Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the annual report of China Infrastructure Holdings Limited for the financial year ended 31 December 2008 (“FY 2008” ). Despite the global economic crisis, our overall business operations registered a commendable performance.

Year on year, we achieved a 25.5% rise in net profit mainly due to the improvement in performance of its t oll b ridges and w ater p lant d evelopment business segments and the gain from disposal of 40% o f the registered and paid-up capital of Tianjin New Beitang Development Limited.

In view of the encouraging performance, the Directors have recommended a final tax-exempt dividend of 0.35 Singapore cent per ordinary share, pending approval at the forthcoming Annual General Meeting.

Operations and Financial Review

In FY2008, Group revenue increased by 4.1% increase to RMB43 million (FY2007: RMB41.3 million ) . This revenue growth was largely due to the implementation of the new toll weighting system at Zuowei Bridge , which in turn increased toll revenue by 34.3%.

During the year, cost of services provided decreased from RMB21.9 million to RMB21.4 million, due to the reduction in repairs and maintenance, as well as amortisation costs. Correspondingly, administrative expenses decreased by 25.3% to RMB8.3 million, due largely to the reduction in option expenses.

In conjunction with the revenue growth, gross profit increased from RMB19.4 million to RMB21.7 million, representing a rise of 11.3%.

Other income rose sharply by 26.4%, growing from RMB30.5 million to RMB38.5 million, mainly due to interest income and gain on disposal of 40% of the registered and paid-up capital of Tianjin New Beitang Development Limited.

During the year, the Group also gained RMB0.6 million from contributions of its jointly controlled entity, CIHL ( Tianjin ) Water Development Company Limited which had recorded increased turnover and other income.

During the year in review, there was a decrease in cash and bank balances as the Group had placed refundable deposits of RMB160 million in relation to tender of the two potential land infrastructure development projects.

Net cash generated from operating activities increased from RMB11.9 million to RMB39. 6 million due primarily to the reduction in receivables. The net cash generated from financing activities increased to RMB68 million primarily due to the repayment from Great Wealth Finance Limited in relation to the disposal of 100% of the issued share capital of China Bridges Investments Limited .

Looking Ahead

In view of the current global economic crisis, we expect our operating environment to be challenging in the next few years as recent and future Chinese government responses to the economic climate may have impacts on our existing businesses in the future.

While mindful of the challenges ahead, we believe it is imperative to continue to seek out opportunities which could provide sustainable earning growth. We would like to assure our shareholders that the Group intends to adopt a prudent and conservative approach towards operating its core businesses and exploring new business opportunities. Nevertheless, we remain positive that the progress seen in FY2008 will pave the way for further development in FY2009. We believe that the Group is in good financial shape, and with right strategies put in place for further advancements.

These strategies include the divestment of slow-growth businesses. Disposing capital in Tianjin New Beitang Development Limited for instance, has enabled the Group to realise its investment with a profit. The proceeds will help us to shore up on cash holdings to tide us over these bleak economic times, and better enable us to seize opportunities as they arise.

Appreciation

To our board members, management team, our employees, business associates , bankers, shareholders and customers, I like to express my most sincere gratitude for their dedication, commitment and contribution to the continued growth to the Company. With your unwavering faith and commitment in the coming year, we are confident we are capable of emerging from possible challenges stronger than before.

Shan Chang

Chairman