Social Responsibility Report

SOCIAL RESPONSIBILITY REPORT

Contribution to the World with Responsibility Contribution to the World

Stock Code: Code: Stock 1829.HK

China Machinery Engineering Corporation 2017 Social Responsibility Report eet, Xicheng District, Beijing, China Str uang'anmenwai 178, G No. ng, Buildi MEC Postcode: 100055 TEL: +86 -10 - 63312002 +86 - 10 - 63268156 FAX: E-mail: [email protected] www.cmec.com Website: ADD: C

About This Report Reporting Period January 1, 2017 - December 31, 2017. This Report also includes additional content and information that pre-dates the stated reporting period.

Reporting Cycle CMEC makes the world better ! This Report is annually published and it is the fifth social responsibility report released by China Machinery Engineering Corporation.

Reporting Scope China Machinery Engineering Corporation and its subsidiaries.

Reference In this Report, “CMEC”, “the Company” and “We” refer to China Machinery Engineer- ing Corporation, and “SINOMACH” refers to its controlling shareholder China National Machinery Industry Group.

Reporting Data Sources All data in this Report is from CMEC’s annual report 2017, work report and other official doc- uments, with some historical data restated in compliance with the accounting standards.

Compilation Conformance Guidelines to the State-owned Enterprises Directly under the Central Government on Fulfilling Corporate Social Responsibilities issued by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC); Environmental, Social and Governance Reporting Guide by Stock Exchange of Hong Kong; Sustainability Reporting Guidelines (G4) from Global Reporting Initiatives (GRI); ISO 26000: Guidance on Social Responsibility (2010) by International Organization for Standardization; Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS- The gear, as well as the Chinese character of “中” and the abbreviation of the CSR 4.0) by Chinese Academy of Social Sciences; Company name “CMEC”, are the three major elements of CMEC’s logo. The Guide on Social Responsibility for Chinese International Contracting Industry released by gear embodies the business characteristics of machinery industry. The design China International Contractors Association. of concentric circle symbolizes the corporate culture of creating success by all the Company staff, and the value of harmonic relationship with the country, the society and business partners. The four letters in “CMEC” with sideper- Access to This Report spective, three-dimensional effect and tough font style reflect the corporate This Report is prepared and released in Chinese and English versions and is available in image of a stable, solid and imperturbable enterprise. The Chinese character paper and electronic formats. For any ambiguity between Chinese and English versions, “中” represents the Company’s Chinese identity. The three elements are in the Chinese one shall prevail. Please contact us if you need a paper version. You may vis- harmony with each other, vividly expressing the value orientation and spiritual it our website to download the online version. connotation of CMEC.

ADD: CMEC Building, No. 178, Guang’anmenwai Street, Xicheng District, Beijing, China Postcode:100055 Contact person: Wang Sudan, Social Responsibility Office TEL:+86 - 10 - 63312002 FAX:+86 - 10 - 63268156 E-mail:[email protected] Website:www.cmec.com Scan the QR Code to Read This Report Online Contents

Transformation and Upgrading Happy Homeland Harmonious Community Promoting Sustainable Development Sharing the Fruits of Development Benefiting Local Livelihood 01 Q&A with Leaders

Stabilizing Operation and Development 41 Protecting Legitimate Rights and Interests 61 Implementing Localized Operation 83 07 Features on Responsibility Strengthening Basic Management 42 Paying Attention to Career Development 65 Improving Community Livelihood 84 23 About Us Improving Value-creating Capacity 44 Safeguarding Occupational Health 66 Engaging in Public Welfare 88 Extending Responsibility to Employees 67 25 Development Strategy Caring for Employees in Work 68 26 Corporate Cultural System 27 Organizational Structure 28 Company Governance 29 Global Business Layout 31 Social Organizations Joined 32 Awards and Honors 91 Key Performance Going Forward withOur Partners 33 Responsibility Management Safety and Environmental Protection 93 Outlook 2018 Pursuing Win-win Cooperation Guaranteeing Healthy Operations 33 Social Responsibility Management Model 95 Third-party Evaluation 34 Social Responsibility Organizational System Creating Excellent Projects 51 Passing on Green Value 73 35 Social Responsibility Work Promotion 96 Reporting Index 37 Stakeholders Management Building Responsible Supply Chains 55 Securing Work Safety 77 38 Stakeholders Communication and Engagement Achieving Win-win Development with Partners 57 97 Feedback Form 2017 Social Responsibility Report 01 China Machinery Engineering Corporation Q&A with Leaders 02

Q&A with Leaders

The 2017 Belt and Road Forum for International Cooperation held in Beijing is of great significance to promoting the international and regional cooperation. What substantive results have CMEC achieved while participating in the forum, and what major progress has been made in CMEC projects along the Belt and Road?

This Forum is an invaluable opportunity for CMEC to ex- CMEC in the field of transportation construction after the pand international cooperation. During the forum, CMEC railway project in Argentina. CMEC also signed the EPC signed the Supplementary Agreement of Argentina Bel- contract for two power station projects of Thar Block II grano Railway Reconstruction Phase I Project witnessed 2×330MW Coal Fired Power Project in Sindh, the contract by President Xi Jinping and Argentine President Macri. for the Punjiab RLNG Combined Cycle Power Plant, the In addition, CMEC leaders met with delegations from Company’s first H-class gas turbine power station, the con- the Trinidad and Tobago and Greece, as well as the dele- tract for Nickel-iron Smelting Project in Central Sulawesi, gation led by the First Vice Prime Minister of Ukraine. In Indonesia, and the contract for the Construction of 3,000 2017, the Company actively promoted the construction Units of Telecommunication Towers Project in Myanmar, of projects along the Belt and Road. The newly signed which is a major progress of CMEC in the Burmese market railway project in Mozambique is another breakthrough of and communications.

2017 is the last year of the CMEC Five-Year Development Strategy Plan. What major achievements does CMEC make in implementing national strategies, SINOMACH strategies and corporate strategies in the past five years?

In the past five years, under the leadership of SINOMACH strategies of and tasks assigned by SINOMACH, we have and the CMEC Party Committee as well as the guidance strengthened the cadres’ recognition for SINOMACH’s phi- of the scientific decision-making of the Board of Direc- losophy and culture through cooperation with companies tors, the Company has steadily promoted reform and in- under SINOMACH, which helped realize mutual benefits, novation, and put forward a series of new concepts, new strengthen cohesion and win acclamation of all brother ideas and new measures, which has helped solve many companies. To strengthen the leading role of the Compa- problems in the development process, and thus boosted ny’s strategy, we have developed and released the 2013- high-quality development. For the implementation of 2017 Five-year Development Plan and put forward the national strategies, we have made substantial progress in vision “to be the world leading international engineering our main business sectors in countries and regions related contractor and services provider”. Attaching great impor- to the Belt and Road Initiative and the Going Global strat- tance to the implementation of corporate strategies, over- egy, especially in Pakistan, Sri Lanka, the Maldives, Ar- all, we have achieved the strategic goals through closed- gentina, Laos, and Serbia where we have contracted and loop management and other measures. constructed multiple projects. In the implementation of

The 19th CPC National Congress is an important congress held in the crucial stage of “securing a de- cisive victory in building a moderately prosperous society in all respects and striving for the great success of socialism with Chinese characteristics for a new era”. How will CMEC implement requirements of the report delivered at 19th CPC National Congress while continuing to pursue a more splendid future of CMEC?

CMEC should take on a new look and make new accom- we will pursue supply-side structural reform as our main plishments in the new era. We will remain true to our orig- task, and work hard for better quality, higher efficiency, and inal aspiration and keep our mission firmly in mind. We more robust drivers of economic growth through reform, Zhang Chun will actively practice national strategies and strive for the so as to constantly emancipate and develop social pro- goals set by the 19th CPC National Congress while en- ductivity. Upholding the global governance concept that Chairman deavoring to create personal values. We will always work “the Belt and Road Initiative should be jointly built through together with all stakeholders, develop excellent projects consultation to meet the interests of all” and the social re- for national economic development and the improvement sponsibility concept to “Contribution to the world with re- of people’s livelihood, build bridges that connect the sponsibility”, we will deepen cooperation with all countries Chinese and foreign people, pave roads for the peace while upholding justice, tackle challenges together and between China and foreign countries, and promote the share opportunities. Starting from every detail of our oper- Belt and One Initiative jointly with all countries along the ation, we will always practice the solemn promise to be a route. Adhering to the practical foundation of innovation force for world peace, a contributor to global development and development and the new development concepts, and a defender of international order. 2017 Social Responsibility Report 03 China Machinery Engineering Corporation Q&A with Leaders 04

Q&A with Leaders

Talents are the primary driving force for sustainable and high-quality development of the Company, and the quality of talents decide the quality of corporate development. How does CMEC strengthen the talent team building?

First, pay attention to the selection and training of cadres tailor-made cultivation plans, provide customized training at all levels. CMEC attaches great significance to heads of according to their reality and conduct regular evaluations. all departments who form a key minority of the Company. Third, focus on the training of the “six talent teams”. We We improve the international vision, political quality, busi- will make all-out efforts to cultivate senior management ness ability, management expertise, theoretical literacy talents, project management talents, marketing talents, and the capacity to solve problems of cadres through technical management talents, professional management training, assigning hard tasks and offering opportunities talents as well as financing and capital operation talents, for multi-post experience, and pay special attention to further improve the talent training and reserve model, as the selection and promotion of young and frontline cad- well as the talent incentive mechanism. Fourth, emphasize res. Second, focus on the cultivation of reserve cadres. team building. Leading cadres at all levels of CMEC take According to the business and management needs of the lead to mentor employees. They try to understand em- CMEC, we have established a team of different levels of ployees’ thinking, care for employees’ life and lead every- reserve cadres with a proper quantity. For cadres and re- one to fight for shared goals. serve cadres in key positions, we will gradually establish

Culture is the soul of a company and an important component of core corporate competitiveness. How does CMEC play the leading role of culture in continuously enhancing the soft power?

First, tell the stories of CMEC people. Sticking to the with CCTV and Xinhua News Agency to publicize CMEC guidance of model employees and learn from them, we overseas projects. Third, build a CMEC family. By fully mo- have opened up the columns of “Set a Good Example in bilizing enthusiasm of the CMEC Cultural and Sports Asso- CMEC, Pioneer in Chasing Dreams” and “CMEC People – ciation, we organized various cultural and sports activities, Chase Dream Overseas” to pass on the rich connotations such as the third Voice of CMEC singing competition, table of CMEC culture, energize employees’ enterprise, and tennis, badminton, football, basketball, tug-of-war compe- concentrate all positive power to facilitate the reform and titions and so on. With these activities as bridges and cata- development. Second, enhance the reputation of CMEC. lysts, we accelerated the integration of China International We have completed the upgrade of CMEC’s external Electric Engineering, China National Complete Engineering network. China Machinery magazine highlights charac- Corporation, China Machinery International Engineering teristics of the Company, CMEC WeChat official account Design & Research Institute Co., Ltd., China JIKAN Insti- shows diversified information about the Company, CMEC tute of Engineering Investigation and Design Co., Ltd. and Communications offers down-to-earth contents, CMEC other subsidiaries of the Company into the CMEC family. Youth WeChat official account fully demonstrates young Fourth, actively fulfill social responsibilities. CEMC active- employees’ life-affirming spirit and enterprise. With the ly took part in helping people in difficulty and distress at Belt and Road Forum for International Cooperation as a Guangan’men Outer Street, and donated clothing and great opportunity, we made publicity on China Daily and books to poor areas. Meanwhile, CMEC participated in the International Business Daily, carried out special publicity “Love Knows No Borders” International Charity Sale, tak- through the New Silk Road Review, and collaborated ing the initiative to fulfill the corporate social responsibility.

After years of development, CMEC has formed the business philosophy of “Being Pioneers in the World”, the corporate philosophy of “Create Ideas, Achieve Dreams” and the corporate culture featuring “diversity, inclusiveness and innovation”. 2018 marks the 40th anniversary of the founding of CMEC. How do you think the Company should further refine, publicize and promote the spirit of CMEC, inherit and develop CMEC culture? First of all, we must carefully summarize and inherit the innovation of mechanism models, market development fine traditions of CMEC and consolidate the cultural foun- methods, as well as products and services, we will promote dation. Many people think that the CMEC spirit should the development of our business operations. Meanwhile, Han Xiaojun cover the courage to overcome challenges, the resolution we shall firmly promote collaborative innovation, among to be the first, the spirit of selfless dedication, the valiancy SINOMACH and CMEC subsidiaries, along the upstream Vice Chairman to explore the global market, the image of a respectable and downstream sectors and industry chains at home and and dedicated corporate citizen, the philosophy that abroad, and invite more foreign companies to establish emphasizes the fulfillment of contracts, the work style of business in China and facilitate more Chinese enterprises sincere cooperation, and the pragmatic and prudent at- to go out, so as to build up our advantages in collabo- titude. We shall inspire the enthusiasm of the cadres and rative, innovative, integrated and shared development. workers for starting a new undertaking by refining, pub- Lastly, we shall build learning organizations for all levels of licizing and promoting CMEC’s historical traditions and the Company and create a long-lasting foundation for sus- fine spirits. Also, we shall add more innovative factors to tainable corporate development. The learning ability of an the culture of CMEC to stimulate the potential energy of organization is the magic weapon for modern enterprises the Company. We shall unswervingly implement our new to win in the market competition, and it is also the basic development concepts and take innovation as the prima- strategy for building a long-lasting foundation for long- ry driving force for high-quality development. Through term sustainable corporate development. 2017 Social Responsibility Report 05 China Machinery Engineering Corporation Q&A with Leaders 06

Q&A with Leaders

2017 is the last year of the CMEC Five-Year Development Strategy Plan. The Company has actively implemented tasks assigned by SINOMACH, and under the leadership of the Party Committee and the scientific decision-making of the Board of Directors, the Company has performed well in terms of the overall operation and financial status. How was the performance of the Company in 2017?

In deployment and development of the international we focused on properties, agriculture industry and logistics market, we implemented the Belt and Road Initiative, under CMEC. In terms of internal and external collabo- Going Global, and other national strategies and made ration, we partnered with China National Erzhong Group the overall arrangement for overseas markets. In building Co., and successfully developed the large casting for the the EPC open platform and the industry ecosphere, we driving wheels of Komatsu 4,100 electric rope shovel, signed strategic cooperation agreements with world lead- becoming the preferred supplier of the product. In terms ing companies such as ABB, and established industrial of team building and talent cultivation, we continued to alliances with well-known domestic enterprises such as improve the echelon of cadres and employee development China XD Group. While innovating in the investment and channels. In terms of work safety, we initially completed financing mode, we actively promoted the Company’s the establishment of HSE system and released the CMEC first project of refinancing of supplier credit. By owning Guideline on HSE Management and Operation of Overseas part of the shares of Ascendas Group of Singapore, we Projects. No major safety accidents happened throughout invested in the development of the Chennai Industrial the year. Park in India. In the development of emerging businesses,

With compliance management as the premise and efficiency improvement and process optimization as the target, CMEC has initially established six modern corporate management systems for engineering contracting, finance, legal affairs, investment and financing, social responsibility and corporate culture. In 2017, what actions did the Company take in these aspects to improve overall management?

For the business management system of engineering con- overseas financing system centering on China Everbest De- tracting, we established and improved the major progress velopment International Limited (Hong Kong) and support- reporting mechanism and multi-level supervision system, ed by regional companies in Singapore and Dubai. In terms improved the security system for procurement manage- of the social responsibility management system, CMEC ment, and established an evaluation system for the clas- has published CSR reports for the fourth consecutive year, sification and rating of domestic and foreign suppliers. In CMEC CSR cases were again selected into the 2017 Report terms of the financial management system, we deepened on the Sustainable Development of Chinese Enterprises the overall management of budgeting, promoted cost re- Overseas, and we also won the China International Sus- duction and efficiency improvement, increased investment tainable Infrastructure Award (CISIA) and other awards. in overseas financial personnel, promoted the reporting For the corporate culture management system, we issued system for major financial issues, and conducted special the Visual Identity Manual for Corporate Image and Brand, inspections on key subsidiaries. For the legal affairs man- held the promotion campaign themed “Commemorating agement system, we adhered to the integration of pre- the 4th Anniversary of the 21st-Century Maritime Silk Road vention of legal risks, compliance management and legal Initiative, CMEC – Your Partner for Success Reception and supervision, through which we achieved full coverage of Conference” with Peking University, effectively enhancing all business units. To improve the investment and financ- the Company’s reputation. ing management system, we made efforts to build an

Except for these achievements in 2017, CMEC must have encountered some challenges in its development. What do you think are the challenges faced by the Company in its development, and what are the working ideas for the next stage of development?

There are a few challenges to the current development of proportion of account receivable to total asset as well as Zhou Yamin the Company. First, CMEC has not gained a thorough un- the proportion of the sum of inventory to total asset still derstanding of the Belt and Road Initiative, Going Global needs to be enhanced. Sixth, informatization of CMEC Executive Director and other national strategies, so we will enhance our needs to be effectively deepened. The years to come are a President effort in implementing such strategies. Second, it is im- crucial period for CMEC to implement new concepts, fos- perative for CMEC to improve its domestic business and ter new drivers, and set foot in new areas. In the next stage deepen analyses of the law of the domestic market. Third, of development, the Company will optimize the business there are still contradictions between risk control and ef- structure, improve operational efficiency and tackle prob- ficiency improvement, and between vitality enhancement lems hindering development by following the guidance of and order maintenance, so we will continuously improve the 19th CPC National Congress, thoroughly implementing management and optimize processes. Fourth, related national strategies and grasping opportunities brought by management systems of our subsidiaries are not perfect, reforms, so as to continue to improve management capa- and the problem of improper business management is in bilities, enhance market competitiveness, and forge ahead urgent need of solutions. Fifth, the management of the unswervingly. 2017 Social Responsibility Report Features on 07 China Machinery Engineering Corporation Responsibility 08

Features on Responsibility 1 Setting up the Monument Building environmental projects that for China-Belarus Friendship meet international advanced standards

Since the Berezovskaya Combined Cycle Power waste water, and collected and treated them Plant Project in Belarus was established, CMEC separately according to related standards. Berezovskaya Combined Cycle Power Plant Project in Belarus has always attached importance to the harmo- Also, for the first time, we built a drainage nious coexistence between the power plant system that could truly separate clear and and the surrounding environment, adhered to dirty rain water to minimize the impact on Berezovskaya Combined Cycle Power Plant Project in Belarus contracted by the guideline for energy saving and emission the environment. At the same time, we CMEC under the EPC mode is located along the Belt and Road. It is the first reduction, and actively practiced environmental strengthened employee education, and world-class power plant project of Belarus with double-shaft gas turbine, and responsibilities. Powered by natural gas, the taught them not to pour waste oil or throw the biggest gas-steam combined cycle unit in operation in the Republic of power plant mainly emits nitrogen oxides and waste into the water. Byelorussia now. The project lowers unit consumption greatly, improves the carbon monoxide, whose emission concentra- The Berezovskaya Combined Cycle Power economic and technological indicators of the plant, and significantly improves tions are 22.5 milligrams per standard cubic the economy and reliability of the energy system in Brest. The electricity it Plant Project successively won the First Prize meter and 0.15 milligrams per standard cubic of 2014 Excellent Design of the Electric Pow- generates accounts for 10% of the total. As a result, it provides sufficient pow- meter respectively, which are far below the er for easing the electricity shortage, improving the efficiency of the energy er Industry (Thermal Power and Power Trans- 2017 designed values and could meet the EU stand- mission and Distribution Projects) issued by system, propelling the social and economic development and improving the ards. The project’s environmental protection living conditions in the Republic of Byelorussia. China Electric Power Planning & Engineering level could meet related international advanced Association, 2015 China’s Luban Prize for The Power Plant has been operating well since it was put into operation. It standards. Construction Project for overseas projects, has received unanimous praise from the government of China and the Repub- Strictly complying with Belarusian standards, the 2015 GoldenBee Good Overseas CSR lic of Byelorussia as well as all sectors of society, and won the Russia Energy we established a water resources classification Practice Award issued by China WTO Trib- Contribution Award, Brest Energy Contribution Award and so on. The project and collection system to treat waste water ac- une in 2016 and the China International Sus- complies with the requirements of the Belt and Road Initiative, and works as cording to related standards. For the first time, tainable Infrastructure Award (CISIA) in 2017, 10% a demonstration, model and promoter for the Silk Road Economic Belt. Other we classified waste water according to their which show CMEC’s active practice of social projects contracted by CMEC in Berezovskaya under the EPC mode have not qualities into circulating water, condensed wa- responsibility and sustainable development Ratio of electrical only brought light to the Belarusian people, but set up the monument for Chi- ter, closed cooling water and machine washing overseas. generating capacity of na-Belarus friendship, promoted mutual understanding and bilateral econom- the power plants to the ic development, and motivated Chinese enterprises to expand the Belarusian national electricity in Belarus and neighboring markets. Implementing localized operation Nitric oxide emission to boost the economic develop-

Enhancing the “Four Improvements” X ment of local communities to realize excellent management The localization strategy is an inevitable ment of local related industries. choice for CMEC to develop core markets For this Project, CMEC provided Belarus CMEC encountered many challenges in the construction, management and operation of Berezovskaya 400 MW in depth, cultivate regional competitiveness with nearly 1,000 jobs in geological ex- Combined Cycle Power Plant Project. Upholding the concept of “developing a project and setting up a monu- and maintain sustainable development. By ploration, design, accounting, taxation, ment”, CMEC has transformed huge pressure into motivation, and fulfilled all tasks successfully. Focusing on the establishing localized organizations in Bere- transportation, goods supply, civil engi- “Four Improvements”, we have practiced craftsmanship and developed excellent projects. Carbon monoxide emission zovskaya, hiring local employees, and carry- neering and installation, etc. The project ing out localized procurement, the Company was highly praised by the local govern- has added momentum to local economic ment and social media. Considering the and social progress and prosperity. Enhance the super- outstanding performance of CMEC in Be- Standardize the qual- vision of equipment Localized procurement is an important part larus, in May 2017, Belarusian Deputy En- ity management of manufacturing to projects to improve of CMEC’s localized operation. During con- ergy Minister Mikhail Mikhadyuk awarded guarantee equipment project management struction of the Berezovskaya Combined CMEC Chairman the Minister Award and quality Cycle Power Plant Project, we procured as the Badge for Commemorating the 85th Enhancing the “Four Improvements” many local products as possible, such as ce- Anniversary of the Energy System on ment, gravel, steel, commissioning service, behalf of the Ministry of Energy of the to Practice Far below the designed values Implement regular insurance, transportation service, customs Republic of Belarus to extend thanks to Optimize the distribu- Craftsmanship inspections strictly to Meeting EU standards tion of responsibilities clearance service, etc. with a total of tens of CMEC for its outstanding contributions to strengthen whole-pro- to enhance quality millions of US dollars for subcontract. This the development of Belarusian energy in- cess quality manage- Meeting advanced international management during ment of project con- standards for environmental not only saved procurement costs and re- dustry. Also, CMEC was invited to partici- construction struction protection duced the pollution caused by long-distance pate in the construction of the Belarusian transportation, but also drove the develop- energy system more deeply. 2017 Social Responsibility Report Features on 09 China Machinery Engineering Corporation Responsibility 10

CMEC donates teaching facilities to the Middle School of Town Belozersk

Fulfilling overseas corporate citizenship Principal of the Middle School of responsibility to promote cultural Town Belozersk presents a letter exchange of thanks to CMEC

Adhering to the philosophy of “development led by responsibility”, CMEC has always paid attention to the social development of local communities and strictly abided by local laws Your help supports our and regulations to strengthen communication and exchanges, students in developing and build harmonious coexistence with local residents. their ability in various During construction of the Berezovskaya 400MW Combined Cycle Pow- aspects and successful- er Plant Project, the project department donated a complete plants of ly getting into the real multimedia teaching facilities to local schools to help improve the local world. Your love and educational conditions. At the same time, a number of CMEC employees care for others, your visited the Tshkovic Middle School of Ivanov on invitation to introduce thoughtfulness and China’s natural geography and humanities to 9th-grade students. More concern for others, will Belarusian teenagers got to know about China through CMEC’s visit, always be eulogized. which also promoted the bilateral cultural exchanges and economic and We wish you happiness trade development of China and Belarus. and a great life.

After the end of the project warranty period in 2016, we donated all the facilities at the project offices (including desks with cabinets, chairs, stools and file cabinets) —— Principal of the to the Middle School of Town Belozersk, and all the facilities in the living quarters Middle School of (including beds, wardrobes, tables, chairs, nightstands) to local kindergartens and Town Belozersk sports schools. The mayor of Town Belozersk extended thanks to CMEC in person for our support and contributions to the education industry of the town. The donations further established the good corporate image of CMEC in Belarus, and it also put a perfect end to the Berezovskaya Combined Cycle Power Plant Project.

Belarus has become one of the countries among Europe and Asia where China carries out the most extensive cooperation in large-scale projects. A CMEC employee introduces China’s natural geography The successful implementation of power station renovation projects in Luk- and humanities to students of muloli and Berezovskaya provided electricity support for Belarus’ economic the Tshkovic Middle School of development and produced good economic and social benefits, thus great- Ivanov. ly boosting the friendly cooperation between China and Belarus. CMEC donates rides for children in Town Belozersk. President Xi Jinping, General Secretary of the Communist Party of China (CPC) Central Committee and Chairman of the Central Military Commission

The Berezovskaya Power Plant’s connection to the grid has played a significant role in boosting Belarus’ GDP. Thanks to CMEC for the contributions 400MW to the energy industry of Belarus. Berezovskaya Combined Cycle Alexander Lukashenko, Belarusian President Power Plant Project in Belarus 2017 Social Responsibility Report Features on 11 China Machinery Engineering Corporation Responsibility 12

Sticking to technological innovation Features on Responsibility to create quality projects 2 The construction site of cast-in-place piles had complex geo- In addition, this method also helped realize high forming rate of logical conditions due to its proximity to the Caribbean Sea. boreholes, stable hole walls, fast and high-quality hole cleaning Being an Industry Pioneer Because there were many strata to cut through, the deepest as well as cost-effectiveness. It also brought substantial econom- sand layer could reach as far as 16 meters. Since there was a ic and social benefits to the project: (1) Effectively improving shortage of cement supply, it took at least 6 hours to finish the construction efficiency, shortening construction period, increas- Setting an Exemplary Brand concrete filling after the drilling of the borehole was completed. ing the speed of rotary drilling rigs by reducing about 20% of As a result, the stability of the wall of the borehole was impacted hole-forming time to 20 minutes; (2) Effectively controlling the because of the prolonged filling process. Moreover, during the happening of quality accidents. The application of molecular installation process, some mud blocks might drop from the wall, polymer slurry protection walls and the hole clearing technol- Project of 600MW Central Power Plant, causing the sediment exceed the designed level and specifica- ogy of pump suction reverse circulation ensured the quality of Venezuela tion requirements. cast-in-situ bored piles constructed through rotary drilling, and To cope with the special geological conditions and a series of reduced accidents of drill burying, cage burying, broken piles, problems brought about by the insufficient concrete supply, pipe burying, intercalated mud, plugged pipes and so on; (3) engineering and technical personnel of the project department, Effectively guaranteeing the efficiency of hole forming, lowering subcontractors, experts of the design institute and external ex- the filling coefficient of concrete, and reducing the use of 770.91 perts held several special meetings to discuss and put forward cubic meters of commercial concrete. The advanced “Method solutions, and proposed the “Method for Constructing Cast-in- for Constructing Cast-in-situ Bored Piles in Waterfront Areas with situ Bored Piles in Waterfront Areas with Complex Strata”, effec- Complex Strata”, which is easy to implement, was adopted for tively tackling the difficulty of rotary drilling in similar waterfront the first time at home and abroad. 2017 areas, unstable walls of boreholes and thick sediment at the bot- tom of the borehole.

At 0:00 on May 8, 2016 in Venezuela, the Project of 600MW Central Power Plant, Venezuela successfully passed the 168-hour full-load reliability assessment on the first try. During the trial operation, the system operated stably with all parame- It is worth mentioning that the project ters reaching high standards and meeting related requirements in the contract, was completed two months earlier which showed that the unit had been completed 83 days earlier than the contract than the contract deadline. That’s really deadline and entered the warranty period in advance. The unit has the largest something new, because it is the only capacity and most advanced technologies among all thermal power generating project that can be completed ahead units in Venezuela and even in South America, and it is also the first time that a of schedule in a large-scale modern 600MW thermal power generating unit made in China was exported to South project implemented in recent years. America. During the project implementation, we encountered many difficulties ——Louis Romero, Coordina- and challenges, such as long distance, the need for numerous suppliers, the re- tor of Corporación Eléctrica quirement for advanced technologies, the tight construction period, the complex Nacional-Corpoelec (CORPOELEC) social, political and economic environment in the local area, the severe security stationed at the project site situation, etc. Adhering to scientific, prudent, efficient and pragmatic work style, we carried out leadership correctly, undertook due responsibilities and completed tasks efficiently, through which we overcome all difficulties and ensured the completion of the project earlier than the contract deadline.

It is worth mentioning that, technically, this unit applies the world’s leading gas emission treatment technology and in- vests heavily in reducing gas emissions and the protection of the atmospheric environment. CMEC has made great efforts to meet international environmental standards and Venezuela’s environmental standards.

——Louis Malawi, Manager of the Central Region of CORPOELEC 83 Days Earlier than the contract deadline Panorama of the Project of 600MW Central Power Plant, Venezuela 2017 Social Responsibility Report Features on 13 China Machinery Engineering Corporation Responsibility 14

Sticking to process management to create safe and reliable projects

Implementing local construction safety standards strictly We hired local professionals as safety management personnel. Before the start of each project, the safety management personnel would examine the construction plan to decide whether the project could be launched. During the construction process, the safety management personnel would conduct on-site inspections. If any safety hazard or incompliance with the construction plan was found during the inspection, the construction would be immediately stopped and would not be resumed only after passing the reassessment. Formulating strict safety management methods

Due to the poor local security, the field project department has formulated a set of strict safety management measures (including on-site safety emergency plans). For example, the local defense force is hired to guard the factory gates and dormitory gates for 24 hours; the project staff takes turns to work at night and imposes a strict morning and evening work schedule; it is forbidden to leave the factory area without authorization and swimming at the seaside is prohibited. As the largest power project jointly constructed by China and Venezuela’s governments, the Project of 600MW Central Power Plant, completed 168 hours of trial operation 83 Enhancing safety education for expatriate employees days ahead of schedule. The groundbreaking project has become the first power project that was developed by a foreign company ahead of schedule in Venezuela. It has created a precedent for the industry and established the benchmark for CMEC. At the same time, Because there were a large number of installation personnel for civil engineering when Venezuela was in extremely short supply of electricity, the No.6 unit was put into op- and most of them are in foreign countries, there was a larger possibility of mass eration three months ahead of schedule, providing electricity that made up more than 5% Hours incidents. Therefore, the domestic project department had repeatedly required 168 of the total power system of the country, which greatly eased the problem of local electricity shortage. In addition, we also attached great importance to fulfilling our social respon- construction companies, especially the management team, to investigate signif- The No.6 unit completed the icant information about each expatriate employee, and require all construction 168-hour trial operation 83 sibilities in the local area, and have established good relationships with the project owner companies to provide personal insurance for each expatriate worker. Through days ahead of the schedule and surrounding residents, thus establishing a good image of Chinese companies always various security measures, all safety hazards related to construction and person- focusing on social responsibility in Venezuela. Therefore, the project, which has increased nel of the Project of 600MW Central Power Plant, Venezuela were eliminated, the influence of CMEC in the power construction market in South America, is of great sig- which contributed to the quality operation and timely delivery of the entire unit. nificance for Chinese companies and China’s complete power generation equipment will play a bigger role in the field of international power engineering.

Adhering to green and low-carbon development to create clean Introducing energy-saving measures to lower heat consumption and environmental projects

Optimizing project design to lower emissions Shortening the start-up time We applied the “fixed-slide-fixed” approach during operation of the unit and set a steam and water system with a bypass of 40% BMCR to facilitate the recycling of working media The project department of the 600MW Central Power Plant project in Venezuela partnered with design institutes, dust at the start-up and shorten the start-up time. removal, desulfurization and denitrification companies to conduct repeated researches and in-depth studies and put forward various technical means to meet local environmental protection requirements. Since putting into operation, the

project has better environmental indicators, such as NOx, SO2 and dust emissions, than the designed values. Reutilizing water and vapor Optimized design Optimized design Application of the While designing the system, we adopted recycling and reusing working idea to recycle of electrostatic of the denitrifica- seawater desulfuri- steam and vapor, set up a drainage flash tank to collect water produced during the start- precipitator tion system zation process up, stop and operation of the unit and then send the collected water to the condenser. Since the project in Venezuela mainly used seawater, in order to save fresh water resourc- Appropriately reducing the flow Optimizing the design of the deni- Applying the seawater desulfuri- es, we equipped the continuous sewerage discharge system of the boiler with a sewage rate of flue gas, optimizing the trification device and adopting the zation process to the 600MW oil heat exchanger. After the sewage of the boiler was cooled down with circulating water, it airflow field at the entrance of the temperature-gradient method for burning boiler, which effectively was sent to the water replenishment system for reuse. precipitator, using different elec- boiler start-up to reduce the impact tackled procurement difficulties trode configurations for the front of insufficient combustion of the of limestone, lowered investment and rear electric fields, and ap- heavy oil on the effect of the deni- and operation costs, reduced the plying electric heating and hot air trification catalyst at the start-up of amount of solid waste, and mini- Improving the operation environment purging for double protection at the oil burning boiler or operating mized the negative impact on the We selected a quality thermal insulation material to reduce the loss of heat and improve the porcelain shell of the insulator at a low capacity. environment. the overall operation environment. compartment to effectively reduce oil spray that lowers the efficiency of the electrostatic precipitator. Optimizing the arrangement of pipelines We optimized the arrangement of pipelines within and outside the plant to reduce systematic resistance and power consumption. 2017 Social Responsibility Report Features on 15 China Machinery Engineering Corporation Responsibility 16

Features on Responsibility

3 Facilitating the Economic Boosting the freight transport capacity of Argentina Development of Argentina Belgrano Railway is the largest railway network of Ar- conditions, the train could only run at 10 to 15 kilom- gentina that runs across 13 provinces and has a total eters per hour on some sections so the railway trans- length of 7,410 kilometers. The total economic output portation accounted for as much as 8% in the trans- within the region accounts for 45% of the GDP and port system. The renovation of the Belgrano Railway Belgrano Cargo Railway Rehabilitation Project 78% of the export value. However, due to long-term as well as the locomotives and carriages provided by lack of investment and disrepair of the railway in the the CMEC will enhance the role of railways in Argen- late 20th century, 2,450 kilometers of the railway have tina’s transport system and fundamentally change the become inoperable and only 4,960 kilometers were transport structure and increase the share of railway CMEC signed the contract for Argentina Belgrano in good condition. What’s worse, with bad operating transport of Argentina. Cargo Railway Rehabilitation Project, which is the largest collaborative transportation project between China and Argentina, as well as a vital national strategic project that facilitates the economic development Before Renovation

of Argentina. The Argentine government has included After Renovation Train speed Annual railway Train speed Annual railway it as a key project for supporting economic recovery. freight volume freight volume CMEC provided the best construction services and equipment for Argentina during the project construc- 28-30 Km / Hour <100 Ton 90 Km / Hour 400 Ton 2017 tion and deepened localization, which benefited the local residents and helped the economic recovery of Transport structure: mainly by highway transportation, Transport structure: mainly by railway Argentina. the proportion of railway transportation is 8% transportation

Lowering the transport costs of exporters

With rich resources, favorable climate and fertile land, much higher than that from Rosario to Rotterdam, the This is a key project for China-Argentina pragmatic cooperation. I hope Argentina is an important producer and exporter Netherlands. The high cost of domestic transportation that Chinese and Argentina companies will make concerted efforts to of grain and meat in the world, and is hence known had become an important factor affecting Argentina’s complete the project as soon as possible, make it a highlight for Chi- as the “granary of the world”. Because the railway export competitiveness and causing inflation. In the na-Argentina cooperation, and contribute to the economic and social network was outdated, large quantities of agricul- provinces where the Belgrano Railway passes by, the development of Argentina. tural products could only rely on highway transport merchandise exports account for 70% of Argenti- to reach the port for export. Transportation of grain na’s total export. As Argentina resumes its ability to by truck is not only costly, but also produces severe transport products and by-products of the inland area —— President Xi Jinping, General Secretary of the Com- waste, and thus could not meet the needs of na- through railways to major ports, the cost of transport munist Party of China (CPC) Central Committee and Chair- tional development. According to statistics, the cost of goods, especially agricultural products, could be man of the Central Military Commission of transporting a ton of soybeans from the western reduced, and thus the transportation benefits and in- province of Salta to the export terminal Rosario was ternational competitiveness could be enhanced.

Since the Chinese trains were put into use, the transportation cost on the San Martín Line has been reduced by 40%, and lost customers have re-selected railway transport. The most direct change is speed. The average speed of new trains can reach 70 km/h. Train drivers’ working environment, with com- fortable operating equipment and air-conditioning for both cooling and heating, is incomparable to that in the past. The most important thing is that, the safety of railway transportation has been greatly improved with the introduction of electronic equipment, which has strengthened communication and monitoring functions.

—— Maximili Luhan, a freight train driver on the San Martín Line when passing by Rosario 2017 Social Responsibility Report Features on 17 China Machinery Engineering Corporation Responsibility 18

September 2016 February 2017 May 18, 2017 July 2017 CMEC became the first Chinese company The first two narrow-gauge locomotives Witnessed by Chinese President Xi Jinping and Argentine The wide-gauge locomotives supplied by to export narrow-gauge locomotives to of the Belgrano Cargo Railway Rehabil- President Macri, CMEC and Ministry of Transport of Argen- CMEC for the Belgrano Railway Reconstruc- Argentina. itation Project arrived at Argentina, be- tina signed the Supplementary Agreement of Argentina tion Project were put into commercial op- coming the first new locomotives on the Belgrano Railway Reconstruction Phase I Project at the Great eration, which was an update of the freight Belgrano Railway in 39 years. Hall of the People, which showed Argentine government’s locomotives of Argentina for the first time recognition of CMEC’s performance in the Argentina Belgra- in 44 years. The new locomotives in use is a no Railway Reconstruction Phase I Project and confidence in landmark in improving the transport capacity cooperating with CMEC. of freight railways of Argentina.

May 11, 2017 Argentine President Macri accepted the interview of CCTV right before the Belt and Enhancing local procurement and employment Road Forum for International Cooperation

CMEC engaged in the equipment supply and civil engineering of the Belgrano Railway Reconstruction Project. Fully respecting the Scan the QR code to project owner’ expectations, CMEC subcontracted the civil engi- Through the railway reconstruction plan, we watch the video about neering part to a designated local company. CMEC also strictly aim to enhance the railway transportation President Macri’s com- complied with Argentine laws and regulations, and hired local em- capacity by updating locomotives and rails, ment on CMEC ployees proactively to promote localized employment. Adhering and thus restore Argentina’s industrial com- to the procurement principle of “purchasing equipment locally as petitiveness. Areas related to the plan, such much as possible”, we expanded the share of local procurement, as goods supply, maintenance, expansion, and subcontracted the transportation of 50% cargos to Argentine etc. will also create a large number of job transportation companies. By doing so, we created jobs directly or opportunities. indirectly for Argentina, and increased local employment rate, which played a positive role in maintaining Argentina’s economic and —— Randazzo, Interior and Transport social stability. It is estimated that the Belgrano Railway Reconstruc- Minister of Argentina tion Project has provided 65,000 jobs for Argentina, among which about 13,000 jobs were directly created and 52,000 were indirectly Promoting economic recovery of Argentina created. Also, the project has exported near 1,000 technical and management personnel abroad. The carriages exported by CMEC to Argentina are used on the San Martín Line and the North Belgrano line. The San Martín runs Promoting social and political from the west to the east, and connects the Argentinean wine With the re-opening of the Belgrano Railway, the Driving the export of Latin America producing areas of Mendoza, Cordoba and Santa Fe and ends cost of land transportation among inland provinces stability of China and Argentina at the capital Buenos Aires. The North Belgrano Line connects will be reduced by 80%. The project will also im- major provinces of northern Argentina and plays a significant role prove the capacity and efficiency of domestic rail- After the completion of the reconstruction project, the The demonstration effect created by the implementation in promoting the economic growth of Argentina. Infrastructure in- way transportation. Thousands of producers living Belgrano Line in Argentina will form a railway network of the Belgrano Railway Reconstruction Project deepens vestment has brought a big pull to Argentina’s economic growth. in Central Santa Fe, Chaco, Santiago del Estero and with railways of Chile, Brazil and other countries across the Argentines’ awareness of infrastructure, especially about Compared with the difficulties faced by Argentine economy in other provinces far away from the logistics center South American continent, which will boost the import and the reality that the railway network will guarantee and 2016, including economic downturn, high inflation and huge fiscal will be reintegrated into the production system and export of products between South American countries, promote social and economic development of Argentina. deficits, the economy has shown a steady recovery since 2017. benefit from it. promote the development and transportation of agri- Such an awareness plays an important role in establishing a In this process, the Belgrano Railway Reconstruction Project has cultural products and mineral products along the railway political and social system and an economic structure that lines, and drive the export of Latin American products. ensures sustainable economic growth. played a direct and indirect role in driving economic growth. —— Randazzo, Interior and Transport Minister of Argentina 2017 Social Responsibility Report Features on 19 China Machinery Engineering Corporation Responsibility 20

Features on Responsibility Pursuing Excellent

4 Management and Cre- ating Quality Projects

Construction of Associated Lines with Soyo Combined Cycle Power Plant Project, in Luanda Region, Angola

The Construction of Associated Lines with Soyo Combined Cycle Power Plant Project in Luanda Region, Angola, contracted by CMEC, undertakes the important mission of transporting electricity generated by Combined Cycle Power Plant SOYO I, the largest coal-fired power plant in Angola, to the capital Luanda and the surrounding industrial parks, and connecting the power plant to the main grid of Angola. After completing the project, it will upgrade the national 2017 grid of Angola and grid of Luanda, increase the construction scale of the power grid in Luanda and its surrounding areas, enhance the stability of the power grid, and contribute to alleviating the shortage In-depth project research at the preliminary stage of design of electricity for industrial and domestic use in the region. Also, the project will greatly enhance the electricity supply capacity in the cap- At the preliminary stage of development and design of the Construction of Associated Lines ital of Angola and its surrounding areas, and accelerate the moderni- with Soyo Combined Cycle Power Plant Project in Luanda Region, Angola, CMEC collected zation of Luanda. and analyzed information about the surrounding environment, geological conditions, cultural In the construction process, we paid close attention to communicat- characteristics, local features, etc., studied the needs of the project owner, and formulated a ing with local governments, the project owner and industry peers, corresponding plan. At the same time, CMEC resorted to excellent leadership management fully mobilized all kinds of resources, and strived to explore a series programs and selected experienced experts and personnel to be responsible for the imple- of excellent quality management methods to ensure the construction mentation of the project, which will fundamentally guarantee the smooth construction and of quality projects. timely delivery of the project.

Scientific management of logistics

Substations under the Construction of Associated Lines with Soyo Combined Cycle Power Plant Project in Luanda Region, Angola, scattered widely around the region, and as there were multiple construction sites operating simultaneously, the project department faced huge challenges in transporting precision equipment such as transformers to the construction sites. Therefore, CMEC hired a professional software technology company to design a BMS (warehousing and logistics) QR code management system based on the characteristics of the project to accurately track the logistics information and usage status of each cargo at Multiple voltage classes Various types of lines any time, which greatly facilitated the efficient management and distribution of cargos. At the same time, the BMS QR code management system can display the inventory of consumable The project covers all existing voltage The project involves almost all tower equipment and materials, thus facilitating timely replenishment and ensuring the continuity of classes in Angola, including 400kV, models and types of leads. project construction. 220kV and 60kV transmission lines and substations. Well-formulated transportation plan

Angola, an underdeveloped war-torn country, has complicated transportation conditions. Challenges to Under such a context, CMEC formulated a thorough inland transportation plan with clear the project transportation processes, transportation means, personnel contact information, contin- gency plans for weather changes, road safety analyses, etc. to ensure that every trans- Wide geological range of the route High standards for route design portation task can be completed in line with related rules, problems can be spotted and corrected in time, and construction materials can be transported to the construction site The project covers a wide geological It is necessary for the project depart- punctually and safely. range. It crosses many regions and ment to fully understand the technical involves large amount of construction needs of Angola’s transmission network work. The organization and planning of and to grasp the technical focuses of the construction is complicated. related European standards. 21 Emphasizing collaboration and communication topromote andcommunication Emphasizing collaboration project progress es foreachworkingprocedure, supervisors. trustofthe whichwon the standardized andestablished supervisorspatiently sion, CMECcommunicatedwith process- tricity before project setbythe deadline the owner. faceofrigorous Inthe project supervi- clocktomakesure useofeveryminutes,andevenworkedagainstthe full torestore elec- made CMEC construction, during outages there were power When preventedconflicts. and communicated land policies, publicized on acquisition progressthe of project construction, two Angolancoordinators tocome uptotargeted problems. topotential solutions They earlyreporting,detection, andearlycoordination”, organized teamandhired specialized work related principlesof“earlyplanning,early tothe CMEC,adhering tolandacquisition. Project, itentailedalotofcoordination inLuandaRegion,Angolawassoextensivethat The route SoyoCombinedCyclePowerPlant ofAssociatedLineswith Construction ofthe 400kV Substation ExpansionProject400kV Substation Angolan MinisterofEnergy andWater inspectsViana China MachineryEngineeringCorporation Report 2017 SocialResponsibility requirements onenvironmental protection. were indicators construction All uptostandard localgovernment’s andmetthe strict processconstruction society, onthe ecologyandsurrounding forests andvegetation. sewage, engineeringwasteandelectromagnetic interference generatedduringthe project adverseeffects itminimizedthe sametime, cycle.Atthe ofnoise,radiation, entire nomajorsafetyaccidentswouldhappeninthe as possibleandguaranteethat programs onsafetyprotection, kindsofsafetyhazards all soastoeliminate asmuch ducting monthly safety inspections, holding safety meetings and organizing training management and control during the entire construction process. It insisted on con- cle PowerPlantProject great inLuandaRegion,Angolaattached importancetosafety Project SoyoCombinedCy- ofAssociatedLineswith Construction departmentofthe through strictmanagement Ensuring safetyandenvironmental protection more localresidents. for bringlight er grid,andthus pow- the of efficiency and quality development speed, structure, surrounding areas intermsofthe architecture inLuanda and its consolidate the electric power riculture. Theproject greatly will ofindustryandag- modernization promotingof Catete,thus the electricitysupplycapacitythe greatlypleted, itwill increase iscom- substation When the —— AngolanMinisterof Energy andWater excellent imageforChinesecompanies. excellent andCMEC’soverseas engineeringcontracting, speedandquality, toguaranteeconstruction ability an helpingtoestablish of field the in CMEC of strength the demonstrated project The Angola. in facilities electricity of construction the to tions project tothe ofcommendation local governmentissuedaletter departmentandhighlyappreciated CMEC’s contribu- project the After completion, was receivedwell energyby the and water department of Angolan the project owner. The Plant Project, inLuandaRegion,Angola ofAssociatedtion Lines Soyo with Combined Cycle Power Angola’s Secretary ofStateforEnergy Construc- inspectsthe Viana -Cacuaco220kVsingle-circuit electricitytransmissionlines project. tothe contribution fortheir gratitude toCMEC andalsoexpresslations my toextend mycongratu- I wouldlike progress. construction the Therefore, standards ofDar, butalsoinmanaging markable job not only in meeting the control. ButCMEChasdoneare- extremely highstandards onquality DarAngolahasjects. Itisknownthat CMEC andDarAngola on powerpro- between cooperation first fruitofthe of Energy andWater. Thisisalsothe is ofgreat importance to Ministrythe Plant Project in Luanda Region, Angola SoyoCombinedCyclePowerwith ofAssociatedLinesThe Construction —— Joaquim Ventura, Secretary Ventura, Joaquim —— of StateforEnergy, Angola Responsibility Features on

ANGOLA 22 2017 Social Responsibility Report 23 China Machinery Engineering Corporation About Us 24

About Us About Us About Us

China Machinery Engineering Corporation (“CMEC”) in November 2015. The Congo (Brazzaville) 4×30MW Management Responsibility was built on its predecessor China National Machinery & Imboulou Hydropower Plant was completed and put into Management Responsibility Equipment Import & Export Corporation, which was set operation in 2010 and is known as the “Three Gorges Create Ideas, Achieve Dreams up in 1978. In 2012, CMEC was listed in Hong Kong with Project” of Congo (Brazzaville). The Thar Coal-electric its controlling stake now owned by China National Ma- Project started in April 2016, and it is the first coal-power A world leading international engineering Development ing- Promoting Sustainable Transformation and Upgrad - chinery Industry Corporation. The core business of CMEC integration project in the China-Pakistan Economic Cor- Development ing- Promoting Sustainable Transformation and Upgrad - is engineering contracting, but as a large international ridor and also the first overseas power project invested contractor and services provider conglomerate, it also extends into trade, investment, by CMEC under the strategy of business development Make the World Better R&D and international services. driven by investment. With more than 30 years of experience in the engineering In the area of international trade, CMEC is a pioneer industry, CMEC has developed the capacity to provide in China’s machinery and electronic industry, and has one-stop, customized and complete plant engineering achieved excellent performance. It is now the key suppli- Cooperation Partners - Pursuing Win-win Going Forward with Our contracting solutions spanning preliminary planning, er of high-end casting and forging products for top inter- Cooperation Partners - Pursuing Win-win Going Forward with Our EPC, financing, and operation and maintenance. We have national corporations including GE, Caterpillar and Lieb- expanded our business presence to 48 countries and re- her. As a comprehensive power solutions supplier, CMEC gions in Asia, Africa, Europe and South America, forming was the partner for many renowned projects such as the a engineering contracting system with electric power 2008 Beijing Olympic Games, the iconic new office build- energy at the core and covering transportation, telecom- ing of China Central Television, and the 2010 World Expo munications, waterworks, building materials, cement, etc. in Shanghai. Besides, CMEC has possessed the capacity the Fruits of Development the Happy Homeland - Sharing In February 1983, the Guddu 210MW Thermal Power to provide one-stop systematic services for distributed Fruits of Development the Happy Homeland - Sharing Plant Project undertaken by CMEC in Pakistan pioneered photovoltaic power plants. in international engineering contracting by Chinese com- CMEC now offers door-to-door customized logistics panies by way of export seller’s credit. After entering the solutions and all-process logistics services for various 21st century, CMEC became the first company to intro- engineering projects. So far, it has provided tailor-made duce Chinese-made 600MW supercritical coal-fired gen- logistics services for more than 100 overseas EPC pro- erator to the international market, and the EREN(1+1) jects, becoming a leading figure in China's international Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental ×600MW supercritical coal-fired power plant in Turkey engineering logistics industry. CMEC’s exhibition business Operations Healthy Protection - Guaranteeing Safety and Environmental won China’s Luban Prize for Overseas Projects in Decem- has introduced foreign trade enterprises and producers ber 2012, which was the first overseas coal-fired power to more than 100 countries and regions, and it has host- plant to win such an award, and the Berezovskaya Com- ed, or participated in more than 1,000 world famous ex- bined Cycle Power Plant Project won the same award pos and exhibitions covering over 30 industry segments. Their scale and level top the exhibition industry in China. As the industry leader, CMEC sets the industry standard Benefiting Local Livelihood Benefiting Harmonious Community— for China's overseas exhibitions. Local Livelihood Benefiting Harmonious Community— CMEC has established a comprehensive management system for quality, environment, occupational health and safety to guarantee the high-standard and quality of its products and services. Through years of innovation and development, CMEC has built itself into a renowned international brand, with 40 subsidiaries both at home and abroad and business interests in more than 150 Key Performance Outlook 2018 Outlook Key Performance Key Performance Outlook 2018 Outlook Key Performance countries and regions across all five Continents. As Chi- na’s top-ranking engineering contractor and service provider with an exemplary international reputation, CMEC embraces the philosophy of “Create Ideas, Achieve Dreams”.th To create a happier life for people around the world, CMEC vows to provide top quality services with high added value and returns. It is committed to mutual benefit, common development and progress in harmony, and making the world better. 2017 Social Responsibility Report 25 China Machinery Engineering Corporation About Us 26

Development Strategy Corporate Cultural System About Us

Overall Strategic Goal Corporate Vision Management Responsibility

Corporate philosophy To maintain the overall business scale and profitability, strengthen the integration Create Ideas,

and upgrade of all business sectors, and Achieve Dreams Development ing- Promoting Sustainable Transformation and Upgrad - actively explore and nurture new business Corporate mission and development models for the formation Social responsibility of business platforms; to strengthen the concept To provide sustainable drive industrial core competence through inter- To be the world leading international for the world development nal and external collaboration and seek the engineering contractor and services Contribution to and create quality life for the world with incorporation of more quality enterprise provider the people with the most resources at home and abroad, and to responsibility humanistic innovations Cooperation Partners - Pursuing Win-win Going Forward with Our establish an internal key management system step by step to lay the foundation for building an international business platform in mid-to-long term and achieving rapid and high-quality business development. Core values Corporate culture the Fruits of Development the Happy Homeland - Sharing Strength Diversity, inclusiveness Reputation and innovation Responsibility Efficiency Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental Business Structure Core Competitiveness Supporting System

To establish a cooperative mul- Market development To establish a management and con- Brand image Brand connotation ti-service platform with engineering trolling mode to satisfy “multi-level, contracting as the pivot, trade and Management innovation diversified and innovative” business Globalization Integrity services, investment as business to development Diversification Innovation Benefiting Local Livelihood Benefiting Harmonious Community— drive transformation and upgrading, Industrial chain integration People first Responsibility To establish an “internationalized, and designing and consulting, CMEC Pioneering nature Harmony Multi-service interoperability diversified and professional” talent properties, and region/agricultural team and talent building and re- comprehensive development as inno- serve mechanism vative business. To establish a risk management system to meet the challenges of “di-

versified and international” business 2018 Outlook Key Performance development To establish an information system to strengthen multi-service management and international operation management To deepen corporate culture, and strengthen the construction of corporate culture through system construction and culture promotion 2017 Social Responsibility Report 27 China Machinery Engineering Corporation About Us 28

Organizational Structure Company Governance

SINOMACH H Share Public Shareholders Strictly abiding by the Company Law of People’s Republic of China and other relevant Chinese laws and regulations as well as the listing rules of the Hong Kong Stock Exchange, CMEC is continuously optimizing the corporate governance system

77.21% 100% 22.01% About Us and structure, and has formed the “standard and rational, well-defined power and responsibility” governance framework China United among the General Meeting of Shareholders, Board of Directors, Board of Supervisors, various specialized committees 0.78% and management. By the normalized, coordinated and efficient operation of the governance structure in compliance with clear rules of procedure and working routine, CMEC aims to promote the sound and stable development and safeguard the proper interests for investors. Management Responsibility

Operation of Board of Directors Investor Communication CMEC In strict accordance with the Company Law and related CMEC values investor relations maintenance and market Development ing- Promoting Sustainable Transformation and Upgrad - national requirements, CMEC improves the management value management, and keeps optimizing the information system and standardizes the organization of the Board of disclosure system. In 2017, CMEC released 59 announce- Audit Committee Directors, and clarifies decision-making boundaries and ments timely and communicated with investors for more procedures, so as to guarantee legal, compliant and effi- than 200 times, which not only increased interaction with General Meeting of Shareholders Remuneration Committee cient operations of the Company. The Board of Directors capital market and inspired investors’ confidence, but is comprised of 3 Executive Directors, 2 Non-executive also raised CMEC brand recognition and ensured a stable

Directors and 4 Independent Non-executive Directors. market value. Cooperation Partners - Pursuing Win-win Going Forward with Our Board of Directors Nomination Committee The members of the Board are as follows: Chairman, Ex- Board of Supervisors Strategy and Development ecutive Director and Deputy Secretary of the Party Com- Committee mittee Zhang Chun, Secretary of Party Committee, Vice General Manager Chairman and Executive Director Han Xiaojun, President Operation and Risk and Executive Director Zhou Yamin, Non-executive Direc- 59 over 200 times tors Yu Benli and Zhang Fusheng, Independent Non-ex- Announcements Communication with investors Management Committee released timely

ecutive Directors Liu Li, Liu Hongyu, Fang Yongzhong and Fruits of Development the Happy Homeland - Sharing Wu Delong. The Board of Supervisors is comprised of 3 Supervisors, and the members are Chairman of Supervi- Board Office General Management Department Strategy and Business Development Department Party Work Department Human Resources Department General Department of Finance Complete Plants Management Department Trade and Services Management Department Legal and Risk Management Department Investment Management Department Department Audit Supervision Department Investment and Financing Department Management Department Design and Consultation 1st Complete Plants Division 2nd Complete Plants Division 3rd Complete Plants Division Complete Plants Division 4th Complete Plants Division 5th Complete Plants Division 6th Complete Plants Division 7th Complete Plants Division 8th East China Division Tendering Division Department of Headquarter General sor Board Quan Huaqiang, supervisor Qian Xiangdong and worker representative supervisor. In light of the business characteristics, CMEC has continued to deepen and improve the professionalization of

the Board of Directors system, strengthened the scope Operations Healthy Protection - Guaranteeing Safety and Environmental of general authorization and the level of management and controlling, therefore continuously enhancing the standardization and effectiveness of the operation of the Board. In 2017, CMEC held 4 general meetings of shareholders, 2 meetings of the Board of Supervisors, 12 meetings of the Board of Directors, 11 meetings of Board

of Directors, and 2 meetings of Independent Director Local Livelihood Benefiting Harmonious Community— Committee. In total, we held 31 meetings in 2017, de- liberated and approved 95 proposals, and approved 38 proposals on general authorization issues of the Board of Directors.

Internal Export Compliance Office 31 95 38 2018 Outlook Key Performance Meetings held in Proposals Proposals on general total approved authorization issues of the Board of Di- International Designing rectors Trade and Engineering and Con- Domestic Subsidiaries Services Overseas Subsidiaries and Offices Contracting sulting Busi- Business Business ness 2017 Social Responsibility Report 29 China Machinery Engineering Corporation About Us 30

Global Business Layout

CMEC boasts 49 subsidiaries both at home and aboard, with diversified businesses covering multiple modern international service industries including engineering contracting, import and export trading, engineering design, international bidding, international exhibitions, international logistics and property management. About Us

150 49 Management Responsibility Countries and regions Subsidiaries both at covered by CMEC business home and aboard Development ing- Promoting Sustainable Transformation and Upgrad -

CMEC Headquarters

Legend Domestic Subsidiaries

Market Distribution Cooperation Partners - Pursuing Win-win Going Forward with Our

Domestic Subsidiaries 25 the Fruits of Development the Happy Homeland - Sharing CMEC Engineering Machinery Import & Export Co., Ltd. CMEC International Engineering Co., Ltd. China National Machinery & Equipment Import & Export (Fujian) Co., Ltd. Shanghai International Transportation Co., Ltd. China National Machinery & Equipment Import & Export (Suzhou) Co., Ltd. Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental China Machinery International Engineering Design & Research Institute Co., Ltd. China Machinery and Equipment International Tendering Co., Ltd. China Machinery Industrial Products Co., Ltd. CMEC Machinery & Electric Equipment Import & Export Co., Ltd. China International Trading Co., Ltd.

China National Complete Engineering Corporation Local Livelihood Benefiting Harmonious Community— China Jikan Research Institute of Engineering Investigations and Design, Co., Ltd. China Power Construction Engineering Consulting Central Southern Corporation Overseas Subsidiaries 24 China Machinery Engineering Henan Co., Ltd. Shenzhen CMEC Industry Corporation Limited China Machinery & Equipment (HK) Company Limited (Hong Kong) China Machinery Engineering Corporation (PNG) Limited (Papua New Guinea) Shanghai Zhong Jing Import & Export Corporation China Everbest Development International Limited (Hong Kong) Sinland Development PTE, Ltd. (Singapore) 2018 Outlook Key Performance CMEC Beijing Property Development Co., Ltd. CMEC Nigeria Development Limited (Nigeria) China Machinery Engineering Corporation Namibia (Proprietary) Limited (Namibia) CMEC Comtrans International Co., Ltd. CMEC Senegal S.A. (Senegal) China Machinery Engineering Argentina S.A. (Argentina) China-East Resources Import & Export Co. Ltd. Ausino Pty. Ltd. (Australia) CMEC Engineering C.A. (Venezuela) CMEC General Machinery Import & Export Co., Ltd. Euro M.E.C. Import & Export GmbH (Germany) CMEC Zambia Development Limited (Zambia) China National Machinery & Equipment Import & Export (Hubei) Co., Ltd. CMEC Enmei Co., Ltd.(Japan) CMEC Engineering XXK (Mongolia) China Machinery Engineering Wuxi Co., Ltd. CMEC Japan Co., Ltd.(Japan) CMEC Africa Development Limited (Kenya) CMEC Petrochemical-General Machinery Co., Ltd. Sino American Machinery Corporation (Delaware, USA) Maldives Renewable Energy Company Limited (Hong Kong) CMEC (Beijing) International Economic & Legal Advisors Inc. CMEC Mexico Engineering, S.DE R.L.DE C.V. CMEC Dutch Caribbean B.V.(Netherlands) China Machinery Engineering Yichuan Free Trade Zone Co., Ltd. Complete Trade and Design Other CMEC Lanka (Private) Limited (Sri Lanka) CMEC Guinea Equatorial, S.L. (Guinea Equatorial) plants services consultation businesses CMEC Middle East FZE (United Arab Emirates) CMEC Saudi for Construction LLC (Saudi Arabia) 2017 Social Responsibility Report 31 China Machinery Engineering Corporation About Us 32

Social Organizations Joined Awards and Honors The Proect of 00MW Central Power Plant in eneuela won the SOMACH uality

Award Proect Prie About Us CMEC actively strengthens communication and shares experience with industry associations and peer companies, so as to make contributions to the healthy and sustainable develop- 2017 nnovation Development ment of international contracting project and service industry. Powerful rand nfluential rands in eiing-Tianin-Hebei Region Management Responsibility CMEC积极加强与各行业组织、同行企业的沟通交流，携手同行企业深化交 China Chamber of Commerce for Import and Export of Vice President Company 流、共享经验，为推动国际承包工程与服务行业健康可持续发展做出贡献。 Machinery and Electronic Products Development ing- Promoting Sustainable Transformation and Upgrad -

The Shanghai Cooperation Organization China Business Council Vice Chairman Company 2017 Most nfluential Green Corporate rands in China

China International Contractors Association Standing Director Member 2017 China nternational Sustainable

nfrastructure Award Cooperation Partners - Pursuing Win-win Going Forward with Our

China Tendering & Bidding Association Standing Director Member

CMEC was rated AAA Credit Grade China Engineering & Consulting Association Standing Director Member in Complete Engineering by China Chamber of Commerce for mport Eport Machinery and Electronic Fruits of Development the Happy Homeland - Sharing China Association for Quality Council Member Products CCCME in 2017

Goldenee 2017 Ecellent CSR China Electrotechnical Society Council Member Report Evergreen Award Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

Chinese - African People’s Friendship Association Council Member SOMACH usiness Collaboration Contribution Award 1st Prie of B20 China Business Council Council Member Advanced Unit for Financial nformation Management in SMACH 201 Advanced Unit of SOMACH Benefiting Local Livelihood Benefiting Harmonious Community—

China Chamber of International Commerce Member CMEC Headuarter General Proect won the 2017 2018 Gold Prie of eiing Great Wall Cup in Structure China Chamber of Commerce of Metals, Minerals & Chemi- Member cals Importers & Exporters

China Construction Industry Association Member 2018 Outlook Key Performance

CMEC was selected as one of China Association of Construction Enterprise Management Member the Top 0 Chinese Design Firms Shanghai CMEC Suare won the Shanghai Civilied Construction Foreign Affairs Council of China Engineering Cost Association Member Site Award and uality Engineer- ing Structure Award 2017 Social Responsibility Report Responsibility 33 China Machinery Engineering Corporation Management 34

Responsibility Management Social Responsibility Organizational System

CMEC has established the Social Responsibility Committee with the Chairman as the director, President as the As a leading company in international engineering contracting, CMEC has become an active CSR executive director, General Managers of functional departments and business divisions as the committee mem- About Us practitioner, promoter and leader. While promoting the in-depth development of social responsibil- bers to plan and coordinate the Company’s overall social responsibility work. Under the Committee, there is ity management, we integrate CSR into all aspects of business and functional management, so as Social Responsibility Office in Strategy and Business Development Department that implements its policies and to continuously enhance the Company’s sustainability and capacity of differentiated competition. performs daily works. Functional departments and business divisions also have designated social responsibility liaison officers to communicate on, promote and implement social responsibility tasks of their department or

division, and to promote the integration of social responsibility into daily management. Management Responsibility

Social Responsibility Management Model Development ing- Promoting Sustainable Transformation and Upgrad -

CMEC sticks to the right views of justice and benefits. With sustainable development as the goal, we fulfill our responsibilities actively to pursue the maximum comprehensive value of the economy, society and environment by joining hands with stakeholders, such as investors, employees, governments, customers, industries as well as partners. Social Responsibility Committee Cooperation Partners - Pursuing Win-win Going Forward with Our Making decisions on how to carry out social responsibility work Establishing social responsibility management system Approving social responsibility plans Approving and releasing social responsibility report Organizing major social responsibility work the Fruits of Development the Happy Homeland - Sharing Social Responsibility Office

Implementing the strategies and deployment of harehoer Ctoer an netor social responsibility work Organizing the compilation of social responsibility 战略引领 report Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental Coordinating the establishment and implementation Economic of social responsibility management system artner Responsibility Enironent Organizing the compilation plans for social responsibility work Right View Proposing budget and training plans for

of Justice social responsibility work Local Livelihood Benefiting Harmonious Community— Responsibility Social and Beneﬁt Organizing the research of key social responsibility projects Epoyee Environmental ntrie Responsibility Implementing major social responsibility work and activities Key Performance Outlook 2018 Outlook Key Performance

Conitie Social Responsibility Liaison Officer oernent an the ic Coordinating to promote social responsibility practice Coordinating the compilation of social responsibility report Implementing the research of key social responsibility projects Participating in major social responsibility work and activities 2017 Social Responsibility Report Responsibility 35 China Machinery Engineering Corporation Management 36

Social Responsibility Work Promotion January 7 Upholding the social responsibility concept of “contribution to the December 19 CMEC was invited to participate in the 2017 China Business Summit on Achieving SDGs. world with responsibility”, CMEC About Us continuously strengthens the ability to fulfill social responsibility, optimizes social responsibility management, and actively explores

practices of social responsibility in Management Responsibility overseas markets as a forerunner among Chinese enterprises to go global in terms of social responsibility fulfillment. Development ing- Promoting Sustainable Transformation and Upgrad - CMEC was invited to participate in the China 100 CSR Forum and Beijing Responsibility Exhibition to share experience with domestic and international enterprises on social responsibility fulfillment.

June 6

December 15 Cooperation Partners - Pursuing Win-win Going Forward with Our the Fruits of Development the Happy Homeland - Sharing CMEC was invited to participate in the 4th China Green Development and Ecological Construc- tion Summit and was honored the title of 2017 Most Influential Green Enterprises of China. December 1 CMEC was invited to participate in the 12th International CSR Forum to discuss ways of sustainable development with domestic and foreign representatives of various fields. September 14 Operations Healthy Protection - Guaranteeing Safety and Environmental Benefiting Local Livelihood Benefiting Harmonious Community—

CMEC was invited to participate in the 10th International Confer- ence on CSR Reporting in China, and the China Machinery Engi- neering Corporation Social Responsibility Report 2016 won the October 31 November 30 GoldenBee Excellent CSR Report 2017 · Evergreen Award.

CMEC was selected to participate in the 18th Sino-Swedish CSR Workshop and was invited 2018 Outlook Key Performance to share experience as a model enterprise.

CMEC was invited to participate in the Launching Ceremony of Report on Chinese Enterprises’ Actions on Climate Change held by CDP, and discussed with representatives of listed companies over issues related to climate change. CMEC was invited to attend the GRI Annual Conference in Beijing and share experience as an enterprise representative. 2017 Social Responsibility Report Responsibility 37 China Machinery Engineering Corporation Management 38

Stakeholders Management Stakeholders Communication and Engagement

CMEC always pays attention to the pertinence and responsiveness of the report. Through in-depth researches on the Stakeholders concerns of stakeholders, we closely integrate the Company’s long-term development strategy with the status quo of Epectations and Demands Communication Approaches operation and management, and discuss material topics that affect corporate development at the global and local levels. Mapping domestic and international standards of social responsibility and leading corporate social responsibility practices,

we dynamically identify material topics of social responsibility, and provide support for continuous improvement of social About Us

responsibility management and practice. Profits and returns mproving profitability Satisfied market values Following market rules Protection of rights and interests Timely information disclosure Knowing the Companys operation situation

Identification of Social Responsibility Material Topics Shareholders and nvestors Management Responsibility

Reviewing domestic and international development environment Accepting guidance and supervision Conducting surveys on internal and external stakeholders Topic Compliance with laws and regulations egal and compliance management

Holding seminars for stakeholders Development ing- Promoting Sustainable Transformation and Upgrad - Identification Promoting local employment Providing employment opportunities Referring to social responsibility standards including ISO 26000, GRI G4, Enhancing local economic and social development Organiing communication activities CASS-4.0, ESG, GB/T 36001,etc. Ta compliance Paying taes Governments Targeted poverty alleviation Topics that affect corporate sustainable development Topic Topics that are highly concerned by the stakeholders Prioritization Topics addressed strategically by the Company Honoring the contracts Honoring contracts Cooperation Partners - Pursuing Win-win Going Forward with Our Topics stressed during overseas operations uality products Suggestions and feedback nformation transparency Daily communication uality services Demand nvestigation Customers Preliminary approval by Social Responsibility Report Team Review and Review by Social Responsibility Group Confirmation Review and confirmation of issues and priorities by Social Responsibility Enforcement of agreements and contracts Common development Win-win cooperation Committee Regular meetings Resource sharing Open and fair Fruits of Development the Happy Homeland - Sharing Open procurement information Responsible procurement operations Multichannel cooperation and communication Payment according to the Honoring Suggestions and support contract commitments Partners egotiation and communication ihs Hge High Higher Highest

ntegrity and compliance Employee training and career development Highest Protection of rights and interests

Shared growth Operations Healthy Protection - Guaranteeing Safety and Environmental Education and training Proect uality Higher Health and safety Risk management Work-life alance Wages and welfare guarantees Win-win cooperation Sincere service Democratic communication High Humanistic concern abor protection Employees

Anti-corruption mproving value-creating ability Satisfactory customer service The Significance to CMEC

Energy conservation and emission reduction Green design Local Livelihood Benefiting Harmonious Community— nnovative development Work safety Clean energy Developing new energy industry ocalied operation Overseas safety Resource saving Green construction Ecological protection and restoration Green office Concerning about occupational health Environment Promoting industry progress

Energy conservation and emission reduction Human rights Key Performance Outlook 2018 Outlook Key Performance Conducting strategic cooperation Facilitating industry development Participating in the formulation of industry standards Achieving mutual-benefit and win-win result mproving community livelihood Organiing and participating in industrial ehibitions Work life balance Fair competition ndustries

Engaging in public welfare

Community engagement ocalied operation High Higher Highest Promoting public welfare mproving peoples livelihood Promoting community development Organiing public welfare activities The Significance to Stakeholders Communities and the Public RMB 47.539 billion Total Asset

RMB 23.682 billion Operating Revenue

0Transformation1 and Upgrading In 2017, facing the global economic downturn, CMEC closely integrated corporate development, transfor- Promoting Sustainable mation and upgrading with the domestic and foreign economic environment. We consolidated our basic Development management and optimized business systems, trying to become the world’s leading international engineering contractor and service provider, complete the task of preserving and increasing the value of state-owned assets and continuously create values for shareholders in an ever-changing environment.

Stabilizing Operation and Development 41 Strengthening Basic Management 42 Improving Value-creating Capacity 44 2017 Social Responsibility Report Transformation and Upgrading- Promoting 41 China Machinery Engineering Corporation Sustainable Development 42

Stabilizing Operation and Development Strengthening Basic Management

CMEC adheres to innovation-driven development and actively adapts to the supply-side structural reform, The fundamental management capability serves as the very basis of the Company’s sustainable operation. CMEC has es- thus maintaining steady and healthy development of various performance indicators. CMEC constantly tablished six management systems for engineering contracting, finance, legal affairs, investment and financing, corporate improves the establishment of modern enterprise system and has formed an interaction between share- culture and social responsibility to continuously improve risk control and informatization, strengthen Party-mass relations holders, the governance and the management. We continuously improve the management capability of and support market expansion and business development, escorting high-quality development of the Company.

key sectors in the industry chain. By comprehensively strengthening and maintaining investor relations About Us and market value management, we have established a goal-oriented, differentiated and lean investor re- Highlighting Strategic Control lations management model to ensure the overall stable operations of the Company. CMEC attaches great importance to the leading role of interprets the spirit of the 19th CPC National Congress, strategy. We continuously enhance strategic control and and carefully analyzes the opportunities brought by na- research, and strictly follow requirements of the strategic tional policies. Guided by relevant national strategies and Management Responsibility path. By interpreting and implementing strategic goals policies and aligning the Company’s strategies with that of one by one and delivering the performance indicators SINOMACH, we lay a solid foundation for the implementa- step by step, we can ensure the realization of strategic tion of the new strategic development plan (2018 - 2020). goals. At the same time, CMEC profoundly and accurately Development ing- Promoting Sustainable Transformation and Upgrad - Law-based Corporate Governance CMEC actively implements the Party Central Committee’s pany. In 2017, we engaged deeply in the acquisition of strategy of advancing law-based governance in all fields the 600MW Morupule B power station from the Botswana and has made solid progress in the construction of law- Power Corporation (BPC), the pre-investment legal service based central state-owned enterprises. Specifically, we for Wyre Power Station and Willington Power Station in have formulated and completed the seventh five-year plan the UK, successfully completed legal tasks related to the for law popularization and education, revised the Export acquisition of CNEEC and buying into Jiangsu Pangwo Cooperation Partners - Pursuing Win-win Going Forward with Our Control Regulations and Detailed Rules for the Implemen- Power Engineering Co., Ltd., and secured the delivery tation of Export Control Regulations. Besides, to strength- of the industrial park project in Chennai, India. The legal en the publicity of the rule of law, we held SINOMACH risk prevention and control system and the export control “CMEC Lecture on Law”, “2017 CMEC Legal Knowledge compliance system have been extended to all business Contest”, and lectures on financial leasing and general segments. Thus, the Company was selected as the Best principles of the civil law to raise the awareness of the Legal Group in State-owned Enterprises 2017 by Asian Le- rule of law among all employees and create a good legal gal Business. Fruits of Development the Happy Homeland - Sharing environment for the reform and development of the Com- Implementing Risk Management SINOMACH representatives carry out an inspection on CMEC CMEC further improves the comprehensive risk manage- ness development, and set up a special working group to ment system and has effectively promoted the implemen- carry out special investigations on the current status of risk

tation of the multi-channel system. We constantly improve management in key regions. The legal support security Operations Healthy Protection - Guaranteeing Safety and Environmental the supervision mechanism to continuously optimize system and risk management prevention and control sys- various approval processes, identify and actively respond tem have gradually matured and we have gradually formed to new risks and conduct regular monitoring on possible into a risk management system covering the headquarters, operational risks, financial risks, investment risks and legal Beijing-based subsidiaries, subsidiaries outside Beijing, Major Business Indicators of CMEC in 2017 risks. We completed 2016 Comprehensive Risk Manage- overseas regional companies and branches as well as all ment Report, and revised Comprehensive Risk Manage- business units. In 2017, there was no significant risk event,

ment Regulations. We also have established a working demonstrating the significant results in risk management. Local Livelihood Benefiting Harmonious Community— mechanism in line with the needs of the Company’s busi- Improving Financial Management Total Asset (RMB billion) Operating Value (RMB billion) CMEC deepens budget and cost management to promote cost reduction and efficiency improvement. More efforts 43.953 47.452 47.539 24.056 21.017 23.682 cost reduction and efficiency improvement. We forward are made to improve group-based financial management, financial functions to better support the major businesses enhance financial supervision, and persist in the reporting

and innovation of the Company, constantly enhance the system of major financial issues. We launch special finan- 2018 Outlook Key Performance support for finance and taxation of regional centers and cial examinations, implement the management of account overseas organizations, contribute more human input in receivable and inventory, and improve the efficiency and finance and promote the formulation and implementation effectiveness of financial management to promote the of related financial and taxation systems as well as financial informatization of financial information, and upgrade the and taxation management and control plans. We also fur- quality of financial analyses. In 2017, CMEC won the first 2015 2016 2017 2015 2016 2017 ther deepen the comprehensive budget management and prize of the Advanced Unit of Financial Information Man- give full play to the leading role of budgeting to promote agement in SINOMACH. Promoting Informatization CMEC strengthens informatization to improve the information management platform for engineering contracting, and optimize the project supervision mode. Through module-based and remote monitoring and other informatized means, we have promoted the full coverage of project supervision. 2017 Social Responsibility Report Transformation and Upgrading- Promoting 43 China Machinery Engineering Corporation Sustainable Development 44

Promoting the Clean Party Building Improving Value-creating Capacity CMEC conscientiously carries out the responsibility system In 2017, the Party branch of the Financial Department was for improving the Party’s style of work and upholds integ- praised by the Organization Department of the Commu- rity emphasized by the series of speeches of the General nist Party of China and the research team of Central Com- Upholding the philosophy of “Create Ideas, Achieve Dreams” ,CMEC pursues technological innovation, Secretary Xi Jinping and the Central Commission for Dis- mission for Discipline Inspection. The joint Party branch of model innovation, product innovation, investment and financing innovation, opens up new markets for cipline Inspection, to deepen the implementation of the the Thar Coal-electric Project was selected one of the first new business, and strengthens domestic and international collaboration to build a “upgraded and optimi- About Us Party committee’s main responsibilities and the supervision batch of grassroots demonstration Party branches among zation system for power plant construction and service” with CMEC characteristics, and promote the de- function of the Central Commission for Discipline Inspec- central SOEs, and was honored one of the first demonstra- velopment from project tracing to project creation. In 2017, CMEC’s overall competitiveness in engineer- tion. We adhere to the problem-oriented approach to tion Party branches of central SOEs by the SASAC. ing contracting has been continuously enhanced, the transformation and upgrading of trade and services ensure the smooth and healthy development of business. have shown evident effects, and the design consulting has developed well. Management Responsibility 1 2

Enhancing the understanding and Deepening the implementation of deepening the implementation of the major responsibilities of the Party com- Innovative Breakthrough in Complete Plants Development ing- Promoting Sustainable Transformation and Upgrad - spirit of the central government, espe- mittee and the supervision responsi- cially the spirit of the 19th CPC Nation- bility of the Commission for Discipline al Congress and Xi Jinping Thought on Inspection As a world leading international engineering contractor, CMEC pays most attention to EPC projects, es- Socialism with Chinese Characteristics pecially those of electric power industry. The Company promotes market development and project imple- for a New Era mentation, and continues to align with national strategies such as the Belt and Road Initiative and “Going Global” strategy. With such efforts, we constantly strengthen the overall layout and construction of the international market, strive to build our unique capabilities and strengthen our comparative advantages, Cooperation Partners - Pursuing Win-win Going Forward with Our so as to create an open EPC platform and industry ecosystem. In 2017, the international engineering con- Improving the establishment of systems and 3 forming a mechanism of no corruption 5 tracting business grew steadily, accounting for 57.2% of the Company’s total revenue.

Implementing the eight-point frugality 4 Implementing the accountability of code constantly to resolutely prevent personnel that violate disciplines the resurgence of four forms of deca- dence the Fruits of Development the Happy Homeland - Sharing

Case Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

Improving the “three improvement and three implementation” method and establishing the “Two Studies, One Action” long-term mechanism Benefiting Local Livelihood Benefiting Harmonious Community— In 2017, CMEC explored and established the “Two Studies, One Action (All Party members to have a solid understanding of the Party CMEC comprehensive quality training class for Party affairs Constitution, Party regulations, and related major policy addresses cadres is launched in Xibaipo, Mecca of Chinese revolution. and to meet Party standards)” long-term mechanism through the “three improvement and three implementation” method and based on the formulation of the CMEC on Promoting the Normalization and Institutionalization of the “Two Studies, One Action” Long-term

Mechanism. We improved the Party building work guide book and 2018 Outlook Key Performance institutionalized the “Two Studies, One Action” mechanism. Based on the practical situation, we successively formulated systems such as CMEC Methods of Establishing a Featured Party Branch and Cre- ating Carrier of Brand and CMEC Guide Book on Party Branch Work in Construction Sites of Overseas Projects. We also improved Party building activities and endeavored to be qualified Party members. The delegation led by Zhang Dejiang, then member of the Standing Committee of Political Bureau of the CPC Central Committee and Chairman of the Standing Committee of the National People's Congress inspects KOS- TOLAC-B Power Plant Project of Serbia. CMEC organizes employees to visit the exhibition featuring China’s outstanding achievements over the past five years. 2017 Social Responsibility Report Transformation and Upgrading- Promoting 45 China Machinery Engineering Corporation Sustainable Development 46

Transformation and Development of Trade and Services

Centering on the three focuses of “making good use of existing financial resources, enhancing innovation capacity, and improving the quality of development”, we continuously strengthen technological innovation capability and product R&D ability. We continue to explore overseas regional operations, and expand the Australian spare parts market of the mining

industry, aiming to build a regional center in Australia, and promote the construction of the Southeast Asia Trade Regional About Us Center in Thailand radiating the markets around Southeast Asia. As of the end of 2017, the total profit of our trade and services had reached RMB 474 million, a year-on-year increase of 34.1%.

Exploring New Markets and Business Models CMEC Business Innovation Methods and Achievements Management Responsibility Promoting the Innovation and Transformation of the Business Model

CMEC launched business in multiple Development ing- Promoting Sustainable Transformation and Upgrad - Enhancing Product links along the supply chain of the Innovation and Upgrade agricultural market in Kazakhstan and Through the business model of over- established the local sales and after seas platform + overseas warehouse + service model for machinery in the CMEC introduced technical and exhibition + logistics, CMEC directly Saudi market. management talents of casting and sold commodities to local suppliers Ren Hongbin, Chairman of SINOMACH, visits CMEC Silk Road Inter- forging, improved product R&D, and and customers. Currently, we have be-

national Cooperation Park. The Phase I Project of CMEC Silk Road Cooperation Partners - Pursuing Win-win Going Forward with Our changed from an original equipment gun to deliver goods to the European International Cooperation Park in Yinchuan Comprehensive Bonded manufacturer (OEM) to original design platform. Zone is a project for strategic cooperation between CMEC and Ningxia Autonomous Region, which will help enhance the coopera- manufacturer (ODM). CMEC became a tion between CMEC and Yinchuan Comprehensive Free Trade Zone major supplier to many of the world’s and contribute to the successful operation of the Phase I Project of top 500 companies with a significant the Silk Road International Cooperation Park and even the entire increase in the number of orders. cooperation park. the Fruits of Development the Happy Homeland - Sharing

International trade Domestic trade The key spare parts of CRH jointly developed by CMEC, successfully substitute the imported products and realize the localized Revenue (RMB billion) Revenue (RMB billion) production. RMB 474 million Total profit of trade and services Creating New Advantages by Investment and Financing 6.486 1.549 Operations Healthy Protection - Guaranteeing Safety and Environmental CMEC’s innovative progress in financing and investment The Industrial Park Project in Chennai, India will soon be Ratio to the total revenue Ratio to the total revenue has become the Company’s new advantage in develop- completed. We steadily promote the reorganization of ment. Through diversified financing approaches, we have assets. For example, we restarted the reorganization of comprehensively enhanced our financing capability and assets of CNEEC in 2017, completed due diligence, au- 80.70% 19.3% advantages in market competition. CMEC initiated the first dits, actuarial calculations, evaluations, etc., and actively “refinancing through seller credit” project by innovating in promoted the reorganization of assets within the Group in

34.1% Local Livelihood Benefiting Harmonious Community— the “refinancing through seller credit” business model. We order to fulfill our post marketing commitments. To boost Year-on-year increase continue to enrich our business financing models, and aim business development and enhance our influence through to provide examples for the Company to promote financ- investment and financing, we carry out due diligence in 15 ing through export seller credit. By setting up a global selected overseas key markets in countries along the Belt SLOVAKIA financing system in accordance with the requirements of and Road in two batches based on our positioning of core regional and localized development strategies, we further market so as to promote the market development while expand overseas financing channels to build an overseas stimulating the development of engineering contracting

CUBA

financing system with the overseas subsidiaries as the as well as investment and financing through early-stage 2018 Outlook Key Performance main body, which will satisfy the diversified and globalized market research. In 2017, we successfully held the first financing of the Company. In addition, we implement the investment and financing forum - “Commemorating the COLOMBIA investment and development strategy. By improving our 4th Anniversary of the 21st-Century Maritime Silk Road investment system, clarifying the direction of overseas in- Initiative, CMEC - Your Partner for Success Reception and vestments in line with requirements of the Belt and Road Conference”. Through the activity, we demonstrated our Initiative and the adjustment of our business directions, capacity in investment and financing, introduced related we have promoted the strategy of “business driven by in- strategies and models, and communicated with major local vestment”. We strengthen cooperation with leading inter- financial institutions and partners, which further enhanced CMEC trade income distribution and ratio in 2017 national companies in the industry to actively explore new the Company’s influence in investment and financing. businesses such as the development of industrial parks. 2017 Social Responsibility Report Transformation and Upgrading- Promoting 47 China Machinery Engineering Corporation Sustainable Development 48

Injecting New Development Impetus for Design and Consultation Emerging Businesses

The Design and Consultation Management Department lished. Besides, 6 patents and 18 software copyrights were CMEC steadily promotes and nurtures the three business fields of CMEC real estate, CMEC agriculture and and the Design and Consultation Technical Committee licensed. CMIE was selected one of the Top 60 Chinese CMEC logistics. The value of the brand “CMEC Plaza” has been continuously enhanced, the industry chain of have been established by CMEC to organize work related Design Firms by ENR/ Construction Times. A Scientific and logistics is getting better and we also maintain a high-speed growth of tender inviting and bidding. We have

to technical innovation for the first time. We formulate Technological Development Department was established achieved excellent result in international credit rating, and our functional management and six major manage- About Us the CMEC Design and Consultation Strategic Plan (2017 - for the China Jikan Research Institute of Engineering In- ment systems continue to be optimized while the reorganization of assets of CNEEC is steadily being promot- 2020), Regulations for Incubation of Special Scientific and vestigations and Design, Co., Ltd. to take charge of the ed. The CMEC Headquarters Comprehensive Building Project won the 2017 - 2018 Beijing Great Wall Cup Technological Projects of Design and Consultation and overall technological and R&D work. It compiled the Tech- Gold Award. In addition, CMEC Headquarter General Project won the 2017 - 2018 Gold Prize of Beijing Great Regulations for Design and Consultation Business to carry nological Innovation System Building and Technological Wall Cup in Structure.

out special incubation of frontier technologies. In 2017, Innovation Strategic Plan, newly established two provincial Management Responsibility China Machinery International Engineering Design&Re- scientific and technological research platforms such as the search Institute Co.,Ltd (CMIE) was approved as a govern- Sanqin Scholar Innovation Team, completed two major ment technology platform - Enterprise Technology Center provincial technological projects, got eight new authorized - in Changsha, and two of its technology innovation patents and won 16 awards at provincial-level or above. platforms, namely Intelligent Manufacturing Engineering Besides, an employee was rated Provincial Survey and De- Development ing- Promoting Sustainable Transformation and Upgrad - Technology Research Center and Prefabricated Building sign Master. Engineering Technology Research Center, were estab-

In September 2017, a groundbreaking ceremony was held for SINOMACH - CMEC Western R&D Center invested by CMEC and built by China JIKAN Institute of Engineering Cooperation Partners - Pursuing Win-win Going Forward with Our Investigation and Design Co., Ltd. It is a key construction project approved by Shaanxi Provincial Government, Xi’an Municipal Government, and SINOMACH in the activity of “central SOEs in Xi’an, Shaanxi Province”. Also, the project is a strategic bridgehead of CMEC’s response to the Belt and Road Initiative and vigorously expanding the market in western China and Central Asia, and an important initiative of CMEC for deploying domestic and foreign markets and Fruits of Development the Happy Homeland - Sharing creating a strategic platform for design and consultation. Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental CMEC holds the Founding Ceremony of the Expert Committee of Technological Achievement Transformation and the First Review Conference. CMEC holds the “Commemorating the 4th Anniversary of the 21st-Century Maritime Silk Road Initiative, CMEC – Your Partner for Success Reception and Conference” in Kuala Lumpur. Benefiting Local Livelihood Benefiting Harmonious Community—

At the Top 80 Chinese Contractors and Top 60 Design Firms award presenting ceremony 2017, co-organized by the American maga- 2018 Outlook Key Performance zine Engineering News-Record (ENR) and the Chinese newspaper Construction Times, two authoritative media in the industry, CMIE was ranked the 56th among all engineering design enterprises in China.

筑梦 2018 1,881 Suppliers

11.02% Proportion of the procurement amount from top five suppliers

02Going Forward with Our Partners CMEC sticks to the corporate philosophy of “Create Ideas, Achieve Dreams”. We develop ourselves by relying on projects, focusing on branding, building upon Pursuing Win-win quality, guaranteeing good services and shouldering social responsibilities. We stay down-to-earth and take every solid step to live up to demands of customers Cooperation in the whole process of production and operation and create more values to customers. Meanwhile, we actively protect the interests of customers and partners, striving to establish favorable partnership, so as to realize long-term win-win cooperation and achieve mutual benefits.

Creating Excellent Projects 51

Building Responsible Supply Chains 55

Achieving Win-win 57 Development with Partners 2017 Social Responsibility Report Going Forward with Our Partners - Pursuing 51 China Machinery Engineering Corporation Win-win Cooperation 52

Creating Excellent Projects

With professional attitude, CMEC is devoted to creating high-quality engineering and showing craftsman- The Belarusian Grodno Wastes Treatment Project undertaken ship to every customer. We provide sincere services with enthusiasm to win satisfaction and trust from by CMEC officially receives the take-over certificate for operation. The project can improve the disposal efficiency of solid About Us customers. domestic garbage and extend the service life of wasteyard. Through carrying out comprehensive management of garbage, 70% of solid domestic garbage could be recycled and reused. Quality Operation Management Responsibility

CMEC strictly carries out operation according to quality standards, controls the construction process and strengthens supervision in building high-quality engineering projects and creating quality projects, so as to create long-term and sustainable engineering value for customers. Development ing- Promoting Sustainable Transformation and Upgrad -

Denis Sassou-Nguesso, President of the Republic of the Congo, attends the acceptance ceremony of the supporting power transmission and transformation project at the Transmission line and Trans- formation for Liouesso Hydropower Plant

Project. Angolan Minister of Energy, Angola’s Cooperation Partners - Pursuing Win-win Going Forward with Our Secretary of State for Energy, the governor of Zaire and leaders of Angolan National Power Generation and Transmission Company inspect the SOYO Combined Cycle Power Plant Project and impressed by the strength of CMEC in constructing and commissioning the Large scale power generation project. Fruits of Development the Happy Homeland - Sharing Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

The Reconstruction of GOMEL CHP Plant No. l. undertaken by CMEC was put into operation. Vladimir Semashko, Deputy Prime Minister of Belarus, highly praised CMEC’s quality and efficient work during the project construction. Benefiting Local Livelihood Benefiting Harmonious Community— Key Performance Outlook 2018 Outlook Key Performance

Construction and Installation of the SINOMACH and CMEC Joint Work- Combined Cycle Power Plant SOYO I ing Team on Discipline Inspection in Angola successfully finishes the grid carries out quality inspection in the connection trial of the first fuel machine, agricultural project of COMPLANT’s with the fastest record of installation and Ukraine office, and the “midair fast preliminary testing in the world. train” project. 2017 Social Responsibility Report Going Forward with Our Partners - Pursuing 53 China Machinery Engineering Corporation Win-win Cooperation 54

Services with Utmost Sincerity

CMEC adheres to the philosophy of doing better than customer’s expectation. We attach great impor- Targeting the needs of customers tance to providing customer services in the whole project period from contract signing, planning, design, procurement, manufacturing, storage and transportation, construction, installation, training, trial opera- During product positioning, CMEC seeks to know better about the needs and expectations of customers tion to after-sales services. About Us and local residents towards its products, so as to consider the features and practical conditions of the local area, protect customers’ interests, continuously improve products and services and live up to the Customer service management needs of customers.

CMEC highly values, explores and timely responds to the needs of customers. During operation and Management Responsibility maintenance of projects, we provide a package of solutions to owners to create values in every link of the projects and win the satisfaction from customers. Development ing- Promoting Sustainable Transformation and Upgrad - Cooperation Partners - Pursuing Win-win Going Forward with Our the Fruits of Development the Happy Homeland - Sharing Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental The Turnkey Ceremony of 1500 Housing Units in Maldives (Second Phase) is held and The Maldivian Minister of Housing and Infrastruc- The governor of Luanda, Angola and Minister of Energy, Angola cut the ribbon for Construc- ture, Mohamed Muizzu and Yang Yin, counsellor to the Chinese embassy in Maldives, participate in the ceremony. tion of Morro Bento 220kv Sub Project, and expresses high recognition and sincere gratitude to CMEC project department. Benefiting Local Livelihood Benefiting Harmonious Community— Key Performance Outlook 2018 Outlook Key Performance

Augusto Tomas, Secretariat Member of the Political Bureau of People’s Movement for the Liberation of Angola (ruling party) and Minister of Transport, attends the vehicle turnover ceremony of Project of 1,000 Mini Buses Supply, and CMEC is rated AAA Credit Grade in Complete Électricité du Laos (EDL) issues a certificate of merit speaks highly of CMEC’s timely response and Engineering by China Chamber of Commerce for to CMEC Mengpin power transmission & distribu- project completion before the deadline. Import & Export Machinery and Electronic Prod- tion project to express gratitude and appreciation ucts (CCCME) in 2017. to CMEC’s intelligence, diligence and graveness in carrying out the project. 2017 Social Responsibility Report Going Forward with Our Partners - Pursuing 55 China Machinery Engineering Corporation Win-win Cooperation 56

Building Responsible Supply Chains Industrial Prosperity While pursuing its own development, CMEC would like to play a leading role in the industry. We actively participate in the formulation and revision of the industry regulations and standards, and deepen cooper- While seeking its own sustainable development, CMEC continuously improves its capacity in inte- ation and communication with peer companies to promote the healthy and orderly development of the grating resources at all links of the industrial chain and strengthens the ability of practicing responsi- industry with concerted efforts. In February 2017, upon the approval of China Chamber of International About Us bilities to suppliers and subcontractors, so as to build a highly responsible supply chain. Commerce, CMEC officially became the vice president member of the Business Council, Shanghai Coop- eration Organisation. Management Responsibility Localized Procurement Supply Chain Management

Localized procurement is an important link in CMEC’s lo- CMEC attaches importance to helping suppliers improve

calized operation. CMEC always prefers local sourcing un- their management, strengthens training to arouse the Development ing- Promoting Sustainable Transformation and Upgrad - der equal conditions. While saving procurement costs and awareness of suppliers and subcontractors in practicing reducing environmental pollution caused by long-distance responsibilities, and consolidates supervision to urge the transportation, the local economic society can also be in- orderly CSR fulfillment of suppliers and subcontractors. vigorated. Till the end of 2017, CMEC has 1,881 suppliers, among which 1,584 are domestic and 297 are overseas. 88 suppliers are in Asia (excluding China and Turkey), 99 in Industrial Chain Development

Africa, 101 in Europe (including Turkey), 6 in North Ameri- Cooperation Partners - Pursuing Win-win Going Forward with Our ca, 4 in South America and 4 in Oceania. The top five sup- During project implementation, CMEC puts emphasis pliers provide 11.02%, and the largest supplier provides on the full-chain industrial basis for projects operation in 3.42% of the total procurement. local areas and actively facilitates the industrialization of technological results to drive the development of relevant industries and the joint development of upstream and downstream enterprises along the industrial chain. the Fruits of Development the Happy Homeland - Sharing Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

Management and Centralized Project inspection After-sales services CMEC is invited to host the Presentation and Networking Meeting on Cooperation Projects in Inter- national Infrastructure and Production Capacity under the 8th International Infrastructure Investment construction supervision procurement and Construction Forum in Macao.

CMEC increasingly en- CMEC has put the pro- CMEC completes the CMEC focuses on build- Benefiting Local Livelihood Benefiting Harmonious Community— hances its management curement management domestic meetings ing its capabilities in and construction super- platform into operation, and on-site inspection power plant operation vision ability and prelimi- which now covers all of the Neelum Jhelum and maintenance, and narily forms the manage- projects under construc- Hydropower Project continues to improve ment and construction tion as well as all new (4×243MW), Tenaga after-sales services and supervision system, contracted projects, 49.5MW Wind Project remote diagnosis ca- which has worked on a effectively ensuring the and other projects in pacity based on Harbin number of new projects. efficiency and compli- Pakistan, and has effec- Complete Power Equip- ance of procurement tively enhanced supervi- ment Design Institute.

management. sion and control during 2018 Outlook Key Performance project implementation.

The key control links of CMEC industry chain management CMEC is invited to attend the International Capacity Coopera- CMEC is invited to attend the annual Belt and Road Meeting tion Forum and Overseas Investment Networking Conference of B20 China Business Council. and give a keynote speech. 2017 Social Responsibility Report Going Forward with Our Partners - Pursuing 57 China Machinery Engineering Corporation Win-win Cooperation 58

Achieving Win-win Development with Partners

CMEC attaches great importance to giving full play to its core competitiveness and expanding external cooperation, and has actively conducted mutually-beneficial cooperation with the government, financial institutions, enterprises and other stakeholders to complement each other and share interests. About Us Management Responsibility Development ing- Promoting Sustainable Transformation and Upgrad -

Cooperation with Banks Cooperation Cooperation Partners - Pursuing Win-win Going Forward with Our with Local Governments Zhang Chun, then CMEC President, is invited to attend “Belt and Road” Leadership Forum and attend high-level discussions on the social economy, trans-regional culture, policy differences, market outlook, challenges and opportunities. Cooperation

with Other Fruits of Development the Happy Homeland - Sharing Enterprises The CMEC Silk Road International Cooperation Park in Yin- chuan Comprehensive Bonded Zone Phase I Project is officially launched. The project marks the landing of the strategic cooperation agreement between CMEC and Ningxia Autonomous Cooperation Region. It will accelerate the cooperation between CMEC and Yinchuan Comprehensive Free Trade Zone and facilitate the with successful operation of the Silk Road International Cooperation Park Phase I Project and even the whole project in the future. Universities Operations Healthy Protection - Guaranteeing Safety and Environmental Cooperation with Overseas Partners

Zhang Chun, then President of CMEC, met with the Iraqi Local Livelihood Benefiting Harmonious Community— ambassador to China and KEPPT delegation. Key Performance Outlook 2018 Outlook Key Performance CMEC and Tsinghua University sign the Agreement on Jointly Building Overseas Social Practice Base for Graduate Students to devote to cultivating them with up-to-date thinking pattern and mindset and encouraging graduate students to do social practice in countries alongside the Belt and Road.

CMEC and China XD Group sign an industrial alliance agreement. CMEC is meeting with Joe Mastrangelo, Vice President of GE, Through establishing an industrial alliance, both parties can obtain and renews the MOU on cooperation in Africa. benefits in development and innovation, strategic layout, market exploration and corporate culture construction. 3,787 Number of on-duty employees

18.32 hours Training hours per capita

RMB 340,000 03 Amount of financial aids Happy Homeland CMEC always adheres to human-oriented philosophy and protects legitimate rights and interests of employees. We pay attention to their career development, Sharing the Fruits improve the career training system and actively extend our responsibility to employees. We care for employ- of Development ees in work and organize various cultural and sports activities to make employees feel happy.

Protecting Legitimate Rights and Interests 61

Paying Attention to Career Development 65

Safeguarding Occu- pational Health 66

Extending Responsi- bility to Employees 67

Caring for Employees in Work 68 2017 Social Responsibility Report Happy Homeland - Sharing the 61 China Machinery Engineering Corporation Fruits of Development 62

Protecting Legitimate Rights and Interests Improving Remuneration and Welfare CMEC values every employee’s efforts, so it continuously improves the remuneration and welfare system, provides competitive salary and welfare, buys social insurance for all employees, and provides other ben- CMEC strictly abides by the Labor Contract Law of the People’s Republic of China and relevant laws and regulations. We efits such as paid leave and welfare according to local customs, aiming to effectively improve employees’

improve the contract signing mechanism, implement the principle of “seeking equal communication and creating mutual sense of gaining and happiness. About Us benefits”, and establish harmonious and stable labor relations with employees. By the end of 2017, we have 3,787 employees on duty, with a male-female ratio of 2:1, labor contract signing rate of 100% and staff turnover rate of 9.35%.

Employment Management Management Responsibility

545 809 1109 The headquarters’ Regional subsidiaries Overseas employees 14.40% 1863 21.36% 29.28% Business Department 49.20% CMEC has formulated and pub- CMEC has published Measures on CMEC has formulated and published the Guidelines for Localized Encouraging Employees to Keep Development ing- Promoting Sustainable Transformation and Upgrad - Senior Master or higher lished the Technical Sequence and Management of Regional Centers, Working Overseas to maximally Project Manager Qualifications to including specific provisions on the guarantee the legitimate rights broaden the professional devel- regional center cadre management and interests of the employees Middle Bachelor opment channels of all kinds of and remuneration and welfare talents, and motivate the creativity management, to support the de- and enthusiasm of talents velopment of regional subsidiaries Junior college or Junior or lower lower 2133 1115 Cooperation Partners - Pursuing Win-win Going Forward with Our 56.32% 29.44%

Education Background of Employees Professional Titles of Employees CMEC improves the remuneration and welfare management system Case 240 12 the Fruits of Development the Happy Homeland - Sharing 6.34% 3.39% 2183 563 75 Showing full respect to local cultures and 57.64% customs where employees work 14.87% 35 years old and 21.19% below 35 years old and below 36-45 years old

267 36-55 years old After Tenga 49.5MW Wind Project Department got to know that local people love playing cricket, they or- Operations Healthy Protection - Guaranteeing Safety and Environmental 46-55 years old 75.42% ganized a Cricket Friendship Match with local people and granted prizes to participants. The cricket match 56 years old and established and deepened friendship between staff members in the Project Department with Pakistani em- 801 above ployees. After knowing local residents love eating chicken and rice, CMEC employees booked chicken and 56 years old and 21.15% rice from Karachi, hundreds miles away from the office, for local employees and residents to enjoy the festi- above val. Over 300 Pakistani employees in the project participated in the grand feast and felt that they were closely connected to Chinese employees. Age Distribution of Employees Employee Turnover Benefiting Local Livelihood Benefiting Harmonious Community—

Geographical Distribution of Employees

China Asia Africa 90.76% 4.04% 2.72% 3437 153 103 2018 Outlook Key Performance (excluding China and (excluding China and Turkey) Turkey)

Europe North America South America

1.16% 0.03% 1.29% 44 1 49 Organizing Cricket Friendship Match Providing festival cuisine - chicken and rice for employees and local residents in Pakistan (including Turkey) 2017 Social Responsibility Report Happy Homeland - Sharing the 63 China Machinery Engineering Corporation Fruits of Development 64

Democratic Administration Corporate Culture

CMEC cares for front-line employees and respects their opinions. We give full play to the role that employees play CMEC always adheres to the corporate philosophy of “Create Ideas, Achieve Dreams”, strengthens the leading role in corporate management, ensure their rights to know, to monitor and to participate. In 2017, the membership of of culture and strives to build the corporate culture of “diversity, tolerance and innovation”, create favorable cultural the labor union was 100%. The Workers Representative Congress processed 28 proposals and adopted two sug- atmosphere and build soft power in order to enhance unity and build a happy family with all employees.

gestions from employees. About Us Management Responsibility

Communication Mechanism Representative Employees 100% Seminar and Petition Reception Employee’s membership

of the labor union Development ing- Promoting Sustainable Transformation and Upgrad -

Feedback CMEC mechanism Participating Mechanism Proposals to protecting in Decision- 28 Employee MakWorkers Number of proposals Hotline, rights and Representative processed by Workers “President and Youth Employees” and CMEC Youth Talent Discovery Forum Cooperation Partners - Pursuing Win-win Going Forward with Our Internal Media, interests of Congress and Representative Congress Suggestion employees Proposals in 2017 Box, etc.

Information Disclosure 2

CMEC Manual, Official Web- Number of adopted sug- Fruits of Development the Happy Homeland - Sharing site, Rules and Regulations, gestions Factory Affair Disclosure

Youth Reading Sharing Salon

Case Operations Healthy Protection - Guaranteeing Safety and Environmental

Never forget where we started and keep up with models

On June 30, 2017, CMEC held the meeting of “Never Forget where We Started and Keep up with Models” to commemo- Local Livelihood Benefiting Harmonious Community— rate the 96th founding anniversary of the Communist Party of China (CPC) and commending outstanding employees. In the meeting, CMEC’s leadership granted certificates of honor to Yan Fei and 34 other outstanding employees, and Wang Sudan and 11 other outstanding correspondents. Yan Fei and other six employees from CMEC First Business Department shared their experience of pursuing career development, and told touching Key Performance Outlook 2018 Outlook Key Performance stories about themselves and their teams. The leaders emphasized the importance of keeping up with model employees to contribute to China’s image and friendship between Chinese people and foreign people, and encouraged every CMEC employee to be a global talent, an all-rounder, an engineer and a dreamcatcher.

Ren Hongbin, President of SINOMACH attends CMEC Inner-party Democratic Consultation Meeting. 2017 Social Responsibility Report Happy Homeland - Sharing the 65 China Machinery Engineering Corporation Fruits of Development 66

Paying Attention to Career Development Safeguarding Occupational Health

The high-quality employee team is the solid foundation and source of power for CMEC’s development CMEC comprehensively implements Occupational Hazards Governance Plan During the 13th Five-Year Plan Period, pays over the years. CMEC always sticks to the strategy of developing the Company through cultivating tal-

attention to adopting prevention and control methods from the root, and provides on-the-job trainings on occupational About Us ents, and strives to build a full-coverage training and career development system. We regard employee health and work safety. We also improve institutional construction, strengthen supervision and inspection and improve training and career development as a long-term and strategic work to support employees’ development. working conditions. We provide employees with labor supplies and labor protection articles that meet national safety standards or industrial standards, and provide trainings to help employees improve self-protection skills and awareness, so as to prevent, control and eliminate occupational hazards.

Providing Education and Training Management Responsibility

CMEC always carries out standardized training, builds di- talent support to the Company’s development, and prac- Occupational Health Management versified training system, improves training mechanism, tice the philosophy of “being responsible to employees”.

and optimizes and integrates educational and training In 2017, we invested RMB 8.5 million in a total of 68,244 While carrying out global operations, CMEC is always Development ing- Promoting Sustainable Transformation and Upgrad - resources. Through organizing symposiums, special train- hours of training involving 4,800 person times and 18.32 devoted to creating favorable working conditions for em- ings, knowledge contests and lectures, we comprehen- hours per capita. The employees’ satisfaction rate towards ployees at home and abroad. We have established and sively help employees improve vocational skills, provide training reached 97%. will continuously improve the occupational health management system, and constantly improve occupational health and safety management. In 2017, CMEC launched RMB 311,6OO CMEC Serious Illness Mutual Fund and received donations Donations from Beijing and other cities from Beijing and other cities, with a total amount of RMB Cooperation Partners - Pursuing Win-win Going Forward with Our 311,600.

Occupational Health Services

CMEC values every employee’s occupational health. We regularly. We offer physical examinations to all employees Fruits of Development the Happy Homeland - Sharing improve and optimize occupational health and safety every year and build occupational health records for them. services, and provide occupational health education and By organizing lectures on mental health, we hope to help training for every employee and operating staff members employees pay attention to mental health and relieve their at the construction site. We equip employees with safety working pressure. protection equipment and devices as well as specific protection tools, and hand out labor protection appliances Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

Pre-planning for source US Export Control Training management

Providing medical Local Livelihood Benefiting Harmonious Community— services overseas · Formulating Measures for the Health Man- agement of Overseas Employees and keeping updating every year · Setting up a medical team to construction sites overseas, providing health lectures on prevention and Unblocking Channels for Career Development · Offering a life-cycle health management treatment of highly-infectious diseases such as malaria Senior package including “epidemic prevention be- and Ebola virus disease. Management fore going abroad, disease prevention and CMEC cares for the career development of em- Posts treatment while working abroad and physical · Providing annual physical examinations to know ployees, and has opened up a diversified career Promotion for examination after returning” health conditions of front-line employees and making 2018 Outlook Key Performance Management development system that is “smooth vertically and treatment plans accordingly Sequence · Organizing regular physical examinations interconnected horizontally” to help employees Ordinary and medical trainings themed preventing in- · Organizing health consultation activities to guide Employees establish a reasonable career development plan Promotion for fectious diseases and other related content employees to take a more active part in physical exer- and motivate them to create more values. Professional cise after work every day, balance work and life, and improve mental and physical health Sequence Senior Professional Posts

CMEC occupational health and Y-pattern career development safety service system channel for CMEC employees 2017 Social Responsibility Report Happy Homeland - Sharing the 67 China Machinery Engineering Corporation Fruits of Development 68

Extending Responsibility to Employees Caring for Employees in Work

As a responsible enterprise, CMEC sticks to the principle of “caring for people and life”. We actively extend To help employees better balance work and life and create a healthy, safe and happy working and living environment for our responsibility to employees and send love and warmth to Chinese and local employees working abroad. them, CMEC has formed CMEC Health Security System for Employees and launched CMEC Serious Illness Mutual Fund to About Us improve the living and medical security of employees. We also visit and help employees in difficulties, female employees, retirees and overseas employees, help them better balance work and life and create a happy working environment. In 2017, CMEC held a meeting on the caring fund, visited 121 person times and granted RMB 340,000 of financial aids.

Case Management Responsibility

Rescuing an Angolan employee with acute myocardial infarction Development ing- Promoting Sustainable Transformation and Upgrad -

On January 7, 2017, a male subcontractor working at the Project Department of Construction and Installation of the Combined Cycle Power Plant SOYO I came to see a doctor due to acute pain in upper Cooperation Partners - Pursuing Win-win Going Forward with Our abdomen. When International SOS medical officer Zhang saw the facial features and examination results of the patient, he judged that the patient was seriously ill based on his own professional experience, so

he immediately contacted South Africa International SOS Center and ter the patient at night to respond to any accidents such as ventricular reported to CMEC to launch medical emergency response plan (MERP). Shi Ke, Party Secretary of SINOMACH, “International Working Women’s Day” ikebana training fibrillation. The patient was successfully transferred to SUNNING HILL visits the retirees. However, the signal was too bad to connect SOS center, so CMEC de- hospital in Johannesburg and treated by cardiology experts. After re- the Fruits of Development the Happy Homeland - Sharing cided at once to transfer the patient to designated local hospital while ceiving treatment, the patient was finally out of danger and returned to continuing attempts to call SOS center for support. home country for further care on January 16, 2017.

Diagnosed with the acute inferior wall myocardial infarction, the pa- For a patient with acute myocardial infarction, time is life. CMEC coor- tient received preliminary treatment from Doctor Zhang supported by dinated with multiple parties to ensure a Green Channel (zero stop or South Africa International SOS Center. SOS center and CMEC manag- block) for transferring the patient. From arriving at the parking apron Case ers immediately developed an emergency transfer plan. In a very short at the airport to sending the patient to the hospital in Johannesburg, time, CMEC decisively authorized SOS Center’s air ambulance to trans- it took 13 hours in total, saving precious time for rescuing the patient’s Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental fer the patient to a hospital in Johannesburg. Doctor Zhang looked af- life. Helping a Pakistani worker who encountered a car accident

In August 2017, while going back home from work, a Local Livelihood Benefiting Harmonious Community— Pakistani worker Abdulla from the Thar Coal-electric Project had a car accident and lost his right leg. Man- agers at the Project Department of CMEC visited him and got to know the difficult conditions of his family. They built a house for him as a store to make a living, and helped him purchase goods. The Abdulla family thanked CMEC project department, and local employ-

ees all showed appreciation. 2018 Outlook Key Performance 2017 Social Responsibility Report Happy Homeland - Sharing the 69 China Machinery Engineering Corporation Fruits of Development 70

Work-Life Balance

To enrich employees’ lives and promote communication and exchange, CMEC plans and organizes color- ful cultural and sports activities, including regular “May Cup” badminton competition, table tennis competition and “CMEC Cup” Soccer Competition, to encourage employees live a healthy life. About CMEC About Us Management Responsibility Management Responsibility Development ing- Promoting Sustainable Transformation and Upgrad - Development ing- Promoting Sustainable Transformation and Upgrad -

“Voice of CMEC” provides a platform for employees to show their talents and attracts The Second “CMEC Cup” soccer tournament CMEC Basketball Team participates in overseas and domestic colleagues, families and Visiting National Museum of China and friends. Beijing Planetarium SINOMACH “Silk Road CUCED Cup” invitational tournament. Cooperation Partners - Pursuing Win-win Going Forward with Our Cooperation Partners - Pursuing Win-win Going Forward with Our the Fruits of Development the Happy Homeland - Sharing the Fruits of Development the Happy Homeland - Sharing Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

“Double Seventh Festival” Singles Party China-Pakistan tug-of-war CMEC organizes “Big Hands with Small Hands Con- Representatives from Cameroon Embassy, Equatorial necting Homes Together” parent-child activity to pro- Guinea Embassy, Gabon Embassy and Liberia Em- vide an opportunity for overseas employees to be with bassy in China participate in the CMEC International family and children. Soccer Friendship Match. Benefiting Local Livelihood Benefiting Harmonious Community—

The “May Cup” badminton competition, table tennis competition Key Performance Outlook 2018 Outlook Key Performance 2017 Most Influential Green Corporate Brands in China

For 6 consecutive years CMEC is awarded SINOMACH “Outstanding Enterprise in Work Safety” 0Safety and Environmental Protection4

CMEC implements safety and environmental protec- Guaranteeing Healthy tion in every link of production and operation, and continuously improves the environmental management Operations system to minimize the negative influence of corporate operation on the environment. By constantly strengthening work safety management, we ensure the continuous improvement of work safety level.

Passing on Green Value 73 Securing Work Safety 77 2017 Social Responsibility Report Safety and Environmental Protection - 73 China Machinery Engineering Corporation Guaranteeing Healthy Operations 74

Passing on Green Value Creating Green Projects During construction, CMEC will take into full consideration the environmental impact and resource utilization efficiency, and continuously improve techniques and procedures through building quality, safety and environmental protection man- CMEC adheres to the philosophy of pursuing low-carbon, green and environmental friendly development. agement and control systems, so as to restore and control the ecological environment in the construction region, inte- Starting from innovation in technology and management, we further arouse employees’ awareness of envi- grate the concept of environmental protection into every link of project development and construction, and minimize the About Us ronmental protection, promote to practice green office, carry out green and public welfare publicity activi- impact on local environment. ties and enhance capacity in environmental management and control, so as to safeguard a green future. CMEC’s full-cycle environmental management system

Strengthening Green Management Management Responsibility

Project Project Survey and We continuously improve the thinking pattern and system of the Leading Group on Energy Saving and Emission Re- Development Financing Design of management and optimize construction scheme and duction, implement environmental management measures techniques to effectively control the dust, noise and pollut- such as the Provisional Regulations of Supervision and Ad- Development ing- Promoting Sustainable Transformation and Upgrad - ants caused by construction, reduce energy consumption ministration of Energy Conservation and Emission Reduc- during construction and protect the environment to the ut- tion, the Provisional Regulations on Energy Conservation · Learn local laws and regulations · Include environmental protec- · Ensure the design to comply with application investment into the total ble safety and environmental laws, regula- most. By regularly organizing meetings on launching work and Emission Reduction Statistics and Monitoring, and the · Learn the EIA requirements in cost tions and mandatory standards safety and energy saving & emission reduction information Provisional Regulations on Energy Conservation and Emis- contracts platform and integrating the work into systematic and in- sion Reduction Assessment, to comprehensively strength- · Improve the designer’s awareness of envi- formatized management, we continuously promote energy en the energy conservation and emission reduction work. ronmental protection and professional ethics through providing education and training saving and emission reduction. We also optimize functions Cooperation Partners - Pursuing Win-win Going Forward with Our

Project Operation Construction Equipment and We have set up the Leading Group on Energy Saving and Emission Reduction. Every de- Maintenance Procurement CMEC’s energy saving and emission reduction promotion system Management Organizational partment designates a person to be in charge of data analysis, promotion and implemen- System tation of the energy conservation and emission reduction work under the guidance of the Complete Engineering Management Department. Fruits of Development the Happy Homeland - Sharing · Monitor pollutant emission · Set goals of safety and environmen- · Conduct verification of suppliers’ environ- tal protection management, identify mental qualifications hazardous substances and insist on carrying out precautionary measures · Manage and control the equipment and and trainings materials that we and our subcontractors We have formulated the Provisional Regulations on Energy Conservation and Emission use, to ensure that they live up to safety and Reduction Monitoring and Management, implemented relevant national and local laws Institutional · Verify the subcontractors’ environ- environmental protection regulations and regulations, followed energy consumption limits for high energy-consuming products mental qualification System and implemented the energy consumption quota management system for major ener- · Ensure green construction Operations Healthy Protection - Guaranteeing Safety and Environmental gy-consuming equipment and devices.

We have set up a specific fund for R&D and management of energy saving and emission Fund reduction, and will increase the investment year by year. We also establish a specific fund Guarantee for giving extra bonus to outstanding departments or individuals in energy saving and CMEC and Belgrade signed the Joint Implementation Agreement on Serbian Benefiting Local Livelihood Benefiting Harmonious Community— emission reduction. Sewage Treatment Plant Project in Central and Eastern Europe 16+1 Summit. After the project is completed, it will finish pretreatment of sewage and sludge caused by 1.2 million people in Belgrade, with a peak processing capacity of 500,000 tons/day. It will fundamentally change the situation of direct emission of sewage and severe pollution in Belgrade. Tenga 49.5MW Wind Project transmits 133.781 million kwh of We have formulated the Provisional Regulations on Energy Conservation and Emission Statistics and electricity to the grid. With 2,703 annual utilization hours and a Reduction Statistics and Monitoring, to prepare relevant measurement devices according Monitoring capacity coefficient of 0.31. It saves about 45,753 tons of standard to law, and examine and calibrate the devices regularly. coal, reduces 402.6 tons of SO emission, 78,435 tons of CO ,

2 2 2018 Outlook Key Performance 352.3 tons of NOX, and 183 tons of dust emission. The project also significantly saves water resources. It is calculated that every one kwh of electricity generated from wind power can save 2.27 liters of water. Pakistan is relatively lack of water resources, so water saving is very important. Tenga 49.5MW Wind Project saves over We have formulated the Provisional Regulations on Energy Conservation and Emission 300 million liters of water every year, and reduces sewage emission Assessment Reduction Assessment, to implement the accountability system for department directors, and thermal discharge, making great contributions to Pakistani energy saving and environmental protection work. During the con- System and conduct annual assessment of department directors to award directors with out- struction, the project strictly met up with green development con- standing performance and punish those with poor performance. cept and took responsible actions, and was thus awarded the Most Beautiful Chinese Overseas Project, CMEC 2016 Outstanding En- gineering Project, 2017 SINOMACH Quality Award and 2017 Most Influential Green Corporate Brands in China. 2017 Social Responsibility Report Safety and Environmental Protection - 75 China Machinery Engineering Corporation Guaranteeing Healthy Operations 76

Being Devoted to Promoting Clean Energy Practicing environmental protection for public welfare

CMEC always pays attention to and devotes itself to developing and utilizing clean energy, and actively undertakes green Building a low-carbon society requires the mutual participation and practice of the general public. and environmental protection projects such as solar power generation project, so as to make contributions to building Therefore, CMEC continuously promotes publicity on environmental protection, advocates a green beautiful China and addressing global climate change. and low-carbon lifestyle and strives to arouse people’s awareness of protecting the environment. About Us Management Responsibility Development ing- Promoting Sustainable Transformation and Upgrad -

The Thar Coal-electric Project in Pakistan participates in The Public Project for Design, Supply, Construction, Commis- Earth Day Walk. sioning and Putting-Into-Service of Transport System Associat- Cooperation Partners - Pursuing Win-win Going Forward with Our ed with Lauca (Lauca-Huambo) helps clean up local domestic garbage and was praised by the leader of Huambo provincial CMEC and Ministry of Energy and Water Resources, Cameroon, signed the contract government. of Ngoila Hydropower Station Project. After the hydropower station is completed, it will help relieve the tense situation of electricity supply in Cameroon and drive local economic development. Practicing “Green Office”

Case CMEC encourages employees practice “green office” and incorporates the green and low-carbon Fruits of Development the Happy Homeland - Sharing concept into employees’ everyday work to minimize the negative impact of administration work on the environment.

Construction of Namibe Water Supply System Project: Caring for environment Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

Angola is in southwestern Africa, with abundant natural resources, zero industrial pollution and various animals and plants. Due to the civil war, the country’s infrastructure is very poor, leading to the poor living conditions of its people. The country has abundant water resources, but is lack of hy- draulic engineering and water supply infrastructure. People in villages and remote areas mainly depend on drinking river water. The unsound urban distribution system causes that most residents have to drive and transport water to store water in their own water tanks, and then drink water from water tanks or ponds. Since the drinking water is not fresh and sanitary enough, cholera, malaria and other diseases are very common.

Saving Oil Local Livelihood Benefiting Harmonious Community— Construction of Namibe Water Supply System Project undertaken by CMEC connects Bibala city and Camucuio city. During construction, CMEC Saving Water attached great importance to environmental protection. Keeping records of the Improving the water-saving usage of official cars capacity of water tanks Advocating green travel Collect, recycle and dispose waste oil due to mechanical maintenance, classify and dispose engineering waste, and landfill kitchen garbage through transformation regularly

Protect the environment and vegetation, and never chop down trees without a reason Key Performance Outlook 2018 Outlook Key Performance Protect local valuable and rare wildlife, and never impose negative influence on the environment and local people’s life

Always stick to safe engineering, set up fences and warning signs to alert children of the danger of staying around the construction site, and assign specific patrol personnel to prevent accidents Saving Electricity Saving Paper Using energy-saving lighting Paperless office Keeping the operation temperature of air conditioners at 26℃ or above Double-sided printing Using energy-saving office equipment 2017 Social Responsibility Report Safety and Environmental Protection - 77 China Machinery Engineering Corporation Guaranteeing Healthy Operations 78

Securing Work Safety Case

CMEC always strictly ensures work safety, practically implements the accountability mechanism and or- The Maldives Housing Project brings ganizes relevant activities to arouse employees’ awareness of work safety and improve their abilities in safety and happiness to local people About Us securing work safety. We also strengthen safety monitoring in domestics and overseas projects to guarantee that work safety is under total control.

During constructing the Maldives Housing Project, CMEC highly valued safety management. It formulated safety management objectives, es-

tablished and improved safety guarantee system, and improved the safety awareness of all staff members. There was no serious injury or fatality Management Responsibility caused by safety accident.

When President Xi Jinping was visiting Maldives, he attended the inauguration ceremony of the Second Phase Housing Project, and emphasized that CMEC should prioritize project quality to benefit local people. Development ing- Promoting Sustainable Transformation and Upgrad -

Safety management measures adopted in the Project

According to the requirements of “equal responsibilities for the Party

committee and the administration, Cooperation Partners - Pursuing Win-win Going Forward with Our Consolidating Safety Management double responsibilities for one According to different fea- post, and holding misconducting tures of projects, specific people accountable”, manage- work safety management CMEC insists on improving the safety management system and safety regulations, enhances safety super- ment personnel at all levels should rules and regulations should vision and strictly holds relevant personnel at all levels accountable. We continuously strengthen the im- finish not only their own work, be developed. Therefore, but also work safety management there will be systems and plementation of basic work, improve employees’ abilities of work safety, and ensure the orderly promot- work within their scope of official rules of assessment, rewards ing of work safety. In 2017, there was no work safety accident at general level or above. CMEC has been duty. All of them should fulfill work and punishment to follow in

awarded SINOMACH “Outstanding Enterprise in Work Safety” for six consecutive years. safety responsibilities and duties every link of work. Fruits of Development the Happy Homeland - Sharing according to the principle of “the person in charge should be held accountable”. Before starting construction, work safety management and plan should be formu- Safety Management System lated. Relevant costs should be budgeted. Organiza-

tional design and reasoning Operations Healthy Protection - Guaranteeing Safety and Environmental mechanism for important plans should be established to fully implement safety and technical disclosure work, and actively carry out standardized and safe construction site building. Benefiting Local Livelihood Benefiting Harmonious Community—

Organizational System Institutional System Subcontractor Management We established emergency plan and reporting system We actively conducted safe- to effectively prevent, timely The Company: Work Safety Committee The Company: Work Safety Management The Company: Formulating the Work ty inspections, and strictly control and properly deal and Work Safety Office Measures, Comprehensive Emergency Safety Management Agreement, which carried out inspections be- with all kinds of possible fore construction, regular, Plan for Work Accidents and Incidents, specifies work safety management emergency incidents, and frequent, professional and Business Department/Subsidiaries: Work etc. responsibilities of the Company and sub- form an emergency man- seasonal inspections, and Safety Leading Group agement system with unified contractors inspections during holidays 2018 Outlook Key Performance command, scientific deci- Project Departments: Work safety re- and festivals. Project Departments: Work Safety Man- sion-making, powerful guar- sponsibility system, work safety inspec- Project Departments: Signingthe Work antee and high efficiency. agement Agencies tions and potential risks identification Safety Management Agreement, which and governance, and work safety assess- requires subcontractors to delegate ment full-time/part-time safety management personnel 2017 Social Responsibility Report Safety and Environmental Protection - 79 China Machinery Engineering Corporation Guaranteeing Healthy Operations 80

Carrying out Activities for Ensuring Safety

Aiming at improve employees’ safety awareness and the and training in the whole process of production and op- awareness of self-protection, CMEC organizes various eration, so as to strengthen employees’ vigilance against activities such as “Work Safety Month” to cultivate safety safety hazards and abilities of dealing with accidents. We Case

culture and enhance the safety awareness among employ- strictly conduct work safety supervision and inspections in About Us ees. We have established a work safety education and projects and departments, continuously improve the safety training system to formulate education and training plans emergency management system, thus effectively consoli- Strengthening safety supervision over Construction of Social Houses and Related at multiple levels, through multiple channels and with spe- dating the Company’s ability of guaranteeing work safety. Infrastructure Project cific goals, and always incorporate work safety education Management Responsibility

As one of the African countries with the most rapid growth rate, Angola is devoted to strengthening the overall urban planning, scaling up CMEC work safety Trainings on work safety are organized regularly as a complement to theme ac- efforts in infrastructure construction, and improving people’s livelihood. In this context, Angolan social security housing and relevant infrastruc- training model tivities such as “Work Safety Month”. ture construction projects were contracted and are anticipated to be completed by February, 2019, which will provide favorable living conditions and complete infrastructure to over 2,000 relocated residents whose houses are pulled down, improve people’s living conditions, create Development ing- Promoting Sustainable Transformation and Upgrad - jobs, and promote local economic development and social progress. The project strictly controls engineering quality, safety management and Regular progress. Since the construction began, there has been no major safety accident. The project receives good comments from owners and super- activities visors. In the early stage of construction, CMEC set clear HSE management objectives, compiled management and implementation plan, established organizational institutions, clarified the responsibilities and duties of management personnel at all levels, and finished the identification and assessment of major hazards and environmental factors in advance. During construction, CMEC conducted quality safety inspections from frequently every month to investigate thoroughly the construction safety, labor protection appliances and the environment of the construction Cooperation Partners - Pursuing Win-win Going Forward with Our site, find problems and carry out timely rectification. There were multiple safety personnel on the construction site to patrol regularly and make inspection records, so as to completely eradicate safety hazards and misconducts. Project departments would invite experienced engineers to Work safety train- give work safety lectures and on-site guidance to each other’s projects, systematically troubleshoot on-site safety hazards, rectify and end exist- ings for employees ing safety problems and form a targeted quality and safety management system for each project.

We innovatively adopt a work We organize various trainings

safety promotion and education Fruits of Development the Happy Homeland - Sharing such as work safety trainings, ex- system that covers all employees, Full Various perience sharing meetings, emer- to enhance their awareness and coverage forms gency drills, Work Safety Month ability of ensuring work safety at and online trainings. different posts. Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental Benefiting Local Livelihood Benefiting Harmonious Community—

CMEC’s Safety Emergency Management System 2018 Outlook Key Performance Work Safety Lecture in the construction site of Construction of Social Houses and Related Infrastructure Project

Comprehensive plan Specialized plan On-site settlement plan

 CMEC develops and imple-  Relevant departments devel-  The project department de- ments level-1 comprehensive op and implement specialized velops and implements onsite plans. plans according to the nature settlement plan.  The division (subsidiary) de- of incidents. velops and implements level-2 comprehensive plans. 346 Number of recruited foreign employees

RMB 1 million

Amount of donations to the society

0Harmonious5 Community CMEC cannot achieve such rapid development without the support of local community. While pursuing its own development, CMEC also proactively helps drive Benefiting Local Livelihood community development, lays emphasis on the impact of its operation on local community and keeps close attention to local residents’ needs and willingness. We also further promote localized operation to improve local people’s livelihood and actively participate in public welfare activities to create a harmonious and happy community.

Implementing Localized Operation 83

Improving Community Livelihood 84

Engaging in Public Welfare 88 2017 Social Responsibility Report Harmonious Community—Benefiting 83 China Machinery Engineering Corporation Local Livelihood 84

Implementing Localized Operation Improving Community Livelihood

CMEC steadfastly promotes the implementation of localized strategy, sets up localized organizations, employs local staff, CMEC is devoted to giving full play to its own strength to improve the livelihood of people in local com- carries out local procurement, and constantly promotes the construction of regional center and overseas institutions to munities, pays attention to strengthening exchange with communities, and takes part in construction and About Us drive and promote the development and prosperity of the economic society where we operate. In 2017, CMEC recruited renovation of community infrastructure with full respect to local customs, habits and religious culture, so 346 foreign employees. The number of foreign contract workers recruited by subcontractors at construction sites was 8,713. as to boost the development of local communities.

Strengthening Communication and Interaction with Communities Management Responsibility

During decision making and operations, CMEC attaches great importance to the communication and Creating jobs in the interaction with communities, takes an initiative in strengthening communication with local governments, project areas NGOs, media and community representatives, and listens to and responds to the advices of local resi- Development ing- Promoting Sustainable Transformation and Upgrad - dents, striving to create a harmonious co-existence relationship between CMEC and local communities. Localized Employment

CMEC Zhang Chun, then CMEC’s Localized President, meets with Chen Weiqing, Chinese ambassa- Operation dor to Iraq, and they have Cooperation Partners - Pursuing Win-win Going Forward with Our Localized Mechanism Localized in-depth discussions about Procurement Oganizations the influence of the local political situation in Iraq.

Building a harmonious Creating social community wealth the Fruits of Development the Happy Homeland - Sharing To thank CMEC for its contributions to local economic development, the Lao government grants Friendship medal and certificate to Zhang Chun, then CMEC’s President.

Case Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental

CMEC grants the award of Overseas Em- ployees with Outstanding Contributions to local employees in Bangladesh

Zhang Chun, then CMEC’s President, visits Zhao Yanbo, Chinese ambassador to Bot- Bangladesh is one of the two traditional overseas bases for CMEC. swana, and they have in-depth discussions Benefiting Local Livelihood Benefiting Harmonious Community— The favorable development situation that CMEC created in the on local political and economic situations, infrastructure development plan and eco- Bangladeshi market and the human-oriented corporate culture nomic & trade cooperation in Botswana. attracted many outstanding local employees. In 2017, there were three employees that had worked in the Bangladeshi representative office for over 20 years, with the longest of 27 years. To reward their loyalty and contributions to CMEC, the office granted the award of Overseas Employees with Outstanding Contributions to the three

employees. 2018 Outlook Key Performance

Zhang Chun, then CMEC’s President, grants the award of Overseas Employees with Outstanding Con- tributions to local employees. 2017 Social Responsibility Report Harmonious Community—Benefiting 85 China Machinery Engineering Corporation Local Livelihood 86

Case Participating in Infrastructure Construction

Construction of Social Houses and Related Infrastruc- CMEC takes an active part in building large infrastructure facilities such as roads, bridges, railways, ture Project builds roads for the local community to power stations and stadiums, thus providing guarantee to improving local people’s well-being and bring more convenient for local people in travel sustainable development. About Us

The existing houses near to the construction site of Construction of Social Houses and Related Infrastructure Project were lack of sound infrastructure facilities. The bumpy roads were extremely muddy during rainy days, and Case dusty during sunny days. To improve surrounding facilities and bring conven-

ience to local residents, the Project Department of CMEC Angolan Housing Management Responsibility Project decided to provide help within their power. Hardening the main Public Project of Electrification and House Connec- streets leading to existing neighborhoods not only made it more convenient tion of The City of Huambo Project helps relieve the for cars to pass, but also reduced dust in the air. tense situation of local electricity supply Development ing- Promoting Sustainable Transformation and Upgrad -

CMEC hardens the main streets leading to surrounding neighborhoods. Public Project of Electrification and House Connection of The City of Huambo is the largest ever urban power network construction project in Huambo and was highly valued by Angolan Ministry of Energy. The project covers the medium-low voltage distribution networks in the whole Huambo city and surrounding cities. Its completion will greatly relieve the tense situation of Huambo’s power supply. Huambo residents would be able to use electricity by prepayment instead of making afterward payments. Therefore, the project will help improve Huambo Power Company’s Case

power management level, make it more convenient for citizens to purchase electricity, save electricity consumption cost, change local people’s hab- Cooperation Partners - Pursuing Win-win Going Forward with Our it of using electricity, and improve local people’s living standards.

CMEC Namibe Water Supply System Project in Angolabrings benefits the local society

CMEC Namibe Water Supply System Project in Angola involves Bibala city and Camucuio city, can benefit over 70,000 residents and can completely Fruits of Development the Happy Homeland - Sharing solve the problem of lacking drinking water in local area. From “looking for water” to “getting water from water taps”, clean drinking water will greatly reduce health risks such as getting cholera and malaria. The project not only created jobs in local area, but also promoted the development of local husbandry and agriculture. The water supply network project is dedicated to improving local people’s livelihood, and has achieved outstanding out- comes, bringing benefits to local people. The Angolan Ministry of Energy and Water and the local government has visited the project’s construction site for several times, and expressed their satisfaction and appreciation. Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental Benefiting Local Livelihood Benefiting Harmonious Community—

Newly-built 60KV line and medium-low voltage distribution networks on both sides of the road Key Performance Outlook 2018 Outlook Key Performance

Local children can get clean drinking water without worry about getting sick. 2017 Social Responsibility Report Harmonious Community—Benefiting 87 China Machinery Engineering Corporation Local Livelihood 88

Supporting Medical, Educational and Cultural Development Engaging in Public Welfare CMEC builds schools and hospitals to constantly improve local educational environment and medical services, support local residents to enjoy better educational resources and medical services, and realize cultural development. CMEC adheres to sharing its development fruits with the public, joins hands with partners from all sectors for cooperation and collaboration, and helps establish a public welfare platform.We actively participate in volunteer activities, such as About Us Case disaster rescue and relief and helping the disabled and the people in difficulty, and take an initiative in showing care and responsibilities to the society.

CMEC Construction and Installation of the Combined Cycle Power Practicing Targeted Poverty Alleviation

Plant SOYO I Project donates “September 17 School” and 1,000 sets Management Responsibility of water purifying equipment to the local community In active response to the call of the nation, CMEC implements the arrangements of SINOMACH on targeted poverty alleviation, promotes and implements the plan of promoting targeted poverty alleviation in Gushi to help Gushi people win In order to improve the education level and drinking water quality in the project area, and assist Soyo city in combating against cholera, CMEC the battle against the poverty and bring benefits to Gushi people.

launched the construction of “September 17 School” on August 18, 2017. The school was donated by CMEC to the Soyo Municipal Government, An- Since CMEC and Gushi County formed a pair in poverty alleviation work, CMEC has established the philosophy, thinking, Development ing- Promoting Sustainable Transformation and Upgrad - gola. In the inauguration ceremony, CMEC also donated 1,000 sets of water purifying equipment to the local government. The governor and deputy mechanism, channels and methods of carrying out targeted poverty alleviation work in Gushi County. CMEC sticks to governor of Zaire, the Minister of Education in Angola and the mayor of Soyo attended the ceremony, and expressed gratitude to CMEC’s donation. principle of “double promoting” in the development strategy & business layout and Gushi county economic development They highly appreciated CMEC’s sense of social responsibility and willingness of helping the local community when it’s in need. plan, and strives to achieve the effect of “one plus one bigger than two”. We put forward the innovative poverty alleviation paths of promoting targeted poverty alleviation through developing trade, industries and agriculture. We organize field visits, put forward the implementation plan of targeted poverty alleviation work in Gushi County, set up CMEC Gushi targeted poverty alleviation fund, and keep close contact and collaboration with the leading organization, SIPPR Engineer- Case ing Group Co., Ltd. to practically carry forward the CMEC tradition of helping people in difficulty and distress. Cooperation Partners - Pursuing Win-win Going Forward with Our

Three Major Innovative Paths of Targeted Poverty Alleviation Work in Gushi County Helping build a hospital in Zambia to improve local medical and sanitary conditions Targeted Poverty Allevi-

Targeted Poverty Allevi- Fruits of Development the Happy Homeland - Sharing Targeted Poverty ation through Promoting ation through Promoting Alleviation through Industrial Development Industrial Development On October 17, 2017, the inauguration ceremony of Lusaka Specialized Hospital was held. Zambian President Edgar Lungu, Minister of Health Chita- Promoting Trade Supporting the labor resources in Gushi “going out” and realizing Giving full play to CMEC e-commerce lu Chilufya, Chinese ambassador to Zambia Yang Youming, Senior Chieftainess Nkomeshya Mukambo II of Chongwe, representatives of the Zambian Concentrating advantageous poverty alleviation through cultivat- platform to boost the agricultural government, representatives of Chinese-invested enterprises and over 1,000 guests attended the ceremony. In the ceremony, President Lungu and resources in establishing ing high-end labor force products sales in Gushi, and actively guests cut the ribbons, and laid bricks according to Zambian traditions. President Lungu also thanked China National Complete Engineering Cor- trade subsidiaries, supporting discussing the deep processing and in- Training and cultivating professional poration for its active assistance in signing the hospital’s loan agreement. After the hospital is built, it will greatly improve the overall medical and Gushi County to prioritize dustrialization of agricultural products industrial and trade services construction, installation and engi- sanitary conditions in Zambia, and become the medical center of surrounding countries. as well as industrial products neering personnel for specific posts Connecting Gushi agricultural products Operations Healthy Protection - Guaranteeing Safety and Environmental manufacturing, promoting to realize high-end poverty allevia- to CMEC agricultural business, and ac- the substantialization of trade tion tively exploring ways to establish bases and establishing a trade pov- including rapeseed oil processing Organizing specific trainings erty alleviation platform base to realize high-end for workers and recommen- agricultural poverty alleviation The successful launching of the project ding suitable jobs to them represents another milestone achievement in Zambian health sector. After Benefiting Local Livelihood Benefiting Harmonious Community— Lusaka Specialized Hospital is completed and put into operation, it will improve the medical resources in Zambia, relieve the difficult medical situation in Lusaka and even Zambia, and attract more high- end medical professionals to serve in the hospital, which will improve the public

health level of Zambia and lay a solid 2018 Outlook Key Performance foundation for the development of Zam- bian economic society. Zambian President Edgar Lungu lays bricks for the foundation of Lusaka Specialized Hospital. —— Chinese Ambassador to Zambia Yang Youming

CMEC Targeted Poverty Alleviation Symposium in Gushi County 2017 Social Responsibility Report Harmonious Community—Benefiting 89 China Machinery Engineering Corporation Local Livelihood 90

Participating in Disaster Relief Carrying out Volunteer Activities

CMEC actively participates in various disaster relief activities, donates materials and funds and joins CMEC actively organizes and carries out volunteer services and activities, and encourages employees to post-disaster reconstruction. CMEC has built a responsible brand image in various project areas. care for the society and provide help as much as possible to the disprivileged, thus helping build a harmonious society. About Us

Case Management Responsibility

CMEC donates disaster relief supplies to the flood-stricken area in Sri Lanka Development ing- Promoting Sustainable Transformation and Upgrad -

In May 2017, continuous rainy days in Sri Lanka resulted in serious flood. Abalalua village, located in 20 miles east of Colombo, is next to the fourth longest river in Sri Lanka—Kelani River, and was seriously influenced by the flood. About 350 households among the total 750 households in the village were impacted by the flood, involving over 1,500 people.

After the disaster happened, CMEC Attanagalla Water Plant Project immediately contacted the local government that night and donated disaster Cooperation Partners - Pursuing Win-win Going Forward with Our relief supplies to the village, including food, daily supplies and other necessary materials, to help local residents survive the disaster and restore their home.

On October 29, 2017, CMEC participated in the “Love Knows No Borders” Interna- tional Charity Sale for the fifth time. the Fruits of Development the Happy Homeland - Sharing

When we were in the hardest time of our lives, Chi- nese friends are the first ones to send us warmth. Their help was precious, and unforgettable. Case Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental —— Abalalua villager, Chuduleca Organizing a Book-donating activity

CMEC representative and the Head of Abalalua Village On International Children’s Day in 2017, the Public Welfare Association under hand out disaster relief supplies CMEC Youth League Committee organized the activity of “sending books, sending love” in Shijiaying Center Primary School in Fangshan District, Beijing. The association collected employees’ idle books that were suitable for children Local Livelihood Benefiting Harmonious Community— to read and comprehend, and donated over 500 books in total. Meanwhile, the association bought 10 sets of encyclopedia and donated to the library of Shi- jiaying Center Primary School. In this way, apart from meeting material needs, children can also experience the imagination and power in books, and could be CMEC provided timely help to solve the problem of lacking materials and supplies during accommodating disaster-stricken res- touched by books. idents. They are the first ones that offered help to local villagers. Thanks to their donations, villagers calmed down and had confidence in fighting against the disaster. Their basic living was also secured. We found it clearer that China and Sri Lanka are true

friends. 2018 Outlook Key Performance

CMEC organizes a book-donating activity. —— Head of Abalalua village, Sunir Langit 2017 Social Responsibility Report 91 China Machinery Engineering Corporation Key Performance 92 Key Performance

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Transformation and Upgrading - Going Forward with Our Partners - Promoting Sustainable Development Pursuing Win-win Cooperation

CMEC will keep consolidating the foundation of engineering contracting business, and CMEC will continuously collect customers’ opinions and suggestions, actively commu- make all-out efforts to keep on innovating to ensure stable development. While further nicate with customers, provide quality products and services to customers, and create solidifying the achievements of trade and services transformation, CMEC will create more quality projects for a long-term cooperation. We will accelerate our integration new growth points centering on technological innovation. We will guarantee stable de- process for the international equipment manufacturing industry chain, and continuously Outlook 2018 velopment of main businesses and further foster emerging sectors, such as real estate, push strategic cooperation to create an industrial ecosystem for win-win cooperation. About CMEC

logistics and agriculture, so as to create core competitiveness in these sectors, realize By deepening strategic cooperation with world-leading companies such as GE and BV, About Us growth and make profits in diversified markets. we will continue to explore a new win-win cooperation model in collaborative market development, collaborative innovation in scientific research and industrialization in developing countries, and continue to deepen cooperation with industrial alliances of Chinese enter. Management Responsibility 2018 marks the 40th anniversary of China’s Reform and Opening-up and the founding of CMEC. The Compa- Management Responsibility ny will further implement the spirit of the 19th CPC National Congress, Central Economic Work Conference and Nationwide SOE Party Building Conference, and launch a new round of strategic development plan for Happy Homeland - Safety and Environmental Protection - 2018 to 2020 to lead corporate development. Meanwhile, under the leadership of SINOMACH and the Party Sharing the Fruits of Development Guaranteeing Healthy Operation Committee of the Company and the guidance of the Board of Directors, we will strive to make innovations, Development ing- Promoting Sustainable Transformation and Upgrad - optimize corporate structure, improve our business layout, and endeavor to create a new picture for business CMEC will strengthen performance management, further improve the performance CMEC will uphold the work safety principle of “safety first, prevention foremost, com- Development ing- Promoting Sustainable Transformation and Upgrad - development. appraisal system, and promote the implementation of performance appraisal among all prehensive management” and firmly establish the “red line” awareness to guarantee business units. Focusing on regional pilot projects, we will actively explore from various work safety. In accordance with the relevant requirements of China and SINOMACH, aspects such as institution building, talent management and incentive mechanisms we will strengthen the construction of work safety organizations, improve the work to boost overseas regionalization and localization, and improve the three-level talent safety responsibility system, work safety cost management system and other systems, team. We will care for employees continuously and ensure the safety of overseas em- and continue to train project managers, safety management personnel, etc., striving to ployees. At the 40th anniversary of China’s Reform and Opening-up and the founding achieve the Company’s safety management objectives. We will integrate environmental Cooperation Partners - Pursuing Win-win Going Forward with Our of CMEC, we will organize a variety of cultural and sports activities to continuously protection into all aspects of production and operation, continue to improve the envi- Cooperation Partners - Pursuing Win-win Going Forward with Our improve employees’ happiness. ronmental management system, and minimize the impact of the Company’s management on the local environment.

Harmonious Community - Benefiting Local Livelihood the Fruits of Development the Happy Homeland - Sharing the Fruits of Development the Happy Homeland - Sharing CMEC will deepen the implementation of localized and regional operations. Relying our advantages in engineering contracting, we will promote the development of community culture, education, medical and health services in places where we operate. We will actively implement tasks of targeted poverty alleviation assigned by SINOMACH. Based on targeted poverty alleviation through trade, industry and agriculture, we will promote the implementation corporate plans for targeted poverty alleviation in Gushi, earnestly fulfill social responsibilities, and make unremitting efforts to win the combat Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental Healthy Operations Healthy Protection - Guaranteeing Safety and Environmental against poverty and bring benefits to the Gushi people. Benefiting Local Livelihood Benefiting Harmonious Community— Benefiting Local Livelihood Benefiting Harmonious Community— Key Performance Key Performance Outlook 2018 Outlook Outlook 2018 Outlook 2017 Social Responsibility Report 95 China Machinery Engineering Corporation 96

Third-party Evaluation Reporting Index

Suggested Location in the Report Note Comply or Explain Disclosure Status This is the fifth social responsibility report of CMEC. It has higher quality and many innovations based on the previous reports. Disclosure (Page) (explain information that is partly or not disclosed) A. Environmental As to the format, this Report combines illustrations and contexts. It summarizes the Company’s performance and highlights in social General Disclosure √ 73- 74 responsibility fulfillment with big data and timelines. In the “Features on Responsibility” part, this Report adopts a popular form of telling a story – one picture for one story, which demonstrates CMEC’s attitude to communicate with stakeholders sincerely. A1.1 √ 91 A1.2 √ 91 For the structure, this Report inherits the previous tradition and summarizes the “Features on Responsibility” part that is in line with Planning to identify and collect data on hazardous waste the Company’s characteristics. This part elaborates on Berezovskaya 427MW Combined Cycle Power Plant in Belarus and Project for A1.3 - - Aspect A1: Emissions emissions in the next three years Engineering, Procurement, Construction and Commissioning of 600MW Unit No.6 and its Associated Transmission System of Central Planning to identify and collect data on harmless waste A1.4 - - Power Plant, which highlights the profits CMEC has brought to stakeholders and demonstrates CMEC’s image as a responsible inter- emissions in the next three years national engineering contractor and service provider. A1.5 √ 75- 76 The content of this Report highlights CMEC’s image as a responsible central SOE that keeps pace with the time. CMEC adds “Make A1.6 √ 75- 76 the World Better” to its original corporate philosophy of “Create Ideas, Achieve Dreams”, which better shows CMEC’s deepened General Disclosure √ 73- 74 awareness of its historical mission and social responsibility, as well as its unremitting efforts to contribute to the sustainable develop- A2.1 √ 91 ment of the society. A2.2 √ 91 CMEC constantly drives the development of engineering contracting and service industry around the world, acts as a benchmark for Aspect A2: Use of Resources A2.3 √ 75- 76 social responsibility fulfillment among central SOEs, so as to further promote the increase of the Company’s economic, environmental and social values. A2.4 √ 74- 75 Planning to identify and collect data on packing material A2.5 - - in the next three years Aspect A3: The General Disclosure √ 74 Environment and Natural Resources A3.1 √ 74- 76 B. Social General Disclosure √ 61- 62 Yu Zhihong, President of China WTO Tribune Aspect B1: Employment B1.1 √ 61 B1.2 General Disclosure √ 77

Aspect B2: Health B2.1 √ 92 This report comprehensively reflects CMEC’s highlights and performance in social responsibility management and practice, and its and Safet B2.2 great achievements in being the world leading international engineering contractor and services provider. It also presents the Com- B2.3 √ 66 pany’s contribution to the realization of SDGs, including “no poverty”, “good health and wellbeing”, “affordable and clean energy”, General Disclosure √ 65 “sustainable cities and communities” and “responsible consumption and production”.This Report has rich contents, clear focuses, and Aspect B3: Development B3.1 high quality, demonstrating distinct characteristics of CMEC. and Training B3.2 Deepening responsibility management. CMEC continuously promotes social responsibility management, and establishes a sound social responsibility organization system to integrate social responsibility and sustainable development concepts into the whole process General Disclosure √ 61 Aspect B4: Labor B4.1 √ 61 of operation management and engineering construction. As the concept of social responsibility is recognized deeply, our system is Standards increasingly complete and our ability has been enhanced, and the Company’s ability for sustainable development and differentiated B4.2 No violation has occurred competitiveness is emerging gradually. General Disclosure √ 55 Aspect B5: Supply Chain Highlighting industry features. In China, CMEC, based on development of the industry and the situation of competition, creates an B5.1 √ 55 Management open platform and ecosystem with EPC as the core, so as to integrate upstream and downstream quality resources, complement ad- B5.2 √ 55 vantages of different sectors and cooperate closely with partners to achieve healthy, harmonious and sustainable development. In the General Disclosure √ 6 international market, CMEC innovates in the win-win cooperation model that promotes international collaboration. Based on the in- depth development of the core market, the Company drives the development of the peripheral markets and nurtures regional com- B6.1

petitiveness, endeavoring to realize the healthy and sustainable development of the Company and local communities. Aspect B6: Product B6.2 No violation has occurred Responsibility Being a responsible central SOE. As a responsible central SOE, CMEC, under the leadership of the Party and guided by the national B6.3 policy, actively fulfilled its social responsibilities and contributed to the global sustainable development. The Company actively par- B6.4 ticipated in the Belt and Road Forum for International Cooperation to expand international cooperation and exchanges, and play an B6.5 important role in promoting the economic and trade cooperation with “Belt and Road” countries to a higher level and benefit people General Disclosure √ 42- 43 along the route. CMEC actively responds to the national call for targeted poverty alleviation, implements the task of SINOMACH on Aspect B7: Anti-Corrup- B7.1 91 poverty alleviation, and promotes the implementation of targeted poverty alleviation programs to benefit the people in poor areas tion and facilitate the winning of the battle against poverty. B7.2 √ 42- 43 General Disclosure √ 82 Aspect B8: Community B8.1 √ 85- 90 Investment B8.2 √ 92

Han Bin, Secretary General of Global Compact Network China 2017 Social Responsibility Report 97 China Machinery Engineering Corporation

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Readability: Very Good Good Fair Poor Very Poor Thank you for reading this Report. We are looking forward to your comments Q Which chapter(s) is / are in line with your needs? and opinions on it, which can help us improve the compilation of future re- A Q&A with Leaders Features on Responsibility About Us

ports and enhance social responsibility Responsibility Management management. Please fill in the following questionnaire or sending us your feed- Transformation and Upgrading - Promoting Sustainable Development back via the contact information below. Going Forward With Our Partners - Pursuing Win-win Cooperation Thank you very much for your support! Happy Homeland - Sharing the Fruits of Development Safety and Environmental Protection - Guaranteeing Healthy Operation China Machinery Engineering Harmonious Community - Benefiting Local Livelihood Outlook 2018 Corporation Others (please specify) July 2018 Which topic(s) is / are to your highest concern? Q (please tick up to three options)

A Strategic management and control Law-based corporate governance

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Construction of the clean party Value creation Excellent projects

Sincere service Responsible procurement Supply chain management

Industrial chain development Partners Employment management

Salary and welfare Democratic management Cultural construction

Employee training Career development Work safety

Occupational health Green operation Localized operation

Community livelihood Public welfare

Q Do you have any opinion or suggestion on our Social Responsibility Report 2018 or the performance of CMEC?

China Machinery Engineering Corporation ADD: CMEC Building, No. 178, Guang'anmenwai Street, Xicheng District, Beijing, China Postcode:100055 Contact person: Wang Sudan, Social Responsibility Office TEL:+86 - 10 - 63312002 Website:www.cmec.com