The Chinese Government has created a National High Technology Research and Development Program, dubbed the "863 Program," and one of the first funding recipients is China BAK Battery Corp. China BAK will be getting a grant of up $3.1 million, initially, from the federal government and more from local governments. The money will be used to fund R&D and commercialization efforts on China BAK's lithium phosphate battery technology. The hope is to get manufacturing of high-power batteries for electric and hybrid vehicles going as soon as possible. The company is already one of the largest producers of lithium ion cells for electronics applications.
[Source: China BAK Battery Inc.]

China BAK Funded by National 863 Program for its Electric Vehicles Battery Project

SHENZHEN, China, Dec 29 /PRNewswire-Asia-FirstCall/ -- China BAK Battery, Inc. ("China BAK", or "BAK") (NASDAQ:CBAK) , one of the largest lithium-ion battery cell manufacturers in the world, as measured by production output, today announced its Electric Vehicles Lithium-phosphate Power Battery Industrialization Project (the "Project") has been selected as a key project of the PRC's National High Technology Research and Development Program, or "863 Program", by the PRC's Ministry of Science and Technology. Under expected terms of the official election, China BAK will receive a grant of up to $3.1 million from the PRC's central government and certain subsidy grants, amount to be determined, from the Shenzhen Municipal Government in coming quarters.

BAK International (Tianjin) Limited, China BAK's wholly-owned subsidiary, which focuses on the R&D, manufacturing and distribution of advanced high-power lithium-phosphate cells, will lead the commercialization of the Project. It aims to commercialize the production of high-power lithium-phosphate cells for use in light electric vehicles and hybrid electric vehicles.

The 863 Program is one of the most important national science and technology programs in China. It was launched in March 1986 by the PRC's central government as a national strategic development program to optimize and upgrade China's hi-tech development in the key fields of IT, biology, energy, agriculture, pharmaceutical, new material, manufacturing and automation, as well as resource and environment. The selection process for 863 Program is highly rigorous and competitive.

China BAK has many years of experience in the R&D, manufacturing and distribution of high-power lithium-phosphate cells. It began commercial production of lithium-phosphate cells at its Shenzhen facility for use in cordless power tools in October 2005, and for mining lamps in March 2007. In December 2006, its new subsidiary, BAK International (Tianjin) Limited, was incorporated to focus on the R&D, manufacturing and distribution of lithium-phosphate cells. China BAK has since shifted all lithium-phosphate cell manufacturing machinery, equipment and personnel from its Shenzhen facility to its Tianjin facility. In October 2008, its Tianjin facility completed construction of its first lithium-phosphate cell production line, and initiated trial production of lithium-phosphate cells. It has also been engaging in the research and development of lithium-phosphate cells for use in light electric vehicles and hybrid electric vehicles, and has been actively seeking market opportunities for such applications.

"To be selected to participate in the 863 Program, a symbol of high technology in China, will further enhance our reputation as a hi-tech battery manufacturer and increase our customers' trust in our products. It is a great opportunity for BAK to commercialize its high-power lithium-phosphate cells production by seeking cooperation and leveraging supply chain in the industry," commented Xiangqian Li, CEO of China BAK.

About China BAK Battery Inc.

China BAK Battery Inc. is one of the largest manufacturers of lithium-based battery cells in the world, as measured by production output. It produces battery cells that are the principal component of rechargeable batteries commonly used in cellular phones, notebook computers, portable consumer electronics, such as digital media devices, portable media players, portable audio players, portable gaming devices and PDAs (Personal Digital Assistants), and other applications, such as cordless power tools and mining lamps. China BAK Battery, Inc.'s 3.0 million square foot facilities are located in Shenzhen and Tianjin, PRC, and have been recently expanded to produce new products.

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China BAK Battery, Inc. and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to risks related to China BAK's business and risks related to operating in China. Please refer to China BAK's Annual Reports on Form 10-K for the fiscal years ended September 30, 2006, 2007 and 2008, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. China BAK's actual results could differ materially from those contained in the forward-looking statements. China BAK undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

Source: China BAK Battery Inc.

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