On December 17, 2006, the General Office of the State Council issued the Circular of the General Office of the State Council on Regulating the Administration of Proceeds from Grant of the Stateowned Land Use Right ( [2006]100 , the “Circular 100”) in order to reinforce land administration, protect arable land, and promote intensive utilization of land.

Circular 100 clarifies the scope of the proceeds from the grant of the state-owned land use right (the “Grant Proceeds”). According to Circular 100, the Grant Proceeds refer to all proceeds received by the government from the grant of land use right. Under Circular 100, the Grant Proceeds shall include the rental incomes paid by the lessees of the land, the rental incomes paid by the lessees of the houses located on the allocated land, and the land compensation received from the user of the allocated land.

According to Circular 100, the departments of finance shall be responsible for the management of the Grant Proceeds and the departments of land and resources may be responsible for the collection of the Grant Proceeds.

Circular 100 provides that, as of January 1, 2007, the Grant Proceeds shall be incorporated into the management of the budget of local funds and the special accounts shall be opened for the management of the Grant Proceeds.

Under Circular 100, if land users fail to make the payment of the Grant Proceeds in full on time, they will be subjected to fines of one percent of the Grant Proceeds payable on a daily basis.