China Automotive Systems Forms Joint Venture to Produce Electric Power Steering Systems

WUHAN, Hubei, China, June 29, 2006; China Automotive Systems, Inc. , a leading power steering components and systems supplier in China, today announced that it has set up a new joint venture to manufacture electric power steering (''EPS'') systems and components.

The joint venture company, under the name of Wuhan Jielong Electric Power Steering Co. Ltd. ''WJEPS'', is based in Wuhan city, Hubei, one of the key auto manufacturing bases in China. The total registered capital of the joint venture is USD 6 million, of which China Automotive Systems has an 85% ownership and Hong Kong Tongda, the joint venture partner, has the remaining 15% ownership. WJEPS is expected to commence production in 2007 and reach its full capacity of 300,000 sets of electric power steering systems and components in 2011.

Chairman and Chief Executive Officer of China Automotive Systems, Hanlin Chen said, "Electric power steering systems represent a significant new market opportunity for global auto steering system suppliers. EPS systems are attractive for a variety of reasons, including lower fuel consumption, environmental friendliness and higher profit margin as compared to hydraulic platforms. In the past four years, we have been researching and developing our own electric power steering systems. Our technical preparation is now ready and the need for EPS in China market is also emerging, therefore it is the right time to launch this initiative. The establishment of the joint venture will not only broaden our product offerings and expand our customer base but also create new competitive advantage for us in the marketplace.''

About China Automotive Systems

Based in Hubei Province, People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through five Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers 4 separate series of power steering and 307 models of power steering with an annual production capacity of 700,000 sets, steering columns, steering oil pumps and steering hoses. Its customer base is comprised of leading Chinese auto manufacturers such as China FAW Group Corp., Donfeng Auto Group Co., Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. etc. For more information, please visit: http://www.caasauto.com/ .

About Hong Kong TongDa

Based in Hong Kong, China, Tonda Electric Ltd. engages primarily in design, distribution, and sales of various electronic devices and components for appliance industry, industrial automation and automotive aftermarket. Through its joint ventures, the company invests in manufacturing and delivers custom designed electronic products to its customers primarily in China, India and other Southeast Asia regions. The company's services include product support, installation and repair.