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Framework Agreement between the Ministry of Finance of the People’s Republic of China and the Export-Import Bank of the United States of America

The Ministry of Finance of the People’s Republic of China (hereinafter referred to as the Ministry of Finance) and the Export-Import Bank of the United States of America - an agency of the United States of America (hereinafter referred to the "US Ex-Im Bank") signed this Framework Agreement on January 24, 2005 (hereinafter referred to as "Framework Agreement", The Ministry of Finance or the US Ex-Im Bank is referred to as "one party", both the Ministry of Finance and the US Ex-Im Bank are referred to as "both parties"):

Background

Considering that the US Ex-Im Bank is willing to assist the export of commodities and services made in or originated from the US to the People’s Republic of China by providing export credit insurance, credit guarantees or direct loans (hereinafter referred to as the "US exports";

Considering that the Ministry of Finance is willing to, in accordance with laws and regulations of the People’s Republic of China, provide the Ex-Im Bank with sovereign reputation guarantees of the People’s Republic China for some businesses by observing the procedures as follows;

Accordingly, on the basis of reciprocal aids and benefits, both parties agreed to:

Article 1 Support of the US Ex-Import Bank

The US Ex-Im Bank may irregularly provide export credit insurances (hereinafter referred to as the "insurances", loan guarantees (hereinafter referred to as the "guarantees" and direct loans (hereinafter referred to as the "loans" for the credits to Chinese banks and other borrowers for the financing of the US exports. Each export financing business shall be denominated in US dollars, on which the Chinese debtor and the US Ex-Im Bank shall sign relevant agreements (hereinafter referred to the "credit agreement").

Article 2 Guarantees of the Ministry of Finance and their nature

1.Guarantees of the Ministry of Finance
The Ministry of Finance shall, according to the format of Annex 1 of this Framework Agreement, issue a letter of guarantee to each export business under this Framework Agreement it supports. Each guarantee of the Ministry of Finance will make the Ministry of Finance bear the direct, universal, irrevocable and unconditional obligations to timely make full payments for all outstanding amounts of the Chinese debtor under the credit agreement (including, but not limited to, the principal, interests, costs and expenses) (hereinafter referred to the "guaranteed amount") without offsetting any debt or deducting any tax. If the Chinese debtor fails to pay any or all the guaranteed amount(s) which are mature, the Ministry of Finance shall, after it receives the first notice of repayment, pay off all outstanding amounts of the Chinese debtor in US dollars according to the requirements of the US Ex-Im Bank.

Each guarantee of the Ministry of Finance is a payment guarantee rather than a mere guarantee for demand of payment and it is completely valid till the Chinese debtor has irrevocably paid off the guaranteed debt. Each guarantee of the Ministry of Finance shall be a consecutive, absolute and unconditional payment guarantee of the first debtor rather than a mere guarantee of the guarantor. The debt under each guarantee of the Ministry of Finance is secured by the sovereign reputation of the People’s Republic of China.

2.Submission of Guarantees of the Ministry of Finance
Both parties agree that the guarantee of the Ministry of Finance shall be submitted to the US Ex-Im Bank during the period after the entry of credit agreement on each export business and prior to the first payment. When the Ministry of Finance submits a guarantee to the US Ex-Im Bank, it shall simultaneously issue a certification about the person authorized to sign the guarantee on behalf of the Ministry of Finance.

3.Notice not required
Except for the issuance of first notice of repayment under the guarantee of the Ministry of Finance, the US Ex-Im Bank shall not be required to issue to the Chinese debtor any other notice about exercising any right or making remedies or taking any other measures. Even if the US Ex-Im Bank has not issued the aforesaid notice of repayment, its any other right or remedy or measure may not be exempt or affected.

4.Demand of Repayment
On the occurrence of breach of the credit agreement, the US Ex-Im bank may demand the Ministry of Finance according to the format of Annex 3 of this Framework Agreement.

5.Modification of credit agreement
All substantial modifications or supplements to the credit agreement are subject to the written acknowledgment of the Ministry of Finance. Even if there is no such acknowledgement, the valid guarantee of the Ministry of Finance will not be restricted or become invalidated. But under such circumstance, the Ministry of Finance shall not bear the obligations under its valid guarantee unless it regards such modifications or supplements as nonexistent.

Article 3 Initiations of financing procedures

The Ministry of Finance will, according to the format of Annex 2 of this Framework Agreement, issue a notice to the US Ex-Import Bank for each export business that the People’s Republic of China will support by using the guarantee of the Ministry of Finance (guarantee notice of the Ministry of Finance). The US Ex-Import Bank shall then decide whether to offer insurance, guarantee or loan in compliance with its policies and procedures.

This Framework Agreement does not constitute any obligation of the US Ex-Im Bank for a particular export business, likewise, nor does it constitute any obligation of the Ministry of Finance to issue a guarantee notice of the Ministry of Finance or issue a guarantee for any particular export business.

Article 4 Statements and Commitments

1.The statements and commitments of the US Ex-Import Bank

The US Ex-Im Bank makes the following statements and commitments to the Ministry of Finance:
(1)The US Ex-Im Bank is an independent agency of the US government, it has all the powers, power limits and statutory rights to sign and deliver this Framework agreement and perform all the obligations thereunder. The US Ex-Im Bank was established and runs under American law.
(2)The Ex-Im Bank has taken all indispensable or necessary measures to sign, deliver, perform and comply with this Framework Agreement, as well as to make this Framework Agreement valid, binding and compulsory.
(3)The Ex-Im Bank’s commitments to provide insurances, guarantees or loans to export business state and guarantee that the Ex-Im Bank has taken all necessary measures and have obtained all necessary approvals for making such commitments.

2.The statements and commitments of the Ministry of Finance

The Ministry of Finance makes the following statements and commitments to the Ministry of Finance:
(1)The Ministry of Finance has all the powers, power limits and statutory rights to sign and deliver this Framework agreement and perform all the obligations thereunder. The Ministry of Finance was established and runs under Chinese Law.
(2)The Ministry of Finance has taken all indispensable and necessary measures to sign, deliver, perform and comply with this Framework Agreement, to make this Framework Agreement and any guarantee of the Ministry of Finance valid, binding and compulsory, as well as to ensure the sovereign reputation of the People’s Republic of China under this Framework Agreement and any guarantee of the Ministry of Finance, including but not limited to the obtainment of approvals to purchase and pay US dollars under this Framework Agreement and any guarantee of the Ministry of Finance.
(3)The guarantees issued by Ministry of Finance state and guarantee that the Ministry of Finance has taken all necessary measures and all necessary approvals to issue such guarantees and perform all relevant obligations.

Article 5 Future financing and cooperation

Pursuant to provisions of Article 6, within the valid period of this Agreement, any export business which obtains the guarantee of the Ministry of Finance shall be in line with the terms of this Framework Agreement. Both parties will periodically check the business under the Framework Agreement and negotiate with each other at any time so as to promote the smooth implementation of the export business.

In addition, in order to facilitate the efficient handling of credits of this Framework Agreement, the Ministry of Finance will, at any time, provide the US Ex-Im Bank with a checklist of export businesses applying for the guarantee of the Ministry of Finance under this Framework Agreement. Moreover, both parties will periodically assign special persons to be responsible for solving problems relating to the current and potential export business under this Framework Agreement.

Article 6 Other financing arrangements

Any provision of this Framework Agreement does not prevent any of the parties from undertaking other export businesses which are different from this Arrangement. However, if no written approval is granted by the Ministry of Finance and the US Ex-Im Bank, no provision of this Framework Agreement may apply to any other export business. Both parties specially propose to timely hold talks to reach a supplementary agreement to the Framework Agreement regarding the export of large-scale planes.

In addition, both parties predict that the US Ex-Im Bank and Chinese debtors will carry out the export business without the guarantee of the Ministry of Finance (hereinafter referred to as the "non-sovereign business"). The non-sovereign business will be regarded as not falling within the scope of this Framework Agreement. Both parties consider that such business will be bound by separate negotiations and legal agreements between the US Ex-Im Bank and Chinese debtors.

Article 7 Applicable law and jurisdiction

1.Both of the Ministry of Finance and US Ex-Im Bank agree that on the occurrence of any claim, controversy or dispute relating to this Framework Agreement or to any guarantee of the Ministry of Finance, both parties shall, within 180 days after either party issues a written notice, negotiate with each other so as to determine whether or not it is possible to reach a settlement method acceptable to both parties.

2.(1)Both parties agree that for a failure to reach any settlement method acceptable to both parties through negotiation as mentioned in Paragraph 1 of this Article, three arbitrators appointed under the Arbitration Rules of the International Chamber of Commerce shall make a final award on the settlement of claim, controversy or dispute relating to this Framework Agreement or to any guarantee of the Ministry of Finance according to the Arbitration Rules of the International Chamber of Commerce pursuant to the Arbitration Rules of the International Chamber of Commerce. The arbitration shall be carried out in London. The working language of arbitration shall be English. All the documents and testimonies to be presented as proofs during the process of arbitration shall be translated into English. The chief arbitrator shall not be a US citizen nor a Chinese citizen. Under the provisions of the following Sub-item (3), the award made by the arbitrators shall be final and be of binding force to both parties.

(2)The arbitration shall proceed as soon as possible, shall cut down expenses to the maximum extent, and shall accelerate the making of an award. Written statements may be considered as proofs.

(3)Notwithstanding other provisions in this Agreement, if the financing with a guarantee of the Ministry of Finance includes any payment of debt within the consolidated period of the Paris Club Arrangement, any arbitration award relating to the claim, controversy or dispute within the scope of this Arrangement (or which shall fall within the scope of such arrangement if any award is not made according to the stipulated terms) may, according to the choice of either party, be deemed null and void.

3.The Framework Agreement, guarantees of the Ministry of Finance and export business as mentioned herein do not mean that the Government of the People’s Republic of China accepts, apart from the forms as mentioned in Paragraph 1 and Item (1) of Paragraph 2, any form of jurisdictional power exercised by any agency over any dispute arising out of or relating to the Framework Agreement, guarantee of the Ministry of Finance or export business.

Article 8 Notices

All notices and communications relating to this Framework Agreement or Guarantees of the Ministry of Finance shall be in writing and in English (or be accompanied by an accurate English translation so as to make the US Ex-Im Bank have the power to use them for all purposes under this Framework Agreement). They shall be delivered to the persons set forth below and shall be effective when delivered to the following address or telephone number of the opposite party (to another address or telephone number offered by the Ministry of Finance or US Ex-Im Bank at least 30 days in advance).

(1)Notices to the Ministry of Finance:
Director General Finance Department of the Ministry of Finance
Sanlihe, Xicheng District, Beijing, People’s Republic of China, 100820
Tel: (+86)10-68551218
Fax: (+86) 10-68551297

(2)Legal Advisor Office of the Legal Advisor
US Ex-Im Bank
811 Vermont Avenue, N. W., Washington DC, USA, 20571
Tel: (+1)202-565-3430
Fax: (+1)202-565-3566

Article 9 Termination of agreement

The Ministry of Finance or US Ex-Im Bank may, at any time, terminate this Framework Agreement by written notice to the opposite party no less than 90 days in advance. However, the termination of this Framework Agreement shall not affect the effectiveness of any prior guarantee of the Ministry of Finance, or any other right or obligation of either party relating to the insurance, guarantee or direct loan that the US Ex-Im Bank has consented to provide for any export business under this Framework Agreement theretofore.

This Framework Agreement shall be formally signed and delivered by both parties, shall be in duplicate, shall be of equivalent force, and shall become effective as of the date as mentioned above.

Signature: Signature:
Name: Names:
Title: Title:
Ministry of Finance of the People’s Republic of China US Ex-Im Bank