China New Energy Announces Acquisition of Fuzhou Flying Dragon Zhongran Gas Inc.

TIANJIN, China, Jan. 12 /PRNewswire-Asia-FirstCall/ — China New Energy
Group Company (OTC Bulletin Board: CNER) (“China New Energy” or the “Company”),
a vertically integrated natural gas company engaged in the development of
natural gas distribution networks, and the distribution of natural gas to
residential, industrial, and commercial users in small- and medium-sized
cities in China, announced that on January 5, 2010, Willsky Development, Ltd.,
the Company’s wholly-owned subsidiary, entered into an equity purchase
agreement (the “Agreement”) to acquire all of the outstanding equity interest
of Fuzhou Flying Dragon Zhongran Gas Inc., a PRC company (“Fuzhou Zhongran”),
from Flying Dragon Resource Development Limited and Flying Dragon Investment
Management Limited, for RMB 26 million (approximately $3.8 million). The
purchase price is payable in three installments based on the satisfaction of
various mutually agreed upon closing conditions.

On November 11, 2007, Fuzhou Zhongran obtained an exclusive operating
license from the Dongxiang County government in Jiangxi Province for the
construction and development of a natural gas pipeline network for 30 years.

“Our acquisition of Fuzhou Zhongran is another important step for our
growth in Jiangxi Province, since we recently announced two other acquisitions
in that province,” said Mr. Yangkan Chong, Chief Executive Officer. “There is
increasing demand for natural gas from both residential and industrial users
in Dongxiang County. In 2010, we plan to connect the Dongxiang regional gas
pipeline network to a major national network. In the coming year, we look
forward to increasing our revenues from additional construction projects and
stronger sales of natural gas.”

About China New Energy Group Company

China New Energy Group Company (“China New Energy” or the “Company”) is a
vertically integrated natural gas company engaged in the development of
natural gas distribution networks, and the distribution of natural gas to
residential, industrial, and commercial users in small and medium sized cities
in China. The Company generates revenues primarily from the connection fees it
charges its customers for interconnecting to pipelines in its natural gas
distribution networks, and fees for natural gas usage. For more information,
please visit http://www.cnegc.com/ .

Safe Harbor Statement

Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995: Any statements set forth above that are not historical facts are
forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Such factors include, but are not limited to, the Company’s
ability to access natural gas for distribution, and ability to identify and
develop operational locations under favorable terms, changes in natural gas
pricing mechanism imposed by the Chinese government, changes in the regulatory
environment and future national or regional economic and competitive
conditions, and other factors detailed from time to time in the Company’s
filings with the United States Securities and Exchange Commission and other
regulatory authorities. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

    For more information, please contact:

    Company Contact:
     Eric Yu, Chief Financial Officer
     Email: ericyu@cnegc.com
     Web:   http://www.cnegc.com

    Investor Relations Contact:
     CCG Investor Relations
     Mr. Athan Dounis, Account Manager
     Phone: +1-646-213-1916
     Email: athan.dounis@ccgir.com

     Mr. Crocker Coulson, President
     Phone: +1-646-213-1915 (New York)
     Email: crocker.coulson@ccgir.com
     Web:   http://www.ccgirasia.com

SOURCE China New Energy Group Company