Stock Code: 600415 Stock Short Name: 小商品城

Zhejiang China Commodities City Group

Co., Ltd.

2020 Annual Report

Important Note

I. The board of directors, the supervisory committee and the directors,

supervisors and senior management of the Company hereby warrant the truthfulness, accuracy and completeness of the contents of the Annual Report, guarantee that there are no false representations, misleading

statements or material omissions contained in this Annual Report, and are jointly and severally responsible for the liabilities of the Company.

II. Absent directors

III. Ernst & Young Hua Ming Certified Public Accountants (special general

partnership) has issued a standard unqualified audit opinion for the

Company.

IV. ZHAO Wenge, Head of the Company, WANG Dong, Head in charge of

accounting, and ZHAO Difang, Head of the accounting department

(Accounting Supervisor), declare that they warrant the truthfulness,

accuracy and completeness of the financial report in the annual report.

V. Is there any profit distribution proposal or capital reserve conversion

proposal for the reporting period that has been deliberated by the Board of Directors?

Based on the total share capital on the registration date of profit distribution equity in 2020, cash dividends of RMB 0.55 (tax inclusive) will be distributed for every 10 shares. According to the current total share capital of the Company, cash dividends of RMB 301,945,279.68 (tax inclusive) will be distributed. In the event of changes in the total share capital of the Company before the dividend distribution registration date, the percentage of allocation shall remain unchanged while the total profits distribution will be adjusted accordingly.

VI. Risk statement with forward-looking representations

√Appicable □Not Applicable

The forward-looking representations involved in this Report such as future plans and development strategies do not constitute the Company’s substantial commitments to investors.

Investors shall watch out for the investment risks.

VII. Is the Company’s cash occupied by its controlling shareholder or any of its affiliates for non-operational purposes?

NO

VIII. Has the Company provided external guarantee in violation of the

prescribed decision-making procedures?

NO

IX. Whether more than half of the directors can not warrant the truthfulness, accuracy and completeness of the annual report disclosed by the

Company

NO

X. Reminder of major risks

The Company has described the risks that may exist in this Report in details. Please refer to the possible risks in the discussion and analysis of operation in Section 4 of this report.

XI. Others

□Applicable √Not applicable

Table of Contents

Section I. Definitions

I. Definitions

For the purpose of this Report, unless otherwise stated in the context, the following terms shall have the following meanings:

Section II. Company Profile and Financial Highlights

I. Company profile

II. Contact information

III. Basic Information

IV. Information disclosure channels and places for inspection

V. Stock profile

VI. Other relevant information

VII. Major accounting data and financial indicators in the past three years

(i) Major accounting data

Unit: RMB

(ii) Major financial indictors

Explanation of main accounting data and financial indicators of the Company in the previous three years at the end of the report period

√Applicable □Not applicable

1. Net profit attributable to shareholders of the Listed Company after deducting non -recurring profit and loss in 2020 decreased by RMB 413 million compared with that in 2019, mainly due to the decrease of RMB 328 million year over year (YoY) in the net profit attributable to the Company, and the increase of RMB 85 million YoY in non-recurring profit and loss.

Net profit attributable to shareholders of the Listed Company after deducting non-recurring profit and loss in 2019 increased by RMB 574 million compared with that in 2018. The main reasons were that the net profit attributable to the Company in 2019 increased by RMB 173 million YoY, and the non-recurring profit and loss decreased by RMB 328 million YoY.

2. Net cash flows from operating activities in 2020 increased by RMB 2.368 billion YoY. Cash received from sales of goods and providing services in 2020 increased by RMB 375 million YoY. The cash paid for purchasing goods and receiving services in 2020 decreased by RMB 1.931 billion YoY due to the land transfer fee for the Station Block paid in 2019.

Net cash flows from operating activities in 2019 decreased by RMB 2.846 billion compared with that in 2018. Cash received from sales of goods and providing services decreased by RMB 880 million YoY. The main reasons were the decrease of RMB 1.38 billion in market receipts, the increase of RMB 500 million in real estate sales returns, and the increase of RM 2.127 billion in cash paid for purchasing goods and receiving services due to the payment of land transfer fees for the Station Blocks.

VIII. Differences in accounting data between foreign and Chinese accounting standards (i) Differences between the net profit and net assets attributable to shareholders of the

Company disclosed in accordance with international accounting standards and China accounting standards in the financial report

□Applicable √Not applicable

(ii) Differences between the net profit and net assets attributable to shareholders of the Company disclosed in accordance with overseas accounting standards and China accounting standards in the financial report

□Applicable √Not applicable

(iii) Explanation of differences between domestic and overseas accounting standards

□Applicable √Not applicable

IX. Key financial indicators by quarter

Unit: RMB

Explanation of difference between quarterly data and disclosed data in regular reports

□Applicable √Not applicable

X. Non-recurring items and amounts thereof

√Applicable □Not applicable

Unit: RMB

XI. Items measured at fair value

√Applicable □Not applicable

Unit: RMB10,000

XII. Others

□Applicable √Not applicable

Section III. Company Operational Highlights

I. Main business, business model and industry situation during the reporting period

According to the definitions in the Guidelines for Industry Classification of Listed Companies (revised in 2012) released by the CSRC, the Company is engaged in “Business Service” (L72) in “Lease and Business Service” (L).

(i) Main businesses

The Company is engaged in market development and operation and supporting services, providing online trading platform and services, online trading market development and operation, etc., belonging to the comprehensive industry category.

(ii) Operating model

1. Market operation

Market operation business is mainly operated and managed by the Company's subordinate market branches. The main business income of the market operation segment is mainly the income from the use of commercial space. The Company adopts a commercial space rental model, that is, the ownership of the commercial space belongs to the Company, and the merchants only have the right to use the commercial space within the contract period. The Company and the merchant sign a contract to clearly stipulate the use period, usage fee and business purpose of the commercial space. The merchant shall not change the agreed business purpose, and shall not sublet without the Company’s consent. Generally, the payment methods of usage fee are one-time payment or installment payment according to the contract terms. Currently the markets that the Company is responsible for operating include Zone 1 to Zone 5 of the International Trade City, Importing Market, Zone 1 East Expansion Market, Huangyuan Market and International Production Goods Market.

2. Online trading platform

During the reporting period, the Company officially launched the platform of Yiwu China Commodities City, the official website of Yiwu market (www.chinagoods.com, hereinafter referred to as "chinagoods platform"). The chinagoods platform relies on the resources of 75,000 physical shops in the market that the Company operates and serves two million small, medium and micro enterprises in the upstream of the industry chain. It is driven by the integratio n of trade data, connecting the supply and demand parties in areas of manufacturing, demonstrating and transactions, warehousing and logistics, financial credit, market management, etc., so as to achieve effective and precise allocation of market resources and build a true, open and integrated digital trade comprehensive service platform.

3. Hotel services

The hotel service business is mainly operated and managed by the Company’s subordinate hotel branches. The hotels operated by the Company mainly provide comprehensive services such as accommodation, catering, leisure and entertainment, and conferences, etc. The main revenue sources of the hotels include room sales, catering sales, commodity sales and venue leasing, etc.

Sales of guest rooms and catering mainly rely on channels such as clients agreement, conferences, wedding banquets and recommendation by operators of online booking platforms.

(iii) The situation of industry

1. Market operation

According to the "Statistical Yearbook of China Commodity Trading Market", the market operated by the Company belongs to the comprehensive market of industrial consumer goods in the segment market category. For many years, the total annual turnover of the Company has been at the forefront of the national comprehensive market. In terms of transaction amount, year-end business area and number of commercial spaces, the Company's share in the national comprehensive market has remained stable. In 2020, the total turnover of YIWU CCC was RMB 162.661 billion. 2. On n trading platform

As of the end of the reporting period, there were around 50,000 merchants settled at chinagoods platform, more than 800,000 registered purchasers (52% of the registered purchasers had been to the Yiwu physical market), the platform product SKUs reached 2.6 million, the number of APP downloads was 2 million, and the turnover reached RMB 2.894 billion since the official launch. After the official launch, the average daily visits exceeded 3.25 million, with a peak of over 5 million. As an important measure of the Company's digital transformation, the chinagoods platform is an important and effective means for the Company's transformation, upgrading, and development in the tide of trade digitization and information technology progress. It is also a sign of the Company's online-offline market integration and progress.

3. Hotel services

In terms of room numbers, as of the end of 2020, the total number of hotel rooms operated by the Company was 1,559. The Company's hotel business accounts for a small share in the industry and makes a small contribution to the Company's profits.

II. Material changes in major assets during the reporting period

√Applicable □Not applicable

The Group transferred 51% of the equity of CCCP and Pujiang Green Valley Real Estate Co., Ltd. this year, and the remaining 49% of the equity was measured at the fair value of RMB 1,867,205,576.66 on the date of disposal, which affected the book value of long-term equity investment of RMB 1,851,245,420.56. For more details, please refer to Note VII Consolidated Financial Statement Item Note 17, Long-term Equity Investment.

Among them: foreign assets are 184,753,621.71 (unit: Yuan, currency: RMB), accounting for 0.64% of the total assets.

III. Analysis of core competencies during the reporting period

√Applicable □Not applicable

(i) First-mover advantages

At the start of China’s reform and opening-up, Yiwu took the lead in establishing the commodities market. During the recent forty years, the market has been upgraded five times and expanded ten times and has been among the top comprehensive national markets with the highest turnover, pointing to its remarkable first-mover advantages. As the largest commodities distribution center in the world, the Yiwu commodities market provides more than 2million products, which fall in 26 categories and supports one-stop purchase. The market boasts enormous resources and huge business flow, goods flow, cash flow and information flow.

(ii) Brand advantages

“Yiwu China Commodities City” is the first market identified by the SAIC as a well-known trademark among the national commodities trading markets. The Company has taken multiple measures to give play to the brand of “Yiwu China Commodities City” and is committed to improving its influence and leading role in the industry. Its brand advantages and influence have kept enhancing.

(iii) Auxiliary services advantages

The People’s Government of Yiwu has been providing policy support for the development of the market for years, and the auxiliary industries are developing rapidly in Yiwu.

1. Convenient logistics system

Yiwu has in place perfect commerce and trade auxiliary facilities and advantageous logistics service. The logistics network has full coverage in Yiwu. A large number of large-sized international and domestic express delivery and logistics companies have regional distribution centers in Yiwu, and a world-oriented goods transport and distribution network has been established. Yiwu has been listed among the “commerce and trade-oriented national logistics hubs” by the National Development and Reform Commission and the Ministry of Transport. According to the Operation of Postal Industry in 2020 announced by the State Post Office, the express business volume of Jinhua (Yiwu) in 2020 surpassed that of Guangzhou and ranked the first in China.

2. Industry support

During the recent years, thanks to the Yiwu China Commodities City, the Yiwu-centered manufacturing industry cluster has been developing fast, an commodities industrial belt that is centered in Yiwu and covers Jinhua, Lishui, Quzhou, Hangzhou, Jiaxing, Taihu, Shaoxing, Ningbo, Wenzhou and Taizhou with an area of nearly 10,000 sq.m has been established, and a benign mechanism under which the Yiwu wholesales market and the peripheral industry cluster develop together has been formed.

3. Support from exhibition service

The major international trade exhibitions held by the Company’s exhibition business division such as China Yiwu International Commodities Fair, China Yiwu International Forest Products Fair, China Yiwu International Imported Commodities Fair and China Yiwu Hardware and Electrical Expo support and cultivate vertical exhibition in multiple industries such as stationery and textiles, have developed multiple professional and international exhibition brands, and are important natio nal platforms for the China Commodities City to lead industry development, develop the city economy and maintain the clusters of traders and commodities.

(iv) Diversified businesses

The Company has strengthened its presence in the related industries, made efforts on financial investment, kept developing the exhibition business, created a new e-commerce model, developed the hotel business and also run international trade, modern logistics, advertising information, shopping and tourism businesses. It has created a group structure and profit-making model of shared and interactive development of market resources.

(v) Management advantages

In terms of personnel, management and technology, excellent operation and management ability is one of the core competences of the Company as a professional market operating company. The Company has developed a series of perfect management systems for market operation and management, accumulated rich experience in operation and management, and has cultivated a professional management team with reasonable knowledge and expertise structures and strategic development insights.

Section IV. Discussion and Analysis of Operation

I. Discussion and analysis of operation

During the reporting period, the Company achieved operating income of RMB 3.726 billion, with a decrease of RMB 317 million or 7.84% YoY; the total profit was RMB 1.422 billion, with a decrease of RMB 211 million or 12.93% YoY; the net profit attributable to the shareholders of the parent company was RMB 927 million, with a decrease of RMB 329 million or 26.18% YoY.

(i) Market operation

In the past year, the Company faced many challenges, such as COVID-19 epidemic prevention and control, complex and changeable domestic and international economic and trade situations, etc. The Company has adopted a series of measures to stabilize the core businesses while vigorously promote market innovation and development, and make every effort to build an upgraded version of the physical market with "the highest degree of digitalization, the best business environment, and the strongest trade service capabilities", further enhancing the Company's core advantages in the markets. In 2020, the rental rate of commercial space in YIWU CCC remained above 96%, and the market continued to operate steadily and positively.

1. The Company promotes precise and intelligent control measures featured as "standardization, market access mechanism, prohibition, inspection system, and informatization", practically adopts "street battle" style of "enhancing CPC + Unit" to guard the "safe door" of global procurement. In the context of COVID-19 epidemic prevention and control, YIWU CCC was partially re-opened on February 18 and fully resumed on March 1, becoming one of the first batch of markets in the country to resume trading.

2. The Company linked 121 downstream markets, held 21 trade matchmaking events, regained more than 200,000 buyers and expanded the domestic trade market. More than 10,000 kinds of goods were displayed in Czech Republic, Dubai, Rwanda and other overseas stations, completed overseas warehouses cooperation projects of more than 250,000 square meters, and foreign trade orders were stabilized.

3. The Company innovatively constructed digital Integrated Free Trade Zone, and early planning work of the new import market and Zone 6 of the International Trade City started in all

(ii) Promoting trade digitalization

aspects.

In 2020, COVID-19 epidemic spread worldwide, which had a profound impact on the global industrial chain and supply chain stability and the direct flow of people and goods, and limited the growth of international trade. Digitalization of trade has become a new driving force for the development of global trade, and the market urgently needs to achieve in-depth integration of online and offline. The Company promotes the market and merchants to “adopt cloud, big data and intelligent technology” to build a digital platform.

During the reporting period, the Company officially launched the platform of Yiwu China Commodities City, the official website of Yiwu market (domain name: www.chinagoods.com, hereinafter referred to as "chinafoods platform"). The chinagoods platform is an important carrier of the company's digital reform, it relies on the resources of 75,000 physical shops in the market and serves two million small, medium and micro enterprises in the upstream of the industry chain. It is driven by the integration of trade data, connecting the supply and demand parties in areas of manufacturing, demonstrating and transactions, warehousing and logistics, financial credit, market management, etc., so as to achieve effective and precise allocation of market resources and build a true, open and integrated digital trade comprehensive service platform.

As of the end of the reporting period, there were around 50,000 merchants settled at chinagoods platform, more than 800,000 registered purchasers, the platform product SKUs reached 2.6 million, the number of APP downloads was 2 million, and the accumulative turnover reached RMB 2.894 billion since the official launch on October 21, 2020. After the official launch, the average daily visits exceeded 3.25 million, with a peak of over 5 million. As an important measure of the Company's digital transformation, the chinagoods platform is an important and effective means for the Company's transformation, upgrading, and development in the tide of trade digitization and information technology progress. It is also a sign of the Company's online-offline market integration and progress.

(iii) Building a global supply chain service system

Yiwu market is an important platform connecting the domestic and international, domestic and foreign trade supply chains, and is at the key node of the global small commodity supply chain. It plays an important role in smoothing the internal circulation, improving the external circulation, and serving the new pattern of "dual circulation".

In recent years, the contradiction between supply and demand of global warehousing logistics has become increasingly prominent. As the basis of dual circulation, the strategic value of supporting facilities such as warehousing base and logistics center has become more and more prominent. At the same time, the global trade ecological chain is imperfect, all links are fragmented, the trends of smaller orders, fragmentation and digitization of global market procurement is obvious. The adjustment of the global industrial pattern is accelerating, and the formation of multi-centralization is also accelerating. All these put forward new requirements for the improvement Yiwu market supply chain, and also expand new space for the Company's market innovation and development.

During the reporting period, the Company accelerated the construction of a global supply chain system. Accelerated the construction of digital trade hubs, accelerated the deployment of overseas warehouses, overseas logistics distribution centers, overseas sub-markets and other overseas projects, and extended the market industry chain, service chain, and value chain. The company has deployed 53 overseas warehouses, completed overseas warehouses cooperation projects of more than 250,000 square meters, and deployed more than 450,000 square meters of local and overseas warehouses accumutively. "Yiwu Goods" "ICMALL" have more than 300 offline outlets. "CCCL" logistics park, the mall warehouse park commercial and trade station project and Yiwu mall supply chain base Shangbo cloud warehouse will soon be completed. A large domestic and foreign warehousing system has takenshape. CCCL has launched 105 international logistics dedicated lines, covering more than 600 cities in 66 countries including Russia, the United States, Thailand, Malaysia, etc. and a global supply chain service system serving the "dual circulation" has taken shape. The construction of a global supply chain service system helps to move Yiwu market, commodities and logistics to the "door, computer and mobile phone" of foreign businessmen, helping the merchants to quickly grab orders and expand the market, and helping foreign purchasers and suppliers to be connected with the Chinese market at a lower threshold and more conveniently.

By unifying storage information platforms and authorizing access to chinagoods platform, the Company helps to solve the key issues that the businesses face and reduce foreign trade risks. Currently most of Yiwu's export trade is credit sales, and the merchants face the risk of uncontrollable rights of goods. In the context of COVID-19 epidemic, in order to reduce the risk of foreign trade, further reduce the credit risk, and enhance the export trade confidence of the merchants, chinagoods and CCCL launched the innovative product "Money Treasure" to guarantee the payment for goods in the market through the digital contract-performing capabilities and to better control the goods through overseas warehouses, so as to solve the problem of market purchase trade balance guarantee for merchants and reduce the risk of credit sales.

(iv) Coordinated development of related businesses

During the reporting period, the exhibition, hotel and advertising business sectors of the Company developed in a coordinated way, and the business situation was stable. The online and offline integration of the exhibition sector has been promoted, the online exhibition platform was innovatively developed, the online Hardware Fair was successfully held, and YIEXPO, Forest Expo and Cultural Tourism Fair online and offline activities were integrated, and six national YIEXPO roadshows was completed. The business of the hotel sector has gradually recovered, and the impact of COVID-19 epidemic has been gradually eliminated. The advertising business was developed steadily, and operating income increased steadily.

II. Operating status during the reporting period

In 2020, in the face of sudden COVID-19 epidemic, the Company faced the difficulties and took active measures. While take measures to prevent and control epidemic in an orderly manner, the Company focused on the business plan and objectives of 2020, continued reforming and innovating, and actively responded to the challenges. In 2020, the Company achieved operating income of RMB 3.726 billion, with a decrease of RMB 317 million or 7.84% compared with the prior year; the total profit was RMB 1.422 billion, with a decrease of RMB 211 million or 12.93% over the prior year.

(i) Analysis of main business

1. Analysis of changes in related accounting subjects of income statement and cash flow statement

Unit: RMB

2. Revenue and cost analysis

√Applicable □Not applicable

None.

(1). Main businesses by industry, product and region

Unit: RMB10,000

Explanation of main businesses by industry, product and region

1. The revenue and cost of product sales increased by 459.44% and 443.24% respectively year-on-year, mainly due to the large year-on-year increase in the commodity sales business of

import and export companies and supply chain companies in the current period

2. The revenue and cost of other services increased by 101.76% and 210.91% year-on-year respectively, mainly due to the revenue and cost of information technology services in big data and other information sectors increased significantly on a year-on-year basis.

(2). Table of production and sales analysis

□Applicable √Not applicable

(3). Cost analysis table

Unit: RMB10,000

Explanation on cost analysis and other information

None

(4). Main sales customers and suppliers

□Applicable √Not applicable

3. Costs

√Applicable □Not applicable

Unit: RMB10,000

Unit: RMB10,000

4. R&D Investment

(1) Table of R&D investment status

√Applicable □Not applicable

Unit: RMB10,000

(2) Explanations

□Applicabe √Not applicable

5. Cash flow

√Applicable □Not applicable

Unit: RMB10,000

1. The net cash flow from operating activities in 2020 increased by RMB 2.368 billion compared with that in 2019. The cash received from selling goods and providing services in 2020 increased by RMB 375 million compared with that in 2019, and the cash paid for purchasing goods and receiving services in 2020 decreased by RMB 1.881 billion compared with that in 2019.

2. The net cash flow from investment activities in 2020 increased by RMB 534 million compared with that in 2019. The net cash flow of wealth management in 2020 increased by RMB 2.085 billion compared with that in 2019, and the net cash inflow of financial aid in 2020 decreased by RMB 1.488 billion compared with that in 2019.

3. The net cash flow from financing activities in 2020 decreased by RMB 5.087 billion compared with that in 2019. In 2020, the net inflow from financing activities decreased by RMB 5.405 billion compared with that in 2019, the cash paid for dividend, profit distribution or interest payment increased by RMB 235 million compared with that in 2019, and the cash received from investment increased by RMB 148 million compared with that in 2019.

(ii) Material changes to profits caused by non-main businesses

□Applicable √Not applicable

(iii) Analysis of assets and liabilities

√Applicable □Not applicable

1. Assets and liabilities

Unit: RMB10,000

Other descriptions

None

2. Encumbrances on major assets as of the end of the reporting period

√Applicable □Not applicable

Unit: RMB Yuan

31, 2019: RMB 56,196,102.62) were used as deposits for obtaining commercial housing mortgage loan, and the ownership or right of use was limited.

As of December 31, 2020, long-term equity investments with a book value of RMB 102,918,559.00 (on December 31, 2019: RMB 102,918,559.00), and other non-current financial assets of RMB 617,511,352.00 (on December 31, 2019: RMB 617,511,352.00) were frozen by Shanghai Public Security Bureau.

3. Other descriptions

□Applicable √Not applicable

(iv) Analysis of business information of industry

√Applicable □Not applicable

Please refer to part 3 in this section Discussion and Analysis of the Company's Future Development (1) Industry Pattern and Trends.

(v) Analysis of investments

(i) Overview of external equity investment

√Applicable □Not applicable

At the end of December 2020, the outbound investment amount was RMB 6,070,791,800 (including financial assets held for trading of RMB 51,712,700, investment in other equity instruments of RMB 662,256,300, other non-current financial assets of RMB 1,523,925,300, and long-term equity investment of RMB 3,832,897,500), which was RMB 2,099,656,600 higher than RMB 3,971,135,200 (including financial assets held for trading of RMB 38,077,700, investment in other equity instruments of RMB 642,188,000, other non-current financial assets of RMB 1,519,449,400, and long-term equity investment of RMB 1,771,420,100) at the end of prior year, up 52.87%, and the main changes are as follows:

Long-term equity investment during the reporting period increased by RMB 2,061,477,400 year-on-year, mainly due to:

1. The newly added long-term equity investment during the reporting period was RMB 2,043,566,600, of which: RMB 1,493,547,700 for CCCP, RMB 373,657,900 for Pujiang Green Valley Real Estate Co., Ltd., RMB 28,711,000 for Jebel Ali Free Zone Trader Market Development and Operation FZCO, RMB 20 million for Yiwu Guoshen Shangbo Real Estate Co., Ltd., RMB 7.65 million for Yiwu Digital Port Technology Co., Ltd., increased capital of RMB 90 million for Yiwu Hongyi Equity Investment Fund Partnership (Limited Partnership), increased capital of RMB 30 million for Yiwu Huishang Bauhinia Phase II Equity Investment Partnership (Limited Partnership).

2. During the reporting period, long-term equity investment decreased by RMB 17,057,800, of which: Yiwu Huishang Micro-finance Co., Ltd. reduced capital by RMB 13.80 million, Zhongyi International Exhibition (Yiwu) Co., Ltd. decreased by RMB 2,654,200 in liquidation, and Zhejiang Huajie’s equity decreased by RMB 603,600 due to accounting method converted from equity method to cost method.

3. Accrued net investment income of RMB 34,968,600 of long-term equity investment using equity method

During the reporting period, investment in other equity instruments increased by RMB 20,068,400 year-on-year, which was due to the gains and losses arising from Shenwan Hongyuan Group Co., Ltd. fair value change of RMB 20,068,400 during the reporting period.

Financial assets held for trading during the reporting period increased by RMB 13.635 million year-on-year, of which: newly added RMB 51,706,100 for Oriental International Entrepreneurship Co., Ltd., Fujian Zongteng Network Co., Ltd. decreased by RMB 32,076,500 after debt-to-equity swap, and bank wealth management product redemptions decreased by RMB 6 million.

Other non-current financial assets during the reporting period increased by RMB 4,475,900 year-on-year, of which: RMB 32,076,500 from Fujian Zongteng Network Co., Ltd., RMB 1.5 million from Chengjianbao (Beijing) Consulting Service Co., Ltd., RMB 20 million from Yiwu Shanyue Equity Investment Partnership (Limited Partnership); RMB 11,269,200 recovered investment from Jiaxing Zhehua Zijing Investment Partnership (Limited Partnership), RMB 3,169,500 recovered investment from Suzhou Yiyun Venture Capital Center (Limited Partnership); minus RMB 34,662,000 gains and losses arising from changes in fair value.

Main investments are as follows:

Unit: RMB10,000

(1) Major equity investments

√Applicable □Not applicable

(2) Major non-equity investments

√Applicable □Not applicable

Financial assets measured with fair value

√Applicable □Not applicable

Unit: RMB10,000

(vi) Sale of major assets and equity

√Applicable □Not applicable

This year, the Company divested 51% equity of CCCP and Pujiang Green Valley, and the remaining equity ratio was 49%, and the accounting method was converted from the cost method to the equity method. For details, please refer to Note VII Consolidated Financial Statement Item Note 17, Long-term Equity Investment.

(vii) Analysis of major subsidiaries and associates

√Applicable □Not applicable

Unit: RMB10,000

(viii) Structured entities controlled by the Company

□Applicable √Not applicable

I. Discussion and Analysis of the Company's Future Development

(i) Industry Pattern and Trends

√Applicable □Not applicable

In 2020, facing the severe and complex international and domestic situation, especially the sudden COVID-19 epidemic, Yiwu market implemented the “ensure 'six priorities' and stability in six areas” with “wartime” status and measures, explored new paths for market development, achieved the capital inflow around the market, and the total volume of public transport of highways, railways, and airlines beginning to increase month-on-month since April 2020. According to the "Statistical Yearbook of China Commodity Trading Market", the total turnover of YIWU CCC market in 2020 was RMB 162.661 billion.

In 2021, epidemic prevention and control, international politics, and global economy are intertwined. Uncertainty and instability of international trade, and restructuring of international trade pattern will become the new normal. At the same time, the signing of RCEP marks the official kick-off of the world's largest free trade area. In this context, the Company will base itself on the positioning as a trade service provider, vigorously promote market innovation and development, and make every effort to build an upgraded version of the physical market with "the highest degree of digitalization, the best business environment, and the strongest trade service capabilities" so as to build up the sixth-generation market and serve the domestic and international dual circulation objectives. Build up the first digital Integrated Free Trade Zone in China, relying on the full-link and full-function services formed by the chinagoods platform to empower the physical market, promote the stability and prosperity of the physical market, and then form a support system driven by two wheels of "online + offline" channels to strengthen the leading position in the market.

(ii) Development strategy of the Company

√Applicable □Not applicable

At the Fifth China-Africa Entrepreneurs Conference, General Secretary Xi Jinping called Yiwu the "Small Commodity Capital" of the world, pointing out the direction for the development of the market and the Company. The Company puts forward the development strategy of “taking the market as the main business, taking the digital as the link, taking the platform as the support, building an international trade comprehensive service provider”.

With the goal of building the world's "Small Commodity Capital" with high quality and high standards, focusing on the main market business, promoting various resource elements to concentrate in the main business, opening up all links of the domestic and foreign trade supply chain through vigorously developing digital trade, and continuously enhancing and upgrading the core competitiveness of market and the Company to empower the small commodity industry chain and ecosystem, promoting the transformation of the physical market into a global trade service platform for small, medium and micro enterprises, and the transformation of the Company from a market manager to a comprehensive trade service provider.

(iii) Business plan

√Applicable □Not applicable

In 2021, under the premise of strict epidemic prevention and control, the Company will continue to aim at the strategic goal of building "the World's Small Commodity Capital" with high quality and high standards, focusing on institutional innovation, digital transformation and international deployment, and strengthening the reform and planning in three major aspects, i.e., the free trade zone, dual circulation and state-owned enterprise reform, accelerating market innovation and development and the Company transformation and upgrading. Business plan goals of 2021: based on 2019 performance, operating income growth rate is not less than 75%; earnings per share is not less than RMB 0.20; main business income in 2021 accounts for not less than 90% of operating income; GMV of chinagoods platform, which is the innovative business of the Company, is not less than RMB 13 billion (the business plan goals of 2021 do not represent the Company's profit forecast and commitment).

1. Market operation

Continuing to maintain a steady and good development trend of the market, stimulating market vitality, vigorously promoting market innovation and development, and further consolidating the core advantages of the market. Innovatively developing the sixth-generation market marked by the new-type import market and Zone 6 of the International Trade City, building up the largest imported small commodity distribution center in China, and accelerating the construction of Zone 6 and east market of Zone 2.

Regarding the construction of the east market of Zone 2: the project is positioned as a specialized market and equipped with the function of a parking lot. After the completion of the project, it will not only help improve the overall business environment of the International Trade City and expand the operating area of the specialized market, but also help improve the traffic environment around the International Trade City, which will effectively help to enhance the overall competitiveness of the International Trade City.

The sixth-generation market is the system integration of the "Scene Forms" of market transformation and upgrading. It takes the new-type import market and Zone 6 of the International Trade City as the core symbols to achieve the integration of "export, import and transit trade"; achieve online and offline integration, "cloud computing + mobile Internet + intelligent terminal" digital linkage; promote standards and design into the market, and move up to the high end of the value chain; integrate "market + manufacturing" to strengthen the support of the real economy; highlight the functions of Yiwu wharf, world commodities base and trade paradise. Strengthening the characteristics of "diversified forms, diversified functions, digital transactions, liberalized market access, trade internationalization, and electronic settlement". The construction and promotion of the Zone 6 market provide new impetus for promoting innovation and development of the Yiwu market and building the world's "Small Commodity Capital" with high quality and high standards. Zone 6 of the International Trade City is scheduled to start construction in 2021.

2. The level of trade digitization is further improved

Striving to strengthen the chinagoods platform, with chinagoods as the core, linking various digital platforms that empower the market, and make the offline trade ecosystem online, forming a digital trade service system with the characteristics of "trade data as the core, credit rating as the basis, and one-stop performance as the feature". Improving the functions of the chinagoods platform, achieving GMV of RMB 13 billion in the whole year, and cultivating more than 10,000 active merchants and more than 1,000 core merchants.

Building version 2.0 of market procurement and promoting the digitization of the trade chain. Relying on the chinagoods platform, accelerating the development of "market procurement + cross-border e-commerce", and bringing various participants into the closed loop of digital trade services, including market merchants, foreign businessmen, foreign trade companies and commodity organizers, etc.

Building a digital Integrated Free Trade Zone in an all-round way, achieving "cloud interconnection" of all elements and digital supervision across the region, exploring new modes and new formats of digital trade, such as "bonded + live broadcast", "bonded + designated ports + specialized market", and striving to be among the forefront of newly established integrated free trade zones in China within this year.

Improving the functions of the public service platform and exploring new rules of digital trade services. Making active efforts to acquire third-party payment license and become digital RMB application pilot, promoting the facilitation of trade payment and settlement.

3. Building a global supply chain service system

The core of building a global supply chain service system is to form a closed trade service loop of "Yiwu Goods (ICMALL) + Smart Warehousing (Overseas Warehouses) + CCCL logistics service chain + Supply Chain Finance", forming the Company's complete service chain and industrial chain, building a global supply chain service system to enhance the competitiveness of the main business, and building the second growth curve of supply chain services.

Accelerating the construction of warehousing and logistics system, opening and operating the CCCL logistics park (48 thousand square meters) steadily, and building the bonded warehouse (317,000 square meters) of Yiwu Integrated Free Trade Zone; relying on the large warehouse management system, deploying 100 digital cloud warehouses in China and integrating 100 domestic logistics trunk lines and increasing international logistics dedicated lines to 200; promoting "Money Treasure" business steadily.

Constructing a closed trade service loop of dual circulation, establishing a "Yiwu Goods" supply and demand matching and product selection system, cultivating 300 city managers within the year; while at the same time promoting innovation of the RCEP border trade markets and the new commercial complex project, and realizing the prototype trial operation within the year.

Speeding up international expansion, increasing the market-oriented deployment of overseas warehouses to more than 120; establishing 10 new "Bring You to China" trade service centers; rental rate of Dubai project reaching the level of more than 90% and the project being officially opened and operated within the year; setting up African head office.

4. Platform and brand building

Chinagoods: with the chinagoods platform as the core carrier, building a framework system of "market entities + business platform + service platform + infrastructure", promoting the construction of national stations and the expansion of cross-border trade business, integrating into the international circulation, and building the market trade ecosystem featured with full links, full scenes and digitalization, demonstrating "one platform on the cloud, one network on the ground", achieving the seamless connection and coordinated development of the online and offline Yiwu market and making trade easier.

Taking full advantage of Yiwu market, such as favorable policies related to commodities and trade service and its logistics, the chinagoods platform will build three core businesses, i.e., commodity center, sales channel center, and trade service center, to provide both trade parties with one-stop procurement supporting services including commodity demonstrating, trading, exhibitions, hotels, warehousing, etc.

CCCL: in recent years, the scale of market procurement trade has continued to rise, and the trend of trade fragmentation has become prominent. At the same time, there are some problems in the market procurement trade logistics industry, such as small-scale business entities, high financial pressures, weak bargaining power with actual carriers such as shipping companies, shipping space not guaranteed, insufficient logistics digitization capabilities, insufficient logistics standardization, insufficient supporting logistics infrastructure, etc. In this context, the Company set up CCCL, a logistics and trade platform, to provide digital cross-border logistics solutions for small and medium-sized foreign trade enterprises. The platform enables online ordering and payment, full visualization and 24-hour online customer service. It is positioned to establish a single window for online fulfillment of Yiwu international logistics service products, achieving the integration of Yiwu international logistics resources, forming a price comparison mechanism, providing more convenient, efficient, and low-cost customs clearance logistics services for trade parties, improving the control of goods rights in international trade process, and extending the back-end services of market supply chain.

Yiwu Goods: Focusing on channel expansion, brand enhancement, supply chain innovation, and trade services, the Company carries out in-depth domestic expansion layout. The Company builds a cobweb distribution system and deepen the Yiwu Goods strategy. The Company promotes the formation of a domestic trade market system dominated by the Yiwu market, undertook by downstream channels, and mutually beneficial to all parties. At the same time, Yiwu Goods actively deploys online channels and foreign trade channels, vigorously develops the mode of live broadcast e-commerce, government and corporate procurement and etc., actively promotes foreign trade export services, rapidly enhances brand influence, enlarges and strengthens transaction volume, and helps merchants in Yiwu to expand distribution channels, in order to achieve innovative development of online and offline integration, wholesale and retail linkage, and domestic sales and foreign trade collaboration. Focusing on innovation channels, in-depth expansion of operations, new product development, design and creativity empowerment, explosive product creation, brand planning and dissemination, the Company has devoted efforts to make Yiwu's small commodity industry chain intensive, digitalized, standardized, and branded. The Company promotes the optimization and upgrading of the small commodity industry structure and build a world -renowned high-quality small commodity supply chain.

Aiximao: Committed to the dual cycle plan to expand domestic distribution channels for imported products of Aiximao. A total of 2,000 domestic sales cooperation outlets have been expanded, and online and offline distribution channels have achieved revenue of RMB 300 million. The Company will build a distribution center for imported commodity brands, optimize the existing commodity structure, and incubate potential imported brands. Through centralized sourcing, bringing you to China overseas direct sourcing and etc., the Company can control the source of goods and strengthen the core advantages of the supply chain. The Company strives to create 2,000 superior products, complete 100 brand agents or authorizations throughout the year, and create 5 new Aiximao and sub-brand OEM products. We expand cross-border commerce and build a cross-border import supply chain.

(iv) Potential risks

√Applicable □Not applicable

1. Market operation risk

Large-sized shopping malls, hypermarkets, warehouse stores and e-commerce platforms are strong competitors in the commodities trading market. Large-sized shopping malls offer products of reliable quality and well-known brands; hypermarkets or warehouse stores supply diversified products at low prices; e-commerce platforms provide new trading means and facilitate consumers. Purchasers or consumers may also choose to make procurement or consumption via e -commerce platforms for convenience. Therefore, the Company may compete with other forms of business. In addition, affected by the rising specialized market, robust development of the industry market and rapid development of the central and western regions, the Company may also face competition from other similar specialized markets.

2. Risk of insufficient reserve of talents

With the acceleration of market transformation and the expansion of the Company’s business, and with the expansion of experienced international trade, warehousing and logistics, supply chain, overseas development, information data, industrial investment, and business operatio ns, the Company may face the risk of insufficient reserves of professional talents and compound talents.

3. The risk of increasing external uncertainty

In the context of the normalization of epidemic prevention and control, the development of global market trade is more complicated and severer than before. The global epidemic and reverse globalization are parallel, and the downward pressure on the world economy has increased. New technologies have accelerated the birth of new opportunities, and new trade models and new business formats have emerged. In the post-epidemic era, uncertainty will become the greatest certainty for the development of market trade, and the global epidemic will continue for a long time, showing a repeated see-saw state. Epidemic prevention and control, international politics, and global economy are intertwined. Uncertainty, instability, and restructuring of international trade will become the new normal. The Company may face the risk of increased external uncertainty.

(v) Others

□Applicable √Not applicale

II. The Company failed to disclose and explain the reasons in accordance with the standards due to special reasons such as non-applicable standards or state secrets and trade secrets.

□Applicable √Not applicale

Section V. Significant Matters

I. Proposal for common stock profit distribution or capital reserve conversion

(i) Formulation, implementation or adjustment of cash dividend policy

√Applicable □Not applicable

According to the China Securities Regulatory Commission's Notice on Further Implementation of Cash Dividends by Listed Companies (ZJF [2012] 37) and Zhejiang Securities Regulatory Bureau’s Notice on Forwarding the Notice on Further Implementation of Cash Dividends by Listed Companies (ZZJSSZ [2012] 138) Regulations, the Company held the 24th meeting of the sixth board of directors on August 15, 2012, and reviewed and approved the Proposal on Amending the Articles of Association, which revised the Company’s profit distribution policy and adjustment decision-making mechanism, and was deliberated and approved in the second extraordinary general meeting of shareholders held on September 3,2012. In order to further implement the new requirements of the China Securities Regulatory Commission's Guidelines for the Supervision of Listed Companies No. 3-Cash Dividend Distribution of Listed Companies (November 30, 2013) and Shanghai Stock Exchange’s Guidelines for Cash Dividend Distribution of Listed Companies, the forty-fourth meeting of the sixth board of directors of the Company held on April 17, 2014 reviewed and approved the Proposal on Amending Profit Distribution Clauses in the Articles of Association of the Company. The Company further clarified the basic principles, distribution forms, specific policies, decision-making mechanisms and procedures of the Company's profit distribution, which were reviewed and approved by the 2013 Annual General Meeting of Shareholders held on May 12, 2014. The nineteenth meeting of the seventh board of directors of the Company held on December 25, 2015 reviewed and approved the Plan of Zhejiang China Commodity City Group Co., Ltd. on Shareholder Dividend Return Plan.

The Company's 2019 annual general meeting of shareholders held on May 22, 2020 reviewed and approved the Company's profit distribution plan for 2019. In 2019, based on the total share capital of 5,443,214,176 shares on December 31, 2019, a cash dividend of RMB 0.7 (including tax) will be distributed for every 10 shares). A total of RMB 381,024,992.32 was allocated. The Company's board of directors published the Announcement on the Implementation of the Distribution of Rights and Interests in YIWU CCC2019 on the website of the Shanghai Stock Exchange and the China Securities Journal, Shanghai Securities News and Securities Times on July 14, 2020. The profits had been completed before July 21, 2020. The decision-making procedures related to the Company's profit distribution comply with the provisions of the Articles of Association. The Company listens to the opinions and demands of small and medium shareholders, and the profit distribution is based on factors such as the Company's industry characteristics, development stage and profitability level, and capital needs. It takes into account the requirements for investors to share the results of the Company's development and growth and obtain reasonable investment returns.

(ii) The Company's common stock dividend distribution plan or pre-plan for the past three years (including the reporting period), and the capital reserve conversion plan and pre-plan

Unit: RMB

(iii) The circumstance when repurchase of shares in cash is included in cash dividends

□Applicable √Not applicable

(iv) During the reporting period, if the parent company is profitable and the profit

available for distribution to common shareholders is positive, but does not propose a plan for the distribution of cash profits on common shares, the Company shall disclose in details the reason, the application and using plan of the undistributed profits.

□Applicable √Not applicable

II. Fulfillment of commitments

(i) Commitments made by the actual controller, shareholders, affiliates and acquirer of the Company, the Company itself and other related parties during the reporting period or as of the reporting period

□Applicable √Not applicable

(ii) If there is a profit forecast for the Company’s assets or projects, and the reporting period is still in the profit forecast period, the Company will explain whether the assets or projects have reached the original profit forecast and the reason

.

□Yes □No √Not applicable

(iii) Completion of performance commitments and its impact on the impairment test of

goodwill

□Applicable √Not applicable

III. Occupation of funds and progress in debts clearing during the reporting period

□Applicable √Not applicable

IV. The Company's explanation on the ‘non-standard opinion audit report’ of the accounting firm

□Applicable √Not applicable

V. The Company's analysis and explanation on the reasons and effects of changes in accounting policies, accounting estimates or corrections of major accounting errors

(i) The Company's analysis and explanation on the reasons and effects of changes in accounting policies and accounting estimates

√Applicable □Not applicable

For details, please refer to Section 11 Financial Report V. Significant Accounting Policies and Accounting Estimates 44. Changes on Significant Accounting Policies and Accounting Estimates.

(ii) The Company's analysis and explanation on the reasons and effects of major accounting errors correction

□Applicable √Not applicable

(iii) Communication with the former accounting firm

□Applicable √Not applicable

(iv) Other descriptions

□Applicable √Not applicable

VI. Engagement and termination of engagement of accounting firm

Unit: RMB10,000

Statement on the engagement or termination of engagement of accounting firm

√Applicable □Not applicable

After deliberation at the 13th meeting of the Company’s eighth session of the Board of Directors held on April 28, 2020, and the Company’s 2019 annual general meeting of shareholders held on May 22, 2020, the Proposal on Renewing the Appointment of an Accounting Firm was passed, and agreed to continue to appoint Ernst & Young Hua Ming Certified Public Accountants (Special General Partnership) as the Company's 2020 financial and internal control audit agency. For details, please refer to the Announcement on Renewing the Appointment of Accounting Firms (L2020-028) issued by the Company on the Shanghai Stock Exchange website www.sse.com.cn on April 30, 2020, and the Announcement on Resolutions of the 2019 Annual General Meeting of Shareholders (L2020-039) issued by the Company on the Shanghai Stock Exchange website www.sse.com.cn on May 23, 2020.

Statement on replacing the accounting firm during the audit

□Applicable √Not applicable

VII. The risk of listing suspension

(i) Reasons for suspension of listing

□Applicable √Not applicable

(ii) The Company's proposed response measures

□Applicable √Not applicable

VIII. Termination of listing and reasons

□Applicable √Not applicable

IX. Matters relating to bankruptcy and reorganization

□Applicable √Not applicable

X. Matters relating to litigations and arbitrations

√There are matters relating to litigations or arbitrations in current reporting period □No matters relating to litigations or arbitrations in current reporting period

(i) Litigations and arbitrations have been disclosed in the temporary announcements and have had no further progresses

□Applicable √Not applicable

(ii) Litigations and arbitrations that have not been disclosed in the temporary

announcements or have had further progresses

√Applicable □Not applicable

Unit: RMB10,000

(iii) Other descriptions

□Applicable √Not applicable

XI. Punishments of and rectifications by the Listed Company and its directors, supervisors, senior officers, actual controller and acquirers

□Applicable √Not applicable

XII. Credit standing of the Company and its controlling shareholder and actual

controller

√Applicable □Not applicable

There was no outstanding court judgment or overdue debt of a large amount involving the Company or its controlling shareholder or actual controller during the reporting period.

XIII. Incentive stock option plans, employee stock ownership plans and other

employee incentives granted by the Company and the impact thereof

(i) Relevant incentive matters have been disclosed in the temporary announcement and there is no progress or change in subsequent implementation.

√Applicable □Not applicable

(ii) Incentives that have not been disclosed in the temporary announcements or had further progresses

Incentive stock option

□Applicable √Not applicable

Other descriptions

□Applicable √Not applicable

Employee stock ownership plans □Applicable √Not applicable

Other incentives

□Applicable √Not applicable

XIV. Material related-party transactions

(i) Related-party transactions relating to regular corporate operation

1. Matters that have been disclosed in the temporary announcements and had no further progresses or changes

□Applicable √Not applicable

2. Matters that have been disclosed in the temporary announcements but had further progresses or changes

□Applicable √Not applicable

3. Matters that have not been disclosed in the temporary announcements

√Applicable □Not applicable

Unit: RMB

(ii) Related transactions in the acquisition or sale of assets or equity

1. Matters that have been disclosed in the temporary announcements and had no further progresses or changes

√Applicable □Not applicable

2. Matters that have been disclosed in the temporary announcements but had further progresses or changes

√Applicable □Not applicable

(1) The Company received the transfer of 35.72% equity of Zhejiang Huajie Investment Development Co., Ltd. held by Shanghai Yuantong Jiaolong Investment Development (Group) Co., Ltd. The Company has transferred a 20.68% stake in Zhejiang Huajie Investment Development Co., Ltd. held by Yiwu International Land Port Group Co., Ltd. For details, please refer to the Announcement on the Progress of External Investment and Related-Party Transactions (Announcement No. Temporary 2020-018).

During the reporting period, Zhejiang Huajie Investment Development Co., Ltd. has completed the relevant industrial and commercial change registration procedures.

(2) In order to meet the needs of Handing Shangbo, a wholly-owned subsidiary of its subsidiary, CCCP, to develop a real estate project on the east side of the intersection of Fotang Avenue and Shuangfeng Road, Fotang Town, Yiwu, the Company provides Handing Shangbo with financial assistance of no more than RMB 490 million, and the Company's controlling shareholder, CCCH, will provide the same proportion of financial assistance to Handing Commercial Bo in accordance with its indirect shareholding ratio. For details, please refer to the Announcement on Providing External Financial Assistance and Related Party Transactions (Announcement Number: L2020-098).

As of the end of the reporting period, the Company has provided RMB 472 million in financial assistance, and CCCH has provided RMB 491 million in financial assistance.

3. Matters that have not been disclosed in the temporary announcements

□Applicable √Not applicable

4. If any agreement on the operating results is involved, the achievement of operating results during the reporting period shall be disclosed

□Applicable √Not applicable

(iii) Related-party transactions arising from joint external investment

1. Matters that have been disclosed in the temporary announcements and had no further progresses or changes

□Applicable √Not applicable

2. Matters that have been disclosed in the temporary announcements but had further progresses or changes

□Applicable √Not applicable

3. Matters that have not been disclosed in the temporary announcements

□Applicable √Not applicable

(iv) Related-party credits and debts

1. Matters that have been disclosed in the temporary announcements and had no further progresses or changes

□Applicable √Not applicable

2. Matters that have been disclosed in the temporary announcements but had further progresses or changes

□Applicable √Not applicable

3. Matters that have not been disclosed in the temporary announcements

□Applicable √Not applicable

(v) Others

□Applicable √Not applicable

XV. Material contracts and performance thereof

(i) Trusteeship, contracting and leases

1. Hosting

□Applicable √Not applicable

2. Contracting

□Applicable √Not applicable

3. Renting

□Applicable √Not applicable

(ii) Guarantees

√Applicable □Not applicable

Unit: RMB10,000

Yiwu Branch of Evergrowing Bank (December 31, 2019:

RMB 201,528,664.67).

3. According to the resolution of the 15th meeting of the 7th

Board of Directors on Jul 1, 2015, the Group applied to the

Yiwu Branch of ABC for an RMB750million loan for Yiwu

Shanglv and provided guarantee based on its shareholding

ratio. The guarantee was a joint and several liability

guarantee, the maximum amount of guarantee was

RMB367.5million and the term was 11 years.As of

December 31, 2020, Yiwu Shanglvactually borrowed RMB 477,659,739.88 from banks (December 31, 2019: RMB 587,412,606.21).In accordance with the guarantee contract, it assumed a guarantee liability of RMB 234,053,272.54 to

the Yiwu Branch of Agricultural Bank of China (December

31, 2019: RMB 287,832,177.04).Yiwu State-owned Capital

Operation Co., Ltd. provided a counter guarantee for this

guarantee.

4. According to the resolution of the nineteenth meeting of

the eighth session of the board of directors on August 13,

2020, the Group applied for a loan of no more than RMB

100 million from Bank of Communications Co., Ltd. Yiwu

Branch for Yiwu Shanglv and provided guarantees in

accordance with the equity ratio. The guarantee method

was the joint liability guarantee which has a maximum

amount of RMB 49 million. The guarantee period is from the

date of the expiry of the debt performance period agreed in

the independent contract to two years after the date of the

expiration of the debt performance period of the last due

principal debt under all the main contracts.As of December

31, 2020, Yiwu Shanglv actually totally borrowed RMB

11,500,000.00 from banks (December 31, 2019: RMB 0).In

accordance with the guarantee contract, it assumed a

guarantee liability of RMB 5,635,000.00 to the Yiwu

Branch of the Agricultural Bank of China (December 31,

2019: RMB 0).Yiwu China Commodity City Holdings Limited

provided counter-guarantee for this guarantee.

5. According to relevant regulations, before the purchaser of

the commercial housing completing the housing ownership

certificate, the Group selling the commercial housing shall

provide the bank with a mortgage guarantee for the

purchaser. As of December 31, 2020, the unsettled

guarantee amount is RMB 16,170,141.08. (December 31,

2019: RMB 540,283,351.51).Those guarantees would be

released after the issuance of the property ownership

certificates and are thus little likely to incur losses.

Therefore, the management believed that it was not

necessary to make provision for the guarantees.

(iii) Entrust the management of the cash assets of others

1. Entrusted financial management

(1) The totality of entrusted financial management

□Applicable √Not applicable

Other information

□Applicable √Not applicable

(2) Individual entrusted financial management

□Applicable √Not applicable

Other information

□Applicable √Not applicable

(3) Entrusted financial management impairment provision

□Applicable √Not applicable

2. Entrusted Loan

(1) Total entrusted loan

√Applicable □Not applicable

Unit: RMB10,000

Other information

√Applicable □Not applicable

1. After review and approval at the 44th meeting of the sixth board of directors of the Company in April 2014 and the 22nd meeting of the seventh board of directors of the Company in March 2016, the Company applied to the Export-Import Bank of China for a total loan of RMB 700 million. Special entrusted loans to market merchants are valid within 2 years from the date of approval by the board of directors. The Company's loans to the Export-Import Bank of China are guaranteed by MDG, and Shanghai Pudong Development Bank Yiwu Branch acts as an entrusted loan processing bank. Merchants who entrust loans are pledged with the right to use China Commodity City.

There are no new entrusted loans in this period, and all entrusted loans issued in the previous period have expired.

As of December 31, 2020, a total of 13 overdue loans with a total amount of RMB 3,210,800 have not been settled. The Company has received RMB 1,632,100 from China

Insurance Property and Casualty Insurance and China Xinlihe to jointly assume the guaranteed insurance payment (amount after the auction of the right to use the store If there is any loss in the external part, the compensation shall be paid by it).

2. The subsidiary, CCCF, entrusted the Yiwu Branch of Agricultural Bank of China Co., Ltd. to provide a working capital loan of RMB 850 million to Sunac Xinheng Investment Group Co., Ltd. for daily production and operation turnover. The annual interest rate is 6.5%. The loan has been returned in advance in August 2015. For details, please refer to the Announcement on the Provision of Entrusted Loans (L2020-020) disclosed by the Company on the website of the

Shanghai Stock Exchange on April 16, 2020, and the Announcement on the Progress of

Providing the Entrusted Loans disclosed on the website of Shanghai Stock Exchange on August 27, 2020 (Provisional 2020-064)

(2) Single Entrusted Loan

√Applicable □Not applicable

Unit: RMB10,000

Other information

□Applicable √Not applicable

(3) Entrusted loan impairment provision

√Applicable □Not applicable

3. Other information

□Applicable √Not applicable

(iv) Other material contracts

√Applicable □Not applicable

XVI. Other significant matters

√Applicable □Not applicable

For details, please refer to 12. Major Events of the Company and Impact on the Company's Operation and Solvency.

XVII. Actively fulfill social responsibilities

(i) Poverty alleviation by the Listed Company

□Applicable √Not applicable

(ii) Social responsibility

√Applicable □Not applicable

The Company has disclosed the 2020 Sustainability Report. For details, please refer to the website of the Shanghai Stock Exchange: www.sse.com.cn.

(iii) Environmental issues

1. Statement on the environmental issues of the company listed among the key polluters announced by the environmental protection authority and its important subsidiaries

□Applicable √Not applicable

2. Statement on the environmental issues of the company not listed among the key polluters

□Applicable √Not applicable

3. Explanation for the failure of the company not listed among the key polluters to disclose environmental issues

□Applicable √Not applicable

4. Further progress or change of the environmental issues disclosed during the reporting period

□Applicable √Not applicable

(iv) Other descriptions

□Applicable √Not applicable

XVIII. Convertible corporate bonds

□Applicable √Not applicable

Section VI. Changes in Common Shares and Shareholders

I. Changes in common stock

(i) Changes in common shares

1. Changes in common shares

During the reporting period, the total number of common shares and share capital structures of the Company remained unchanged.

2. Description of changes in common shares

□Applicable √Not applicable

3. The impact of changes in common shares on financial indicators such as earnings per share and net assets per share in the most recent year and the most recent period (if any)

□Applicable √Not applicable

4. Other matters the Company deems it necessary to disclose or required by the securities regulatory authority to be disclosed

√Applicable □Not applicable

On January 15, 2021, the Company completed the registration of shares granted for the first time under the 2020 restricted stock incentive plan. The total share capital of the Company increased by 46,700,000 shares, and the total share capital after the increase was 5,489,914,176 shares.

(ii) Changes in non-tradable shares

□Applicable √Not applicable

II. Securities issuance and listing

(i) Securities issuance as of the reporting period

√Applicable □Not applicable

Currency: million shares Currency: RMB

Notes on the issuance of securities as of the reporting period (for bonds with different interest rates during the duration, please specify separately):

√Applicable □Not applicable

In accordance with the CSRC License [2019] 380 document issued by the China Securities Regulatory Commission on March 14, 2019, the Company publicly issued RMB 800,000,000 of corporate bonds on June 3, 2019. The face value of the current bonds is RMB 100 and the coupon rate is 4.30 %. It was listed and traded on the Shanghai Stock Exchange on June 18, 2019. The abbreviation of the bond is 19XS01 and the bond code is 155450.

In accordance with the document Zheng Jian Li [2019] No. 380 issued by the China Securities Regulatory Commission on March 14, 2019, the Company publicly issued RMB 700,000,000 of corporate bonds on September 26, 2019. The face value of the current bonds is RMB 100, and the coupon rate is 3.99%. It was listed and traded on the Shanghai Stock Exchange on October 15, 2019. The abbreviation of the bond is 19XS02 and the bond code is 155750.

(ii) The total number of common shares of the Company, changes in the shareholder structure, and changes in the Company's assets and liabilities structure

□Applicable √Not applicable

(iii) Existing internal employee shares

□Applicable √Not applicable

III. Shareholders and actual controllers

(i) Total number of shareholders

(ii) Shareholdings of the top 10 shareholders and top 10 holders of tradable shares (or shareholders not subject to trading restrictions)

Unit: number of shares

Number of shares held by the top 10 shareholders subject to trading restrictions and the trading

restrictions

□Applicable √Not applicable

(iii) Strategic investors or general legal persons became the top 10 shareholders due to

the placement of new shares.

□Applicable √Not applicable

IV. Controlling shareholder and actual controller

(i) Controlling shareholder

1. Legal person

√Applicable □Not applicable

2. Natural person

□Applicable √Not applicable

3. Special statement that the Company does not have a controlling shareholder

□Applicable √Not applicable

4. Index and date of controlling shareholder changes during the reporting period

√Applicable □Not applicable

On February 26, 2020, the Company received a notice from the controlling shareholder Market Group. According to the approval of the State-owned Assets Supervision and Administration Office of the People's Government of Yiwu, it decided to transfer 3,038,179,392 shares of Commodity City held by it to CCCH for free. For details, please refer to the Indicative Announcement on the Gratuitous Transfer of State-owned Equity of Controlling Shareholders (L2020-008) disclosed on February 27, 2020.

On March 2, 2020, MDG and CCCH signed the Equity Free Transfer Agreement. For details, please refer to the Announcement on the Progress of the Gratuitous Transfer of State-owned Equity of Controlling Shareholders (L2020-009) disclosed on March 5, 2020.

On May 11, 2020, CCCH received the Confirmation of Transfer Registration issued by China Securities Depository and Clearing Co., Ltd., confirming that the share transfer registration procedures for the free transfer of state-owned shares have been completed. For details, please refer to the Announcement on Completion of Transfer Registration of Controlling Shareholder's State-owned Equity Free Transfer (L2020-038) disclosed on May 13, 2020.

5. Block diagram of the property rights and control relationship between the Company and the controlling shareholder

√Applicable □Not applicable

(ii) The actual controller

1 Legal person

√Applicable □Not applicable

2 Natural person

□Applicable √Not applicable

3 Special explanation that the Company does not have an actual controller

□Applicable √Not applicable

4 Index and date of actual controller change during the reporting period

□Applicable √Not applicable

5 Block diagram of the property rights and control relationship between the Company and the actual controller

√Applicable □Not applicable

6 The actual controller controls the Company through trust or other asset

management methods.

□Applicable √Not applicable

(iii) Other introductions of controlling shareholders and actual controllers

□Applicable √Not applicable

V. Other corporate shareholders holding more than 10% of the shares

□Applicable √Not applicable

VI. Description of share restriction reduction

□Applicable √Not applicable

Section VII. Preferred Shares

□Applicable √Not applicable

Section VIII. Directors, Supervisors, Senior Managers and Employees

I. Changes in shareholding and remuneration

(i) Changes in shareholding and remuneration of current and resigned directors, supervisors and senior executives during the reporting period

√Applicable □Not applicable

Unit: Ten Thousand Shares

Statement on other matters

√Applicable □Not applicable

1. The remuneration received by some of the Company's directors and executives is the pre-paid remuneration for 2020, and the actual remuneration will be determined after the completion of relevant assessments and the implementation of relevant procedures.

2. ZHANG Yuhu, LIU Zhenting, FANG Min, and JIN Yongsheng are the employee representative supervisors, and the remuneration listed in the table is the total remuneration received after the annual appraisal based on the position in the Company.

(ii) Equity incentives granted to directors and senior executives during the reporting period

□Applicable √Not applicable

II. Appointments of current and resigned directors, supervisors and senior executives during the reporting period

(i) Position in shareholder units

√Applicable □Not applicable

(ii) Serving in other units

√Applicable □Not applicable

III. Remuneration of directors, supervisors and senior management personnel

√Applicable □Not applicable

IV. Changes in directors, supervisors and senior officers of the Company

√Applicable □Not applicable

V. Explanation of punishments by securities regulatory agencies in the past three years

√Applicable □Not applicable

1. On December 5, 2018, the Company received the Decision on Announcement and Criticism of Zhejiang China Commodity City Group Co., Ltd. and relevant responsible persons issued by the Shanghai Stock Exchange (Shangzheng Gongchu Han [2018] No. 70). For the relevant decision letter, please refer to the Shanghai Stock Exchange website www.sse.com.cn.

2. On January 29, 2019, the Company received the China Securities Regulatory Commission Zhejiang Regulatory Bureau's Decision on Measures to Issue Warning Letters to Zhejiang China Commodity City Group Co., Ltd. and related personnel (Administrative Regulatory Measures Decision [2019 ] No. 8). For the specific content of the relevant decision, please refer to the Announcement of the YIWU CCC on Receiving the Warning Letter from Zhejiang Securities Regulatory Bureau issued by the Company on January 30, 2019 (Announcement No.: L2019-007).

VI. Employees of the parent company and major subsidiaries

(i) Employees

(ii) Salary policy

√Applicable □Not applicable

I. Principles of remuneration system

1. Combination of duties, powers, responsibilities, and benefits;

2. It is fair internally and competitive externally;

3. Distribution according to work, priority to efficiency, fairness and sustainable development;

4. Adopt the distribution form of salary determined by post, grade determined by ability, and award determined by performance to reasonably widen the income gap.

II. Basis of salary system

Position importance, performance contribution, ability, work attitude and spirit of cooperation.

1. As far as the overall level is concerned, the Company determines the remuneration based on the current economic benefits and sustainable development.

2. The Company's salary system includes two different types.

(1) The annual salary system is applicable to managers and deputy managers of the Company's headquarters, as well as members of the management team of branches and subsidiaries;

(2) The structured wage system is applicable to employees who have signed labor contracts for two years and above. Including grassroots management personnel, functional department personnel, engineering management personnel, logistics management personnel and equipment maintenance personnel.

3. The remuneration of specially hired staff, staff waiting for duty, retired staff and timing piecework staff shall be stipulated separately.

4. The Company's employee income generally includes four parts: job skill wages, bonuses, benefits, and allowances.

(iii) Training program

√Applicable □Not applicable

According to the different training organizations, the Company's employee training can be divided into: OJT training, company internal training, expatriate training and online training.

1. OJT (On the Job Training) The training of ordinary employees and new employees by leaders of various departments, experienced or skilled employees belongs to OJT training, including the Company's administrative management series training, business management series training, engineering technology series training, and security logistics series training.

2. Enterprise internal training. According to the Company's training needs, the Company organizes internal trainers or invites external training institutions to tailor training courses for the Company, allowing employees to receive systematic training, including corporate culture, company organizational structure and rules and regulations, industry status and prospects, and professional ethics, etiquette, code of conduct, language, computer skills, etc.

3. Expatriate training In accordance with the needs of the Company's business development and job skills, the Company organizes personnel in specific positions to go out to participate in the training of training institutions, including financial securities series training, human resource management training, and enterprise management series training.

4. Network training It is an online training for employees through the application of information technology and Internet technology, and different training contents are set for different positions, so that training and learning are independent and personalized, and the use of resources is maximized.

(iv) Labor outsourcing

√Applicable □Not applicable

VII. Others

□Applicable √Not applicable

Section IX. Corporate Governance

I. Description of corporate governance

√Applicable □Not applicable

In strict accordance with the Company Law, Securities Law, Guidelines for Corporate Governance of Listed Companies and the relevant provisions of the China Securities Regulatory Commission and other laws and regulations, the Company continuously establishes and improves relevant systems, strives to improve the corporate governance structure, standardize operations, and operate in compliance with laws. There is no difference between the corporate governance structure of the Company and the regulatory documents on the governance of listed companies issued by the China Securities Regulatory Commission.

1. Shareholders and general meetings

The Company convenes and holds a general meeting of shareholders in strict accordance with the Rules of Procedure for the General Meeting of Shareholders to ensure that all shareholders of the Company fully exercise their rights, especially those of small and medium shareholders. In peacetime, we earnestly receive visits and calls from shareholders to ensure the shareholders’ rights to know, participate and vote on major company issues, so that shareholders can truly enjoy equal rights.

2. Controlling shareholders and listed companies

The controlling shareholder of the Company exercised the rights of investors through the general meeting of shareholders in accordance with the law, and did not directly or indirectly intervene in the Company's decision-making and business activities beyond the general meeting of shareholders. The Company has achieved the five independences of personnel, assets, finances, institutions and businesses. The Company's board of directors, board of supervisors and internal institutions can operate independently. The controlling shareholder of the Company can strictly abide by the promise made to the Company to avoid horizontal competition. The company should strictly follows the Related Transaction Decision and Implementation System when it has connected transactions with its controlling shareholders to ensure that the connected transactions are fair and just.

3. Directors and Board of Directors

The Company selects directors in strict accordance with the procedures stipulated in the Articles of Association; convenes and holds board meetings in strict accordance with the Rules of Procedures for the Board of Directors. All directors of the Company can seriously attend the board of directors and shareholders meetings, actively participate in training, and earnestly perform their duties as directors. Three independent directors can earnestly perform the duties and obligations entrusted by laws, regulations and the Company's Articles of Association, and express independent opinions and suggestions on important company matters, so as to effectively protect the legitimate rights and interests of shareholders. Clarified the annual report review procedures of the Audit Committee of the Board of Directors, and effectively played the role of each special committees.

4. Supervisors and Board of Supervisors

During the reporting period, the Company held four board of supervisors, and the convening and holding procedures of each meeting complied with the provisions of the Company Law, the Articles of Association and the Rules of Procedure of the Board of Supervisors. Company supervisors can earnestly perform their duties, supervise major company matters, supervise the legality and compliance of the Company's directors and senior managers in performing their duties, safeguarding the legitimate rights and interests of the Company and shareholders.

5. Information disclosure and investor relationship management

According to the Information Disclosure Management System, the Company discloses relevant information truthfully, accurately, completely and in a timely manner. Investors can learn about the Company through media promotion, telephone consultation, and company website. In addition to completing the mandatory periodic reports and temporary announcements disclosed by laws and regulations, the Company also actively carry out compliance and voluntary information disclosure, so that investors can have a continuous understanding of the operations that they care about, and truly protect the shareholders' right to know.

Whether there are major differences between the corporate governance and the requirements of the relevant regulations of the China Securities Regulatory Commission; if there are major differences, the reasons should be explained.

□Applicable √Not applicable

II. Shareholders’ meetings

Statement on shareholders’ meetings

√Applicable □Not applicable

1. The 2020 First Extraordinary General Meeting of Shareholders reviewed and approved the Proposal on the Redemption of the Remuneration of Certain Directors of the Company in 2018.

2. The Second Extraordinary General Meeting of Shareholders in 2020 reviewed and approved the Proposal on External Donations.

3. The 2019 Annual General Meeting of Shareholders deliberated and approved the 2019 Work Report of the Board of Directors, 2019 Work Report of the Board of Supervisors, 2019 Annual Report and Summary, 2019 Financial Statement Report, 2020 Financial Budget Report, 2019 Annual Profit Distribution Plan, Proposal on Renewing the Appointment of Accounting Firms, Proposal on the Proposed Issuance of Debt Financing Instruments in the Next 12 Months, Proposal on Additional Independent Directors.

4. The 2020 Third Extraordinary General Meeting of Shareholders reviewed and approved the Proposal on the Proposal to Transfer Part of the Equity Interests in a Wholly-owned Subsidiary and Related Transactions.

5. The 2020 Fourth Extraordinary General Meeting of Shareholders reviewed and approved the Proposal on the Redemption of Some Directors' Remuneration in 2019 and the Proposal on the By-election of Supervisors.

6. The Fifth Extraordinary General Meeting of Shareholders in 2020 deliberated and approved the Proposal on the Company's 2020 Restricted Stock Incentive Plan (Draft)and its summary, Proposal on the Measures for the Evaluation and Management of the Implementation of the Company's 2020 Restricted Stock Incentive Plan, Proposal on requesting the shareholders meeting to authorize the board of directors to handle equity incentive related matters, Proposal on by-election of directors.

III. Duties performed by directors

(i) Board of Directors and Shareholders Meetings attended by Directors

Explanation of not attending the board meeting in person for two consecutive times

√Applicable □Not applicable

Director Zhu Hang did not personally attend the 13th and 14th meetings of the eighth board of directors of the Company due to epidemic prevention and control and work reasons, and entrusted the Company's director Xu Hang to attend.

(ii) Objections raised by independent directors on company-related matters

□Applicable √Not applicable

(iii) Others

□Applicable √Not applicable

IV. If there are objections to the important opinions and suggestions put forward by the special committees under the board of directors during the performance of their duties during the reporting period, the specific circumstances shall be disclosed.

√Applicable □Not applicable

During the reporting period, the strategy committee, audit committee, nomination committee, and remuneration and appraisal committee under the Company’s board of directors were able to actively and effectively carry out their work in accordance with relevant laws and regulations and their respective working procedures. They Participate in discussions and express professional opinions on matters such as the Company’s annual financial audit, internal control audit, accounting policies changes, related party transaction review, director and senior management qualification review, remuneration and performance appraisal etc. to ensure the scientific and effective decision-making of the board of directors.

V. Explanation of the Company risk that the board of supervisors founds

□Applicable √Not applicable

VI. The Company's explanation on the fact that it cannot guarantee independence or maintain its ability to operate independently with its controlling shareholder in business, personnel, assets, organization, and finance

□Applicable √Not applicable

Where there is competition in the same industry, the Company's corresponding solution measures, work progress and follow-up work plan. □Applicable √Not applicable

VII. The evaluation mechanism for senior managers during the reporting period, as well as the establishment and implementation of incentive mechanisms

√Applicable □Not applicable

The salary appraisal of the senior management personnel is completed and determined according to the performance appraisal method of the head of the enterprise and the Company's operation and related appraisal indicators, then the salary determination is completed.

VIII. Disclosure of internal control self-evaluation report or not

√Applicable □Not applicable

The Company has compiled and disclosed the 2020 Internal Control Self-evaluation Report. For details, please refer to the announcement on the Shanghai Stock Exchange website (www.sse.com.cn).

Explanation of major deficiencies in internal control during the reporting period

□Applicable √Not applicable

IX. Explanation of the internal control audit report

√Applicable □Not applicable

The Company hired Ernst & Young Hua Ming Certified Public Accountants (special general partnership) to audit the effectiveness of the Company's internal control in its 2020 financial report. The accounting firm has issued a standard unqualified internal control audit report. It is believed that the Company maintained effective internal control of financial reporting in all major aspects in accordance with the Basic Standards for Corporate Internal Control and related regulations on December 31, 2020. For details of the internal control audit report, please refer to the announcement on the Shanghai Stock Exchange website (www.sse.com.cn).

Disclosure of internal control audit report: Yes

Opinion type of internal control audit report: standard unqualified opinion

X. Others

□Applicable √Not applicable

Section X. Corporate Bonds

√Applicable □Not applicable

I. Basic information on corporate bonds

Unit: RMB100million

Principal repayment and interest payment of corporate bonds

√Applicable □Not applicable

On June 5, 2020, the Company paid interest to all "19XS01" holders on time from June 5, 2019 to June 4, 2020.

On September 28, 2020, the Company paid interest to all "19XS02" holders on time from September 27, 2019 to September 26, 2020.

Other statement on corporate bonds

□Applicable √Not applicable

II. Bond trustee, contact information of the trustee and contact information of credit rating agency

□Applicable √Not applicable

III. Use of funds raised from corporate bonds

√Applicable □Not applicable

RMB800million of funds were raised from the 2019 corporate bond (Phase I). The Company has used the funds after deduction of issuance fees to repay its interest-bearing liabilities in accordance with the plan for the use of raised funds as agreed in the prospectus.

RMB700million of funds were raised from the 2019 corporate bond (Phase II). The Compa ny has used the funds after deduction of issuance fees to repay its interest-bearing liabilities in accordance with the plan for the use of raised funds as agreed in the prospectus.

IV. Credit ratings of corporate bonds

√Applicable □Not applicable

Shanghai Brilliance Credit Rating & Investors Service Co., Ltd. issued the Credit Rating Surveillance Report on Zhejiang China Commodities City Group Co., Ltd. and the 2019 CCC 01 and 2019 CCC 02 [Brilliance Surveillance (2020) 100930] on Jun 29, 2020. The Company had an issuer rating of AAA with stable outlook, and the bonds had a rating of AAA.

V. Credit enhancement mechanism for corporate bonds, bond repayment plans and other related matters during the reporting period

√Applicable □Not applicable

During the reporting period, there was no change to the credit enhancement mechanism, bond repayment plans or other bond repayment protection measures for the corporate bonds issued by the Company. In order to fully and effectively protect the bondholders’ interests, the Company has made a series of plans and arrangements for the timely and full repayment of the corporate bonds, including determining the specific department and personnel to be in charge, opening a special bond repayment account, formulating and strictly implementing the cash management plan, making proper organization and coordination, giving full play to the role of the bond trustee and strictly performing the information disclosure obligation to develop a set of measures to ensure interest payment and principal repayment for the bonds.

VI. Convention of bondholders’ meetings

□Applicable √Not applicable

VII. Performance of duties by the bond trustee of the Company’s corporate bonds

√Applicable □Not applicable

The trustee of the Company’s corporate bonds, Haitong Securities Co., Ltd., during the reporting period, performed its duty as the trustee in compliance with the Administrative Measures for the Issuance and Trading of Corporate Bonds, the Rules for Listing of Corporate Bonds on Shanghai Stock Exchange, the Code of Conduct for Trustees of Corporate Bonds and other related laws and regulations, including but not limited to paying continuing attention to the Company’s credit status and supervising the receipt, deposit, transfer of the funds raised from the corporate bonds, principal repayment and interest payment in the Company’s designated special account.

VIII. The Company's accounting data and financial indicators for the past 2 years as of the end of the reporting period

√Applicable □Not applicable

Unit: RMB10,000

IX. Payment of interest and repayment of principal for other bonds and debt financing instruments of the Company

√Applicable □Not applicable

1. The Company issued a 270-day super-short-term commercial paper of RMB1bn at an annual interest rate of 3.30% on Aug 29, 2019. The lead underwriter was China Merchants Bank Co., Ltd. and the joint underwriter was Industrial and Commercial Bank of China Co., Ltd.. The Company

repaid the principal and paid the interest for the bond upon its maturity on May 29, 2020.

2. The Company issued 180-day ultra-short-term financing bonds of RMB 1 billion on February 18, 2020, with an annual interest rate of 2.89%. The lead underwriter is Agricultural Bank of China Co., Ltd. The joint lead underwriter is Bank of Ningbo Co., Ltd., which is due to redeem the principal and interest on August 18, 2020.

3. The Company issued 120-day ultra-short-term financing bonds of RMB 1 billion on May 14, 2020, with an annual interest rate of 1.97%. The lead underwriter is China Construction Bank

Corporation. The joint underwriter is the Export-Import Bank of China Co., Ltd., which is due to

redeem the principal and interest on September 15, 2020.

4. The Company issued 120-day ultra-short-term financing bonds of RMB 1 billion on August 12, 2020, with an annual interest rate of 2.89%. The lead underwriter is Industrial and Commercial Bank of China. The joint underwriter is the Export-Import Bank of China Co., Ltd., which is due to redeem the principal and interest on December 12, 2020.

5. The Company issued 90-day ultra-short-term financing bonds of RMB 1 billion on September 1, 2020, with an annual interest rate of 2.2%. The lead underwriter is Shanghai Pudong

Development Bank Co., Ltd., which is due to redeem the principal and interest on December 2, 2020.

6. The Company issued 90-day ultra-short-term financing bonds of RMB 1 billion on September 28, 2020, with an annual interest rate of 2.5%. The lead underwriter is the Agricultural Bank of China Co., Ltd., which is due to redeem the principal and interest on December 29, 2020.

7. The Company issued 90-day ultra-short-term financing bonds of RMB 1 billion on November 25, 2020, with an annual interest rate of 2.5%. The lead underwriter is the Agricultural Bank of China Co., Ltd., which is due to redeem the principal and interest on February 25, 2021.

8. The Company issued 90-day ultra-short-term financing bonds of RMB 1 billion on December 8, 2020, with an annual interest rate of 2.45%. The lead underwriter is Shanghai Pudong

Development Bank Co., Ltd., which is due to redeem the principal and interest on March 9, 2021.

9. The Company issued 28-day ultra-short-term financing bonds of RMB 1 billion on December 24, 2020. The annual interest rate of the issuance is 2.70%. The lead underwriter is Industrial and Commercial Bank of China Co., Ltd., and the principal and interest are due on January 22, 2021.

X. Lines of credit from banks during the reporting period

√Applicable □Not applicable

As of the end of the reporting period, the Company’s bank credit lines totaled RMB 10 billion.

Among them, the used credit line is RMB 1.838 billion, and the unused line is RMB 8.162 billion.

XI. Execution of promises or commitments in the prospectus of the Company’s corporate bonds during the reporting period

√Applicable □Not applicable

During the reporting period, the Company strictly fulfilled the promises or commitments in the prospectus of the Company’s corporate bonds, used the raised funds in compliance therewith, and paid interest of the corporate bonds in time, without prejudice to the interests of bond investors.

XII. Major events in the Company and their impacts on the Company’s operations and solvency

√Applicable □Not applicable

The 22.667% equity in Hunan Provincial Asset Management Co., Ltd. held by the industry fund Yiwu Shangfu Chuangzhi Investment Center (limited partnership), for which the Company’s wholly-owned subsidiary CCCF subscribed, was frozen by the Public Security Bureau of Shanghai for a term from Sep 6, 2018 until Sep 6, 2019. For details, please refer to the Announcement of China Commodities City on the Freezing of the Investment Project of the Industry Fund Subscribed for by China Commodities City Financial Holdings (Announcement code: Temporary 2018-045) disclosed on the website of Shanghai Stock Exchange www.sse.com.cn.

In 2019, the 22.667% equity held by Yiwu Shangfu Chuangzhi Investment Center (limited partnership) in Hunan Provincial Asset Management Co., Ltd. kept being frozen by the Public Security Bureau of Shanghai for a term from Sep 6, 2019 until Mar 5, 2020. For details, please refer to the Announcement on the Progress of the Freezing of the Investment Project of the Industry Fund Subscribed for by China Commodities City Financial Holdings (Announcement Code: Temporary 2019-067) disclosed on the website of Shanghai Stock Exchange www.sse.com.cn.

On Mar 6, 2020, the 22.667% equity held by Yiwu Shangfu Chuangzhi Investment Center (limited partnership) in Hunan Provincial Asset Management Co., Ltd. kept being frozen by the Public Security Bureau of Shanghai for a term from Mar 6, 2020 until Sep 5, 2020. For details, please refer to the Announcement of China Commodities City on the Freezing of the Investment Project of the Industry Fund Subscribed for by China Commodities City Financial Holdings (Announcement code: Temporary 2020-010) disclosed on the website of Shanghai Stock Exchange www.sse.com.cn.

On September 6, 2020, the 22.667% equity of Hubei Asset Management Co., Ltd. held by Yiwu Shangfu Chuangzhi Investment Center (Limited Partnership) was frozen by Shanghai Public Security Bureau. The freezing period is from September 6, 2020 to 2021. March 5th. For details, please refer to YIWU CCCs Announcement on the Freezing of Industrial Fund Investment Projects Involved in Subscribing for CCCF(Announcement No.: L2020-067) disclosed by the Company on the Shanghai Stock Exchange website www.sse.com.cn on September 8, 2020. ).

The amount involved in the freezing of the investment project of the industry fund subscribed for by CCCF occupied a small share in the Company’s total assets and revenue. Therefore, it would not have materially adverse impact on the Company’s operation and solvency.

Section XI. Financial Report

I. Auditor’s report

√Applicable □Not applicable

All the shareholders of Zhejiang China Commodities City Group Co., Ltd,

1. Audit opinion

We have audited the financial statements of Zhejiang China Commodities City Group Co., Ltd., including Consolidated & Corporate Balance Sheets as of December 31, 2020, Consolidated & Corporate Income Statements, Consolidated & Corporate Cash Flow Statements, Consolidated & Corporate Statements of Changes in Owner’s Equity for 2020 and Notes to the Financial Statements.

We believe that the attached financial statements were prepared according to Accounting Standards for Zhejiang China Commodities City Group Co., Ltd. in all material aspects as a fair reflection of the consolidated and parent company’s financial status of Zhejiang China Commodities City Group Co., Ltd. on the December 31, 2020 and the operation outcomes and cash flows of the company for 2020.

2. Basis of audit opinion

We conducted our audit in accordance with the Auditing Standards for Chinese Certified Public Accountants. The section “CPAs’ Responsibility for Audit of Financial Statements” in the audit report further describes on our responsibilities under these standards. In accordance with the CPA Code of Ethics in China, we are independent of Zhejiang China Commodities City Group Co., Ltd. and have performed other responsibilities in respect of professional ethics.

We believe that the audit evidence we have acquired is sufficient and effective, providing a reasonable basis for our opinion.

3. Key audit matters

Key audit matters are matters that we believe are the most important matters for the audit of the financial statements based on professional judgment. The response to such matters is based on the background of auditing the financial statements as a whole and forming an audit opinion. We do not express independent opinions on such matters. This was also the background for our description for how every matter below was responded in the audit.

We have fulfilled the responsibilities described in the "Certified Accountants' Responsibilities for the Audit of Financial Statements" section of this report, including those related to these key audit matters. Correspondingly, our audit work included the implementation of audit procedures designed to deal with the assessed risk of material misstatement in the financial statements. The results of our audit procedures, including the procedures performed in response to the following key audit matters, provide a basis for the expression of the audit opinion in the financial statements as a whole.

Key audit matters: Audit response to the matter:

4. Other information

Zhejiang China Commodities City Group Co., Ltd.’s management is responsible for other information. Such information includes the information covered by the annual report, but the financial statements and the audit report provided by us are excluded.

Our audit opinion released in the financial statements do not cover other information and we do not release any form of assurance conclusion on other information.

Our responsibility is to read other information in conjunction with our audit of the financial statements. During the process, we consider whether there is a material inconsistency or other material misstatement in the financial statements with the knowledge acquired by us during the audit process.

Based on the work we have performed, if we determine that there is a material misstatement of other information, we should report the fact. We have nothing to report in this aspect.

5. Responsibility of management and governance for financial statements

The management is responsible for preparing financial statements in accordance with the provisions of the Accounting Standards for Business Enterprises to achieve fair reflection, and designing, implementing and maintaining necessary internal controls to prevent these financial statements from material misstatement arising from fraud or error.

During preparing the financial statements, the management is responsible for assessing the sustainability management capabilities of Zhejiang China Commodities City Group Co., Ltd., disclosing, as applicable, going-concern-related matters and applying the going-concern assumption unless the management plans to liquidate Zhejiang China Commodities City Group Co., Ltd. and discontinue operations or has no other realistic choices.

The governance is responsible for supervising the financial reporting process of Zhejiang China Commodities City Group Co., Ltd.

6. Certified Public Accountants’ responsibility for audit of financial statements

Our goal is to obtain reasonable assurance about whether the financial statements are free from material misstatement caused by fraud or error and express an opinion on these financial statements based on our audits. The reasonable assurance is a guarantee at a high level, but there is no guarantee that an audit performed in accordance with the auditing standards will always identify existing material misstatement. Misstatements may be caused by fraud or error. Misstatement is generally considered to be material if it is reasonably expected that the misstatement, alone or aggregated, may affect the financial decision made by the users of the financial statements based on the financial statements.

We applied professional judgment and professional skepticism during conducting audit work in accordance with the Auditing Standards for CPA while performing following works: (1) Identifying and evaluating the risk of material misstatements of financial statements for fraud or error designing and implementing audit procedures to deal with these risks and obtaining adequate and appropriate audit evidence as a basis for release of our audit opinion. As fraud may involve collusion, forgery, willful omission, misrepresentation or override of internal control, the risk of not discovering a material misstatement due to fraud is higher than the risk of not discovering a material misstatement resulting from an error.

(2) Understanding the internal control related to the audit in order to design the appropriate audit procedures.

(3) Evaluating the appropriateness of the accounting policies selected by management level and the reasonableness of accounting estimates and related disclosures.

(4) Concluding the appropriateness of management level’s use of the going concern assumption while drawing a conclusion as to whether there is any material uncertainty about the issues or circumstances that may cause major doubts about the ability of the Zhejiang China Commodities City Group Co., Ltd. to continue as a going concern on basis of the audit evidence acquired. If we conclude that there is a significant uncertainty, the auditing standards require us to remind user of the statements of the relevant disclosures in the financial statements in the audit report. If the disclosures are inadequate, we should release an unqualified opinion. Our conclusion is based on the information available by the date of the audit report. However, future events or circumstances may result in Zhejiang China Commodities City Group Co., Ltd. being unable to continue as a going concern.

(5) Evaluating the overall presentation, structure and content (including disclosure) of the financial statements as well as whether the financial statements are a fair reflection of the related transactions and matters.

(6) Obtaining adequate and appropriate audit evidence on the financial information of the entities or business activities in Zhejiang China Commodities City Group Co., Ltd. to express an opinion on the financial statements. We are responsible for directing, supervising and implementing the Group’s audit and assume full responsibility for the audit opinion.

We have communicated with the governance on the matters such as the scope and timing of audit and major audit findings, including the notable defects of internal control identified in our audit.

We also provided a statement to the governance that we had complied with the professional ethics requirements related to independence, and communicated with the governance all relationships and other matters that may be reasonably believed to affect our independence, and related preventive measures (if applicable).

In the matters communicated with the governance, we determined which matters should be the most important to the audit of the financial statements of the current period, and should constitute the key audit matters accordingly. We described such matters in the audit report, unless laws and regulations had prohibited public disclosure of these matters, or in rare cases, we determined that such matters should not be communicated in the audit report if the negative consequences of communicating a matter in the audit report are reasonably expected to outweigh the public interests.

Chinese CPA: YIN Guowei

Ernst & Young Huaming Certified Public

(Project Partner)

Accountants (Special General Partnership)

Chinese CPA: YANG Zhuye

Beijing, China

April 28, 2021

II. Financial statements

Consolidated Balance Sheet

December 31, 2020

Prepared by: Zhejiang China Commodities City Group Co., Ltd.

Unit: RMB

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Balance Sheet of Parent Company

December 31, 2020

Prepared by: Zhejiang China Commodities City Group Co., Ltd.

Unit: RMB

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Consolidated Income Statement

January -December 2020

Unit: RMB

For merger of the enterprises under common control during the current period, net profits of the merged party prior to the merger were RMB 0, and net profits of the merged party during the previous period were RMB 0.

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Income Statement of Parent Company

January -December 2020

Unit: RMB

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Consolidated Cash Flow Statement

January -December 2020

Unit: RMB

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Cash Flow Statement of Parent Company

January -December 2020

Unit: RMB

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Consolidated Statement of Changes in Owners’ Equity

January -December 2020

Unit: RMB

Legal representative: ZHAO Wenge Person in charge of accounting: WANG Dong Person in charge of the accounting body: ZHAO Difang

Statement of Changes in Owners’ Equity of Parent Company

January -December 2020

Unit: RMB

Difang

III. Basic information of the Company

1. Company profile

√Applicable □Not applicable

Zhejiang China Commodities City Group Co., Ltd. (the “Company”) is a company limited by share and was incorporated on Dec 28, 1993 in Zhejiang province of the People’s Republic of China. The RMB-denominated common A shares issued by the Company got listed on Shanghai Stock Exchange on May 9, 2002. The Company is headquartered at No.105 Futian Road, Yiwu, Zhejiang.

The Group’s main business activities: market development and operation and supporting services, provision of online trading platforms and services, development and management of online trading market, etc., in the category of comprehensive services.

The parent company of the Group is Yiwu China Commodities City Holdings Limited (hereinafter referred to as “CCCH”) and the final controller of the Group is the State-owned Assets Supervision and Administration Office of the People’s Government of Yiwu.

These financial statements were approved by the company's board of directors on April 28, 2021. According to the company's articles of association, these financial statements are to be submitted to the general meeting of shareholders for deliberation.

2. Consolidation scope of financial statements

√Applicable □Not applicable

The consolidation of financial statements is determined on the basis of control. For the changes in the current year, please refer to Note VIII.

IV. Preparation basis for financial statements

1. Basis of preparation

The financial statements of the Company were prepared on a going-concern basis. The financial statements were prepared in accordance with the Accounting Standards for Enterprises-Basic Standards and the specific accounting standards, application guidelines, interpretations and other related regulations promulgated and amended thereafter (collectively referred to as “Accounting Standards”).

The financial statements were all prepared based on the valuation principle of historical cost, except for certain financial instruments. If an asset is impaired, the corresponding provision for impairment should be made in accordance with relevant regulations.

2. Going concern

√Applicable □Not applicable

The Company prepared its financial statements on a going-concern basis. The

management of the Company expected that the Group would generate adequate cash inflow from the future day-to-day operation, which in combination with the

Group’s adequate lines of credit from banks could be sufficient to repay its due debts.

V. Important Accounting Policies and Accounting Estimates

Reminders on specific accounting policies and accounting estimates:

√Applicable □Not applicable

The Group has formulated specific accounting policies and accounting estimates based on the characteristics of actual production and operation, which are mainly reflected in the bad debt provisions for receivables, inventory valuation methods, depreciation of fixed assets, amortization of intangible assets, income recognition and measurement, recognition of property investments and fixed assets, and

service life and residual value of fixed assets.

1. Statement on compliance with Accounting Standards for Business Enterprises

The financial statements prepared by the Company comply with the requirements of the Accounting Standards, and truly and completely reflect the Company’s financial conditions, operating results, changes in shareholders’ equity, cash flows and other related information.

2. Fiscal period

The Company’s accounting year is from Jan 1 to Dec 31 of each calendar year.

3. Operating cycle

√Applicable □Not applicable

The business cycle of the company is relatively short, and 12 months are used as the standard for defining the liquidity of assets and liabilities.

4. Bookkeeping currency

The Company’s functional currency is RMB.

The Group uses RMB as its functional currency and in the preparation of financial statements. Unless specifically stated, all amounts are expressed in RMB.

The subsidiaries, joint ventures and associates of the Group determine their

functional currencies at their own discretion based on the main economic

environments in their places of businesses and convert all amounts into RMB while preparing financial statements.

5. Accounting methods for merger of the enterprises under common control and

merger of the enterprises not under common control

√Applicable □Not applicable

Business mergers are divided into business mergers under the same control and business mergers not under the same control.

Business merger under the same control

If the enterprises participating in the merger are ultimately controlled by the same party or the same parties before and after the merger, and the control is not temporary, the deal is a business merger under the same control. For a business merger under the same control, the party that acquires control of other participating companies on the merger date is the merging party, and the other enterprise participating in the merger are the merged party. The merger date refers to the date on which the merging party actually obtains control of the merged party.

The assets and liabilities acquired by the merging party in a merger of the enterprises under common control (including the goodwill formed through the acquisition of the merged party by the ultimate controller) are accounted according to the book value thereof in the ultimate controller’s financial statements on the date of merger. For the difference between the book value of the net assets obtained by the merging party and the book value of the consideration paid for the merger (or the total nominal value of the shares issued), the share capital premium in the capital reserve shall be adjusted; if the share capital premium is not sufficient to absorb the difference, the retained earnings shall be adjusted.

Business merger not under common control

If the enterprises participating in the merger are not under the ultimate control of the same party or the same parties before and after the merger, the deal is business merger not under the same control. For a business merger not under the same control, the party that acquires control of other participating companies on the acquisition date is the acquirer, and the other companies participating in the merger are the acquiree. The acquisition date refers to the date on which the acquirer actually obtains control of the acquiree.

The acquiree’s identifiable assets, liabilities and contingent liabilities obtained from the merger of the enterprises not under common control are measured at their fair values on the date of acquisition.

If the sum of the fair value of the consideration paid for the merger (or fair value of the equity securities issued) and the fair value of the acquiree’s equity held before the date of acquisition is higher than the share in the fair value of the acquiree’s identifiable net assets acquired from the merger, the difference between them is recognized as goodwill, which will be subsequently measured by the cost less accumulated impairment loss. If the sum of the fair value of the consideration paid for the merger (or fair value of the equity securities issued) and the fair value of the acquiree’s equity held before the date of acquisition is lower than the share in the fair value of the acquiree’s identifiable net assets acquired from the merger, the measurement of the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities, the fair value of the consideration paid for the merger (or fair value of the equity securities issued) and the fair value of the acquiree’s equity held before the date of acquisition will be reviewed, and if the sum of the fair value of the consideration paid for the merger (or fair value of the equity securities issued) and the fair value of the acquiree’s equity held before the date of acquisition is still lower than the share in the fair value of the acquiree’s identifiable net assets acquired from the merger after such review, the difference will be recognized in the profit and loss for the current period.

For mergers of the enterprises not under common control that are executed through multiple transactions, the long-term equity investment of the acquiree before the date of acquisition shall be re-measured based on the fair value thereof on the date of acquisition and any difference between the fair value and book value thereof shall be recognized in the profit and loss for the current period; other comprehensive income from the long-term equity investment of the acquiree before the date of acquisition under the equity method shall be accounted on the same basis as that for the direct disposal of related assets or liabilities by the investee, and other changes in shareholders’ equity than net profit and loss, other comprehensive income and profit distribution shall be recognized in the profit and loss for the period where the date of acquisition falls.

6. Preparation method of consolidated financial statements

√Applicable □Not applicable

The financial statements to be consolidated is determined on the basis of control, including those of the Company and all of its subsidiaries. Subsidiaries refer to the entities controlled by the Company (including the severable parts of enterprises and invested entities, and the structured entities controlled by the Company).

In the preparation of consolidated financial statements, the subsidiaries adopt the same accounting year and accounting policies as those adopted by the Company.

Assets, liabilities, equity, income, expenses and cash flows generated from all deals between companies within the Group are fully offset at the time of merger.

If the amount of loss for the current period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders’ share in the opening balance of shareholders’ equity in the subsidiary, the excess will still be recognized against minority interest.

For a subsidiary acquired through a business merger not under the same control, the operating results and cash flows of the acquiree will be included in the consolidated financial statements from the day when the Group acquires control, until the control of the Group ceases. In the preparation of consolidated financial statements, adjustments will be made to the financial statements of the subsidiary based on the fair value of its identifiable assets, liabilities or contingent liabilities determined on the date of acquisition.

For a subsidiary acquired through a business merger under the same control, the operating results and cash flows of merged party will be included in the consolidated financial statements since the beginning of the current period of the merger. In the preparation of consolidated financial statements, adjustments will be made to the related items in its previous financial statements as if the reporting entity formed after the merger has been existing as from the ultimate controller starts to exercise control.

In case of any change to one or more elements of the control due to the changes in related facts and circumstances, the Group will re-evaluate whether to control the investee.

7. Classification of joint arrangements and accounting treatment of joint operations

√Applicable □Not applicable

Joint arrangements are divided into joint operations and joint ventures. Joint operation refers to a joint arrangement in which the parties thereto enjoy the assets relating to such arrangement and assume the liabilities relating to such arrangement. Joint venture refers to a joint arrangement in which the parties thereto only enjoy rights to the net assets in this arrangement.

Each party to a joint arrangement recognizes the following items relating to its share in the joint operation: assets held individually by it and assets held jointly based on its share; liabilities assumed individually by it and liabilities assumed jointly based on its share; revenue from the sale of its share in the output of the joint operation; revenue from the sale of the output of the joint operation based on its share; expenses incurred individually by it and expenses incurred by the joint operation based on its share.

8. Standard for determining cash and cash equivalents

Cash refers to the Group’s cash on hand and deposits that can be used for payment at any time; cash equivalent refers to the investment held by the Group with a short term, strong liquidity, easy to convert into cash with a known amount, and with low risk of value changes.

9. Foreign currency transactions and translation of foreign currency financial

statements

√Applicable □Not applicable

For foreign currency transactions, the Group will translate the foreign currency amounts into its functional currency amounts.

In the initial recognition of a foreign currency transaction, the foreign currency amount is translated to a functional currency amount according to the spot exchange rate on the date of transaction. On the balance sheet date, the foreign currency monetary items are translated according to the spot exchange rate on the balance sheet date. The translation difference between settlement and monetary items is recognized in the profit and loss for the current period, except for the difference arising from the special foreign currency borrowing relating to the acquisition and construction of the assets qualified for capitalization, which will be treated based on the principles for the capitalization of borrowing expenses. The foreign currency non-monetary items measured by historical cost are also translated according to the spot exchange rate on the date of transaction, without changing the functional currency amounts thereof. The foreign currency non-monetary items measured by fair value are translated according to the spot exchange rate on the fair value determination date and the difference arising therefrom is recognized in the profit and loss or other comprehensive income for the current period based on the nature of the items.

The Group translates the functional currency of its foreign business into RMB while preparing the financial statements. The assets and liabilities items in the balance sheet are translated according to the spot exchange rate on the balance sheet date, the shareholders’ equity items are translated according to the spot exchange rate at the occurrence of the items except for “undistributed profits”; revenue and expenses items in the income statement are translated according to the average exchange rate during the period in which the transaction happens. The translation differences of foreign currency statements arising from the above translations are recognized as other comprehensive income. For the disposal of foreign business, other comprehensive income relating to the foreign business is recognized in the profit and loss of the disposal for the current period and is calculated pro rata for partial disposal.

The foreign currency cash flow and cash flow of foreign subsidiaries are translated according to the spot exchange rate on the occurrence date of cash flow/average exchange rate during the period in which the cash flow occurs. The amount of impact of the changes in exchange rate on cash is separately stated in the cash flow statement as an adjustment item.

10. Financial instruments

√Applicable □Not applicable

Financial instruments refer to the contracts which form financial assets of an enterprise and form financial liabilities or equity instruments of other entities.

Recognition and de-recognition of financial instruments

The Group recognizes a financial asset or financial liability at the time of becoming a party to a financial instrument contract.

The Group will derecognize a financial asset (or a part of the financial asset or a part of a group of similar financial assets), i.e. writing off the asset from its account and balance sheet, if:

(1) The right to receive cash flows from financial assets expires;

(2) The Group has transferred the right to collect the cash flow of financial assets, or

assumed the obligation to pay the collected cash flow in full to a third party in a timely manner under the “handover agreement”; and (a) substantially transferred almost all risks and rewards related to the ownership of financial assets, or (b)waived the control over the financial asset although almost all the risks and rewards of the ownership of the financial asset are neither transferred nor retained.

If a financial liability has been fulfilled, revoked or expired, it will be derecognized. If an existing financial liability is replaced by the same creditor with another financial liability under substantially different terms or the terms of the existing liability are substantially modified in whole, the existing liability will be derecognized and the new liability will be recognized, and the difference will be recognized in the profit and loss for the current period.

For the transactions of financial assets in regular ways, the recognition and de-recognition thereof will be conducted based on the accounting on the transaction date. Transactions of financial assets in regular ways refer to the collection or delivery of financial assets within the time limit prescribed by laws and regulation or prevailing practices in accordance with the contract terms. The transaction date refers to the date when the Group promises to buy or sell the financial assets.

Classification and measurement of financial assets

Based on the Group’s business model for the management of financial assets and the features of the contractual cash flow of financial assets, the Group’s financial assets are classified at initial recognition into the financial assets that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period, the financial assets measured by amortized cost and the financial assets that are measured by fair value and of which the changes in fair value are recognized in other comprehensive income.

If a financial asset is measured by fair value at initial recognition, but the accounts receivable or notes receivable from the sale of goods or rendering of service do not include significant financing components or the financing components with a term no longer than one year are not considered, the initial measurement will be made based on the transaction price.

For the financial assets that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period, the related transaction fees will be directly recognized in the profit and loss for the current period; the related transaction fees of other financial assets will be recognized in the initially recognized amounts thereof.

The subsequent measurement of financial assets depends on the classification thereof:

Investment in debt instruments measured by amortized cost

A financial asset is classified into those measured by amortized cost, if the business model for the management of the asset is for the purpose of collecting contractual cash flow; and the terms of the contract of the asset stipulate that the cash flow generated on the specific date is only the repayment of principal and the payment of interest on the outstanding principal. The interest income of such financial assets is recognized with the effective interest method, and the profit and loss from the de-recognition, modification or impairment thereof are all recognized in the profit and loss for the current period.

Investment in the equity instruments that are measured by fair value and of which the changes in fair value are recognized in other comprehensive income

The Group has irrevocably chosen to designate some non-trading equity instrument investments as the financial assets that are measured by fair value and of which the changes in fair value are recognized in other comprehensive income. Only the related dividend income (except for the dividend income expressly acting as a recovery of investment cost) is recognized in the profit and loss for the current period, while the subsequent changes in fair value are recognized in other comprehensive income, and no provision is required for impairment. When the financial assets are derecognized, the accumulated profit and loss previously recognized in other comprehensive income will be moved out of other comprehensive income and recognized in retained earnings.

Financial assets that are measured at fair value and whose changes are included in the current profit and loss

The financial assets other than the above financial assets measured by amortized cost and the above financial assets that are measured by fair value and of which the changes in fair value are recognized in other comprehensive income are classified as the financial assets that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period. Those financial assets are subsequently measured by fair value and all changes in the fair value thereof are recognized in the profit and loss for the current period.

Classification and measurement of financial liabilities

The Group’s financial liabilities are classified at initial recognition into the financial liabilities that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period and other financial assets.

For the financial liabilities that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period, the related transaction fees are recognized directly in the profit and loss for the current period, while the related transaction fees of other financial liabilities are recognized in the initially recognized amounts thereof.

The subsequent measurement of financial liabilities depends on the classification thereof:

Financial liabilities that are measured at fair value and whose changes are included in the current profit and loss

The financial liabilities that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period include financial liabilities held for trading (including the derivative instruments as financial liabilities) and the liabilities that are designated at initial recognition as the financial liabilities that are measured by fair value and of which the changes in fair value are recognized in the profit and loss for the current period. The financial liabilities held for trading (including the derivative instruments as financial liabilities) are subsequently measured by fair value and all changes in the fair value are recognized in the profit and loss for the current period.

Other financial liabilities

Those financial liabilities are subsequently measured by amortized cost with the effective interest method.

Impairment of financial instruments

The Group has treated and recognized the impairment of the financial assets measured by amortized cost based on the expected credit loss.

For receivables that do not contain significant financing components, the Group measures the loss provision based on the amount of expected credit loss equivalent to the entire duration under a simplified measurement method,

For the financial assets not measured with the simplified method, the Group evaluates on each balance sheet date whether their credit risks have increased significantly since the initial recognition. If the credit risk of a financial asset has not increased significantly since the initial recognition, the asset is in the first stage and the Group will make provision for loss based on the amount of expected credit loss within the coming 12 months and calculate interest income based on the book balance and effective interest rate; if the credit risk has increased significantly since the initial recognition, but credit has not been impaired, the asset is in the second stage and the Group will make provision for loss equivalent to the amount of expected credit loss during the entire term and calculate interest income based on the book balance and effective interest rate; if credit has been impaired after the initial recognition, the asset is in the third stage and the Group will make provision for loss equivalent to the amount of expected credit loss during the entire term and calculate interest income based on the amortized cost and effective interest rate.

The Group evaluates the expected credit losses of financial instruments on the individual and group bases. It evaluates the expected credit loss of accounts receivable by taking into account the credit risk characteristics of different clients and based on the account aging-based asset groups.

The Group's criteria for judging a significant increase in credit risk, the definition of credit-impaired assets, and the assumptions for the measurement of expected credit losses are disclosed in Note VIII.2.

When the Group no longer reasonably expects that it can recover the contractual cash flow of a financial asset in whole or in part, it will directly write down the book balance of the asset.

11. Notes receivable

Determination and accounting treatment of the expected credit loss of notes receivable

□Applicable√Not applicable

12. Accounts Receivable

Determination and accounting treatment of the expected credit loss of accounts receivable

√Applicable □Not applicable

Please refer to Notes X-2. Risks of Financial Instruments

13. Accounts receivable financing

□Applicable √Not applicable

14. Other receivables

Determination and accounting treatment of the expected credit loss of other receivables

√Applicable □Not applicable

Please refer to Notes X-2. Risks of Financial Instruments

15. Inventories

√Applicable □Not applicable

Inventory includes raw materials, work-in-progress materials, finished goods, real estate development costs and real estate development products.

Inventory is initially measured by cost. The costs of inventory except development costs and development products include the procurement cost, processing cost and other costs. The actual costs of items out of inventory are determined with the weighted average method. Work-in-progress materials include low-value consumables and packages, which are amortized with the one-off amortization method.

Development costs refer to the properties that have not been completed and are developed for the purpose of being sold. Development products refer to the properties that have been completed and are ready for sale. The actual costs of real estate development costs and development products include the land acquisition cost, expenditures on construction and installation works, capitalized interest and other direct and indirect development expenses. The use right of the land for development purpose at the development of a project is amortized and recognized as the development cost of the project based on the site area of the development product, and the development cost will be changed over to development product after being completed.

If the public auxiliary facilities are completed earlier than the related development product, the facilities will be allocated to and recognized in the development cost of related development project based on the floor space of the project after final accounting of the facilities upon completion; if the public auxiliary facilities are completed later than the related development product, they will be recognized in the development cost of related development project based on the predicted cost of the public auxiliary facilities.

Hotel, catering and fresh goods inventories are subject to onsite inventory, while other inventories are subject to perpetual inventory.

On the balance sheet date, inventory is measured by cost and net realizable value, whichever is lower. If the cost is higher than the net realizable value, provision will be made for inventory depreciation, which will be recognized in the profit and loss for the current period. If the impact of the previous provision for inventory depreciation has disappeared and the net realizable value of the inventory becomes higher than the book value thereof, the amounts written down previously in the original provision for inventory depreciation will be restituted and recognized in the profit and loss for the current period.

Net realizable value is the estimated selling price of inventory less the cost estimated to occur as of completion, estimated sales expenses and related taxes. In principle, provisions for inventory depreciation shall be made for inventory items individually. For the inventory with a large quantity and a low unit price, inventory depreciation provision will be made based on the Groups of items.

16. Contract assets

(1).Determination and criteria for contract assets

√Applicable □Not applicable

The Group presents contractual assets or contractual liabilities in the balance sheet based on the relationship between performance obligations and customers’ payments. The Group offsets the contractual assets and contractual liabilities under the same contract as a net amount.

A contractual asset refers to the right to receive a consideration for the transfer of goods or services to a customer, and this right depends on the factors other than the passage of time.

(2).Determination and accounting treatment of the expected credit loss of contract

assets

□Applicable √Not applicable

17. Held-for -sale assets

□Applicable √Not applicable

18. Debt investments

(1).Determination and accounting treatment of the expected credit loss of debt

investments

□Applicable √Not applicable

19. Other debt investments

(1).Determination and accounting treatment of the expected credit loss of other debt

investments

□Applicable √Not applicable

20. Long-term receivables

(1).Determination and accounting treatment of the expected credit loss of long-term

receivables

□Applicable √Not applicable

21. Long-term equity investment

√Applicable □Not applicable

Long-term equity investment includes equity investment in subsidiaries, joint ventures and associates.

Long-term equity investment is initially measured by the initial investment cost at the time of being acquired. For a long-term equity investment acquired through a business merger under the same control, the initial investment cost is the share of the book value of the merged party’s owner’s equity acquired on the merger date in the ultimate controlling party’s consolidated financial statements; The difference between the initial investment cost and the book value of the merger consideration is adjusted to the capital reserve (if it is insufficient to offset, the retained earnings will be offset); other comprehensive income before the merger date is accounted for on the same basis as that for the investee’s direct disposal of related assets or liabilities when disposing of the investment. The shareholders’ equity recognized by the investee due to the changes in shareholders’ equity other than net profit and loss, other comprehensive income, and profit distribution is transferred to the current profit and loss when the investment is disposed of; those that are still long-term equity investments after disposal are carried forward in proportion, and those that are converted into financial instruments after disposal are carried forward in full. For a long-term equity investment acquired through a business merger not under the same control, the merger cost shall be used as the initial investment cost (for the business merger not under the same control realized step by step in a package deal, the sum of the book value and the new investment cost on the acquisition date is used as the initial investment cost). The merger cost includes the sum of fair values of the assets paid, the liabilities incurred or assumed, and the equity securities issued by the acquirer; the other comprehensive income held prior to the acquisition date that is recognized for accounting under the equity method is accounted for on the same basis as that for the investee’s direct disposal of related assets or liabilities when disposing of the investment. The shareholders’ equity recognized by the investee due to the changes in shareholders’ equity other than net profit and loss, other comprehensive income, and profit distribution is transferred to the current profit and loss when the investment is disposed of; those that are still long-term equity investments after disposal are carried forward in proportion, and those that are converted into financial instruments after disposal are carried forward in full. The initial investment costs of the long-term equity investment acquired other than through merger are determined with the following methods: if an investment is acquired through the payment of cash, its initial investment cost consists of the purchase price actually paid and the expenses, taxes and other necessary expenses directly relating to the acquisition of the investment; and if an investment is acquired through the offering of equity securities, its initial investment cost is the fair value of the equity securities offered.

For the accounting of the long-term equity investment through which the Company can exercise control over the investees, the Company adopts the cost method in individual financial statements. Control refers to the power over an investee, with which the investor enjoys variable return by participating in the investee’s related activities and is able to exercise its power over the investee to affect the amount of return.

In the cost method, the long-term equity investment is measured by initial investment cost. If the investment is added or recovered, the cost of long-term equity investment will be adjusted. The cash dividend or profit declared by the investees to be distributed is recognized as the investment income for the current period.

If the Group has joint control over or significant influence on the investee, the long-term equity investment will be measured with the equity method. Joint control refers to joint control over an arrangement in accordance with related agreements, and decisions on the activities relating to the arrangement shall be made only after the parties sharing the control reach an agreement. Significant influence refers to the power over the decision-making on the financial affairs and business policies of the investee, but the investor does not have control or joint control with others over the formulation of those policies.

In the equity method, if the initial investment cost of long-term equity investment is higher than the share enjoyed by the Group in the fair value of the investee’s identifiable net assets at investment, the excess will be recognized in the initial investment cost of the long-term equity investment; if the initial investment cost of long-term equity investment is lower than the share enjoyed by the Group in the fair value of the investee’s identifiable net assets at investment, the difference will be recognized in the profit and loss for the current period and the cost of the long-term equity investment will be adjusted simultaneously.

In the equity method, after long-term equity investment is acquired, the investment profit and loss and other comprehensive income shall be recognized and the book value of the long-term equity investment shall be adjusted based on the share in the net profit and loss and other comprehensive income realized by the investees to be enjoyed or assumed. The share in the investee’s net profit and loss to be enjoyed shall be determined based on the fair value of the investee’ s identifiable assets at the acquisition of investment, according to the Group’s accounting policies and accounting periods and after net profits of the investee are adjusted with the portion of profit and loss from the internal transactions with its associates and joint ventures that is attributable to the investor based on the share to be enjoyed by it (but if the loss from internal transactions falls in the assets impairment loss, it shall be recognized in full) offset, except for the invested and sold assets that constitute businesses. The book value of long-term equity investment shall be reduced according to the share to be enjoyed by it in the profits or cash dividend declared by the investees to be distributed. For an investee’s net losses recognized by the Group, the book value of the long-term equity investment and other long-term equity that substantially constitute net investment in the investee shall be written down to zero at maximum, except for the extra losses for which the Group is liable. For the investee’s other changes in shareholders’ equity other than net profit and loss, other comprehensive income and profit distribution, the book value of the long-term equity investment will be adjusted and the changes will be recognized in the shareholders’ equity.

For the disposal of long-term equity investment, the difference between the book value of long-term equity investment and the proceeds actually received from the disposal thereof is recognized in the profits or loss for the current period. For the long-term equity investment measured with the equity method, if the equity method is terminated due to the disposal, the original related other comprehensive income measured with the equity method will be accounted on the same basis as that for the direct disposal of related assets or liabilities by the investees, and the shareholders’ equity recognized due to the investees’ other changes in shareholders’ equity than net profit and loss, other comprehensive income and profit distribution will be recognized in the profits or loss for the current period in full; if the equity method is still adopted, the original related other comprehensive income measured with the equity method will be accounted on the same basis as that for the direct disposal of related assets or liabilities by the investees and recognized in the profits or loss for the current period pro rata, and the shareholders’ equity recognized due to the investees’ other changes in shareholders’ equity than net profit and loss, other comprehensive income and profit distribution will be recognized in the profit and loss for the current period pro rata.

Where the Company loses control over a subsidiary due to step-by-step disposal of its equity investment in the subsidiary through multiple transactions, if the transactions constitute a package of deals, each transaction will be accounted as a transaction that disposes of the subsidiary and causes the loss of control over the subsidiary; however, the difference between the proceeds from each disposal and the book value of the corresponding long-term equity investment disposed of is recognized as other comprehensive income in individual financial statements before the Company loses control and is recognized in the profits or loss for the period in which the control is lost at the loss of control. If the transactions do not constitute a package of deals, each transaction will be accounted separately. In the event that the Company loses control, if the residual equity after the disposal enables the Company to have joint control over or significant influence on the subsidiary, it will be recognized as long-term equity investment in individual financial statements and be accounted in accordance with the relevant rules for changing the cost method to the equity method; otherwise, it will be recognized as a financial instrument and the difference between its fair value on the date of the loss of control and its book value will be recognized in the profit and loss for the current period.

22. Investment real estate

(1).In cost measurement model:

Depreciation or amortization methods

A property investment is a real estate property held with the intention of earning rents or of capital appreciation or both, including land use rights that have been leased, land use rights that are held and ready to be transferred after appreciation, and buildings that have been leased.

Property investments are initially measured by cost. The subsequent expenses relating to an property investment will be recognized in the cost of the property investment if the economic benefits relating to the asset are very likely to flow in and the cost thereof can be measured reliably. Otherwise, they will be recognized in the profit and loss for the current period at the time of being incurred.

The Group subsequently measures its property investments with the cost model.

The depreciation/amortization of property investments is calculated on a straight line basis. The service life, estimated net residual value and annual depreciation rate of property investments are as follows:

Land use rights 40-70 years - 1.4%-2.5%

23. Property, plant and equipment

(1).Recognition requirements

√Applicable □Not applicable

Property, plant and equipment are only recognized when the economic benefits related to them are likely to flow into the Group and their costs can be reliably measured. If meeting the above recognition requirement, the subsequent expenses relating to a fixed asset will be recognized in the cost of the fixed asset, and the book value of the replaced part will be deleted; otherwise, the subsequent expenses will be recognized in the profit and loss for the current period at the time of being incurred.

Fixed assets are initially measured by cost. The costs of purchasing a fixed asset include the purchase price, related taxes and other expenses that are incurred before the fixed asset is made to the predetermined ready-for-use status and are directly attributable to the asset.

(2).Depreciation method

√Applicable □Not applicable

(3).Identification basis, pricing and depreciation method of the fixed assets under

financial lease

√Applicable □Not applicable

For the property, plant and equipment under financing lease, the leased asset is depreciated under the same policy as that for the property, plant and equipment for own use. If it can be reasonably determined that the ownership of a leased asset will be acquired upon expiry of the lease term, the depreciation will be based on its service life; if it cannot be reasonably determined that the ownership of a leased asset can be acquired upon expiry of the lease term, the depreciation will be based on the lease term or the service life of the asset, whichever is shorter.

24. Construction in progress

√Applicable □Not applicable

The cost of construction in progress is determined based on the actual expenses, including the necessary expenses on the works incurred during the construction, the borrowing costs incurred before the works reach the predetermined ready-for-use status that shall be capitalized and other related expenses.

The construction in progress will be recognized as fixed assets, property investment and long-term prepaid expenses when reaching the predetermined ready-for-use status.

25. Borrowing costs

√Applicable □Not applicable

Borrowing costs refer to the interests incurred by the Group for its borrowings and other related costs, including interest, amortization of discounts or premiums, ancillary costs and exchange difference arising from foreign currency borrowings.

Borrowing costs that are directly attributable to the acquisition, construction or production of the assets qualified for capitalization shall be capitalized, and other borrowing costs shall be recognized in the profit and loss for the current period. The assets qualified for capitalization refer to the fixed assets, property investment, inventory and other assets that can reach the predetermined ready-for-use or sale status only after a quite long time of acquisition, construction or production.

Borrowing costs can start to be capitalized only if they meet the following requirements simultaneously:

(1) Asset expenditure has occurred;

(2) Borrowing costs have been incurred;

(3) The acquisition or production activities necessary for the asset to reach the intended usable or saleable state have already begun.

The borrowing costs for the assets qualified for capitalization shall cease being capitalized when the assets reach the predetermined ready-for-use or sale status after the acquisition, construction or production. The borrowing costs incurred subsequently will be recognized in the profit and loss for the current period.

During capitalization, the amount of interest to be capitalized during each accounting period is determined as follows:

(1) Special borrowings are determined by the actual interest expense in the current period, minus income from interest over temporary deposits or investment income.

(2) Occupied general borrowings are calculated and determined by multiplying the weighted average of asset expenditures for the portion of accumulated asset expenditures beyond special borrowings by the weighted average interest rate of the occupied general borrowings.

If an asset qualified for capitalization is interrupted abnormally for more than three months during its acquisition, construction or production except due to the

necessary procedures for it to reach the predetermined ready-for-use or sale status, the capitalization of its borrowing costs will be suspended. The borrowing costs

incurred during the interruption will be recognized as expenses and in the profit and loss for the current period until the acquisition, construction or production of the

asset is resumed.

26. Biological assets

□Applicable √Not applicable

27. Oil and gas assets

□Applicable √Not applicable

28. Right-of-use assets

□Applicable √Not applicable

29. Intangible assets

(1).Measurement method, service life and impairment test

√Applicable □Not applicable

Intangible assets will be recognized only if the economic benefits relating thereto are very likely to flow into the Group and the costs thereof can be measured reliably, and will be initially measured by cost. However, the intangible assets acquired from the merger of the enterprises not under common control will be individually recognized so long as the fair values thereof can be measured reliably, and will be measured by fair value.

The service life of an intangible asset is determined based on the term during which it can bring economic benefits to the Group. If the term during which an intangible asset can bring economic benefits to the Group is unforeseeable, it will be deemed as an intangible asset with uncertain service life.

The service life of intangible assets is as follows:

The land use rights acquired by the Group are generally accounted as intangible assets. The buildings constructed by the Group itself, the related land use rights and buildings are accounted as intangible assets and fixed assets respectively. The price paid for the land and buildings purchased externally shall be allocated between the land use rights and buildings. If it is hard to reasonably allocate the price, the price in full will be treated as fixed assets.

The intangible assets with finite service life shall be amortized with the straight-line method during their service life. The Group reviews and makes adjustment to, if necessary, the service life and amortization method of its intangible assets with finite service life at least at the end of each year.

(2).Accounting policies for internal R&D expenses

√Applicable □Not applicable

The Group divides expenditures for internal R & D projects into research expenditures and development expenditures. Research expenditures are included in the current profits and losses when incurred. Development expenditures can be capitalized only when all of the following conditions are met at the same time, that is, it is technically feasible to complete the intangible asset to make them usable or saleable; there is an intention to complete the intangible asset and use or sell it; the way for intangible assets to generate economic benefits, including the ability to prove that there are markets for the products generated by the intangible assetsor the intangible assets themselves. Intangible assets that will be used internally can prove their usefulness; there are sufficient technology, financial resources and other resource supports to complete the development of the intangible asset and ability to use or sell the intangible asset; the expenditure attributable to the development of such intangible asset can be reliably measured. Development expenditures that do not satisfy the above conditions are included in the current profits and losses when incurred.

30. Impairment of long-term assets

√Applicable □Not applicable

The Group determines the impairment of the assets other than inventory, deferred income tax and financial assets with the following methods.

The Group decides on the balance sheet date whether an asset has a sign of

impairment. If it has a sign of impairment, the Group will estimate its recoverable value and carry out an impairment test. For the goodwill formed due to the merger of enterprises and the intangible assets with uncertain service life, the Group carries out impairment tests at least at the end of each year, regardless of the impairment signs. For the intangible assets that have not been ready for use, the Group also carries out impairment tests every year.

The recoverable value of an asset is determined based on the fair value of the asset less the disposal expenses or the present value of the expected future cash flows of the asset, whichever is higher. The Group estimates the recoverable value of each asset. For an asset whose recoverable value is hard to be estimated, the Group estimates the recoverable value of the assets group which the asset belongs to. An assets group is identified based on whether the main cash inflows from the Group are independent from the cash inflows from other assets or assets groups.

When the recoverable value of an asset or assets group is lower than its book value, the Group will write down its book value to the recoverable value and the amount written down will be recognized in the profit and loss for the current period; meanwhile, it will make provision for the impairment thereof.

The above assets impairment loss will not be reversed during the subsequent accounting periods.

31. Long-term deferred expenses

√Applicable □Not applicable

Long-term prepaid expenses are amortized with the straight-line method and the amortization periods are as follows:

Amortizati

on period

Decorations for houses and buildings 3-5 years

Advertising facilities 3-5 years

32. Contract liabilities

(1).Recognition of contract liabilities

√Applicable □Not applicable

The Group presents contractual assets or contractual liabilities in the balance sheet based on the relationship between performance obligations and customers’ payments. The Group offsets the contractual assets and contractual liabilities under the same contract as a net amount.

A contractual liability refers to an obligation to transfer goods or services to a customer for the consideration received or receivable from the customer, such as the amount received by the enterprise before the transfer of committed goods or services.

33. Employee compensations

(1).Accounting treatment of short-term compensations

√Applicable □Not applicable

The short-term compensations actually incurred during the accounting period when the employees provide service for the Group are recognized as liabilities and are recognized in the profit and loss for the current period or costs of related assets.

(2).Accounting treatment of post-employment benefits

√Applicable □Not applicable

The employees of the Group participate in the endowment insurance and

unemployment insurance managed by the local government, as well as the

enterprise annuity, and the corresponding expenditures are included in the relevant asset cost or current profit and loss when incurred.

(3).Accounting treatment of severance benefits

√Applicable □Not applicable

Where the Group provides severance benefits to its employees, the employee compensation liabilities arising from the severance benefits will be recognized, and the amount will be recognized in the profit and loss for the current period on the earlier date below: the date when the Group cannot unilaterally withdraw the severance benefits provided as a result of the employment termination plan or downsizing proposal; or the date when the Group recognizes the costs or expenses relating to the reorganization involving the payment of severance benefits.

(4).Accounting treatment of other long-term employee benefits

□Applicable √Not applicable

34. Lease liabilities

□Applicable √Not applicable

35. Estimated liabilities

√Applicable □Not applicable

Except for the contingent considerations and contingent liabilities assumed in the mergers of enterprises not under common control, an obligation relating to contingent matters will be recognized by the Group as estimated liabilities if meeting the following requirements simultaneously:

(1) This obligation is the current obligation assumed by the Group;

(2) The performance of such obligation is likely to cause outflow of economic benefits from the Group;

(3) The amount of such obligation can be measured reliably.

Estimated liabilities are initially measured based on the best estimate of the

expenses required for the performance of related current obligations, and the risks, uncertainties and time value of money relating to the contingent matters are also factored in. The book value of estimated liabilities is reviewed on each balance sheet date. If any conclusive evidence indicates that the book value cannot reflect the current best estimate, the book value will be adjusted based on the current best estimate.

36. Share-based payment

√Applicable □Not applicable

Share-based payment is divided into equity-settled share-based payment and cash-settled share-based payment. An equity-settled share-based payment refers to a deal in which the Group uses shares or other equity instruments as the consideration for settlement to obtain services.

The equity-settled share-based payment in exchange for services provided by employees shall be measured at the fair value of the equity instruments granted to employees. If it can be exercised immediately after the grant, it shall be included in the relevant costs or expenses at fair value on the grant date, and the capital reserve shall be increased accordingly; if it cannot be exercised until the service within the waiting period has been completed or the specified performance conditions have been satisfied on each balance sheet date during the waiting period, the Group will, based on the best estimate of the number of exercisable equity instruments, include the services acquired in the current period, as relevant costs or expenses based on the fair value on the grant date, and increase the capital reserve accordingly .

None of cost or expense shall be recognized for a share payment that cannot be exercised due to failure to meet non-market conditions and/or service period conditions. Where market conditions or non-exercising conditions are stipulated in the share-based payment agreement, regardless of whether the market conditions or non-exercising conditions are satisfied, it shall be deemed as exercisable as long as all other performance conditions and/or service period conditions have been satisfied.

If the equity-settled share payment is canceled, it will be treated as an accelerated exercise on the cancellation day, and the unrecognized amount shall be recognized immediately. If an employee or other party has option to satisfy the non-exercising conditions but fails to satisfy within the waiting period, it shall be treated as cancellation of equity-settled share-based payment. However, if a new equity instrument is granted and if it is determined that the new equity instrument granted is used to replace the canceled equity instrument on the grant date of the new equity instrument, the replacement equity instruments granted in the same way shall be treated in the same way as that for the modification of the terms and conditions for the original equity instrument.

37. Preferred stocks, perpetual bonds and other financial instruments

□Applicable √Not applicable

38. Incomes

(1).Accounting policies for the recognition and measurement of revenue

√Applicable □Not applicable

Incomes from contracts with customers (since January 1, 2020)

The Group recognizes incomes when it has fulfilled its performance obligations in the contract, that is, the customer has acquired the control over the relevant goods or services. The acquisition of the control over related goods or services means the ability to control the use of the goods or the provision of the service and obtain almost all of the economic benefits from them.

Commodity sales contracts

Commodity sales contracts between the Group and customers usually only include performance obligations for the transferred commodities. The Group generally recognizes incomes on the basis of comprehensive consideration of the following factors, at the time when the customer obtains control of the relevant products: the acquisition of the current right to receive payment for the commodities, the transfer of the major risks and rewards in the ownership of the commodities, the transfer of the legal ownership of the commodities, the transfer of the physical assets of the commodities, and the acceptance of the commodities by the customer.

Service contracts

The service contracts between the Group and its customers usually include performance obligations such as the provision of the use of commercial spaces in the Commodity City and its operating supporting services, the provision of hotel accommodation services and hotel catering services, and the provision of fixed-term paid funding services to related parties outside the Group.

The use of commercial spaces in the Commodity City and its supporting services Since customers obtain and consume the economic benefits brought about by the Group’s performance at the time of the performance by the Group, the Group regards them as a performance obligation to be fulfilled within a certain period of time and recognizes an income based on the performance progress, except that the performance progress cannot be reasonably determined. Under the output method, the Group determines the performance progress of the provision of the use of commercial spaces in the Commodity City and the supporting services for its operation based on the number of using days of the commercial spaces When the performance progress cannot be reasonably determined, if the cost incurred by the Group is expected to be compensated, the income shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined.

Hotel accommodation business

Since customers obtain and consume the economic benefits brought about by the Group’s performance at the time of the performance by the Group, the Group regards them as a performance obligation to be fulfilled within a certain period of time and recognizes an income based on the performance progress, except that the performance progress cannot be reasonably determined. In accordance with the output method, the Group determines the performance progress of hotel accommodation services based on the number of staying days. . When the performance progress cannot be reasonably determined, if the cost incurred by the Group is expected to be compensated, the income shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined.

Hotel catering business

For individual performance obligations in the provision of hotel catering services, the Group prices hotel catering services separately, and uses the completion of hotel catering services as the point of income recognition.

Fixed -time paid funding services

Since customers obtain and consume the economic benefits brought about by the Group’s performance at the time of the performance by the Group, the Group regards them as a performance obligation to be fulfilled within a certain period of time and recognizes an income based on the performance progress, except that the performance progress cannot be reasonably determined. Under the output method, the Group determines the performance progress of the services for the fixed-term paid funding services based on the number of using days of funds. When the performance progress cannot be reasonably determined, if the cost incurred by the Group is expected to be compensated, the income shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined.

Income (applicable to 2019)

Revenue will be recognized if the economic benefits are very likely to flow into the Group, the amount can be measured reliably and the following requirements are met simultaneously.

Revenue from the sales of goods

The Group has transferred the main risks and compensations on the title of goods to the buyers and no longer retains the continued management right associated with title or exercises effective control over the goods, the related costs incurred or to be incurred can be measured reliably, and then revenue can be recognized. The amount of revenue from the sales of goods is determined based on the contract price or agreed price received or receivable from the buyers, except that the contract price or agreed price received or receivable from the buyers is unfair; if the contract price or agreed price is collected in a deferred way and is a kind of financing in nature, the amount shall be determined based on the fair value thereof.

For the sales of real estate properties, a development product has completed and been accepted after inspection, the sales contract has been signed, the obligations stipulated in the contract have been performed, i.e. the main risks and compensations on the title of the development product have transferred to the buyer, the Group no longer exercises continued management right or actual control over the project, the related revenue has been received or can be proved to be received, the costs relating to the project can be measured reliably, and then revenue can be recognized.

Income from labor service

On the balance sheet date, if the results of rendering service can be estimated reliably, the revenue from the rendering of service will be recognized based on the percentage of the service completed; otherwise, the revenue will be recognized based on the cost of the service that has been incurred and can be compensated for. The results of rendering service can be estimated reliably if the following conditions are met simultaneously: the amount of the revenue can be measured reliably, the related economic benefits are very likely to flow into the Group, the progress of the transaction can be determined reliably, and the costs incurred and to be incurred during the transaction can be measured reliably. The Group determines the progress of rendering service based on the percentage of the service provided in the service that should be provided. The total revenue from the rendering of service is determined based on the contract price or agreed price received or receivable from the service recipients, except that the contract price or agreed price received or receivable from the service recipients is unfair.

Interest income

It is determined based on the time of use by others of and effective interest rate of the cash and cash equivalents of the Group.

Royalty income

It is determined based on the charging periods and methods agreed in the related contracts or agreements.

Rental income

For operating lease, the rental income is recognized with the straight-line method during each period of the lease terms based on the lease dates and rentals agreed in the lease contracts or agreements when the rentals have been received or can be proved to be received.

(2).Differences in the revenue recognition policies for the same business under

different business models

□Applicable √Not applicable

39. Contract cost

□Applicable √Not applicable

40. Government grants

√Applicable □Not applicable

A government grant is recognized when it can meet the requirements and can be received. If a government grant is a monetary asset, it should be measured at the amount received or receivable. If a government grant does not fall in monetary assets, it will be measured by fair value. If the fair value of a grant cannot be determined reliably, it will be measured by its nominal amount.

A government grant prescribed by government documents to be used to acquire or construct or otherwise form long-term assets will be deemed as an asset-related government grant; if no government documents have express provisions, the grants that are used to acquire or construct or otherwise form long-term assets will be deemed as asset-related government grants and others as income-related government grants.

The Group treats the account of government grants with the total amount method.

The income-related government grants that are used to compensate for the related costs, expenses or losses during the subsequent periods are recognized as deferred income and will be recognized in the profit and loss or against the related costs for the period when the related costs, expenses or losses are recognized. The income-related government grants used to compensate for the related costs, expenses or losses that have been incurred are directly recognized in the profit and loss or against the related costs for the current period.

The asset-related government grants shall be used to offset the book value of

related assets; orrecognized as deferred income, and included in profit and loss in stages under a reasonable and systematic method during the useful life of the

related assets (but government grants measured at a nominal amount shall be

directly included in the current profit and loss); if the relevant asset is sold,

transferred, scrapped or damaged before the end of its useful life, the balance of the undistributed deferred income shall be transferred to the current profit and loss when the asset is disposal.

41. Deferred income tax assets and deferred income tax liabilities

√Applicable □Not applicable

Income tax consists of current income tax and deferred income tax. Except for the income tax arising from the adjustment of goodwill caused by the mergers of enterprises or the income tax that is related to the transactions or matters directly recognized in shareholders’ equity, which are recognized in the shareholders’ equity, income tax will be recognized in the profit and loss for the current period as income tax expenses or income.

The Group measures the current income tax liabilities or assets formed during the current period and the previous periods by the estimated amount of income tax to be paid or refunded as calculated in accordance with the tax law.

The Group recognizes deferred income tax with the balance sheet liability method based on the temporary difference between the book value of assets and liabilities on the balance sheet date and the tax base and that between the book value of the items that have not been recognized as assets and liabilities but whose tax base can be determined according to the tax law and the tax base thereof.

All taxable temporary differences will be recognized as deferred income tax liabilities, unless:

(1) The taxable temporary difference is generated in the following types of transactions: the initial recognition of goodwill, or the initial recognition of assets or liabilities generated in a transaction with the following characteristics: the transaction is not a business merger, and neither affecting accounting profits, nor impacting taxable incomes or deductible losses.

(2) For taxable temporary differences related to investments in subsidiaries, joint ventures and associated enterprises, the time for the reversal of the temporary differences can be controlled and the temporary differences may not be reversed in the foreseeable future.

For the deductible temporary differences and the deductible losses and tax deductions that can be carried forward to the subsequent years, the Group recognizes the deferred income tax assets arising therefrom within the limit of the future taxable income that is very likely to be obtained and used to be offset against the deductible temporary differences, deductible losses and tax deductions, unless: (1) The deductible temporary difference is generated in the following types of transactions: the transaction is not a business merger, and neither affecting accounting profits, nor impacting taxable incomes or deductible losses.

(2) For deductible temporary differences related to investments in subsidiaries, joint ventures, and associated enterprises,the corresponding deferred income tax assets are recognized when theyhave satisfied the following conditions at the same time: the temporary differences are likely to be reversed in the foreseeable future, and it is likely to obtain taxable income that can be used to offset the deductible temporary differences in the future.

The Group measures, on the balance sheet date, the deferred income tax assets and liabilities based on the applicable tax rate for the period when the assets are expected to be recovered or the liabilities are expected to be paid off, in accordance with the tax law, which will also reflect the impact of the way of the expected recovery of assets or repayment of liabilities on the income tax on the balance sheet date.

The Group reviews the book value of deferred income tax assets on the balance sheet date. If it is very likely to be unable to acquire adequate taxable income to be offset against the benefits of deferred income tax assets in the future, the book value of deferred income tax assets will be written down. On the balance sheet date, the Group re-evaluates the unrecognized deferred income tax assets and recognizes the same to the extent that it is very likely to acquire adequate taxable income to reverse all or part of the deferred income tax assets.

If all the following requirements are met, deferred income tax assets and liabilities will be presented in net amount after offsetting: the Group has the legal right to settle the current income tax assets and liabilities in net amount; the deferred income tax assets and liabilities are related to the income tax levied by an identical tax authority on an identical taxpayer, or are related to the income tax levied by an identical tax authority on different taxpayers, but during each important period when the deferred income tax assets and liabilities are reversed, the involved taxpayers intend to settle the current income tax assets and liabilities in net amount or acquire assets or pay off debts simultaneously.

42. Lease

(1).Accounting treatment of operating lease

√Applicable □Not applicable

The leases that substantially transfer all risks and compensations in connection with the title of assets are financial leases, and others are operating leases.

The Group as the lessee to operating leases

The rental expenses under operating leases are recognized in the costs of assets or the profit and loss for the current period with the straight-line method during each period of the lease terms; contingent rentals are recognized in the profit and loss for the period at the time of being actually incurred.

The Group as the lessor to operating leases

The rental income under operating leases are recognized in the profit and loss for the current period with the straight-line method during each period of the lease terms; contingent rentals are recognized in the profit and loss for the period at the time of being actually incurred.

Rental concessions triggered by the COVID-19 epidemic

For rental reductions, such as rental reductions andpayment postponement on the existing lease contracts that are directly caused by the COVID-19 epidemic, between the Group and the counter-parties, if all of the following conditions have been satisfied at the same time, the Group will adopt a simplified method for all leases:

(1) The lease consideration after the concession is reduced or basically unchanged from that before the concession;

(2) The concessions are only for the rentals payable before June 30, 2021;

(3) Through comprehensive consideration of qualitative and quantitative factors, it is determined that there are no major changes in other terms and conditions of the lease.

As a tenant

For operating leases, the Group will continue to include the original contractual rentals in the relevant asset costs or expenses in the same way as that before the concession. In the event of any rental reduction or exemption, the Group will treat the exempted rental as contingent rental and include it in the profit and loss during the exemption period.

As a lessor

For an operating lease, the Group continues to recognize the original contract rental as lease income in the same way as before the reduction; if rental reduction or exemption occurs, the Group will treat the reduced or exempted rental as a contingent rental and offset the rental income during the reduction or exemption period.

(2).Accounting treatment of financial lease

√Applicable □Not applicable

The Group as the lessee to finance leases

For an asset leased under a finance lease, the entry value of the leased asset on the starting date of the lease team is the fair value of the asset on the starting date of the lease or the present value of the minimum lease payment, whichever is lower; and the amount of the minimum lease payment is taken as the entry value of long-term accounts payable; the difference between them is unrecognized financing expenses and will be amortized with the effective interest method during each period of the lease term. Contingent rentals are recognized in the profit and loss for the period at the time of being actually incurred.

(3).Determination and accounting treatment of leases under the new lease standards

□Applicable √Not applicable

43. Other important accounting policies and accounting estimates

√Applicable □Not applicable

Distribution of profits

The Company’s cash dividend is recognized as liabilities after approval by the shareholders’ meeting.

Measurement of fair value

The Group measures the fair values of equity instruments investments on each balance sheet date. Fair value refers to the price that market participants can receive from the sale of an asset or need to pay for the transfer of a liability in an orderly transaction that occurs on the measurement date. The Group measures the related asset or liability by fair value, assuming that the orderly transaction of selling the asset or transferring the liability is executed in the principal market of related asset or liability, or if there is no principal market, assuming that the transaction is executed in the most advantageous market of related asset or liability. The principal market (or most advantageous market) is the marketplace which the Group can enter on the measurement date. The Group adopts the assumptions used by market players to maximize economic benefits in the pricing of the assets or liabilities.

The Group adopts the valuation technique that is applicable under the current conditions and is supported with sufficient available data and other information and uses the related observable inputs with priority. The unobservable inputs will be used only if the observable inputs are unavailable or it is unfeasible to acquire the observable inputs.

For the assets and liabilities which are measured or disclosed by fair value in the financial statements, the levels of fair value are determined based on the lowest-level input of important significance for the overall measurement of fair values: Level 1 input is the unadjusted offer price for an identical asset or liability that can be obtained in an active market on the measurement date; Level 2 inputs are the inputs that are directly or indirectly observable for related assets or liabilities other than Level 1 inputs; Level 3 inputs are the inputs that are observable for related assets or liabilities.

On each balance date, the Group re-evaluates the assets and liabilities that are recognized in the financial statements and keep being measured by fair value so as to determine whether to change the measurement levels of fair value.

Significant accounting judgments and estimates

The preparation of financial statements requires management to make judgments, estimates and assumptions, which would affect the presentation and disclosure of income, expenses, assets and liabilities, as well as the disclosure of contingent liabilities on the balance sheet date

. However, the uncertainties of these assumptions and estimates may cause material adjustment to the book value of the assets or liabilities that will be affected in the future.

Judgments

When applying the Group’s accounting policies, the management have made the following judgments which have had significant influence on the amounts recognized in the financial statements:

Operating lease—as the lessor

The Group has signed lease contracts for the property investments. The Group thinks that according to the terms of the lease contracts, the Group retains all major risks and compensations on the titles of those real estate properties and thus handles them as operating leases.

Partition between property investments and fixed assets

The Group classifies the buildings and structures leased out other than for the main businesses such as market and hotel services as well as the auxiliary land use rights thereof as property investments, including but not limited to the auxiliary banking and catering outlets for market operation and the auxiliary service outlets for hotels. Other buildings and structures leased out are classified as fixed assets.

Judgments on assets acquisition and mergers of enterprises

When determining whether an acquisition transaction constitutes a merger, the Group assesses various factors, including whether the acquiree constitutes a business, in accordance with the Accounting Standards for Enterprises No. 20 – Merger of Enterprises. A business refers to a group of some production and operation activities or assets and liabilities within an enterprise, which has the input, processing and output abilities and whose costs and expenses or revenue can be calculated independently, but an asset or a group of assets or liabilities can be deemed as a business so long as it has the input and processing processes. The Group makes comprehensive judgments by combining the asset acquired and the processing process.

Business model

The classification of financial assets at initial recognition depends on the Group’s business model for the management of financial assets. When judging the business model, the Group factors in the enterprise evaluation, the way of reporting financial assets performance to key management personnel, the risks affecting the performance of financial assets, the way of managing financial assets and the way of related business management personnel obtaining remunerations. When assessing whether to aim at the collection of contractual cash flow, the Group needs to analyze the reasons, time, frequency and value for sale of the financial assets to be sold before the expiry dates thereof.

Characteristics of contractual cash flow

The classification of financial assets at initial recognition depends on the characteristics of the contractual cash flow of the financial assets. For the judgment on whether the contractual cash flow is the repayment of principal and the payment of interest on outstanding principal, including the evaluation of the adjustment to the time value of money, it should be judged whether it is significantly different from the benchmark cash flow; for the financial assets with the early repayment characteristic, it should be judged whether the fair value of the early repayment characteristic is extremely low.

Uncertainties of estimates

The key assumptions on the balance sheet date for the future and other key sources of the uncertainties of estimates are shown below, which may cause significant adjustments to the book values of assets and liabilities during the future accounting periods.

Impairment of financial instruments

The Group evaluates the impairment of financial instruments with the expected credit loss model. To apply the model, the Group needs to make significant judgments and estimates and take into account all reasonable and evidenced information, including forward-looking information. When making these judgments and estimates, the Group infers the expected changes in the debtors’ credit risks based on their historical repayment data, in combination with the economic policies, macroeconomic indicators and industry risks. Different estimates may affect the provisions for impairment and the provision that has been made for impairment may not necessarily be equal to the actual amount of impairment loss in the future.

Net realizable value of property inventory

The Group’s property inventory is measured by cost or net realizable value, whichever is lower. For the calculation of net realizable value, assumptions and estimates should be used. If the management adjust the estimated price and the costs and expenses to be incurred until the completion, it will affect the estimate of the net realizable value of the inventory and the difference will affect the provision for inventory depreciation.

Impairment of non-current assets other than financial assets (excluding goodwill) The Group determines, on the balance sheet date, whether the non-current assets other than financial assets have a sign of being impaired. For a non-current asset other than financial asset, if it is indicated that its book value cannot be recovered, an impairment test will be made. When the book value of an asset or a group of assets is higher than its recoverable value, i.e. fair value less the disposal expenses or the present value of expected future cash flow, whichever is higher, the asset or group has been impaired. For the fair value less the disposal expenses, the Group refers to the agreed selling price or observable market price of the similar asset in a fair transaction, less the cost increase directly attributable to the disposal of the asset. When predicting the present value of future cash flows, the management must estimate the expected future cash flows of the asset or group of assets and select an appropriate discount rate. When identifying a group of assets, the management consider whether the smallest identifiable group of assets can generate income and cash flows independently from other departments or units, or the income and cash inflows generated thereby are mostly independent from other departments or units, and also take into account the way of managing or monitoring production and operating activities and the way of making decisions on the continued use or disposal of the asset.

Fair value of unlisted equity investment

Valuation of the unlisted equity investment is the expected future cash flows discounted at the current discount rate of other financial instruments with similar contract terms and risk characteristics. This requires the Group to estimate the expected future cash flows, credit risk, volatility and discount rate, which brings uncertainties.

Development expenditures

When determining the amount of capitalization, management must make assumptions on the expected future cash flow, the applicable discount rate, and the expected benefit period of the asset.

Deferred tax assets

To the extent that it is very likely for the Group to have enough taxable income to be offset against the deductible losses, the Group shall recognize deferred income tax assets in connection with the outstanding deductible losses. This requires the management to use lots of judgments to estimate the acquisition time and amount of the taxable income to be acquired in the future to determine the amount of deferred income tax assets to be recognized, in consideration of the tax payment planning strategy.

Service life and residual value of fixed assets

The Group makes provisions for the depreciation of its fixed assets during the expected service life thereof after considering their residual value. The Group reviews the expected service life and residual value of related assets on a regular basis to determine the amount of depreciation expenses to be recognized for each reporting period. The Group determines the service life and residual value of assets based on its experience in similar assets and in combination with the expected technology changes. If the previous estimates have material changes, the depreciation expenses will be adjusted for the future periods.

44. Changes in important accounting policies and accounting estimates

(1).Changes in important accounting policies

√Applicable □Not applicable

Other descriptions

The new income standard has established a new income recognition model for regulating income generated from contracts with customers. According to the new income standard, the method of recognizing income should reflect the model for entity to transfer of goods or services to customers, and the amount of income should reflect the amount of consideration that the entity expects to be entitled to due to the transfer of such goods and services to customers. At the same time, the new income standard also regulates the judgments and estimates required for each link in the process ofincome recognition. The Group only adjusted the cumulative amounts affected by the contracts that had not been completed on January 1, 2020.

For any changes in the contracts before January 1, 2020, under a simplified method, according to the final arrangement of all contracts, the Group identified the fulfilled and unfulfilled performance obligations, determined transaction prices, and apportioned transaction prices between fulfilled and unfulfilled performance obligations.

The impact by the implementation of the new income standard on the financial statements as of January 1, 2020 is as follows:

Consolidated Balance Sheet

Corporate balance sheet

The impact of the implementation of the new income standard on the financial statements as of December 31, 2020 is as follows:

Consolidated Balance Sheet

Corporate balance sheet

(2).Changes in important accounting estimates

□Applicable √Not applicable

(3).The relevant information of the adjustments of the initial implementation of the

financial statements at the beginning of the year due to the initial implementation of the new income standard since 2020

√Applicable□Not applicable

Consolidated Balance Sheet

Unit: RMB

□Applicable √Not applicable

Balance Sheet of Parent Company

Unit: RMB

Item December 31, 2019 Jan 1, 2020 Adjustment

Statements on item adjustment:

□Applicable □Not applicable

None

(4).The notes to the retrospective adjustment of the previous comparative data due to

the initial implementation of the new income standard since 2020

√Applicable □Not applicable

The implementation of the new income standard had no significant impact on the corporate income statement for 2020.

For the advances from customers in accordance with the contracts, the Group had presented as advances from customers before January 1, 2020. Since January 1, 2020, the Group included the estimated value-added tax in the advances from customers that do not comply with the definition of “liabilities” into the tax payable-tax to be written off. According to the “Regulations on Accounting of Value-added Taxes” (C K [2016] No. 22), the above tax to be written off waspresented as other current liabilities and the remaining part of the commodity price waspresented as contract liabilities.

The quantitative impact of the above changes on the specific financial statement items is follows: on January 1, 2020, the advances from customers were reduced by RMB 4,324,453,368.34, andcontractual liabilities and other current liabilities were increased by RMB 4,202,117,719.47 and RMB 122,335,648.87 respectively; on December 31, 2020, the advances from customers were reduced by RMB 2,449,482,542.05, andcontractual liabilities and other current liabilities were increased by RMB 2,442,211,788.88 and RMB 7,270,753.17 respectively.

45. Others

□Applicable √Not applicable

VI. Taxes

1. Main tax varieties and tax rates

Major taxes and tax rates

√Applicable □Not applicable

Disclosure of taxpayers subject to different income tax rates

√Applicable □Not applicable

2. Tax preference

√Applicable □Not applicable

According to the Yi Di Shui Han [2017] No.56 Notification on the Yiwu’s Implementing Measures for Adjusting Urban Land Use Tax Policies to Promote Intensive and Economic Utilization of Land, based on the calculation of per mu tax, the Company is entitled to a 90% reduction of the land use tax.

3. Others

□Applicable √Not applicable

VII. Notes to items in consolidated financial statements

1. Monetary capital

√Applicable □Not applicable

Unit: RMB

For monetary capital with restricted ownership or use rights, see Note VII. 81 for details.

Interest income of demand deposits is accrued based on the demand deposit rates of banks. The term of short-term time deposits ranges from three months to half a year and depends on the Group’s cash demand, and the interest income thereof is accrued based on the corresponding time deposit rates of banks.

2. Held-for-trading financial assets

√Applicable □Not applicable

Unit: RMB

□Applicable √Not applicable

3. Derivative financial assets

□Applicable √Not applicable

4. Notes receivable

(1). Categorized presentation of notes receivable

□Applicable √Not applicable

(2). Notes receivable having been pledged by the Company as of the close of the

reporting period

□Applicable √Not applicable

(3). Notes receivable having been endorsed or discounted by the Company as of the

close of the reporting period and having not been due as of the balance sheet date

□Applicable √Not applicable

(4). Notes turned into accounts receivable due to the drawers’ non-performance at the

close of the reporting period

□Applicable √Not applicable

(5). Categorized disclosure based on the bad debt provision method

□Applicable √Not applicable

Accounts receivable for which bad debt provision is made individually:

□Applicable√Not applicable

Explanation for making bad debt provision for accounts receivable by group:

□Applicable√Not applicable

If the bad debt provision is made according to the general model of expected credit loss, please refer to the disclosure of other receivables:

□Applicable √Not applicable

(6). Provisions for bad debts

□Applicable √Not applicable

(7). Notes receivable actually written off during the current period

□Applicable √Not applicable

Other descriptions

□Applicable √Not applicable

5. Accounts Receivable

(1).Disclosure based on account age

√Applicable □Not applicable

Unit: RMB

(2).Categorized disclosure based on the bad debt provision method

√Applicable □Not applicable

Unit: RMB

Accounts receivable for which bad debt provision is made individually:

□Applicable√Not applicable

Explanation for making bad debt provision for accounts receivable by group:

□Applicable√Not applicable

If the bad debt provision is made according to the general model of expected credit loss, please refer to the disclosure of other receivables:

√Applicable □Not applicable

2020 2019

Book balance with expected

Expected credit

Expected

Book balance

Expected credit

Expected

credit loss for

with expected

credit loss for

defaut loss rate （%）

the entire duration

defaut loss rate （%）

the entire dur

ation

Within 1 year 62,456,089.79 0.13 80,018.87 16,047,805.22 0.10 16,727.17 1 - 2 years 440,254.08 8.79 38,695.90 - 7.15 - 2 -3 years - 23.53 - - 19.14 - Above 3 years 11,562.06 100.00 11,562.06 211,046.06 100.00 211,046.06

62,907,905.93 130,276.83 16,258,851.28 227,773.23

(3).Provisions for bad debts

√Applicable □Not applicable

Unit: RMB

In which the recovered or reversed amount is important:

□Applicable √Not applicable

(4).Accounts receivable actually written off during the current period

□Applicable √Not applicable

(5).Accounts receivable from the five debtors with the highest closing balance

√Applicable □Not applicable

The Group is mainly engaged in market operations, hotel services, merchandise sales and real estate sales. The balance of accounts receivable is mainly based on the use of market receivables, hotel consumption, trade receivables and advertising production and release fees.

As of December 31, 2020, the top five entities of in terms of the balance of accounts receivable are as follows:

Balance Balance of bad debt provision

Proportion in the balance

of accounts receivable

(%)

Total balance of the accounts receivable with the top five entities

115,983,771.

75.58

59

32,270.82

(6).Accounts receivable derecognized due to transfer of financial assets

□Applicable √Not applicable

(7).Amounts of assets and liabilities formed by the transfer of accounts receivable and

continuing involvement

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

The credit period of accounts receivable is usually 3 months, and the those with the customers with high credit rating can be extended to 6 to 12 months. Accounts receivable are not interest-bearing.

6. Accounts receivable financing

□Applicable √Not applicable

7. Prepayments

(1).Presentation of prepayment by age

√Applicable □Not applicable

Unit: RMB

Age Closing balance Opening balance

Explanation for failure to settle the prepayments with an account age longer than one year and in important amounts:

None

(2).Prepayments to the five suppliers with the highest closing balance

√Applicable □Not applicable

As of December 31, 2020, the top five entities in terms of the balance of the prepayments are as follows:

Book balance Proportion in the closing

balance of prepayment at the

end of the year (%)

Sociedad Nacional de Galapagos C.A.

SONGA 7,691,029.33 7.31

Zhejiang Jiangong Lvzhi Steel Structure

Co., Ltd. 7,480,053.08 7.11

Zhejiang Public Information Industry Co.,

Ltd. 6,474,786.47 6.16

Chen Shanshan 3,994,118.17 3.80

Bright Diva International Limited 3,904,331.69 3.71

29,544,318.74 28.09

Other descriptions

□Applicable √Not applicable

8. Other receivables

Presentation of items

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

Interest receivable

(1).Categorization of interest receivable

√Applicable □Not applicable

Unit: RMB

(2).Significant overdue interest

□Applicable √Not applicable

(3).Bad debt provision

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Dividend receivable

(1).Dividend receivable

□Applicable √Not applicable

(2).Important dividend receivable with an account age longer than 1 year

□Applicable √Not applicable

(3).Bad debt provision

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Other receivables

(1).Disclosure based on account age

√Applicable □Not applicable

Unit: RMB

(2).Classification based on the nature of accounts

√Applicable □Not applicable

Unit: RMB

(3).Bad debt provision

√Applicable □Not applicable

Unit: RMB

Significant changes in the book balance of other receivables with changes in loss provisions:

□Applicable √Not applicable

Basis for the bad debt provision made in the current period and for assessing whether the credit risk of financial instruments has increased significantly:

□Applicable √Not applicable

(4).Provisions for bad debts

√Applicable □Not applicable

Unit: RMB

In which the recovered or reversed amount is important:

□Applicable √Not applicable

(5).Other receivables actually written off during the current period

□Applicable √Not applicable

(6).Other receivables from the five debtors with highest closing balance

√Applicable □Not applicable

Unit: RMB

(7).Receivables involving government grants

□Applicable √Not applicable

(8).Other receivables derecognized due to transfer of financial assets

□Applicable √Not applicable

(9).Amounts of assets and liabilities formed by the transfer of accounts receivable and

continuing involvement

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

9. Inventories

(1).Category of inventory

√Applicable □Not applicable

Unit: RMB

(2).Provision for inventory depreciation/provision for impairment of contract

performance cost

√Applicable □Not applicable

Unit: RMB

(3).Closing balance of inventory containing capitalized borrowing costs

√Applicable □Not applicable

On December 31, 2020, there are inventory with a book value of RMB 35,797,443.87 (December 31, 2019: RMB 36,196,787.20) that was formed in capitalization of borrowing costs.

(4).Amortization of contract performance cost during the current period

□Applicable √Not applicable

Other descriptions

√Applicable □Not applicable

2020

Inventory-development costs

Transfer-out by

disposal of

subsidiaries

Project Opening blance Current increase Current decrease Closing balance

Pujiang Lvgu 865,287,512.92 28,484,888.90 - 893,772,401.82 -

Haicheng Phase I Business Street 67,907,950.27 - - - 67,907,950.27

Haicheng Phase II 135,754,710.48 137,991,780.07 - - 273,746,490.55

Jiamei Plaza 1,198,924,906.61 96,529,521.41 - 1,295,454,428.02 -

Suxi Yinxiang 765,539,329.95 125,353,714.35 - 890,893,044.30 -

Gongchen Shangbo 121,662.00 3,172,193,186.94 - 3,172,314,848.94 -

3,033,536,072.23 3,560,553,091.67 - 6,252,434,723.08 341,654,440.82

Inventory—development products

Transfer-out by

disposal of

subsidiaries

Project Opening blance Current increase Current decrease Closing balance

Pujiang Lvgu 130,954,254.73 - - 130,954,254.73 -

Haicheng Phase I Business Street 918,976,130.79 - - - 918,976,130.79

Mingshi Jiayuan 946,724.03 - 88,755.38 857,968.65 -

Trade City Century Village 23,993.03 - - 23,993.03 -

Jin Qiao Ren Jia 1,731,088.61 - 395,202.49 1,335,886.12 -

Hangzhou Dongcheng Yinxiang Apartment 31,653,448.92 - 9,096,509.42 22,556,939.50 -

Qiantang Yinxiang 238,807.22 - - - 238,807.22

Fenghuang Yinxiang 150,488,116.13 7,632,666.18 10,616,164.68 147,504,617.63 -

He Tang Yue Se 10,845,072.64 - 65,435.89 10,779,636.75 -

Shuangchuang Building 17,364,805.35 - 4,426,083.60 - 12,938,721.75

1,263,222,441.45 7,632,666.18 24,688,151.46 314,013,296.41 932,153,659.76

2019

Inventory-land to be developed

Project Opening balance Current increase Current decrease Closing balance

Land in Haicheng Phase II 115,714,005.00 - 115,714,005.00 -

Inventory-development costs

Fenghuang Yinxiang - 4,603,888.80 4,603,888.80 -

Pujiang Lvgu 740,740,134.21 124,547,378.71 - 865,287,512.92

Haicheng Phase I Business Street 67,907,950.27 - - 67,907,950.27

Haicheng Phase II - 135,754,710.48 - 135,754,710.48

Jiamei Plaza 1,076,075,702.30 122,849,204.31 - 1,198,924,906.61

Suxi Yinxiang - 765,539,329.95 - 765,539,329.95

Shuangchuang Building - 201,912,287.56 201,912,287.56 -

Gongchen Shangbo - 121,662.00 - 121,662.00

1,884,723,786.78 1,355,328,461.81 206,516,176.36 3,033,536,072.23

Inventory—development products

Project Opening balance Current increase Delivery in the current year Closing balance

Pujiang Lvgu 150,775,486.13 - 19,821,231.40 130,954,254.73

Haicheng Phase I Business Street 918,976,130.79 - - 918,976,130.79

Mingshi Jiayuan 976,309.16 - 29,585.13 946,724.03

Trade City Century Village 23,993.03 - - 23,993.03

Jin Qiao Ren Jia 2,345,848.06 - 614,759.45 1,731,088.61

Hangzhou Dongcheng Yinxiang Apartment 56,897,766.07 - 25,244,317.15 31,653,448.92

Jiahe Square 1,241,659.42 - 1,241,659.42 -

Qiantang Yinxiang 7,241,373.17 - 7,002,565.95 238,807.22

Fenghuang Yinxiang 167,469,729.17 20,998,923.35 37,980,536.39 150,488,116.13

He Tang Yue Se 57,548,424.68 - 46,703,352.04 10,845,072.64

Shuangchuang Building - 201,912,287.56 184,547,482.21 17,364,805.35

1,363,496,719.68 222,911,210.91 323,185,489.14

1,263,222,441.45

10. Contract assets

(1).Overview of contract assets

□Applicable √Not applicable

(2).Amount of and reasons for material changes to book value during the reporting

period

□Applicable √Not applicable

(3).Provision for impairment of contract assets in the current period

□Applicable √Not applicable

If the bad debt provision is made according to the general model of expected credit loss, please refer to the disclosure of other receivables:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

11. Held-for -sale assets

□Applicable √Not applicable

12. Non-current assets due within one year

□Applicable √Not applicable

Important debt investments and other debt investments at the end of the period: □Applicable √Not applicable

Other descriptions

None

13. Other current assets

√Applicable □Not applicable

Unit: RMB

Other descriptions

None

14. Debt investments

(1).Overview of debt investment

□Applicable √Not applicable

(2).Important debt investment as of the close of the reporting period

□Applicable √Not applicable

(3).Provision for impairment

□Applicable √Not applicable

Amount of impairment provision for the current period and the basis for assessing whether there is significant increase in the credit risk of financial instruments

□Applicable √Not applicable

Other descriptions

□Applicable √Not applicable

15. Other debt investments

(1).Overview of other debt investment

□Applicable √Not applicable

(2).Important other debt investment as of the close of the reporting period

□Applicable √Not applicable

(3).Provision for impairment

□Applicable √Not applicable

Amount of impairment provision for the current period and the basis for assessing whether there is significant increase in the credit risk of financial instruments

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

16. Long-term receivables

(1).Overview of long-term receivables

√Applicable □Not applicable

Unit: RMB

(2).Bad debt provision

□Applicable √Not applicable

Amount of bad debt provision for the current period and the basis for assessing whether there is significant increase in the credit risk of financial instruments □Applicable √Not applicable

(3).Long-term receivables derecognized due to transfer of financial assets

□Applicable √Not applicable

(4).Amounts of assets and liabilities formed by the transfer of long -term receivables and

continuing involvement

□Applicable √Not applicable

Other descriptions

□Applicable √Not applicable

17. Long-term equity investment

√Applicable □Not applicable

Unit: RMB

Other descriptions

Provision for impairment of long-term equity investment：

2020

Opening balance Current increase Current decrease Closing balance

Yiwu China Commodity City Investment

Management Co., Ltd. (Note 2) 9,508,049.22 - - 9,508,049.22

Others 3,327,216.16 - - 3,327,216.16

12,835,265.38 - - 12,835,265.38

Note 1: In current year, the Group transferred 51% of the equity of Yiwu China Commodities City Property Development Co., Ltd. and Pujiang Lvgu Real Estate Co., Ltd., and the remaining 49% of the equity was measured at the fair value of RMB 1,867,205,576.66 on the disposal date. See Note VIII.4 for details.

Note 2: In 2017, Yiwu China Commodities City Financial Holdings Co., Ltd. (hereinafter referred to as “CCCF”), a wholly-owned subsidiary of the Group, and Shanghai Fuxing Industrial Group Co., Ltd.

(hereinafter referred to as “Fuxing”) jointly incorporatedan fund of funds, Yiwu China Commodity City Fuxing Investment Center (Limited Liability Partnership) (hereinafter referred to as “FOF”). The FOF invested12 sub-funds including Yiwu Shangfu Chuangzhi Investment Center (Limited Liability Partnership) (hereinafter referred to as “Shangfu Chuangzhi Funds”). CCCF, as a limited partner, subscribed RMB 998 million in the FOF, accounting for 49.9% of the subscribed capital. The paid -in capital was RMB 102.92 million, and there is no deadline for the payment for the unpaid capital contribution. The other limited partner of the FOF is Fuxing. CCCF also contributed RMB 9.8 million, 49% of total shares, to jointly establish Yiwu China Commodity City Investment Management Co., Ltd. (hereinafter referred to as “CCCIM”) with Fuxing as the general partner of the above-mentioned FOF and sub-funds. The FoF and CCCIM are both under the control of Fuxing and are associates of CCCF. The above paid-in capital contribution made by CCCF to the FoF has been contributed to Shangfu Chuangzhi Fund together with the capital contribution of Fuxing to the FoF through the FoF as a limited partner. With the capital contribution from the FoF as a limited partner and CCCF’s capital contribution to Shangfu Chuangzhi Fund as a limited partner, Shangfu Chuangzhi Fund made capital contribution of RMB820.54million to subscribe for the increase in the registered capital of Hubei Provincial Asset Management Co., Ltd. to acquire 22.667% equity therein.

In 2018, CCCF learned during its after-investment follow-up management that Fuxing and its actual controller ZHU Yidong were suspected of having committed a criminal offense and the 22.667% equity held by Shangfu Chuangzhi Fund in Hubei Provincial Asset Management Co., Ltd. was frozen by the Public Security Bureau of Shanghai due to Fuxing’s contribution to the sources of the capital contribution. The Group believes that, on December 31, 2020, the Group’s investment in the FOF and Shangfu Chuangzhi Fund was not related to the Fuxing’s investment, and the underlying assets had no indications of impairment. Although they were still frozen, but there was no impairment on them since they had not affected the Group’s equity. However, for the equity investment in CCCIM, a full impairment provision has been made since 2018. See Note XII.1 and Note V. 58 for details.

18. Other equity instruments investment

(1).Overview of other equity instruments investment

√Applicable □Not applicable

Unit: RMB

(2).Non-trading equity instruments investment

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

19. Other non-current financial assets

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

20. Investment real estate

Measurement models

(1).Property investment measured by cost

Unit: RMB

(2).Information of investment real estate without property right certificates

√Applicable □Not applicable

Unit: RMB

Other descriptions

√Applicable □Not applicable

As of December 31, 2020, the total amount of investment real estate for which the property right certificates had not been received due to the final settlement was still in progress was RMB 103,587,608.79.

21. Property, plant and equipment

Presentation of items

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

Property, plant and equipment

(1).Property, plant and equipment

√Applicable □Not applicable

Unit: RMB

(2).Temporarily idle fixed assets

□Applicable √Not applicable

(3).Fixed assets leased in through financial lease

√Applicable □Not applicable

Unit: RMB

(4).Fixed assets leased out through operating lease

□Applicable √Not applicable

(5).Information of property, plant and equipment without property right certificate

√Applicable □Not applicable

Unit: RMB

Other notes:

√Applicable □Not applicable

Note 1: The impairment of property, plant and equipment was RMB 471,163,467.85, as the impairment of property, plant and equipment of Haicheng Yiwu China Commodities City Investment Development Co., Ltd.

As of December 31, 2020, the total amount of property, plant and equipmentfor which the property right certificates had not been received due to the final settlement was still in progress was RMB 1,314,838,880.20.

Liquidation of property, plant and equipment

□Applicable √Not applicable

22. Construction in progress

Presentation of items

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

Construction in progress

(1).Overview of construction in progress

√Applicable □Not applicable

Unit: RMB

(2).Changes to important construction in progress during the current period

√Applicable □Not applicable

Unit: RMB

(3).Provision made for the impairment of construction in progress in the current period

□Applicable √Not applicable

Other descriptions

√Applicable □Not applicable

The impairment of construction in progress was RMB 4,635,059.96, as provisional impairment for the hotel project in the Phase I of the commercial project of Haicheng Yiwu China Commodities City Investment Development Co., Ltd.

Construction materials

(1).Engineering materials

□Applicable √Not applicable

23. Productive biological assets

(1).Bearer biological asset measured by cost

□Applicable √Not applicable

(2).Bearer biological asset measured by fair value

□Applicable √Not applicable

Other descriptions

□Applicable √Not applicable

24. Oil and gas assets

□Applicable √Not applicable

25. Right-of-use assets

□Applicable √Not applicable

26. Intangible assets

(1).Overview of intangible assets

√Applicable □Not applicable

Unit: RMB

The percentage of the balance of the intangible assets formed through the company's internal R & D in the balance of intangible assets at the end of the period 0

(2).Information of land use rights without property right certificates

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

27. Development expenditures

√Applicable □Not applicable

Unit: RMB

Other descriptions

None

28. Goodwill

(1).Original book value of goodwill

□Applicable √Not applicable

(2).Provision for goodwill impairment

□Applicable √Not applicable

(3).Information on the assets group or combination of assets groups to which the

goodwill belongs

□Applicable √Not applicable

(4).Goodwill impairment test process, key parameters (e.g. growth rate in the forecast

period, growth rate in the stable period, profit margin, discount rate, forecast period for the estimate of present value of future cash flows, if applicable) and recognition of goodwill impairment loss

□Applicable √Not applicable

(5).Impact of goodwill impairment test

□Applicable √Not applicable

Other descriptions

□Applicable √Not applicable

29. Long-term deferred expenses

√Applicable □Not applicable

Unit: RMB

Other notes:

None

30. Deferred income tax assets/deferred income tax liabilities

(1).Deferred income tax assets having not been offset

√Applicable □Not applicable

Unit: RMB

(2).Deferred income tax liabilities having not been offset

√Applicable □Not applicable

Unit: RMB

(3).Deferred income tax assets or liabilities presented in net amount after offsetting

□Applicable √Not applicable

(4).Breakdown of unrecognized deferred income tax assets

√Applicable □Not applicable

Unit: RMB

(5).The deductible loss in unrecognized deferred income tax assets will be due in the

following years

√Applicable □Not applicable

Unit: RMB

Other notes:

√Applicable □Not applicable

The Group believes that, the deductible temporary differences including the aforementioned provision for asset impairment and the deductible losses of some subsidiaries can be deducted in the foreseeable future, and it is expected that the Group will have sufficient pre-tax profit for deduction during the reversing period. Therefore, the Group deemed it necessary to recognize the above deferred income tax assets.

31. Other non-current assets

√Applicable □Not applicable

Unit: RMB

Other notes:

None

32. Short-term loans

(1).Categories of short-term loans

√Applicable □Not applicable

Unit: RMB

Note to the classification of short-term borrowings:

None

(2).Overdue short-term borrowings

□Applicable √Not applicable

The important overdue and unpaid short-term loansare as follows:

□Applicable √Not applicable

Other descriptions

√Applicable □Not applicable

As of December 31, 2020, the range of annual interest rates of the above-mentioned borrowings was 1.20%-4.35% (December 31, 2019: 1.20%-4.35%).

33. Held-for-trading financial liabilities

□Applicable √Not applicable

34. Derivative financial liabilities

□Applicable √Not applicable

35. Notes payable

(1).Presentation of notes payable

□Applicable √Not applicable

36. Accounts payable

(1).Presentation of accounts payable

√Applicable □Not applicable

Unit: RMB

(2).Important accounts payable with age over 1 year

√Applicable □Not applicable

Unit: RMB

Other descriptions

√Applicable □Not applicable

The accounts payable are free of interest and are generally paid within two months after receipt of the payment notice or based on the project contracts and progress of projects. The balance payments for the projects are made after completion of settlement.

37. Advances from customers

(1). Presentation of advances from customers

√Applicable □Not applicable

Unit: RMB

(2). Important advances from customers with age of over 1 year

□Applicable √Not applicable

Other descriptions

√Applicable □Not applicable

Since the advances from customers are mainly derived from the advance rentals of auxiliary housing businesses and investment real estate with small individual amounts, as of December 31, 2020, there were no single large advances from customers with an age of more than 1 year.

38. Contract liabilities

(1).Overview of contract liabilities

√Applicable □Not applicable

Unit: RMB

(2).Amount of and reasons for material changes to book value during the reporting

period

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

39. Employee compensations payable

(1).Presentation of employee compensations payable

√Applicable □Not applicable

Unit: RMB

(2).Presentation of short-term compensations

√Applicable □Not applicable

Unit: RMB

(3).Presentation of defined contribution plans

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

40. Taxes payable

√Applicable □Not applicable

Unit: RMB

Other notes:

As of December 31, 2020, the details of the main taxes prepaid by the Group were as follows:

International trade city market

Qiantang Impression Real Estate Project

Occident

Total amount of

Center Real

prepaid tax

Estate Project

Land appreciation tax - 109,576,320.66 - 109,576,320.66

Business tax 191,769.77 240,013.55 - 431,783.32

Urban maintenance and

construction tax - - 731,793.32 731,793.32

Education surcharges and

Local education surcharge - - 522,709.51 522,709.51

191,769.77 109,816,334.21 1,254,502.83 111,262,606.81

41. Other payables

Presentation of items

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

Interest payable

(1).Presentation by category

□Applicable √Not applicable

Dividend payable

(1).Presentation by category

□Applicable √Not applicable

Other payables

(1). Presentation of other payables by nature

√Applicable □Not applicable

Unit: RMB

(2). Important other payables with account age over 1 year

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

Other payables mainly come from deposits for commercial spaces and bid deposits for engineering projects, with small individual amounts, so there were no important other payables with an age of more than 1 year on December 31, 2020.

42. Held-for-sale liabilities

□Applicable √Not applicable

43. Non-current liabilities due within one year

√Applicable □Not applicable

Unit: RMB

Other notes:

None

44. Other current liabilities

Other current liabilities

√Applicable □Not applicable

Unit: RMB

Changes in short-term bonds payable:

√Applicable □Not applicable

Unit: RMB

Other notes:

√Applicable □Not applicable

As of December 31, 2020, the range of the annual interest rates of the above-mentioned short-term financing bonds was 2.45%-2.70% (December 31, 2019: 3.30%-4.19%).

45. Long- term loans

(1). Classification of long-term borrowings

√Applicable □Not applicable

Unit: RMB

Notes on the classification of long-term borrowings:

None

Other notes, including the interest rate range:

√Applicable □Not applicable

As of December 31, 2020, the range of the annual interest rates of the above-mentioned borrowings was 2.70%-3.92% (December 31, 2019: 3.92%-4.51%). For the guarantee information about guaranteed loans, see Note X.5 (2) “Related party guarantees” for details.

46. Bonds payable

(1).Bonds payable

√Applicable □Not applicable

Unit: RMB

(2).Changes in bonds payable: (excluding preferred stocks, perpetual bonds and other

financial instruments classified as financial liabilities)

√Applicable □Not applicable

Unit: RMB

(3).Conditions and time for the conversion of convertible corporate bonds

□Applicable √Not applicable

(4).Notes on other financial instruments classified as financial liabilities

Basic information of other financial instruments such as preferred shares and perpetual bonds

outstanding at the end of the reporting period

□Applicable √Not applicable

Changes in other financial instruments such as preferred shares and perpetual bonds outstanding at the end of the reporting period

□Applicable √Not applicable

The basis for classifying other financial instruments as financial liabilities:

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

As of December 31, 2020, the range of the annual interest rate of the aforementioned bonds payable was 3.97%-4.30% (December 31, 2019: 3.97%-4.75%).

47. Lease liabilities

□Applicable √Not applicable

48. Long-term payables

Presentation of items

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Long-term payables

(1).Long-term payables by nature

□Applicable √Not applicable

Special payables

(1).Special payables by nature

□Applicable √Not applicable

49. Long-term employee compensation payable

□Applicable √Not applicable

50. Estimated liabilities

√Applicable □Not applicable

Unit: RMB

Other notes, including the notes on related important assumptions and estimates of important

estimated liabilities:

In 2017, the letters of credit issued by the Group’s subsidiary based on international trade agency business became overdue successively due to the principals’ failure to make payments as agreed.

Based on the principle of prudence, the Group recognized estimated liabilities for the estimated

potential losses. On Apr 30, 2018, the Group lost control over the subsidiary due to its disposal of

some equity in the subsidiary. As of December 31, 2020, this matter had not been resolved.

51. Deferred incomes

Overview of deferred income

√Applicable □Not applicable

Unit: RMB

Items involving government grants:

√Applicable □Not applicable

Unit: RMB

Other notes:

√Applicable □Not applicable

None

52. Other non-current liabilities

□Applicable √Not applicable

53. Capital stock

√Applicable □Not applicable

Unit: RMB

Opening balance Increase or decrease in the current period (+, -) Closing balance Other notes:

On December 11, 2020, the Group implemented a restricted stock incentive plan, granting 47,920,000 restricted stocks to incentive objects. On December 29, 2020, the Group received RMB 137,298,000.00 for the restricted stock subscription from the incentive objects. The number of

shares subscribed was 46,700,000, which has been verifiedby Ernst & Young Huaming Certified Public Accountants (Special General Partnership) with a capital verification report ((2020) Y Z No.

60709629_B01).

54. Other equity instruments

(1).Basic information of other financial instruments such as preferred shares and

perpetual bonds outstanding at the end of the reporting period

□Applicable √Not applicable

(2).Changes in other financial instruments such as preferred shares and perpetual

bonds outstanding at the end of the reporting period

□Applicable √Not applicable

Changes in other equity instruments in the current period, the reasons therefor and the basis for

relevant accounting treatment:

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

55. Capital reserves

√Applicable □Not applicable

Unit: RMB

Other notes including those on the changes in the current period and the reasons therefor:

None

56. Treasury shares

√Applicable □Not applicable

Unit: RMB

Other notes including those on the changes in the current period and the reasons therefor:

On December 11, 2020, the Group implemented a restricted stock incentive plan, granting 47,920,000 restricted stocks to incentive objects. On December 29, 2020, the Group received RMB 137,298,000.00 for the restricted stock subscription from the incentive objects. The number of

shares subscribed was 46,700,000, which has been verifiedby Ernst & Young Huaming Certified Public Accountants (Special General Partnership) with a capital verification report ((2020) Y Z No.

60709629_B01).

57. Other comprehensive income

√Applicable □Not applicable

Unit: RMB

Other notes, including those on the adjustment of the initially recognized amount of hedged items converted from the effective part of profit and loss from cash flow hedging:

None

58. Special reserves

□Applicable √Not applicable

59. Surplus reserve

√Applicable □Not applicable

Unit: RMB

Notes on surplus reserves, including those on the changes in the current period and the reasons therefor:

According to the “Company Law” and the Company’s articles of association, the company accrued a statutory surplus reserve in terms of 10% of its net profit. If the amount of statutory surplus reserve accrued reaches more than 50% of the company's registered capital, the accrual may cease.

The company can accruefree surplus reserve after accruing the statutory surplus reserve. With the approval, the free surplus reserve can be used to make up for previous losses or to increase share capital.

60. Retained earnings

√Applicable □Not applicable

Unit: RMB

Details of the adjustment of opening undistributed profits:

1. The opening undistributed profits affected by the retroactive adjustment made in accordance with the Accounting Standards for Enterprises and related new provisions amounted to RMB0.

2.The opening undistributed profits affected by the changes in accounting policies amounted to

RMB0.

3. The opening undistributed profits affected by the correction of major accounting errors amounted to RMB0.

4. The opening undistributed profits affected by changes in the scope of mergers caused by common control amounted to RMB0.

5. The opening undistributed profits affected by other adjustments together amounted to RMB0.

61. Revenue and cost of sales

(1).Overview of revenue and cost of sales

√Applicable □Not applicable

Unit: RMB

(2).Revenue generated from contracts

√Applicable □Not applicable

Unit: RMB

Description of the incomefrom contracts:

√Applicable □Not applicable

The income recognized in the current year and included in the opening book value of contractual liabilities is as follows:

Year 2020

Sales of goods 68,713,877.37

The use of commercial spaces in the

Commodity City and its supporting services 2,049,590,815.28

Hotel accommodation service 4,571,618.80

Other services 40,216,575.76

2,163,092,887.21

In 2020, there was no income recognized in the current year for performance obligations completed (or partially completed) in the previous period.

(3).Contract performance obligations

√Applicable □Not applicable

The information related to the performance obligations of the Group is as follows: Sales of goods

The performance obligation is fulfilled when the goods are delivered to the customer, and the contract price is collected in advance before the goods are delivered to the customer or received upon the delivery of the goods.

The use of commercial spaces in the Commodity City and its supporting services The contractual performance obligation is fulfilled when providing the use of commercial spaces in the Commodity City and the supporting services for business.

For the use of commercial spaces in the Commodity City and the supporting services for business, the progress of contract performance is determined based on the number of using days of the commercial spaces. Customers usually need to pay in advance before the use of commercial spaces in the Commodity Cityand the supporting services for business are provided.

Hotel accommodation business

The performance obligation is fulfilled when providing hotel accommodation services. For the hotel accommodation business, the progress of contractual performance is determined based on the number of days of stay. For hotel accommodation services, a partial deposit iscollected from the customer first, and the remaining contract price is usually collected upon the completion of the hotel accommodation services.

Hotel catering business

The performance obligation is fulfilled when the hotel catering services are provided. The contract price for hotel catering services is usually charged when the hotel catering services are performed.

Fixed -time paid funding services

The performance obligation is fulfilled when the fixed-time paid funding service is provided. For the fixed-time paid funding service, the progress of contractual performance is determined based on the number of using days the fund. For the fixed-time paid funding service, the contract price is usually charged regularly as agreed in the contract.

(4).Amortization to remaining contract performance obligations

√Applicable □Not applicable

At the end of the reporting period, the amount of income corresponding to the

signed performance obligations that have not been performed or completed was RMB 2,442,211,788.88, including:

RMB 2,442,211,788.88, that is expected to be recognized as income in 2025

Other notes:

None

62. Taxes and surcharges

√Applicable □Not applicable

Unit: RMB

Other notes:

None

63. Selling expenses

√Applicable □Not applicable

Unit: RMB

Other notes:

None

64. General and administrative expenses

√Applicable □Not applicable

Unit: RMB

Other notes:

None

65. R&D expenses

√Applicable □Not applicable

Unit: RMB

Other notes:

None

66. Financial expenses

√Applicable □Not applicable

Unit: RMB

Item Amount in the current Amount in the previous

Other notes:

The capitalized amount of borrowing costs has been included in the construction in progress.

67. Other incomes

√Applicable □Not applicable

Unit: RMB

Other notes:

None

68. Investment income

√Applicable □Not applicable

Unit: RMB

Other notes:

None

69. Income from net exposure hedging

□Applicable √Not applicable

70. Income from changes in fair value

√Applicable □Not applicable

Unit: RMB

Other notes:

None

71. Loss of impairment of credit

√Applicable □Not applicable

Unit: RMB

Other notes:

None

72. Loss for asset impairment

√Applicable □Not applicable

Unit: RMB

Other notes:

None

73. Income from asset disposal

√Applicable □Not applicable

Unit: RMB

Other notes:

None

74. Non-operating income

Information of non-operating incomes

√Applicable □Not applicable

Unit: RMB

Government grants recognized in the profit and loss for the current period

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

75. Operating expenses

√Applicable □Not applicable

Unit: RMB

Other notes:

None

76. Income taxes

(1).Overview of income tax expenses

√Applicable □Not applicable

Unit: RMB

(2).Adjustment process of accounting profits and income tax expenses

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

77. Other comprehensive income

√Applicable □Not applicable

Please refer to Notes 57 Other Comprehensive Income for details

78. Items of cash flow statement

(1).Other cash receipts relating to operating activities

√Applicable □Not applicable

Unit: RMB

Notes on other cash receipts relating to operating activities:

None

(2).Other cash payments relating to operating activities

√Applicable □Not applicable

Unit: RMB

Notes on other cash payments relating to operating activities:

None

(3).Other cash receipts relating to investing activities

√Applicable □Not applicable

Unit: RMB

Notes on other cash receipts relating to investing activities:

None

(4).Other cash payments relating to investing activities

√Applicable □Not applicable

Unit: RMB

Other cash paid related to investment activities:

None

(5).Other cash receipts relating to financing activities

□Applicable √Not applicable

(6).Other cash payments relating to financing activities

√Applicable □Not applicable

Unit: RMB

Other cash paid related to financing activities:

None

79. Supplements to cash flow statement

(1).Supplements to cash flow statement

√Applicable □Not applicable

Unit: RMB

(2).Net cash paid for acquisition of subsidiaries in the current period

□Applicable √Not applicable

(3).Net cash received from disposal of subsidiaries in the current period

√Applicable □Not applicable

Unit: RMB

Other notes:

None

(4).Composition of cash and cash equivalents

√Applicable □Not applicable

Unit: RMB

Other notes:

√Applicable □Not applicable

Monetary capital with a deposit period of more than three months

Year 2020 Year 2019

Negotiated deposits 3,580,000,000.00 3,003,500,000.00

80. Notes to items in statement of changes in owners’ equity

Names of “others” items whose closing balances in the previous year are adjusted and the amounts of adjustments:

□Applicable √Not applicable

81. Assets with restricted title or right of use

√Applicable □Not applicable

Unit: RMB

Other notes:

Note 1: On December 31, 2020, the bank deposits with a book value of RMB 60.58 (December 31, 2019: RMB 56,196,102.62) were used asdeposits for opening a special governmental enhanced credit account for import industries,deposits for issuingletters of guarantee, deposits for obtaining commercial housing mortgage loan and pre-sale commercial housing funds under supervisionso that they were restricted in ownership or use rights.

Note 2: As of December 31, 2020, the long-term equity investment with book value of RMB 102,918,559.00 (December 31, 2019: RMB 102,918,559.00), andother non-current financial assets with book value of RMB 617,511,352.00 (December 31, 2019: RMB 617,511,352.00) had been frozen by Shanghai Public Security Bureau. See Note XIV.1 for details.

82. Foreign currency monetary items

(1).Foreign currency monetary items

√Applicable □Not applicable

Unit: RMB Yuan

Other notes:

None

(2).Notes on overseas business entities, including, with respect to important overseas

business entities, disclosure of their overseas main business places, functional currency and the basis of choosing the functional currency, and the reasons for changes in functional currency (if any)

□Applicable √Not applicable

83. Hedging

□Applicable √Not applicable

84. Government grants

(1).Overview of government grants

√Applicable □Not applicable

Unit: RMB

(2).Refund of government grants

□Applicable √Not applicable

Other notes:

None

85. Others

□Applicable √Not applicable

VIII. Changes in consolidation scope

1. Business merger not under common control

√Applicable □Not applicable

(1). Current business mergers not under the same control

√Applicable □Not applicable

Unit: RMB

Other notes:

During the year, the Group acquired 56.40% equity of Zhejiang Huajie Investment and Development Co., Ltd. (hereinafter referred to as “Zhejiang Huajie”) from an independent third party at a consideration of RMB 0.00, and assumed the obligation for paying the remaining contribution. On April 10, 2020, the Group completed the signing of the transfer agreement, payment of capital increase, and changes in the registration with the administration for industry and commerce, and the acquisition date was determined as April 10, 2020. Prior to this acquisition, the Group had held 40% of Zhejiang Huajie’s equity. According to Zhejiang Huajie’s articles of association, the Group regarded Zhejiang Huajie as its associated enterprise and did not include it in the Group’s scope ofconsolidation. After the completion of this acquisition, the Group held 96.40% equity of Zhejiang Huajie and began to include Zhejiang Huajie into the scope of consolidation from April 10, 2020.

(2).Merger costs and goodwill

√Applicable □Not applicable

Unit: RMB

The method of determining the fair value of the merger cost, contingent

consideration and its changes:

None

Main reasons for the formation of large -sum goodwill:

None

Other notes:

None

(3).Acquiree’s identifiable assets and liabilities on the acquisition date

√Applicable □Not applicable

Unit: RMB

Method for determining fair value of identifiable assets and liabilities:

The method for determining fair value of the acquiree’s identifiable assets and liabilities acquired in business mergers not under the same control is evaluation by management expert using the

asset-based method.

The acquiree’s contingent liabilities assumed in the business merger:

None

Other notes:

None

(4).Profit and loss arising from the re -measurement of equity held before the

acquisition date at fair value

Whether there wasany transaction that realized a business merger step by step in a package deal and where the enterprise obtained control during the reporting period □Applicable √Not applicable

(5).Relevant explanations on the circumstances where the merger consideration or the

fair value of the acquiree’s identifiable assets and liabilities could not be reasonably determined on the acquisition date or at the end of the current period

□Applicable √Not applicable

(6).Other descriptions

□Applicable √Not applicable

2. Business merger under the same control

□Applicable √Not applicable

3. Reverse acquisition

□Applicable √Not applicable

4. Disposal of subsidiaries

Has the Group lost control upon a single disposal of investment in a subsidiary?

√Applicable □Not applicable

Unit: RMB

Other notes:

√Applicable □Not applicable

Note 1: On July 12, 2020, the YIWU CCC and CCCH signed an equity transfer agreement. The YIWU CCC transferred 51% of the equity of each of Yiwu China Commodities City Property Development Co., Ltd. (hereinafter referred to as “CCCP”) and Pujiang Green Valley Real Estate Co., Ltd. (Hereinafter referred to as “Pujiang Green Valley”) to CCCH. Through negotiation between both parties, based on the evaluation value, the transfer consideration was RMB 2.232 billion. According to the revised articles of association of the company, the board of directors occupied by the Group and the proportion of votes held in the shareholders’ meeting can realize the power to participate in the decision-making of the financial and operating policies of the CCCP and Pujiang Green Valley by taking part in the resolution process of the shareholders’ meeting and the board of directors, but the proportion of the votes held cannot control, or jointly controlwith other parties, the making of such policies.

Afterthe disposal, the company's shareholding ratio in the CCP and Pujiang Green Valley declined from 100% to 49%, and the articles of association of the company and the registration with the administration for industry and commercehave been completed. The disposal date is July 15, 2020. Therefore, starting from July 15, 2020, the Group no longer incorporated the CCCP and Pujiang Green Valley into the scope of consolidation.

Note 2: The Group’s subsidiary, CCCP and Shenzhen Guoshen Real Estate Development Co., Ltd. signed a cooperative development

agreement on February 25, 2020 to jointly incorporate a joint venture, Yiwu Guoshen Shangbo Real Estate Co., Ltd. (hereinafter referred to as “Guoshen Shangbo”) for co-development of the project of the plot for station construction.

Shangcheng Real Estate acquired 49% of the equity of Guoshen Shangbo withits100% equity of Yiwu Gongchen Shangbo Real Estate Co., Ltd. (hereinafter referred to as “Gongchen Shangbo”) as a capital contribution of RMB 20,000,000.00, and completed the changes in the

registration with the administration for industry and commerce, and the company appointed directors on February 28, 2020. The disposal date is February 28, 2020. Therefore, as of February 28, 2020, the Group no longer included Gongchen Shangbo into the scope of consolidation.

Did the Group dispose of subsidiaries through multiple transactions and lose control in the current period?

□Applicable√Not applicable

Package deal

□Applicable √Not applicable

Non-package deal

□Applicable √Not applicable

5. Changes in consolidation scope for other reasons

Changes in the consolidation scope for other reasons (e.g. new establishment of subsidiaries, liquidation of subsidiaries, etc.) and the related information:

√Applicable □Not applicable

In the current period, the company set its subsidiaries including Yiwu China Commodity City Big Data Co., Ltd., Yiwu Comprehensive Free Trade Zone

Operation Management Co., Ltd. and Yiwu China Commodity City Research Institute Co., Ltd.; acquired Zhejiang Huajie Investment Development Co., Ltd.

and its subsidiary Europe Huajie Development Co., Ltd. in a business merger not under common control; the company's subsidiary Yiwu China Commodity City Logistics Warehousing Co., Ltd. set a subsidiary Yiwu Global Yida Logistics Co., Ltd. in current period.

6. Others

□Applicable √Not applicable

IX. Equity in Other Entity

1. Equity in subsidiaries

(1).Composition of the enterprise group

√Applicable □Not applicable

Explanation for the difference between the shareholding ratio and voting right ratio in a subsidiary: None

Basis for holding half or less voting rights in but still controlling an investee, and holding more than half of the voting rights in but not controlling an investee:

None

Basis for controlling important structured entities included in the consolidation scope:

None

Basis for determining whether a company is an agent or a principal:

None

Other notes:

None

(2).Important non-wholly-owned subsidiaries

√Applicable □Not applicable

Unit: RMB

Explanation for the difference between the shareholding ratio and voting right ratio of minority

shareholders in a subsidiary:

□Applicable □Not applicable

None

Other notes:

□Applicable √Not applicable

(3).Major financial information of important non-wholly-owned subsidiaries

√Applicable □Not applicable

Unit: RMB

None

(4).Significant restrictions on the use of enterprise group’s assets and the settlement of

enterprise group’s debts

□Applicable √Not applicable

(5).Financial or other supports provided to structured entities included in the scope of

consolidated financial statements

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

2. Transactions in which the Group’s share of owners’ equity in a subsidiary changes and the Group still controls the subsidiary

□Applicable √Not applicable

3. Equity in joint ventures or associates

□Applicable □Not applicable

(1).Important joint ventures or associates

√Applicable □Not applicable

Unit: RMB

Explanation for the difference between the shareholding ratio and voting right ratio in a joint venture or associate:

None

Bases for holding less than 20% of the voting rights but having significant influence, or holding 20% or more of the voting rights but not having significant influence:

Note 1: the company held 10.42% (2019: 10.42%) of equity of Yiwu Huishang Zijing Equity Investment Co., Ltd. (hereinafter referred to as “Zijing Investment”), but treated it as an associated enterprise of the company. According to Redbud Investment’s articles of association, it is engaged in investing and its important financial and operating decision-making activities are to pick and manage investment projects, which have been fully entrusted to the Company’s joint venture Yiwu Huishang Redbud Capital Management Co., Ltd. (“Redbud Capital”). Redbud Capital picks and manages investment projects via its investment decision-making committee. Except for special investment matters, which are subject to the resolution of Redbud Investment’s board of directors, other important financial and operating decision-making activities are conducted by Redbud Capital on the behalf of Redbud Investment. Therefore, the company was able to exercise significant influence on Zijing Investment in which the company held 10.42% of total equity.

The company held 9.43% (2019: 9.43%) equity of Yiwu Huishang Zijing Phase II Investment Partnership (Limited Liability Partnership) (hereinafter referred to as “Zijing Phase II”), but treated it as an associated enterprise of the company. According to Redbud Phase II’s articles of association, it is engaged in investing and its important financial and operating decision-making activities are to pick and manage investment projects, which have been fully entrusted to the Company’s joint venture Redbud Capital. Redbud Capital picks and manages investment projects via its investment decision-making committee. Except for special investment matters, which are subject to the resolution of Redbud Phase II’s board of directors, other important financial and operating decision-making activities are conducted by Redbud Capital on the behalf of Redbud Phase II. Therefore, the Company can exert significant influence on Redbud Phase II in which it holds 9.43% equity.

(2).Main financial information of important joint ventures

√Applicable □Not applicable

Unit: RMB

None

(3).Main financial information of important associates

√Applicable □Not applicable

Unit: RMB

Other descriptions

None

(4).Summary financial information of unimportant joint ventures and associates

√Applicable □Not applicable

Unit: RMB

Other descriptions

None

(5).Restrictions on the ability of joint ventures or associates to transfer money to the

Company

□Applicable √Not applicable

(6).Excess losses of joint ventures or associates

□Applicable √Not applicable

(7).Unrecognized commitments relating to investment in joint ventures

□Applicable √Not applicable

(8).Contingent liabilities relating to investment in joint ventures or associates

□Applicable √Not applicable

4. Important joint operations

□Applicable √Not applicable

5. Equity in structured entities not included in the consolidated financial

statements

Notes on structured entities not included in the consolidated financial statements: □Applicable √Not applicable

6. Others

□Applicable √Not applicable

X. Risks associated with financial instruments

√Applicable □Not applicable

1. Classification of financial instruments

The book values of financial instruments on the balance sheet date are as follows: Year 2020

Financial assets

Fin

anc

ial

liab

iliti

es

2019

Financial assets

2.

The risks associated with financial instruments faced by the Group in regular activities mainly include credit risk, liquidity risk and market risk. The main financial instruments of the Group include cash, borrowings from banks, bonds payable and commercial papers payable. Those instruments are used mainly to finance the operation of the Group. The Group has lots of other financial assets and liabilities directly arising from operation, such as accounts receivable, other receivables, accounts payable and other payables. The risks associated with those financial instruments and the risk management strategy taken by the Group to reduce those risks are stated as follows.

Credit risk

The Group only deals with the recognized third parties with good reputation.

According to its policy, the Group needs to carry out credit review on all clients who require to deal with the Group on credit. In addition, the Group keeps monitoring the balance of accounts receivable to ensure it will not face any material bad debt risk. For the transactions settled other than in the functional currency of related business entities, unless with specific approval of the Group’s credit control department, the Group will not provide the conditions for dealing on credit. The Group also faces credit risks due to the provision of financial guarantees. See the disclosure in Note XII. 2 for details.

As the counterparties to the transactions of cash are banks with good reputation and high credit ratings, the credit risk of those financial instruments is relatively low.

The Group’s other financial assets include cash, debt investment, other receivables and certain derivatives, the credit risk of which is sourced from default by the counterparties, and the maximum risk exposure is equal to the book value of those instruments.

As the clients from which the Group’s accounts receivable are receivable are scattered in different sectors and industries, there’s no material credit risk concentrated within the Group. The Group does not have any collaterals or other credit enhancements for the balance of its accounts receivable.

For quantitative data on the credit risk exposure of the Group due to accounts receivable and other receivables, see Note V.3 and 5 for details.

Criteria for significant increase in credit risk

The Group evaluates, on each balance sheet date, whether the credit risk of related financial instruments has increased significantly since the initial recognition thereof. In determining whether the credit risk of a financial instrument has increased significantly since the initial recognition thereof, the Group takes into account the reasonable and well-grounded information that is accessible without unnecessary extra costs or efforts, including the qualitative and quantitative analyses based on the Group’s historical data, external credit risk rating and forward-looking information. The Group compares the risk of financial instruments defaulting on the balance sheet date and the risk of them defaulting on the date of initial recognition based on an individual financial instrument or a group of financial instruments with similar credit risk characteristics to determine the changes in anticipated default risk of the financial instrument(s) within the duration thereof.

If a financial instrument meets one or more of the following quantitative or qualitative criteria, the Group will determine that its credit risk has increased significantly:

（1） The main quantitative criterion is that its probability of default within the

remaining duration on the reporting date rises by a certain margin from that at

its initial recognition;

（2） The main qualitative criterion is that the debtor has materially adverse

changes in business or financial conditions or is on the warning list of clients.

Definition of the assets whose credit has been impaired

In order to determine whether the credit of an asset has been impaired, the Group adopts the criteria consistent with its internal credit risk management goal for related financial instruments and also takes into account the quantitative and qualitative indicators. The Group mainly considers the following factors while assessing whether the credit of a debtor has been impaired:

（1） the issuer or debtor suffers material financial difficulty;

（2） the debtor is in breach of contract, such as breach in interest payment, principal repayment or overdue payment;

（3） the creditor makes a compromise to the debtor which it would in no case

make, based on the economic or contract considerations in connection

with the debtor’s financial difficulty;

（4） the debtor is very likely to go bankrupt or enter into other financial reorganizations;

（5） the financial difficulty of the issuer or debtor results in the disappearance of the active market of the financial asset;

（6） a financial asset is purchased or derived at a large discount and the

discount points to the fact of credit loss having been incurred.

The credit impairment of financial assets may be caused by multiple events together and may not necessarily be caused by an individually identifiable event.

Measurement parameters of expected credit loss

Depending on whether credit risk has increased significantly and whether credit has been impaired, the Group makes impairment provisions for the expected credit losses of different assets within 12 months or the entire durations. The key

parameters of expected credit loss include the probability of default, loss given

default and default risk exposure. The Group has built the models of probability of default, loss given default and default risk exposure based on the quantitative

analysis of historical data (e.g. rating of counterparties, form of guarantee and

category of collaterals or pledges, form of repayment) and forward-looking

information.

The related definitions are as follows:

（1） The probability of default refers to the possibility that the debtor will be

unable to fulfill its payment obligations in the next 12 months or throughout the remaining duration. The Group adjusts the probability of default based on

the results of the expected credit loss model and with forward-looking

information included to reflect the debtors’ probability of default under the

current macro economic environment.

（2） The default loss rate refers to the Group’s expectation on the extent of losses

incurred due to the default risk exposure. The loss given default varies with

the type of counterparty, the form and priority of claims and collaterals. The

loss given default is the percentage of risk exposure loss at the time of

default and is calculated based on the coming 12 months or the entire

remaining duration.

（3） The default risk exposure refers to the amount that the Group should pay out

when a default occurs in the next 12 months or throughout the remaining

duration.

The determination of significant increase in credit risk and the calculation of expected credit loss both involve forward-looking information. The Group identifies the key economic indicators that affect the credit risk and expected credit loss of various types of businesses through the analysis of historical data.

The influence of those economic indicators on the probability of default and loss given default varies with the type of business. The Group predicts those indicators on a quarterly basis based on experts’ judgments and determines their influence on the probability of default and loss given default through regression analysis.

The Group provides for the expected credit lossesin the next 12 months using the simplified method for other receivables and the general method for other

receivables. See Note V. 3 and Note V.5 for details.

Liquidity risk

The Group manages the cash shortage risk with the cyclical liquidity plan tool. The tool considers not only the maturity dates of financial instruments but also the estimated cash flows arising from the operation of the Group.

The Group aims to make use of such financing instruments as bank loans, commercial papers, MTNs, corporate bonds and long-term borrowings to maintain the balance between the continuity and flexibility of financing. As of December 31, 2020, 66.99% (December 31, 2019: 60.81%) of the Group’s debts would become due in less than one year.

The following table summarizes theanalysis on the due day of financial liabilities based on non-discounted contractual cash flows:

Year 2020

Year 2019

Market risks

Interest rate risk

The risk of changes in market interest rates faced by the Group is mainly related to the Group's long-term liabilities at floating interest rates.

The Group manages interest costs by maintaining an appropriate combination of fixed-rate debts and variable-rate debts. In the long-term debts of the Group as of December 31, 2020, there are long-term loans of RMB 282 million in total. The interest rate is adjusted based on the benchmark loan interest rate on that day at the end of each year, and will not be adjusted in the middle of the year. Therefore, the management believes that the risk of changes in market interest rates is relatively low.

Foreign exchange rate risk

The Group faces trading exchange rate risks. Such risks are caused by sales or purchases made by certain business units in currencies other than their bookkeeping currency. 3%(2019: 1%)of the Group’s current sales amount were denominated in currencies other than the bookkeeping currencies of the business units where the sales occurred, and 98% (2019: 99%) of the cost were nominated in the bookkeeping currencies of the business units. Considering the Group’s short time of inventory and timely collection of accounts receivable, the management believe that its foreign exchange rate risk is relatively low.

Price risk of equity instrument investments

The price risk of equity instrument investments refers to the risk of the fair value of equity securities decreasing due to the changes in stock indices and value of individual securities. On December 31, 2020, the Group was exposed to the price risk of equity instrument investment arising from individual equity instrument investments that is measured at fair value and whose changes are included in the current profit and loss (Note V. 2) andindividual equity instrument investmentsthat is measured at fair value and whose changes are included in the other comprehensive income (Note V. 10). The listed equity instruments that were invested and held by the Group were listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, respectively, the determination is made through discounting and adjustment using the trading prices of similar circulating stocks of the same listed company on the balance sheet date, combined with liquidity.

The market stock indexes of the following stock exchanges at the closing point of the trading day that is closest to the balance sheet date, and their respective highest and lowest closing points during the year are as follows:

At the end of 2020

Highest/lowest in 2020

At the end of 2019

Highest/low

SZSE-A Share Index 2,438 2,442/1,683 1,802 1,865/1,303

SSE-A Share Index 3,640 3,640/2,788 3,196 3,426/2,580

The following table indicates the sensitivity of the Group’s net profit and loss and other comprehensive income after tax to the change each 10% of the fair value of equity instrument investment (based on the book value on the balance sheet date) under the assumption that all other variables remain unchanged.

Year 2020

changes are included in the

current profit and loss

Year 2019

Equity instrument investment book value

Increase/(decrease) in net profit and loss

Increase/(decrease) in after-tax net in other comprehensive income

Increase/(decrease)

in total shareholders’

equity

Equity instrument investment

Fair value increase/decrease

by10%

SZSE—Equity instrument

investments that are measured

at fair value and whose

changes are included in other

comprehensive income 642,187,968.78 - 48,164,097.66 48,164,097.66

3. Capital management

The main objective of the Group in capital management is to ensure the Group’s ability to continue operations and maintain a healthy capital ratio to support its business development and maximize the values for shareholders.

The Group manages and adjusts its capital structure based on the changes in the economic situation and the risk characteristics of related assets. To maintain or adjust the capital structure, the Group may adjust the distribution of profits to shareholders, return capital contribution to shareholders or issue new shares. The Group is not subject to external mandatory capital requirements. In 2020 and 2019, there was no change in objectives, policies or procedures of capital management.

XI. Disclosure of fair value

1. Closing fair value of the assets and liabilities measured by fair value

√Applicable □Not applicable

Unit: RMB

2. Basis for determining the market prices of the items continuously and

non-continuously measured by Level 1 fair value

√Applicable □Not applicable

The Group’s level-1 items continuously measured at fair value mainly include listed equity instruments, and the fair value is determined based on the market quotation on the last trading day of 2020.

3. Valuation techniques and qualitative and quantitative information of important parameters for the items continuously and non-continuously measured by Level 2 fair value

√Applicable □Not applicable

The Group’s level-2 items continuously measured at fair value mainly include unlisted

equity investments and listed equity instruments with restricted sales conditions. The fair value of unlisted equity investments is determined based on the information in the financial statements of these unlisted companies on December 31, 2020, combined with

comparable information of listed companies in the same industry under the comparable company multiplier method. In the listed equity instruments subject to restricted sales

conditions, the valuation model is used to determine the fair value based on the market quotation, and the important observable input value is the liquidity discount.

4. Valuation techniques and qualitative and quantitative information of important parameters for the items continuously and non-continuously measured by Level 3 fair value

√Applicable □Not applicable

The Group’s level-3 items continuously measured at fair value include equity investments and debt investments in non-listed companies for which the comparable company multiplier method cannot be used. The fair value of the equity investments and debt investments in non-listed companies for which the comparable company multiplier method cannot be used are determined under the asset-based method as of December 31, 2020.

5. Adjustment information between the opening book value and closing book value, and the sensitivity analysis of unobservable parameters for items continuously measured by Level 3 fair value

□Applicable √Not applicable

6. For items continuously measured by fair value, if there is conversion between different levels in the current period, the reasons for the conversion and the policy for determining the time of conversion

□Applicable √Not applicable

7. Changes in valuation techniques in the current period and reasons for changes

□Applicable √Not applicable

8. Fair value of financial assets and financial liabilities not measured by fair value

√Applicable □Not applicable

Assets and liabilities disclosed by fair value

Year 2020

9. Others

√Applicable □Not applicable

Estimate of fair value

Fair value of financial instruments

The table below shows the differences between book value and fair value of the Group’s financial instruments other than the financial instruments with very small

differences between book value and fair value and the equity instruments that did not have an offering price in the active market and whose fair value could not be measured reliably:

The management have evaluated cash and cash equivalents, accounts receivable, notes payable and accounts payable. Their fair values were equivalent to their book values as their remaining terms were not long. The fair values of long-term receivables, other non-current assets, long and short-term borrowings and long-term accounts payable were determined with the discounted future cash flow method, with the market yields of other financial instruments with similar contract terms, credit risks and remaining terms as the discount rates. Their fair values were equivalent to their book values.

The financial department of the Group is led by the general manager of the financial department of the Group, who is responsible for formulating policies and procedures for the measurement of fair value of financial instruments. The general manager of the financial department of the Group reports directly to the Financial Director of the Group, and the Financial Director reports to the audit committee. On each balance sheet date, the financial department analyzes the changes in the value of financial instruments and determines the main input values applicable to the valuation. The valuation shall be reviewed and approved by the Group's Financial Director. For the preparation of semi-annual and annual financial statements, the valuation process and results are discussed with the audit committee twice a year.

The fair values of financial assets and financial liabilities refer to the amounts determined based on the voluntary exchange of assets or repayment of debts by the parties to arm’s length transactions who are familiar with the transactions rather than forced sale or liquidation. The following methods and assumptions are used to estimate fair value.

The fair value of bonds payable is determined with the discounted future cash flow method, with the market yields of other financial instruments with similar contract terms, credit risks and remaining terms as the discount rates, and falls in Level 2. The significant unobservable inputs for measurement of the fair value of bonds payable are the prepayment rate and loss given default.

If there are no restrictions on the sale of listed equity instruments, the fair value is determined at the quoted market price. In the listed equity instruments subject to restricted sales conditions, the valuation model is used to determine the fair value based on the market quotation, and the important observable input value is the liquidity discount. The Group believes that the fair value estimated by valuation techniques is reasonable and is also the most appropriate value on the balance sheet date.

There was no major transfer of financial instruments measured at fair value by the Group and the Company between levels in current and previous years

.

XII. Related parties and related-party transactions

1. Parent company of the Company

√Applicable □Not applicable

Unit: RMB10,000

Notes on the parent company of the Company

None

The ultimate controlling party of this enterprise is the State-owned Assets Supervision and

Administration Office of Yiwu Municipal People's Government.

Other notes:

None

2. Subsidiaries of the Company

For details of the Company’s subsidiaries, please refer to the Notes

√Applicable □Not applicable

For details of subsidiaries, see Note“Equity in Subsidiaries”

3. Joint ventures and associates of the Company

The important joint ventures or associated enterprises of this enterprise are detailed in Note“Equity in joint ventures or associated enterprises”

□Applicable √Not applicable

Other joint ventures or associates that have related-party transactions with the Company in the current period or had related-party transactions with the Company in the prior year which resulted in an outstanding amount are as follows √Applicable □Not applicable

Other descriptions

□Applicable √Not applicable

4. Other related parties

√Applicable □Not applicable

Other descriptions

None

5. Related-party transactions

(1).Related-party transactions of purchasing and selling goods and rendering and

accepting service

Purchasing goods/accepting service

√Applicable □Not applicable

Unit: RMB

Selling goods/rendering service

√Applicable □Not applicable

Unit: RMB

Notes on related-party transactions of purchasing and selling goods and rendering and accepting service

□Applicable √Not applicable

(2).Entrustment/contracting from and to related parties

Entrustment/contracting to the Company:

√Applicable □Not applicable

Unit: RMB

Notes on entrustment/contracting from related parties

√Applicable □Not applicable

According to the obligation Xingfuhu International Conference Center management contract signed by and between the company and MDG, the company is entrusted to manage the Xingfuhu

International Conference Center Hotel at No. 100 Xingfuhu, Yiwu City. The hotel management fee charged this year was RMB 1,020,591.87 (2019: RMB1,018,656.74).

Entrusted management/contracted by the company

□Applicable √Not applicable

Notes on related-party management/contracting

□Applicable √Not applicable

(3).Related-party lease

The Company as the lessor:

√Applicable □Not applicable

Unit: RMB

□Applicable √Not applicable

Notes on related-party lease

√Applicable □Not applicable

The Group leased out office spaces to above related parties at market prices

(4).Related-party guarantees

The Company as the guarantor

√Applicable □Not applicable

Unit: RMB

The Company as the guaranteed party

√Applicable □Not applicable

Unit: RMB

Notes on related-party guarantees

√Applicable □Not applicable

1. MDG provided an guarantee for an loan of RMB 200 million (December 31, 2019: RMB 420 million) for the Group with the Zhejiang Branch of the Export-Import Bank of China. As of December 31, 2020, the Group's bank loans under said guarantee totaled RMB 200 million (December 31, 2019: RMB 420 million), and MDG assumed full joint and several guarantee liabilities.

2. The Group provided a guarantee for a loan up to RMB 49 million for Yiwu Shanglv withthe Yiwu Branch of Bank of Communications Co., Ltd. As of December 31, 2020, Yiwu Shanglv had borrowed RMB 11.50 million (December 31, 2019: RMB 0.00) from the bank. According to the guarantee

contract, the Yiwu Branch of Bank of Communications Co., Ltd. assumed a guarantee liability for RMB 5.63 million (December 31, 2019: RMB 0.00). The company's controlling shareholder CCCH provided the company with a counter-guarantee in the form of joint liability guarantee. The guarantee is 2 years since the day after Zhejiang China Commodities City Group Co., Ltd. acted as the

guarantor to repay loans, interest and related expenses for Yiwu Shanglv Investment Development Co., Ltd.

3. The Group provided loan guarantees for Yiwu Shanglv. As of December 31, 2020, Yiwu Shanglv had borrowed a total of RMB 477.6597 million from banks (December 31, 2019: RMB 587.4126 million). As agreed in the guarantee contracts, the company assumed the guarantee liability for RMB 234.0533 million (December 31, 2019: RMB 287.8322 million) in total. The state-owned capital operation center provided counter-guarantee for the said loan.

4. The Group provided loan guarantees for Yiwu Shanglv. As of December 31, 2020, Yiwu Shanglv had borrowed RMB 11.5 million from banks (December 31, 2019: RMB 0.00). As agreed in the guarantee contracts, the Group assumed the guarantee liability for RMB 5.63 million (December 31, 2019: RMB 0.00). Yiwu China Commodities City Holdings Co., Ltd. provided counter-guarantee for the said loan.

5. The Group provided loan guarantees for Huangyuan Shangbo. As of December 31, 2020, Huangyuan Shangbo had borrowed RMB 1,289,098,700 from banks (December 31, 2019: RMB 1,682,121,700). As agreed in the guarantee contracts, the com company assumed the guarantee liability for RMB 631,658,300 (December 31, 2019: RMB 824,239,600).

6. The Group provided loan guarantees for Chengzhen Real Estate. As of December 31, 2020, Chengzhen Real Estate had borrowed RMB 36,0315,800 from banks (December 31, 2019: RMB 839,702,800). As agreed in the contracts, the company assumed the guarantee liability for RMB 86,475,800 (December 31, 2019: RMB 201,528,700).

(5).Related-party lending and borrowing

√Applicable □Not applicable

Unit: RMB

(6).Related-party transfer of assets and restructuring of debts

√Applicable □Not applicable

Unit: RMB

(7).Remunerations of key officers

√Applicable □Not applicable

Unit: RMB

(8).Other related-party transactions

□Applicable √Not applicable

6. Accounts receivable from and payable to related parties

(1).Receivables

√Applicable □Not applicable

Unit: RMB

(2).Payables

√Applicable □Not applicable

Unit: RMB

7. Related-party commitments

□Applicable √Not applicable

8. Others

□Applicable √Not applicable

XIII. Share-based payment

1. Overview of share-based payment

√Applicable □Not applicable

Unit: Share Currency: RMB

None

2. Share-based payment settled with equity

√Applicable □Not applicable

Unit: RMB

Other descriptions

On December 10, 2020, the 2020 fifth extraordinary general meeting of shareholders of the company reviewed and approved the “Plan on the Company's Restricted Stock Incentive Plan 2020 (Draft)” and its summary. A total of 50,480,000 restricted stocks were granted, accounting for 0.927% of 5,443,214,176 shares, the company’s total share capital, of which 47,920,000 shares were granted for the first time and 2,560,000 shares reserved; the number of incentive recipients granted for the first time under the plan was 405, and the restricted stock incentive recipients were the company’s (including its subsidiaries’) directors, senior management, core technical personnel, and other personnel deemed by the board of directors to be motivated; the initial grant price of some restricted stocks granted in this plan is RMB 2.94/share.

According to the authorization of the fifth extraordinary general meeting of shareholders in 2020, the company held the 26th meeting of the eighth board of directors on December 11, 2020, and reviewed and passed the “Plan on Initially Granting Restricted Shares to Incentive Objects”. The first grant date is December 11, 2020. The number of first grants is 47,920,000 shares, and the grant price is RMB 2.94/share. The source of the restricted stock incentive plan is the company's directional issuance of restricted stocks to incentive objects, and the types of stocks is RMB common stocks. During the subscription process, 10 incentive objects voluntarily waived 1,220,000 restricted stocks to be granted to them due to personal reasons; therefore, 46,700,000 restricted stocks were granted, and the number of incentive objects was 395 in this action. On December 29, 2020, the company received the subscription payment for restricted stocks for RMB 137,298,000.00 from the incentive objects. The actual number of stocks subscribed was 46,700,000, which was verified by Ernst & Young Hua Ming Certified Public Accountants (Special General Partnership) with a capital verification report ( (2020) YZ No. 60709629_B01). On January 15, 2021, the company's board of directors has completed the registration of the first grant of restricted stocks.

The restricted stocks granted for the first time under the restricted stock incentive plan should be vested in three terms from the first trading day after 24 months after the grant registration is completed until the last trading day in 60 months after the grant registration is completed. That is, after the vesting conditions have been satisfied, employees have the right to purchase stocks at the vesting price. If the vesting conditions of the restricted stock incentive plan have been satisfied during the vesting period, the incentive objects can apply for the ownership of stocks and being listed for circulation.

3. Share-based payment settled with cash

□Applicable √Not applicable

4. Modification and termination of share-based payment

□Applicable √Not applicable

5. Others

□Applicable √Not applicable

XIV. Commitments and contingencies

1. Important commitments

√Applicable □Not applicable

Important external commitments, nature and amount thereof as of the balance sheet dates

Capitalcommitment Year2020 Year2019

Signed but not provided 1,346,968,354.17 128,556,605.78

Investment commitments:

In 2017, the Group’s wholly-owned subsidiary Yiwu China Commodities City Financial Holdings Co., Ltd. (“CCCF”) and Shanghai Fuxing Industry Group Co., Ltd. (“Fuxing”) jointly

established an industry fund Yiwu China Commodities City Fuxing Investment Center (limited

partnership) (hereinafter referred to as the “FoF”). The FoF invested in 12 sub-funds including Yiwu Shangfu Chuangzhi Investment Center (limited partnership) (“Shangfu Chuangzhi Fund”). CCCF subscribed for capital contribution of RMB998million in the FoF as a limited partner, accounting for 49.9% of the total capital contribution, and has paid in RMB102.92million. The unpaid portion of its subscribed capital contribution was promised to be RMB895.08million and was not subject to a term. CCCF also made capital contribution of RMB9.8million (49% equity) to Yiwu China

Commodities City Investment and Management Co., Ltd. (hereinafter referred to as the “CCCIM”), which was a general partner of the above FoF and sub-funds. Fuxing made capital contribution of 51% to and had control over CCCIM.

Shangfu Chuangzhi Fund raised funds of RMB823.36million in total. The FoF has subscribed for and paid in capital contribution of RMB205.84million as a limited partner (including the above RMB102.92million from CCCIM and the rest was contributed by Fuxing, the other limited partner of the FoF). As the other limited partner of Shangfu Chuangzhi Fund, CCCF has separately subscribed for and paid in capital contribution of RMB617.51million. In addition, neither the Group nor CCCF have invested in other sub-funds of the FoF. Subsequently, Shangfu Chuangzhi Fund made capital contribution of RMB820.54million to subscribe for the increase in the registered capital of Hubei Provincial Asset Management Co., Ltd. to acquire 22.667% equity therein. By 2019, 9 out of the above 12 sub-funds had been deregistered.

In 2018, CCCF learned during its after-investment follow-up management that Fuxing and its actual controller ZHU Yidong were suspected of having committed a criminal offense and the 22.667% equity held by Shangfu Chuangzhi Fund in Hubei Provincial Asset Management Co., Ltd. was frozen by the Public Security Bureau of Shanghai for a term from Sep 6, 2018 to Sep 6, 2019 due to Fuxing’s contribution in the sources of the capital contribution. As of the approval date of the financial statements, the freeze period has been extended until September 2, 2021.

As of the approval date of the financial statements, the Group had not received any notice of capital contribution other than the above contributions that had been made or any notice of action involving the Group, CCCF, FoF and its sub-funds.

In addition, as of December 31, 2020, the Group had other investment commitments for RMB 201.71 million (December 31, 2019: RMB 401.86 million) in total.

2. Contingencies

(1).Important contingencies on the balance sheet dates

√Applicable □Not applicable

Year 2020. Year 2019

Contingent liability due to

external guarantees 973,992,539.81 1,853,883,809.89

According to relevant regulations, before the buyer of the commodity housing has completed the property ownership certificate, the Group needs to provide a mortgage guarantee to the bank for the sale of commodity housing. As of December 31, 2020, the guarantee amount not settled was RMB 16,170,141.08 (December 31, 2019: RMB 540,283,351.51). Those guarantees would be released after the issuance of the property ownership certificates and are thus little likely to incur losses. Therefore, the management believed that it was not necessary to make provision for the guarantees.

According to the resolution of the 15th meeting of the 7th Board of Directors on Jul 1, 2015, the Group applied to the Yiwu Branch of ABC for a RMB750million loan for Yiwu Shanglv and provided guarantee based on its shareholding ratio. The guarantee was a joint and several liability guarantee, the maximum amount of guarantee was RMB367.5million and the term was 11 years. As of December 31, 2020, Yiwu Shanglvactually borrowed RMB 477,659,739.88 from banks (December 31, 2019: RMB 587,412,606.21). In accordance with the guarantee contract, the Group assumed the guarantee liability for RMB 234,053,272.54 (December 31, 2019: RMB 287,832,177.04) with Yiwu Branch of the Agricultural Bank of China. Yiwu State-owned Capital Operation Co., Ltd. provided a counter guarantee for this guarantee.

According to the resolution of the 19th meeting of the eighth session of the board of directors on August 23, 2020, the Group applied for a loan of no more than RMB 100 million with the Yiwu Branch of Bank of Communications for Yiwu Shanglv and provided a guarantee based on the equity ratio. The guarantee method was joint liability guarantee, with the highest guarantee. The amount was RMB 49 million, and the guarantee period was two years from the day after the expiration of the loan period under the independent contract. As of December 31, 2020, Yiwu Shanglv actually borrowed RMB 11,500,000.00 from the bank (December 31, 2019: RMB zero). According to the guarantee contract, the Group shall assume the guarantee liability for RMB 5,635,000.00 (December 31, 2019: RMB zero) to the Yiwu Branch of Bank of Communications. Yiwu China Commodity City Holdings Limited provided counter-guarantee for this guarantee.

According to the resolution of the 65th meeting of the 7th Board of Directors on Jul 23, 2019, the Group applied to the Yiwu Branch of ICBC and Yiwu Branch of SPDB for RMB1bn loans respectively for Huangyuan Shangbo and provided guarantees for them based on its shareholding ratio. As of December 31, 2020, Huangyuan Shangbo actually borrowed RMB 674,889,305.56 from Yiwu Branch of Industrial and Commercial Bank of China and RMB 614,209,347.22 from Shanghai Pudong Development Yiwu Branch (December 31, 2019: RMB 700,923,611.11, RMB 981,198,055.56) ). According to the guarantee contract, the Group assumed a guarantee liability for RMB 330,695,759.72 to the Yiwu Branch of Industrial and Commercial Bank of China, and a guarantee liability for RMB 300,962,580.14 to the Yiwu Branch of Shanghai Pudong Development Bank (December 31, 2019: RMB 343,452,569.44, and RMB 480,787,047.22, respectively).

According to the resolution of the fourth meeting of the 8th Board of Directors on Nov 4, 2019, the Group applied to the Yiwu Branch of Hengfeng Bank for a loan with a total amount no higher than RMB1.63bn for Chengzhen Property and provided guarantee based on its shareholding ratio. The guarantee was a joint and several liability guarantee, the maximum amount of guarantee was RMB391.2million and the term was from the maturity date of the debt agreed under the corresponding loan contract until two years after the maturity date of the debt agreed in the loan contract with the latest expiration date among all loan contracts. As of December 31, 2020, Chengzhen Real Estate actually borrowed RMB 360,315,776.39 from Yiwu Branch of Evergrowing Bank (December 31, 2019: RMB 839,702,769.44). In accordance with the guarantee contract, it assumed a guarantee liability of RMB 86,475,786.33 for Yiwu Branch of Evergrowing Bank (December 31, 2019: RMB 201,528,664.67).

(2).Notes shall also be made even if the Company has no important contingencies to be

disclosed:

□Applicable √Not applicable

3. Others

□Applicable √Not applicable

XV. Matters after the balance sheet date

1. Important non-adjusting events

√Applicable □Not applicable

Unit: RMB

2. Profit distribution

√Applicable □Not applicable

Unit: RMB

Profits or dividends to be distributed 301,945,279.68 Profits or dividends announced through deliberation and approval

3. Sales return

□Applicable √Not applicable

4. Other post-balance sheet date events

□Applicable √Not applicable

XVI. Other important matters

1. Correction of previous accounting errors

(1).Retrospective restatement

□Applicable √Not applicable

(2).Prospective application

□Applicable √Not applicable

2. Debt restructuring

□Applicable √Not applicable

3. Exchange of assets

(1).Exchange of non-monetary assets

□Applicable √Not applicable

(2).Exchange of other assets

□Applicable √Not applicable

4. Annuity plan

□Applicable √Not applicable

5. Termination of operations

□Applicable √Not applicable

6. Information of divisions

(1).Determination basis and accounting policy of reporting divisions

√Applicable □Not applicable

Information of divisions is reported based on business divisions of the Group. In the identification of region-based divisions, revenue is attributable to the divisions in the regions where the clients are located, and assets are attributable to the divisions in the regions where the assets are located. As the Group’s main operating activities and operating assets are both concentrated in mainland China, it is not required to report more detailed information on region-based divisions.

The Group’s businesses are organized and managed separately based on the nature of business and the products and services provided. Each business division of the Group is a business department or a subsidiary and provides the products and services that face the risk different from that faced by other business divisions and bring the compensations different from those brought by other business divisions. The detailed information on business divisions is summarized as follows:

(a) Market operation segment refers to the business that the Group engages in market

operation, collecting business space usage fees and rentals for auxiliary buildings and

office buildings;

(b) Commodity sales segment refers to commodity trading business such as export trade; (c) Real estate sales segment refers to thereal estatedevelopment and salebusiness; (d) Hotel service segment refers to the operation of the hotel, including guest room accommodation, catering services and other business activities;

(e) Exhibition advertising segment refers to the design, production, release, and agency

advertising business;

(f) Other service segments include the provision of market-related supporting services.

The transfer pricing between divisions is made based on the prices offered to third parties and the then prevailing market prices.

(2).Financial information of reporting divisions

√Applicable □Not applicable

Unit: RMB million

(3).If the Company does not have reporting divisions or is unable to disclose the total

assets and total liabilities of each division, please explain

□Applicable √Not applicable

(4).Other descriptions

□Applicable √Not applicable

7. Other important transactions and events that have influence on investors’ decisions

□Applicable √Not applicable

8. Others

√Applicable □Not applicable

As a tenant

Major operating leases: According to the lease contracts signed with the lessors, the amounts of the minimum lease payment for irrevocable leases are as follows:

2020 2019

Within 1 year (1 year inclusive) 5,481,259.27 6,843,030.36

1-2 years (2 years inclusive) 15,750,503.12 10,173,297.19

2-3 years (3 years inclusive) 14,325,047.19 5,440,615.15

Above 3 years 194,335,820.19 3,456,383.31

229,892,629.77 25,913,326.02

XVII. Notes to the main items in the corporate financial statements

1. Accounts Receivable

(1).Disclosure based on account age

√Applicable □Not applicable

Unit: RMB

(2).Categorized disclosure based on the bad debt provision method

√Applicable □Not applicable

Unit: RMB

Accounts receivable for which bad debt provision is made individually:

□Applicable √Not applicable

Explanation for making bad debt provision for accounts receivable by group:

√Applicable □Not applicable

Items for which the bad debts are provided for by combination: by combination of credit risk characteristics

Unit: RMB

Standard for recognition of provision for bad debt by combination of credit risk characteristics and descriptions:

√Applicable □Not applicable

None

If the bad debt provision is made according to the general model of expected credit loss, please refer to the disclosure of other receivables:

√Applicable □Not applicable

(3).Provisions for bad debts

√Applicable □Not applicable

Unit: RMB

In which the recovered or reversed amount is important:

□Applicable √Not applicable

(4).Accounts receivable actually written off during the current period

□Applicable √Not applicable

Information of write-off of important accounts receivable

□Applicable √Not applicable

(5).Accounts receivable from the five debtors with the highest closing balance

□Applicable √Not applicable

(6).Accounts receivable derecognized due to transfer of financial assets

□Applicable √Not applicable

(7).Amounts of assets and liabilities formed by the transfer of accounts receivable and

continuing involvement

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

The Company is mainly engaged in market operation and hotel services and its revenue from an individual client is very low. Therefore, the combined accounts receivable from the top five clients occupied a very small share in its total balance of accounts receivable.

2. Other receivables

Presentation of items

√Applicable □Not applicable

Unit: RMB

Other notes:

□Applicable √Not applicable

Interest receivable

(1).Categorization of interest receivable

√Applicable □Not applicable

Unit: RMB

(2).Significant overdue interest

□Applicable √Not applicable

(3).Bad debt provision

□Applicable √Not applicable

Other notes:

√Applicable □Not applicable

As of December 31, 2020, the capital occupation fee receivable is the capital occupation fee

collected by the company for providing financial assistance to joint ventures and associated

companies.

Dividend receivable

(1).Dividend receivable

□Applicable √Not applicable

(2).Important dividend receivable with an account age longer than 1 year

□Applicable √Not applicable

(3).Bad debt provision

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

Other receivables

(1). Disclosure based on account age

√Applicable □Not applicable

Unit: RMB

Age Closing book balance

(2). Classification based on the nature of accounts

√Applicable □Not applicable

Unit: RMB

(3). Bad debt provision

√Applicable □Not applicable

Unit: RMB

Significant changes in the book balance of other receivables with changes in loss provisions:

□Applicable √Not applicable

Basis for the bad debt provision made in the current period and for assessing

whether the credit risk of financial instruments has increased significantly:

□Applicable √Not applicable

(4). Provisions for bad debts

√Applicable □Not applicable

Unit: RMB

In which the recovered or reversed amount is important:

□Applicable √Not applicable

(5). Other receivables actually written off during the current period

□Applicable √Not applicable

(6). Other receivables from the five debtors with highest closing balance

√Applicable □Not applicable

Unit: RMB

(7). Receivables involving government grants

□Applicable √Not applicable

(8). Other receivables derecognized due to transfer of financial assets

□Applicable √Not applicable

(9). Amounts of assets and liabilities formed by the transfer of other receivables and

continuing involvement

□Applicable √Not applicable

Other notes:

□Applicable √Not applicable

3. Long-term equity investment

√Applicable □Not applicable

Unit: RMB

(1). Investment in subsidiary

√Applicable □Not applicable

Unit: RMB

(2). Investment in associates and joint ventures

√Applicable □Not applicable

Unit: RMB

Other notes:

None

4. Revenue and cost of sales

(1). Overview of revenue and cost of sales

√Applicable □Not applicable

Unit: RMB

(2). Revenue generated from contracts

√Applicable □Not applicable

Unit: RMB

Description of the incomefrom contracts:

√Applicable □Not applicable

The income recognized in the current year and included in the opening book value of contractual liabilities is as follows:

Year 2020

The use of commercial spaces in the Commodity City and its supporting services for business

2,045,470,400.02

Hotel accommodation service 4,571,618.80

Other services 10,347,082.83

2,060,389,101.65

In 2020, there was no income recognized in the current year for performance obligations completed (or partially completed) in the previous period.

(3). Contract performance obligations

√Applicable □Not applicable

The information related to the performance obligations of the Group is as follows:

The use of commercial spaces in the Commodity City and its supporting services

The contractual performance obligation is fulfilled when providing the use of commercial spaces in the Commodity City and the supporting services for business. For the use of commercial spaces in the Commodity Cityand the supporting services for business, the progress of contract performance is determined based on the number of using days of the commercial spaces. Customers usually need to pay in advance before the use of commercial spaces in the Commodity Cityand the supporting services for business are provided.

Hotel accommodation business

The performance obligation is fulfilled when providing hotel accommodation services. For the hotel accommodation business, the progress of contractual performance is determined based on the number of days of stay. For hotel accommodation services, a partial deposit iscollected from the customer first, and the remaining contract price is usually collected upon the completion of the hotel accommodation services.

Hotel catering business

The performance obligation is fulfilled when the hotel catering services are provided. The contract price for hotel catering services is usually charged when the hotel catering services are performed.

Fixed -time paid funding services

The performance obligation is fulfilled when the fixed-time paid funding service is provided. For the fixed-time paid funding service, the progress of contractual performance is determined based on the number of using days the fund. For the fixed-time paid funding service, the contract price is usually charged regularly as agreed in the contract.

(4). Amortization to remaining contract performance obligations

□Applicable √Not applicable

Other notes:

As of December 31, 2020, the transaction price allocated to the remaining performance obligations was RMB 2,283,994,068.70. The Group expects that this amount will be

recognized as an income in the next 5 years with the progress of the relevant service.

5. Investment income

√Applicable □Not applicable

Unit: RMB

Other notes:

None

6. Others

□Applicable √Not applicable

XVIII. Supplementary information

1. Detailed statement of current non-recurring items

√Applicable □Not applicable

Unit: RMB

Explanations shall be made for the non-recurring items identified by the Company according the Explanatory Announcement No. 1 on Information Disclosure by Companies Publicly Offering Securities – Non-recurring Items, and for the Company identifying the non-recurring items

enumerated in the Explanatory Announcement No. 1 on Information Disclosure by Companies Publicly Offering Securities – Non-recurring Items as recurring items.

□Applicable √Not applicable

2. ROE and EPS

√Applicable □Not applicable

3. Differences in accounting data between foreign and Chinese accounting standards

□Applicable √Not applicable

4. Others

□Applicable √Not applicable

Section XII. Documents for Inspection

Chairman of the Board of Directors: ZHAO Wenge

Date of approving by the Board of Directors for release: April 30, 2021

Amendment

□Applicable √Not applicable