Rights

Scope of mortgage on property

According to the Chinese laws, properties that may and may not be used for mortgage are respectively as follows:

The following properties to which the debtor or the third party has the right to dispose of may be used for mortgage: (1) buildings and other attachments on the ground; (2) the right to the use of land for construction; (3) the contractual management right to barren land, etc. obtained through bidding, auction, open consultation or other means; (4) production equipment, raw and semi-finished materials, semi-finished products and finished products; (5) buildings, vessels and aircraft under construction; (6) means of transportation; and (7) other property that is not prohibited from being mortgaged by laws or administrative regulations.

A mortgagor may mortgage all the properties listed in the previous paragraph together.

The following property may not be mortgaged: (1) land ownership; (2) the right to the use of the land owned by the collective, such as cultivated land, house sites, private plots and private hilly land, except where otherwise provided for by law; (3) educational facilities, medical and health facilities and other public welfare facilities of undertakings for public welfare, such as schools, kindergartens and hospitals and public organizations; (4) property the ownership or right to the use of which is indefinite or controversial; (5) property sealed up, distained or placed under custody in accordance with law; and (6) other property which may not be mortgaged as prescribed by laws and administrative regulations.