Progress Report on Ongoing Corporate Governance Rectification

Pursuant to a notice issued by the China Securities Regulatory Commission (CSRC), Shandong bureau following an in-house inspection, the company has conducted the following rectification activities:

1. Operation of the board meetings and the general meetings of shareholders
Missing registration information of general meetings of shareholders was supplemented according to meeting records.
The company will regulate the convening of the board meetings and general meetings of shareholders and enhance training of its staff.

2. Information disclosure
a) Errors in the 2007 Semiannual Report have been corrected in the 2007 Annual Report.
b) The company has initiated its purchase of assets of Chongqin Weichai Engine Plant. Procedures for the asset transfer and property right change will be completed following payment for the target assets by the company.

The company also plans to take the following rectification measures to further strengthen its corporate governance:

1. Independence of the company
a) to sign a lease contract with Weichai Holdings Group Co., Ltd., the company's controlling shareholder, to lease housing properties for use as the company's offices, and to use the company's own estates as the offices for its Chongqing branch, after the company purchases medium-speed engine assets from the Chongqing Weichai Engine Plant
b) to adjust operating procedures and improve the independence of its purchasing and marketing systems, which have been implemented by Weichai Power Co., Ltd.
3) to improve its internal organization and management, establish independent departments for internal audit and business management, and avoid cross appointments of managers and conflict of interest of individuals of different departments working in the same office

2. Financial accounting
The company will adjust relevant accounting policies, improve its financial accounting methods and guarantee the accuracy of its financial status and operating results.

Board of Supervisors
10 Sept 2008


Source: Securities Times

Date: 17 Sept 2008

CN01/SC/LZ/BT/KM