China Construction Bank (CCB) recently signed the Initiator Agreement on the Establishment of CCB-Principal Asset Management Co., Ltd. with the US company Principal Financial Group (the Principal) and China Huadian Group. Earlier as one of the first pilot banks, CCB was approved by the China Banking Regulatory Commission (CBRC) to invest directly in setting up a fund management company. The joint venture will be 65 percent owned by CCB, 25 percent owned by the Principal and 10 percent owned by China Huadian Group. The company will be headquartered in Beijing. The application for CCB-Principal Asset Management Co., Ltd. is subject to approval by the China Securities Regulatory Commission (CSRC).

CCB highly values this opportunity of being one of the pilot banks allowed to set up a fund management company. As one of the four major Chinese commercial banks, CCB, with strong capital strength, financial service capacity and risk control ability, is one of the best recognized financial service brands in China. By June 30, 2005, CCB has had total assets exceeding RMB 4 trillion, 14,000 sub-branches or outlets within and outside China, 14,000 ATMs and 600 self-service banks. In recent years, the Bank has been maintaining a competitive position in the fund sales and custodian arena among Chinese banks.

By setting up the joint venture as a open asset management platform, CCB will be able to improve product design and customer service capacity, produce quality financial products for customers in response to their needs and offer them more sophisticated and professional wealth management services.

The Principal Financial Group is a US financial conglomerate offering businesses, institutional clients and individuals a wide range of financial and insurance services, including mutual fund and pension management, life and health insurance and mortgage loans. A member of the Fortune 500, the Principal Financial Group has over $170 billion in assets under management and serves some 15 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States.

Founded on December 29, 2002, China Huadian Group, with a registered capital of RMB12 billion, is one of the biggest Chinese state-owned power companies. By the end of 2004, its total capital has reached US$119.7 billion. The group is mainly engaged in the development, investment, construction, operation and management of power generation, coal and other power-related industries, production and sales of power (thermal power) and investment and financing services within and outside China.

CCB believes with the concerted efforts of the three parties CCB-Principal Asset Management Co., Ltd. will benefit from their complementary advantages and gradually grow into a leading global fund management company with complete product line, sound business performance and strong financial strength and provide quality, convenient and effective financial products and services to its customers.