Acquisition

Zhejiang Expressway Co
19 August 2002

                         ZHEJIANG EXPRESSWAY CO., LTD.

 (A joint stock limited company incorporated in the People's Republic of China
                            with limited liability)

                             Connected Transaction
              Acquisitions of Additional Interests in Shangsan Co

Acquisitions

The directors (the 'Directors') of Zhejiang Expressway Co., Ltd. (the 'Company')
approved sale and purchase agreements on August 19, 2002 (the 'Agreements') to
purchase from Zhejiang Communications Investment Group Co., Ltd. ('CIG') and
Tiantai County Transport Development Company ('Tiantai Co') a 6.625% equity
interest (the ' CIG Acquisition') and a 2.0% equity interest (together the
'Acquisitions') respectively, in Zhejiang Shangsan Expressway Company Limited
('Shangsan Co'), for a consideration of Rmb187.62 million (equivalent to
approximately HK$177 million)(the 'CIG Purchase Consideration') and Rmb57.6
million (equivalent to approximately HK$54.34 million) (the 'Tiantai Purchase
Consideration')(collectively the 'Aggregate Consideration') in cash,
respectively. Shangsan Co is a 63% owned subsidiary of the Company and is
principally engaged in the investment in, the development, operation and
management of, and collection of tolls on, the Shangsan Expressway.

Connected Transaction

CIG is the controlling shareholder of the Company and as such is a connected
person of the Company for the purposes of the Rules (the 'Listing Rules')
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
(the 'Stock Exchange'). Accordingly, the CIG Acquisition constitutes a connected
transaction for the Company under rule 14.23 of the Listing Rules. Since the CIG
Purchase Consideration represents less than 3% of the book value of the net
tangible assets of the Company as disclosed in its latest published audited
accounts, while no shareholder approval is required under rule 14.25 of the
Listing Rules, relevant details of the CIG Acquisition will be disclosed in the
Company's next published annual report.

The Agreements

Parties


                Vendors:      CIG, a state-owned enterprise under the Zhejiang
                State Assets Management Commission, holds approximately 56% of
                the issued share capital of the Company and is a connected
                person of the Company for the purposes of the Listing Rules, and

                          Tiantai Co, an independent third party not connected
                with the promoters, directors, supervisors, chief executive or
                substantial shareholder of the Company or its subsidiaries or
                any of their respective associates.

Purchaser:      The Company.

Assets to be purchased

The Company has agreed to purchase a 6.625% equity interest and a 2.0% equity
interest in Shangsan Co from CIG and Tiantai Co, respectively.

Consideration

The Aggregate Consideration payable by the Company is Rmb245.22 million and is
based on valuations mutually agreed between the Company and the Vendors. The
Aggregate Consideration was arrived at after arm's length negotiations between
the relevant parties, and the sale and purchase agreements are on normal
commercial terms. The Directors consider the Aggregate Consideration to be fair
and reasonable.

Payment and completion

The Agreements were entered into on August 20, 2002. The CIG Purchase
Consideration of Rmb187.62 million will be paid in cash within 30 days from
August 20, 2002, while the Tiantai Purchase Consideration of Rmb57.6 million
will be paid in cash on or before August 31, 2002. The slight difference in the
valuation of Shangsan Co by CIG and Tiantai Co was due to the fact that the
negotiations between the Company and the two parties were conducted
independently.

Shangsan Co

Shangsan Co is a company established in the PRC with limited liability. As the
holding company of Shangsan Expressway, Shangsan Co is principally engaged in
the investment in, development, operation and management of, and collection of
tolls on, the Shangsan Expressway. As of December 31, 2001, the audited net
asset value of Shangsan Co is approximately Rmb2,737 million based on PRC GAAP.

Immediately prior to the Acquisitions, Shangsan Co was owned as to 63% by the
Company, 18.375% by Huajian Transportation Economic Development Center, 7% by
Tiantai Co, 6.625% by CIG, 3% by Shangyu Municipal Transport Investment Company
and 2% by Xinchang County Transport Development Company. Immediately after the
Acquisitions, the Company's equity interest in Shangsan Co will be increased to
71.625%, while CIG and Tiantai Co's equity interest will be reduced to nil and
5%, respectively.

Shangsan Expressway

Shangsan Expressway is a four-lane expressway with a total length of
approximately 142 km. It was fully completed and formally opened to traffic on
December 26, 2000. The Company has been granted the rights to collect tolls on
the Shangsan Expressway for a period of 30 years from the date the construction
of the expressway is completed.

Reasons for the Acquisitions

Since the Shangsan Expressway's opening to traffic in December 2000, traffic
volume has grown steadily. Monthly average daily full-trip traffic volume on the
expressway has exceeded 10,000 consistently since February 2002.

The Directors are optimistic as to the prospects of the Shangsan Expressway and
believe that the acquisition of additional equity interests in Shangsan Co will
further enhance the Company's asset base and future earnings.

Funding

The Company intends to use a combination of cash and commercial bank borrowings
to fund the Acquisitions.

Connected transaction

CIG is the controlling shareholder of the Company and as such is a connected
person of the Company for the purposes of the Listing Rules. Accordingly, the
CIG Acquisition constitutes a connected transaction for the Company under rule
14.23 of the Listing Rules. Since the CIG Purchase Consideration represents less
than 3% of the book value of the net tangible assets of the Company as disclosed
in its latest published audited accounts, while no shareholder approval is
required under rule 14.25 of the Listing Rules, relevant details of the CIG
Acquisition will be disclosed in the Company's next published annual report.

                                                           By order of the Board
                                                                    JIANG Wenyao
                                                               Company Secretary
                                                       Hangzhou, August 20, 2002


        Note:     For the purposes of illustration only and unless otherwise
        stated, the translation of Renminbi into Hong Kong dollars is based on
        the exchange rate of HK$1.00=Rmb1.06. Such translations should not be
        construed as a representation that the amounts in question have been,
        could have been or could be converted at any particular rate or at all.

Please also refer to the published version of this announcement in the South
China Morning Post.


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of this announcement, makes no representation as to its accuracy or completeness
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