NEW YORK and SHENZHEN, China, Oct. 6 /Xinhua-PRNewswire-FirstCall/ -- China Finance, Inc. (OTC Bulletin Board: CHFI) (the "Company"), a provider of financial support and services for China's large and rapidly expanding class of small and medium enterprises ("SMEs"), today announced that the Company intends to expand its business to include strategic direct investments in and acquisitions of the equity of SMEs through its wholly-owned subsidiary, Value Global International Limited, a British Virgin Islands company ("Value Global"). The Company also announced today that, consistent with this new line of business, Value Global has signed a non-binding letter of intent to acquire 80% of the current issued and outstanding shares of Wenxi Baiyu Magnesium Co., Ltd. ("WBM") from Shanxi Baiyu Industrial Group ("Shanxi") for approximately $11,420,000 (the "LOI"). The proposed transaction is subject to the satisfactory completion by the Company of due diligence and business negotiations, the finalization of terms for a definitive agreement, and the receipt of final approval from the Company's board of directors and any approvals required under WBM's and Shanxi's governing documents and applicable law.

Currently, the Company's business focuses on providing surety guarantees, loan guarantees and short-term loans to SMEs when they seek access to capital or seek to become publicly-traded companies in the United States. The Company believes that the introduction of direct investment and acquisition opportunities is a natural evolution and expansion of its current business. To evaluate direct investment acquisition opportunities, the Company will use investment analysis and due diligence reviews similar to those used by the Company for its current lines of business. In general, the Company expects its direct investments and acquisitions to be made in SMEs in a wide range of industries with annual revenues of at least $30 million.

Ms. Ann Yu, CEO of the Company, stated, "We are excited about the implementation of this new line of business for the China Finance. We anticipate that the direct investments will allow China Finance to continue to grow strategically and prove to be lucrative for the company."

To kick off its new business line, the Company recently signed the LOI with Shanxi to purchase 80% of its shares of WBM. WBM was founded in April 2000 by Shanxi, a large paper making enterprise, and is located in Yuncheng, Shanxi Province, which is a major magnesium production base in China. WBM currently owns one of the largest monomer magnesium spindle production lines in China producing magnesium spindle, metal calcium and magnesium alloy. Recently, WBM acquired dolomite mining rights to two independent mines. Estimates place these mines' reserves of dolomite, a mineral from which magnesium is obtained, at approximately 30,000,000 tons. WBM's current magnesium production capacity is 30,000 tons per year, and WBM is seeking to complete a project to reduce its production costs by 15% by the end of 2008. In 2009, WBM plans to increase its magnesium production capacity to 60,000 tons per year, and to develop new magnesium alloy products. WBM currently anticipates annual sales of $47,000,000 with $7,500,000 in net profits for the fiscal year 2008 and annual sales of $116,000,000 with $14,500,000 of net profits in the fiscal year 2009.

Ms. Yu noted that: "The non-ferrous metal industry in China, including the magnesium industry, is a growing area as magnesium is used in a number of new areas of technology. We think that this investment will prove profitable for China Finance."

ABOUT CHINA FINANCE, INC.

China Finance, Inc. provides financial support and services - primarily in the form of surety guarantees, loan guarantees, or short-term loans - to privately owned SMEs when they seek access to capital or to be acquired by a United States reporting company. China Finance provides its services through its wholly-owned indirect subsidiary, Shenzhen Hua Yin Guaranty and Investment Limited Liability Corporation, which is located in the financial district of Shenzhen, China.

FORWARD-LOOKING STATEMENTS

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements relating to expected operating results and future performance, as well as future events and developments, are forward-looking statements and are not historical in nature. Generally, the words "looking forward", "believe", "expect", "intend", "estimate", "anticipate", "likely", "project", "may", "will" and similar expressions identify forward-looking statements. The Company warns that any forward-looking statements in this release involve numerous risks and uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by any forward-looking statement. These risks and uncertainties include, but are not limited to, the risk that the value of our portfolio securities will decline resulting in a decline in the value of the Company's stock, we might not achieve our anticipated development milestones, the market for our services will not grow as expected and we might not achieve our expectations. If these or other significant risks and uncertainties occur, or if our underlying assumptions prove inaccurate, our actual results could differ materially. While the Company is an operating company, the Company is registered as a "closed-end" investment company under the Investment Company Act of 1940, as amended, and is subject to the types of investment risks that effect investment companies. You are urged to consider the operating and investment objectives and strategies, expenses and history of the Company, along with all risks and uncertainties noted above, and to review the risk factors and financial information about the Company available in the Company's registration statement on Form N-2, and the Company's Annual and Semi-Annual Reports and other regulatory filings accessible on the SEC's website at http://www.sec.gov . In light of the uncertainty inherent in forward-looking statements, you should not consider their inclusion to be a representation that such forward-looking matters will be achieved. Moreover, pursuant to the Private Securities Litigation Reform Act of 1995, such statements speak only as of the date they were made, and the company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. Past performance is no guarantee of future results, and like all investments, you may lose money on an investment in the Company's stock.

SOURCE China Finance, Inc.