China Wind Systems, Inc. Signs Letter of Intent to Supply Wind Power Components to Hangzhou Advance Gearbox Group Co. Ltd.

China Wind Systems, Inc., which supplies forged rolled rings to the wind power and other industries and industrial equipment to the textile and energy industries in China, today announced that it has signed a letter of intent to supply shafts and gear rims for use in 1.5 megawatt (MW) gearboxes to Hangzhou Advance Gearbox Group Co. Ltd (Hangzhou Advance Gearbox Group) -one of the top three gearbox manufacturers in China.

Under the terms of the agreement, China Wind Systems will complete two shafts and five gear-rim prototypes based on Hangzhou Advance Gearbox Group’s technical specifications. Upon successfully passing the inspection phase, Hangzhou Advance Gearbox Group is expected to purchase shafts and gear rims from China Wind Systems in 2009 for use in its 1.5 MW gearboxes. Hangzhou Advance Gearbox Group’s current manufacturing capability is 500 gearboxes per year, and total tonnage of shafts and gear rims in a gearbox is approximately 30-35 tons. The current average selling price per ton of forged products in a gearbox is RMB 15,000 (approximately $2,195). Orders under the LOI are contingent on successful delivery of the prototypes and subject to negotiation as to pricing, quantities and terms of delivery.

“We look forward to fulfilling Hangzhou Advance Gearbox Group’s need for precision wind components by supplying the company with high-quality shafts and gear rims. We are very pleased with our progress in transitioning to a wind-power components manufacturer, and hope to enter into more purchase agreements as we complete our trial production phase,” said Mr. Jianhua Wu, chairman and CEO of China Wind Systems. “Forged products sales are expected to reach $9.0 million, which is approximately 55% of projected total revenues in the fourth quarter of 2008. Sales of our forged products for use in the wind power industry are expected to reach $7.0 million in the fourth quarter of 2008, which will account for approximately 44% of our total revenues. In addition, we are also currently in talks with a number of potential customers and feel confident that we will secure more orders in the coming months. This could boost sales of our forged products for use in the wind power industry to $40 million in 2009, which will account for more than 50% of our total revenues,” Mr. Wu said.

China Wind Systems supplies forged rolled rings to the wind power and other industries and industrial equipment to the textile and energy industries in China. With its newly finished state-of-the-art production facility, the Company is expected soon to significantly increase its shipment of high- precision rolled rings and other essential components primarily to the wind power and other industries. For more information on the Company, visit http://www.chinawindsystems.com .