Connected Transaction

Zhejiang Expressway Co
17 August 2004


The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.


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

                               (Stock code: 0576)

                             Connected Transaction

This announcement is made pursuant to Rule 14A.66 of the Listing Rules in
connection with the provision of financial assistance by the Company to Shangsan
Co under the Guarantees in relation to loan facilities of a principal amount of
RMB280,000,000 (HK$264,150,943) and RMB80,000,000 (HK$75,471,698), respectively,
granted to Shangsan Co, under the respective Facility Agreement.

Shangsan Co is a connected person of the Company as Huajian Transportation, a
substantial shareholder of the Company, owns more than 10% equity interest in
Shangsan Co, which is also owned as to 73.625% by the Company. The Company's
provision of financial assistance to Shangsan Co pursuant to each Guarantee thus
constitutes a connected transaction for the Company under Rule 14A.13(2)(a) of
the Listing Rules.

As the aggregate value of financial assistance provided by the Company under the
Guarantees represents less than 2.5% of the percentage ratios, and each
Guarantee is on normal commercial terms, the provision of the financial
assistance thereunder is exempt from the approval of the independent
shareholders of the Company but subject to the disclosure requirements under
Rule 14A.66 of the Listing Rules.


Group structure (simplified):


Background

On 16 August 2004, the Board of Directors resolved the Company to enter into two
Guarantees to be dated 18 August 2004 in favour of two independent financial
institutions in the PRC, namely, Industrial and Commercial Bank of China
(Zhejiang Province branch) and Shanghai Pudong Development Bank, in respect of
loan facilities of a principal amount of RMB280,000,000 (HK$264,150,943) and
RMB80,000,000 (HK$75,471,698), respectively, granted to Shangsan Co under the
respective Facility Agreement. The loans under the Facility Agreements are
unsecured and the interest rates will be subject to the rates applicable to
loans with maturity periods within one year as announced by the Bank of China
from time to time. Each Guarantee shall take effect until the expiration of two
years from the repayment date of each loan to be drawn down under the respective
Facility Agreement. No consideration is receivable by the Company for the
provision of the financial assistance under each Guarantee.


Benefits to the Group

The purpose of the facilities under the Facility Agreements is to re-finance the
existing bank term loans of Shangsan Co of approximately RMB360,000,000
(HK$339,622,642) in total and with similar interest rates and maturity periods
of the new facilities under the Facility Agreements. The new facilities will be
applied by Shangsan Co as its general working capital.

On the basis of the foregoing paragraph, the Board of Directors, including the
independent non-executive Directors, believes that the terms of each Guarantee
are fair and reasonable, are normal commercial terms, and in the best interests
of the Group and the Company's shareholders as a whole.


Connected Transaction Implications

Shangsan Co is a connected person of the Company as Huajian Transportation, a
substantial shareholder of the Company, owns more than 10% equity interest in
Shangsan Co, which is also owned as to 73.625% by the Company. The Company's
provision of financial assistance to Shangsan Co pursuant to each Guarantee thus
constitutes a connected transaction for the Company under Rule 14A.13(2)(a) of
the Listing Rules.

As the aggregate value of financial assistance provided by the Company under the
Guarantees represents less than 2.5% of the percentage ratios, and each
Guarantee is on normal commercial terms, the provision of the financial
assistance thereunder is exempt from the approval of the independent
shareholders of the Company but subject to the requirements under Rule 14A.66 of
the Listing Rules to disclose such transaction in this announcement and in the
next published annual report and accounts of the Company.


Information of the Company

The Company was incorporated on 1 March 1997 in the PRC and is a joint stock
limited company with a registered share capital of RMB4,343,114,500
(HK$4,097,277,830) at present. The main business of the Group is investment in,
development, operation, management, and collection of tolls, of the
Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway, both in the
Zhejiang Province of the PRC, and businesses ancillary to the operation of the
expressways, such as billboard advertising and operation of service areas on the
expressways.

Shangsan Co owns and operates the Group's business relating to collection of
road tolls in respect of the Shangsan Expressway.


Definitions

In this announcement, the following expressions have the meanings set out below
unless the context requires otherwise.

'Company'                        Zhejiang Expressway Co., Ltd. ((Chinese characters));

'Directors'                      the directors of the Company;

'Facility Agreements'            two loan facility agreements each entered into between Shangsan Co and the respective
                                 independent financial institution, to be dated 18 August 2004 and for a principal
                                 amount of RMB280,000,000 (HK$264,150,943) and RMB80,000,000 (HK$75,471,698),
                                 respectively;

'Group'                          the Company and its subsidiaries;

'Guarantees'                     two guarantee agreements each to be dated 18 August 2004 and entered into by the
                                 Company in favour of the respective independent financial institution in respect of
                                 the Facility Agreements;

'HK$'                            Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative Region;

'Huajian Transportation'         Huajian Transportation Economic Development Center ((Chinese Characters)), a
                                 state-owned enterprise in the PRC;

'Listing Rules'                  the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong
                                 Limited;

'percentage ratios'              has the meaning as ascribed to it under the Listing Rules, as applicable to a
                                 transaction;

'PRC'                            the People's Republic of China;

'RMB'                            renminbi, the lawful currency of the PRC;

'Shangsan Co'                    Zhejiang Shangsan Expressway Co., Ltd, ((Chinese Characters)), a PRC-incorporated
                                 company; and


The exchange rate used for reference purpose in this announcement is HK$1 to
RMB1.06.

                                                                                               By Order of the Board
                                                                                                   Geng Xiaoping
                                                                                                      Chairman


Hangzhou, 16 August 2004

As at the date of this announcement, the executive directors of the Company are:
Messrs. Geng Xiaoping, Fang Yunti, Zhang Jingzhong and Xuan Daoguang; the
non-executive directors are: Messrs. Zhang Luyun and Zhang Yang; and the
independent non-executive directors are: Messrs. Tung Chee Chen, Zhang Junsheng
and Zhang Liping.


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