Securities Code: 600500   Share shortened form: G SINOCHEM  Announcement No.: 2005-027

The Announcement of SINOCHEM International Corporation��s Connected Transactions 

��Specific Brief ��

This company and all the members of the Board ensure the truth, accuracy and integrity of the announcement, and should bear the joint and several obligations to any falsely recorded announcement, misguiding presentation or serious omitted.

��Brief on the major contents��

�� The main contents of the transactions: This Company is going to wholly transfer the main shareholding of the following fives subsidiaries of SINOCHEM to related parties at the price of ��104.33 million Yuan��the companies are SINOCHEM Taicang Xingguo Industrial Co., Ltd (hereafter called "Xing Guo Company"), SINOCHEM Taicang Xingnuo Industrial Co., Ltd (hereafter called "Xingnuo Company"), SINOCHEM Taicang Xingkai Industrial Co., Ltd (hereafter called "Xingkai Company"), SINOCHEM Suzhou New Technology New Material R&D Co., Ltd (hereafter called "Suzhou R&D"), and SINOCHEM Yuhang High Molecular Material R&D Design Co., Ltd (hereafter called "Yuhang R&D")
�� This shareholding transaction is a connected transaction; the relevant items had been reviewed by the independent directors before being submitted to the board of directors for checking. The directors of the connected party were not presented during the board voting. Whole independent directors delivered their opinions and agreed expressly.
�� This connected traction of the shareholding transferring wouldn't hinder the capability of continuous operation of this company or impact its profit and loss, or reduce its capital.

This company published its announcement of the Decision Announcement of the 13th Meeting of the 3rd Session Board of Directors of This Company in Chinese Security Daily, Shanghai Security Daily and Security Times on Aug. 10, 2004, about the plan of transferring the shareholding of the following fives subsidiaries of SINOCHEM, i.e. Xingguo Company, Xingnuo Company, Xingkai Company, Suzhou R&D and Xuhang R&D to the connected parties. Now the relevant agreement on transferring the shareholding has been signed, and related situations are announced as following:

I. Summary of the connected transaction

On Sept. 16, 2005, this company and its relevant subsidiary signed the shareholding transferring agreement with China New Technology Development Trade Co., Ltd (hereunder called New Technology) and SINOCHEM Europe Capital Company (hereunder called Europe Capital)in Shanghai. This company would transfer the 56% shares, which this company was holding seprately, of the Xingguo Company,  Xingguo Company, Xingkai Company, Xingnuo Company, Suzhou R&D and 71% shares of Yuhang R&D to the New Technology and the solely owned subsidiary of this company--SINOCHEM INTERNATIONAL (OVERSEAS)PTE., LTD would transfer the 25% shares, which this subsidiary was holding separately, of the Xingguo Company, Xingkai Company, Xingnuo Company and Suzhou R&D to the Europe Capital; Hainan SINOCHEM Shipping Co., LTd -- the holding subsidiary of this company--would transfer the 10% shares of Yuhang R &D, which it was holding, to the New Technology. After transferring, this company holds only 19% shares of Xingguo Company, Xingkai Company, Xingnuo Company, Suzhou R&D Company and Yuhang R & D Company respectively. The total amount of the above transferring was��104.33 million. As the New Technology and Europe are held by the same shareholder of this company--SINOCHEM Corporation (Hereunder called SINOCHEM Corporation), this transaction was a connected one.

The foresaid connected transaction was examined and approved by the 13th Meeting of the 3rd Session of the Board of Directors of this company. The relevant items had been reviewed by the independent directors before being submitted to the board of directors for checking. The directors of the connected party were not presented during the board voting. Whole independent directors delivered their opinions and agreed expressly.

Since Xingguo Company, Xingkai Company, Xingnuo Company and Suzhou R&D are Sino-foreign joint venture companies, the shareholding transferring should be approved by the temporary organization set up in each company and the relevant examination and approval formalities are being handled.

II. Introduction of the connected parties:

1. China New Technology Development Trade Co., Ltd

This company was found in Beijing on Apr. 1, 1988 approved by Ministry of Foreign Trade and Economic Cooperation, and jointly invested by shareholder SINOCHEM and SINOCHEM International Bidding Co., Ltd, wherein, SINOCHEM holds 95% of its shares. Its registered office address is located in the SINOCHEM Building Fuxingmenwai Street A2, Xicheng District, Beijing. Its legal representative is Mr. Xin Jie and the registered capital is ��824.3 million.

The main businesses of this company include: importing and exporting the 3rd class products approved, as well as researching, developing, producing and selling the hi-tech products, new technology products, software and communication products. The net profit of its latest accounting year was ��2.6742 million; the net assets of the closing of the latest accounting years was ��137.9584 million; it has/has not the liabilities at the end of the latest accounting year or the items after this period.

2. SINOCHEM EUROPE CAPITAL CORPORATION LTD.

It was solely found by SINOCHEM Hong Kong (Group) on Dec. 6, 2002. The registered office address is British Virgin Islands and its main office is located in the RM 4701, Office Tower, Convention Plaza, 1 Harbor Road, Wanchai, Hong Kong. The accepted capital was $ 10 million. The sole shareholder of this company-- SINOCHEM Hong Kong (Group) �Cis a window of SINOCHEM in Hong Kong.

The major businesses of this company are financing and investment. It raised $ 80 million syndicated loans with 3 years period for a Banking Syndicate headed by ABM Amro in Mar. 2003, which was refunded ahead of the schedule on July 11, 2005. The net profit of its latest accounting year was $ 850,000; the net assets of the closing of the latest accounting years was ��19,85 million; it has/has not the liabilities at the end of the latest accounting year or the items after this period.

III. The basic information of the transaction

The subject of this connected transaction is the 56% shares of Xingguo Company, Xingkai Company, Xingnuo Company and Suzhou R&D and 71% shares of Yuhang R&D held respectively by this company; the 25% shares of Xingguo Company, Xingkai Company, Xingnuo Company and Suzhou R&D held by the SINOCHEM INTERNATIONAL (OVERSEAS) PTE., LTD (hereunder called SINOCHEM International Singapore)--solely owned by this company; and the 10% shares of Yuhang R&D held by Hainan SINOCHEM Shipping Co., Ltd (hereunder called Hainan Shipping)--held by this company. The above shareholdings are without enacted sponsion, pledge, impawn or other limitations to the transferring. There is no any lawsuit, arbitration, legal enforcement or other heavy disputes yet.

The basic information of Xingguo Company, Xingkai Company, Xingnuo Company, Suzhou R&D and Yuhang R&D is as following:

The foresaid accounting data dated June 30, 2005 have been audited by Li'an Daxinlong CPA Firm Ltd which has been qualified in auditing the securities business and an open and complete auditing report has been issued. Upon the auditing report, the net assets of the foregoing companies have been appraised by China United Asset Appraisal Co., Ltd, which is qualified to appraise the assets of securities industry. The reference date of the appraisal was June 30, 2005. These companies were wholly appraised. Via the appraisal, the book value of the will-be transferred shareholdings was ��106.1156 million and the appraised value was��104.33 million.

IV. The main contents of the connected transactions and the pricing strategy

1. The agreement was signed on:  Sept. 16

2. The transaction subject: (see the above )

3. The transaction pricing: as per the auditing report issued by Li'an Daxinlong CPA Firm Ltd and the whole appraising result from China United Asset Appraisal Co., Ltd, the total amount of the foregoing shareholding transferring is ��104.33 million.

4. Payment of the transaction: in cash

5. Time limit for executing the agreements: within 1 month after this agreement is signed.

6. The conditions for making the Shareholding Transferring Agreement valid:

(1) The proper representatives of each party of the agreement has signed and handed over this agreement;

(2) The board of directors or the board of shareholders of each subject of the transaction has approved the relevant shareholding transferring agreement or the transaction stated in the agreement accordance with decisions made as per their constitutions;

(3)The power organizations of each party of the agreement have authorized internally to approve the relevant shareholding transferring agreement or the transaction stated in the agreement in a proper way defined in their organizational constitutions or the relevant documents, and the signed authorization documents have been provided to the relevant parties:

(4) The original examination and appraising organizations of each transaction subject have completely approved the relevant shareholding transferring agreement or the transaction stated in the agreement without any limitation, and each party has signed and issued/received the relevant approval documents;

(5) Each party of the agreement has completed properly all relevant formalities required for selling and transferring the seller's shareholdings to the buyer; the buyer has bought all shareholdings of the seller as per the terms and conditions confirmed by the property right exchange of such formalities without any limitation, and each party has signed the relevant documents as per the requirements of the property right exchange;

7. Risks of this transaction: The finance conditions of the New Technology and Europe Capital have been good since they were found, and they are capable for payment. There is no any risk for this company to get back the capitals for transferring its shareholding.

V. The purpose of the connected transaction and its impacts to this company

1. Purpose: as the foregoing five companies need lots of capital investment in along period and the financing conditions of the current capital market have changed significantly, the board of the directors of this company researched carefully and decided to introduce into SINOCHEM as the strategy investor of the above five companies and transfer their shareholdings so as to ensure their future development. The connected transaction of this shareholding transferring would not hinder the continuous operational capability and loss and profits of this company or reduce its assets.

2. Impacts: This company and its subsidiaries--Hainan Shipping and SINOCHEM International Singapore have gotten ��-1.78 million yield from this connected transaction. In addition, the scope changes of the combined reports resulted from selling the shareholdings have reduced the total assets in the combined reports of this company by ��750 million.

VI. Opinions of the independent directors

1. The connected transaction had been reviewed by the independent directors before all of them agreed independently submit them to the board of directors for checking.

2. The directors of the connected party were not presented during the board voting. The voting processes of the board of directors were legal and the decisions were valid.

3. Via the auditing, all independent directors believed that this connected transaction can break effectively the bottle neck of the strategic development of the related subsidiaries. As the price of transferring completely the shareholdings has been audited and appraised strictly, it was fair and reasonable, and the benefits of this company and all shareholders were not reduced.

4. All independent directors agreed the foregoing connected transactions.

VII. The traceable documents:

1. The decision of the 13th Meeting of the 3rd Session Board of Directors of This Company, and the minutes signed by all directors;

2. The Opinion of the Pre-auditing confirmed and signed by all independent directors and the duty opinion of the independent directors;

3. The shareholding transferring agreements of Xingguo Company, Xingkai Company, Xingnuo Company, Suzhou R&D and Yuhang R&D;

5. The account statements of Xingguo Company, Xingkai Company, Xingnuo Company, Suzhou R&D and Yuhang R&D for year 2004 and the first half of 2005;

6. The Audit Report of Xingguo Company, Xingkai Company, Xingnuo Company, Suzhou R&D and Yuhang R&D for the first halfo of 2005 issued by Li'an Daxinlong CPA Firm Ltd;

7. The Asset Appraising Report of Xingguo Company, Xingkai Company, Xingnuo Company. Suzhou R&D and Yuhang R&D issued by China United Asset Appraisal Co., Ltd.

Hereby it is specially announced:

SINOCHEM International Corporation