Cathay Merchant Group, Inc. - Exhibit 10.11






Exhibit 10.11

Memorandum of
Understanding

Party A: Kangbao County Government of Hebei
Province
          Chuzhangdi
Town Government

Party B: Cathay Merchant Group (Shanghai) Wind Energy Co.,
Ltd.

In accordance with the principles of equality and mutual
benefit, Party A and Party B hereby sign this MOU based on their discussions on
January 28, 2005.

	1. 	
      Party B, subject to commercial, technical and legal parameters
        being met satisfactory to it, intends to construct a Wind Power Plant
        (about east longitude 114o22'30"— 114o27’14"
        , north latitude 41o45'— 41o50') within about 50km2
        of Chuzhangdi Village which is governed by Party A. The above longitude
        and latitude points shall be confirmed by both Parties soon.

	 	 
	2. 	
      In order to establish the exact location for the wind
      turbines Party B will install its wind-measurement equipment soon after
      signing of this Memorandum of Understanding and Party A herewith grants
      Party B the right to use the above land for one year for wind measuring.
      Party A is entitled to terminate its approval if Party B fails to install
      its wind measuring equipment consisting of at least one wind measuring
      tower within above period of time.

	 	 
	3. 	
      The construction scale shall be in accordance with the
      topography and landform. The installation scale for the engineering of one
      phase shall be approximately 50,000 kw.

	 	 
	4. 	
      Party A shall provide Party B with its Certificate of
      Land Use Rights to certify that it is entitled to lease the
      afore-mentioned land.

	 	 
	5. 	
      As soon as possible following the location of the wind
      turbines is known, Party B, by or with the assistance of Party A, shall be
      granted valid land use rights by either a lease agreement or otherwise
      granting of such rights. The price payable shall relate exclusively to a
      reasonable size around the wind turbines and the specific price shall be
      confirmed through negotiations between both
Parties.



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	6. 	 Party A shall be responsible to assist Party B in handling
        the examination and approval procedures for obtaining the permission of
        construction land for the Wind Power Plant and land requisition. In addition,
        Party A shall assist Party B in handling various necessary procedures
        of the project construction within this Province.

	 	 
	7. 	 Party A and Party B shall co-operate in all other matters
        relating to the Wind Power Plant, e.g. road construction, power grid connection
        and power purchase agreement, etc.

	 	 
	8. 	 Furthermore, Party A guarantees that any development
        within above described site shall not affect the current and future construction
        and operation of the Wind Power Plant of Party B. The detailed issues
        shall be discussed further between both Parties.

	 	 
	9. 	 Party A shall assist Party B in handling various preliminary
        procedures required for the construction of the Wind Power Plant.

	 	 
	10. 	 It is the intention of Party B to complete the first
        phase of the construction project within 3.5 years from the date of signing
        of this MOU to pursue the Wind Power Plant Project after successful wind
        measuring.

	 	 
	11. 	 Within this 3.5 year period, the above said land is
        only used for the purpose of wind-measurement, project evaluation and
        erection of the Wind Power Plant by Party B and party A will ensure that
        it cannot be used by other persons or entities. In case Party B fails
        to complete phase one project (i.e. install at least one tower), Party
        A is entitled to take back the project and transfer it to another party
        without any penalties payable by Party B.

	 	 
	12. 	 Within the duration as set out in Article 11, Party
        A shall not interrupt or cancel the project construction right of Party
        B for any reason. However, due to infrastructure reasons that the Project
        cannot be carried out as soon as possible, Party A will not take any responsibility.
        But Party A will try its best to gain support from upper level governments
        and to improve the infrastructure and associated constructions for the
        Wind Power Plant.

	 	 
	13. 	 The issues not covered by this Memorandum of Understanding
        shall be solved through negotiation by both Parties. In the event an agreement
        cannot be reached the issue shall be handled by the Intermediate Court
        of Beijing in accordance with the laws of the PRC. However, no Party shall
        be entitled to damages from the respective other Party.

	 	 
	14. 	 This Memorandum of Understanding shall come into effect
        upon signing and it is made in



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three copies and written in Chinese and
English. Each Party shall hold one original in Chinese and one original in
English language. 

Signed by:

Party A: Kangbao County Government of Hebei
Province
          /s/ Wu
Zhanqiang

         
Chuzhangdi Village
Government
          /s/ Ma
Zhansen

Party B: Cathay Merchant Group (Shanghai) Wind Energy Co.,
Ltd.
          /s/ George Ho

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