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          Stock Issuance
              from China Securities Regulatory Commission

Stock Issuance System

Currently, stock issuance is subject to approval by the CSRC. Based on Article 11 of the Securities Law, approved by the Standing Committee of the National People's Congress on Dec. 29, 1998, and effective on July 1, 1999, "a public stock issuance shall follow the conditions as stipulated in the Company Law and be submitted to the securities regulatory agency under the State Council for verification."

Public Offering and Listing Review Committee

To ensure the fairness and quality of stock issuance examination and verification, a Public Offering and Listing Review Committee was set up by the CSRC in 1993.

Based on Article 14 of the newly promulgated Securities Law, "the securities supervisory agency under the State Council shall set up a Public Offering and Listing Review Committee, examining and verifying issuance applications in accordance with law. Comprising professionals in the agency and relevant experts specially engaged from outside, the Committee shall cast votes over a stock issuance application and reach a resolution on it."

Mode of Stock Issuance

Under the primary method of stock issuance, a stock's issuing price is fixed after registration with the stock trading system, that is, the lead underwriter issues the stock at a pre-fixed issuing price, by using the trading system of stock exchanges.

Based on Article 28 of the Securities Law, " In case premium issuance is adopted for a stock issuance, the issuing price shall be negotiated and determined between the issuer and the underwriter, subject to the verification of the securities regulatory agency under the State Council."

Size of Stock Issuance

By the end of 1998, China's listed companies had issued a total of 74.61 billion shares in the markets and had raised a total of RMB 355.31 billion. The total can be broken down as follows: (1) A-share market: 34.302 billion shares and RMB 168.709 billion; (2) B-Share market: 9.598 billion and US$ 4.745 billion; and (3) H-share markets: 30.719 billion shares and US$ 10.02 billion.