Article 156    A director, supervisor, the president, vice-president, Chief
               Financial Officer or secretary of the board of directors of the
               Company may be relieved of liability for specific breaches of
               his duty with the informed consent of the shareholders given at
               a general meeting, save under the circumstances of Article 55
               hereof.

Article 157    Where a director, supervisor, the president, vice-president,
               Chief Financial Officer or secretary of the board of directors
               of the Company is in any way, directly or indirectly, materially
               interested in a contract, transaction or arrangement or proposed
               contract, transaction or arrangement with the Company, (other
               than his contract of service with the Company), he shall declare
               the nature and extent of his interests to the board of directors
               at the earliest opportunity, whether or not the contract,
               transaction or arrangement or proposal therefor is otherwise
               subject to the approval of the board of directors.

               If a director or his associate (as defined in the Rules
               Governing the Listing of Securities of the Hong Kong Stock
               Exchange Limited) have a material interest in any contract,
               transaction, arrangement or other matters that requires the
               approval of the board of directors, the relevant director shall
               not vote for the relevant matter at the meeting of the board of
               directors, and shall not be listed in the quorum of the meeting.

               Unless the interested director, supervisor, the president,
               vice-president, Chief Financial Officer or secretary of the
               board of directors discloses his interests in accordance with
               the preceding sub-paragraph of this Article and the contract,
               transaction or arrangement is approved by the board of directors
               at a meeting in which the director, supervisor, the president,
               vice-president, Chief Financial Officer or secretary of the
               board of directors is not counted as part of the quorum and
               refrains from voting, or from entering into a contract,
               transaction or arrangement in which that senior officer is
               materially interested is voidable at the instance of the Company
               except as against a bona fide party thereto who does not have
               notice of the breach of duty by the interested senior officer.

               For the purposes of this Article, a director, supervisor, the
               president, vice-president, Chief Financial Officer or secretary
               of the board of directors of the Company is deemed to be


                                      33
<PAGE>

               interested in a contract, transaction or arrangement in which
               his associate is interested.

Article 158    Where a director, supervisor, the president, vice-president,
               Chief Financial Officer or secretary of the board of directors
               of the Company gives to the board of directors a notice in
               writing stating that, by reason of the facts specified in the
               notice, he is interested in contracts, transactions or
               arrangements which may subsequently be made by the Company, that
               notice shall be deemed for the purposes of the preceding Article
               to be a sufficient disclosure of his interests, so far as the
               content stated in such notice is concerned, provided that such
               notice shall have been given before the date on which the
               question of entering into the relevant contract, transaction or
               arrangement is first taken into consideration by the Company.

Article 159    The Company shall not pay taxes for or on behalf of a director,
               supervisor, the president, vice-president, Chief Financial
               Officer or secretary of the board of directors in any manner.

Article 160    The Company shall not directly or indirectly make a loan to or
               provide any guarantee in connection with the making of a loan to
               a director, supervisor, the president, vice-president, Chief
               Financial Officer or secretary of the board of directors of the
               Company or a senior officer (including but without limitation to
               a director, supervisor and the president) of the holding company
               of the Company or any of their respective associates.

               The foregoing prohibition shall not apply to the following
               circumstances:

               (1)    provision of a loan or guarantee for a loan by the
                      Company to its subsidiary;

               (2)    the provision by the Company of a loan or a guarantee in
                      connection with the making of a loan or any other funds
                      available to its directors, supervisors, president,
                      vice-president, Chief Financial Officer or the secretary
                      of the board of directors to meet expenditure incurred or
                      to be incurred by him for the purposes of the Company or
                      for the purpose of enabling him to perform his duties
                      properly, in accordance with the terms of a service
                      contract approved by the shareholders in a general
                      meeting;

               (3)    if the ordinary course of business of the Company
                      includes the lending of money or the giving of
                      guarantees, the Company may make a loan to or provide a
                      guarantee in connection with the making of a loan to a
                      director, supervisor, the president, vice-president,
                      Chief Financial Officer or secretary of the board of
                      directors or his associates in the ordinary course of its
                      business on normal commercial terms.

Article 161    Any person who receives funds from a loan which has been made by
               the Company acting in breach of the preceding Article shall,
               irrespective of the terms of the loan, forthwith repay such
               funds.

Article 162    A guarantee for the repayment of a loan which has been provided
               by the Company acting in breach of Article 158(1) shall not be
               enforceable against the Company, save in respect of the
               following circumstances:

               (1)    the guarantee was provided in connection with a loan
                      which was made to an associate of a director, supervisor,
                      the president, vice-president, Chief Financial Officer or
                      secretary of the board of directors of the Company or a
                      senior officer (including but without limitation to a
                      director, supervisor and the president) of the Company's
                      holding company and the lender of such funds did not know
                      of the relevant circumstances at the time of the making
                      of the loan; or

               (2)    the collateral which has been provided by the Company has
                      already been lawfully disposed of by the lender to a bona
                      fide purchaser.

Article 163    For the purposes of the foregoing provisions of this Chapter, a
               "guarantee" includes an undertaking or property provided to
               secure the obligor's performance of his obligations.

Article 164    In addition to any rights and remedies provided by the laws and
               administrative regulations, where a director, supervisor, the
               president, vice-president, Chief Financial Officer or secretary
               of the board of directors of the Company breaches the duties
               which he owes to the Company, the Company has a right:

               (1)    to demand such a director, supervisor, the president,
                      vice-president, Chief Financial Officer or secretary of
                      the board of directors to compensate it for losses
                      sustained by the Company as a result of such breach;



                                      34
<PAGE>


               (2)  to rescind any contract or transaction which has been
                    entered into between the Company and such a director,
                    supervisor, the president, vice-president, Chief Financial
                    Officer or secretary of the board of directors or between
                    the Company and a third party (where such third party
                    knows or should have known that such a director,
                    supervisor, the president, vice-president, Chief Financial
                    Officer or secretary of the board of directors
                    representing the Company has breached his duties owed to
                    the Company);

               (3)  to demand such a director, supervisor, the president,
                    vice-president, Chief Financial Officer or secretary of
                    the board of directors to surrender the gains made as
                    result of the breach of his obligations;

               (4)  to recover any monies which should have been received by
                    the Company and which were received by such a director,
                    supervisor, the president, vice-president, Chief Financial
                    Officer or secretary of the board of directors instead,
                    including (without limitation to) commissions; and

               (5)  to demand repayment of interest earned or which may have
                    been earned by a director, supervisor, the president,
                    vice-president, Chief Financial Officer or secretary of
                    the board of directors officer on money that should have
                    been paid to the Company.

Article 165    If a director, supervisor, the president, vice-president, Chief
               Financial Officer or secretary of the board of directors has
               violated the law, administrative rules or these Articles of
               Association in discharging his duties thereby causing damage to
               the Company, he shall be liable for compensation. Shareholders
               shall have the right to ask the Company to commence legal or
               arbitration proceedings to claim for compensation according to
               law.

Article 166    The Company shall make written contract with a director or
               supervisor in relation to the rights and duties of the Company
               and the director/supervisor, emoluments and term of office of the
               director/supervisor, liability of the director/supervisor for
               breach of law, regulations and these Articles of Association and
               compensation for early termination of the contract, etc. The
               emoluments shall be approved in advance by the shareholders in a
               general meeting. The aforesaid emoluments include:

               (1)  emoluments in respect of his service as director,
                    supervisor, president, vice-president, Chief Financial
                    Officer or secretary of the board of directors of the
                    Company;

               (2)  emoluments in respect of his acting as a senior officer
                       (including but without limitation to a director,
                       supervisor and the president) of any subsidiary of the
                       Company;

               (3)  emoluments in respect of the provision of other services
                    in connection with the management of the affairs of the
                    Company and any of its subsidiaries;

               (4)  payment by way of compensation for loss of office, or as
                    consideration for or in connection with his retirement
                    from office.

               No proceedings may be brought by a director or supervisor
               against the Company for anything due to him in respect of the
               matters mentioned in this Article except pursuant to the
               contract mentioned above.

Article 167    The contract concerning the emoluments between the Company and
               its directors or supervisors should provide that in the event
               that the Company is acquired, the Company's directors and
               supervisors shall, subject to the prior approval of shareholders
               in a general meeting, have the right to receive compensation or
               other payment in respect of his loss of office or retirement. For
               the purposes of this paragraph, the acquisition of the Company
               includes any of the following:

               (1)  an offer made by any person to the general body of
                    shareholders;

               (2)  an offer made by any person with a view to the offeror
                    becoming a "controlling shareholder" within the meaning of
                    Article 56 hereof.

               If the relevant director or supervisor does not comply with
               this Article, any sum so received by him shall belong to those
               persons who have sold their shares as a result of such offer.
               The expenses incurred in distributing such sum on a pro rata
               basis amongst such persons shall be borne by the relevant
               director or  supervisor and shall not be paid out of such sum.


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<PAGE>



     CHAPTER 15 FINANCIAL AND ACCOUNTING SYSTEMS, PROFIT DISTRIBUTION AND
          AUDITING

Article 168    The Company shall establish its financial and accounting
               systems in accordance with laws, administrative regulations
               and PRC accounting standards formulated by the finance
               regulatory department of the State Council.

Article 169    The accounting year of the Company shall adopt the
               calendar year, i.e. starting from the 1 January of every
               calendar year and to 31 December of every calendar year. The
               Company shall adopt Renminbi as its denominated currency for
               booking and accounting purposes , the account books shall be
               recorded in Chinese.
               At the end of each fiscal year, the Company shall prepare a
               financial report which shall be examined and verified in a
               manner prescribed by law.

Article 170    The board of directors of the Company shall place before
               the shareholders at every annual general meeting such
               financial reports which the relevant laws, administrative
               regulations and directives promulgated by competent regional
               and central governmental authorities require the Company to
               prepare. These reports shall be verified.

Article 171    The Company's financial reports shall be made available
               for shareholders' inspection at the Company twenty (20) days
               before the date of every shareholders' annual general
               meeting. Each shareholder shall be entitled to have a copy of
               the financial reports referred to in this Chapter.
               The Company shall deliver or send to each shareholder of
               Overseas-Listed Foreign-Invested Shares by prepaid mail at
               the address registered in the register of shareholders the
               said reports not later than twenty-one (21) days prior to the
               date of every annual general meeting of the shareholders.

Article 172    The financial statements of the Company shall, in
               addition to being prepared in accordance with PRC accounting
               standards and regulations, be prepared in accordance with
               either international accounting standards, or that of the
               place outside the PRC where the Company's shares are listed.
               If there is any material difference between the financial
               statements prepared respectively in accordance with the two
               accounting standards, such difference shall be stated in the
               financial statements. In distributing its profits after tax,
               the lower of the two amounts shown in the financial
               statements shall be adopted.

Article 173    Any interim results or financial information published or
               disclosed by the Company must also be prepared and presented
               in accordance with PRC accounting standards and regulations,
               and also in accordance with either international accounting
               standards or that of the place overseas where the Company's
               shares are listed.

Article 174    The Company shall publish its financial reports four times in
               each fiscal year, that is, the report for the first quarter shall
               be published within thirty (30) days after the expiration of the
               first three (3) months of each fiscal year; the biannual
               financial report shall be published within sixty (60) days after
               the expiration of the first six (6) months of each fiscal year;
               the report for the third quarter shall be published within thirty
               (30) days after the expiration of the first nine (9) months of
               each fiscal year; and the annual financial report shall be
               published within one hundred and twenty (120) days after the
               expiration of each fiscal year. Annual financial reports shall be
               checked and verified as required by law.

Article 175    Annual financial reports and biannual financial reports
               which deal with biannual profit distribution shall include
               the followings:

               (1)  balance sheet;

               (2)  statement of profit;

               (3)  statement of profit distribution;


                                      36
<PAGE>


               (4)  cash flow statement;

               (5)  explanatory notes to accounting statements. If the Company
                    does not make biannual profit distribution, the biannual
                    financial report shall include the above accounting
                    statements and explanatory notes save sub-paragraph (3).

Article 176    The Company shall not keep accounts other than those
               required by law. Assets of the Company will not be deposited
               into any account opened in the name of an individual.

Article 177    When allocating the after-tax profits of the current
               year, the Company shall allocate (10) ten percent of its
               profit to the statutory common reserve fund, and allocate (5)
               five percent to (10) ten percent of its profit to the
               statutory public welfare fund. In the event that the
               accumulated statutory common reserve fund of the Company has
               reached more than (50) fifty percent of the registered
               capital of the Company, no allocation is needed.
               In the event that the statutory common reserve fund of the
               Company is insufficient to make up the losses of the Company
               on the previous year, before allocating the statutory common
               reserve fund and the statutory public welfare fund in
               accordance with the stipulations of the previous paragraph,
               the Company shall first make up the losses by using the
               profits of the current year.

               After allocating the statutory common reserve fund and public
               welfare fund from the after-tax profits of the Company, the
               Company can allocate the arbitrary common reserve fund
               according to the resolution of shareholders' general meeting.
               The remaining profits after making-up the losses, allocating
               the common reserve funds and the statutory public welfare
               fund shall be distributed in accordance with the proportion
               of shares held by the shareholders.

Article 178    Before making-up the losses, allocating the surplus
               common reserve funds and the statutory public welfare fund,
               the Company shall not allocate the dividends or carry out
               other allocations by way of bonus.

Article 179    Capital common reserve fund includes the following items:

               (1)  premium on shares issued at a premium price;

               (2)  any other income designated for the capital common reserve
                    fund by the regulations of the finance regulatory
                    department of the State Council.

Article 180    The common reserve fund of the Company shall be applied
               for compensating the losses or converting the common reserve
               fund into the capital of the Company.

               When such conversion takes place upon the approval of
               shareholders in a general meeting, the Company shall distribute
               new shares in proportion to the existing shareholders' number
               of shares, provided, however, that when the statutory common
               reserve fund is converted to capital nature, the balance of the
               statutory common reserve fund may not fall below 25% of the
               registered capital.

Article 181    The Company's statutory public welfare fund is used for the
               collective welfare of the Company's employees.

Article 182    After the Company's shareholders have approved in a general
               meeting the proposal for profit distribution or for conversion
               of the common reserve fund into capital of the Company, the
               Company's board of directors shall complete the distribution or
               conversion of dividends (or shares) within two (2) months of the
               general meeting.

Article 183    The Company may distribute dividends in the form of:

               (1)  cash;

               (2)  shares.


                                      37
<PAGE>

Article 184    The Company shall calculate, declare and pay dividends
               and other amounts which are payable to holders of
               Domestic-Invested Shares in Renminbi. The Company shall
               calculate and declare dividends and other payments which are
               payable to holders of Overseas-Listed Foreign-Invested Shares
               in Renminbi, and shall pay such amounts in Hong Kong Dollars.
               As for the foreign currency needed by the Company for payment
               of cash dividends and other funds which are payable to the
               holders of the Overseas-Listed Foreign-Invested Shares, it
               shall be handled in accordance with any related national
               regulations on foreign exchange control.

Article 185    Unless otherwise provided by the relevant laws and
               administrative regulations, as regards dividends and other
               amounts payable in Hong Kong dollars, the applicable exchange
               rate shall be the average benchmark rate for the relevant
               foreign currency determined by the Peoples' Bank of China and
               announced by the State Administration of Foreign Exchange
               during the week prior to the announcement of payment of
               dividend and other amounts.

Article 185    Unless the shareholders have approved otherwise in a
               general meeting, the board of directors may determine to make
               half-yearly dividends distribution. Unless otherwise provided
               by the relevant laws and administrative regulations, the
               amount of the half-yearly dividends distribution shall not
               exceed 50% of the profits shown in the biannual statement of
               profit of the Company.

Article 187    In the event of allocating the dividends to shareholders
               of the Company, the payable taxes on the dividend incomes of
               the shareholders shall be withdrawn in accordance with the
               requirements of Taxation Law of China and in consideration of
               the allocated sum.

Article 187    The Company shall appoint receiving agents for holders of
               the Overseas-Listed Foreign-Invested Shares. Such receiving
               agents shall receive dividends which have been declared by
               the Company and all other amounts which the Company should
               pay to holders of Overseas-Listed Foreign-Invested Shares on
               such shareholders' behalf.

               The receiving agents appointed by the Company shall meet the
               relevant requirements of the laws of the place at which the
               stock exchange on which the Company's shares are listed or the
               relevant regulations of such stock exchange.

               The receiving agents appointed for holders of Overseas-Listed
               Foreign-Invested Shares listed in Hong Kong shall each be a
               company registered as a trust company under the Trustee
               Ordinance of Hong Kong.

Article 189    The Company adopts the system of internal auditing and
               hires professional auditors to undertake internal auditing of
               the Company's financial income and expenditure and economic
               activities.

Article 190    The Company's internal auditing system and duties of the
               auditors shall be implemented after they have been approved by
               the board of directors.

                  CHAPTER 16 APPOINTMENT OF ACCOUNTING FIRMS

Article 191    The Company shall appoint an independent firm of
               accountants which is qualified under the relevant regulations
               of the State to audit the Company's annual financial report
               and review other financial reports, to conduct verification
               of net asset value and other relevant consulting service
               business. Engagement of the firm of accountants shall be
               determined in a shareholders' general meeting.

Article 192    The auditors appointed by the Company shall hold office
               from the conclusion of the annual general meeting of
               shareholders at which they were appointed until the
               conclusion of the next annual general meeting of
               shareholders.

Article 193    The auditors appointed by the Company shall enjoy the following
               rights:

               (1)  a right to review to the books, records and vouchers of
                    the Company at any time, the right to require the
                    directors, supervisors, president, vice-president, Chief
                    Financial Officer and secretary of the board of directors
                    of the Company to supply relevant information and
                    explanations;

                                      38
<PAGE>


               (2)  a right to require the Company to take all reasonable
                    steps to obtain from its subsidiaries such information and
                    explanation as are necessary for the discharge of its
                    duties;

               (3)  a right to attend shareholders' general meetings and to
                    receive all notices of, and other communications relating
                    to, any shareholders' general meeting which any
                    shareholder is entitled to receive, and to speak at any
                    shareholders' general meeting in relation to matters
                    concerning its role as the Company's accounting firm.

Article 194    If there is a vacancy in the position of the accounting
               firm, the board of directors may appoint an accounting firm
               to fill such vacancy before the convening of the
               shareholders' general meeting. Any other accounting firm
               which has been appointed by the Company may continue to act
               during the period during which a vacancy arises.

Article 195    The shareholders in a general meeting may by ordinary
               resolution remove the accounting firm before the expiration
               of its term of office, irrespective of the provisions in the
               contract between the Company and the accounting firm.
               However, the right of the accounting firm in claiming for
               damages which arise from its removal shall not be affected
               thereby.

Article 195    The remuneration of an accounting firm or the manner in
               which such firm is to be remunerated shall be determined by
               the shareholders in a general meeting. The remuneration of an
               accounting firm appointed by the board of directors which is
               to fill the vacancy shall be determined by the board of
               directors and approved by the shareholders' general meeting.

Article 195    The Company's appointment, removal or non-reappointment
               of an accounting firm shall be resolved by the shareholders
               in a general meeting and disclosed in the relevant newspapers
               and publications stating the reasons for removal, if
               necessary. Such resolution shall be filed with the securities
               authority of the State Council and The Chinese Institute of
               Certified Public Accountants.

               Where a resolution at a general meeting of shareholders is
               passed to appoint an accounting firm other than an incumbent
               accounting firm, to fill a casual vacancy in the office of
               the accounting firm, to reappoint an accounting firm who was
               appointed by the board of directors to fill a casual vacancy
               or to remove an accounting firm before expiry of its term of
               office, the following provisions shall apply:


               (1)  A copy of the appointment or removal proposal shall be
                    sent (before issue of the notice of meeting) to the firm
                    proposed to be appointed or proposing to leave its post or
                    the firm which has left its post in the relevant fiscal
                    year. Reference as leaving herein includes leaving by
                    removal, resignation and retirement.

               (2)  If the accounting firm leaving its post makes
                    representations in writing and requests the Company to
                    give the shareholders notice of such representations, the
                    Company shall (unless the representations have been
                    received too late) take the following measures:

                    (i)  in any notice of the resolution given to
                         shareholders, state the fact of the representations
                         having been made by the accounting firm leaving its
                         post; and

                    (ii) attach a copy of the representations to the notice
                         and deliver it to the shareholders in the manner
                         stipulated in the Company's Articles of Association.

               (3)  If the Company fails to circulate the accounting firm's
                    representations in the manner set out in sub-paragraph (2)
                    above, such accounting firm may (in addition to its right
                    to be heard) require that the representations be read out
                    at the meeting.

               (4)  An auditor which is retired from its office shall be
                    entitled to attend the following shareholders' general
                    meetings:

                    (i)  the general meeting at which its term of office would
                         otherwise have expired;

                    (ii) the general meeting at which it is proposed to fill
                         the vacancy caused by its removal; and




                                      39
<PAGE>

                    (iii) the general meeting which convened as a result of
                         its voluntary resignation:

               The leaving accounting firm has the right to receive all
               notices of, and other communications relating to, any such
               meeting, and to speak at any such meeting which it attends on
               any part of the business of the meeting which concerns it as
               the former accounting firm of the Company.


Article 198    Prior notice should be given to the accounting firm
               30 days in advance if the Company decides to remove such
               accounting firm or not to renew the appointment thereof. Such
               accounting firm shall be entitled to make representations at
               the shareholders' general meeting. Where the accounting firm
               considers that there is no proper reason for the removal or the
               non-renewal of appointment, it may appeal to the securities
               regulatory authority of the State Council and The Chinese
               Institute of Certified Public Accountants. Where the accounting
               firm resigns from its position as the Company's auditors, it
               shall make clear to the shareholders in a general meeting
               whether there has been any impropriety on the part of the
               Company.

               An accounting firm may resign its office by depositing at the
               Company's domicile a resignation notice which shall become
               effective on the date of such deposit or on such later date as
               may be stipulated in such notice. Such notice shall contain the
               following statements:

               (1)    a statement to the effect that there are no
                      circumstances connected with its resignation which it
                      considers should be brought to the notice of the
                      shareholders or creditors of the Company; or

               (2)    a statement of any such circumstances.

               Where a notice is deposited under the preceding sub-paragraph,
               the Company shall within fourteen (14) days send a copy of the
               notice to the relevant governing authority. If the notice
               contains a statement under the preceding sub-paragraph (2), a
               copy of such statement shall be placed at the Company for
               shareholders' inspection. The Company should also send a copy
               of such statement by prepaid mail to every shareholder of
               Overseas-Listed Foreign Shares at the address registered in the
               register of shareholders.

               Where the accounting firm's notice of resignation contains a
               statement in respect of the above, it may require the board of
               directors to convene a shareholders' extraordinary general
               meeting for the purpose of receiving an explanation of the
               circumstances connected with its resignation.

                 CHAPTER 17 MERGER AND DIVISION OF THE COMPANY

Article 199    The Company may carry out mergers or division in
               accordance with law. In the event of merger or division of the
               Company, the following procedures shall be adopted:

               (1)    a proposal for merger or division be drawn up in a board
                      meeting;


               (2)    a resolution be made in a shareholders' general meeting
                      in accordance with these Articles of Association;

               (3)    a contract for merger or division be made by the
                      relevant parties;

               (4)    the relevant procedures for approval be gone through
                      according to law;

               (5)    disposal of credit rights and liabilities in the merger
                      or division;

               (6)    registration of dissolution or modification.

               In the case of merger or division of the Company, the board of
               directors of the Company shall take necessary measures to
               protect the legitimate interests of the shareholders who object
               to the plan of merger or division. A shareholder who objects to
               the plan of merger or division shall have the right to demand
               the Company or the shareholders who consent to the plan of
               merger or division to acquire such dissenting shareholders'
               shareholding at a fair price.

                                      40

<PAGE>

               The contents of the resolution of merger or division of the
               Company shall constitute special documents which shall be
               available for inspection by the shareholders of the Company.
               Such special documents shall be sent by mail to holders of
               Overseas-Listed Foreign-Invested Shares.

Article  200   The  merger  of the  Company  may take the form of
               either merger by absorption or merger by the establishment of a
               new company.

               In the event of a merger, the merging parties shall execute a
               merger agreement and prepare a balance sheet and an inventory
               of assets. The Company shall notify its creditors within ten
               (10) days from the date of the Company's merger resolution
               which is passed at a shareholders' general meeting and shall
               publish a public notice in a newspaper at least three (3) times
               within thirty (30) days of the date of the Company's merger
               resolution.

Article  201   Where  there is a  division  of the  Company,  its
               assets shall be divided up accordingly.

               In the event of division of the Company, the parties to such
               division shall execute a division agreement and prepare a
               balance sheet and an inventory of assets. The Company shall
               notify its creditors within ten (10) days from the date of the
               Company's division resolution which is passed at a
               shareholders' general meeting and shall publish a public notice
               in a newspaper at least three (3) times within thirty (30) days
               of the date of the Company's division resolution.

  Article 202  A creditor shall have the right either within 30
               days of receipt of the notice if he has received a notice or
               within 90 days of the first announcement if he has not received
               a notice to require the Company to settle indebtedness or
               provide the relevant security. If the Company fails to settle
               the indebtedness or provide the relevant security, the merger
               or division shall not be proceeded with.

Article 203    Disposal of the assets, credit rights and
               liabilities of the parties to the merger or division shall be
               provided explicitly in a contract.

               After the merger, the rights against debtors and the
               indebtedness of each of the parties to the merger shall be
               inherited by the company which survives the merger or the newly
               established company.

               Debts of the Company prior to division shall be assumed by the
               companies which exist after the division in accordance with the
               agreement of the parties.

Article 204    The Company shall, in accordance with law, apply
               for change in its registration with the companies registration
               authority where a change in any item in its registration arises
               as a result of any merger or division. Where the Company is
               dissolved, the Company shall apply for cancellation of its
               registration in accordance with law. Where a new company is
               established, the Company shall apply for registration thereof
               in accordance with law.

                    CHAPTER 18 DISSOLUTION AND LIQUIDATION

Article 205    The Company shall be dissolved and liquidated  upon
               the occurrence of any of the following events:

               (1)    a resolution regarding the dissolution is passed by
                      shareholders at a general meeting;

               (2)    dissolution is necessary due to a merger or division of
                      the Company;

               (3)    the Company is legally declared insolvent due to its
                      failure to repay debts as they become due; and

               (4)    the Company is ordered to close down because of its
                      violation of laws and administrative regulations.

Article 206    Where the Company is dissolved under sub-paragraph
               (1) of the preceding paragraph, a liquidation committee shall
               be set up within fifteen (15) days thereafter, and the
               composition of the liquidation committee of the Company shall
               be determined by an ordinary resolution of shareholders in a
               general meeting. Where a liquidation committee is not
               established according to schedule, the creditor may apply to
               the People's Court to organize the relevant personnel to
               establish a liquidation committee to proceed the liquidation.
               Where the Company is dissolved under sub-paragraph (2) of the
               preceding Article, the liquidation shall be conducted by the
               parties to the merger or division in accordance with the
               contract or agreement made at the time of merger or division.

               Where the Company is dissolved under sub-paragraph (3) of the
               preceding Article, the People's Court shall in accordance with
               the provisions of relevant laws organize the shareholders,
               relevant organizations and relevant professional personnel to
               establish a liquidation committee to proceed the liquidation.
               Where the Company is dissolved under sub-paragraph (4) of the
               preceding Article, the relevant governing authorities shall
               organize the shareholders, relevant organizations and
               professional personnel to establish a liquidation committee to
               proceed with the liquidation.

Article 207    Where the board of directors proposes to liquidate
               the Company for any reason other than the Company's declaration
               of its own insolvency, the board shall include a statement in
               its notice convening a shareholders' general meeting to
               consider the proposal to the effect that, after making full
               inquiry into the affairs of the Company, the board of directors
               is of the opinion that the Company will be able to pay its
               debts in full within twelve (12) months from the commencement
               of the liquidation.

               Upon the passing of the resolution by the shareholders in a
               general meeting in relation to the liquidation of the Company,
               all duties and powers of the board of directors and the
               president shall cease.

               The liquidation committee shall act in accordance with the
               instructions of the shareholders' general meeting to make a
               report at least once every year to the shareholders' general
               meeting on the committee's income and expenses, the business of
               the Company and the progress of the liquidation; and to present
               a final report to the shareholders' general meeting on
               completion of the liquidation.

Article 208    The liquidation committee shall, within ten (10)
               days of its establishment, send notices to creditors and shall,
               within sixty (60) days of its establishment, publish a public
               announcement at least three (3) times in a newspaper published
               by the securities regulatory authority of the State Council.
               The liquidation committee shall register the creditors' rights.

Article 209    During the liquidation period, the liquidation
               committee shall exercise the following functions and powers:

               (1)    to categorise the Company's assets and prepare a balance
                      sheet and an inventory of assets respectively;

               (2)    to notify the creditors or to publish public
                      announcements;

               (3)    to dispose of and liquidate any unfinished businesses of
                      the Company;

               (4)    to pay all outstanding taxes;

               (5)    to settle claims and debts;

               (6)    to deal with the surplus assets remaining after
                      repayment by the Company of its debts;

               (7)    to represent the Company in any civil proceedings.

Article 210    After it has categories the Company's assets and
               after it has prepared the balance sheet and an inventory of
               assets, the liquidation committee shall formulate a liquidation
               plan and present it to a shareholders' general meeting or to
               the relevant governing authority for confirmation. After the
               initial payment of the settlement expense, the assets of the
               Company shall be liquidated in the following order:

               (i)    salary and labor insurance expenses of the staff members
                      of the Company; (ii) outstanding taxes; (iii) bank
                      loans, debentures and debts to other companies. Any
                      surplus assets of the Company remaining after its debts
                      have been repaid in accordance with the provisions of
                      the preceding paragraph shall be distributed to its
                      shareholders according to the class of shares and the
                      proportion of shares held:

                 (1)   In case of the preferred shares, the allocation shall
                       be first given to the holders of the preferred shares
                       in accordance with the face value of the preferred
                       shares; if it is insufficient to repay the preferred
                       shares, the allocation shall be carried out in
                       accordance with the proportions of the preferred shares
                       held by them respectively;

               (2)    The allocation shall be carried out in accordance with
                      proportions of shares held by the holders of ordinary
                      shares.

               During the liquidation period, the Company shall not commence
               any new business activities.

Article 211    Upon completion of the categorization of the
               Company's assets and preparation a balance sheet and an
               inventory of assets in connection with the liquidation of the
               Company, the liquidation committee discovers that the Company's
               assets are insufficient to repay the Company's debts in full,
               the liquidation committee shall immediately apply to the
               People's Court for a declaration of insolvency. After a Company
               is declared insolvent by a ruling of the People's Court, the
               liquidation committee shall transfer all matters arising from
               the liquidation to the People's Court.

Article 212    Following the completion of the liquidation, the
               liquidation committee shall prepare a liquidation report, a
               statement of income and expenses received and made during the
               liquidation period and a financial report, which shall be
               verified by a Chinese registered accountant and submitted to
               the shareholders' general meeting or the relevant governing
               authority for confirmation.

               The liquidation committee shall, within thirty (30) days after
               the confirmation of the liquidation report, submit the
               documents referred to in the preceding paragraph to the
               companies registration authority and apply for cancellation of
               registration of the Company, and publish a public announcement
               relating to the termination of the Company.

                    CHAPTER 19 PROCEDURES FOR AMENDMENT OF
                    THE COMPANY'S ARTICLES OF ASSOCIATION

Article 213    The Company may amend its Articles of Association
               in accordance with the requirements of laws, administrative
               regulations and the Company's Articles of Association.

Article 214    The Company shall amend these Articles of
               Association on the occurrence of any of the following events:

               (1)    the Company Law or the relevant laws or administrative
                      regulations are amended and these Articles of
                      Association are in conflict with the amended laws or
                      administrative regulations;

               (2)    there is change to the Company which makes it not
                      consistent with these Articles of Association;

               (3)    it has been approved by the shareholders in a general
                      meeting to amend these Articles of Association.

Article 215    Any amendment of these Articles of Association
               shall be made in the following manner:

               (1)    The Board of Directors shall pass a resolution to draw
                      up a proposal for amendment of the Company's Article of
                      Association in accordance with these Articles of
                      Association;

               (2)    The foregoing proposal shall be furnished to the
                      shareholders in writing and a shareholders' meeting

                                      43

<PAGE>

                      shall  be convened;

               (3)    The amendments shall be approved by a special resolution
                      in a shareholders' general meeting. The board of
                      directors shall amend these Articles of Association
                      pursuant to the resolution of shareholders in a general
                      meeting for amendment of these Articles of Association
                      and the approval opinions of the competent authority.

               Amendment of these Articles of Association involving the
               contents of the Mandatory Provisions shall become effective
               upon receipt of approvals from the companies approving
               department authorized by the State Council.

Article 216    If there is any change relating to the registered
               particulars of the Company, application shall be made for
               change in registration in accordance with law. If the amendment
               to the Articles of Association is a matter which is required by
               the relevant laws and regulations to be disclosed, an
               announcement shall be made in accordance with the provisions of
               those laws and regulations.

                               CHAPTER 20 NOTICE

Article 217    Notices of the Company shall be issued in the
               following manner: (1) by hand; (2) by post; (3) by public
               announcement; (4) any other manner as provided in these
               Articles of Association. If a notice of the Company is issued
               by public announcement, it shall be deemed received by the
               relevant officers once announced.

               Unless otherwise provided in these Articles of Association,
               notices, information or written statement issued by the Company
               to holders of Overseas-Listed Foreign-Invested Shares shall be
               personally delivered to the registered address of each of such
               shareholders, or sent by pre-paid mail to each of such
               shareholders.

Article 218    If a notice of the Company is issued by hand, the
               date when the recipient signed or stamped to acknowledge
               receipt of the same shall be regarded as the date of service of
               the notice.

               If a notice of the Company is issued by public announcement,
               the date of the first publication of the announcement shall be
               regarded as the date of service of the announcement.

               All notices which are to be sent by mail shall be clearly
               addressed, postage pre-paid, and shall be put into envelopes
               before being posted by mail. Such letters of notice shall be
               deemed to have been received by shareholders on the third
               working day since it is left with the post office.

Article 219    If a notice of meeting is accidentally omitted to
               be sent to any person who is entitled to receive the same or
               that person has not received such a notice of meeting, it will
               not cause the meeting and any resolution made therein to be
               void.

                       CHAPTER 21 RESOLUTION OF DISPUTES

Article 220    The Company shall abide by the following principles
               for dispute resolution:

               (1)    Whenever any disputes or claims arise between: holders
                      of the Overseas-Listed Foreign-Invested Shares and the
                      Company; holders of the Overseas-Listed Foreign-Invested
                      Shares and the Company's, directors, supervisors,
                      president, vice-presidents, Chief Financial Officer or
                      the secretary of the board of directors; or holders of
                      the Overseas-Listed Foreign-Invested Shares and holders
                      of Domestic-Invested Shares, in respect of any disputes
                      or claims in relation to the affairs of the Company
                      arising as a result of any rights or obligations arising
                      from these Articles of Association, the Company Law or
                      other relevant laws and administrative regulations, such
                      disputes or claims shall be referred by the relevant
                      parties to arbitration.

                      Where  a dispute or claim of rights referred to in the
                      preceding paragraph is referred to arbitration, the
                      entire claim or dispute must be referred to arbitration,
                      and all persons who have a cause of action based on the
                      same facts giving rise to the dispute or claim or whose
                      participation is necessary for the resolution of such
                      dispute or claim, shall, where such person is the
                      Company or the Company's shareholders,

                                      44

<PAGE>

                      directors, supervisors, president, vice-presidents, Chief
                      Financial Officer or the secretary of the board of
                      directors, comply with the decisions made in the
                      arbitration. Disputes in respect of the definition of
                      shareholders and disputes in relation to the register of
                      shareholders need not be resolved by arbitration.

               (2)    A claimant may elect for arbitration to be carried out
                      at either the China International Economic and Trade
                      Arbitration Commission in accordance with its Rules or
                      the Hong Kong International Arbitration Center in
                      accordance with its Securities Arbitration Rules. Once a
                      claimant refers a dispute or claim to arbitration, the
                      other party must submit to the arbitral body elected by
                      the claimant. If a claimant elects for arbitration to be
                      carried out at Hong Kong International Arbitration
                      Center, any party to the dispute or claim may apply for
                      a hearing to take place in Shenzhen in accordance with
                      the Securities Arbitration Rules of the Hong Kong
                      International Arbitration Center.

               (3)    If any disputes or claims of rights are settled by way
                      of arbitration in accordance with sub-paragraph (1) of
                      this Article, the laws of the PRC shall apply, save as
                      otherwise provided in the laws and administrative
                      regulations.

               (4)    The judgement of an arbitral body shall be final and
                      conclusive and binding on all parties.

                           CHAPTER 22 SUPPLEMENTARY

Article 221      These Articles of Association are written in Chinese and
                 English. If there is any conflict between the two versions,
                 the Chinese version shall prevail.

Article 222      The expressions of "above", "within" and "below" shall
                 include the figures mentioned whilst the expressions of
                 "short of" and "less than" shall not include the figures
                 mentioned.

Article 223      The right to interpret these Articles of Association
                 vests with the board of directors of the Company, and the
                 right to revise these Articles of Association vests with
                 shareholders' general meeting.

Article 224      If these Articles of Association are in conflict with the
                 laws, administrative regulations or provisions of other
                 regulatory documents promulgated from time to time, the laws,
                 administrative regulations and provisions of other regulatory
                 documents shall prevail.

Article 225      In these Articles of Association, references to
                 "accounting firm" shall have the same meaning as "auditors".
                 In these Articles of Association, references to "president"
                 shall have the same meaning as "manager".

                                      45

<PAGE>


                                                                    Appendix I







                             Rules and Procedures

                                      for

                        Shareholders' General Meetings

                                      of

                    China Petroleum & Chemical Corporation






<PAGE>


                         CHAPTER 1 GENERAL PROVISIONS

Article 1      In order to safeguard the legitimate interests of
               China Petroleum & Chemical Corporation (the "Company") and its
               shareholders, to specify the duties, responsibilities and
               authority of the shareholders' general meetings, to ensure the
               proper, efficient and smooth operation of the shareholders'
               general meeting and to ensure the shareholders' general meeting
               exercises its functions and powers according to law, these
               Rules are formulated according to the "Company Law of the
               People's Republic of China" (the "Company Law"), "Mandatory
               Provisions for the Articles of Association of Companies to be
               Listed Overseas", "Guidelines for the Articles of Association
               of Listed Companies", "Standards for the Governance of Listed
               Companies" and "Regulatory Opinions Regarding General Meetings
               of Listed Companies" and other relevant laws and regulations
               regulating listed companies inside and outside the PRC and the
               Articles of Association of China Petroleum & Chemical
               Corporation ("Articles of Association").

Article 2      These Rules apply to the shareholders' general meetings of
               the Company and shall be binding on the Company, all
               shareholders, authorized proxies of the shareholders,
               directors, supervisors, president, vice-president, Chief
               Financial Officer, secretary of the board of directors and
               other relevant personnel present at the meeting.

Article 3      Shareholders' general meetings are divided into annual
               general meetings (hereinafter referred to as "AGM"),
               extraordinary general meetings; or all shareholders' general
               meetings or class shareholders' general meetings.

Article 4      AGMs are held once every year within six months from
               the end of the previous accounting year.

Article 5      For the shareholders' general meetings convened each
               year, all of them are extraordinary general meetings except the
               AGM. The extraordinary general meetings shall be arranged in
               the order of the year in which they are convened.

Article 6      Holders of different classes of shares are class
               shareholders. Except other class shareholders, holders of
               domestic shares and holders of H shares are deemed to be
               shareholders of different classes. If the Company intends to
               alter or annul the rights of class shareholders, it shall have
               such alteration or annulment approved by a special resolution
               at the shareholders' general meeting and shall convene a class
               shareholders' meeting in accordance with the provisions of the
               Articles of Association. Only class shareholders are entitled
               to attend class shareholders' meetings.

Article 7      The board of directors of the Company shall strictly
               comply with the provisions of the Company Law and other laws
               and regulations regarding the convening of shareholders'
               general meetings, and shall properly organize the shareholders'
               general meeting in a conscientious manner and on schedule. All
               directors of the Company are under a bona fide duty to ensure
               that the shareholders' general meeting is convened in order,
               and shall not obstruct the exercise of powers by the
               shareholders' general meeting according to law. The directors
               present at the meeting shall perform their duties in good
               faith, and shall ensure that the contents of the resolutions
               passed at the meeting are true, accurate and complete and shall
               not use any words and expressions that may easily cause
               ambiguity.

Article 8      Any shareholder who holds the shares of the Company
               legally and validly are entitled to attend or authorize a proxy
               to attend the shareholders' general meeting, and shall have the
               right to know the Company's affairs, the right to speak, the
               right to raise questions and the right to vote pursuant to law
               and these Rules. Shareholders and their proxies attending the
               shareholders' general meeting shall comply with the provisions
               of the relevant laws and regulations, Articles of Association
               and these Rules, and shall take the initiative to maintain the
               order of the meeting and shall not infringe the legitimate
               rights and interests of other shareholders.

Article 9      The Secretary to the board of directors of the
               Company shall be responsible for implementing the preparatory
               and organization work for convening a shareholders' general
               meeting. In convening a shareholders' general meeting, the
               principle of cost-saving and simplicity shall be adhered to.

                                      1

<PAGE>

Article 10     No extra benefits shall be given to the shareholders
               (or their proxies) present at the meeting.


      CHAPTER 2 FUNCTIONS AND POWERS OF THE SHAREHOLDERS' GENERAL MEETING

Article 11     The shareholders' general meeting is the authority
               organ of the Company and shall exercise the following functions
               and powers according to law:

               (1)    to decide on the Company's operational policies and
                      investment plans;

               (2)    to elect and replace directors and to decide on matters
                      relating to the remuneration and liability insurance of
                      directors;

               (3)    to elect and replace supervisors who are shareholder
                      representatives and to decide on matters relating to the
                      remuneration and liability insurance of supervisors;

               (4)    to examine and approve the board of directors' reports;

               (5)    to examine and approve the supervisory committee's
                      reports;

               (6)    to examine and approve the Company's profit distribution
                      plans and loss recovery plans;

               (7)    to examine and approve the Company's proposed annual
                      preliminary and final financial budgets;

               (8)    to pass resolutions on the increase or reduction of the
                      Company's registered capital;

               (9)    to pass resolutions on matters such as merger, division,
                      dissolution and liquidation of the Company;

               (10)   to pass resolutions on the issue of debentures by the
                      Company;

               (11)   to pass resolutions on the appointment, dismissal and
                      non-reappointment of the accounting firm by the Company;

               (12)   to amend the Articles of Association and its appendices
                      (including the Rules and Procedures for the
                      Shareholders' General Meetings, Rules and Procedures for
                      the Board of Directors' Meetings and Rules and
                      Procedures for the Supervisors' Meetings);

               (13)   to consider motions raised by the supervisory committee
                      or shareholders who represent 5% or more of the total
                      number of voting shares of the Company at the annual
                      general meetings;

               (14)   to decide on other matters which, according to laws,
                      administrative regulations, rules of the competent
                      authorities and the Articles of Association, shall be
                      approved by the shareholders' general meetings.

               The shareholders' general meetings shall exercise its powers
               within the scope stipulated by the Company Law and shall not
               interfere with the decision of shareholders regarding their own
               rights.

                                      2

<PAGE>

           CHAPTER 3 AUTHORITY OF THE SHAREHOLDERS' GENERAL MEETINGS

Article 12     Matters which, in accordance with laws,
               administrative regulations, rules of the relevant government
               authorities and provisions of the Articles of Association, fall
               within the scope of the authority of the shareholders' general
               meeting must be examined at such meeting so as to protect the
               decision-making power of the shareholders of the Company on
               such matters.

Article 13     In order to ensure and increase the stability and
               efficiency of the daily operations of the Company, the
               shareholders' general meeting authorizes the board of directors
               of the Company, on a partial basis, to exercise the following
               powers on investment plans, asset disposals and external
               guarantees:

               (1)    Investment:

                      (i)    The shareholders' general meetings shall examine
                             and approve medium and long-term investment plans
                             and annual investment plans of the Company. The
                             board of directors is authorized to make
                             adjustments of not more than 15% of the amount of
                             the capital expenditure for the current year as
                             approved at the shareholders' general meeting.

                      (ii)   Individual project investments (including but not
                             limited to exploration and development, fixed
                             assets, external shareholdings) shall be approved
                             by the shareholders' general meeting if the
                             investment amounts are more than 5% of the latest
                             audited net asset value of the Company. The board
                             of directors is authorized to examine and approve
                             projects if the investment amount is not more
                             than 5% of the latest audited net asset value of
                             the Company.

                      (iii)  Where the Company uses its own assets to make
                             risky investment in areas not related to the
                             business of the Company (including but not
                             limited to debentures, futures, shares), risky
                             investments shall be approved by the
                             shareholders' general meeting if the amount of
                             investment is more than 1% of the latest audited
                             net asset value of the Company. The board of
                             directors is authorized to examine and approve
                             projects if the investment amount is not more
                             than 1% of the latest audited net asset value of
                             the Company.

               (2)    Asset disposal:

                      (i)    When the Company acquires or sells assets, it has
                             to take into account of the following 4 testing
                             indices: (1) total asset ratio: the total amount
                             of the assets to be acquired or sold (according
                             to the latest audited financial report, valuation
                             report or capital verification report) divided by
                             the latest audited total asset value of the
                             Company; (2) net profit (loss) ratio of the
                             acquisition: the absolute value of the net profit
                             or loss relating to the assets to be acquired
                             (according to the audited financial report of the
                             preceding year) divided by the absolute value of
                             the audited net profit or loss of the Company for
                             the preceding year; (3) net profit (loss) ratio
                             of the sale: the absolute value of the net profit
                             or loss relating to the assets to be sold
                             (according to the audited financial report of the
                             preceding year) or the absolute value of the
                             profit or loss arising from such transaction
                             divided by the absolute value of the audited net
                             profit or loss of the Company for the preceding
                             year; (4) transaction amount ratio: the
                             transaction amount (taking into account of the
                             assumed liabilities and costs, etc) of the
                             acquired assets divided by the total amount of
                             the latest audited net asset value of the
                             Company. The shareholders' general meeting shall
                             examine and approve any of the above projects
                             with a ratio of not less than 50%. The board of
                             directors is authorized to examine and approve
                             any of the above projects with a ratio of less
                             than 50%.

                      (ii)   In disposing of fixed assets, where the total
                             value of the expected value of the fixed assets
                             to be disposed of and the value of the fixed
                             assets which have been disposed of in the four
                             months prior to such proposed disposal exceeds
                             33% of the value of the fixed assets as shown in
                             the latest balance sheet considered by the
                             shareholders' general meeting, the shareholders'
                             general meeting shall examine and approve such
                             disposal, and the board of directors is
                             authorized to examine and approve those fixed
                             asset disposals of less than 33%.

                                      3

<PAGE>

                             The disposal of fixed assets referred to in this
                             Article includes the transfer of certain asset
                             interests but excludes the provision of guarantee
                             by way of fixed assets.

                             The validity of the transactions for disposal of
                             fixed assets by the Company shall not be affected
                             by any breach of paragraph (2)(i) of this
                             Article.

                      (iii)  Regarding others (including but not limited to
                             the entering into, varying and termination of
                             important contracts relating to entrustment of
                             operation, entrusted operation, entrusted
                             financial management, contracting and leasing),
                             the relevant amount or the amount accumulated in
                             12 months shall be calculated according to one of
                             four testing indices referred to in paragraph
                             (2)(i) of this Article.

                             Any of the above projects with a ratio of more than
                             5% shall be examined and approved by the
                             shareholders' general meeting. The board of
                             directors is authorized to examine and approve
                             any of the above projects with a ratio of not
                             more than 5%.

               (3)    External guarantees

                      The Company shall not provide guarantees for its
                      shareholders, controlling subsidiaries of its
                      shareholders, subsidiary enterprises of shareholders or
                      personal liability and shall not directly or indirectly
                      provide liability guarantee for debtors with an asset to
                      liability ratio exceeding 70%. If the Company provides
                      guarantees to others, the guaranteed person shall
                      provide counter-guarantee to the Company or take other
                      necessary risk preventive measures. The total amount of
                      external guarantees of the Company shall not exceed 50%
                      of the net assets stated in the consolidating accounting
                      statements of the latest accounting year of the
                      Company."

                      If the guarantee amount exceeds 5% of the latest audited
                      net asset value of the Company, such guarantees shall be
                      examined and approved by the shareholders' general
                      meeting. The board of directors is authorized to examine
                      and approve guarantees of not more than 5% of the latest
                      audited net asset value of the Company.

               (4)    If, when applying the relevant standards as set out
                      above, the approving offices of any investment, asset
                      disposal and external guarantee matters as referred to
                      above include both shareholders' general meeting and the
                      board of directors, such matters shall be submitted to
                      the shareholders' general meeting for approval.

               (5)    If the above investment, asset disposal and external
                      guarantee matters constitute connected transactions
                      according to the regulatory stipulations of the places
                      where the Company is listed, the relevant matters shall
                      be dealt with according to the relevant stipulations.

Article 14     Under necessary and reasonable circumstances, as
               regards specific matters related to the matters to be resolved
               and those which cannot or are not required to be decided at the
               shareholders' general meeting, the shareholders' general
               meeting may authorize the board of directors or the secretary
               to the board of directors to decide within the scope of
               authority authorized by the shareholders' general meeting.


              CHAPTER 4 PROCEDURES FOR CONVENING A SHAREHOLDERS'
                                GENERAL MEETING

Section 1      Putting Forward, Collecting and Examining Motions

Article 15     Motions put forward in a shareholders' general
               meeting shall be specific and shall relate to the matters which
               shall be discussed at a shareholders' general meeting.

Article 16     Motions at the shareholders' general meeting are
               usually put forward by the board of directors.

                                      4

<PAGE>


Article 17     Where two or more than half of the independent
               directors request the board of directors to convene an
               extraordinary general meeting, they shall be responsible for
               putting forward the motions to be examined at the meeting. If
               the board of directors disagrees with the convening of an
               extraordinary general meeting, it shall disclose the relevant
               details.

Article 18     Where the Company convenes an AGM, the supervisory
               committee or shareholders individually or jointly holding more
               than 5% of the total voting shares of the Company are entitled
               to put forward provisional motions. If the proposing
               shareholders have any objection to the decision of the board of
               directors of not including their motions in the agenda, they
               may request the convening of an extraordinary general meeting
               according to the provisions of these Rules.

Article 19     Where the supervisory committee proposes to convene
               a shareholders' general meeting, it shall be responsible for
               putting forward motions.

Article 20     Where shareholders individually or jointly holding
               more than 10% of the Company's voting shares propose to convene
               a shareholders' general meeting, the proposing shareholders
               shall be responsible for putting forward the motions, whether
               or not the meeting is convened by the board of directors.

Article 21     Before the Chairman of the board of directors issues
               a notice of the board meeting relating to the convening of a
               shareholders' general meeting, the secretary to the board of
               directors may collect motions from shareholders individually
               holding more than 5% of the Company's voting shares (at the
               time of proposing to convene an AGM) or shareholders
               individually holding more than 10% of the Company's voting
               shares (at the time of proposing to convene an extraordinary
               general meeting), supervisors and independent directors and
               submit the same to the board of directors for examination and
               approval and subsequently submit the same as motions to the
               shareholders' general meeting for examination.

Article 22     The following motions shall be put forward at the
               AGM for consideration:

               (1)    to examine the board of directors' annual reports,
                      including the investment plans and operation strategy
                      for the following year;

               (2)    to examine the supervisory committee's annual reports;

               (3)    to examine the Company's audited final budget proposal
                      for the preceding year;

               (4)    to examine and approve the Company's profit distribution
                      plans and loss recovery plans for the preceding year;

               (5)    to appoint, dismiss or not to reappoint the accounting
                      firm.

Article 23     Shareholders individually or jointly holding more
               than 5% of the Company's voting shares are entitled to put
               forward provisional motions at an AGM. The board of directors
               shall examine and approve such shareholders' motions according
               to the following principles:

               (1)    Relevance. The board of directors shall conduct
                      preliminary examination of a motion, that is, the motion
                      should be submitted or delivered to the board of
                      directors or chairman of the meeting in a written form,
                      and the contents of the motion shall comply with laws,
                      administrative regulations and the Articles of
                      Association, shall fall within the scope of business of
                      the Company and the duties of the shareholders' general
                      meeting, and shall cover a specific subject for
                      discussion with concrete matters to be resolved. If the
                      motion complies with the above requirements, it shall be
                      submitted to the AGM for discussion. Otherwise no such
                      submission shall be effected. If the board of directors
                      decides not to submit the shareholders' motion to the
                      AGM for voting, it shall give an explanation and
                      statement at the AGM.

               (2)    Procedures. The board of directors may decide on the
                      procedural issues relating to the motion. Where a motion
                      needs to be divided into different motions or merged
                      with other motions to be voted on, consent of the person
                      putting forward the original motion is required. If the
                      person putting forward the original motion does not
                      agree with any change, the chairman of the meeting may
                      request the AGM to decide on

                                      5

<PAGE>

                      the procedural issues and conduct discussion according
                      to the procedures decided by the AGM.

Article 24     Where the supervisory committee or shareholders
               individually or jointly holding more than 10% of the Company's
               voting shares propose to convene an extraordinary general
               meeting or class shareholders' general meeting, they may sign
               one or more written request(s) of identical form and contents
               stating the topics for discussion at the meeting, and at the
               same time submit motions complying with the above requirements
               of these Rules to the board of directors.

Article 25     Motions involving the following circumstances shall
               be deemed to lead to a change or abrogation of the rights of a
               class shareholder and the board of directors shall submit them
               to a class shareholders' general meeting for examination:

               (1)    to increase or decrease the number of shares of such
                      class, or to increase or decrease the number of shares
                      of a class having voting rights, distribution rights or
                      other privileges equal or superior to those of the
                      shares of such class;

               (2)    to change all or part of the shares of such class into
                      shares of another class or to change all or part of the
                      shares of another class into shares of that class or to
                      grant such conversion right;

               (3)    to cancel or reduce rights to accrued dividends or
                      cumulative dividends attached to shares of such class;

               (4)    to reduce or remove preferential rights attached to
                      shares of such class to receive dividends or to the
                      distribution of assets in the event that the Company is
                      liquidated;

               (5)    to add, cancel or reduce share conversion rights,
                      options, voting rights, transfer rights, pre-emptive
                      placing rights, or rights to acquire securities of the
                      Company attached to shares of such class;

               (6)    to cancel or reduce rights to receive payment payable by
                      the Company in a particular currency attached to shares
                      of such class;

               (7)    to create a new class of shares with voting rights,
                      distribution rights or other privileges equal or
                      superior to those of the shares of such class;

               (8)    to restrict the transfer or ownership of shares of such
                      class or to impose additional restrictions;

               (9)    To issue rights to subscribe for, or to convert into,
                      shares of such class or another class;

               (10)   To increase the rights or privileges of shares of
                      another class;

               (11)   to restructure the Company in such a way so as to cause
                      the shareholders of different classes to bear liability
                      to different extents during the restructuring;

               (12)   to amend or abrogate the provisions of Chapter 9 of the
                      Articles of Association "Special Procedures for Voting
                      by a Class of Shareholders".



Section 2      Notice of Meeting and its Alterations

Article 26     The notice of a shareholders' general meeting shall
               be issued by the convenors of the meeting. Convenors of the
               meeting include the board of directors or shareholders
               individually or jointly holding more than 10% of the Company's
               voting shares.

Article 27     A written notice shall be issued 45 days (excluding
               the date of the meeting) prior to the meeting, informing all
               shareholders of the matters to be considered at the meeting,
               and the date and place of the meeting. The notice of a
               shareholders' general meeting shall be delivered to the
               shareholders (whether or not such shareholders are entitled to
               vote at the meeting) by hand or by pre-paid mail to the
               addresses of the shareholders as shown in the register of
               shareholders of the Company. For the holders of domestic
               shares, the notice of the

                                      6

<PAGE>

               meeting may also be given by way of public announcement.

               The public announcement referred to in the preceding paragraph
               shall be published in one or more newspapers designated by the
               securities regulatory authority of the State Council during the
               period between forty-five to fifty days before the date of the
               meeting. Once the announcement is made, the holders of domestic
               shares shall be deemed to have received the notice of the
               relevant shareholders' general meeting. Where the Company fails
               to issue a notice of meeting according to schedule thus
               resulting in the failure of the Company to convene an AGM
               within six months from the end of the preceding accounting
               year, it shall report the same immediately to the stock
               exchanges on which its shares are listed stating the reasons
               and shall make an announcement accordingly.

Article 28     The notice of a class shareholders' general meeting shall be
               delivered only to the shareholders who are entitled to vote at
               such meeting.

Article 29     The notice of a shareholders' general meeting shall satisfy the
               following requirements:

               (1)    in writing;

               (2)    specify the place, date and time of the meeting;

               (3)    set out the matters to be discussed at the meeting and
                      fully disclose the contents of the motions. If it is
                      required to alter matters involved in the resolutions of
                      the previous shareholders' general meeting, the contents
                      of the motion shall be complete and not only the contents
                      of the changes are stated. Items included under "any
                      other businesses" without specific contents shall not be
                      deemed as a motion and the same shall not be voted at a
                      shareholders' general meeting;

               (4)    provide the shareholders with such information and
                      explanation as necessary to enable the shareholders to
                      make an informed decision on the proposals put before
                      them. Such principle includes (but not limited to) where
                      a proposal is made to amalgamate the Company with
                      another, to repurchase shares of the Company, to
                      reorganize its share capital, or to restructure the
                      Company in any other way, the terms of the proposed
                      transaction must be provided in detail together with
                      contracts (if any) and the cause and effect of such
                      proposal must be properly explained;

               (5)    contain a disclosure of the nature and extent of the
                      material interests of any director, supervisor,
                      president, vice-president, Chief Financial Officer and
                      secretary of the board of directors in the proposed
                      transaction and the effect which the proposed transaction
                      will have on them in their capacity as shareholders in so
                      far as it is different from the effect on the interests
                      of shareholders of the same class;

               (6)    contain the full text of any special resolution to be
                      proposed at the meeting;

               (7)    contain a clear statement that a shareholder entitled to
                      attend and vote at such meeting is entitled to appoint
                      one or more proxies to attend and vote at such meeting on
                      his behalf and that such proxy needs not be a
                      shareholder;

               (8)    specify the shareholding registration date for the
                      shareholders who are entitled to attend the shareholders'
                      general meeting;

               (9)    specify the time and place for lodging proxy forms for
                      the meeting;

               (10)   state names and telephone numbers of the contact persons
                      for the meeting.

Article 30     The board of directors shall issue a notice to convene the
               shareholders' general meeting within fifteen days upon receipt
               of a written request for convening a shareholders' general
               meeting from the supervisory committee which is in compliance
               with the relevant requirements.


                                       7
<PAGE>

Article 31     After the board of directors has received a written request for
               convening an extraordinary general meeting in compliance with
               the relevant requirements from shareholders individually or
               jointly holding more than 10% of the Company's voting shares, it
               shall issue a notice to convene a shareholders' general meeting
               as soon as possible. Any alterations to the original motion
               shall have the consent of the proposing shareholders. After the
               issue of the notice, the board of directors shall not propose
               any new motions or change or defer the time for holding the
               shareholders' general meeting without the consent of the
               proposing shareholders.

Article 32     If the board of directors fails to issue a notice to convene a
               meeting within thirty days upon receipt of a written request
               from shareholders individually or jointly holding more than 10%
               of the Company's voting shares, the proposing shareholders may
               convene a shareholders' extraordinary general meeting themselves
               within four months after the board of directors has received
               such request. Where the proposing shareholders decide to convene
               such a meeting themselves, it shall notify the board of
               directors in writing, and shall issue a notice to convene the
               meeting after reporting to the branch of the securities
               regulatory authority of the State Council of the locality of the
               Company and the stock exchanges on which the Company's shares
               are listed. The notice of the meeting shall comply with the
               general requirements for notices of meetings and shall also
               satisfy the following requirements:

               (1)    new contents shall not be added to a motion, otherwise
                      the proposing shareholders shall resubmit a request to
                      convene a shareholders' general meeting to the board of
                      directors;

               (2)    the meeting shall be held at the offices of the Company.

Article 33     After the issue of the notice of a meeting, the convenors of the
               meeting shall not put forward any new motion which is not set
               out in the notice. Where a shareholder who has the largest
               shareholding of the Company intends to put forward a new motion
               on profit distribution at an AGM, such shareholder shall, not
               less than ten days before the date of the AGM, submit the motion
               to the board of directors to enable it to make an announcement,
               failing which the shareholder is not entitled to put forward the
               motion at the AGM.

Article 34     Shareholders and authorized proxies intending to attend a
               shareholders' general meeting shall deliver to the Company
               their written replies concerning their attendance at such
               meeting twenty days before the date of the meeting.

               The Company shall, based on the written replies which it
               receives from the shareholders twenty days before the date of
               the shareholders' general meeting, calculate the number of
               voting shares represented by the shareholders and the authorized
               proxies who intend to attend the meeting. If the number of
               voting shares represented by the shareholders who intend to
               attend the meeting amount to more than one-half of the Company's
               total voting shares, the Company may hold the shareholders'
               general meeting; if not, then the Company shall, within five
               days, notify the shareholders again by way of public
               announcement the matters to be considered at, and the place and
               date for, the meeting. The Company may then hold the
               shareholders' general meeting after publication of such
               announcement.

Article 35     After the convenors of a meeting have issued the notice of
               the shareholders' general meeting, the shareholders' general
               meeting shall not be convened at an earlier date, nor shall it
               be postponed without reasons. Where a shareholders' general
               meeting has to be postponed for special reasons, the convenors
               of the meeting shall publish a postponement notice at least
               five working days before the original date of the shareholders'
               general meeting. The convenors of the meeting shall state the
               relevant reasons and the date for convening the meeting after
               the postponement in the postponement notice.

Article 36     Where the Company postpones the shareholders' general
               meeting, it shall not change the shareholding registration date
               for the shareholders who are entitled to attend the
               shareholders' general meeting according to the original notice.

Article 37     The Company shall post all information relating to the
               shareholders' general meeting on the website of the Shanghai
               Stock Exchange at least five working days before the date of
               the meeting according to the requirements of the Shanghai Stock
               Exchange.



                                       8
<PAGE>

Section 3      Registration of a Meeting

Article 38     A shareholder may attend the shareholders' general meeting
               in person or appoint a proxy to attend and vote on his behalf.
               Directors, supervisors, secretary to the board of directors and
               the PRC lawyer(s) engaged by the Company shall attend the
               meeting. The president, vice-president, Chief Financial Officer
               of the Company and persons invited by the board of directors
               may also attend the meeting.

               In order to ensure the solemnity and proper order of the
               shareholders' general meeting, the Company shall have the right
               to refuse persons other than those stated above to enter into
               the venue.

Article 39     The Company shall be responsible for preparing an attendance
               register, which will be signed by the personnel attending the
               meeting. The attendance register shall set out the names of
               persons present at the meeting (and/or names of units),
               identification document numbers, information confirming the
               identities of the shareholders (such as shareholder account
               numbers), the number of voting shares held or represented,
               names of the proxies (or names of the units) and so on.

Article 40     The contents of registration for the shareholders or proxies
               attending the shareholders' general meeting shall include:

               (1)    confirmation of the identity as a shareholder or proxy;

               (2)    request to speak and contents of the text (if any);

               (3)    collecting the voting slips according to the number of
                      shares held/represented by the shareholders or proxies;

               (4)    registering new motions (if any).

Article 41     The instrument appointing a proxy of a shareholder shall be in
               writing. Such written instrument shall state the following:

               (1)    the name of the authorized proxy of the shareholder;

               (2)    the number of shares of the principal represented by the
                      authorized proxy;

               (3)    whether or not the proxy has any voting right;

               (4)    an indication to vote for or against each and every
                      matter included in the agenda;

               (5)    whether or not the proxy has voting rights in respect of
                      the provisional motion which may be included in the
                      agenda of the AGM; and, if this is the case, specific
                      instructions as to the type of voting rights to be
                      exercised;

               (6)    the date of issue and validity period of the proxy form;

               (7)    the signature (or seal) of the principal or its agent
                      appointed in writing; if the principal is a legal person
                      shareholder, the proxy form shall bear the seal of the
                      legal person unit, or signed by its director or an agent
                      duly appointed by it.

               The proxy form shall state clearly that the proxy shall be
               entitled to vote at his discretion in the absence of specific
               instructions from the shareholder.


                                       9
<PAGE>

Article 42     The proxy form shall be lodged with the Company's premises
               or such other place as specified in the notice convening the
               meeting at least twenty-four hours prior to the relevant
               meeting for which the proxy is appointed to vote or twenty-four
               hours prior to the scheduled voting time. Where the proxy form
               is signed by a person authorized by the principal, the power of
               attorney or other authorization documents shall be notarized.
               The notarized power of attorney and other authorization
               documents, together with the proxy form, shall be lodged with
               the Company's premises or such other place as specified in the
               notice convening the meeting.

Article 43     Shareholders attending a shareholders' general meeting shall
               fulfil registration procedures. Shareholders shall produce the
               following documents for registration purposes:

               (1)    Natural person shareholders: an individual shareholder
                      shall produce his identification documents and provide
                      information enabling the Company to confirm his identity
                      as a shareholder. Where a proxy is appointed to attend
                      the meeting, the proxy shall produce his own
                      identification documents and the proxy form, and provide
                      the Company with information enabling the Company to
                      confirm the identity of his principal as a shareholder.

               (2)    Legal person shareholders: if a legal representative is
                      appointed to attend the meeting, the legal representative
                      shall produce his identification documents and proof of
                      his qualification as a legal representative, and he shall
                      provide the Company with the information enabling the
                      Company to confirm the identity of the legal person
                      shareholder. Where a proxy is appointed to attend the
                      meeting, the proxy shall produce his own identification
                      documents, the proxy form issued by the legal
                      representative of the legal person shareholder pursuant
                      to law, or a notarized copy of a resolution on
                      authorization adopted by the board of directors of the
                      legal person shareholder or other decision-making organs,
                      and shall provide information enabling the Company to
                      confirm the identity of the principal as a legal person
                      shareholder.

Article 44     Where a shareholder or a proxy requests to speak at the
               shareholders' general meeting, he shall register with the
               Company prior to the meeting. The number of speakers shall be
               limited to ten. If there are more than ten speakers, the first
               ten shareholders who have the largest shareholdings shall have
               the right to speak in an order according to their
               shareholdings.

Article 45     Where an AGM is convened, the supervisory committee and
               shareholders individually or jointly holding more than 5% of the
               Company's voting shares shall be entitled to propose new motions
               to the Company for registration. For the new motions put forward
               by the shareholders, it is for the chairman of the meeting to
               decide according to Article 23 of these Rules whether or not to
               include the same in the agenda.

               Where an extraordinary general meeting is convened, no new
               motions are allowed to be registered with the Company, and the
               chairman shall not add such new motions to the agenda of the
               meeting. Convening a Meeting

Section 4

Article 46     A shareholders' general meeting shall be chaired by the Chairman
               of the board of directors, who shall act as the chairman of the
               meeting. If the Chairman is unable to attend the meeting, the
               Vice Chairman shall act as the chairman of the meeting.

               If both the Chairman and Vice Chairman are unable to attend the
               meeting and the Chairman has not appointed another director to
               act as the chairman of the meeting, the board of directors may
               appoint a director of the Company to take the chair. If the
               board of directors fails to do so, the shareholders present at
               the meeting may choose a person to act as the chairman. If, for
               any reason, the shareholders cannot elect a chairman, the
               shareholder (including a proxy) holding the largest number of
               voting shares shall be the chairman of the meeting.


                                      10
<PAGE>

Article 47     Where shareholders individually or jointly holding more than 10%
               of the Company's voting shares of their own motion decide to
               convene an extraordinary general meeting, the board of directors
               and secretary to the board of directors shall earnestly perform
               their duties. Directors and supervisors shall attend the
               meeting, and the secretary to the board of directors must attend
               the meeting to ensure the meeting is held in proper order. The
               meeting shall be presided over by the Chairman, who shall also
               act as the chairman of the meeting. If the Chairman is unable to
               attend the meeting for any reason, the Vice Chairman shall act
               as the chairman of the meeting. If both the Chairman and Vice
               Chairman are unable to attend the meeting and the Chairman has
               not designated a person to act as chairman of the meeting, the
               board of directors may designate a director of the Company to so
               act. If the board of directors is unable to designate a director
               to chair the shareholders' general meeting, the proposing
               shareholder shall take the chair after filing a report with the
               branch of the securities regulatory authority of the State
               Council of the locality of the Company.

Article 48     The chairman shall declare that the meeting commences at the
               scheduled time after he has been informed that the participants
               are in compliance with legal requirements and new motions and
               speakers are registered. In any of the following circumstances,
               the meeting may be declared to commence later than the time
               scheduled:

               (1)    when any equipment of the venue is out of order so that
                      the meeting cannot proceed as usual;

               (2)    when any matters of material importance take place
                      affecting the proceeding of the meeting.

Article 49     After the chairman of the meeting has declared the official
               commencement of the meeting, he shall firstly announce that the
               number of shareholders attending the meeting and the number of
               shares represented by such shareholders are in compliance with
               the legal requirements. Subsequently he shall read out the
               agenda as stated in the notice of the meeting, and shall inquire
               whether any person present at the meeting has any objection to
               the voting order of the motions. If an AGM is convened, the
               chairman of the meeting shall also inquire whether the
               supervisory committee or the shareholders individually or
               jointly holding more than 5% of the Company's voting shares need
               to put forward new motions. Where a new motion is put forward by
               a shareholder, the chairman of the meeting shall decide whether
               to accept the motion according to Article 23 of these Rules.

               Where the board of directors or chairman of the meeting decides
               not to include the motion of the supervisory committee or
               shareholders into the agenda of the AGM, explanations and
               statements shall be given at such AGM.

               At an extraordinary general meeting, no person shall be allowed
               to request for discussion of new motions not set out in the
               notice of the shareholders' general meeting.

Article 50     After the chairman of the meeting has made inquires regarding
               the agenda, he shall read out the motions or appoint another
               person to read out the motions, and shall explain the motions
               according to the following requirements if necessary:

               (1)    Where the motion is put forward by the board of
                      directors, the motion shall be explained by the Chairman
                      or other persons designated by the Chairman;

               (2)    Where the motion is put forward by the supervisory
                      committee or shareholders individually or jointly holding
                      more than 5% of the Company's voting shares, the motion
                      shall be explained by the person putting forward the
                      motion or its legal representative or lawful and valid
                      proxy.

Article 51     Motions included in the agenda shall be examined before voting.
               Reasonable time shall be given at the shareholders' general
               meeting for each motion to be discussed, and the chairman of the
               meeting shall orally ask the shareholders attending the meeting
               whether they have completed the examination procedures.
               Examination procedures shall be regarded as completed if there
               are no objections by shareholders attending the meeting.

Article 52     No shareholder shall speak for more than twice at the meeting
               without the consent of the chairman. A shareholder is allowed to
               speak for no more than five minutes for the first time, and no
               more than three minutes for the second time.

               When a shareholder requests to speak, he shall only do so if he
               does not interrupt report which is being made by the meeting
               reporter or speeches which are being made by other shareholders.


                                      11
<PAGE>


Article 53     Shareholders may query the Company at the shareholders' general
               meeting. The chairman of the meeting shall direct the directors
               or supervisors to answer such queries unless they relates to the
               Company's business secret and shall not be disclosed at the
               meeting.

Section 5      Voting and Resolution

Article 54     Shareholders' general meeting shall resolve on any specific
               motions.

Article 55     Matters not included in the notice convening the shareholders'
               extraordinary general meeting shall not be resolved on at such a
               meeting. In approving the motions included in the notice of an
               extraordinary general meeting, no alteration shall be made to
               the relevant motions in respect of the following matters:

               (1)    increase or reduction of the registered capital of the
                      Company;

               (2)    issuance of bonds of the Company;

               (3)    division, merger, dissolution and liquidation of the
                      Company;

               (4)    amendment to the Articles of Association;

               (5)    profits distribution plans and loss recovery plans of the
                      Company;

               (6)    appointment and removal of a member of the board of
                      directors and the supervisory committee;

               (7)    changing the use of proceeds from a share offer;

               (8)    the entering into of a connected transaction which
                      requires the approval of the shareholders in general
                      meetings;

               (9)    acquisition or sale of assets which requires the approval
                      of the shareholders in general meetings;

               (10)   changing the accounting firm engaged.

               Any alteration in respect of the contents of the above motions
               shall be deemed to be a new motion and shall not be voted on at
               that shareholders' general meeting.

               Shareholders' general meetings shall resolve on all motions
               included in the agenda one by one, and shall not for any reason
               cause delay in considering, or fail to consider, such motions.
               Where different motions are put forward at the annual general
               meeting for the same matter, such motions shall be resolved on
               in the order of time in which they are put forward.

Article 56     The chairman of the meeting is obliged to request the
               shareholders to approve the motions by open ballot at the
               general meeting.

               Each shareholder or proxy shall exercise his voting rights in
               accordance with the number of voting shares represented by him.
               Except for the circumstances where cumulative voting system is
               applicable to the election of directors in accordance with the
               Articles of Association, each share shall carry one voting
               right.

Article 57     Resolutions in respect of the election of directors shall be
               passed by a way of cumulative voting at shareholders' general
               meeting in accordance with the Articles of Association. The
               details of the cumulative voting system are as follows:

               (1)    Where the number of directors to be elected is more than
                      two, the cumulative voting system must be adopted.

               (2)    Where cumulative voting system is adopted, each of the
                      shares held by a shareholder shall carry the same number
                      of votes as the number of directors to be elected.


                                      12
<PAGE>

               (3)    The notice of a shareholders' general meeting shall
                      notify the shareholders that a cumulative voting system
                      will be adopted for the election of directors. The
                      convenors of the shareholders' general meeting shall
                      prepare ballots suitable for cumulative voting, and shall
                      give explanations in writing regarding the cumulative
                      voting system, the completion of the ballots and the
                      methods of counting the votes.

               (4)    In casting his votes for the director candidates at a
                      shareholders' general meeting, a shareholder may exercise
                      his voting rights by spreading his votes evenly and cast
                      for each of the candidates the number of votes
                      corresponding to the number of shares he holds; or he may
                      focus his votes on one candidate and cast for a
                      particular candidate the total number of votes carried by
                      all of his shares while the number of voting rights
                      carried by each of his shares is the same as the number
                      of directors to be elected; or he may spread his votes
                      over several candidates and cast for each of them part of
                      the total number of votes carried by the shares he holds
                      while the number of voting rights carried by each of his
                      shares is the same as the number of directors to be
                      elected.

               (5)    Upon the exercise of his voting rights by focusing his
                      votes on one or several of the candidates while the
                      number of voting rights carried by each of his shares is
                      the same as the number of directors to be elected, a
                      shareholder shall not have any right to vote for any
                      other candidates.

               (6)    Where the total number of votes cast by a shareholder for
                      one or several of the candidates is in excess of the
                      number of votes carried by the total number of shares
                      held by him, the votes cast by the shareholder shall be
                      invalid, and the shareholder shall be deemed to have
                      waived his voting rights. Where the total number of votes
                      cast for one or several candidates by a shareholder is
                      less than the number of votes carried by the total number
                      of shares held by such a shareholder, the votes cast by
                      the shareholder shall be valid, and the voting rights
                      attached to the shortfall between the votes actually cast
                      and the votes which the shareholder is entitled to cast
                      shall be deemed to have been waived by the shareholder.

               (7)    Where the number of approval votes won by a director
                      candidate exceeds one-half of the total voting rights (to
                      be calculated according to the total number of shares if
                      the cumulative voting is not adopted) represented by the
                      shareholders present at the shareholders' general meeting
                      and the approval votes exceeds the objection votes, the
                      candidate shall be the elected director candidate. If the
                      number of the elected director candidates exceeds the
                      total number of directors to be elected, those candidates
                      who win the largest number of approval votes shall be
                      elected as directors (however, if the elected director
                      candidates whose approval votes are comparatively fewer
                      win the same number of approval votes, and the election
                      of such candidates as directors will give rise to the
                      number of directors elected exceeding the number of
                      directors to be elected, such candidates shall be deemed
                      as having not been elected); if the number of directors
                      elected at a shareholders' general meeting is less than
                      the number of directors to be elected, a new round of
                      voting shall be carried out for the purpose of filling
                      such directorship vacancies, until all the directors to
                      be elected are validly elected.

               (8)    Where a new round of voting is carried out according to
                      the provisions of paragraph (7) of this Article at the
                      shareholders' general meeting, the number of votes casted
                      by the shareholders in the cumulative voting shall be
                      re-counted according to the number of directors to be
                      elected in the new round of voting.

Article 58     In examining the motions on the election of directors and
               supervisors at a shareholders' general meeting, shareholders
               shall vote on the candidates for the office of directors or
               supervisors one by one.

Article 59     Resolutions of a shareholders' general meeting shall be divided
               into ordinary resolutions and special resolutions.

               (1)    Ordinary resolutions

                      (i)    Ordinary resolutions shall be passed by votes
                             representing more than one-half of the voting
                             rights represented by the shareholders (including
                             proxies) present at the meeting.

                      (ii)   The following matters shall be approved by
                             ordinary resolutions at shareholders' general
                             meetings:

                             (a)   work reports of the board of directors and
                                   the supervisory committee;

                                      13
<PAGE>

                             (b)   profit distribution plans and loss recovery
                                   plans formulated by the board of directors;

                             (c)   appointment and removal of members of the
                                   board of directors and members of the
                                   supervisory committee, their remuneration
                                   and manner of payment and their liability
                                   insurance;

                             (d)   annual preliminary and final budgets,
                                   balance sheets and profit and loss accounts
                                   and other financial statements of the
                                   Company;

                             (e)   annual reports of the Company;

                             (f)   matters other than those which are required
                                   by laws and regulations or by the Articles
                                   of Association to be passed by special
                                   resolutions.

               (2)    Special resolutions

                      (i)    Special resolutions shall be passed by votes
                             representing more than two-thirds of the voting
                             rights represented by the shareholders (including
                             proxies) present at the meeting.

                      (ii)   The following matters shall be approved by special
                             resolutions at a shareholders' general meetings:

                             (a)   increase or reduction in share capital and
                                   the issue of shares of any class, warrants
                                   and other similar securities;

                             (b)   issue of bonds of the Company;

                             (c)   division, merger, dissolution and
                                   liquidation of the Company; (d) repurchase
                                   of shares of the Company;

                             (e)   amendment to the Articles of Association,
                                   the Rules and Procedures for the
                                   Shareholders' General Meetings, the Rules
                                   and Procedures for the Board of Directors'
                                   Meetings and the Rules and Procedures for
                                   the Supervisors' Meetings;

                             (f)   any other matters approved by an ordinary
                                   resolution by the shareholders at a general
                                   meeting which may have material impacts on
                                   the Company and accordingly should be passed
                                   by special resolutions.

Article 60     As far as any matter relating to sub-paragraphs (2) to (8), (11)
               to (12) of Article 25 of these Rules, the affected class
               shareholders, whether or not such shareholders originally have
               the right to vote at shareholders' general meetings, shall have
               the right to vote at the class meetings. However, interested
               shareholder(s) shall not be entitled to vote at such class
               meetings.

               "(An) interested shareholder(s)", as such term is used in the
               preceding paragraph, means:

               (1)    in the case of a repurchase of shares by way of a general
                      offer to all shareholders of the Company or by way of
                      public dealing on a stock exchange pursuant to Article 29
                      of the Articles of Association, an interested shareholder
                      is a controlling shareholder within the meaning of
                      Article 55 of the Articles of Association;

               (2)    in the case of a repurchase of shares by an off-market
                      agreement pursuant to Article 29 of the Articles of
                      Association, a holder of the shares to which the proposed
                      agreement relates;

               (3)    in the case of a restructuring of the Company, a
                      shareholder who assumes a relatively lower proportion of
                      obligation than the obligations imposed on shareholders
                      of that class under the proposed restructuring or who has
                      an interest in the proposed restructuring which is
                      different from the general interests of the shareholders
                      of that class.


                                      14
<PAGE>

Article 61     Resolutions of a class of shareholders shall be passed by votes
               representing more than two-thirds of the voting rights of
               shareholders of that class represented at the relevant meeting
               who, according to Article 62, are entitled to vote at the
               meeting.

               The special procedures for approval by a class of shareholders
               shall not apply in the following circumstance: where the Company
               issues, upon the approval by special resolution of its
               shareholders in a general meeting, either separately or
               concurrently once every twelve months, not more than 20% of each
               of its existing issued Domestic-Invested Shares and
               Overseas-Listed Foreign-Invested Shares.

Article 62     Where a connected transaction is being considered at a
               shareholders' general meeting, the connected shareholders shall
               abstain from voting, and the voting rights represented by the
               shares held by them shall not be counted towards the total
               number of valid votes. The voting result of the non-connected
               shareholders shall be fully disclosed in the announcement in
               relation to the resolutions passed at the shareholders' general
               meeting.

               If any shareholder are required to abstain from voting or may
               only vote for or against a matter according to the Rules
               Governing the Listing of Securities of the Hong Kong Stock
               Exchange Limited, any vote by such shareholder or his proxy in
               violation of the relevant rules or restrictions referred to
               above shall not be counted in the voting results.

Article 63     Shareholders (and proxies) shall complete their ballot papers
               carefully as instructed and put the ballot papers into the
               ballot box. Any ballot paper containing uncompleted parts, false
               information, illegible writing and any uncast paper shall be
               deemed to be an abstention of voting by the shareholder, and
               such ballot papers shall not be regarded as valid votes.

Article 64     Prior to voting, the shareholders present at a shareholders'
               general meeting shall nominate at least one supervisor and two
               shareholders to act as counting officers. Such counting officers
               shall count all the votes cast on site and sign the counting
               statistical sheet.

               If the votes for and against a resolution are equal, the
               chairman of the meeting shall be entitled to cast one more vote.

Article 65     The chairman of the meeting shall be responsible for deciding
               whether or not a resolution is duly passed according to the
               results of the votes counting. The chairman's decision, which
               shall be final and conclusive, shall be announced at the meeting
               and recorded in the minutes of the meeting.

Article 66     A shareholders' general meeting shall be recorded by the minutes
               of the meeting, which shall be signed by the directors present
               at the meeting and the minutes-taking officer. If no director is
               present at the meeting, the shareholder or the shareholder's
               proxy chairing the meeting together with the minutes-taking
               officer shall sign the minutes. The minutes of the meeting shall
               record the following matters:

               (1)    the number of voting shares represented by the
                      shareholders present at the meeting, and the percentage
                      of such shares out of the total number of shares of the
                      Company;

               (2)    the date and place of the meeting;

               (3)    the name of the person chairing the meeting and the
                      agenda of the meeting;

               (4)    the main points regarding the matters made by each person
                      who speaks at the meeting;

               (5)    the voting result of each matter considered;

               (6)    the inquiries and suggestions of the shareholders and the
                      answers to these inquiries or statement made by the
                      directors and supervisors;

               (7)    other matters which according to the opinions of the
                      shareholders' general meeting and the provisions of the
                      Articles of Association shall be recorded in the minutes
                      of the meeting.


                                      15
<PAGE>

Article 67     The board of directors of the Company shall retain (a) PRC
               lawyer(s) to attend the shareholders' general meeting in
               accordance with law to enable him(them) to give legal opinions
               on the following matters, and shall publish these legal opinions
               together with the resolutions of the shareholders' general
               meeting:

               (1)    whether the procedures for convening and holding the
                      shareholders' general meeting comply with the relevant
                      laws and regulations as well as the Articles of
                      Association;

               (2)    verification of the legality and validity of the
                      eligibility of the participants of the meeting;

               (3)    verification of the eligibility of the shareholders who
                      put forward new motions at the shareholders' annual
                      general meeting;

               (4)    whether the voting procedures of the shareholders'
                      general meeting are lawful and valid;

               (5)    the issue of any legal advice on any other matters
                      requested by the Company.

               Where the shareholders' extraordinary general meeting is chaired
               by the shareholders proposing the holding of such a meeting, the
               proposing shareholders shall, in accordance with law, retain (a)
               lawyer(s) to give witness legal opinions according to the
               provisions as set out above, and the procedures for convening
               such a meeting shall also comply with relevant laws, regulations
               and this Article.

               Adjournment of a Meeting

Section 6

Article 68     The board of directors of the Company shall ensure that a
               shareholders' general meeting is held continuously within
               reasonable office hours, until the resolutions are finally voted
               on.

Article 69     If, in the course of the meeting, disputes arising out of
               the identity of any shareholder or the results of the
               calculation of the votes and so on cannot be resolved on site
               in such a way that the order of the meeting is affected and the
               meeting cannot proceed as usual, the chairman shall declare an
               adjournment of the meeting.

               If the foregoing circumstances cease to exist, the chairman of
               the meeting shall notify the shareholders of the resumption of
               the meeting as soon as possible.

Article 70     Where a shareholders' general meeting is adjourned for more than
               one working day due to force majeure or any other extraordinary
               reasons, and the meeting cannot be convened properly or no
               resolution is passed, the board of directors of the Company
               shall give explanations to the stock exchanges on which the
               Company's shares are listed and make a proper announcement. The
               board of directors of the Company is obliged to take all
               necessary measures to resume the shareholders' general meeting
               as soon as possible.

               Post-meeting Affairs and Announcement

Section 7

Article 71     The secretary to the board of directors shall be responsible for
               submitting the minutes of the meeting and the resolutions passed
               at the meeting and other relevant documentation to the relevant
               regulatory authorities in accordance with laws, regulations, the
               requirements of the securities regulatory authority of the State
               Council and the stock exchanges on which the Company's shares
               are listed after the meeting. He shall also be responsible for
               handling the announcement to be published in the designated
               media.

Article 72     The announcement of the resolutions of the shareholders' general
               meeting shall state the number of the shareholders (or the
               proxies) present at the meeting, the number of shares held by
               them (or nominees) and the percentage of such shares out of the
               total voting shares of the Company, the method of voting and the
               voting result of each motion. The resolutions on the motions
               shall state the names of the proposing shareholders, the
               percentage of shares held and the details of the motions. Where
               a shareholder's motion is not included in the agenda of an AGM,
               the details of the motion and the statement made by the board of
               directors or the chairman at the AGM shall be published together
               with the resolutions of the AGM.

               Where the board of directors or the chairman of the meeting
               decides not to include the motions put forward by the


                                      16
<PAGE>

               supervisory committee or the shareholders in the agenda of the
               AGM, explanations and statements shall be given at such a
               meeting. Such statements and details of the motions shall,
               together with the resolutions of the AGM, be published after the
               conclusion of the AGM.

               Where a resolution of the meeting is not adopted, or a
               resolution passed at the previous shareholders' general meeting
               is changed at the current shareholders' general meeting, the
               board of directors shall give an explanation in relation to the
               resolutions of the current shareholders' general meeting.

               The announcement of resolutions passed at shareholders' general
               meetings shall be published in designated newspapers and on the
               Company's website.

Article 73     The secretary to the board of directors shall be responsible for
               keeping written information such as the register of attendees,
               power of attorney, voting statistical sheet, minutes of the
               meeting, legal opinions endorsed by lawyer(s) and announcements
               of resolutions.

                        CHAPTER 5 SUPPLEMENTARY ARTICLES

Article 74     These Rules shall come into effect upon the adoption by the
               shareholders' general meeting by a special resolution and the
               approval by the relevant authorities in accordance with law.

Article 75     Any amendment to these Rules shall be proposed by the board of
               directors in the form of an amendment proposal, and shall be
               submitted to the shareholders' general meeting for approval by a
               special resolution.

Article 76     The right to interpret these Rules shall rest with the board of
               directors.

Article 77     Where any relevant matters are not covered in these Rules or
               where these Rules fail to comply with the relevant laws,
               administrative rules and other relevant regulatory documents as
               promulgated from time to time, those laws, administrative rules
               and other relevant regulatory documents shall prevail.




                                      17
<PAGE>

                                                                    Appendix II





                              Rules and Procedures

                                      for

                          Board of Directors' Meetings

                                       of

                     China Petroleum & Chemical Corporation






<PAGE>


                         CHAPTER 1 GENERAL PROVISIONS

Article 1      In order to ensure that the board of directors of China
               Petroleum & Chemical Corporation (the "Company") fulfils the
               duties and responsibilities conferred by all shareholders of the
               Company, conducts discussions efficiently, makes scientific,
               immediate and prudent decisions and standardizes the operation
               of the board of directors, these Rules are formulated according
               to the "Company Law of the People's Republic of China" (the
               "Company Law"), "Mandatory Provisions for the Articles of
               Association of Companies to be Listed Overseas", "Guidelines for
               the Articles of Association of Listed Companies", "Standards for
               the Governance of Listed Companies" and other governing
               regulations of the places of the Company's listings inside and
               outside the PRC and the Articles of Association of China
               Petroleum & Chemical Corporation ("Articles of Association").

      CHAPTER 2 FUNCTIONS, POWERS AND AUTHORITY OF THE BOARD OF DIRECTORS

Article 2      The board of directors is accountable to the shareholders'
               general meetings and shall exercise the following functions and
               powers:

               (1)    to be responsible for convening shareholders' general
                      meetings and to report on its work to the shareholders'
                      general meetings;

               (2)    to implement the resolutions passed at shareholders' in
                      general meetings;

               (3)    to determine the Company's business plans and investment
                      proposals;

               (4)    to formulate the Company's annual preliminary and final
                      financial budgets;

               (5)    to formulate the Company's profit distribution proposals
                      and loss recovery proposals;

               (6)    to formulate proposals for the credit and financial
                      policies of the Company, the increase or reduction of the
                      registered capital of the Company and for the issue of
                      debentures and securities of any kinds (including but
                      without limitation to the debentures of the Company) and
                      the listing or repurchase of the shares of the Company;

               (7)    to draw up plans for significant acquisition or disposal
                      proposals, the merger, division or dissolution of the
                      Company;

               (8)    to determine the risks investment of the Company
                      according to the authority given in the shareholders'
                      general meeting;

               (9)    to determine matters relating to external guarantees
                      (including pledging of assets) of the Company according
                      to the authority given in the shareholder's general
                      meeting;

               (10)   to decide on the Company's internal management structure;

               (11)   to appoint or remove the Company's president and to
                      appoint or remove the vice-president and Chief Financial
                      Officer of the Company according to the recommendations
                      of the president; to appoint or remove the secretary of
                      the board of directors and to decide on their
                      remuneration;

               (12)   to appoint or replace the members of the board of
                      directors and the supervisory committee of its
                      wholly-owned subsidiaries; to appoint, replace or
                      recommend the shareholders' proxies, directors
                      (candidates) and supervisors (candidates) of its
                      subsidiaries which are controlled or invested by the
                      Company;

               (13)   to determine the establishment of the Company's branch
                      offices;

               (14)   to formulate proposals for any amendment of the Company's
                      Articles of Association and its appendices;


                                       1
<PAGE>

               (15)   to formulate the Company's basic management system;

               (16)   to manage the disclosure of information of the Company;

               (17)   to propose in a shareholders' general meeting to engage
                      or replace the accounting firm which undertakes auditing
                      work of the Company;

               (18)   to listen to the president's work report and check the
                      president's work;

               (19)   to determine important matters and administrative matters
                      of the Company other than those which should be
                      determined by resolution of a shareholders' general
                      meeting of the Company except for matters as specified by
                      law, administrative rules, regulations of the competent
                      government department(s) and the Articles of Association,
                      and to sign other important agreements;

               (20)   to exercise any other powers stipulated by laws,
                      administrative rules, regulations of the competent
                      government department(s) or the Articles of Association,
                      and any other functions and powers conferred by the
                      shareholders' in general meetings.

               The necessary conditions for the board of directors to perform
               its duties shall include the following:

Article 3      The president shall provide the directors with necessary
               information and data, enabling the board of directors to make
               scientific, immediate and prudent decisions.

               A director may require the president or, through the president,
               require the relevant departments of the Company to provide
               information and explanations which are necessary for him to make
               scientific, immediate and prudent decisions.

               Where the independent directors think necessary, they may engage
               (an) independent institution(s) to provide independent opinions
               to be relied upon by them in making decisions. The fees incurred
               in the engagement of such (an) independent institution(s) shall
               be borne by the Company.

Article 4      The board of directors shall examine and resolve on the
               matters which the board of directors is required by laws,
               administrative rules, regulations of the competent government
               department(s) and the Articles of Association to submit to the
               shareholders in general meetings for determination (including
               matters proposed by two or more than half of the independent
               directors).

               The board of directors shall examine the provisional motions put
               forward by the shareholders individually or jointly holding more
               than 5% of the Company's voting shares at the shareholders'
               annual general meeting (the "AGM") according to the standard of
               "relevance" as set out in the Rules and Procedures for the
               Shareholders' General Meetings, and to decide whether to submit
               the provisional motions to the AGM for examination.

Article 5      In order to ensure and increase the stability and efficiency of
               the daily operation of the Company, the board of directors shall
               explicitly authorise, on a partial basis, the chairman, other
               one or more directors or the president to exercise its functions
               and powers on investment plans, assets disposals, external
               guarantees, the credit and financial policies and the internal
               management structure of the Company according to the provisions
               of the Articles of Association and the authorisation of the
               shareholders' general meeting.

Article 6      The powers and authority of the board of directors on
               investments shall include the following:

               (1)    The board of directors shall be responsible for
                      conducting preliminary examination of the medium and
                      long-term investment plans proposed by the president, and
                      shall submit them to the shareholders' general meetings
                      for approval.


                                       2
<PAGE>

               (2)    The board of directors shall be responsible for
                      conducting preliminary examination of the annual
                      investment plans proposed by the president, and shall
                      submit them to the shareholders' general meetings for
                      approval. The board of directors may make adjustments of
                      not more than 15% of the amount of the capital
                      expenditure for the current year as approved at the
                      shareholders' general meeting. The chairman of the board
                      of directors is authorised to make adjustments of not
                      more than of not more than 8% of the amount of the
                      capital expenditure for the current year as approved at
                      the shareholders' general meeting.

               (3)    Individual project investments (including but not limited
                      to exploration and development, fixed assets, external
                      shareholdings) shall be approved by the board of
                      directors if the investment amounts are not more than 5%
                      of the latest audited net asset value of the Company. The
                      Chairman of the board of directors is authorised to
                      examine and approve projects if the investment amount is
                      not more than 3% of the latest audited net asset value of
                      the Company.

               (4)    Where the Company uses its own assets to make risky
                      investment in areas not related to the business of the
                      Company (including but not limited to debentures,
                      futures, shares), risky investments shall be approved by
                      the board of directors if the amount of the individual
                      investment is not more than 1% of the latest audited net
                      asset value of the Company. The chairman of the board of
                      directors is authorised to examine and approve projects
                      if the investment amount is not more than 0.5% of the
                      latest audited net asset value of the Company.

               The powers and authority of the board of directors on asset
               disposals shall include the following:

Article 7

               (1)    When the Company acquires or sells assets, it has to take
                      into account of the following four testing indices: (i)
                      total asset ratio: the total amount of the assets to be
                      acquired or sold (according to the latest audited
                      financial report, valuation report or capital
                      verification report) divided by the latest audited total
                      asset value of the Company; (ii) net profit (loss) ratio
                      of the acquisition: the absolute value of the net profit
                      or loss relating to the assets to be acquired (according
                      to the audited financial report of the preceding year)
                      divided by the absolute value of the audited net profit
                      or loss of the Company for the preceding year; (iii) net
                      profit (loss) ratio of the sale: the absolute value of
                      the net profit or loss relating to the assets to be sold
                      (according to the audited financial report of the
                      preceding year) or the absolute value of the profit or
                      loss arising from such transaction divided by the
                      absolute value of the audited net profit or loss of the
                      Company for the preceding year; (iv) transaction amount
                      ratio: the transaction amount (taking into account of the
                      assumed liabilities and costs, etc) of the acquired
                      assets divided by the total amount of the latest audited
                      net asset value of the Company.

                      The board of directors shall examine and approve projects
                      with a ratio of less than 50% according to all the above
                      four testing indices. The chairman of the board of
                      directors is authorised to examine and approve projects
                      with a ratio of less than 10% according to all the above
                      four testing indices.

               (2)    In disposing of fixed assets, where the total value of
                      the expected value of the fixed assets to be disposed of
                      and the value of the fixed assets which have been
                      disposed of in the four months prior to such proposed
                      disposal does not exceed 33% of the value of the fixed
                      assets as shown in the latest balance sheet considered by
                      the shareholders' general meeting, the board of directors
                      shall examine and approve such disposal, and the Chairman
                      of the beard of directors is authorised to examine and
                      approve those fixed asset disposals of less than 10%.

               (3)    As regards others (including but not limited to the
                      entering into, varying and termination of important
                      contracts relating to entrustment of operation, entrusted
                      operation, entrusted financial management, contracting
                      and leasing), the relevant amount or the amount
                      accumulate in twelve months shall be calculated according
                      to one of four testing indices referred to in paragraph
                      (1) of this Article.

               Projects with a ratio of not more than 5% according to all the
               above four testing indices shall be examined and approved by the
               board of directors. The chairman of the board of directors is
               authorised to examine and approve projects with a ratio of not
               more than 1% according to all the above four testing indices.


                                       3
<PAGE>

Article 8      The powers and authority of the board of directors on debt
               liabilities shall include the following:

               (1)    The board of directors shall examine and approve the
                      amount of the long-term loans for the current year
                      according to the annual investment plan as approved by
                      the shareholders' general meeting. The chairman of the
                      board of directors is authorised to make adjustments of
                      not more than 10% of the total amount of the long-term
                      loans for the current year as approved by the board of
                      directors. Within the total amount of the long-term loans
                      as approved by the board of directors, the chairman of
                      the board of directors is authorised to approve and sign
                      the contract for every single long-term loan for the
                      amount exceeding RMB1 billion, and the president is
                      authorised to approve and sign the contract for every
                      single long-term loan for the amount not exceeding RMB1
                      billion.

               (2)    Within the total amount of the working capital loans for
                      the current year as approved by the board of directors,
                      the Chairman of the board of directors is authorised to
                      sign the overall short-term loan facility contracts for
                      raising working capitals required by the operation and
                      management of the Company according to the demand of the
                      Company. Within the amount limit as fixed by these loan
                      facility contracts, the chairman of the board of
                      directors is authorised to approve and sign the working
                      capital short-term loan contracts where the amount of one
                      single loan exceeds RMB1 billion, and the president is
                      authorised to approve and sign the working capital
                      short-term loan contracts where the amount of one single
                      loan does not exceed RMB1 billion.

               (3)    The Company shall not provide any guarantees for its
                      shareholders, controlling subsidiaries of its
                      shareholders, subsidiary enterprises of shareholders or
                      personal liability. If the Company provides guarantees to
                      others, the guaranteed person shall provide
                      counter-guarantee to the Company or take other necessary
                      risk preventive measures.

                      If the guarantee amount does not exceed 5% of the latest
                      audited net asset value of the Company, such guarantees
                      shall be examined and approved by the board of directors.
                      The chairman of the board of directors is authorised to
                      approve and sign the external guarantee contracts the
                      guaranteed amount of which does not exceed 1% of the
                      latest audited net asset value of the Company but more
                      than RMB100 million. The president is authorised to
                      approve and sign the external guarantee contracts the
                      guaranteed amount of which does not exceed RMB100
                      million.

Article 9      If, when applying the relevant standards as set out above, the
               approving offices of any investment, asset disposal and external
               guarantee matters as referred to above include the board of
               directors, chairman of the board of directors and/or president,
               such matters shall be submitted to the approving offices of the
               highest level for approval.

               If the above investment, asset disposal and loan matters
               constitute connected transactions according to the regulatory
               stipulations of the places where the Company is listed, the
               relevant matters shall be dealt with according to the relevant
               stipulations.

Article 10     The board of directors authorises the chairman to determine the
               following matters: (1) internal management structure of the
               Company; (2) the establishment of branch offices by the Company;
               (3) to appoint or replace the members of the board of directors
               and the members of the supervisory committee of the wholly-owned
               subsidiaries of the Company; and (4) to appoint, replace or
               recommend the shareholders' representatives, director
               (candidates) and supervisors (candidates) of the subsidiaries
               which are controlled or invested by the Company.

               CHAPTER 3 COMPOSITION OF THE BOARD OF DIRECTORS AND ITS
                         SUBORDINATED OFFICES

Article 11     The board of directors shall consist of twelve directors. The
               board of directors shall have one chairman and one
               vice-chairman.


                                       4
<PAGE>

Article 12     The board of directors shall establish strategic decision-making
               sub-committee, auditing sub-committee, remuneration and
               evaluation sub-committee and other special committees. These
               special committees shall conduct research on specific matters
               and provide opinions and suggestions on these matters to the
               board of directors for the reference.

               Members of the special committees shall be directors of the
               Company. The majority of the membership of the auditing
               sub-committee, and remuneration and evaluation sub-committee
               shall consist of the independent directors, who shall also act
               as convenors. The auditing sub-committee shall have at least one
               independent director who is also an accounting professional.

Article 13     The major responsibilities of the strategic decision-making
               sub-committee shall be to conduct research and put forward
               proposals on the long-term development strategy and significant
               investment decisions of the Company.

Article 14     The major responsibilities of the auditing sub-committee shall
               include the following:

               (1)    to propose the appointment or replacement of the external
                      auditor of the Company;

               (2)    to oversee the Company's internal auditing system and its
                      implementation;

               (3)    to be responsible for the communication between the
                      internal auditing department of the Company and the
                      external auditor;

               (4)    to examine and approve the Company's financial
                      information and it disclosure;

               (5)    to examine the internal control system of the Company.

Article 15     The major responsibilities of the remuneration and evaluation
               sub-committee shall include the following:

               (1)    to research on the criteria for the evaluation of
                      directors and the president, to conduct evaluation of
                      them and make necessary suggestions;

               (2)    to research on and review the policies and proposals in
                      respect of the remuneration of directors, supervisors,
                      president, vice-president, Chief Financial Officer and
                      secretary of the board of directors.

Article 16     The special committees of the board of directors shall formulate
               detailed working rules, which shall come into effect upon the
               submission to, and the approval of, the board of directors.


                 CHAPTER 4 SECRETARY OF THE BOARD OF DIRECTORS

Article 17     The Company shall have one secretary of the board of directors.
               The main duty of the secretary of the board of directors is to
               promote and improve the Company's corporate governance standards
               and properly deal with the matters regarding disclosure of
               information.

Article 18     The main duties of the secretary of the board of directors
               include:

               (1)    to organize and arrange for board meetings and
                      shareholders' general meetings, prepare the meeting
                      materials, handle the meeting related affairs, to be
                      responsible for record of meetings, ensure the accuracy
                      and completeness of records, keep the meeting documents
                      and records and take initiative to keep abreast of the
                      execution of the related resolutions; and submit reports
                      to the board of directors and put forward the proposals
                      for importance issues arising during the implementation;

               (2)    to ensure that the material issues concerning the
                      resolutions of the board of directors can be strictly
                      implemented in accordance with the specified procedures;
                      to participate and organize the consultation and analysis


                                       5
<PAGE>

                      on the decision-making matters of the board in accordance
                      with its requirements, and put forward the related
                      opinions and suggestions; to deal with the daily matters
                      of the board of directors and its related committees if
                      authorised;

               (3)    to be the contact person of the Company with the
                      securities regulatory authorities, be responsible for
                      organisation, preparation and timely submission of
                      related documents as required by the regulatory
                      authorities, and be responsible for related tasks
                      assigned by the regulatory authorities and to organise
                      and complete these tasks, and to ensure that the Company
                      prepares and submits the reports and other documents as
                      required by the regulatory authorities in accordance with
                      law;

               (4)    to be responsible for the co-ordination and organization
                      of the matters on disclosure of information of the
                      Company, establish and perfect the system concerning
                      information disclosure, participate in all related
                      meetings of the Company concerning information
                      disclosure, and keep abreast of the important business
                      policies and related information of the Company in a
                      timely manner;

               (5)    to be responsible for keeping confidential of the
                      sensitive materials concerning the share price of the
                      Company, and formulate effective and enforceable secrecy
                      systems and measures. For the divulgence of the sensitive
                      materials concerning the share price of the Company due
                      to various reasons, he shall take necessary remedial
                      measures, make timely explanation and clarification, and
                      notify the regulatory organizations in the places where
                      the shares of the Company are listed as well as the
                      securities regulatory authority of the State Council;

               (6)    to be responsible for the co-ordination and organization
                      of market promotion, coordinate the visit and interview,
                      deal with the relationship with investors, maintain the
                      relationship with investors, intermediary organs and news
                      agencies, be responsible for the co-ordination and
                      explanation of the inquiries of the public, and ensure
                      the investors to obtain the information as disclosed by
                      the Company in a timely manner, organize and arrange the
                      promotion and advertising activities of the Company
                      inside and outside the PRC, prepare and work out the
                      summary report on market promotion and other important
                      visiting activities, and report the related matters to
                      the securities regulatory authorities of the State
                      Council; to establish effective communication channels
                      between the Company and its shareholders, including
                      designating a staff and/or establishing (a) special
                      office(s) to keep sufficient and necessary contacts with
                      the shareholders, and to relay, in a timely manner, all
                      the feedbacks including opinions and suggestions of the
                      shareholders to the board of directors or the management
                      team of the Company;

               (7)    to ensure the proper preparation of the register of
                      shareholders, to be responsible for the management and
                      proper maintenance of the materials concerning register
                      of shareholders, directors' register, quantity of shares
                      held by majority shareholders and record of shares held
                      by directors, as well as the name list of the
                      beneficiaries of the outstanding debentures of the
                      Company;

               (8)    to assist directors and the president to practically
                      implement the domestic and foreign laws, regulations, the
                      Company's Articles of Association and other provisions in
                      discharge of their duties and exercise of their powers;
                      be liable to remind directors and the president timely on
                      becoming aware that the Company passes or may pass
                      resolutions which may breach the relevant regulations,
                      and be entitled to report the related matters to
                      securities regulatory authorities of the State Council
                      and other regulatory authorities according to the facts;

               (9)    to provide the related information necessary for the
                      supervisory committee of the Company and other approving
                      authorities to discharge their duties and to exercise
                      their powers, assist the investigation on the Chief
                      Financial Officer, directors and the president of the
                      Company concerning the performance of their fiduciary
                      duties;

               (10)   to ensure the complete organizational documents and
                      records of the Company are kept properly, and the persons
                      who have the rights of access to the relevant documents
                      and records of the Company obtain those documents and
                      records in a timely manner; and

               (11)   to discharge other duties and to exercise other powers as
                      conferred by the board of directors, as well as other
                      duties and powers as required by the listing rules of the
                      stock exchanges on which the Company's shares are listed.


                                       6
<PAGE>

Article 19     The board of directors of the Company shall have a secretarial
               office, which shall be a daily working body assisting the
               secretary of the board of directors in performing his duties.

Article 20     The Company shall formulate regulations in relation to the work
               of the secretary of the board, and perform the work for
               disclosure of information and investor relations. The relevant
               system shall be effective after reporting to the board of
               directors for approval.


              CHAPTER 5 RULES OF THE BOARD OF DIRECTORS' MEETING

Article 21     The board of directors' meetings shall be divided into regular
               meetings and provisional meetings according to the regularity of
               such meetings.

Article 22     The regular meetings shall include the following:

               (1)    The board meetings approving financial reports of the
                      Company:

                      (i)    The annual results meetings

                             The annual results meetings shall be convened
                             within 120 days from the end of the accounting
                             year of the Company. The directors shall approve
                             the Company's annual reports and deal with other
                             relevant matters at such meetings. The timing of
                             such meetings shall ensure that the annual reports
                             of the Company will be despatched to the
                             shareholders within the time limit specified by
                             the relevant regulations and the Articles of
                             Association, and shall ensure that the preliminary
                             annual financial results of the Company will be
                             announced within the time limit specified by the
                             relevant regulations of the Company, and shall
                             ensure that the AGM will be convened within 180
                             days from the end of the accounting year of the
                             Company.

                      (ii)   The interim results meetings

                             The interim results meetings shall be convened
                             within 60 days from the end of the first six
                             months of the accounting year of the Company. The
                             directors shall approve the Company's interim
                             reports and deal with other relevant matters at
                             such meetings.

                      (iii)  The quarterly results meetings

                             The quarterly results meetings shall be held in
                             the first month of each of the second and fourth
                             quarter of the Gregorian calendar year. The
                             directors shall approve the Company's quarterly
                             reports for the preceding quarters at such
                             meetings.

               (2)    The year-end review meetings

                      The year-end review meetings shall be convened in
                      December of each year. The directors shall listen to and
                      approve the president's report in respect of the expected
                      performance of the Company in the year and the work
                      arrangements for the following year at such meetings.

Article 23     The chairman of the board of directors shall approve the issue
               of a notice convening the provisional board of directors'
               meeting within seven days in any one of the following events:

               (1)    where the chairman of the board of directors considers
                      necessary;

               (2)    where more than one-third of the directors propose in
                      their joint names;


                                       7
<PAGE>

               (3)    where more than one-half of the independent directors
                      propose in their joint names;

               (4)    where the supervisory committee proposes;

               (5)    where the president proposes.

Article 24     The board of directors' meetings shall be divided into meetings
               at which all directors must be physically present and meetings
               which the directors may authorise other directors to attend on
               their behalf, according to whether the directors are physically
               present at the meetings. The meetings which all directors must
               be physically present shall be held at least once every six
               months, and such meetings shall not be held by way of written
               resolutions or video-telephone meetings.

Article 25     The board of directors' meetings shall be divided into on-site
               meetings, video-telephone meetings and meetings by way of
               written resolutions.

               All the meetings of the board of directors may be held by the
               way of on-site meetings.

               The board of directors' meetings may be held by the way of
               video-telephone meetings, provided that the attending directors
               are able to hear clearly the director who speaks at the meeting
               and communicate amongst themselves. The meetings convened by
               this way shall be recorded and videotaped. In the event that the
               attending directors are unable to sign for the resolutions on
               site, they shall express their opinions orally during the
               meeting and shall complete the signing procedures as soon as
               practicable. The verbal voting by a director shall have the same
               effect as signing in the voting sheet, provided that there is no
               discrepancy between the opinions expressed by such director in
               completing signing procedure and the opinions orally expressed
               by him during the meeting.

               In the case of urgency (limiting to cases where an on-site
               meeting or a video-telephone meeting is impractical), and the
               matters to be examined are comparatively procedural and unique
               so that the a discussion of the motions proves to be
               unnecessary, the board of directors' meeting may be held by
               written resolutions, in which case the motions shall be passed
               by way of circulating the motions for directors' review. Unless
               otherwise expressed by the directors, signing on the written
               resolutions by the directors shall be sufficient evidence that
               they have agreed to the resolutions.


           CHAPTER 6 PROCEEDINGS OF THE BOARD OF DIRECTORS' MEETING

Article 26     Putting forward Motions

               The motions of the board of directors' meetings shall be put
               forward in the following circumstances:

               (1)    matters proposed by the directors;

               (2)    matters proposed by the supervisory committee;

               (3)    motions from the special committees of the board of
                      directors;

               (4)    matters proposed by the president;

               (5)    matters to be considered by the shareholders of the
                      subsidiaries controlled or invested by the Company in
                      their shareholders' meetings (shareholders' general
                      meetings).

Article 27     Collecting Motions


                                       8
<PAGE>

               The secretary of the board of directors shall be responsible for
               collecting the draft motions in respect of the matters to be
               considered at the meeting. Each person who puts forward the
               relevant motion(s) shall submit the motions and relevant
               explanatory materials before the date of the meeting. Motions
               concerning material connected transactions (which are determined
               according to the standards promulgated by the relevant
               regulatory authorities from time to time) shall first be
               approved by the independent directors. The relevant materials
               shall be submitted to the chairman of the board of directors
               after scrutinized by the secretary of the board of directors,
               who shall also set out the time, place and agenda of the meeting
               in the materials submitted.

Article 28     Convening the Meetings

               A board of directors' meeting shall be convened by the chairman
               of the board of directors, who shall also approve the issue of
               the notice convening the meeting. If the chairman of the board
               of directors is unable to convene the meeting due to special
               reasons, he shall designate the vice-chairman or other
               director(s) to convene the meeting. Where the chairman fails to
               convene a meeting with no reason or designate specific personnel
               to act on his behalf, a director chosen by the vice-chairman and
               one-half of the directors jointly shall convene the meeting. The
               convenors of the meeting shall be responsible for approving the
               issue of the notice of the meeting.

Article 29     Notice of the Meetings

               (1)    The notice of a board of directors' meeting shall be
                      delivered to all directors, supervisors and other
                      personnel attending the meeting before the date of the
                      meeting. The notice of the meeting shall generally set
                      out the following:

                      i.     the time and place of the meeting;

                      ii.    the duration of the meeting;

                      iii.   the agenda, reasons, subject matters and other
                             relevant particulars of the meeting;

                      iv.    the date of the issue of the notice.

               (2)    The board of directors' meetings shall be noticed
                      according to the following requirements and form:

                      i.     the notice of the meeting may be served on the
                             directors by courier, facsimile, electronic means,
                             telegraph or mail;

                      ii.    the notice of the board of directors' meeting
                             shall be delivered to the directors ten days
                             before the date of the meeting;

                      iii.   the notice shall be written in Chinese, if
                             necessary, the English version can be attached.

               Any director may waive the right to receive the notice of board
               meeting.

               Notice of a meeting shall be deemed to have been given to any
               director who attends the meeting without protesting against,
               before or at its commencement, any lack of notice.

Article 30     Communication before the Meetings

               After the issue of the notice of a meeting and before the date
               of the meeting, the secretary of the board of the directors
               shall be responsible for, and shall communicate and liaise with
               all supervisors, to seek their opinions or suggestions in
               respect of the motions of the meeting, and shall pass on these
               opinions or suggestions to the persons put forward the motions,
               so as to enable necessary amendments to be made to them. The
               secretary of the board of directors shall also, in a timely
               manner, arrange for the provision of the supplemental materials
               which are required for the directors to make decisions on the
               motions of the meeting, including the background information
               relating to the subject of the meeting and other information
               which will assist the directors in making scientific, immediate
               and prudent decisions.


                                       9
<PAGE>

               Where more than one-fourth of the directors or two external
               directors are of the opinion that the materials provided are
               insufficient or unclear, they may make a proposal jointly
               concerning the postponement of holding of the board meeting or
               the postponement of discussions on the part of the issues put
               forward by the board of directors, and the board of directors
               shall adopt such a proposal. Unless such a proposal is put
               forward during the meeting, the secretary of the board of
               directors shall serve a notice on the directors, supervisors and
               other personnel attending the meeting upon receiving a written
               request concerning the postponement of holding of the meeting or
               the postponement of discussions on part of the issues put
               forward by the board of directors.

Article 31     Attendance of the Meetings

               Meetings of the board shall be held only if more than half of
               the directors are present.

               Directors shall attend the meetings of the board of directors in
               person. Where a director is unable to attend a meeting for any
               reason, he may by a written power of attorney appoint another
               director to attend the meeting on his behalf (where an
               independent director is unable to attend in person, he shall
               appoint another independent director to attend on his behalf).
               The power of attorney shall set out the name of the attorney,
               the particulars and the scope of authorisation, duration of the
               validity of such authorisation, and shall be signed or sealed by
               the principal.

               In the event that an independent director does not attend the
               board of directors' meeting for three consecutive meetings, the
               board of directors may propose to the shareholders' general
               meeting to have such independent directors dismissed.

               The board of directors' meeting shall be chaired by the chairman
               of the board of directors. Where circumstances preclude the
               Chairman, he may designate the vice-chairman or other directors
               to act on his behalf. Where the chairman of the board fails to
               chair the meeting without reason or designate specific personnel
               to act on his behalf, a director chosen by the vice-chairman or
               more than half of the directors shall chair the meeting. Upon
               the expiry of the term of office of the directors and the
               re-election of the new directors at the shareholders' general
               meeting, the directors who obtains the largest number of votes
               at such re-election (if more than one, one shall be chosen
               amongst them) shall chair such meeting, at which the chairman of
               the new board of directors shall be elected.

Article 32     Examining the Motions

               The chairman of the meeting shall declare the commencement of
               the meeting as scheduled. The directors in presence shall reach
               an agreement on the agenda of the meeting thereafter. Where more
               than one-fourth of the directors or more than two external
               directors are of the opinion that the materials of the meeting
               are insufficient or unclear, they may make a proposal jointly
               concerning the postponement of holding of the board meeting or
               the postponement of discussions on the part of the issues put
               forward by the board of directors, and the board of directors
               shall adopt such a proposal.

               When an agreement is reached in respect of the agenda of the
               meeting by the directors present at the meeting, the chairman of
               the meeting shall direct the motions to be examined one by one.
               Persons who put forward the motions or their attorneys shall
               first report to the board of directors their work or make
               statements in respect of the motions.

               In reviewing the relevant proposals, motions and reports, in
               order to understand the main points and the background
               information of the motions in detail, the board of directors'
               meeting may require the heads of the departments which are
               responsible for handling the motions to attend the meeting to
               listen to and make inquiries of the relevant statements made at
               the meeting, so that proper decisions can be made at the
               meeting. If, in the course of the meeting, any motions examined
               are found to be unclear or infeasible, the board of directors
               shall require the departments which are responsible for handling
               the motions to give a statement at the meeting, and the motions
               can be returned to such departments for re-handling and their
               examination and approval shall be postponed.

               The independent directors shall give their independent opinions
               to the board of directors on the following matters:


                                      10
<PAGE>

               (1)    the nomination, appointment and removal of the directors;

               (2)    the appointment and dismissal of the president,
                      vice-president, Chief Financial Officer and secretary of
                      the board of directors;

               (3)    the remuneration of the directors, the president,
                      vice-president, Chief Financial Officer and secretary of
                      the board of directors of the Company;

               (4)    the loans made by the Company to its shareholders, the
                      person in actual control of the Company or the associated
                      enterprises of the Company or other money transfer
                      between them, the amounts of which are equivalent to or
                      exceed the relevant thresholds of the Company's material
                      connected transactions (which shall be determined in
                      accordance with the standards promulgated from time to
                      time by the relevant regulatory authorities) which must
                      be examined by the board of directors or shareholders'
                      general meeting according to law, and whether the Company
                      has taken effective measures to recover such debts;

               (5)    any matters which the independent shareholders consider
                      to be detrimental to the interests of minority
                      shareholders.

               An independent director shall give his opinion on the
               above-mentioned matters in the following manner:

               (1)    consent;

               (2)    opinion reserved and reasons;

               (3)    opposition and its reasons;

               (4)    no opinion can be expressed and the obstacles.

Article 33     Voting on the Motions

               In reviewing the motions at the board of directors' meeting, all
               attending directors shall deliver their opinions in respect of
               approval or objection to such motions or abstention from voting.

               The directors who are acting as proxies of others shall exercise
               the rights of voting within the authorisation.

               Where a director is not present at a board of directors' meeting
               and fails to appoint a proxy to act on his behalf, such director
               shall be deemed to have waived his rights to vote at the
               meeting.

               In reaching resolutions by the board of directors, except the
               following matters the resolutions of which shall be passed by
               the consent of more than two-thirds of the directors, the other
               matters shall be passed by the consent of more than one-half of
               the directors:

               (1)    to formulate proposals for the credit and financial
                      policies of the Company, the increase or reduction of the
                      registered capital of the Company and the issuance of
                      debentures and securities of any kind (including but
                      without limitation to the debentures of the Company) and
                      the listing or repurchase of the shares of the Company;

               (2)    to draw up plans for significant acquisition or disposal
                      proposals, the merger, division or dissolution of the
                      Company;

               (3)    to determine to provide external guarantees;

               (4)    to formulate proposals for any amendment to the Articles
                      of Association and its schedules.

               The resolutions of the board of directors may be decide on a
               poll or show of hands. Each director shall have one vote.


                                      11
<PAGE>

               Where the votes for and against a resolution are equal, the
               chairman of the board of directors is entitled to cast one more
               vote. If a director or his associate (as defined in the Rules
               Governing the Listing of Securities of the Hong Kong Stock
               Exchange Limited) have a material interest in any contract,
               transaction, arrangement or other matters that requires the
               approval of the board of directors, the relevant director shall
               not vote for the relevant matter at the meeting of the board of
               directors, and shall not be listed in the quorum of the meeting.
               Where resolutions cannot be reached due to the abstention from
               voting of the connected directors, the relevant motions shall be
               submitted directly to the shareholders' general meeting for
               examination.

Article 34     Liability of Directors in respect of Resolutions of the Board of
               Directors' Meetings

               A written resolution of the board of directors shall not take
               effect as a resolution of the board of directors if it has not
               been formulated in accordance with the stipulated procedures,
               notwithstanding all the directors have already expressed their
               opinions in different ways. The directors shall be responsible
               for the resolutions passed at the meetings of the board of
               directors. Any director who votes for a resolution which
               contravenes the laws, administrative regulations or the Articles
               of Association thus causing serious damages to the Company shall
               be directly liable (including the compensation of damages) for
               all the loss incurred by the Company as a result. A director who
               votes against the resolution, and who has been proved as having
               expressed dissenting opinions on the resolution and such
               opinions are recorded in the minutes of the meeting can be
               exempt from liability. A director who waives his right of
               voting, or who fails to attend the meeting and fails to appoint
               a proxy to act on his behalf, cannot escape liability. A
               director who explicitly express his objection in the course of
               discussion but fails to cast an objection vote in the voting
               cannot escape liability.

Article 35     Resolutions of the Meeting

               In principle, the board of directors' meeting shall resolve on
               all the matters examined at the meeting.

               A resolution on the Company's connected transaction shall not be
               valid until it is signed by all directors.

               The independent directors' opinions shall be set out in the
               resolutions of the board of directors meetings.

Article 36     Minutes of the Meetings

               Minutes of the board of directors' meeting are proof of the
               resolutions on the matters examined at the meeting. Detailed
               minutes in respect of the matters examined at the meeting shall
               be recorded. The minutes of the board of directors' meeting
               shall state the following:

               (1)    the date, place, names of the convenors and chairman of
                      the meeting;

               (2)    the names of the attending directors and the names of the
                      present, the names of appointing directors and their
                      attorneys;

               (3)    the agenda of the meeting;

               (4)    the essential points of the directors' presentations (for
                      the written resolution meeting, the version containing
                      the directors' feedbacks in writing shall prevail);

               (5)    the voting methods and outcome for each proposal (the
                      outcome of the voting shall set out the respective number
                      of assenting or dissenting votes or votes that were
                      waived);

               (6)    the directors' signature.


                                      12
<PAGE>

               The secretary of the board of directors shall take initiative to
               arrange for the matters examined at the meeting to be recorded.
               The minutes of each meeting shall be provided to the directors
               for review without delay. Those directors who wish to make
               supplementary revision on the minutes shall report their
               opinions on the revision to the chairman of the board of
               directors in written form within one week after the receipts of
               the minutes of the board meeting. After the minutes of board
               meeting are finally determined, the attending directors, the
               secretary of the board of directors and the minute-taking
               officer shall sign the minutes of the board meeting. The
               secretary of the board of directors shall deliver the complete
               duplicate of the minutes to all directors. The minutes of the
               board meeting, being an important document, shall be properly
               kept at the business address of the Company.

                   CHAPTER 7 DISCLOSURE OF INFORMATION RELATING TO THE
                             BOARD OF DIRECTORS' MEETING

Article 37     The board of directors of the Company shall strictly comply
               with the requirements of the regulatory authorities and the
               stock exchanges on which the Company's shares are listed in
               relation to the disclosure of information. It shall ensure that
               matters examined or resolutions passed at the board of
               directors' meeting which are discloseable are disclosed
               accurately and in a timely manner. Information relating to
               significant matters of the Company must be reported to the
               stock exchanges on which the Company's shares are listed at the
               earliest opportunity, and shall be submitted to relevant
               regulatory authorities for filing.

Article 38     Where a matter which requires the independent opinions of the
               independent directors is discloseable, the Company shall
               disclose such opinions in the relevant announcement. If the
               independent directors are of divergent views and cannot reach
               any consensus, the board of directors shall disclose the
               respective opinions of each of the independent directors.

Article 39     Regarding confidential information, the attendees of the meeting
               must keep such information confidential. Punishment shall be
               imposed on those who are in breach of this duty.

                      CHAPTER 8 IMPLEMENTATION OF THE RESOLUTIONS OF THE BOARD
                                OF DIRECTORS' MEETING AND FEEDBACKS

Article 40     The following matters shall not be implemented until they
               are examined and preliminarily approved by the board of
               directors and submitted to the shareholders' general meeting
               for approval thereafter:

               (1)    the formulation of the Company's annual preliminary and
                      final financial budgets;

               (2)    the formulation of Company's profit distribution
                      proposals and loss recovery proposals;

               (3)    the increase or reduction of the registered capital of
                      the Company and the issue of debentures or other
                      securities, as well as the listing or repurchase of the
                      shares of the Company;

               (4)    the formulation of plans for merger, division or
                      dissolution of the Company;

               (5)    the formulation of proposals for any amendment to the
                      Articles of Associations; and

               (6)    proposal to be submitted to the shareholders in general
                      meeting for the appointment or replacement of the
                      accounting firm auditing the accounts of the Company.

Article 41     After resolutions are passed at a board of directors'
               meeting, the president shall implement the resolutions which
               fall within the scope of the authority of the president, or
               which the board of directors authorises the president to
               handle, and shall report the status of implementation to the
               board of directors.

Article 42     The chairman of the board shall have the power to, or
               authorize the vice-chairman or the directors to, urge, examine
               and supervise the implementation of the resolutions of the
               meeting.


                                      13
<PAGE>


Article 43     At each board of directors' meeting, the president shall
               deliver a written report to the meeting in relation to the
               status of implementation of the matters which, according to the
               resolutions of the previous meeting, must be implemented.

Article 44     Under the direction of the board of directors and the
               chairman, the secretary of the board of directors shall take
               initiative to obtain information in respect of the progress on
               the implementation of the resolutions, and shall, in a timely
               manner, report to and submit proposals to the board of directors
               and the chairman in relation to the important issues to be
               implemented.


                        CHAPTER 9 SUPPLEMENTAL ARTICLES

Article 45     Where these Rules fail to comply with relevant laws, regulations
               and other regulatory documents as promulgated from time to time,
               these laws, regulations and other regulatory documents shall
               prevail.

Article 46     Upon the unanimous consensus of all directors of the Company,
               the formulation of and the amendment to these Rules shall come
               into effect if they are adopted by the shareholders' general
               meeting by a special resolution and approved by the relevant
               authorities.

Article 47     The right to interpret these Rules shall vest with the board of
               directors.




                                      14
<PAGE>


                                                                   Appendix III





                              Rules and Procedures

                                      for

                        Supervisory Committee's Meetings

                                       of

                     China Petroleum & Chemical Corporation






<PAGE>



                          CHAPTER 1 GENERAL PROVISIONS

Article 1      In order to standardize the operation of the supervisory
               committee of China Petroleum & Chemical Corporation (the
               "Company"), to ensure the supervisory committee implementing the
               duties and responsibilities conferred by all shareholders of the
               Company, these Rules are formulated according to the "Company
               Law of the People's Republic of China" (the "Company law"),
               "Mandatory Provisions for the Articles of Association of
               Companies to be Listed Overseas", "Guidelines for the Articles
               of Association of Listed Companies", "Standards for the
               Governance of Listed Companies" and other relevant laws and
               regulations regulating listed companies inside and outside the
               PRC and the Articles of Association of China Petroleum &
               Chemical Corporation ("Articles of Association").

Article 2      The supervisory committee is accountable to the shareholders'
               general meetings. It shall be responsible for supervising the
               financial affairs of the Company and the lawfulness of the
               performance of their duties by the directors, president,
               vice-president, Chief Financial Officer and secretary of the
               board of directors of the Company so as to safeguard the
               legitimate interests of the Company and its shareholders.

Article 3      The Company shall take measures to ensure the supervisors'
               rights to know the Company's affairs, and provide them with
               necessary information and materials, so as to enable the
               supervisory committee to conduct effective supervision,
               inspection and evaluation of the financial status and
               management situation of the Company.

               The president shall report to the supervisory committee the
               entering into of, and the enforcement of, material contracts by
               the Company, the use of capitals and the profitability of the
               Company upon the request of the supervisory committee. The
               president shall ensure the truthfulness of such report.

                      CHAPTER 2 COMPOSITION OF THE SUPERVISORY COMMITTEE
                                AND ITS ADMINISTRATIVE OFFICE

Article 4      The supervisory committee shall compose of ten supervisors. Of
               which, six of them shall be shareholder representatives
               (including those who are eligible to be external supervisors);
               four of them shall be representatives of workers and staff of
               the Company. The supervisory committee shall have one chairman
               and one vice-chairman.

               The election and removal of the chairman of the supervisory
               committee shall be determined by two-thirds or more of the
               members of the supervisory committee.

Article 5      The term of the office of a supervisor shall be three years.
               The supervisors representing the shareholders shall be elected
               and removed by the shareholders' general meeting. The
               supervisors representing the workers and staff of the Company
               shall be elected and removed democratically by those workers
               and staff of the Company. The term of a supervisor is renewable
               upon re-election and re-appointment.

Article 6      Except for complying with the eligibility requirements as set
               out in the Company Law and the Articles of Association, the
               supervisors shall possess professional knowledge and work
               experience in the field of law or accounting.

Article 7      A supervisor may resign before the expiry of his term of office
               by submitting a written resignation letter to the supervisory
               committee.

               Provisions in respect of the resignation of directors as set out
               in the Articles of Association shall be applicable to the
               resignation of supervisors, including (but without limitation
               to) where a supervisor's resignation will result in the number
               of supervisors of the Company falling below the quorum as
               provided by law, the resignation letter of such supervisor shall
               not be effective until the vacancy created by his resignation
               has been filled.

Article 8      The supervisory committee shall have an administrative office
               responsible for handling daily affairs of the supervisory
               committee.


                                       1
<PAGE>



                 CHAPTER 3 FUNCTIONS AND POWERS OF THE SUPERVISORY COMMITTEE

Article 9      The supervisory committee shall exercise the following functions
               and powers in accordance with law:

               (i)    to review the Company's financial position. Where
                      necessary, the supervisory committee may appoint another
                      accounting firm on behalf of the Company to carry out
                      independent audit;

               (ii)   to supervise the directors, president, vice-president,
                      Chief Financial Officer and secretary of the board of
                      directors of the Company in order to ensure that they do
                      not act in contravention of any law, regulation or the
                      Articles of Association in performing their duties;

               (iii)  to demand the directors, president, vice-president, Chief
                      Financial Officer and secretary of the board of directors
                      of the Company who acts in a manner which is harmful to
                      the Company's interest to rectify such acts, and report
                      to the shareholders' general meeting and relevant
                      authorities of the State when necessary;

               (iv)   to check and inspect the financial information such as
                      the financial report, business report and plans for
                      distribution of profits to be submitted by the board of
                      directors to the shareholders' general meetings and to
                      authorize, in the Company's name, publicly certified and
                      practicing accountants to assist in reviewing such
                      information should any doubt arise in respect thereof;

               (v)    to give opinions on the appointment of an accounting firm
                      of the Company;

               (vi)   to propose to convene an extraordinary general meeting,
                      and may put forward provisional motions at the
                      shareholders' annual general meeting;

               (vii)  to propose to convene provisional board meetings;

               (viii) to represent the Company in negotiations with or in
                      bringing actions against a director;

               (ix)   other duties and powers provided for in the Articles of
                      Association. The supervisors shall attend meetings of the
                      board of directors.

Article 10     The supervisory committee shall declare the Company's
               supervisory report for the preceding year at the AGM. Such
               report shall include the following matters:

               (i)    the review of the Company's financial position;

               (ii)   the implementation of relevant laws, regulations,
                      Articles of Association and the resolutions of the
                      shareholders' general meetings by the directors,
                      president, vice-president, Chief Financial Officer and
                      secretary of the board of directors of the Company;

               (iii)  the evaluation of the performance of the directors,
                      president, vice-president, Chief Financial Officer and
                      secretary of the board of directors of the Company by the
                      supervisory committee, in particular the specific
                      opinions of the external supervisors;

               (iv)   other significant events which in the opinion of the
                      supervisory committee shall be reported to the
                      shareholders' general meeting.

               Where the supervisory committee thinks necessary, it may
               express its opinions on the motions examined at the
               shareholders' general meetings, and may submit an independent
               report to the shareholders' general meetings.

Article 11     All reasonable fees incurred in respect of the employment of
               professionals such as lawyers, certified public accountants or
               practicing auditors which are required by the supervisory
               committee in the exercise of its functions and powers shall be
               borne by the Company.


                                       2
<PAGE>

               The expenses incurred by the supervisors in attending the
               supervisors' meeting shall be borne by the Company. These
               expenses shall include the transport fares incurred by the
               supervisors in travelling from their own addresses to the
               places of the meetings, and fees for the accommodation and
               meals during the meeting.

Article 12     The chairman of the supervisory committee shall exercise the
               following functions and powers:

               (i)    to convene and chair the meetings of the supervisory
                      committee;

               (ii)   to organise and carry out the duties of the supervisory
                      committee;

               (iii)  to review and approve, and signing the reports of the
                      supervisory committee and other important documents;

               (iv)   to represent the supervisory committee to report to the
                      shareholders' general meetings;

               (v)    other duties that shall be performed by him in accordance
                      with law or the Articles of Association.

               Where special circumstances preclude the chairman from
               exercising his functions and powers, these functions and powers
               shall be exercised by a supervisor designated by him.

Article 13     In performing its duties, the supervisory committee may
               report to the board of directors and the shareholders general
               meetings the breach of laws and rules relating to the Company's
               financial affairs and the acts of the directors, president,
               vice-president, Chief Financial Officer and secretary of the
               board of directors of the Company which are in violation of
               laws, regulations or the Articles of Association. It may also
               directly report the same to the securities regulatory
               authorities of the State Council and other relevant
               authorities.

Article 14     A supervisor shall abide by the laws, regulations and the
               Articles of Association, and shall perform his duties
               faithfully and diligently.

                  CHAPTER 4 RULES OF THE SUPERVISORS' MEETINGS

Article 15     The supervisors' meetings shall be divided into regular meetings
               and provisional meetings according to the regularity of such
               meetings.

Article 16     The regular meetings shall be convened at least four times
               each year, including the interim results meeting, the annual
               results meeting, the year-end review and the arrangement
               meetings for supervisors financial management meetings.

               The interim results meetings shall be convened within sixty
               days from the end of the first six months of the accounting
               year of the Company. The supervisors shall listen to and
               approve the Company's interim reports and deal with other
               relevant matters at such meetings.

               The annual results meetings shall be convened within 120 days
               from the end of the accounting year of the Company. The
               supervisors shall listen to and approve the Company's annual
               reports and deal with other relevant matters at such meetings.

               The year-end review and arrangement meetings shall be convened
               in December of each year. The supervisors shall listen to and
               approve the president's report in respect of the expected
               performance of the Company in the year and the work
               arrangements for the following year at such meetings.

               The financial management meetings shall be convened within 30
               days from the end of the annual financial work meeting of the
               Company. The supervisors shall listen to and approve the report
               of the Company's financial department in respect of conducting
               the overall budget management and strengthening financial
               control by the Company.

Article 17     A provisional supervisors' meeting shall be convened in any one
               of the following events:


                                       3
<PAGE>

               (i)    here the chairman of the supervisory committee considers
                      necessary;

               (ii)   where more than two-thirds of the supervisors propose in
                      their joint names;

               (iii)  where the Company has suffered or is suffering loss of
                      substantial assets causing the shareholders' interests to
                      be damaged;

               (iv)   where the directors, president, vice-president, Chief
                      Financial Officer and secretary of the board of directors
                      of the Company act in a way which is in contravention of
                      laws, regulations or the Articles of Association causing
                      the Company's interests to be seriously damaged.

Article 18     The supervisors' meetings shall be divided into on-site
               meetings, video-telephone meetings and meetings by way of
               written resolutions.

               All the meetings of the supervisory committee may be held by the
               way of on-site meeting.

               The meetings of the supervisory committee may be held by the
               way of video-telephone meetings, provided that the attending
               supervisors are able to hear clearly the supervisor who speaks
               at the meeting and communicate amongst themselves. In the event
               that the attending supervisors are unable to sign for the
               resolutions on site, they shall express their opinions orally
               during the meeting and shall complete the signing procedures as
               soon as practicable.

               Where an on-site meeting or a video-telephone meeting is
               impractical, the supervisors' meeting may be held by way of
               written resolutions, in which case details of the motions to be
               discussed and examined at the meeting, which are in the written
               form, shall be despatched to the supervisors for decision.
               Unless otherwise expressed by the supervisors, signing on the
               written resolutions by the supervisors shall be sufficient
               evidence that they have agreed to the resolutions.

Article 19     A supervisors' meeting shall be validly convened by the presence
               of not less than two-thirds of the supervisors.

               The supervisors shall be physically present at the supervisors'
               meetings. If for any reason a supervisor is unable to attend
               the meeting, he shall by written authorisation appoint another
               supervisor to act as his proxy to attend the meeting and
               exercise his functions and powers. The written authorisation
               shall state the name of the proxy, the scope of the
               authorisation, the authority of the proxy and the period of
               validity. It shall also be signed by the proxy or affix the
               seal of the proxy.

               In the event that a supervisor does not attend the supervisors'
               meeting in person for two consecutive meetings, he shall be
               deemed to be unable to perform his duties, and the
               shareholders' general meeting or the staff representative
               meeting shall dismiss such supervisor.


               CHAPTER 5 PROCEEDINGS OF THE SUPERVISORS' MEETING

Article 20     The supervisory committee shall put forward motions according to
               the matters to be examined by the board of directors and matters
               proposed by the supervisors.

Article 21     The administrative office of the supervisory committee shall be
               responsible for gathering the matters to be examined by the
               board of directors and the matters proposed by the supervisors,
               and shall submit these matters to the chairman of the
               supervisory committee in time. The chairman of the supervisory
               committee shall determine whether to submit these matters to the
               supervisory committee for review according to the importance and
               urgency of these matters.

Article 22     The chairman of the supervisory committee shall be
               responsible for convening the supervisors' meeting, and shall
               sign the notice of the meeting. Such notice shall state the
               date, place, duration, agenda, reasons and subject matters of
               the meeting and other relevant information, as well as the date
               of the issuance of such notice.

               The notice of a supervisors' meeting shall be delivered to the
               supervisors ten days before the date of the meeting. Any


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               supervisor may waive his right to demand the notice of the
               meeting.

               The notice of the meeting may be served on the supervisors by
               courier, facsimile, telegraph or mail.

Article 23     After the issue of the notice of a meeting and before the
               date of the meeting, the administrative office of the
               supervisory committee shall be responsible for, and shall
               communicate and liaise with all supervisors, to seek their
               opinions or suggestions in respect of the motions of the
               meeting, so as to enable necessary amendments to be made to
               them.

               Where more than one-fourth of the members of the supervisors or
               two external supervisors are of the opinion that the
               information in respect of a specific motion is insufficient to
               allow judgment to be made, or the motion is not convincing,
               they may in their joint name propose to postpone the
               examination of such a motion, and the supervisory committee
               shall adopt such a proposal.

Article 24     The supervisors' meeting shall be chaired by the chairman of
               the committee. Where circumstances preclude the chairman to
               chair the meeting, he may designate a supervisor to chair the
               meeting. Upon the expiry of the term of office of the
               supervisory committee and the re-election of the new
               supervisors by the shareholders' general meeting, the
               supervisor who obtains the largest number of approval votes at
               such re-election (if more than one, one shall be chosen amongst
               them) shall chair such meeting, at which the chairman of the
               new supervisory committee shall be elected.

Article 25     The chairman of the meeting shall declare the commencement
               of the meeting as scheduled. The supervisors in presence shall
               reach an agreement on the agenda of the meeting thereafter.

               Where more than one-fourth of the supervisors or two external
               supervisors are of the opinion that the information in respect
               of one specific motion is insufficient to allow judgment to be
               made, or the motion is not convincing, they may in their joint
               name propose to postpone the examination of such a motion, and
               the chairman of the meeting shall adopt their proposal.

               Where an agreement is reached in respect of the agenda of the
               meeting by the supervisors present at the meeting, the chairman
               of the meeting shall direct the motions to be examined one by
               one.

Article 26     In reviewing the relevant motions and reports, the
               supervisors' meeting may require the directors, president,
               vice-president, Chief Financial Officer, secretary of the board
               of directors and the internal and external auditors of the
               Company to attend the meeting to give necessary explanations to
               the relevant matters, and to answer the questions which the
               supervisory committee is concerned with.

Article 27     In reviewing the motions at supervisors' meetings, all
               attending supervisors shall deliver their opinions in respect
               of approval or objection to such motions or abstention from
               voting.

               The supervisors who are acting as proxies of others shall
               exercise the rights of voting within the authorization.

               Where a supervisor is not present at a supervisors' meeting and
               fails to appoint a proxy to act on his behalf, such supervisor
               shall be deemed to have waived his rights to vote at the
               meeting.

Article 28     In principle, resolutions shall be made on the matters
               examined at the supervisors' meeting. Such resolutions shall be
               decided on a poll or show of hands. No resolution shall be
               effective unless approved by more than two-thirds of all the
               supervisors.

Article 29     Detailed minutes of a supervisors' meeting shall be recorded as
               proof of the resolutions on the matters examined at the meeting.

               The minutes of the meeting shall state the date and place of
               the meeting, name of the chairman of the meeting, names of the
               attending supervisors and names of the principals and proxies
               who have fulfilled the necessary procedures for attending the
               meeting, agenda of the meeting, main points of each
               supervisor's speech, the methods of voting for each matter to
               be resolved on and the voting result (the result shall state
               the number of votes for approval or objection to the motion or
               abstention).


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               The administrative office of the supervisory committee shall
               designate staff to arrange for the matters examined at the
               meeting to be recorded. The minutes of each meeting shall be
               provided to the attending supervisors for review without delay.
               Supervisors present at the meeting and the minutes-taking
               officer shall sign the minutes of that meeting. A supervisor
               shall have the right to request an explanatory note be made for
               his speech at the meeting.

Article 30     Minutes of a supervisors' meeting and the resolutions passed
               at such meeting, being important documents, shall be properly
               kept by the administrative office of the supervisory committee
               at the Company's place of business.


                CHAPTER 6   DISCLOSURE OF INFORMATION RELATING TO
                            THE SUPERVISORS' MEETING

Article 31     The supervisory committee shall strictly comply with the
               requirements of the regulatory authorities and the stock
               exchanges on which the Company's shares are listed in relation
               to the disclosure of information. It shall ensure that matters
               examined or resolutions passed at supervisors' meetings which
               are discloseable are disclosed accurately and in a timely
               manner.

Article 32     Regarding confidential information, the attendees of the
               meeting must keep such information confidential. Punishment
               shall be imposed on those who are in breach of this duty.

               CHAPTER 7  IMPLEMENTATION OF THE RESOLUTIONS OF THE
                          SUPERVISORS' MEETING AND FEEDBACKS

Article 33     The supervisory committee may pass resolutions and make
               proposals to the board of directors and the shareholders'
               general meetings. These resolutions and proposals shall be
               implemented by the relevant departments of the Company under the
               direction of the board of directors.

Article 34     The administrative office of the supervisory committee
               shall, under the direction of the committee and its chairman,
               take initiative to obtain the information in respect of the
               implementation of the relevant resolutions, and shall report
               and make proposals to the supervisory committee and the
               chairman of the committee.

Article 35     Where resolutions concerning the proposals to convene a
               provisional board meeting or shareholders' extraordinary
               general meeting, or the submission of provisional motions to
               the AGM are passed by the supervisory committee, the
               supervisory committee shall, within a specified period, submit
               to the board of directors the subjects of such meetings and the
               detailed motions in writing, and shall ensure that the contents
               of the motions comply with relevant laws, regulations and the
               Articles of Association.


                        CHAPTER 8 SUPPLEMENTARY ARTICLES

Article 36     The right to interpret these Rules shall vest with the
               supervisory committee.


Article 37     Where these Rules fail to comply with relevant laws,
               regulations and other regulatory documents as promulgated from
               time to time, these laws, regulations and other regulatory
               documents shall prevail.


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