SOURCE: Yasheng Group

July 06, 2006 06:00 ET

Yasheng Continues Development of Ethanol as the Chinese Government Puts Into Law National Quality Standards

REDWOOD CITY, CA -- (MARKET WIRE) -- July 6, 2006 -- The agricultural industry of YaSheng Group (PINKSHEETS: YHGG) will become the production base for ethanol fuels and chemicals in Northwestern China. As previously announced The YaSheng Group is in position to profit from increased energy costs and expand with the global demands for alternative energies. YaSheng Group agricultural sector, in coordination with their biotechnical sector, possesses the production experience of white spirit alcohol and ethanol for several decades. The company has also mastered the process to produce ethanol-based raw materials enabling them to enter this new era of alternative energies with a cost-efficient, profitable, and a competitive lead. This has become another example of the key advantages Yasheng Group has in the Agriculture, Biotechnology, and Chemicals industries. With vast amounts of Land, Low Cost Labor, Technology, and diverse resources the company has the global competitive advantage to become a leading producer of alternative fuels.

On Apr 18, 2005 a statement was declared that ethanol-gas would be popularized nationwide in China at the press conference jointly launched by China National Planning Committee and China National Bureau of Quality Supervision and Quarantine. On April 2, 2005 two national standards were put into law on ethanol chemicals and ethanol gas used in automobiles which took effect on April 15, 2005. To ensure traffic safety and smooth implementation of the mandatory standards in promoting the special kind of ethanol gas, standardizing ethanol products guarantees quality consistently for its diverse uses.

China is set to follow a national principle for energy in developing alternative fuels that conserve and replace traditional petrol. This technology will be popularized nationally in China over the next 5 years. This will not only develop alternative energy but effectively solve the transition of corn to other industries resulting in good circulation of agriculture production. China's recent agricultural production has had a plentiful harvest for many consecutive years. The capacity of grain production is close to 500 million tons making a historical transition from a shortage of agricultural products to overproduction. Corn alone reached nearly 200 billion kilograms with surplus to establish stockpiles.

The environmentally safe fuel "ethanol" is created from the deep refining process of plants, like corn, cassava, potato, and others. This is a new kind of environment friendly energy now appointed and promoted by national officials to be used in China, can reduce gas emissions of up to 30% while having an advantage in cost. Because of economic conditions, mass amounts of land resources, and labor, China's ethanol can be produced and sold about 1/3 cheaper then current gas prices leaving a huge potential for this market. Over the next 20 years Ethanol will be categorized as a major product in the Chemical industry producing many by-products such as an ingredient for ethylene. It will support the petrochemical industry in the post-crude oil times and become a newly found chemical base with great potential in the new century.

Ethanol & its By-Products are one of many projects Yasheng Group is undertaking in the transition to utilizing alternative fuels on a large scale. Methanol, Biomass materials, and Bio-Oils, are some of the products Yasheng is able to develop from existing traditional industries. The company has taken the lead in producing these products at the same time in assisting the Nation in creating an improved and sustainable environment.

As previously announced, YaSheng has launched an Ethanol pilot project with total investment of $101,250,000 that will have an initial annual production at 350,000 tons of raw ethanol. The company is expecting annual income from this project to be $225,000,000 per year once the project's investment has matured, and overall will create yearly tax breaks of up to $43,750,000 . YaSheng's Project is listed by the Provincial and National Committee of Reform & Development as a key construction Project during the 11th Five-Year Plan of China. Preliminary preparations have been completed and construction is to start by the end of 2006 and in full use by 2008.

About YaSheng Group:

The YaSheng Group (PINKSHEETS: YHGG) is a diversified industrial conglomerate incorporated in Redwood City, California, operates in hi-tech agriculture, salt chemistry and biological technology as its core Business with advantages in rich land, mineral resources, capital and technology reserves.

Through three major industries, Agriculture, Chemical, and Biotechnology, the company's operating categories include: chemical engineering, agricultural production, biotech, pharmaceuticals, textile products, printing and dyeing, commercial trading, beverages and inorganic salt manufacturing. With total assets of approximately $1.5 billion USD and over 15,000 employees, YaSheng Group has 155,097,355 shares issued and outstanding as of December 1, 2004.

Further information concerning YaSheng Group can be found on the corporate website: http://www.yashenggroup.com/

Forward-Looking Statements:

Certain statements contained in this press release are forward-looking statements that involve risks and uncertainties. The statements contained herein that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.

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