China Weaving Materials : Continuing Connected Transaction-Framework Supply Agreement With Baoyuan

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Weaving Materials Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges 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.

CHINA WEAVING MATERIALS HOLDINGS LIMITED 中 國 織 材 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3778)

CONTINUING CONNECTED TRANSACTION FRAMEWORK SUPPLY AGREEMENT WITH BAOYUAN AND NOTICE OF EXTRAORDINARY GENERAL MEETING Independent Financial Adviser to Independent Board Committee and Independent Shareholders Giraffe Capital Limited

A letter from the Board is set out on pages 3 to 11 of this circular. A letter from the Independent Board Committee is set out on page 12 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 13 to 21 of this circular.

A notice convening the EGM to be held at the Conference Room, 2nd Floor, the Office Building, Jinyuan Textile Company Limited, Jiangxi, Fengtian Development Zone, Fengxin County, Jiangxi Province, the PRC, at 10:30 a.m. on Friday, 8 September 2017 is set out on pages N-1 to N-2 of this circular.

Whether or not you are able to attend the EGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible and deposit the same with the Company's Hong Kong share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the commencement of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

18 August 2017

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Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Letter from the Independent Board 12

Letter from the Independent Financial Advisor 13

Appendix - General Information 22

Notice of the EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-1

In this circular, the following expressions have the following meanings, unless the context requires otherwise:

"Announcement" the announcement of the Company dated 7 July 2017

"associate(s)" has the meaning ascribed to it under the Listing Rules

"Board" the board of Directors

"Baoyuan" Jiangxi Baoyuan Colourful Textile Co. Ltd.* (江西寶源彩紡有限 公司), a limited liability company established in the PRC on 8 January 2008 and is 80% owned by Ms. Lin Xiaochun as at the Latest Practicable Date

"Baoyuan Continuing Connected Transactions"

the transactions contemplated under the Framework Supply Agreement

"China" or "PRC" the People's Republic of China (except Taiwan, Macau Special Administrative Region and the Hong Kong Special Administrative Region, for the purpose of this circular)

"Company" China Weaving Materials Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (stock code: 3778)

"connected person" has the meaning ascribed to it under the Listing Rules

"Director(s)" director(s) of the Company

"Dtex" the abbreviation of decitex, the mass in grams per 10,000 meters. The most commonly used unit of measurement for the linear mass density of fibers

"EGM" the extraordinary general meeting of the Company to be convened to approve, among other things, the Framework Supply Agreement, the Baoyuan Continuing Connected Transactions and the Proposed Annual Caps

"Framework Supply Agreement" the framework supply agreement dated 7 July 2017 entered into

between Baoyuan and Xinyuan in relation to the sale and purchase of PSF

"Group" the Company and its subsidiaries

"HK$" Hong Kong dollars, the lawful currency of Hong Kong

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"Independent Financial Adviser" or "Giraffe Capital Limited"

Giraffe Capital Limited, a licensed corporation under the SFO to carry on type 6 (advising on corporate finance) regulated activity, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders

"Independent Board Committee" an independent committee of the Board, comprising all the

independent non-executive Directors

"Independent Shareholders" Shareholders other than Mr. Zheng Yongxiang, Mr. Zheng Hong

and their respective associates, who are not required to abstain from voting at the EGM

"Latest Practicable Date" 16 August 2017, being the latest practicable date prior to the

printing of this circular for ascertaining certain information in this circular

"Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange

"Proposed Annual Caps" the proposed maximum transaction amounts for the Baoyuan

Continuing Connected Transactions for the following periods, for the year ending 31 December 2017, from 1 January 2018 to 31

December 2018, from 1 January 2019 to 31 December 2019 and

from 1 January 2020 to 30 June 2020

"Percentage Ratios" the percentage ratios as set out in Rule 14.07 of the Listing Rules "PSF" polyester staple fibres

"PTA" purified terephthalic acid

"RMB" Renminbi, the lawful currency of the PRC

"Shareholder(s)" shareholder(s) of the Company

"Share(s)" ordinary share(s) of HK$0.10 each in the share capital of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Xinyuan" Jiangxi Xinyuan Special Fibres Company Ltd.* (江西鑫源特種纖 維有限公司), a limited liability company established in the PRC on 5 December 2014 and is 51% indirectly owned by the Company as at the Latest Practicable Date

* English names for reference only

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