Re Agreement

Zhejiang Expressway Co
5 February 2001


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.

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

          CONNECTED TRANSACTION IN RELATION TO
 ACQUISITION OF ADDITIONAL INTEREST IN ZHEJIANG SHANGSAN
                  EXPRESSWAY CO., LTD.
SUMMARY:

Transfer Agreement

Further to the announcement dated 10th January, 2001, the
Board hereby announces that the Company has entered into
the Transfer Agreement pursuant to which the Company has
conditionally agreed to purchase an approximate 18.4%
interest in Shangsan Co from Huajian for an estimated
consideration of approximately RMB 485 million. The
consideration is to be satisfied in cash, and is intended
to be funded by either a portion of the proceeds arising
from the A Share Issue, or by internal resources of the
Company and/or bank loans.

Connected Transaction

Shangsan Co is a non-wholly owned subsidiary of the
Company and Huajian is a substantial shareholder of
Shangsan Co within the meaning of the Listing Rules. The
Acquisition accordingly constitutes a connected
transaction for the Company under the Listing Rules.
Huajian will also become a substantial shareholder of the
Company pursuant to the State-owned Share Transfer
Agreement and upon completion of certain registration
formalities with the relevant PRC authorities. An EGM
will be convened at which, inter alia, a resolution, on
which Huajian and its associates (as defined in the
Listing Rules) will be required to abstain from voting,
will be put forward for the Independent Shareholders to
approve the Acquisition.

Prior to completion of the transfer of the 11% interest
in the Company from Zhejiang Provincial Investment Co to
Huajian pursuant to the State-owned Share Transfer
Agreement, Zhejiang Provincial Investment Co will not be
under any obligation or requirement to vote at the
direction of Huajian in respect of the 11% interest, and
accordingly will be entitled to vote at the EGM in
respect of its 67% interest in the Company. Nevertheless,
Zhejiang Provincial Investment Co has indicated to the
Company that, for good corporate governance,
it will abstain from voting at the EGM in respect of the
11% interest in the Company, even though it is not under
any obligation or requirement to so abstain from voting.

The Independent Board Committee has been formed to advise
the Independent Shareholders on the Acquisition and DBS
Asia Capital Limited has been appointed as the
independent financial adviser to advise the Independent
Board Committee on the terms of the Transfer Agreement.

A Share Issue

The Company intends to use the proceeds arising from the
A Share Issue to fund the second stage of the
construction to widen the Shenshi to Hongken section of
the Shanghai-Hangzhou-Ningbo Expressway, in addition to
the use of proceeds set out in the announcement of 10th
January, 2001.


The Board announced on 10th January, 2001 that the
Company intended to apply to the CSRC and the Shanghai
Stock Exchange for the issue and placement of A Shares
and for the listing of the A Shares on the Shanghai Stock
Exchange. The Board further announced that the Company
intended to use part of the proceeds arising from the A
Share Issue to acquire an approximate 18.4% interest in
Shangsan Co from Huajian.

Transfer Agreement

Date: 2nd February, 2001

Parties:

(1) The Company; and

(2) Huajian.

Under the Transfer Agreement, the Company has
conditionally agreed to purchase, and Huajian has
conditionally agreed to sell, an approximate 18.4%
interest in Shangsan Co held by Huajian. The
consideration to be paid by the Company for the
Acquisition is to be determined by reference to the
audited net book value of Shangsan Co for the year ended
31st December, 2000, prepared in accordance with PRC
GAAP, together with a sum of approximately RMB10.55
million representing interest payments incurred by
Huajian in respect of
its capital contribution in Shangsan Co. The audited net
book value of Shangsan Co for the year ended 31st
December 1999 was RMB2,195 million, and the unaudited net
book value of Shangsan Co for the year ended 31st
December, 2000 was approximately RMB2,584 million. The
Directors estimate that the consideration payable by the
Company will accordingly amount to approximately RMB485
million. The consideration is to be satisfied in cash,
and is intended to be funded by a portion of the proceeds
arising from the A Share Issue. In the event that the
proceeds from the A Share Issue are unavailable for
funding the Acquisition, or the proceeds are
insufficient, or if the A Share Issue does not proceed,
the Company intends to fund the Acquisition by internal
resources and/or bank loans. The consideration is to be
paid within 6 months from the date of the completion of
the A Share Issue and the issuance of a report in
relation to the A Share Issue by a firm of accountants to
be appointed by the Company. In the event that the A
Share Issue does not proceed or is not completed, the
parties will agree a different timing for payment of the
consideration.

Completion of the Transfer Agreement is conditional upon
the passing of a resolution by the Independent
Shareholders at the EGM to approve the entering into by
the Company of the Transfer Agreement, and the obtaining
of approvals from the Ministry of Communication and the
Ministry of Finance.

The registered capital of Shangsan Co is RMB 2,400
million, of which Huajian contributed RMB 441 million,
representing an approximate 18.4% interest. The audited
net profits of Shangsan Co before and after taxation and
extraordinary items and the audited net profits before
and after taxation and extraordinary items attributable
to the approximate 18.4% interest in Shangsan Co for the
two years ended 31st December, 1999 are set out below:

                   Net profit of       Net profit of
                   Shangsan Co         Shangsan Co
                   before taxation     after taxation and
                   and                 extraordinary
                   extraordinary       items
                   items
                   RMB                 RMB
     1998          94,219,659          70,173,365
     1999          92,172,259          79,667,063



                   Net profit of       Net profit of
                   Shangsan Co before  Shangsan Co after
                   taxation and        taxation and
                   extraordinary       extraordinary
                   items               items
                   attributable to an  attributable to an
                   18.4% interest      18.4% interest
                                       
                   RMB                 RMB
     1998          17,336,417          12,911,899
     1999          16,959,696          14,658,740




Shangsan Co

Shangsan Co was incorporated under the laws of the PRC
with limited liability and is principally engaged in the
management and operation of, and collection of tolls
from, the Shangsan Expressway. The Company currently
holds a 61% interest in Shangsan Co while Huajian holds
an approximate 18.4% interest. There are five other
minority shareholders in Shangsan Co.

Shangsan Expressway

Construction of the Shangsan Expressway was completed and
the expressway fully opened to traffic on 26th December
2000. Toll collection commenced on the same date and will
continue for a period of 30 years. The Shangsan
Expressway is 142.3 kilometers in length and starts at
the Guzhu Interchange on the Shanghai-Hangzhou-Ningbo
Expressway and ends at the Wuao Interchange on the Ningbo-
Taizhou-Wenzhou Expressway. It links the major
municipalities and cities such as Shangyu, Shengzhou,
Shinchang, Tiantai, Sanmen in the Zhejiang Province, and
connects the Shanghai-Hangzhou-Ningbo Expressway with the
Ningbo-Taizhou-Wenzhou Expressway. Shangsan Expressway is
a major expressway in the so-called 'four hours
expressway traffic circle' and connects the provincial
capital of Hangzhou with other municipalities. It also
forms an important part of the national coastal highway
network. The Shangsan Expressway is a four-lane closed
end expressway, with full 3D viaducts and full
supervisory control. There are 11 inter-connecting
entrances and 3 service areas along the expressway.

Reasons for the Acquisition

The Shangsan Expressway connects the Shanghai-Hangzhou-
Ningbo Expressway, which is wholly-owned by the Group,
with the Ningbo-Taizhou-Wenzhou Expressway. The Directors
believe that the traffic network constituted by the
Shangsan Expressway, the Shanghai-Hangzhou-Ningbo
Expressway and the Ningbo-Taizhou-Wenzhou Expressway will
lead to additional traffic volume to the expressways
currently owned and operated by the Company, and are
optimistic as to the prospects of the Shangsan
Expressway. The Directors believe that the acquisition of
a further interest in Shangsan Co will consolidate the
existing portfolio of the Group, and serve to further
enhance its asset base and improve its profitability.

Shareholding upon completion of Acquisition

Following the completion of the Acquisition, the Company
will hold an approximate 79.4% interest in Shangsan Co,
while the interest of Huajian will be reduced to zero.

Connected Transaction

Shangsan Co is a non-wholly owned subsidiary of the
Company and Huajian is a substantial shareholder of
Shangsan Co within the meaning of the Listing Rules.
Accordingly, the Acquisition will constitute a connected
transaction for the Company under the Listing Rules, and
is subject to approval by the Independent Shareholders at
the EGM to be convened by the Company. In addition,
Huajian entered into the State-owned Share Transfer
Agreement with Zhejiang Provincial Investment Co, the
controlling shareholder of the Company
(within the meaning of the Listing Rules) with a 67%
interest in the issued share capital of the Company.
Pursuant to this agreement, Zhejiang Provincial
Investment Co transferred an 11% interest in the issued
share capital of the Company to Huajian. The transfer
will be completed and Huajian will become a substantial
shareholder of the Company after the EGM and upon
completion of certain registration formalities with the
relevant PRC authorities. Prior to completion of the
transfer, Zhejiang Provincial Investment Co will not be
under any obligation or requirement to vote at the
direction of Huajian in respect of the 11% interest, and
will accordingly be entitled to vote at the EGM in
respect of its 67% interest in the Company. Nevertheless,
Zhejiang Provincial Investment Co has indicated to the
Company that, for good corporate governance, it will
abstain from voting at the EGM in respect of the 11%
interest in the Company, even though it is not under any
obligation or requirement to so abstain from voting.
Huajian and its associates will be required to abstain
from voting at the EGM on the resolution to approve the
Acquisition

An Independent Board Committee consisting of Dr. Hu Hung
Lick, Mr. Tung Chee Chen and Mr. Zhang Junsheng has been
formed to review the terms of the Acquisition and to
advise the Independent Shareholders as to whether the
terms of the Acquisition are fair and reasonable. DBS
Asia Capital Limited has been appointed as the
independent financial adviser to advise the Independent
Board Committee on the terms of the Acquisition.

A Share Issue

The Company intends to use the proceeds arising from the
A Share Issue to fund the second stage of the
construction to widen the Shenshi to Hongken section of
the Shanghai-Hangzhou-Ningbo Expressway, in addition to
the use of proceeds set out in the announcement of 10th
January, 2001.

Subject to shareholders' approval at the EGM, the
proceeds from the A Share Issue, which the Directors
anticipate will amount to not less than RMB1 billion,
will be used for the following purposes:

(i) approximately RMB425,000,000 to be used for funding
the first stage of the construction to widen the Hongken
to Guzhu section of the Shanghai-Hangzhou-Ningbo
Expressway;

(ii) approximately RMB860,000,000 to be used for funding
the second stage of the construction to widen the Shenshi
to Hongken section of the Shanghai-Hangzhou-Ningbo
Expressway;

(iii) subject to approval of the Acquisition by the
Independent Shareholders at the EGM, and subject to the
approvals from the Ministry of Communication and Ministry
of Transport being obtained on or before the date of the
EGM, the balance of the proceeds to be used for funding
the Acquisition;

(iv) any balance remaining after funding the
projects/transaction contemplated in paragraphs (i), (ii)
and (iii) above from the proceeds of the A Share Issue to
be used as working capital of the Company; and

(v) if the proceeds from the A Share Issue are not
sufficient for funding the projects/transaction
contemplated under paragraphs (i), (ii) and (iii) above,
the internal resources of the Company and/or bank loans
will be used.

General

The Company and its subsidiaries are principally engaged
in investing in, constructing and managing high grade
roads. The Group also operates certain ancillary
businesses, such as
automobile servicing, operations of gas stations and bill
board advertising along expressways.

An EGM will be convened at 10:00 a.m. on 22nd March, 2001
at 18th Floor, Zhejiang World Trade Center, 15 Shuguang
Road, Hangzhou 310007, the PRC at which, inter alia, a
resolution will be put forward for the Independent
Shareholders to approve the Acquisition. The register of
members of H Shares will be closed from 20th February,
2001 to 21st March,
2001 (both days inclusive) during which no transfer of
shares will be registered.

A circular setting out, inter alia, details of the
Acquisition, the advice from the independent financial
adviser, and the recommendation from the Independent
Board Committee on the Acquisition will be despatched to
the shareholders of the Company as soon as practicable in
compliance with the requirements of the Listing Rules.

By Order of the Board
Zhejiang Expressway Co., Ltd.
Geng Xiaoping
Chairman Hangzhou, Zhejiang Province, the PRC, 2nd
February, 2001

DEFINITIONS

In this announcement, unless the context otherwise
requires, the following expressions have the following
meanings:

'A Shares' means the domestic ordinary shares of RMB 1.00
each in the share capital of the Company proposed to be
issued by the Company
'A Share Issue' means the proposed issue and placement of
A Shares by the Company and the proposed application for
listing of A Shares on the Shanghai Stock Exchange
'Acquisition' means the acquisition of an approximate
18.4% interest in Shangsan Co by the Company from Huajian
pursuant to the Transfer Agreement
'Board' means the board of Directors
'Company' means Zhejiang Expressway Co., Ltd.
'CSRC' means the China Securities Regulatory Commission
of the PRC
'Directors' means the directors, including the
independent non-executive directors, of the Company
'EGM' means the extraordinary general meeting of the
Company to be held to consider, inter alia, the A Share
Issue and the Acquisition
'Group' means the Company and its subsidiaries
'Hong Kong' means the Hong Kong Special Administrative
Region of the PRC
'H Shares' means the overseas listed foreign shares of
RMB 1.00 each in the share capital of the Company which
are listed on the Stock Exchange and admitted to trading
on the London Stock Exchange Limited
'Huajian' means Huajian Transportation Economic
Development Centre , a State-owned enterprise established
pursuant to the laws of the PRC
'Independent Board Committee' means an independent
committee of the Board
'Independent Shareholders' means Shareholders other than
Huajian and its associates as defined in the Listing
Rules
'Listing Rules' means the Rules Governing the Listing of
Securities on the Stock Exchange
'Ministry of Communication' means the Ministry of
Communication of the PRC
'Ministry of Finance' means the Ministry of Finance of
the PRC
'PRC' means the People's Republic of China, and for the
purposes of this announcement only, excludes Hong Kong,
Macau and Taiwan
'PRC GAAP' means PRC Generally Accepted Accounting
Principles
'RMB' means Renminbi, the lawful currency of the PRC
'Shangsan Co' means Zhejiang Shangsan Expressway Co.,
Ltd., a company established pursuant to the laws of the
PRC, which is 61% owned by the Company prior to
completion of the Acquisition
'Shangsan Expresssway' means the Shangyu-Sanmen Road,
within the Zhejiang Province of the PRC
'Shanghai-Hangzhou-Ningbo Expressway' means the Shanghai-
Hangzhou Expressway and Hangzhou-Ningbo Expressway within
the Zhejiang Province of the PRC
'Shanghai Stock Exchange' means Shanghai Stock Exchange
of the PRC
'Shareholders' means the shareholders of the Company
 'State-owned Share Transfer Agreement' means the
transfer agreement dated 28th December, 2000 entered into
between Zhejiang Provincial Investment Co and Huajian in
relation to the transfer of an 11% interest in the share
capital of the Company
'Stock Exchange' means The Stock Exchange of Hong Kong
Limited
'Transfer Agreement' means the transfer agreement dated
2nd February, 2001 and the supplemental agreement dated
the same date, entered into between the Company and
Huajian in relation to the transfer of an approximate
18.4% interest in Shangsan Co held by Huajian to the
Company
'Zhejiang ProvincialInvestment Co' means Zhejiang
Provincial High Class Highway Investment Company Limited,
being the controlling shareholder (as defined in the
Listing Rules) of the Company with a 67% interest in the
share capital of the Company prior to completion of the
transfer pursuant to the State-owned Share Transfer
Agreement