THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt about this circular, you should consult appropriate independent advisers.

If you have sold or transferred all your shares in China Shipping Development Company Limited, you should at once hand this circular and the enclosed proxy form to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

This circular appears for information proposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities.

Hong Kong Exchange and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1138)

PROPOSAL FOR THE ISSUE OF BONDS CONVERTIBLE INTO NEW A SHARES OF THE COMPANY AND APPOINTMENT OF EXECUTIVE DIRECTOR

A letter from the Board is set out on pages 4 to 15 of this circular.

A notice convening the extraordinary general meeting and corporate claim meetings of the Company to be held at 2:00 p.m. on Wednesday, 6 April 2011 at 700 Dong Da Ming Road, Shanghai, the People’s Republic of China and notice convening class meetings of the Company are set out on pages N1-1 to N2-3 of this circular. Whether or not you are able to attend the above meeting, please complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as practicable and in any event by not less than 24 hours before the time appointed for the holding of the meeting or any adjournment thereof (i) in case of holders of H Shares, to the Company’s Hong Kong branch share registrar, Hong Kong Registrars Ltd at 17 M/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, (ii) in case of holders of A shares, to the Office of the Secretary to the Board of Directors of the Company at Room 1601, 700 Dong Da Ming Road, Shanghai, the People’s Republic of China. Completion and return of the proxy form will not preclude you from attending and voting in person at the meeting or at any adjourned meetings should you so wish.

16 February 2011

	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I: Proposal in respect of the Bond Issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II: Feasibility Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III: Utilization Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV: Assurance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Notice of Extraordinary General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	N1-1
Notice of Class Meeting of the Holders of H Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	N2-1

— i —

DEFINITIONS

“A Shares”	ordinary shares of RMB 1.00 each in the share capital of the
	Company which are listed on the Shanghai Stock Exchange
	and traded in RMB;
“A Shareholder(s)”	holders of A Shares;
“Assurance Report”	the assurance report in respect of the utilization of the
	proceeds from the previous issuance of convertible bonds by
	the Company on 2 July 2007, details of which are set out in
	Appendix IV of the circular;
“Board”	the board of Directors;
“Bond Issue”	the conditional issue of the Convertible Bonds;
“Company”	China Shipping Development Company Limited (中海發展股
	份有限公司), a joint stock limited Company incorporated in
	the PRC with limited liability, the H Share of which are listed
	on the Hong Kong Stock Exchange;
“Convertible Bonds”	the convertible corporate bonds convertible into new A Shares
	of an aggregate amount of not more than RMB 3.95 billion,
	proposed to be issued by the Company in the PRC;
“CSRC”	the China Securities Regulatory Commission;
“Directors”	the director(s) of the Company;
“EGM”	an extraordinary general meeting of the Company to be held
	on Wednesday, 6 April 2011, at 700 Dong Da Ming Road,
	Shanghai, the PRC at 2:00 p.m.;
“Feasibility Analysis Report”	the feasibility analysis report on the use of proceeds to be
	raised by the Company from the proposed Bond Issue, details
	of which are set out in Appendix II to this circular;
“Group”	the Company and its subsidiaries;
“H Shares”	overseas listed foreign shares of RMB 1.00 each in the share
	capital of the Company which are listed on the Hong Kong
	Stock Exchange and traded in Hong Kong dollars;
“H Shareholder(s)”	holders of H Shares;
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Latest Practicable Date”	11 February 2011, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein;

— 1 —

DEFINITIONS

“PRC” the People’s Republic of China; “RMB” Renminbi, the lawful currency of the PRC; “SASAC” the State-owned Assets Supervision and Administration Commission of the State Council; “Shareholders” holders of A Shares and/or H Shares; “Share(s)” A Shares and/or H Shares; and “Utilisation Report” the report prepared by the Board on the utilization of proceeds on previous issuance of convertible bonds by the Company on 2 July 2007, details of which are set out in Appendix III to this circular.

For the purpose of this circular, unless otherwise specified, the conversion of RMB into HK$ is based on the exchange rate of HK $1.00 = RMB 0.86.

— 2 —

EXPECTED TIMETABLE

Date of despatch of this circular . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 16 February 2011 Last date for returning the reply slips for the EGM . . . . . . . . . . . . . . . . . Thursday, 17 March 2011 Last date for returning the reply slips for the class meeting of the H Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday, 17 March 2011 Latest time for lodging proxy forms for the EGM . . . . . . . . . . . . .2:00 p.m., Tuesday, 5 April 2011 Latest time for lodging proxy forms for the class meeting of the H Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . .2:00 p.m., Tuesday, 5 April 2011 Time and date of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2:00 p.m., Wednesday, 6 April 2011 Time and date of the class meeting of the H Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2:30 p.m., Wednesday, 6 April 2011

— 3 —

LETTER FROM THE BOARD

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1138)

Executive Directors: Li Shaode (Chairman) Ma Zehua Lin Jianqing Wang Daxiong Zhang Guofa Qiu Guoxuan

Independent Non-Executive Directors:

Zhu Yongguang Gu Gongyun Zhang Jun Lu Wenbin

Registered Office: 168 Yuanshen Road Shanghai The PRC

Principal place of business in Hong Kong: 20/F., Alexandra House 18 Chater Road Central, Hong Kong

16 February 2011

To the Shareholders

Dear Sir/Madam,

PROPOSAL FOR THE ISSUE OF BONDS CONVERTIBLE INTO NEW A SHARES OF THE COMPANY AND APPOINTMENT OF EXECUTIVE DIRECTOR

INTRODUCTION

Reference is made to the announcement of the Company dated 31 January 2011 in respect of the proposal for the issue of bonds convertible into new A shares of the Company and the announcement on the same day in relation to the appointment of Mr. Yan Zhichong as an executive Director.

The purpose of this circular is to provide the Shareholders with further information on the terms of the Bond Issue, the appointment of Mr. Yan and to convene the EGM and separate class meetings to seek the approval of the Shareholders with respect to the proposed Bond Issue.

— 4 —

LETTER FROM THE BOARD

PROPOSED BOND ISSUE

The Board announced that at the meeting of the Board held on 30 January 2011, the proposal in relation to the Bond Issue in principal amount equal to or not more than RMB 3.95 billion (equivalent to approximately HK$4.59 billion) convertible into new A Shares with face value of RMB1.00 each of the Company was approved. The initial conversion price of the A Shares which may fall to be issued upon conversion of the Convertible Bonds will not be lower than the higher of the average of the trading prices of the A Shares for the 20 trading days immediately before the issue of the relevant offering memorandum and the average trading price of the A shares on the trading day immediately preceding the issue of the aforesaid memorandum as required by relevant PRC regulations, and shall be determined by the Board and such other person authorised by the Board (as authorized by Shareholders in a general meeting) by reference to market conditions and in consultation with the sponsor and lead underwriter of this transaction. The Convertible Bonds are proposed to be in the form of RMB denominated convertible bonds. The proposed Bond Issue is conditional upon, among other things, obtaining approvals from (i) the SASAC; (ii) the Shareholders at the EGM and the respective class meetings of H Shareholders and A Shareholders and (iii) the CSRC. The underwriting arrangements of the Bond Issue (if any) have not been finalized as at the Latest Practicable Date.

OFFER OF CONVERTIBLE BONDS TO BE MADE IN THE PRC ONLY

The Convertible Bonds are expected to be offered to natural persons, legal persons, securities investment funds and other investors who have complied with the relevant laws and regulations, who are holders of securities accounts opened at the Shanghai Branch of China Securities Depositary and Clearing Corporation Limited (save for those prohibited by the PRC laws and regulations). The proportions of the Bond Issue to be designated for subscription between the existing A Shareholders and those who are not existing A Shareholders have yet to be determined. In any event, within the tranche of Convertible Bonds allocated to existing A Shareholders, they will be entitled to subscribe for the Convertible Bonds pro rata their shareholdings of A Shares and in priority to others who are not A Shareholders. There will be a public offering of the Convertible Bonds in the PRC only. No offering document will be issued or circulated in Hong Kong or to any member of the public in Hong Kong.

SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSED BOND ISSUE

The current proposed principal terms and conditions of the Bond Issue are summarized as follows (such terms and conditions will have to be approved by the CSRC and be finalised in the relevant offering memorandum):

Total issuing amount:

Equal to or not more than RMB 3.95 billion (equivalent to approximately HK$4.59 billion). The actual total issuing amount will be determined by the Board and such other persons authorized by the Board (as authorized by the Shareholders in a general meeting) but shall be subject to the above ceiling.

— 5 —

LETTER FROM THE BOARD

Bond maturity: Issue price:

Interest:

6 years

According to the face value of the Convertible Bonds which will be issued in integral principal amounts of RMB100 (equivalent to approximately HK$116).

The range of interest rates is preliminarily estimated to be from 0.5% to 3.0% per annum representing what the Company believes to be the range of interest rates acceptable in the current market based on publicly available information. The actual interest rate will be determined by the Board and such other persons authorized by the Board (as authorized by the Shareholders in a general meeting) after consultation with the sponsor and the lead underwriter and taking into account state policies, market conditions and the requirements of the Company. Should there be any depositary interest rate changes by commercial banks, the Board shall determine the coupon rate accordingly as authorised by the Shareholders (where applicable).

Interest will be payable annually commencing from the first anniversary of the Bond Issue with actual payment to be made within 5 trading days immediately after each anniversary date.

Conversion price:

The initial conversion price of the Convertible Bonds will not be lower than the higher of the average of the trading prices of the A Shares for the 20 trading days immediately before the issue of the relevant offering memorandum and the average trading price of the A shares on the trading day immediately preceding the issue of the aforesaid memorandum, and shall be determined by the Board and such other persons authorized by the Board (as authorized by the Shareholders in a general meeting) by reference to market conditions, relevant status of the Company and in consultation with the sponsor and the lead underwriter of the proposed Bond Issue.

Conversion price will be subject to adjustment in the event of bonus issues of shares, rights issue, conversion of common reserve into share capital, issue or placement of new shares (other than as a result of conversion of the Convertible Bonds) payment of cash dividends and other events which would have an impact on the classes or number of issued shares of the Company.

— 6 —

LETTER FROM THE BOARD

During the conversion period of the Convertible Bonds, in the event that the closing prices of the A Shares for at least 10 trading days out of any 30 consecutive trading days are lower than 90% of the then conversion price, the Board is entitled to propose a special resolution to the Shareholders in a general meeting for a downward adjustment of the conversion price. Holders of the Convertible Bonds shall abstain from voting on such resolution. The adjusted conversion price shall not be lower than the higher of (i) the average of the trading prices of the A Shares for the 20 trading days immediately before the meeting of the Shareholders held to consider and approve the said conversion price adjustment; (ii) the average trading price of the A Shares on the trading day immediately preceding the aforesaid general meeting; (iii) the net asset value per A Share based on the latest audited financial statement; and (iv) the nominal value per A Share.

Conversion mechanism:

Conversion period:

Redemption on maturity:

Applications to convert to A Shares may be made by the holders of the Convertible Bonds at any time during the conversion period in accordance with the conditions set out in the relevant offering memorandum at the conversion price then effective during the conversion period where processing of the conversion applications are not suspended. Holders of the Convertible Bonds may convert all or part of the Convertible Bonds. No fractional shares will be issued, the relevant Convertible Bond holder shall receive cash instead where applicable.

At any time from and including the first trading day immediately after the expiry of the six months period commencing from the completion of issue of the Convertible Bonds, up to the maturity date of the Convertible Bonds.

The Company shall redeem all outstanding Convertible Bonds within five trading days from the maturity date at no more than 105% of the nominal value of the Convertible Bonds (inclusive of accrued interest). The actual redemption price will be determined by the Board and such other persons authorized by the Board (as authorized by the Shareholders in a general meeting) after consultation with the sponsor and the lead underwriter and in accordance with state policies, market conditions and the requirements of the Company.

— 7 —

LETTER FROM THE BOARD

Redemption at the option of the Company:

During the conversion period of the Convertible Bonds, in the event that either (i) the closing price of the A Shares for at least 15 trading days out of any 30 consecutive trading days shall be no less than 130% of the then conversion price, or (ii) the principal amount of Convertible Bonds outstanding is less than RMB 30,000,000, the Company shall be entitled to redeem all or part of the Convertible Bonds then outstanding in accordance with the specified redemption procedures at the face value of the Convertible Bonds plus accrued interest.

Sale back at the option of the holders of the Convertible Bonds:

During the final two years of the conversion period where interests will normally be accrued, in the event that the closing prices of the A Shares in any 30 consecutive trading days shall be lower than 70% of the then conversion price, the holders of the Convertible Bonds have a one-off right to require the Company to redeem all or part of the Convertible Bonds held by them at the face value of the Convertible Bonds plus accrued interest (if any). In the event the relevant holder of the Convertible Bonds does not apply for such redemption within the relevant redemption period, such holder shall not exercise the right of redemption in connection with such instance of triggering event within the same year.

If the Shareholders approve a change in the use of proceeds from the issue of the Convertible Bonds or CSRC deems that there has been a material change in the use of the same proceeds, the holders of the Convertible Bonds will have a one-off right to require the Company to redeem all or part of the Convertible Bonds held by them at the face value of the Convertible Bonds plus accrued interest (if any). In the event the relevant holder of the Convertible Bonds does not apply for such redemption within the relevant redemption period, such holder shall not exercise the right of redemption in connection with such instance of triggering event within the same period.

Target subscribers:

Natural persons, legal persons, securities investment funds and other investors who have complied with the relevant laws and regulations, who are holders of securities accounts opened at the Shanghai Branch of China Securities Depositary and Clearing Corporation Limited (save for those prohibited by PRC laws and regulations). The actual arrangements for subscription will be determined by the Board and such other persons authorized by the Board (as authorized by the Shareholders in a general meeting) after consultation with the sponsor and the lead underwriter.

— 8 —

LETTER FROM THE BOARD

Listing of bonds:

An application is expected to be made to the Shanghai Stock Exchange for the listing of the Convertible Bonds and the related conversion shares on the Shanghai Stock Exchange.

The holders of A Shares as at a record date to be determined shall have preferential rights over persons who are not existing holders of A Shares as at such record date to subscribe for the Convertible Bonds proposed to be issued. The actual amount of Convertible Bonds to be allocated between holders of A Shares and non-holders of A Shares will depend on, amongst other things, the subscription demand expected from holders of A Shares and availability of interested potential investors at the relevant time of the Bond Issue and shall be determined by the Board and such other person authorized by the Board (as anthorized by Shareholders in a general meeting) with reference to market conditions at the time of the issue. The amount of preferential allocation as well as other offering statistics, once finalised, are expected to be set out in the offering memorandum to be issued by the Company in the PRC and the Company shall announce the publication of the offering memorandum pursuant to rule 13.09(2) of the Listing Rules at the relevant time. The balance amount of the Convertible Bonds after allocation to the existing holders of A Shares on a preferential basis and the Convertible Bonds, the preferential right of which have been given up by the existing holders of A Shares, will be issued by way of offline placement to institutional investors and/or online issuance through the system of Shanghai Stock Exchange. If the Convertible Bonds are not fully subscribed, the remainder of the Convertible Bonds will be underwritten by the underwriting syndicate.

In any event, within the tranche of Convertible Bonds allocated to existing A Shareholders, they will be entitled to subscribe for the Convertible Bonds pro rata their shareholdings of A Shares and in priority to others who are not A Shareholders. There will be a public offering of the Convertible Bonds in the PRC only. The timing of the Bond Issue will be determined by the Board after careful consideration and taking into account the prevailing market conditions and all other relevant factors at the time. The actual terms and conditions of the Convertible Bonds will be determined by the Board prior to the Bond Issue.

PROPOSED USE OF PROCEEDS

The purpose of the issue of the Convertible Bonds is to enable the Company to fund the ongoing vessel constructions already contracted by the Company. Based on the gross proceeds of RMB3.95 billion (equivalent to approximately HK$4.59 billion), the Board expects to utilise approximately RMB1,013,950,000 (equivalent to approximately HK$1.2 billion) for the construction of three oil tankers of 110,000 dead weight tonnes each, approximately RMB924,950,000 (equivalent to approximately HK$1.1 billion) for the construction of eight oil tankers of 48,000 dead weight tonnes each, approximately RMB360,270,000 (equivalent to approximately HK$418.9 million) for the construction of two VLCCs of 308,000 dead weight tonnes each, and approximately RMB1,650,830,000 (equivalent to approximately HK$1.9 billion) for the construction of six bulk cargo carriers of 76,000 dead weight tonnes each. The proportions of the funds to be utilised for the above purposes may be adjusted by the Board based on actual demand. However, if further funds are required for the vessel constructions, or should the Convertible Bonds were not issued or the Bond Issue not completed at the relevant time, it will be financed by bank loans, general working capital and/or other resources.

— 9 —

LETTER FROM THE BOARD

REASONS FOR THE BOND ISSUE

The Board has carefully considered different financing options for the funding requirements of the Company. It believes that the Bond Issue is the most appropriate option for the Company for the following reasons:

(a) the Bond Issue would allow the Company to have a relatively lower funding cost;
(b) the Bond Issue, as a convertible bond issue, would generally allow the Company to pay a lower interest coupon payment than for a straight bond issue; and
(c) the Bond Issue would not lead to any immediate dilution of the Company’s basic earnings per share which would arise in the case of a new issue of A Shares.

IMPACT OF THE BOND ISSUE ON CAPITAL STRUCTURE OF THE COMPANY

Upon conversion of the Convertible Bonds, there would be an increase in the number of A Shares held by the public. Shareholders’ equity interest in the Company will be diluted as a result of the exercise of the conversion rights attached to the Convertible Bonds. The exact size of the above increase in number of A Shares will depend on the final terms of the Convertible Bonds, including, amongst other terms, the conversion price at which the Convertible Bonds will be converted into A Shares. It is currently contemplated that the initial conversion price will be determined with reference to a premium over the higher of the average trading price of A Shares for 20 trading days immediately prior to the issue of the relevant offering memorandum and the average trading price of the A Shares on the trading day immediately preceding the issue of the aforesaid memorandum. The final terms of the Convertible Bonds are expected to be determined by the Board and such other persons authorized by the Board (as authorized by the Shareholders in a general meeting) by reference to market conditions and in consultation with the sponsor and the lead underwriter of this transaction.

— 10 —

LETTER FROM THE BOARD

As the proportion of Convertible Bonds to be allocated to existing A Shareholders and investors who are not existing A Shareholders are yet to be determined, for illustrative purposes only and assuming all Convertible Bonds are only issued to existing A Shareholders, upon full conversion of the Convertible Bonds and using the conversion price of RMB9.64 (being the average trading price of the A Shares for the last 20 trading days ending on 28 January 2011 before the suspension of trading in the Shares on 31 January 2011), the percentage of shareholding of the existing Shareholders are as follows:

China Shipping (Group) Company* A Shares (public) H shares (public) Public	Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately before conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds 1,578,500,000 46.36% 1,885,246,966 49.43% 530,052,270 15.57% 633,056,340 16.60% 1,296,000,000 38.07% 1,296,000,000 33.97% 1,826,052,270 53.64% 1,929,056,340 50.57% 3,404,552,270 100% 3,814,303,306 100%	Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately before conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds 1,578,500,000 46.36% 1,885,246,966 49.43% 530,052,270 15.57% 633,056,340 16.60% 1,296,000,000 38.07% 1,296,000,000 33.97% 1,826,052,270 53.64% 1,929,056,340 50.57% 3,404,552,270 100% 3,814,303,306 100%
		50.57%
		100%

China Shipping (Group) Company currently holds 74.86% of the total issued A Shares. As the Convertible Bonds are being offered on a pro rata basis to existing shareholders of A Shares in priority to other eligible persons, this percentage of shareholding immediately after conversion in full of the Convertible Bonds assumes that China Shipping will take up its priority right to subscribe for its pro rata share of the Convertible Bonds.

The Directors do not currently expect that the Bond Issue will adversely affect the minimum number of shares of the Company and H Shares which are, under the Listing Rules, required to be held by members of the public. If there is such adverse effect, the Company intends to adopt necessary measures to meet the relevant requirement(s). Upon full conversion of the Convertible Bonds, there will not, by reason only of such conversion, result in any change in control of the Company. Further announcements will be made once the terms and conditions of the Convertible Bonds are determined and the relevant offering memorandum is issued.

Any new A Shares to be issued upon conversion of the Convertible Bonds will rank pari passu with, and within the same class as, the A Shares in issue on the relevant conversion date in all respects, save in respect of entitlement to dividends and other distributions which will depend on, inter alia, the conversion date(s) for the Convertible Bonds.

A full version of the proposal in relation to the issuance and listing of the Convertible Bonds is set out in Appendix I to this circular.

— 11 —

LETTER FROM THE BOARD

The Shareholders and potential investors should be aware that the proposed Bond Issue is subject to all necessary approvals being obtained and various factors including the market conditions, and therefore the proposed Bond Issue may or may not proceed.

IMPLICATIONS OF ISSUANCE OF CONVERTIBLE BONDS UNDER THE PRC REGULATORY REQUIREMENTS

The proposed Bond Issue may lead to issuance of new A Shares upon conversion of the Convertible Bonds. For illustrative purpose, based on the proposed issue size of the Convertible Bonds of RMB3.95 billion and assuming the Conversion Price of approximately RMB9.64 (by reference to the average trading price of the A Shares for the 20 trading days ended on 28 January 2011 before the suspension of trading in the Shares on 31 January 2011), the maximum number of new A Shares to be issued is approximately 409,751,037 Shares, representing (i) 16.27% of the enlarged total issued A Share capital of the Company, and (ii) 10.74% of the enlarged total issued share capital of the Company. The exact number of new A Shares to be issued as a result of the conversion of Convertible Bonds is subject to various factors, including the conversion price. The conversion of the Convertible Bonds into new A Shares will result in dilution of the shareholding interests of the existing Shareholders.

PROPOSAL IN RESPECT OF THE FEASIBILITY ANALYSIS REPORT ON USE OF PROCEEDS FROM THE BOND ISSUE

Subject to the approval of the CSRC, the entire amount of the proceeds raised from the proposed issuance of the Convertible Bonds, after deduction of the expenses relating to the issuance, will be applied to the construction of vessels. Details in relation to the use of proceeds to be raised by the Company from the proposed Bond Issue are set out in the Feasibility Analysis Report, a copy of which is set out in Appendix II to this circular. The Feasibility Analysis Report, which was considered and approved by the Board on 30 January 2011, is subject to Shareholders’ approval.

PROPOSAL IN RESPECT OF THE REPORT ON UTILISATION OF PROCEEDS FROM PREVIOUS ISSUANCES

The funds previously raised by the Company from its issuance of convertible bonds on 2 July 2007 have been used for the purpose as set out in the Utilisation Report. The Board prepared a Utilisation Report and Baker Tilly China has been appointed by the Company to issue an Assurance Report in respect of the utilisation of the proceeds from previous issuances by the Company. Full versions of the Utilisation Report are set out in Appendices III and IV to this circular respectively. The Utilisation Report, which was considered and approved by the Board on 30 January 2011, is subject to Shareholders’ approval by way of ordinary resolution.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any equity fund raising activities in the previous 12 months immediately preceding 31 January 2011, being the date the Company announced the proposed Bond Issue.

— 12 —

LETTER FROM THE BOARD

APPOINTMENT OF EXECUTIVE DIRECTOR

The Board announced on 31 January 2011 that the Board resolved to appoint Mr. Yan Zhichong (嚴志沖) (“Mr. Yan”) as an executive director of the Company subject to shareholders approval at the upcoming extraordinary general meeting. Mr. Yan’s appointment will take effect immediately after the EGM once the Shareholders passed the relevant resolution to approve Mr. Yan’s appointment.

Mr. Yan Zhichong, born in May 1957 and aged 53, is a senior engineer. He is currently the general manager of the Company, a non-executive director of China Shipping Container Lines Co., Ltd. and a director of China Shipping Haisheng Co., Ltd. (a company listed on the Shanghai Stock Exchange). He was formerly the general manager of China Shipping Development Company Limited Guangzhou Tanker Branch, the general manager of the transportation department of China Shipping (Group) Company, the vice president of China Shipping (H.K.) Holdings Co., Ltd., the general manager of China Shipping International Ship Management Co., Ltd. and the general manager of Guangzhou Marine Transport (Group) Company Limited. Mr. Yan first joined the Company in May 2002 as an executive director and had been a supervisor of the Company from October 2007 to January 2011. Mr. Yan had been the general manager of the Company since January 2011.

It is proposed that subject to shareholders’ approval, Mr. Yan shall enter into a service contract with the Company for his appointment as an executive director for a term from the date of the EGM up to the date of the Company’s annual general meeting in 2013. Pursuant to such proposed contract, it is expected that Mr. Yan will be entitled to an annual remuneration of RMB800,000 per year as determined by reference to the prevailing market rate and his time, effort and expertise expected to be devoted by him to the Company’s affairs. Both the Company and Mr. Yan consider such remuneration to be reasonable. Such service contract shall be terminated by either party giving at least three months’ prior notice in writing.

As at the Latest Practicable Date and save as disclosed above, Mr. Yan does not hold any other position with the Company or other members of the Group. Save as disclosed above, Mr. Yan does not and has not, in the past three years from the Latest Practicable Date, held any directorships in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas. Save as disclosed herein, Mr. Yan does not have any relationship with any director, member of senior management or substantial or controlling shareholder of the Company. As at the Latest Practicable Date, Mr. Yan does not have any interest in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

As at the Latest Practicable Date and save as disclosed above, there is no other information relating to Mr. Yan to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules. There is also no other matter which needs to be brought to the attention of the Shareholders in respect of Mr. Yan’s appointment as an executive director of the Company.

EGM AND CLASS MEETINGS

Under the Company Law of the PRC and the Company’s articles of association, the Bond Issue is subject to the approval of the Shareholders. It is proposed that resolutions for the approval of the Bond Issue will be put to the Shareholders for their consideration at the EGM and the respective class

— 13 —

LETTER FROM THE BOARD

meetings of the holders of A Shares and H Shares. In relation to the Bond Issue, the relevant resolutions to be passed at the EGM and relevant class meetings can be generally categorised into (a) eligibility of the Company to issue the Convertible Bonds, (b) terms of the Bond Issue, (c) feasibility of use of proceeds from the Bond Issue on investment projects, (d) report on the use of proceeds from the previous convertible bond issued by the Company on 2 July 2007 and (e) authorisation of the Board and such other persons authorized by the Board to take such actions as may be necessary or desirable to complete the Bond Issue. The Company is not aware of any Shareholder who is obliged to abstain from voting on the resolutions.

It is therefore proposed that the EGM, H Shareholders’ and A Shareholders’ class meetings be convened on Wednesday, 6 April 2011 to consider and; if thought fit, to approve, among other things, the Bond Issue by way of poll.

The notices of the EGM and the respective class meetings are set out on pages N1-1 to N2-3 of this circular.

A proxy form for use at the EGM to be held at 2:00 p.m. on Wednesday, 6 April 2011 at 700 Dong Da Ming Road, Shanghai, the PRC is enclosed. Whether or not you intend to attend the EGM, you are requested to complete and return the enclosed proxy form (for use at the EGM) in accordance with the instructions printed thereon as soon as possible to the Company’s Hong Kong H share registrar and transfer office, Hong Kong Registrars Ltd., 17M/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or the Office of the Secretary to the Board of Directors of the Company at Room 1601, 700 Dong Da Ming Road, Shanghai, the PRC (in case of holders of A Shares) but in any event not less than 24 hours before the respective time appointed for the holding of the EGM. Completion and return of the said proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish.

Proxy form for use at the Shareholders Class Meeting for the holders of H Shares to be held at 2:30 p.m. on Wednesday, 6 April 2011 at 700 Dong Da Ming Road, Shanghai, the PRC is enclosed. Whether or not you intend to attend the Shareholders class meetings for the holders of H Shares, you are requested to complete and return the enclosed proxy forms for use at the Shareholders class meetings for the holders of H Shares in accordance with the instructions printed thereon as soon as possible to the Company’s Hong Kong H share registrar and transfer office, Hong Kong Registrars Ltd., 17M/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong but in any event not less than 24 hours before the respective time appointed for the holding of the Shareholders Class Meetings for the holders of H Shares. Completion and return of the said proxy form will not preclude you from attending and voting in person at the Shareholders class meetings for the H Shareholders or at any adjourned meeting should you so wish.

A reply slip and form of proxy used at the EGM and the class meeting for holders of H shares are enclosed. If you are eligible and intend to attend the EGM or the class meeting, please complete and return the enclosed reply slips in accordance with the instructions printed thereon on or

— 14 —

LETTER FROM THE BOARD

before Thursday, 17 March 2011. Whether or not you are able to attend the above meeting(s), please complete and return the enclosed proxy form(s) in accordance with the instructions printed thereon as soon as practicable and in any event by not less than 24 hours before the time appointed for the holding of the meeting. Completion and return of the proxy forms will not preclude you from attending and voting in person at the meeting or at any adjourned meetings should you so wish.

Upon approval of the Bond Issue at the EGM and the respective class meetings, the issue of the Convertible Bonds will still be subject to the approval of CSRC. The timing of the Bond Issue shall be subject to the approval of CSRC, as well as the bond market conditions in the PRC. Further announcement will be made by the Company when the CSRC’s approval has been obtained and the maturity period and the coupon rate of the Convertible Bonds have been fixed.

INFORMATION ABOUT THE COMPANY

The business scope of the Group includes: coastal, ocean and Yangtze River cargo transportation, chartering, cargo agency and cargo transportation agency.

RECOMMENDATION

The Directors consider that the approval of (1) the Feasibility Analysis Report, (2) the Utilisation Report, (3) the eligibility of the Company to issue the Convertible Bonds, (4) terms of the Bond Issue, (5) authorization of the Board and its delegates to take such further actions as may be necessary or desirable to complete the Bond Issue and (6) the appointment of Mr. Yan as an executive Director are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of all proposed resolutions.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices to this circular.

Yours faithfully, China Shipping Development Company Limited Li Shaode Chairman

— 15 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

The proposal in respect of the Bond Issue is only written in Chinese, with no official English translation. The following English translation is provided solely for reference only. In case of discrepancy between the two versions, the Chinese shall prevail. The full version of the proposal in respect of is as follows:

PROPOSAL IN RESPECT OF PUBLIC ISSUANCE AND LISTING OF THE CONVERTIBLE BONDS

In order to reduce financial impact as a result of future business developments and to improve the debt structure of the Company as well as to further enhance its competitiveness and to promote its development, the Company has developed the plan for the issuance of A Share convertible corporate bonds (hereinafter referred to as “convertible bonds”) in accordance with the relevant provisions of laws, regulations and regulatory documents of the PRC such as the Company Law, the Securities Lawand the Administrative Measures for the Issuance of Securities by Listed Companies, taking into account its individual conditions. The specific terms of the issuance plan are as follows:

1. Type of bonds to be issued

The type of the bonds to be issued by the Company is A Share convertible corporate bonds. Such convertible bonds and the A Shares to be issued upon conversion of the Convertible Bonds in the future will be listed on the Shanghai Stock Exchange.

2. Issue size

According to the relevant requirements of laws and regulations and in view of the financial conditions and investment plan of the Company, the aggregate amount of the convertible bonds proposed to be issued will be equal to or not more than RMB3.95 billion. The actual size of the issuance shall be determined by the Board of the Company and its authorized persons within the above scope, subject to authorization by the Shareholders at a general meeting.

3. Term of the convertible corporate bonds

According to the relevant requirements and implementation progress of the projects which intended to be invested with proceeds from the issuance of Convertible Bonds of the Company, and in view of the issue size of Convertible Bonds and future operating and financial conditions of the Company, the term of the convertible bonds to be issued will be six years from the date of issuance.

4. Nominal value and issue price

The A Share corporate convertible bonds will be in principal amounts of RMB100 each, and will be issued at par.

5. Coupon rate

The interest rate range of the A Share corporate convertible bonds will be 0.5%-3.0%. Subject to authorization by the Shareholders at a general meeting of the Company, the actual interest rate will

— I-1 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

be determined by the Board of the Company and its authorized persons with reference to the PRC government policies, market conditions and the actual conditions of Company, prior to the issuance of the Convertible Bonds and in consultation with the sponsor and the lead underwriter.

Before completion of the issuance of the A Share corporate convertible bonds, if an adjustment is made to the bank deposit interest rate, a corresponding adjustment can be made to the coupon rate by the Board and its authorized persons, subject to authorization by the Shareholders at a general meeting.

6. Interest payment

(1) Calculation of annual interest

Annual interest means the interest accrued to the holders of the A Share corporate convertible bonds (the “CB Holders”) in each year on each anniversary of the date of issuance of the Convertible Bonds, calculated based on the aggregate nominal value of the Convertible Bonds. The formula for calculating the annual interest is:

I = B x i

“I”: denotes the annual interest;
“B”: denotes the aggregate nominal value of the Convertible Bonds held by a CB Holder as at the record date for interest payment in an interest accrual year (“that year” or “each year”); and
“i”: denotes the nominal interest rate of the Convertible Bonds of that year.
(2) Method of interest payment
A. Interest of the Convertible Bonds will be paid annually, accruing from the date of issuance of the Convertible Bonds. Tax payable on the interest income derived by a CB Holder shall be borne by such CB Holder.
B. Interest payment date: The interest is payable annually on each anniversary of the date of issuance of the Convertible Bonds. If such day falls on a statutory holiday or rest day, the interest payment date shall be postponed to the first working day immediately thereafter, provided that no additional interest will be accrued during the period of postponement. The period between an interest payment date and the immediately following interest payment date will be an interest accrual year.

The vesting of interest and dividends for the year of conversion shall be determined by the Board of the Company in accordance with relevant laws and regulations and the requirements of the Shanghai Stock Exchange.

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APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

C. Record date for interest payment: The record date for interest payment in each year will be the trading day preceding the interest payment date. The Company will pay the interest accrued in that year within five trading days from the interest payment date. The Company will not pay any interest for that year and subsequent interest accrual years to the CB holders whose Convertible Bonds have been converted into Shares on or before the record date for interest payment.

7. Conversion period

The conversion period of the Convertible Bonds commences on the first trading day immediately following the expiry of the six-month period after the date of issuance of the Convertible Bonds and ends on the maturity date of the Convertible Bonds.

8. Determination of the Conversion Price

The initial Conversion Price of the A Share convertible bonds shall not be lower than the average trading price of A Shares of the Company for the 20 trading days preceding the date of publication of the offering document (in the event that during such 20 trading days, the share price has been adjusted due to ex-rights or ex-dividend, the trading price for each of these trading days before adjustment shall be adjusted with reference to the ex-rights or ex-dividend share price) and the average trading price of A Shares of the Company on the trading day preceding the date of the offering document of the Convertible Bonds. The actual initial Conversion Price shall be determined by the Board and its authorized persons with reference to market conditions and the actual conditions of the Company, and in consultation with the sponsor and the lead underwriter, subject to authorization by the Shareholders at a general meeting.

The average trading price of A Shares of the Company for the 20 trading days preceding the date of publication of the offering document = the total trading value of A Shares of the Company for such 20 trading days/the total trading volume of A Shares for the same 20 trading days. The average trading price of A Shares of the Company on the trading day preceding the date of the offering document = the total trading value of A Shares of the Company on such day/the total trading volume of A Shares on such day.

9. Determination and adjustment of conversion price

In the event of bonus issue, capitalization, new issue (other than the increase in the share capital as a result of the conversion of the convertible corporate bonds), rights issue and the distribution of cash dividends, the Company shall make accumulated adjustments to the conversion price in the sequence of the occurrence of the above conditions, and details of the adjustment are as follows:

By assuming the conversion price before the adjustment to be Po, the number of bonus Shares or Shares being issued upon capitalization of each Share as N, the number of new Shares or rights issue of each Share to be K, the price of the new Shares or rights issue to be A, the distribution of cash dividends for each Share to be D, the conversion price after the adjustment to be P (the adjustment value is reserved up to two digits after the decimal place, and rounding the last figure), then

— I-3 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

Distribution of cash dividends: P = Po-D;

Bonus issue or capitalization: P = Po/(1+N);

Issue of new shares or rights issue: P=(Po+A�K)/(1+K);

Combination of the three items: P = (Po-D+A�K)/(1+N+K).

Where the abovementioned changes in shareholding and/or Shareholders’ equity occur, the conversion price will be adjusted accordingly in the same order of the occurrence of the changes. The adjustment to the conversion price, having been resolved by the Board, will be published in the form of an announcement on the media designated by China Securities Regulatory Commission of the PRC (hereinafter referred to as “ CSRC ”) for information disclosure of listed companies. The announcement will indicate the date of adjustment to the conversion price, the adjustment method and the suspension period of share conversion (if required). If the conversion price adjustment date is on or after the day of application by CB Holders for conversion, and before the share conversion registration date, then such conversion will be effected based on the adjusted conversion price.

In the event that the CB Holders’ rights and benefits, or the interests derived from the share conversion are affected by the change in the Company’s share class and quantity due to any possible share repurchase, consolidation, division or any other action which may be undertaken by the Company, the Company will adjust the conversion price based on the actual situation and in accordance with the principles of fairness, justice, equity and full protection of the holders’ interests. The details of adjustments to the conversion price and its implementation shall be determined in accordance with the then relevant PRC laws, regulations and the relevant requirements of the securities regulatory authorities.

10. Provision for Downward adjustment to Conversion Price

(1) Conditions and magnitude of adjustment

If, during the term of the Convertible Bonds issued hereunder, the closing prices of the Shares of the Company in at least 10 trading days out of any 30 consecutive trading days are lower than 90% of the prevailing conversion price, the Board of the Company may put forward a proposal for a downward adjustment to the conversion price and submit it for consideration and voting at a general meeting. The proposal is subject to approval of two-thirds of the attending Shareholders with voting rights. Shareholders who hold the Convertible Bonds issued hereunder should abstain from voting. The adjusted conversion price should be no less than the average trading price of the A Shares of the Company for the 20 trading days immediately before the general meeting or the average trading price of the A Shares of the Company on the trading day immediately prior to that general meeting, and should be also no less than the net asset value per Share based on the latest audited financial statement or the nominal value per share.

In the event that an adjustment to the conversion price is made during the aforementioned 30 trading days, in respect of the trading days prior to the adjustment, the calculation shall be based on the unadjusted conversion price and the closing price of the Shares on each such day, and in respect of the trading days after the adjustment, the calculation shall be based on the adjusted conversion price and the closing price of the Shares on each such day.

— I-4 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

(2) Adjustment procedures

If the Company decides to make a downward adjustment to the conversion price, the Company is required to publish an announcement on the resolutions of the Shareholders’ general meeting in the print media and the website designated by the CSRC to announce the magnitude of the adjustment, the conversion price adjustment date and the suspension period of share conversion, and shall make an announcement, if necessary, in the Hong Kong market in accordance with the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Articles of Association.

11. Method for handling fractional shares upon conversion

The number of shares to be requested by the CB Holders for conversion shall be in whole number. The portion of the Convertible Bonds whereby fractional shares are issued upon conversion will be redeemed by the Company at par with accrued interest in cash within five trading days after the date of conversion.

12. Terms of redemption

(1) Terms of redemption at maturity

Within five trading days after the maturity of the Convertible Bonds, the Company will redeem the Convertible Bonds which have not been converted into the Shares at the price of not more than RMB105 (including interest for the final term). The Board and its authorised persons shall determine the specific redemption price with reference to market conditions upon issuance of the Convertible Bonds and in consultation with the sponsor and the lead underwriter, subject to the authorisation at the Shareholders’ general meeting.

(2) Terms of early redemption

During the term of the Convertible Bonds, when any of the following two events occurs, the Company has the right to redeem all or part of the Convertible Bonds which have not been converted into the Shares at par plus current accrued interest:

A. during the conversion period of the Convertible Bonds, if the closing price of the Shares of the Company is equal to or higher than 130% of the prevailing conversion price in at least 15 trading days out of any 30 consecutive trading days;
B. when the outstanding balance of Convertible Bonds which have not been converted into the Shares is less than RMB30 million.

Formula for calculating current accrued interest: IA=B�i�t/365

IA: Accrued interest for the current period;
B: Aggregate nominal value of the Convertible Bonds held by the CB Holders;

— I-5 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

i: Coupon interest rate of the Convertible Bonds for the current year; and
t: Number of interest accrual days, i.e. actual calendar days from the last interest payment date to the redemption date (excluding the redemption date) of current interest accrual year.

In the event that an adjustment to the conversion price has been implemented within the aforementioned 30 trading days, in respect of the trading days prior to the adjustment, the calculation shall be based on the unadjusted conversion price and the closing price of the shares on each such day, and in respect of the trading days after the adjustment, the calculation shall be based on the adjusted conversion price and the closing price of the shares on each such day.

13. Terms of sale back

(1) Terms of conditional sale back

During the last two interest accrual years within the term of the Convertible Bonds, if the closing prices of the Shares in any 30 consecutive trading days are lower than 70% of the prevailing conversion price, the CB Holders are entitled to sell back all or part of the Convertible Bonds they hold to the Company at par plus current accrued interest. If the conversion price has been adjusted in the abovementioned trading days as a result of issuance of bonus shares, capitalization issue, issuance of new shares (excluding any increase in the share capital as a result of the conversion of the Convertible Bonds), rights issue or the distribution of cash dividends, in respect of the trading days prior to the adjustment, the calculation shall be based on the unadjusted conversion price and the closing price of the shares on each such day, and in respect of the trading days after the adjustment, the calculation shall be based on the adjusted conversion price and the closing price of the shares on each such day. If a downward adjustment to the conversion price occurs, the abovementioned “30 consecutive trading days” shall be recalculated from the first trading day after such adjustment.

The CB Holders can exercise the sale back rights once every year when the sale back conditions are initially satisfied according to the abovementioned agreed terms in the last two interest accrual years. If the sale back conditions are initially satisfied, but the CB Holders do not apply for and exercise their sale back rights during the sale back declaration period announced by the Company, they shall not exercise the sale back rights during such accrual year. The CB Holders are not allowed to exercise part of their sale back rights repeatedly.

(2) Additional terms of sale back

If the actual investment usage of the proceeds from the issuance of the Convertible Bonds substantially differs from the description of the use of proceeds set out by the Company in the offering document, and the change may be regarded as a change of use of proceeds according to the relevant regulations of the CSRC or regarded by the CSRC as a change of use of proceeds, then the CB Holders will have a one-off right to sell back all or part of the Convertible Bonds they hold to the Company at par plus current interest accrued. When the additional sale back conditions are satisfied, the CB Holders may sell back their Convertible Bonds during the additional sale back declaration period after it is announced by the Company. If the CB Holders do not exercise their sale back rights during the additional sale back declaration period, they shall not exercise such additional sale back right.

— I-6 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

14. Dividend distribution after conversion

The new shares of the Company to be issued upon the conversion of the Convertible Bonds shall rank pari passu with all existing shares. All Shareholders of ordinary shares (including those formed as a result of the conversion of the Convertible Bonds) whose names appear on the register of members on the registration date for dividend payment are equally entitled to current dividend distribution.

15. Method of issuance and target investors

The method of the issuance of the Convertible Bonds will be determined by the Board and its authorised persons together with the sponsor and the lead underwriter, subject to the authorisation at the Shareholders’ general meeting. The target investors are natural persons, legal persons, securities investment funds and other investors permitted by the laws who have maintained securities accounts with the Shanghai Branch of China Securities Depository and Clearing Corporation Limited, except those prohibited by the PRC laws and regulations.

16. Subscription arrangement for existing shareholders

The existing holders of A Shares of the Company have the pre-emptive rights to subscribe for the convertible bonds issued hereunder. The actual ratio in respect of the preferential allocation to the existing holders of A Shares shall be determined by the Board and its authorised persons under the mandate granted at a general meeting and disclosed in the issuance announcement in respect of the Convertible Bonds. The Convertible Bonds not subject to the pre-emptive rights of the existing holders of A Shares and the portion which has been given up by the existing holders of the A Shares will be issued by way of offline placement to institutional investors and online issuance through the trading system of Shanghai Stock Exchange, and the remaining balance shall be underwritten by the underwriters.

17. Matters relating to CB Holders’ meetings

A CB Holders’ meeting shall be convened by the Board of the Company upon the occurrence of any of the following events:

(1) the Company proposes to change the terms of the convertible bond offering document;
(2) the Company defaults in paying the principal amount and interest of the convertible bonds on time;
(3) the Company undertakes a capital reduction, merger, division, dissolution or files for bankruptcy;
(4) other matters which may affect the material interests of the CB Holders.

The Company will stipulate in the offering document the measures for protecting the rights of the CB Holders, as well as the rights of the CB Holders to convene meetings, the meeting procedure and the conditions for passing valid resolutions at such meetings.

— I-7 —

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

18. Use of proceeds from the issuance of the Convertible Bonds

The proceeds from the issuance of the Convertible Bonds will not exceed RMB3.95 billion. The Company intends to use RMB1.01395 billion to settle the relevant payment for the construction of three 110,000-tonne Aframax oil tankers; RMB924.95 million to settle the relevant payment for the construction of eight 48,000-tonne MR-type oil tankers; RMB360.27 million to settle the relevant payment for the construction of two 308,000-tonne VLCC oil tankers; and RMB1.65083 billion to settle the relevant payment for the construction of six 76,000-tonne Panamax bulk carriers.

If the net proceeds from the issuance of the Convertible Bonds cannot meet the funding requirements of the projects of the Company, the Company will apply its own funds and bank loans and/or other resources. The Company may make appropriate adjustments to the sequence and amounts of proceeds allocated to the aforesaid projects based on the actual requirements of the projects, provided that there is no change in the financing project. Before the proceeds are in place, the Company will first allocate its own funds or funds raised by other means based on the actual progress of the project, and will capitalize on the proceeds instead when they are available.

19. Guarantee

No guarantee will be provided in relation to the proposed issuance of the Convertible Bonds.

20. Validity period of the resolutions in relation to the issuance of the Convertible Bonds

The resolution in respect of the issuance of the Convertible Bonds by the Company will be valid for 12 months from the date on which the resolution is passed at a Shareholders’ general meeting.

Please consider each of the abovementioned proposals.

The proposal is required to be submitted for consideration at a general meeting and a class meeting of the Company, and is subject to approval by more than two-thirds of the shares with voting rights represented by all shareholders present at the meeting and all class shareholders present at the class meeting.

After the proposal is considered and approved at a Shareholders’ general meeting, it is also subject to the approval of China Securities Regulatory Commission.

— I-8 —

FEASIBILITY ANALYSIS REPORT

APPENDIX II

The Feasibility Analysis Report is written in Chinese, with no official English translation. The following English translation is provided solely for reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail. The full version of the Feasibility Analysis Report is as follows:

FEASIBILITY ANALYSIS REPORT ON USE OF PROCEEDS FROM THE BOND ISSUE

To alleviate its pressure of fund and optimize its debt structure, the Company intends to apply the proceeds from the issuance of A share convertible corporate bonds (hereinafter referred to as “Convertible Bonds”) for the payment of the following shipbuilding projects:

		Amounts	Amounts
	Total	expected to be	invested with
	investment (in	invested (in	proceeds (in
Project	RMB10,000)	RMB10,000)	RMB10,000)
3 Aframax oil tankers of 110 thousand dead
weight tonnes class	106,802	106,802	101,395
8 MR oil tankers of 48 thousand dead
wejght tonnes class	194,726	155,781	92,495
2 VLCC oil tankers of 308 thousand dead
weight tonnes class	180,133	36,027	36,027
6 Panamax bulk vessels of 76 thousand
dead weight tonnes class	215,325	165,083	165,083
Total	696,986	463,693	395,000

The feasibility of the projects to be invested with the proceeds from the issuance of convertible bonds is analyzed as follows:

I. Payment for construction of 3 Aframax oil tankers of 110 thousand dead weight tonnes class
Essentiality of the Project

In recent years, there has been steady increase in the demand for Aframax oil tankers in the coastal and imported oil transportation industry. Currently, the Company operates 6 Aframax oil tankers, 2 sinlge-hull Aframax oil tankers of which will be phased out by 2013. The Company’s Aframax oil tanker fleet is relatively small in scale, although having established leading positions in the PRC, and to maintain its market advantages both in the domestic coastal oil transportation market and the Russian Far East oil transportation market for export to China, the Company shall supplement its Aframax oil tanker fleet in due time to enhance its market competitiveness.

2. Proposed use of proceeds

The Company invests US$159.84 million or approximately RMB1,068.02 million (based on the agreed exchange rate specified in the vessel building contract) for newly construction of 3 Aframax

— II-1 —

FEASIBILITY ANALYSIS REPORT

APPENDIX II

oil tankers of 110 thousand dead weight tonnes class by Dalian Shipbuilding Industries Co., Limited (大連船舶重工集團有限公司). The Company intends to apply RMB1,013.95 million of the proceeds from the issuance of convertible bonds for the payment of building of these 3 oil tankers.

Economic benefits forecast

Each of the above Aframax oil tankers of 110 thousand dead weight tonnes class is forecast to have favorable economic results, with an embedded ratio of remuneration of 12.1% and a static payback period of 8.3 years.

II. Payment for construction of 8 MR oil tankers of 48 thousand dead weight tonnes class

Essentiality of the Project

The existing 18 single-hull oil tankers of the Company engaged in domestic trade transportation will be phased out gradually by 2015, 16 of which shall be replaced by MR oil tankers, according to the Notice on the Early Withdrawal of Single-shell Oil Tanker for Internal Navigation issued by the Ministry of Communications. Furthermore, as the domestic coastal crude oil transportation market is opened at an increasingly accelerated rate, there is rising demand for the coastal refined oil product, which has broaden the market space for MR oil tankers of 48 thousand dead weight tonnes class. In response to the new competitive environment of the domestic oil transportation market and ensure the Company’s market share in the coastal domestic trade transportation, the Company shall work hard to optimize the structure of fleet, improve the competitiveness of fleet and strengthen its market advantages.

Proposed use of proceeds

The Company invests US$292.64 million or approximately RMB1,947.26 million (based on the agreed exchange rate specified in the vessel building contract) for the construction of 8 MR oil tankers by Guangzhou Shipyard International Company Limited (廣州廣船國際股份有限公司). The Company intends to apply RMB924.95 million of the proceeds from the issuance of convertible bonds for the payment of building of these 8 oil tankers.

Economic benefits forecast

Each of the above MR oil tankers of 48 thousand dead weight tonnes class is forecast to have favorable economic results, with an embedded ratio of remuneration of 15.7% and a static payback period of 7.8 years.

III Payment for construction of 2 VLCC oil tankers of 308 thousand dead weight tonnes class

Essentiality of the Project

With continuing rapid development of economy and improving energy policy, China’s crude oil import soars. According to preliminary statistics, China imported about 240 million dead weight tonnes crude oil in 2010. At present, domestic ship-owners have low market shares in China’s imported crude oil shipping market, far below the target of “Self-Transportation of National Oil Strategy”. Therefore, there is large development space for the Company’s VLCC fleet.

— II-2 —

FEASIBILITY ANALYSIS REPORT

APPENDIX II

Proposed use of proceeds

The Company invests US$228.52 or approximately RMB 1,801.33 million (based on the agreed exchange rate specified in the vessel building contract) for newly construction of two VLCC oil tankers of 308 thousand dead weight tonnes class by CSSC Guangzhou Lonogxue Shipbuilding Company Limited (廣州中船龍穴造船有限公司). The Company intends to apply RMB360.27 million of the proceeds from the issuance of convertible bonds for the payment of building of these oil tankers.

3. Economic benefits forecast

Each of the above VLCC oil tankers of 308 thousand dead weight tonnes class is forecast to have favorable economic results, with an embedded ratio of remuneration of 10.1% and a static payback period of 9.9 years.

IV Payment for construction of 6 Panamax bulk vessels of 76 thousand dead weight tonnes class
Essentiality of the Project

With the deepening of market-oriented reform in electricity, the domestic coal-fired power plants reduce transportation cost by increasing shipping quantities. In South China coast, power plants which have commenced production in recent years are equipped with terminals that can be used by Panamax vessels. Therefore, power plants are increasingly demanding ship owners to use large ships for transportation. Newly build Panamax bulk vessels of 76 thousand dead weight tonnes class have good adaptability and competitiveness in terms of both time charter and coastal coal shipping capacity.

2. Proposed use of proceeds

The Company invests US$297.00 million or approximately RMB2,153.25 million (based on the agreed exchange rate specified in the vessel building contract) for newly construction of 6 Panamax bulk vessels of 76 thousand dead weight tonnes class by Jiangnan Construction Group Limited (江南造船（集團）有限責任公司) . These tankers are currently under construction. The Company intends to apply RMB1,650.83 million of the proceeds from the issuance of convertible bonds for the payment of building of these oil tankers.

3. Economic benefits forecast

Each of the above Panamax bulk vessels of 76 thousand dead weight tonnes class is forecast to have favorable economic results, with an embedded ratio of remuneration of 10.9% and a static payback period of 8.3 years.

Based on the above, the implementation of aforementioned projects is in line with PRC national industrial policy. It will promote the Company’s development strategy and enhance our core competitiveness and sustainable development capacity. In addition, these projects are of good market prospects and profitability, which will bring higher returns for shareholders. It is therefore feasible to apply funds raised on these projects.

This resolution shall be submitted to the Company’s general meeting for consideration and passed with over 50% voting shares held by all the shareholders present at the meeting.

— II-3 —

APPENDIX III

UTILIZATION REPORT

The Utilisation Report is written in Chinese, with no official English translation. The following English translation is provided solely for reference only. In case of any discrepancy between the two versions, the Chinese Version shall prevail. The full version of the Utilisation Report is as follows:

REPORT ON UTILISATION OF PROCEEDS FROM PREVIOUS ISSUE

1. Basis of Preparation

This report on utilisation of proceeds from previous issue has been prepared in accordance with Zhengjian Faxingzi [2007] No. 500 issued by China Securities Regulatory Commission (“CSRC”) titled “Regulations in respect of the status report on utilisation of proceeds from previous issue”.

2. Amount of proceeds from previous issue and status of receipt of funds

By the approval of Zhengjian Faxingzi [2007] No.150 issued by CSRC, China Shipping Development Company Limited (hereinafter referred to as the “Company”) publicly issued 20 million A share convertible corporate bonds with nominal amount of RMB100 each on 2 July 2007 and the total amount was RMB2 billion. The issuance costs of such issue amounted to RMB51,539,357.82, of which fees payable to sponsors and underwriters were RMB35 million, other costs payable to intermediaries such as accountants and lawyers as well as roadshow costs, etc. amounted to RMB16,539,357.82. The aggregate funds raised from such issuance of convertible corporate bonds were RMB1,948,460,642.18, net of issuance costs.

After deducting sponsorship and underwriting fee, the fund raised of RMB1.965 billion was deposited into the special fundraising account (account number: 1001262129204407051) which was opened by the Company at Industrial and Commercial Bank of China, Shanghai Branch, Waitan sub-branch. Grant Thornton Zhonghua had audited and checked such deposit and issued its capital verification report of Huzhong Kuaizi (2007) No. 2401 on 9 July 2007. As of 31 December 2010, the fund raised has run out and the account No. 1001262129204407051 has been closed.

The conversion of such convertible corporate bonds into shares was commenced on 2 January 2008. As of 26 March 2008, a total of RMB1,988,173,000.00 convertible corporate bonds were converted into A shares of the Company and the remaining RMB11,827,000.00 convertible corporate bonds which have not been converted Were all redeemed by the Company redeemed on 2 April 2008.

3. Status of actual utilisation of proceeds from previous issue

(i) Corresponding with status of actual utilisation status of proceeds from previous issuance

The Company has undertaken that the funds raised would be used to acquire 42 dry bulk cargo carriers from subsidiaries of China Shipping (Group) Company. The Company had paid 30% of the purchasing amount which was proposed to acquire 42 dry bulk cargo carriers through its own capital before the full receipt of the previously-raised funds. Upon the previously-raised funds were in place, the Company immediately paid up the remaining purchasing amount to the subsidiaries of China Shipping (Group) Company. Please refer to attachment 1 of this report in relation to the table of comparison in respect of the status of utilisation of proceeds from previous issue.

— III-1 —

UTILIZATION REPORT

APPENDIX III

(ii) Status in relation to changes to utilisation of proceeds on actual investment projects

There is no change to the actual investment projects for the previously-raised funds.

(iii) Status of actual utilisation of proceeds from previous issue

The Company actually used RMB1,948,460,600 of previously-raised funds, which had been used up. Please refer to attachment 1 of this report in relation to the amount invested in our investment projects.

(iv) Status of transfer or replacement of investment projects utilising proceeds from previous issue

Based on shipping markets and corporate strategies, the Company had disposed of partial vessels of the projects invested by previously-raised funds since the funds were in place for the purpose of optimizing fleet structure. As of 31 December 2010, the Company has disposed of a total of 10 out of 42 dry bulk cargo carriers which were acquired with previously-raised fund, the consideration from disposing of vessels was RMB341,903,900. The accrued transportation profits net of tax before the disposal were RMB732,255,600 with the pricing for the disposal determined by reference to evaluation, and the disposal gain/loss was RMB147,426,800. All proceeds from the disposal were received and used to supplement the working capital of the Company.

Please refer to attachment 2 of this report in relation to the status of transfer or replacement of investment projects utilising proceeds from previous issue.

(v) Status of idle proceeds

As at 31 December 2010, there are no temporary idle funds comprising proceeds raised from the previous issue.

4. Status of income from previously raised proceeds

As the dry bulk cargo carriers (acquired from utilising proceeds previously raised) are managed together with the Company’s other dry bulk cargo carriers, and the Company had not guaranteed the yield of projects in the previous offering memorandum issued, no comparison could be made against the expected income.

According to the intended use of the proceeds, the accrued transportation profits before tax and the disposal gain/loss from the acquisition of 42 dry bulk cargo carriers from the subsidiaries of China Shipping (Group) Company between 2007 and 2010 were RMB2,758,313,400, out of which operating profits amounted to RMB2,610,886,600 and disposal gain/loss to RMB147,426,800.

Status of actual income from investment projects utilising proceeds from previous issue for each year up to 31 December 2010 are set out in attachment 3 to this report.

— III-2 —

UTILIZATION REPORT

APPENDIX III

Details of other differences

Status of the Company’s actual utilisation of proceeds are basically consistent with disclosures made in the “Issue of Convertible Bonds Offering Memorandum”, regular reports and other documentation of the Company. Attachments:

Comparison table of status of utilsation of proceeds from previous issue
Table on status of transfer and replacement of investment projects utilising proceeds from previous issue
Comparison table on realisation of benefits of investment projects utilising proceeds from previous issue

China Shipping Development Company Limited 28 January 2011

— III-3 —

UTILIZATION REPORT

APPENDIX III

Attachment 1

Comparison table on status of utilisation of proceeds from previous issue (RMB)

==> picture [664 x 209] intentionally omitted <==

----- Start of picture text -----

Total amount of proceeds raised: 1,948,460,600 Total cumulative amount of proceeds used: 1,948,460,600
Total proceeds used over the years: 1,948,460,600
No change in use of proceeds 2007: 1,948,460,600
Investment Project Total amount of proceeds invested Aggregate proceeds invested as at cut-off date
Difference
between
actual
investment
amount and Date when
Investment Investment Investment Investment investment project
amount amount amount amount amount achieved
Investment Investment undertaken undertaken Actual undertaken undertaken Actual undertaken expected
Project Project actually prior to fund after fund investment prior to fund after fund investment after fund stage of
No. undertaken carried out raising raising amount raising raising amount raising completion
1 Acquisition of 42 Acquisition of 42
dry bulk cargo dry bulk cargo
carriers from the carriers from the
subsidiaries of subsidiaries of
China Shipping China Shipping
(Group) (Group)
Company Company 1,952,000,000 1,948,460,600 1,948,460,600 1,952,000,000 1,948,460,600 1,948,460,600 0 July 2007
----- End of picture text -----

Notes:

(a) Actual amount invested for the above projects is RMB2,470,000,000, the Company funded the difference with self-raised resources
(b) The difference between investment amount undertaken prior to fund raising and investment amount undertaken after fund raising is RMB3,539,400, where the difference represents the difference between the estimated amount of fees incurred and fees actually incurred for the issue.

— III-4 —

UTILIZATION REPORT

APPENDIX III

Attachment 2

Table on status of transfer or replacement of investment projects utilising proceeds from previous issue (RMB)

							Accumulated	Accumulated	Accumulated
								realised
					Completion		transportation
			Original			status of	profits before			Net book value
			acquisition		acquisition		tax prior		to	of vessel at time		Profit/loss on
No.	Vessel name			price		projects	replacement			of replacement		replacement
1.	Da	Luo Shan	34,377,900			100	131,858,200			16,483,500		8,463,800
2.	Kun Lun Shan		14,124,100			100	97,400,000			14,124,100		8,347,400
3.	Dan Xia Shan		20,486,600			100	50,671,100				9,644,400	(1,340,000)
4.	Fei Xia Shan		21,124,600			100	51,800,200			10,401,800		26,820,000
5.	Xue Feng Ling		21,116,600			100	48,152,900				9,841,500	9,293,500
6.	Da	Yu Shan	27,972,400			100	81,590,300			12,559,100		12,087,800
7.	Bei Ji Xing		65,553,700			100		2,826,500		64,298,300		33,368,500
8.	Ying Yang		51,310,900			100	109,699,200			24,455,500		21,064,200
9.	Ying Bing		45,244,500			100	84,907,600			26,777,600		15,140,000
10.	Ying Shen		40,592,600			100	73,349,600			20,620,900		14,181,600
	Total		341,903,900				732,255,600			209,206,700		147,426,800

Note: The determination of the prices for the replacement of vessels above are by reference to their valuation prices. The Company has already received the replacement proceeds and have bee used to supplement working capital of the Company.

— III-5 —

UTILIZATION REPORT

APPENDIX III

Attachment 3

Comparison table on realised benefits of investment projects utilising proceeds from previous issue (RMB)

	Actual investment project Guaranteed benefits (average per year) No. Project name	Actual benefits during the recent four years Accumulated realised benefits as at cut-off date Whether expected benefits have been achieved 2007 2008 2009 2010 1,184,411,000 1,347,696,300 (6,466,300) 232,672,400 2,758,313,400 Not applicable
	1 Acquisition of 42 dry bulk cargo carriers from the subsidiaries of China Shipping (Group) Company Not applicable

Note: As the dry bulk cargo carriers (acquired from utilising proceeds from previous issue) are managed together with the Company’s other dry bulk cargo carriers, and the Company had not guaranteed the yield of projects in the previous offering memorandum issued, no comparison could be made against the expected benefits.

— III-6 —

ASSURANCE REPORT

APPENDIX IV

The Assurance Report is written in Chinese, with no official English translation. The following English translation is provided solely for reference only. In case of any discrepancy between the two versions, the Chinese Version shall prevail. The full version of the Assurance Report is as follows:

REPORT ON THE VERIFICATION OF THE USE OF THE PREVIOUS PROCEEDS

Tian Zhi Hu No.QJ[2011]521

To: The Board of China Shipping Development Co., Ltd.

We have reviewed the attached “Report on the Verification of the Use of the Previous Proceeds” of China Shipping Development Co., Ltd. (hereinafter referred to as the “Company”) as of 31 December 2010.

1. The responsibility of the management

The responsibility of the management of the Company is to provide true, legal and complete relevant information, prepare the “Report on the Verification of the Use of the Previous Proceeds” in accordance with the “Regulations for the Report on the Use of the Previous Proceeds” (Zheng Jian Fa Xing Zi [2007] No.500) issued by the China Securities Regulatory Commission, and warrant the truthfulness, accuracy and completeness of the content contained therein and there are no false records, misleading representations or material omissions.

2. The responsibility of the Auditors

Our responsibility is to conduct verification work in accordance with the requirements of the “Standards on Other Assurance Engagements for CPAs of China No.3101 — Assurance Engagements Other than Historical Financial Information Audit or Review”. The standards require us to plan and conduct verification work so as to obtain reasonable assurance as regards whether the information of the verification object is free of any material misstatements. In the course of verification, we have implemented procedures as deemed necessary by us, including the examination of accounting records. We believe the verification work undertaken by us has provided a reasonable basis for expressing our opinions.

3. Restrictions on report users and the purpose of using the report

This verification report shall only be used by the Company to apply for the issuance of convertible corporate bonds and shall not be used for any other purposes. We agree to make this verification report a required document for the Company to apply for the issuance of convertible corporate bonds, which shall be submitted together with other application materials.

— IV-1 —

ASSURANCE REPORT

APPENDIX IV

Verification opinion

We believe the “Report on the Verification of the Use of the Previous Proceeds” prepared by the management of the Company complies with the requirements of the “Regulations for the Report on the Use of the Previous Proceeds” (Zheng Jian Fa Xing Zi [2007] No.500) issued by the China Securities Regulatory Commission and truly reflects the use of the previous proceeds of the Company as of 31 December 2010 in all material respects.

28 January 2011 Beijing, China

Chinese Certified Public Accountant: Hu Jianjun Chinese Certified Public Accountant: Zhao Jie

— IV-2 —

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

==> picture [65 x 48] intentionally omitted <==

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1138)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Notice is hereby given that an extraordinary general meeting of China Shipping Development Company Limited (the “ Company ”) will be held at 700 Dong Da Ming Road, Shanghai, the People’s Republic of China on Wednesday, 6 April 2011 at 2:00 p.m. to consider and, if thought fit, pass the following resolutions as ordinary resolutions and special resolutions (as the case may be):

ORDINARY RESOLUTIONS

“ THAT the feasibility analysis report on use of proceeds from the public issuance of A Share Convertible Bond as set out in Appendix II to the circular of China Shipping Development Company Limited dated 16 February 2011 be and is hereby approved.”
“ THAT the Report of China Shipping Development Company Limited (the “ Company ”) on Utilisation of Proceeds from Previous Issuance (A Share Convertible Bonds) as set out in Appendix III to the circular of the Company dated 16 February 2011 be and is hereby approved.”
“ THAT the board of directors of China Shipping Development Company Limited (the “ Company ”) and its authorized delegates be and are hereby authorized to take any further actions, do such other acts and things and execute such other documents which in their opinion may be necessary or desirable to implement the proposed issue of the convertible bonds, details of which are set out in the Company’s circular dated 16 February 2011.”
“ THAT the appointment of Mr. Yan Zhichong as an executive director of China Shipping Development Company Limited be and is hereby approved and the terms of the service contract of Mr. Yan Zhichong, details of which are set out in the circular of China Shipping Development Company Limited (the “ Company ”) dated 16 February be and is hereby approved and any director of the Company be and is hereby authorised to make any further amendments to such service contract as he sees fit or desirable and execute the same on behalf the Company.”

— N1-1 —

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

SPECIAL RESOLUTIONS

“ THAT China Shipping Development Company Limited’s (the “ Company ”) eligibility to issue A share convertible bonds, details of which are set out in the Company’s circular dated 16 February 2011, be and is hereby approved.”
“ THAT each of the following items in respect of the issue of convertible bonds as set out in the circular of China Shipping Development Company Limited dated 16 February 2011 be and is hereby approved:
(1) Type of bond issue
(2) Size of issue
(3) Term
(4) Face value and issue price
(5) Interest rate
(6) Interest payment
(7) Conversion period
(8) Determination of conversion price
(9) Adjustment and calculation method of conversion price
(10) Terms for downward adjustment of conversion price
(11) Method on handling fractional shares upon conversion
(12) Terms on Redemption
(13) Terms on sale back
(14) Dividend distribution post conversion
(15) Mode of issue and subject of issue
(16) Placement arrangements for original shareholders
(17) Matters relating to meetings of bond holders
(18) Use of proceeds from this bond issue

— N1-2 —

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

(19) Matters relating to guarantees
(20) Effective period of this convertible bond issue.”

By Order of the Board China Shipping Development Company Limited Yao Qiaohong Company Secretary

16 February 2011 Shanghai The People’s Republic of China

(A) The H share register of the Company will be closed from Saturday, 5 March 2011 to Wednesday, 6 April 2011 (both days inclusive), during which no transfer of H shares will be effected. Any holders of H shares of the Company, whose names appear on the Company’s register of members at the close of business on Friday, 4 March 2011, are entitled to attend and vote at the EGM after completing the registration procedures for attending the meeting. In order to be entitled to attend and vote at the EGM, share transfer documents should be lodged with the Company’s H share registrar not later than 4:30 p.m. on Friday, 4 March 2011.

The address of the share registrar (for share transfer) for the Company’s H Shares is as follows:

Hong Kong Registrars Limited Rooms 1712-1716 17M Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

(B) Holders of H Shares, who intend to attend the EGM, must complete and return the reply slip to the Office of the Secretary to the Board of Directors of the Company not later than 20 days before the date of the EGM, i.e. no later than Thurday, 17 March 2011.

Details of the Office of the Secretary to the Board of Directors of the Company are as follows:

Room 1601, 700 Dong Da Ming Road, Shanghai, People’s Republic of China Postal Code: 200080 Tel: 86(21) 6596 6666 Fax: 86(21) 6596 6160

— N1-3 —

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

(C) Each holder of H Shares who has the right to attend and vote at the EGM is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on his behalf at the EGM.
(D) The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified.
(E) To be valid, for the holders of H Shares, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointor, a notarially certified copy of that power of attorney or other authority, must be delivered to the Company’s H Shares share registrar, Hong Kong Registrars Limited, at Hopewell Centre, 163 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time for holding the EGM and the relevant class meetings or any adjournment thereof in order for such documents to be valid.
(F) Each holder of A Shares is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on its behalf at the EGM and the relevant class meetings. Notes (C) to (D) also apply to holders of A Shares, except that the proxy form or other documents of authority must be delivered to the Office of the Secretary to the Board of Directors, the address of which is set out in Note (B) above, not less than 24 hours before the time for holding the EGM or any adjournment thereof in order for such documents to be valid.
(G) If a proxy attends the EGM on behalf of a shareholder, he should produce his identity card and the instrument signed by the proxy or his legal representative, which specifies the date of its issuance. If the legal representative of a shareholder which shareholder is a legal person attends the EGM, such legal representative should produce his identity card and valid documents evidencing his capacity as such legal representative. If a shareholder, which is a legal person, appoints a Company representative of a company other than its legal representative to attend the EGM and the relevant class meetings, such representative should produce his identity card and an authorization instrument affixed with the seal of the shareholder (which is a legal person) and duly signed by its legal representative.
(H) The EGM is expected to last for half an hour. Shareholders attending the EGM are responsible for their own transportation and accommodation expenses.
(I) As at the date of this notice, the board of directors of the Company is comprised of Mr. Li Shaode, Mr. Ma Zehua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Guofa and Mr. Qiu Guoxuan as executive Directors, and Mr. Zhu Yongguang, Mr. Gu Gongyun, Mr. Zhang Jun and Mr. Lu Wenbin as independent non-executive Directors.

— N1-4 —

NOTICE OF CLASS MEETING OF THE HOLDERS OF H SHARES

==> picture [65 x 48] intentionally omitted <==

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1138)

NOTICE OF THE CLASS MEETING FOR HOLDERS OF H SHARES

NOTICE IS HEREBY GIVEN that the H shareholders class meeting (the “ H Shareholders Class Meeting ”) of China Shipping Development Company Limited (the “ Company ”) will be held at 700 Dong Da Ming Road, Shanghai, the People’s Republic of China on Wednesday, 6 April 2011 at 2:30 p.m..

The purpose of the H Shareholders Class Meeting is to consider and, if thought fit, pass the following resolution as a special resolution:

SPECIAL RESOLUTION

“ THAT each of the following items in respect of the issue of convertible bonds as set out in the circular of China Shipping Development Company Limited dated 16 February 2011 be and is hereby approved:

(1) Type of bond issue
(2) Size of issue
(3) Term
(4) Face value and issue price
(5) Interest rate
(6) Interest payment
(7) Conversion period
(8) Determination of conversion price
(9) Adjustment and calculation method of conversion price
(10) Terms for downward adjustment of conversion price

— N2-1 —

NOTICE OF CLASS MEETING OF THE HOLDERS OF H SHARES

(11) Method on handling fractional shares upon conversion
(12) Terms on Redemption
(13) Terms on sale back
(14) Dividend distribution post conversion
(15) Mode of issue and subject of issue
(16) Placement arrangements for original shareholders
(17) Matters relating to meetings of bond holders
(18) Use of proceeds from this bond issue
(19) Matters relating to guarantees
(20) Effective period of this convertible bond issue.”

By Order of the Board

China Shipping Development Company Limited Yao Qiaohong Company Secretary

16 February 2011

Shanghai The People’s Republic of China

(A) The H share register of the Company will be closed from Saturday, 5 March 2011 to Wednesday, 6 April 2011 (both days inclusive), during which no transfer of H shares will be effected. Any holders of H shares of the Company, whose names appear on the Company’s register of members at the close of business on Friday, 4 March 2011, are entitled to attend and vote at the H Shareholders Class Meeting after completing the registration procedures for attending the meeting. In order to be entitled to attend and vote at the H Shareholders Class Meeting, share transfer documents should be lodged with the Company’s H share registrar not later than 4:30 p.m. on Friday, 4 March 2011.

— N2-2 —

NOTICE OF CLASS MEETING OF THE HOLDERS OF H SHARES

The address of the share registrar (for share transfer) for the Company’s H Shares is as follows:

Hong Kong Registrars Limited Rooms 1712-1716 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

(B) Holders of H Shares, who intend to attend the H Shareholders Class Meeting, must complete and return the reply slip to the Office of the Secretary to the Board of Directors of the Company not later than 20 days before the date of the H Shareholders Class Meeting, i.e. no later than Thursday, 17 March 2011.

Details of the Office of the Secretary to the Board of Directors of the Company are as follows:

Room 1601, 700 Dong Da Ming Road, Shanghai, People’s Republic of China Postal Code: 200080 Tel: 86(21) 6596 6666 Fax: 86(21) 6596 6160

(C) Each holder of H Shares who has the right to attend and vote at the H Shareholders Class Meeting is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on his behalf at the H Shareholders Class Meeting.
(D) The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified,
(E) To be valid, for the holders of H Shares, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointor, a notarially certified copy of that power of attorney or other authority, must be delivered to the Company’s H Shares share registrar, Hong Kong Registrars Limited, at Hopewell Centre, 163 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time for holding the H Shareholders Class Meeting and the relevant class meetings or any adjournment thereof in order for such documents to be valid.
(F) If a proxy attends the H Shareholders Class Meeting on behalf of a shareholder, he should produce his identity card and the instrument signed by the proxy or his legal representative, which specifies the date of its issuance. If the legal representative of a shareholder which shareholder is a legal person attends the H Shareholders Class Meeting, such legal representative should produce his identity card and valid documents evidencing his capacity as such legal representative. If a shareholder, which is a legal person, appoints a Company representative of

— N2-3 —

NOTICE OF CLASS MEETING OF THE HOLDERS OF H SHARES

a company other than its legal representative to attend the H Shareholders Class Meeting and the relevant class meetings, such representative should produce his identity card and an authorization instrument affixed with the seal of the shareholder (which is a legal person) and duly signed by its legal representative.

(G) The H Shareholders Class Meeting is expected to last for an hour. Shareholders attending the H Shareholders Class Meeting are responsible for their own transportation and accommodation expenses.
(H) As at the date of this notice, the board of directors of the Company is comprised of Mr. Li Shaode, Mr. Ma Zehua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Guofa and Mr. Qiu Guoxuan as executive Directors, and Mr. Zhu Yongguang, Mr. Gu Gongyun, Mr. Zhang Jun and Mr. Lu Wenbin as independent non-executive Directors.

— N2-4 —

AI assistant

Dida Inc. — Proxy Solicitation & Information Statement 2011

50671_rns_2011-02-15_b05da173-8229-43d7-9ce9-4c1b7f9443b9.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

CONTENTS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

PROPOSAL FOR THE ISSUE OF BONDS CONVERTIBLE INTO NEW A SHARES OF THE COMPANY AND APPOINTMENT OF EXECUTIVE DIRECTOR

INTRODUCTION

LETTER FROM THE BOARD

PROPOSED BOND ISSUE

OFFER OF CONVERTIBLE BONDS TO BE MADE IN THE PRC ONLY

SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSED BOND ISSUE

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

PROPOSED USE OF PROCEEDS

LETTER FROM THE BOARD

REASONS FOR THE BOND ISSUE

IMPACT OF THE BOND ISSUE ON CAPITAL STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

LETTER FROM THE BOARD

IMPLICATIONS OF ISSUANCE OF CONVERTIBLE BONDS UNDER THE PRC REGULATORY REQUIREMENTS

PROPOSAL IN RESPECT OF THE FEASIBILITY ANALYSIS REPORT ON USE OF PROCEEDS FROM THE BOND ISSUE

PROPOSAL IN RESPECT OF THE REPORT ON UTILISATION OF PROCEEDS FROM PREVIOUS ISSUANCES

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

LETTER FROM THE BOARD

APPOINTMENT OF EXECUTIVE DIRECTOR

EGM AND CLASS MEETINGS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INFORMATION ABOUT THE COMPANY

RECOMMENDATION

ADDITIONAL INFORMATION

PROPOSAL IN RESPECT OF PUBLIC ISSUANCE AND LISTING OF THE CONVERTIBLE BONDS

1. Type of bonds to be issued

2. Issue size

3. Term of the convertible corporate bonds

4. Nominal value and issue price

5. Coupon rate

6. Interest payment

7. Conversion period

8. Determination of the Conversion Price

9. Determination and adjustment of conversion price

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

10. Provision for Downward adjustment to Conversion Price

(1) Conditions and magnitude of adjustment

(2) Adjustment procedures

11. Method for handling fractional shares upon conversion

12. Terms of redemption

(2) Terms of early redemption

APPENDIX I PROPOSAL IN RESPECT OF PUBLIC ISSUANCE THE BOND ISSUE

13. Terms of sale back

(1) Terms of conditional sale back

(2) Additional terms of sale back

14. Dividend distribution after conversion

15. Method of issuance and target investors

16. Subscription arrangement for existing shareholders

17. Matters relating to CB Holders’ meetings

18. Use of proceeds from the issuance of the Convertible Bonds

19. Guarantee

20. Validity period of the resolutions in relation to the issuance of the Convertible Bonds

FEASIBILITY ANALYSIS REPORT ON USE OF PROCEEDS FROM THE BOND ISSUE

2. Proposed use of proceeds

II. Payment for construction of 8 MR oil tankers of 48 thousand dead weight tonnes class

3. Economic benefits forecast

2. Proposed use of proceeds

3. Economic benefits forecast

UTILIZATION REPORT

REPORT ON UTILISATION OF PROCEEDS FROM PREVIOUS ISSUE

1. Basis of Preparation

2. Amount of proceeds from previous issue and status of receipt of funds

3. Status of actual utilisation of proceeds from previous issue

4. Status of income from previously raised proceeds

Attachment 1

Comparison table on status of utilisation of proceeds from previous issue (RMB)

Dida Inc. Proxy Solicitation & Information Statement 2011