Dispatch of Letter to Shareholders

SINGAPORE, July 30 /PRNewswire-Asia-FirstCall/ -- China Yuchai
International Limited (NYSE: CYD) ("China Yuchai" or the "Company"), refers to
its announcement on July 28, 2009 with regard to the convening of a special
general meeting ("SGM") to be held on September 4, 2009 at 11.00 a.m.
(Malaysia time).
The Board wishes to announce that a Letter to Shareholders ("Letter")
setting out the recommendations of the Board of Directors on the resolutions
to be placed before the shareholders at the SGM is in the process of being
dispatched to shareholders. In order to provide shareholders sufficient time
to review the Letter prior to casting their votes, a copy of the Letter is
attached to this announcement.
About China Yuchai International
China Yuchai International Limited, through its subsidiary, Guangxi Yuchai
Machinery Company Limited ("GYMCL"), engages in the manufacture, assembly, and
sale of a wide array of light-duty, medium-sized and heavy-duty diesel engines
for construction equipment, trucks, buses, and cars in China. GYMCL also
produces diesel power generators, which are primarily used in the construction
and mining industries. Through its regional sales offices and authorized
customer service centers, the Company distributes its diesel engines directly
to auto OEMs and retailers and provides maintenance and retrofitting services
throughout China. Founded in 1951, GYMCL has established a reputable brand
name, strong research & development team and significant market share in China
with high-quality products and reliable after-sales support. In 2008, GYMCL
sold approximately 372,000 diesel engines and was consistently ranked No. 1 in
unit sales by China Association of Automobile Manufacturers. For more
information, please visit http://www.cyilimited.com
For more information, please contact:

Kevin Theiss / Dixon Chen
Grayling
Tel: +1-646-284-9409
Email: kevin.theiss@us.grayling.com
dixon.chen@us.grayling.com

July 30, 2009

Dear Shareholders.

The Board of Directors of China Yuchai International Limited ("CYI" or
"the Company") has scheduled a Special General Meeting ("SGM") for September
4,
2009 to consider the proposals set out in five separate requisition notices
("Notices") received by the Company from a group of shareholders (the
"Requisitioning Shareholders"). Based on legal advice from Bermuda counsel,
your Board is of the view that many aspects of the Notices are defective in
relation to the exact business sought to be placed before shareholders for
their consideration and vote. Nevertheless, in compliance with the Company's
bye-laws, your Board has agreed to convene the SGM and would like to
articulate and share its views on the proposals contained in the Notices for
your consideration.
YOUR VOTE IS IMPORTANT AT THIS SGM.
Your Board of Directors is of the unanimous view that the matters
contained in the proposals should be rejected. Your Board also believes that
there is no good reason for the delivery of the Notices or the requisitioning
of the SGM and that the actions of the Requisitioning Shareholders merely
misuse and waste time and money of both the Company and its shareholders. The
Notices also divert the attention of management from running the business of
the Company which remains financially sound, especially in these difficult
economic times.
The first proposal relates to removal of the special share rights held by
Hong Leong Asia Limited ("HLA"). HLA has been the controlling shareholder in
CYI since its initial public offering in 1994 and the existence of and the
rights relating to the special share have been publicly and widely disclosed
in the Company's filings. The rights attached to the special share are
contained in the Company's bye-laws which are available to all shareholders.
Your Board of Directors is of the view that shareholders who purchase CYI
shares have full, complete and prior notice of the existence of the special
share and have no cause to complain against the rights accorded to HLA as a
result of its ownership of the special share, which is legally recognized
under Bermuda law, the country in which the Company is incorporated, and which
was part of the economic bargain when the Company made its public offering.
HLA is a long-term, strategic investor in the Company and has been actively
involved in the growth and development of CYI through the years.
The Requisitioning Shareholders also propose the immediate removal of Mr.
Teo Tong Kooi as an officer and director of the Company. This is a curious
request as Mr Teo is a director nominee of the special share holder which,
under the Company's bye-laws is the party who possesses the right to remove
its nominees. Further, the Company had already announced on June 22, 2009,
before receipt of the Notices and prior to the date appearing on some of the
Notices, that Mr. Teo, after a long and accomplished service to the Company,
would be leaving the post of President effective August 1, 2009 but will
continue as a non-executive director of CYI. Your Board appointed Mr. Saw Boo
Guan, an experienced veteran of the automotive industry, to its board of
directors and he will be assuming the role of President from Mr. Teo on August
1, 2009. The appointment of the President of CYI is a power given to the Board
of Directors under the bye-laws. Mr. Teo has been an active and industrious
executive officer since his appointment as President of the Company in January
2005 and has played a key role in overseeing the operations of the Company's
main operating subsidiary, Guangxi Yuchai Machinery Company Limited
("Yuchai"),
to deliver consistent results in each year of his tenure. The considerable
progress made over the last 18 months in resolving our historical problems
with Yuchai's Chinese shareholders, improving our communications with
shareholders and the appointment of a dedicated management team at CYI from
November 2007 onwards, is largely due to the efforts of Mr. Teo. The decision
to appoint Mr. Saw as President of the Company is therefore not, in any way
related to Mr Teo's performance and any criticism of his performance is
fundamentally misinformed and a poor attempt to discredit his numerous and
valuable contributions to the Company.
In addition, the Board of Directors believes that the proposal to remove
Mr. Tan Aik Leang as Chairman of the Audit Committee and as a director of CYI
is not in the best interests of the Company or its shareholders. Mr. Tan's
performance has been exemplary. He has been active and effective as Chairman
of the Audit Committee and his stewardship of the Audit Committee has been
instrumental in its independent investigation in 2007 into the facts and
circumstances of the potential errors of approximately Rmb168 million in the
accounts payable of Yuchai ("Independent Investigation"). The past delay in
financial reporting was largely due to the Independent Investigation as all
audit work had to cease, resuming only in early 2008 to avoid any disruption
to and compromise of the Independent Investigation while it was ongoing. Upon
the conclusion of the Independent Investigation, the Company restated its
audited consolidated financial statements for FY 2005 and filed its audited
consolidated financial statements for FY 2006 and FY 2007 within a period of
eight months. As Chairman of the Audit Committee, Mr. Tan also recently
oversaw the smooth transition from the Company's previous independent auditors
to its current independent auditors. Notwithstanding the appointment of new
independent auditors in April 2009, the Company filed its 2008 Annual Report
on Form 20-F containing its audited consolidated financial statements for FY
2008 with the U.S. Securities & Exchange Commission on July 15, 2009. CYI
expects to shortly make available unaudited financial information for the
three and six months ended June 30, 2009 and thereafter timely release
quarterly financials. The criticism levied against Mr. Tan in the Notices with
regard to the release of the financials in a timely and effective fashion is
therefore misconceived and does not comport to the reality of his role and
performance.
The Requisitioning Shareholders propose to remove two experienced
directors who have contributed significantly to CYI from the Board without any
valid reason yet at the same time request that CYI amend its bye-laws in an
unspecified manner to permit the appointment of two "independent" directors to
be elected to the Board. The Company has always had independent directors on
its Board of Directors as it believes in having strong corporate governance
and this is already one of the requirements for CYI's continued listing on the
New York Stock Exchange. Having regard to its composition and size to ensure
effective decision making, your Board is not opposed to the appointment of
additional independent directors and will consider potential candidates
possessing competencies largely complementary to the skills and experience of
the other directors to ensure that the Board as a whole is dedicated to and
delivers value in the long term for the benefit of all shareholders.
Your Board of Directors believes that it is relevant to share with you
that one of the Requisitioning Shareholders, Shah Capital Management, had on
two occasions in March 2009 together with another investor, Mr. Peter Delgado
of Threshold Capital Corp, suggested themselves for appointment to the Board
of Directors. The CYI management team has also been contacted repeatedly by
certain of the Requisitioning Shareholders requesting that the Company
discloses to them certain financial and other information which the Company
did not believe was yet appropriate for public disclosure and certainly not
appropriate to selectively share with only certain shareholders with no duty
of confidentiality. Your Board would also like to inform you that while some
of the Requisitioning Shareholders lecture about running public companies and
corporate governance and disclosure, Shah Capital Management is not even
current in its filings of the requisite amendment to Form 13D and has not
disclosed to the public as required by law in these filings, their desire to
change the board composition and amend the bye-laws of the Company.
Your Board of Directors is committed to continue to deliver value to all
shareholders. The delivery of the Notices by the Requisitioning Shareholders
and forcing the calling of the SGM to consider unhelpful proposals without
specific details will provide no value or benefit whatsoever to shareholders
and are an unnecessary distraction to our management team. Accordingly, your
Board of Directors RECOMMENDS that all shareholders vote NO for all the
proposals set out in the accompanying Notice of SGM.
Your vote is very important. Please vote in the manner recommended by your
Board of Directors by following the instructions on and completing the proxy
form enclosed with this letter.
For and on behalf of
the Board of Directors

Deborah Foo
General Counsel

SOURCE China Yuchai International Limited

Kevin Theiss & Dixon Chen Of Grayling, +1-646-284-9409, or
kevin.theiss@us.grayling.com & dixon.chen@us.grayling.com