Legal Work Report on the Stock Swap Absorption Merger of Weichai Power Co., Ltd. and Xianghuoju Automobile Group Co., Ltd.

Legal Work Report on the Stock Swap Absorption Merger of Weichai Power Co., Ltd. and Xianghuoju Automobile Group Co., Ltd. and the Initial Public Offering of A Shares

January 12, 2007

Table of Contents

1. Interpretation ........................................................................................................ 4
2. Introduction ......................................................................................................... 6
3. I. Introduction of King & Wood Mallesons and Signing Lawyers ........................ 6
4. II. Work Process of King & Wood Mallesons for This Legal Opinion .................. 7
5. Main Text ........................................................................................................... 10
   • I. Approval and Authorization .............................................................................. 10
   • II. Qualification of the Parties in the Merger ....................................................... 11
   • III. Plan and Procedure for the Merger and Weichai Power's Issuance ............... 13
   • IV. Investor Protection Measures ......................................................................... 16
   • V. Qualification of Weichai Power for This Issuance .......................................... 17
   • VI. Substantive Conditions for Weichai Power's Issuance .................................... 18
   • VII. Establishment of Both Parties in the Merger ................................................ 23
   • VIII. Independence ............................................................................................... 29
   • IX. Founders and Shareholders ............................................................................. 33
   • X. Share Capital and Its Evolution ....................................................................... 40
   • XI. Business .......................................................................................................... 47
   • XII. Related Transactions and Competition ............................................................ 50
   • XIII. Major Assets .................................................................................................. 61
   • XIV. Major Debts and Liabilities of Both Parties .................................................. 132
   • XV. Major Asset Changes and Mergers of Both Parties ....................................... 137
   • XVI. Drafting and Amending the Articles of Association ..................................... 140
   • XVII. Rules of Procedure for Shareholders' Meetings, Board of Directors, and Supervisory Board .................................................................................. 142
   • XVIII. Changes in Directors, Supervisors, and Senior Management .................... 143
   • XIX. Taxation ......................................................................................................... 146
   • XX. Environmental Protection and Product Quality, Technology Standards .......... 148
   • XXI. Business Development Goals of Weichai Power ........................................... 149
   • XXII. Litigation, Arbitration, or Administrative Penalties .................................... 150
   • XXIII. Evaluation of Legal Risks in the Prospectus ............................................... 153
   • XXIV. Conclusive Opinions ................................................................................... 153