Schedule for easing of restrictions

1 January 2002

• Foreign exchange business permitted for foreign banks without geographic and client restrictions;

• Renminbi business permitted for foreign banks in four cities, with four additional cities permitted each year thereafter and nationwide access beginning on 1 January 2007. Foreign banks licensed to conduct renminbi business in one city may service clients in any other city that has been opened for such business;

• Foreign non-bank financial institutions permitted to provide auto financing without any market access or national treatment limitations.

1st January 2004

• Renminbi business with Chinese enterprises permitted for foreign banks.

1st January 2007

• Renminbi business with Chinese individuals permitted for foreign banks;

• Auto-financing to Chinese individuals permitted for foreign banks;

• Restrictions lifted on foreign banks' equity composition and form of establishment;

• Permission granted to set up branch networks within the same city, with approval on the same basis as domestic banks;

• Financial leasing permitted for foreign banks where permitted for domestic banks.

Foreign exchange business

According to the agreement, foreign banks are permitted to provide foreign exchange- related services in China without geographic and client restriction from 1 January 2002, one year earlier than the relevant terms of the Sino-US agreement.

As a result, foreign banks will be allowed to conduct foreign exchange business for Chinese enterprises and individuals in all locations within mainland China.

Renminbi business

Conducting renminbi business with foreign clients is permitted and will be expanded to include Chinese enterprise clients within two years and Chinese individuals within five years. Initially, foreign financial institutions will be restricted to Shanghai, Shenzhen, Tianjin and Dalian for renminbi business, with three to four cities added each year until all geographic restrictions are removed within five years .

Looking ahead, a new phase of banking development in China is imminent with competition intensifying in the wake of China's WTO entry. Hopefully a more efficient industry will result from the competitive interaction among a growing number of domestic and foreign banks. This will benefit the economy in general and both foreign invested and domestic enterprises in particular from the services of foreign banks.