Xinhua Finance and Milken Institute Launch Indicators to Measure China's Banking Sector and Cross-Border Trade

Xinhua Finance and Milken Institute Launch Indicators to Measure China's Banking Sector and Cross-Border Trade

April 24, 2007

    SHANGHAI, April 24 /Xinhua-PRNewswire/ -- Xinhua
Finance Ltd. (TSE Mothers: 9399; OTC: XHFNY) and the Milken
Institute today jointly released the Chinese Banking
Strength Indicator (BSI) and the Chinese Adjusted-Trade and
Finance Indicator (ATF indicator), the latest in an
eight-part series of Xinhua Finance/Milken Institute China
Economic Indicators.  The BSI is a gauge of the financial
strength of Chinese banks and the ATF Indicator examines
the cross-border flow of goods and capital.  Both issues
are key points of China's WTO commitments. The indicator
series provides investors and financial professionals
insight into China's financial markets.   

    (Logo: http://www.xprn.com.cn/xprn/sa/200611140926.gif
)

    "These two new indicators represent another
significant initiative by Xinhua Finance and Milken
Institute to enhance the transparency of China's
markets," said Dan Connell, COO of Xinhua Finance. 
"We are proud to have taken the lead in assessing the
progress in China's integration with the world economy in
the five years since its WTO accession.  The empirical
results of our methodologies will be of great interest to
individuals and organizations that are focused on
China." 

    Chinese Banking Strength Indicator (BSI): This
indicator measures the financial strength of Chinese banks,
benchmarked to fifteen top international banks.  The
methodology is based on CAMELS, a well-established rating
system for bank examinations worldwide and has a benchmark
value of five. The indicator enables investors to observe
if banking reforms in China are improving the financial
strength of Chinese banks.  Fifty Chinese banks, comprising
72 percent of Chinese bank assets, were included in the
calculation of the BSI value for December 2005. The BSI
will be updated on a semiannual basis.

    The combined assets of the "Big Four" Chinese
commercial banks -- the Industrial and Commercial Bank of
China, the Bank of China, the China Construction Bank, and
the Agricultural Bank of China¨Drepresent over 50 percent
of China's banking industry assets.  They collectively
score below the benchmark value 5, indicating an aggregate
financial performance below that of the benchmarked
international banks.  However, the 2005 indicator score of
these four banks exceeded that of Chinese banks
system-wide. 

    Chinese Adjusted-Trade and Finance (ATF) Indicator:
This indicator provides a measure for assessing China's
progress in establishing balanced cross-border movement in
goods and capital.  A country's trade flow is traditionally
measured by the ratio of exports plus imports to GDP. 
Similar measures have been developed for its capital
accounts to gauge financial flows. However, the measure
does not capture the extent to which imbalances occur in
the trade and capital accounts.  The ATF Indicator adjusts
the more traditional measure to capture the degree of these
imbalances; the greater the imbalance, the lower the score.

    The ATF Indicator, as a measure of imbalance-adjusted
trade flow, demonstrates the extent to which imbalances are
being contained through appropriate government policies to
promote stable and continued economic growth.

    China's ATF indicator score has experienced a fourfold
increase over the past quarter century, from 15.2 in 1982
to 61 in 2005, and has trended upward since December 2001,
from 48 to 62.5 in less than five years.  This indicates
the degree by which China's capital and current account
activities have been increasing rapidly relative to the
size of the economy, while imbalances have also been rising
since the 1980s.

    Glenn Yago, director of capital markets at the Milken
Institute noted that the indicators are useful and
efficient new tools for investors to track the rapid growth
within China's markets.

    "Quantitative assessments of markets are never
easy," he said, "particularly in an economy such
as China's, which is undergoing such dynamic change. 
However, we are dedicated to building a body of research
that works to clarify these complexities and provides
metrics that are useful to the finance community."

    Xinhua Finance, China's leading financial information
and media service provider, and the Milken Institute, one
of the world's leading economic think tanks, agreed in
April 2006 to create a set of eight new economic indicators
tracking China's markets.  The indicators apply Xinhua
Finance's extensive local data-gathering capabilities and
the Milken Institute's expertise and established
methodologies for capital-market research.  

    The launch of the BSI and ATF indicator follows last
November's launch of three other economic indicators: the
Renminbi Pressure Indicator (RPI), Chinese Initial Public
Offering (IPO) Indicator, and Market-Adjusted Debt (MAD)
Indicator.

    For more information, go to
http://www.xinhuafinance.com/indicators or
http://www.milkeninstitute.org . 

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's premier financial
information and media service provider, and is listed on
the Mothers board of the Tokyo Stock Exchange (symbol:
9399) (OTC ADRs: XHFNY).  Bridging China's financial
markets and the world, Xinhua Finance serves financial
institutions, corporations and re-distributors through four
focused and complementary service lines: Indices, Ratings,
Financial News and Investor Relations.  Founded in November
1999, the Company is headquartered in Shanghai with 20 news
bureaus and offices in 19 locations across Asia, Australia,
North America and Europe.  For more information, please
visit http://www.xinhuafinance.com . 

    About the Milken Institute 

    The Milken Institute is a nonprofit, independent
economic think tank whose mission is to improve the lives
and economic conditions of diverse populations around the
world by helping business and public policy leaders
identify and implement innovative ideas for creating
broad-based prosperity.  The Milken Institute has extensive
expertise in China and conducts ongoing research on China's
banking and capital markets.  It is based in Santa Monica,
CA.  For more information, please visit
http://www.milkeninstitute.org .




    For more information, please contact:

    Xinhua Finance
     China
     Ms. Joy Tsang
     Tel:   [phone] or [phone]
     Email: [e-mail]

     Mr. Scott Zhang
     Tel:   [phone]
     Email: [e-mail]

     Japan
     Mr. Jiong Sun
     Tel:   [phone]
     Email: [e-mail]

    Taylor Rafferty (Media contact for Xinhua Finance)
     Japan 
     Mr. James Hawrylak
     Tel:   [phone]
     Email: [e-mail]

     United States
     Mr. John Dudzinsky
     Tel:   [phone]
     Email: [e-mail] 

     Europe
     Faisal Kanth
     Tel:   [phone]
     Email: [e-mail]

    Milken Institute
     Jennifer Manfre, 
     Communications Manager
     Tel:   [phone]
     Email: [e-mail]