China Energy Resources Corporation Reports 1997 Results and Updates 1998 Developments.

NEW YORK--(BUSINESS WIRE)--July 16, 1998--China Energy Resources Corporation (ASE:CHG) today announced results for the year ended December 31, 1997. Please see attached table and refer to the Company's Form 20-F filed July 15, 1998.

Operationally, the Company announced that as a result of local management difficulties, cash flow shortages and other operational issues, one of its factories, MCCF, did not operate at full capacity during 1997. The Company subsequently closed the facility in March of 1998, and does not plan to reopen MCCF without raising additional financing. In addition, although one of the world's leading geological surveyors recommended that China Energy implement various programs to expand the demonstrated coal reserve base of its five coal fields, it has been unable to do so due to inadequate working capital.

The Company also reported a $1.8 million write-off for cash advances to related parties. This write-off pertains to advances made under the authority of the Company's former and deceased Chairman to an arm of the PRC Government that formerly owned one of the Company's factories. The advances were intended to establish relationships for future business opportunities. Since the terms of repayment are unclear, the Company took a conservative approach and wrote-off the advances. However, management is currently in negotiations to structure a repayment in cash or in kind.

The Company previously announced that its former Chairman made an unauthorized withdrawal of $285,562. The Company, in conjunction with the Mishan City Government, has been seeking recovery of the funds. For fiscal 1997, China Energy recorded a $184,000 expense classified as "other expense" representing the amount not yet recovered. The new management team is implementing tighter financial controls to prevent future occurrences.

In the Independent Auditor's Report, it was stated that "...the Company is experiencing difficulty in generating sufficient cash flow to enable it to operate all its facilities and develop its coal mine use right, which raises substantial doubt about its ability to continue as a going concern."

In this regard, the new management team is in discussions with several potential investors to obtain additional equity financing and with governmental agencies to assist in resolving the management and operational issues relating to MCCF. While the Company is optimistic, there can be no assurances that it will be successful in these endeavors.

Additionally, the Company plans to hold a shareholder meeting in New York City in the fall of 1998.

China Energy Resources Corporation is a coal refining company operating in the People's Republic of China. Through its 80% interest in a 30-year joint venture with the government, the Company owns two modern coal production plants. In addition, the Company has exclusive 100-year mining rights for five coal fields that the Company believes have a significant reserve of high quality coal. -0-

                  CHINA ENERGY RESOURCES CORPORATION
                 Consolidated Statements of Operations
                 (In Thousands, Except Per Share Data)

                                              Year Ended
                                              December 31,
                                          1997        1996

Net sales                                 $9,053      $7,801
Subcontracting income                        362         723
Total revenues                             9,415       8,524

Cost of sales                            (5,516)      (5,584)
Gross profit                              3,899        2,940

Selling, general and administrative
expenses                                 (4,921)       (961)
Write-off of advances to related parties (1,768)         --

Operating income (loss)                  (2,790)       1,979

Interest expense                         (1,056)        (422)
Other income (expense)                     (190)          46
Net income before minority interest      (4,036)       1,603
Minority interest                           494         (345)

Net income (loss)                   $    (3,542)    $  1,258

Earnings (loss) per share
     Basic                          $     (1.18)    $    .66
     Fully-diluted                  $     (1.18)    $    .57


Weighted average number of
  shares outstanding
     Basic                                2,994        1,918
     Fully-diluted                        2,994        2,314

The statements in this press release that are not historical facts constitute "forward-looking statements" that involve risks, uncertainties and other facts which may cause actual results to be materially different from those set forth in the forward-looking statements. Such factors include but are not limited to, the following general economic and business conditions; competition; the ability to implement and the effectiveness of business strategy and development plans; quality of management; business abilities and judgment of personnel; availability of qualified personnel; labor and employee benefit costs; and availability and cost of raw materials and supplies. China Energy Resources Corporation will not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

  CONTACT: China Energy Resources Corp.
            Monita Mo, U.S. Representative
            [phone]
            Rose-Marie Fox, U.S. Representative
            [phone]
                   or
            INVESTOR RELATIONS COUNSEL:
            The Equity Group Inc.

            Loren Goldstein  [phone]
            [e-mail]
            Linda Latman     [phone]