Chongqing Machinery & Electric Company Ltd. provided earnings guidance for the six months ended June 30, 2012. For the period, the company expects to record a decline as compared to the corresponding period in 2011. Such decline is mainly due To the following reasons: in the first half of 2012, with the world economic situation getting increasingly complicated and the European debt crisis still unresolved, China was confronted with increasing risk of slower economic growth and economic downturn.

Accordingly, the state reduced its investment projects, with smaller investment scale; the slower economic growth led to insufficient market demands, the decline in orders, increased competition and downward prices; and the increase in labour costs.