Shanghai Tyre & Rubber Downgrades to C (pi) From B- (pi)

HONG KONG, Aug. 11, 2003 -- Xinhua Far East China Credit Ratings (Xinhua Far East), the pioneering undertaking to rank credit risk among Chinese corporations using international standards, today downgrades the B- (pi) long-term credit rating of Shanghai Tyre & Rubber Co Ltd ("STRC" or "the Company", SH A 600623, SH B 900909) to C (pi).

  The downgrade is prompted by the following two issues:

   * The 2000 - 2002 annual reports and the 2003 interim report all indicate
   that the Company all along has carried overdue debt that is pending
   rollover. As of mid-2003, the Company's overdue debt accounted for 4.05%
   of the gross debt, of which several overdue loans had been recorded for
   two or three consecutive years. This reflects serious difficulties in
   financial management, as well as lack of debt repayment ability.

   * STRC's international auditors have issued unqualified opinions with
   explanatory notes for two consecutive years. The international auditors
   also note that the Company's substantial cumulative losses of RMB 1.28
   billion yuan (USD 158 million) at end-2002, and its current liabilities
   far in excess of current assets (by the end of 2002 the Company's current
   liabilities exceeded current assets by RMB 840 million yuan (USD103.7
   million) indicate that the Company's status as a going concern depends on
   its future performance as well as on support from banks and its
   controlling shareholder, Huayi Group.

Xinhua Far East recognized that vigorous market demand for radial truck tyres in 2002 and first half of 2003, as well as the Company's good performance resulting from its recent acquisition of Shanghai Soap Group Co, STRC's turnover and gross margin both increased. Moreover, the Company divested some loss-making assets through asset swaps with Huayi Group. However, since the Company has excessively high expenditures and debt burden while it is exposed to risks of contingent losses from guarantees for third parties, it is very challenging for the Company to significantly lower its financial risks in the next three years.

STRC manufactures and distributes bias tires and radial tires under the brands of "Warrior" and "Double Coin". It also manufactures other rubber products and raw material, as well as machinery and molds for production of rubber products. The Company is a tire manufacturer under the petrochemical sector. Shanghai Huayi (Group) Co holds a 68.4% stake in STRC and is the largest shareholder of STRC.

The Company is a constituent ranking the 23rd in the Xinhua/FTSE China B 35 Index. As of August 8, 2003, the total market cap (B share) of the constituent accounted for RMB 1 billion yuan (USD 123.5 million).

  Note to Editors:

  About Xinhua/FTSE China B 35 Index

Xinhua/FTSE China B 35 Index is the large cap index in the Xinhua/FTSE China B Share Index Series and includes the top 35 companies in China by market cap. It is designed as a tradable index and is calculated in real-time every minute. For daily data and further information, see www.xinhuaftse.com.

About Xinhua Far East China Credit Ratings

Xinhua Far East China Credit Ratings (Xinhua Far East) is a pioneering venture in China that aims to rank credit risks among corporations in China. It is engineered by the strategic alliance between Xinhua Financial Network and Shanghai Far East Credit Rating Co., Ltd.

Capitalizing on the synergy between XFN and Shanghai Far East, Xinhua Far East's rating methodology and process blend unique local market knowledge with international rating standards. Xinhua Far East is committed to provide investors with independent, objective, timely and forward looking credit opinions on Chinese companies. It aims at helping investors differentiate the credit risks among the corporations in China, thereby, cultivating their awareness and promoting information disclosures and transparency in China market. For more information, see www.xfn.com/creditrating.

About Xinhua Financial Network

Xinhua Financial Network (XFN) is an independent financial service and media company based in Hong Kong providing financial information and unique access to Chinese and Asian markets. XFN provides real-time coverage of the Chinese and Asian equity markets and the corporate and economic news that moves them, delivering an integrated platform of indices, financial news feeds, credit ratings and investor relations services to global financial institutions and re-distributors via leased line, Internet and satellite technology. Early this year, the company acquired AFX-Asia Pte Ltd. and became immediately one of the leading financial news services in Asia, providing information from twelve bureaus throughout Asia and Australasia, for the professional investment community and the investing public.

Founded in 2000, XFN is backed by a select group of partner investors and is managed by a team of international business professionals recognized for their industry knowledge and proven leadership. The company is owned by a group of international shareholders including PR Newswire, informa, Xinhua News Agency, Nippon Venture Capital, REFCO and Funai Venture Capital. XFN is a Hong Kong corporation, with offices in Beijing, Shanghai, Shenzhen, Korea, Taiwan, Japan, Singapore and North America. For more information, see www.xfn.com.

About Shanghai Far East Credit Rating Co., Ltd

Shanghai Far East Credit Rating Co., Ltd. is the first and leading professional credit rating company with comprehensive business coverage in China. It is an independent agency established by the Shanghai Academy of Social Sciences with the mission to develop internationally accepted standards of capital market in China. The company is a pioneer to conduct bond-rating business in China. For years, it has been recognized by the Shanghai branch of the PBOC to do loan certificate credit rating.

Since establishment, it had rated over 1,000 corporate long-term bonds and commercial papers, based on the principles of objectivity, fairness and independence. The company has also maintained over 50% market share in the loan certificate-rating sector in Shanghai for three consecutive years. With its strong local presence and knowledge, it provides investors the most insightful and unique credit opinion. For more information, see www.fareast-cr.com.