Foreign Investment in China Civil Aviation 1. Scope of Foreign Investments CAAC Industry

Flying areas of civil airports, including the runway, taxiway, connecting apron, parking apron, and flight assisting light; Terminal buildings. (The "civil airport" excluding the military-civil airport)

general aviation enterprises engaging in agriculture, forestry and fishery operations. general aviation enterprises engaging in business flight, air sight-seeing or serving the industry, but may not engage in the projects involving state secrets.

air fuel, airplane maintenance, freight transport and storage, ground service, air food, parking lots and other approved projects. 2. Scope of Prohibited Foreign Investment Industries Foreign investors are forbidden from investing in and managing air traffic control systems. 3. Forms of Foreign Investment

Foreign investors must be qualified as a Chinese legal person to invest, in the form of contractual joint venture, in public air transport and general aviation enterprises engaging in business fight and air sight-seeing. Where foreign investors invest in civil airports, the Chinese party shall take the relatively holding position.Where foreign investors invest in public air transport enterprises, the Chinese party shall take the holding position, and the proportion of investment made by one foreign investor (including its associate enterprises) may not exceed 25%. Other investment forms are by the proportion of foreign investment shall be determined by both the Chinese and foreig n parties through negotiation. The operating period of joint ventures with foreign investment shall not exceed 30 years generally.