Dear Shareholders,

I hereby present the Chairman’s Statement of 2021 on behalf of the Board of China New Town Development Company Limited(hereinafter referred to as the “Company” or “China New Town”, together with its subsidiaries, the “Group”), which is also my firststatement after serving as chairman of the Board of the Company.
On 28 September 2021, the acquisition by Xitong International Holdings (HK) Limited (“Xitong International”), a wholly-ownedsubsidiary in Hong Kong of Wuxi Communications Industry Group Co., Ltd. (“Wuxi Communications”) of 29.99% equity interests held inChina New Town by China Development Bank International Holdings Limited (“CDBI”), a wholly-owned subsidiary of ChinaDevelopment Bank Capital Corporation Limited (“CDB Capital”), has been completed. Upon completion, Xitong International held 29.99% equity interests of the Company; and CDBI held 24.99% equity interests. I was elected to serve as the chairman of the Board and a non-executive director of the Company at the board meeting of the Company on October 18th.

Wuxi Communications is a large state-owned enterprise under the direct supervision of Wuxi Municipal Government. It is actively performing the development strategy of promoting regional economic development and promoting “going out” of business. It is precisely because of the strategic plan that Wuxi Communications launched and finally completed the acquisition of the equity interests of the Company, and the Company became the first platform for Wuxi Communications listing in Hong Kong since then. Given its business development strategy of “transportation, engineering construction, aviation industry, transportation technology and manufacturing, transportation finance and investment”, Wuxi Communications will build the Company a platform entity integrating “investment + construction + industrial investment + operation” leveraging on the resources of CDBIH in the financial industry. Wuxi, as a key economic region in Jiangsu, has a good industrial resource base and has first-mover advantages in integrated circuits, biomedicine and other industries. It plans to vigorously develop strategic emerging industries during the 14th Five-Year Plan, including the Internet of Things, high-end manufacturing, artificial intelligence, to build a base for advanced manufacturing in the world. The resource advantages and development of Wuxi can provide a good industrial implementation base for investment targets in emerging industries identified during the Group’s business transformation, and support the business development of the Group.

In 2021, the Chinese economy kept moving forward steadily amid internal and external crises and challenges. Due to Covid-19 epidemic, blood and other factors, China was facing triple pressures, namely demand contraction, supply shock and weakening expectations; coupled with the unstable political and economic environment abroad and sluggish world economic recovery, uncertainties increased greatly. Against this backdrop, the Chinese economy has shown strong resilience and development momentum.
The year 2021 is also the first year of the “14th Five-Year Plan”. During the year, China has completed the first centenary goal and started a new journey towards the second centenary goal. Meanwhile, the development momentum of the Chinese economy has shifted from traditional factor-driven to innovation-driven, and the development pattern has shifted from opening to the outside world to a domestic and international double-loop. Economic development faces multiple challenges such as mid- to long-term structural transformation, short-term stable growth, and risk control. The CPC Central Committee with Xi Jinping at its core led the people of all ethnic groups in the country in response calmly to the changes in the century and the epidemic, and actively built a new “double loop” development pattern. Adhering to the path of high-quality development, the “14th Five-Year Plan” construction achieved a good start.
In 2021, the annual GDP increased by 8.1% year-on-year, exceeding RMB100 trillion for the second consecutive year, and its proportion in the world further increased. The per capita GDP exceeded US$10,000 for the third consecutive year, which is higher than the average of the world. Based on the average of the two years, the economic growth rates in the first, second, third and fourth quarters were 4.9%, 5.5%, 4.9% and 5.2%, respectively. The growth rate in the fourth quarter was slightly higher than that in the third quarter, which reflects the overall stable economic operation.
The year 2021 is also an important year for the reform and transformation of the Group. Under the complex and changeable economic condition at home and abroad, the Company stuck to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and under the support of Wuxi Communications (a shareholder) and CDB Capital, all our employees unified their thoughts, changed their concepts and actively adapted to the new pattern to set new goals and embrace new challenges, which steadily promoted the reform and transformation of the Company and accumulated new momentum for business transformation and development in 2022 while ensuring a smooth transition during the equity transfer and turning losses into profits.

In the third quarter of 2021, the shareholder of the Company smoothly completed the share transfer. In June 2021, CDBIH signed a share transfer agreement in respect of approximately 29.99% shares of China New Town Development Company Limited with Wuxi Communications and Xitong International. On 28 September 2021, the share transfer was completed, and Wuxi Communications and CDB Capital became the former largest and second largest shareholders of the Company, respectively. With the optimization of the shareholding structure, the Company achieved a mixed ownership structure as a “local state-owned enterprise + financial institution of state-owned enterprises”, which is conducive to the establishment of an effective market incentive mechanism.
Given the different resource endowments and advantages of the two substantial shareholders, the Company organized a team to conduct in-depth analysis and research on national policies, industry dynamics and market environment, to research the development direction of shareholders’ business and industrial layout, especially the industrial development advantages in Wuxi, and uncover the team’s investment and research capabilities to scientifically formulate the development strategy of the Company. It was clear that the Company would enter a business transformation period in the next 2 to 3 years. By actively increasing appropriate investments in industries that are in line with the development prospects of the new economy, such as big health industries, strategic emerging industries, and information technology application innovation, we cultivated new businesses and principal business goals. Meanwhile, the Company accelerated the disposal of certain inefficient assets and maintained the operation of high-quality assets stably to stabilize fixed-income investment portfolios and implement the “three-step” implementation strategy of “disposing of non-performing assets, reinforcing capital and improving quality”.

After determining the development strategy and considering the resource advantages of shareholders, the Group actively developed project resources in the target industry, and completed certain investments in new economic industries such as medical beauty industry and autonomous driving in the second half of 2021. Besides, the Group has reserved a number of high-quality projects in information technology, medical beauty, health and other industries, which laid a good foundation for project investment in 2022.
In terms of putting more in fixed-income projects as its principal business, the Group gave full play to the advantages of customer resources accumulated in the early stage, solidly prepared for project development and reserve, and completed investment in several projects in the second half of 2021. As such, the balance of fixed-income investment portfolio was approximately RMB1.43 billion at the end of 2021 after deducting the impairment provision of projects with risks, which laid a foundation for the Company to achieve its target on net profit for 2022.

Based on the actual condition of existing projects, the Company has implemented classified management to ensure project safety, operated quality assets stably and accelerated the disposal of inefficient assets. The Optical Valley project in Wuhan held by the Group overcame the adverse impact of the epidemic and unfavorable policies in tenant industry and maintained a stable occupancy rate. The Company developed the operation, administration and management policy for K12 bilingual school projects in line with the national
education policy.
The Company accelerated the disposal of existing inefficient assets, and started negotiating an overall plan with the government for existing Shenyang Lixiang projects, striving to optimize projects successfully in 2022.

As of 31 December 2021, the Company recorded operating income of RMB368 million, net profit of RMB131 million and net profit attributable to the parent company of RMB109 million, and successfully turned losses to profits in the year.

Looking ahead, the world economy in 2022 will remain complex and severe, the recovery will be unstable and unbalanced, and there will inevitably be various derivative risks caused by epidemic. In contrast, the Chinese economy will have huge development potential and its recovery momentum will surpass the world.
The Group will keep seeking investment opportunities prudently amid changes. By sticking to business transformation, in response to national guidelines and policies and being market-oriented, the Company will vigorously expand its investment business in new economic sectors such as big health industry, strategic emerging industry and information technology application innovation industry, while operating quality assets stably and disposing of existing inefficient assets, steadily advancing the premier development of the Company, and continuously creating core value for shareholders in the long run.
In terms of fixed income investment, the Company will make full use of the financing function of the international financial market, select projects considering the resource endowment in different regions in China, and control investment risks and obtain stable source of profits under the principles of “safety, liquidity and profitability” to support the development of the principal business of the Company. Equity investment in the new economic sector is the growth point of surplus profits. Based on the development goal of China’s new economy, the Company will screen opportunities for equity investment by selecting high-quality companies in strategic emerging industries, and seek to achieve higher investment returns under the principles of “profitability, liquidity, and safety”.
As the largest substantial shareholder of the Company, Wuxi Communications will provide all-round support including industrial resources, business synergy, financing and credit enhancement, to promote the further development of the Company.

Finally, on behalf of the Board, I would like to express my sincere gratitude to all shareholders, investors and relevant partners for their unremitting support to the Company in the past year. Meanwhile, I would like to pay sincere heartfelt respects to the hard work of directors, management team and all staff. We will continue to strive to create more long-term interests and value for all shareholders.