Xinhua China Ltd. Acquires HDTV Editing Technology

Xinhua China Ltd. Acquires HDTV Editing Technology

May 31, 2006

Acquisition Enhances Digital Content Delivery Capabilities

    BEIJING, May 31 /Xinhua-PRNewswire/ -- Xinhua China
Ltd. (OTC Bulletin Board: XHUA) announced it has acquired
leading Chinese High Definition Television text-editing
software company Bear Technology.  The acquisition expands
Xinhua's presence in the rapidly expanding digital media
industry in China.

    Founded in 2002, Bear Technology offers multiple
proprietary solutions for rendering and editing text in
High Definition.  Bear text-editing software is an
essential component in the production of HDTV content,
which require on-screen text to be rendered in HD for
enhanced visual fidelity, according to Xinhua China.  Some
applications for Bear's software include personal and
commercial HD cameras, televised language translation,
closed-captioning, and news and entertainment programming. 
Currently, Bear Technology customers include leading HDTV
and camera manufacturers such as Sony and Panasonic, Xinhua
China said.

    Xinhua China stated that, although China's digital
television market is relatively small by North American
standards, the annual compounded growth rate of digital
television subscribers is estimated to grow at 165% per
year from 2005 to 2008.  With 5.3 million home subscribers
in 2005, up from 1 million in 2004, digital TV in China is
enjoying exponential growth.

    "HDTV software is a complementary technology to
our initiatives to expand our business base through the
sale of digital media online in China," said Mr.
Xianping Wang, CEO of Xinhua China.  "We are fortunate
to have had this opportunity at a time when HDTV is rapidly
overtaking older television technology.  We believe HDTV
has the potential to further enhance the online experience
for enjoyment of all types of online media in China."

    "The acquisition of Bear Technology will position
Xinhua China as a leading provider of HD content text
editing.  We see significant revenue opportunities over the
long-term as the convergence of the personal computer and
High Definition Digital Television gathers momentum,"
Mr. Wang commented.

    Xinhua China noted terms of the acquisition are more
fully discussed in its periodic report to the United States
Securities and Exchange Commission on Form 8-K dated May 19,
2006.

    Xinhua China Ltd. will issue up to 20 million shares of
common stock.  Eight million shares will be issued within 10
business days of the execution of the Agreement, and up to
12 million shares will be issued within 15 business days of
the completion of an asset valuation report of Bear
Technology, provided that the asset valuation is no less
than $35 million.  If the valuation is less than $35
million, then the 12 million shares to be issued will be
reduced accordingly, based on a share price of $1.75 per
share and also taking into account the first 8 million
shares issued.  In addition, upon completion of the
purchase of all the issued capital in Bear Technology, the
Company agrees to grant in aggregate 6 million stock
options to employees, officers and directors of Bear
Technology.  The options will be priced at the time of
issue.

    About Xinhua China

    Xinhua China Ltd. (OTC Bulletin Board: XHUA) is a
U.S.-based holding company with publishing and distribution
interests in China.  Through its subsidiary, Xinhua
Publications Circulation & Distribution Co., Ltd., the
Company holds a national license for distribution of books
and other publications in China.

    Safe Harbor Statement

    This news release may include forward-looking
statements within the meaning of section 27a of the UNITED
STATES SECURITIES ACT of 1933, as amended, and section 21e
of the UNITED STATES SECURITIES and EXCHANGE ACT of 1934,
as amended, with respect to achieving corporate objectives,
developing additional project interests, Xinhua China's
analysis of opportunities in the acquisition and
development of various project interests and certain other
matters.  These statements are made under the "safe
harbor" provisions of the United States private
securities litigation reform act of 1995 and involve risks
and uncertainties, which could cause actual results to
differ materially from those in the forward-looking
statements contained herein.

    For more information, please contact:

     Alex Helmel,
     Investor Relations,
     At Xinhua China Ltd.
     Tel:   [phone] or [phone]

     Woody Wallace or Michael Arneth
     The Investor Relations Company
     Tel:   [phone]

SOURCE  Xinhua China Ltd.