Cooperation Agreement



THIS COOPERATION AGREEMENT made as of March _____, 2000

AMONG

     ChinaAerospace    Machinery   and   Electric   Group    Institute   No.   2
     Telecommunication  Station,  of  Beijing,  the  People's  Republic of China
     (`PRC") ("Party A")

     AND  Beijing   Qizhengtong   Scientific   and   Technological   Development
     Corporation, a company incorporated under the laws of the PRC ("Party B")

AND

     Beijing  CathayOnline   Technologies  Co.,  Ltd.,  a  wholly-owned  foreign
     enterprise established under the laws of the PRC ("Party C")

WHEREAS:

A.   Party A is a division of China  Aerospace and is currently  providing  full
     telecom  services to  customers in Yongding  Road Area in Beijing,  with an
     existing  customer  basis of corporate and  individual  customers of around
     15,000 ("Existing Customers");

B.   Party B is a corporate  entity  established  by Party A, which has separate
     legal status and is capable of obtaining  internet service provider ("ISP")
     license;

C.   Party A and/or Party B wish to establish full ISP services for the Existing
     Customers  and to market  such  services  to  customers  of the other China
     Aerospace   divisions  as  well  as  other  potential   customers   ("Other
     Customers"); and

D.   Party A and/or Party B and Party C wish to cooperate with each other in the
     provision of the Services.

IN CONSIDERATION OF mutual promises and other good and valuable  considerations,
the receipt and sufficiency of which are hereby acknowledged,  the Parties agree
as follow:

Cooperation Structure and Provision of Services

1.   Party A and/or Party B,  together with Party C (or its  designated  party),
     will jointly  incorporate a company in Beijing ("Beijing  Company"),  which
     will provide full ISP services and other value added internet services (the
     "Services") to the Existing Customers and Other Customers.

The Parties' Contributions

2.   Party A and/or Party B will jointly and  severally be  responsible  for the
     following:

(1)  obtaining telecom or other licenses from relevant government departments in
     the PRC that are  required for the Beijing  Company to legally  provide the
     Services,  including,  but not limited to licenses  required for ISP,  ICP,
     data processing and e-mail services; and

(2)  cooperating  with other stations of China  Aerospace to market the Services
     to Other Customers.

3.   Party C (or through its designated  entity) will  contribute to the Beijing
     Company a total  amount of about US$ 2.5  million in the form of  necessary
     equipment  and  provision of operating  capital  required for marketing and
     development of the Services ("Development Expenses"), the schedule of which
     will be  determined  by the  Parties  on the  basis  of the  project  needs
     provided that the funding and accounting  practice  related  thereto comply
     with requirements of relevant securities  regulatory  authorities.  Party C
     will further  provide  funds  required for the provision of the Services or
     expansion of such Services and such funding  requirements  will be reviewed
     by the Parties.

Operation and Management of the Beijing Company

4.   The board of directors of the Beijing Company will be consisted of five (5)
     directors, of which Party A and/or Party B will appoint Two (2) and Party C
     will appoint Three (3).

5.   The Chairman of the Board of the Beijing Company will be appointed by Party
     C and the General  Manager for the Beijing  Company  will be  appointed  by
     Party A and/or Party B.

6.   Party  C  (or  its  designated   entity)  will,  with  the  assistance  and
     participation  of Party A and/or Party B, be responsible  for management of
     the Beijing Company on the basis of a management agreement to be entered by
     the relevant parties.

7.   Party A and/or Party B will provide the technical and  administrative  team
     required by the Beijing  Company for the development and maintenance of the
     Services.

Shareholding and Dividend

8.   Party A and/or  Party B will hold  Thirty  (30)  percent  of all issued and
     outstanding  shares of the Beijing  Company and Party C (or its  designated
     entity) will hold Seventy (70) percent of all issued and outstanding shares
     of the Beijing Company.

9.   After  tax  profits  of the  Beijing  Company  will be  distributed  to the
     shareholders in accordance with their respective  shareholding  pursuant to
     relevant  laws and rules  provided that no such  distribution  will be made
     before and until the  Capital  Expenses  are fully paid back to Party C (or
     its designated entity).

Covenants and Undertakings

10.  Each of the Parties covenants not to enter into any similar  discussion and
     agreement with any other third parties.

11.  The Parties  undertake to cooperate in good faith to implement  the project
     contemplated by this Agreement.

Representations and Warrants

12.  Party A and/or Party B jointly and severally represent and warrant that:

     (1)  It has legal  capacity to enter into this  Agreement and has taken all
          actions and steps required for entering into this Agreement.

     (2)  It is  legally  bound  by this  Agreement  and has  legal  rights  and
          capacity to perform its obligations under this Agreement; and

     (3)  The  entering  into  this   Agreement  and  the   performance  of  the
          obligations hereunder by Party A and/or Party B is not in violation of
          any laws or rules to which Party A and/or Party B is subject.

13.  Party B represents and warrants that:

     (1)  It is established under the laws of the PRC and is validly  subsisting
          and has complied with all the reporting requirements under the laws of
          the PRC;

     (2)  It has legal  capacity to enter into this  Agreement and has taken all
          corporate actions and steps required for entering into this Agreement;

     (3)  It is  legally  bound  by this  Agreement  and has  legal  rights  and
          capacity to perform its obligations under this Agreement; and

     (4)  The  entering  into  this   Agreement  and  the   performance  of  the
          obligations  hereunder  by Party C is not in  violation of any laws or
          rules to which Party C is subject.

General Provisions

14.  This  Agreement  will come into effective upon the execution of the same by
     the duly  authorized  signatories  of the  Parties  and  upon  satisfactory
     completion of due diligence on the project  contemplated  by this Agreement
     by Party C or its advisers

15.  This Agreement is governed by and construed in accordance  with laws of the
     PRC and the Parties  hereby  submit to the  non-exclusive  jurisdiction  of
     courts in the PRC.

16.  Any provisions hereof held by a competent court or arbitration  tribunal to
     be invalid or illegal  shall not affect the  validity  of other  provisions
     hereof which shall remain  intact and legally  binding.  The Parties  shall
     continue to implement such other provisions.

   17. This Agreement shall be binding on and enure to the benefits of heirs,
     executors,  administrators,  successors  and assigns of the Parties  hereto
     provided  that  Party A and/or  Party B shall not  assign  its  rights  and
     obligations hereunder unless with express prior written consent of Party C.

18.  This  Agreement  is  prepared in both  English  and Chinese  with three (3)
     original copies in each language version. Should the two versions conflict,
     the English version shall prevail.


Executed by the Parties on the date first above mentioned.

Witness                                 China Aerospace Machinery and Electric
                                        Group No.2 Institute Telecommunication
                                        Station


_____________________________            Per:_________________ (corporate seal)

Witness                                  Beijing Qizhengtong Scientific and
                                         Technological Development Corporation


_____________________________            Per:_________________ (corporate seal)

Witness                                  Beijing CathayOnline Technologies
                                         Co., Ltd.


_____________________________            Per:_________________(corporate seal)