UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------

                                    FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended November 30, 1997
                         Commission file number 0-23148

                          AES CHINA GENERATING CO. LTD.
             (Exact name of registrant as specified in its charter)



BERMUDA                                                     98-0152612
(State or other jurisdiction of                             (I.R.S.  Employer
incorporation or organization)                              Identification No.)

26/F, Entertainment Building
30 Queen's Road, Central
Hong Kong
                                                            Not Applicable
(Address of principal executive offices)                    (Zip Code)



        Registrant's telephone number, including area code: 852-2842-5111
        Securities registered pursuant to Section 12(b) of the Act: None
        Securities registered pursuant to Section 12(g) of the Act: None

                              (Title of each class)

                                 ---------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes           No    X
                                    ----        -----

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

                                 ---------------

         Registrant is a wholly owned subsidiary of The AES Corporation.
Registrant meets the conditions set forth in General Instruction I(1)(a) and (b)
of Form 10-K and is filing this Annual Report on Form 10-K with the reduced
disclosure format authorized by General Instruction I.



                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>


Item 1.  Business

         (a) General Development of Business

         The Registrant (hereinafter referred to as the "Company" or "AES
Chigen"), a Bermuda Company, is a leading independent power generation company
in the People's Republic of China (the "PRC" or "China") and one of the few
international developers that has successfully completed the development of
electric power projects in the country. AES Chigen was founded in December 1993
by The AES Corporation ("AES") to serve as the exclusive vehicle for AES to
develop, acquire, finance, construct, own and operate electric power generation
facilities in the PRC. The Company is currently a wholly owned subsidiary of
AES.

         To respond to significant opportunities in China, AES, through a wholly
owned subsidiary, opened an office in Hong Kong in early 1993. Following the
incorporation of AES Chigen, AES purchased shares of AES Chigen Class B Common
Stock for $50.0 million and, in early 1994, AES Chigen completed an initial
public offering of shares of its Class A Common Stock, which provided AES Chigen
with net proceeds, after underwriting commissions and discounts, of $151.9
million. The Company became a wholly owned subsidiary of AES on May 8, 1997 as a
result of its amalgamation (the "Amalgamation") with a wholly owned subsidiary
of AES pursuant to an Amended and Restated Agreement and Plan of Amalgamation,
dated as of November 12, 1996 (the "Amalgamation Agreement"), between the
Company and AES. Prior to the Amalgamation, the Company was a controlled
affiliate of AES, which owned approximately 48% of the outstanding common stock
of the Company.

         Since commencing business, AES Chigen has committed $357.8 million and
as of January 31, 1998 has invested $234.2 million in nine power projects in
operation or under construction in the PRC, having an aggregate nameplate
capacity (the full load continuous rating of a generator, prime mover or other
electrical equipment under specified conditions as designated by its
manufacturer) of approximately 2,918 megawatts ("MW") (approximately 947 MW of
which is attributable to AES Chigen's interests in certain sino-foreign joint
venture enterprises (the "Joint Ventures")). These Joint Ventures' projects
include coal, oil and natural gas-fired and hydropower plants located in seven
different provinces in China. These projects are referred to as the "Current
Projects."

         With a presence in over 35 countries, AES is a global power company
committed to supplying electricity to customers world-wide in a socially
responsible way. AES, based in Arlington, Virginia, markets power principally
from electric generating facilities that it develops, owns and operates. AES was
one of the original entrants in the independent power market and today is one of
the world's largest global power companies, based on net equity ownership of
generating capacity (in megawatts) in operation or under construction.

         On December 19, 1996, AES Chigen completed a $180 million public
offering of its 10-1/8% Notes due December 2006 (the "2006 Notes") and received
net proceeds of approximately $173.9 million. Pursuant to the terms of the
indenture under which the 2006 Notes were issued (the "Indenture"), AES Chigen
was required to deposit approximately $27.1 million in an interim reserve
account to make interest payments on the 2006 Notes through June 15, 1998, and
approximately $9.1 million in a debt payment reserve. As of February 28, 1998,
the balance in the interim reserve account was $9.1 million. The 2006 Notes are
redeemable at the option of AES Chigen on or after December 15, 2001. Net
proceeds from the offering of the 2006 Notes will be used to fund investments in
AES Chigen's Current Projects and for general corporate purposes. The Company is
permitted, pursuant to the terms of the Indenture, to pay dividends to AES,
provided that the Company satisfies certain conditions.

         The 2006 Notes have been rated BB- by Standard & Poor's Rating Group
and Ba3 by Moody's Investors Service. On January 26, 1998, Standard & Poor's
announced that it had placed its BB- rating of the 2006 Notes on CreditWatch
with negative implications. Standard & Poor's noted a number of factors
contributing to this action, including decline in growth rates in demand for
power and construction of new capacity resulting in oversupply in some areas,
failure of purchasers of power from the Company's Joint Ventures to purchase the
minimum offtake of electricity they were contractually required to purchase,
uncertainty concerning the performance by the power purchasers of their
obligations to compensate the Company's Joint Ventures for their failure to
purchase such minimum offtakes, receipt of dividends from the Company's joint
ventures in 1997 that were less than the amounts expected, erosion of
distributable profits of the Company's Joint Ventures due to higher than
expected generating costs incurred by third party operators, higher than
expected corporate overhead expenses in 1997 resulting from non-recurring
charges and higher than expected expenditures on technical staffing at
construction sites and development costs.

         In the event of a shortfall between the amount of the Company's
commitments and the cash available, the shortfall may be made up by loans or
equity contributions from AES, but AES is not obligated to provide any such loan
or equity contribution for such purpose and there is no assurance that AES would
decide to provide any such loans or equity contribution.

         As a result of the Amalgamation, the Company is subject to covenants
(the "AES Debt Covenants") contained in the documents governing AES's 10-1/4%
subordinated Notes due 2006, 8-3/8% Senior Subordinated Notes due 2007 and $425
million credit facility due 1999. Due to recent amendments to the terms of the
AES Debt Covenants, certain material restrictions previously applicable to AES
Chigen, including a prohibition on direct investments in future projects, are no
longer applicable. However, no assurance can be given that AES Chigen will
invest in any additional future projects.

         Both the AES Debt Covenants and the covenants contained in the
Indenture for AES Chigen's 2006 Notes require the repayment or purchase of
indebtedness under specified circumstances involving asset dispositions. Insofar
as separate repayments are required at the AES and the Company levels with
respect to a single asset sale, this covenant may tend to cause the Company not
to make an asset sale under circumstances where it otherwise would.

         One of the results of the Amalgamation has been the termination of the
Non-Competition and Non-Disclosure Agreement, dated as of December 29, 1993 and
amended and restated as of February 1, 1994, between the Company and AES, which,
among other things, prohibited the Company from developing, constructing,
owning, managing and operating electric power generation projects in any part of
Asia other than China. The Company may consider investing through its
subsidiaries in power projects outside of China.

         The Company's operations, prospects, results of operations and
financial condition are subject to significant risks and uncertainties,
including those set forth in "Business-Narrative Description of Business" on
pages 2 through 19 of the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 1996, which is incorporated herein by reference.

         Several countries in Southeast Asia, including Korea, Thailand and
Indonesia, have experienced a significant devaluation of their currencies and a
decline in the value of their capital markets. In addition, these countries have
experienced a number of bank failures and consolidations. The Company cannot
predict the effect that these conditions will ultimately have on its activities.


Description of the Current Projects

         The following table presents certain summary information on the
Company's Current Projects.

<TABLE>
<CAPTION>

                                               The Current Projects

                                                          Company
                                              Company    Investment
                       Location   Capacity   Interest    Commitment
      Project         (Province)    (MW)       (MW)          (%)        Fuel                Status
------------------    ----------  --------   --------    ----------     ----    ----------------------------

<S>                    <C>        <C>        <C>            <C>       <C>       <C>

Yangcheng Sun City     Shanxi     2,100      525            25          Coal    Under construction (first
                                                                                unit scheduled to be in
                                                                                operation  by second quarter
                                                                                of 2000; last unit scheduled
                                                                                to be in operation by the
                                                                                second quarter of 2002)


Jiaozuo Aluminum       Henan        250      175            70          Coal    First unit commenced
Power                                                                           commercial operation on
                                                                                August 17, 1997; second unit
                                                                                was synchronized with the
                                                                                power grid on February 22,
                                                                                1998 and is scheduled to be
                                                                                in operation by the second
                                                                                quarter of 1998

Wuhu Grassy Lake       Anhui        250       62.5          25          Coal    In operation

Hefei Prosperity       Anhui        115.2     80.6          70           Oil    Simple cycle unit commenced
Lake                                                                            commercial operation on
                                                                                August 1, 1997; combined
                                                                                cycle unit scheduled to be in
                                                                                operation in the third
                                                                                quarter of 1998

Wuxi Tin Hill          Jiangsu       63       34.7          55          Oil     In operation

Aixi Heart River       Sichuan       50       35            70          Coal    Under construction (scheduled
                                                                                to be in operation in the
                                                                                second quarter  of 1998)

Chengdu Lotus City     Sichuan       48       16.8          35         Natural  Commenced commercial
                                                                         Gas    operation on July 5, 1997

Cili Misty Mountain    Hunan         26.2     13.4          51          Hydro   In operation

Yangchun Sun Spring   Guangdong      15.1      3.8          25           Oil    In operation
                                  -------   ------
               TOTAL              2,917.5    946.8
                                  =======   ======
</TABLE>


Overview

         The Company, directly or through one of its wholly owned offshore
subsidiaries, has formed Joint Ventures, each with one or more Chinese entities
as partners, to develop, construct, own and operate each of the electric power
plants described in this section. Two of the power plants -- Cili Misty Mountain
and Yangchun Sun Spring -- are financed solely with registered capital (equity).
Three of the power plants -- Aixi Heart River, Jiaozuo Aluminum Power and
Chengdu Lotus City -- are financed with a combination of registered capital and
shareholder loans. Four of the power plants -- Wuhu Grassy Lake, Hefei
Prosperity Lake, Yangcheng Sun City and Wuxi Tin Hill -- are financed by
registered capital, shareholder loans and third party debt.

         All of the Company's power plants are owned by cooperative joint
ventures, except for one of the projects -- Wuhu Grassy Lake -- which is owned
by an equity joint venture. The joint venture contracts for three of the
cooperative joint ventures -- Wuxi Tin Hill, Aixi Heart River and Chengdu Lotus
City -- provide for the liquidation of the project assets at the end of the term
of the Joint Venture. The cooperative joint venture contracts relating to the
remaining five projects provide for the transfer of all of the fixed assets of
the Joint Venture to the Chinese partners without charge at the end of the Joint
Venture term. Three of these five provide for the recovery of the Company's
registered capital during the term of the Joint Venture.

         Revenues from the power plants are generally used to pay operating
expenses, taxes and financing costs and allocated to provide reserves for
employee social welfare benefits and other matters as required by law. Repayment
of principal and interest of third party loans (if any) and shareholder loans
(if any) of the Joint Ventures has priority over distributions of profit to the
Joint Venture partners. Dividends are generally distributed to the Company and
its partners by the Joint Ventures pursuant to board resolutions. In a number of
cases with respect to the Joint Ventures described in this section, the Company
has a priority in the payment of dividends over the Chinese partners to the
Joint Venture. In certain cases, where the Company is not entitled to appoint a
majority of the board of directors of a Joint Venture, the declaration of
dividends or other equity distributions by such Joint Venture may depend on the
assent of the other directors of the Joint Venture.

         Pursuant to certain shareholder loan contracts, the Company has
committed to provide shareholder loans to several of the Joint Ventures. In each
case the applicable Joint Venture has either registered the shareholder loan
with the relevant branch of the State Administration of Foreign Exchange of the
Central Government ("State Administration of Foreign Exchange" or "SAFE") if the
loan has been drawn, or the Joint Venture will register the shareholder loan
with the relevant branch of the SAFE when the loan is drawn by the Joint
Venture. The payment of principal and interest to the Company with respect to
its shareholder loans to the Joint Ventures is made in accordance with schedules
established by the relevant shareholder loan contracts.

         Each of the Joint Ventures described in this section has entered into
one or more power purchase contracts for the sale of the electricity from its
power plant on a minimum take-or-pay basis. The power purchase contracts
generally require that the power purchaser purchase a specified annual minimum
amount of electricity generated by the power plant during the term of the power
purchase contract at a fixed price or pursuant to a tariff formula set forth in
the power purchase contract. In all but two cases -- Cili Misty Mountain and
Yangchun Sun Spring -- the power purchase contracts also contain incentives to
encourage the power purchaser to purchase greater than the agreed minimum amount
of electricity. Payments for electricity sold under the power purchase contracts
are generally made to the Joint Ventures on a monthly basis.

         All of the power purchase contracts have tariff formulas and other
pricing provisions which are designed, based on the minimum take obligation of
the power purchaser, to be sufficient to pay the operating costs and financing
costs of the project and to enable the Company to realize a return on its
investment. These tariff formulas are indexed to hedge against the risk of
fluctuations in the exchange rate between the US dollar and the Renminbi Yuan,
the official currency of the PRC ("RMB(Y)"), relating to repayment of principal
and interest on debt and the conversion to US dollars of the Company's profits.
In the event of a change in law which increases the Joint Ventures' costs, the
power purchase contracts typically require an adjustment to the tariff formulas
in order to pass through such increased costs.

         For 1997, the approved tariff for Wuhu Grassy Lake was less than the
tariff requested by the Joint Venture, which was based on a formula set forth in
the Power Purchase Contract. As a result, Wuhu Grassy Lake's revenue for 1997
was insufficient for the Joint Venture to pay the projected return to its
shareholders. The joint venture plans to make up such shortfall by means of a
tariff adjustment in 1998. However, there is no assurance that the relevant
pricing bureau will approve it.

         In 1997, the approved tariff for Chengdu Lotus City was less than the
tariff requested by the Joint Venture, which was based on a formula set forth in
the Power Purchase Contract. Due to the priority return structure in the Joint
Venture Agreement for Chengdu Lotus City, the Company's dividends from Chengdu
Lotus City related to its 1997 operations will be as expected.

         The Joint Ventures in all cases except one -- Cili Misty Mountain --
have entered into dispatch contracts with the relevant dispatching entity for
its power plant pursuant to which the dispatcher has agreed or plans to agree to
dispatch the power plant at least the annual minimum amount of hours required
under the power purchase contract. For the one case, the power purchaser, which
is also the dispatcher, is responsible for dispatching the power plant.

         Each of the joint venture contracts for the projects described in this
section may be terminated early, including on account of a termination of the
relevant power purchase contract. In all cases except two -- Jiaozuo Aluminum
Power and Yangcheng Sun City -- in the event of an early termination of a power
purchase contract which results from a default of a power purchaser, the Joint
Venture is entitled under the applicable power purchase contract to receive from
the power purchaser payment intended to compensate the Joint Venture for the
return it would have received had the power purchase contract continued to the
end of its term.

         In two cases -- Yangchun Sun Spring and Wuxi Tin Hill -- projects
directly managed by the Joint Ventures have been successfully constructed on
time. For one of the Company's projects currently under construction -- Jiaozuo
Aluminum Power -- the Joint Venture also directly manages the construction of
the power plant. In these instances the Joint Venture has entered into
arrangements with various construction and equipment procurement consortiums,
including established foreign equipment manufacturers, in which certain
responsibilities relating to construction and procurement have been allocated to
members of the consortium. For the remaining three projects currently under
construction, each relevant Joint Venture has entered into a fixed price, fixed
schedule construction contract, two of which are turnkey arrangements. In all of
the projects described in this section except Yangcheng Sun City, the electrical
transmission and interconnection facilities are being financed by interest
bearing loans from the Joint Venture to the relevant power purchaser who is
responsible for constructing, owning, operating and maintaining the facilities.
In the case of Wuhu Grassy Lake, Hefei Prosperity Lake and Yangcheng Sun City,
the power purchasers have also agreed in the power purchase contracts to begin
making payments under their respective power purchase contracts on a specified
date if the power plant is completed, but cannot deliver electricity due to a
delay in completing the transmission and interconnection facilities.

         Six of the nine power plants are or will be operated directly by the
Joint Ventures -- Cili Misty Mountain, Wuxi Tin Hill, Aixi Heart River, Jiaozuo
Aluminum Power, Chengdu Lotus City and Yangcheng Sun City -- and three --
Yangchun Sun Spring, Hefei Prosperity Lake and Wuhu Grassy Lake -- will be
operated by the relevant power purchasers. Fuel for most of the power plants has
been contracted for under long term fuel supply contracts with fuel suppliers or
will be supplied by the power purchasers. In the latter case, the relevant power
purchaser is not excused from its payment obligations under its power purchase
contract if it is unable to provide fuel to the power plant.

         The power projects which are currently in operation or under
construction have obtained insurance coverage for property loss and damage
(including damage arising from natural calamities) and third party liability,
except for Yangcheng Sun City, which is in the process of obtaining insurance
coverage for property loss and damage and third party liability. Most force
majeure risks which can be categorized as natural calamities are covered under
the insurance policies. The Joint Ventures are in all cases relieved of their
obligation to deliver electricity under their power purchase contracts for the
power plants described in this section in the event of force majeure, including
an event of force majeure caused by the PRC Government. In the case of all
projects, except Wuhu Grassy Lake, Hefei Prosperity Lake and Yangcheng Sun City,
the power purchaser is not relieved of its obligations under its applicable
power purchase contract, including the obligation to make payments to the
Company in such circumstances. In these three projects, the power purchaser is
relieved of its obligation to purchase the minimum amount of electric power
under its respective power purchase contract during periods in which the power
plant is unable to generate electric power due to events of force majeure,
including events of force majeure caused by the PRC Government.

         The State Council of the PRC, the highest administrative organ of the
PRC's Central Government, has reserved to itself the authority to approve any
project with a total investment which exceeds $100 million. Pursuant to various
internal PRC Government notices, the State Council has delegated the authority
to approve any project with a total investment of less than $100 million to
various ministries and ministry level entities, including the State Planning
Commission of the Central Government ("State Planning Commission" or "SPC"). The
SPC and certain ministries and other ministry level entities have, in turn,
adopted a policy, also by internal directives, of further delegating authority
to approve projects with a total investment of less than $30 million to
provincial governments, provincial level bureaus of the Central Government and
certain municipalities. Separate from project approval, foreign investment must
be approved by The Ministry of Foreign Trade and Economic Cooperation of the
Central Government ("Ministry of Foreign Trade and Economic Cooperation or
"MOFTEC"), or one of its departments at the provincial or local government
level, should the total investment amount be below $30 million.

         In the case of all of the power plants described in this section, the
Company and its Joint Venture partners have applied for and received PRC
approvals for the project and for the establishment of the related foreign
investment enterprise. In the case of three power plants -- Yangcheng Sun City,
Jiaozuo Aluminum Power and Wuhu Grassy Lake -- the power plants have received
project approvals at the Central Government level from the State Planning
Commission and have received approvals from MOFTEC for the establishment of
their related Joint Venture. Each of the remaining six power plants has received
its project approval and foreign investment approval from provincial and local
government entities.

         Two of the Company's power plants currently in operation or under
construction -- Wuxi Tin Hill and Hefei Prosperity Lake -- have been structured
as multiple projects and Joint Ventures, with each project and Joint Venture
having a total investment not exceeding the $30 million approval authority
threshold generally applicable to provincial and local governments. In two other
cases -- Aixi Heart River and Chengdu Lotus City -the Company's projects and
Joint Ventures have obtained local government approvals on the basis of
anticipated total investments which did not exceed $30 million at the time the
approvals were obtained, but will, when construction is completed, exceed the
$30 million approval threshold.

         The tariff formulas set forth in the power purchase contracts of the
Joint Ventures described in this section have been either approved or confirmed
by the relevant provincial and local government pricing bureaus responsible for
reviewing such tariffs. However, there can be no assurance that the relevant
pricing bureaus will calculate and adjust tariffs in accordance with these
tariff formulas.

         All of the joint venture contracts and project contracts of the Joint
Ventures are governed by PRC law. Some of the joint venture contracts provide
for arbitration of a dispute arising under the joint venture contracts in
locations outside of the PRC, while some provide for arbitration in the PRC by
PRC arbitration bodies. Most of the project contracts, including the power
purchase contracts, provide for arbitration of disputes in the PRC by PRC
arbitration bodies.

         Yangcheng Sun City

         The Power Plant. The Yangcheng Sun City power plant is a 6 x 350 MW
coal-fired power plant located near Yangcheng, Shanxi Province. Construction of
the power plant commenced in August 1997. The first unit of the power plant is
scheduled to commence commercial operation by the second quarter of 2000. The
last unit is scheduled to commence commercial operation by the second quarter of
2002.

         Joint Venture. The Yangcheng Sun City power plant is owned by Yangcheng
International Power Generating Company Ltd. ("Yangcheng International Power"), a
20-year cooperative joint venture formed by North China Electric Power Group
Corporation ("North China Power"), Jiangsu Province Investment Corporation
("Jiangsu Investment"), Shanxi Energy Enterprise (Group) Company ("Shanxi
Energy"), Shanxi Provincial Power Company ("Shanxi Power"), Jiangsu Provincial
Power Company ("Jiangsu Power") and a wholly owned subsidiary of the Company.

         Pursuant to the joint venture contract, the Company is entitled to a
fixed priority return commencing in the year 2002.

         The board of directors of Yangcheng International Power consists of
nine directors, of which two are appointed by the Company. The Company also
appoints one of the three vice chairmen and a deputy general manager of the
power plant.

         Financing. The approved total investment in Yangcheng International
Power is approximately $1.6 billion. The approved registered capital of
Yangcheng International Power is 25% of the total investment, equal to $392.9
million. The respective ownership interests of the shareholders in Yangcheng
International Power are as follows: the Company-25%, North China Power-25%,
Jiangsu Investment-20%, Shanxi Energy-16%, Shanxi Power-10% and Jiangsu
Power-4%. Hence, the Company's registered capital contribution will be
approximately $98.2 million. The difference between the total investment and the
total registered capital of the joint venture is being financed through export
credit agency loans, debt arranged or guaranteed by the Chinese parties and
shareholder loans from the Chinese parties. Export credit agency loan guarantees
from the Export-Import Bank of the United States and Hermes
Kreditversicherungs-Aktiengesellschaft of approximately $800 million have been
provided to Yangcheng International Power. The export credit agency loan
guarantees are supported by guarantees from the Construction Bank of China.

         Power Purchase. The electric power from the power plant will be
purchased by Jiangsu Provincial Power Company ("Jiangsu Power") pursuant to a
20-year power purchase contract dated as July 1997 between Yangcheng
International and Jiangsu Power. Under the power purchase contract, Jiangsu
Power has agreed to purchase from Yangcheng International at least 5,500
kilowatt hours of electricity for each calendar year prior to the year 2011, at
least 5,386 hours for the calendar year 2011 and at least 5,000 hours for each
year thereafter. In the event that Jiangsu Power fails in any calendar year to
purchase such minimum amount, Jiangsu Power is required by the power purchase
contract to make payment for any shortfall at the then current power price less
fuel costs. Pursuant to the power purchase contract, if Yangcheng International
fails to deliver electricity to Jiangsu Power by the construction completion
date specified in the power purchase contract, it is obligated to pay a penalty
to Jiangsu Power for each day of delay.

         Construction. Yangcheng International has entered into a lump sum,
fixed price, fixed schedule, turnkey contract with Shanxi Provincial Power
Company ("Shanxi Power") to design, engineer, procure and construct the power
plant. Pursuant to the Engineering, Procurement and Construction Contract
("EPC"), Shanxi Power is the principal contractor and has subcontracted the
design, construction, installation and commissioning work to subcontractors. The
turbines and generators of the power plant will be provided by Siemens and
boilers will be provided by Foster Wheeler Energy Corporation.

         Shanxi Power will provide a one-year warranty after the commencement of
operation of a unit. If Shanxi Power fails to complete construction of the each
unit of the power plant by the applicable guaranteed completion date, the
contractor will be required to pay liquidated damages to Yangcheng
International.

         Under the EPC, Shanxi Power has guaranteed all the performance
specifications of the power plant, including output, heat rate, and emissions.
If Shanxi Power fails to achieve the performance specifications, Shanxi Power
will be obligated to pay liquidated performance damages to Yangcheng
International.

         Interconnection and Dispatch. Jiangsu Power is responsible for the
construction and has guaranteed the completion of the interconnection facility
three months before the first unit of the power plant goes into commercial
operation. If a delay in the completion of the interconnection facility results
in delays in commencement of the commercial operation of the power plant,
Jiangsu Power is obligated to pay Yangcheng International a penalty for each day
of delay.

         Electric power for the plant will be transmitted over a 755 kilometer
transmission line to Jiangsu Power in Jiangsu Province, on the eastern coast of
China. When in commercial operation, the power plant will be dispatched by State
Power Dispatch and Communication Centre ("State Power Dispatch"). State Power
Dispatch will ensure that Yangcheng International's on-grid electricity is not
less than the minimum take quantity.

         Fuel. Yangcheng International has entered into a 20-year coal supply
contract with Shanxi Coal Sales and Transportation Corporation. The coal
supplier will supply low-cost anthracite coal which is available from several
coal mines located within 30 kilometers of the power plant site. The coal
supplier will be obligated, under the contract, to pay damages for any failure
to supply the power plant with adequate quantities of coal or coal not meeting
certain specifications. The coal supplier is obligated to arrange for the
transportation of the coal by truck or by train to the power plant.

         Operator. Yangcheng International will operate the power plant.

         Jiaozuo Aluminum Power

         The Power Plant. The Jiaozuo Aluminum Power plant is a 2 x 125 MW
coal-fired power plant located adjacent to the Jiaozuo Aluminum Mill ("Jiaozuo
Mill") aluminum production mills in Jiaozuo, Henan Province. Construction of the
power plant commenced in the first quarter of 1995. The first unit of the power
plant was completed and commenced commercial operation on August 17, 1997. The
second unit is scheduled to commence commercial operation in the second quarter
of 1998.

         Joint Venture. The Jiaozuo Aluminum Power plant is owned by Jiaozuo Wan
Fang Power Company Ltd. ("Jiaozuo Wan Fang"), a 23-year cooperative joint
venture formed by Jiaozuo Mill and a wholly owned subsidiary of the Company.
Pursuant to the joint venture contract, the Company is entitled to recover its
registered capital (equity) during the term of the Joint Venture. The Company,
as the majority shareholder of Jiaozuo Wan Fang, is entitled to appoint four of
the six members of the board of directors of the Joint Venture, including the
chairman of the board and the general manager. Pursuant to a co-development
agreement, an entity unaffiliated with the Company is entitled to no more than
ten percent of the Company's equity distributions from Jiaozuo Wan Fang.

         Financing. The approved total investment in Jiaozuo Wan Fang is $151.3
million. The Joint Venture's approved registered capital is $53.7 million. As of
November 30, 1997, it is estimated that the total cost of Jiaozuo Aluminum Power
will be approximately $161.3 million. Any difference between the approved total
investment and the actual total cost will be funded by additional equity or
loans to be contributed pro rata by the shareholders of Jiaozuo Wan Fang. The
Company has contributed $37.6 million to the registered capital of the Joint
Venture. Jiaozuo Mill has contributed $16.1 million in land use rights and
certain fixed assets to the registered capital of the Joint Venture.

         Power Purchase. Jiaozuo Wan Fang and Jiaozuo Mill have entered into a
23-year power purchase contract effective April 26, 1996. Pursuant to the power
purchase contract, Jiaozuo Mill has agreed to purchase from Jiaozuo Wan Fang at
least 5,500 hours each calendar year at 75 MW up to the amount required to
operate Jiaozuo Mill's aluminum mill. Any remaining electricity from the power
plant, but no less than 5,500 hours at 155 MW, will be purchased by the Henan
Electric Power Corporation ("Henan Power") under a 23-year power purchase
contract between Jiaozuo Wan Fang and Henan Power. Both power purchase contracts
require the purchasers to pay for a minimum amount of electricity generated
every calendar year and to compensate the Joint Venture for any shortfalls in
purchases of such minimum amount based on the most recent approved tariff for
power less fuel costs. Both power purchase contracts allow the Joint Venture to
adjust the minimum amount of electricity required to be purchased by the power
purchasers and Jiaozuo Mill may request the Joint Venture to adjust the minimum
amount of electricity required to be purchased by Jiaozuo Mill, in all cases,
upon prior notice.

         During 1997, Jiaozuo Mill and Henan Power failed to purchase the
required minimum amounts of electricity under the power purchase contract, and
accordingly, are required to compensate the Joint Venture for the shortfall.
Jiaozuo Mill and Henan Power are negotiating with the Joint Venture about
providing the compensation to the Joint Venture for the shortfall by purchasing
excess on-grid electricity from the Joint Venture during the first half of 1998.

         There are no specific provisions regarding liquidated damages upon
early termination of either power purchase contract. However, in the case of
early termination due to Henan Power's default, Henan Power is obligated under
the power purchase contract, to the extent permitted by law, to transmit
electricity generated by the Joint Venture's power plant to any entity
designated by the Joint Venture which is interconnected with Henan Power.

         Construction. Jiaozuo Wan Fang has directly managed the construction of
Unit 1 of the power plant and is directly managing the construction of Unit 2 of
the power plant. Jiaozuo Wan Fang has hired the Henan Power Design Institute for
the project design and Henan Provincial No. 1 Power Construction Company and
Henan Provincial No. 2 Power Construction Company as contractors for civil and
installation work. Although no heat rate (the term "heat rate" refers to a power
plant's thermal efficiency), output or completion guarantees are being provided
by the contractors, these two contractors have built a number of similar power
plants. In addition, more than 100 of such 125 MW units have been delivered by
their manufacturer, Shanghai Electric Corporation ("Shanghai Electric"), which
is providing a limited two-year warranty of the units. The construction risk in
the case of this project is also mitigated by the tariff formula set forth in
the power purchase contract which provides for an increase in the tariff payable
by the power purchaser sufficient to compensate the Joint Venture for any
reduction in heat rate and capacity resulting from the contractor's performance
failure. Unit 2 of the power plant was synchronized with the power grid on
February 22, 1998 and is expected to commence commercial operation in the second
quarter of 1998.

         Interconnection and Dispatch. The interconnection facilities were
completed by Henan Power in February 1998. Jiaozuo Wan Fang has provided a loan
in the amount of approximately $9.9 million to Henan Power for the design and
construction of the interconnection facilities. The power plant is currently
dispatched by Henan Power. The Joint Venture is required under its dispatch
contract with Henan Power to cause the power plant to maintain an annual minimum
availability. If this annual minimum availability is not met, the minimum amount
required to be purchased by Henan Power may be reduced proportionately.

         Fuel. Jiaozuo Wan Fang obtains fuel pursuant to short-term contracts
for the purchase of anthracite coal from mines in Jiaozuo and mines located
approximately 120 kilometers from the power plant. The price for coal is
negotiated periodically with the mine owners. The coal supplier arranges for the
transportation of the coal by truck to the power plant.

         Operation. Jiaozuo Wan Fang operates the power plant.

         Wuhu Grassy Lake

         The Power Plant. The Wuhu Grassy Lake power plant is a 2 x 125 MW
coal-fired power plant located near Wuhu, Anhui Province. It is the phase IV
expansion of an existing 325 MW coal-fired power station. The first unit of the
power plant commenced commercial operation in September 1996. The second unit
went into commercial operation in March 1997.

         Joint Venture. The Wuhu Grassy Lake power plant is owned by Wuhu Shaoda
Electric Power Development Company Ltd. ("Wuhu Shaoda"), a 20-year equity joint
venture formed by CPI, Anhui Liyuan Electric Power Development Company Limited
("Anhui Liyuan"), Wuhu Energy Development Company Limited ("Wuhu Energy") and a
wholly owned subsidiary of the Company. The board of directors of Wuhu Shaoda
consists of nine directors, of which two are appointed by the Company. The
Company also appoints one of the two vice chairmen and the deputy general
manager responsible for supervising the operation and maintenance of the power
plant.

         Financing. The approved total investment in the Joint Venture is $118.4
million. The Joint Venture's approved registered capital is $30.0 million. The
Joint Venture partners of Wuhu Shaoda have contributed their registered capital
according to their respective ownership interests as follows: (i) CPI, $13.5
million (45%), (ii) the Company, $7.5 million (25%), (iii) Anhui Liyuan, $6.0
million (20%) and (iv) Wuhu Energy, $3.0 million (10%). As of November 30, 1997,
the estimated total cost of this project was in the range of $118.2 million to
$121.4 million. The difference between the total investment and the registered
capital of Wuhu Shaoda is being financed through a bank facility and shareholder
loans arranged by the Joint Venture partners. Wuhu Shaoda entered into a $65.0
million term loan facility (the "Term Loan") with a syndicate of lenders. The
first drawdown of the Term Loan took place in August 1996. The Term Loan is to
be repaid in 11 successive semi-annual installments beginning April 22, 1998. In
addition to the Term Loan, the Company has provided a $17.5 million subordinated
loan (the "AES Loan") and Anhui Liyuan has provided $4.6 million and Wuhu Energy
has provided $2.3 million in subordinated shareholders' loans to the Joint
Venture. The $6.9 million total amount of shareholder loans from Anhui Liyuan
and Wuhu Energy were composed of cash in the amount of $4.6 million and accrued
interest to the two partners on their early capital injections in the amount of
$2.3 million. The recognition of this $2.3 million of accrued interest as part
of the two partners' shareholder loans is still subject to the unanimous
agreement by all the partners. The Company has guaranteed to the lenders of the
Term Loan certain obligations of its wholly owned subsidiary under the joint
venture contract, including the obligation to fund the AES Loan and certain
other liabilities which, in the aggregate, do not exceed $6.0 million.

         Dividend payments are subject to certain restrictions under the Term
Loan. No dividend distributions by the Joint Venture are permitted if certain
debt service coverage ratios are not met.

         Power Purchase. The electric power from the power plant is purchased by
Anhui Provincial Electric Power Corporation ("Anhui Power") pursuant to a
20-year operation and offtake contract dated as of July 5, 1996, between Wuhu
Shaoda and Anhui Power. Under the operation and offtake contract, Anhui Power
has agreed to purchase a minimum amount of electricity at a price based upon an
agreed tariff formula. In the event that the power plant fails to generate
electricity for a period in excess of that permitted for maintenance and repair
in the operation and offtake contract and such failure is a result of force
majeure or Wuhu Shaoda's failure to perform its obligations under the operation
and offtake contract, the minimum amount required to be purchased by Anhui Power
may be reduced in proportion to such excess shutdown period, provided that in no
event will the electricity payments to be made under the operation and offtake
contract be reduced below the amount necessary to allow Wuhu Shaoda to pay all
applicable financing costs under the Term Loan, the AES Loan and the other
shareholder loans.

         During 1997, Anhui Power failed to purchase the required minimum amount
of electricity under the operation and offtake contract. Accordingly, Anhui
Power is required pursuant to the operation and offtake contract to compensate
the Joint Venture for the shortfall based on the 1997 approved tariff less
approved generation cost. The relevant pricing bureau approved only the tariff
and not the generation cost assumed for purposes of setting the tariff. The
Joint Venture and Anhui Power, the operator of the plant, have disagreed over
determination of the generation cost to be used for the calculation of the
minimum take compensation. The minimum take compensation will be subject to
finalization of the generation cost issue, which is currently under negotiation
between Anhui Power and Wuhu Shaoda.

         Construction. The power plant was designed, engineered and constructed
pursuant to a fixed price construction contract between Wuhu Shaoda and Anhui
Power. Pursuant to the construction contract, Anhui Power is the principal
contractor and is responsible for the timely and successful completion of the
power plant. Anhui Power sub-contracted the design, construction, installation
and commissioning work to several of its subsidiaries. The construction contract
does not obligate Anhui Power to provide guarantees of heat rate or capacity.
However, in the event that Anhui Power fails to achieve the design heat rate or
nameplate capacity of the power plant, the tariff formula set forth in the
operation and offtake contract increases the tariff payable by Anhui Power in a
manner that compensates Wuhu Shaoda for the reduction in heat rate and capacity.
An independent engineering company, Stone and Webster Management Consultants,
was retained by the lenders of the Term Loan to monitor construction. As of
November 30, 1997, the work remaining was completion of construction of an ash
pond and living quarters. This work is scheduled to be completed by the end of
1998.

         Interconnection and Dispatch. The power plant is interconnected to the
Anhui power grid and is subject to dispatch by Anhui Power pursuant to an
interconnection contract between Wuhu Shaoda and Anhui Power.

         Fuel. As part of its obligations under the operation and offtake
contract, Anhui Power is required to supply such fuel as may be necessary to
allow the power plant to generate electricity purchased under the operation and
offtake contract.

         Operation. Pursuant to the operation and offtake contract, Anhui Power
is responsible for the operation, maintenance and management of the power plant
and is responsible for satisfying all operating costs of the power plant. In
return, Anhui Power is entitled to deduct the approved generation cost from the
electricity fee to the Joint Venture. Due to disagreement between Anhui Power
and the Joint Venture over the determination of generation cost as indicated
above, the total electricity fee for 1997 has not yet been finalized. Anhui
Power is responsible for ensuring that the power plant generates the minimum
amount of electricity required to be purchased by Anhui Power and is required to
compensate Wuhu Shaoda for any resulting shortfall in such minimum amount,
unless, as indicated above, the shortfall is the result of force majeure or the
failure of Wuhu Shaoda to perform its obligations under the operation and
offtake contract.

         Hefei Prosperity Lake

         The Power Plant. The Hefei Prosperity Lake power plant is an oil-fired
combined cycle power plant consisting of 2 x 38.2 MW gas turbine generating
units ("gas turbine unit") and a 1 x 38.8 MW heat recovery steam turbine
generating unit ("steam turbine unit"). It is located within the boundaries of
an existing 325 MW coal fired power plant in Hefei, Anhui Province. Construction
of the power plant commenced in November 1996. The gas turbine unit commenced
commercial operation on August 1, 1997 as scheduled, and the steam turbine unit
is scheduled to commence commercial operation in the third quarter of 1998.

         Joint Ventures. The Hefei Prosperity Lake power plant is owned by Anhui
Liyuan AES Power Company Ltd. ("Liyuan-AES") and Hefei Zhongli Energy Company
Ltd. ("Zhongli Energy"), two 16-year cooperative joint ventures formed among a
wholly owned subsidiary of the Company, Hefei Municipal Construction and
Investment Company ("Hefei Construction") and Anhui Liyuan. In accordance with
the joint venture contracts, the Company is entitled to appoint four of the
seven members of the board of directors and the general manager of each of the
Joint Ventures.

         Financing. The approved total investment in each of Liyuan-AES and
Zhongli Energy is $30.0 million. The approved registered capital of each of
Liyuan-AES and Zhongli Energy is $15.0 million. The Joint Venture partners in
Liyuan-AES and Zhongli Energy contributed registered capital to each Joint
Venture according to their respective ownership interests as follows: (i) Anhui
Liyuan, $3.0 million (20%), (ii) the Company, $10.5 million (70%) and (iii)
Hefei Construction, $1.5 million (10%). As of November 30, 1997, it is estimated
that the total cost of Hefei Prosperity Lake will be approximately $65.7
million. The difference between the estimated total cost and the registered
capital of each Joint Venture will be financed through shareholder loans or
third party debt arranged by the Joint Venture partners. The Company has entered
into shareholder loan contracts with Liyuan-AES and with Zhongli Energy pursuant
to which the Company has committed to provide loans to the Joint Ventures in an
aggregate amount not to exceed $16.0 million, of which $14.7 million has been
provided as of November 30, 1997. A PRC bank has entered into long-term loan
contracts with Liyuan-AES and Zhongli Energy for the provision of loans totaling
$14 million of which $7 million has been provided as of November 30, 1997. The
loans were arranged and guaranteed by one of the PRC partners.

         Power Purchase. The power generated by the power plant is purchased by
Anhui Power pursuant to a 16-year operation and offtake contract, dated
September 26, 1996, between Liyuan-AES and Zhongli Energy, as the sellers, and
Anhui Power as power purchaser. Under the operation and offtake contract, Anhui
Power has agreed to purchase a minimum amount of electricity at an agreed upon
tariff formula or to compensate the Joint Ventures for any shortfall in
purchases of such minimum amount based on an approved tariff less approved
generation costs. Anhui Power's minimum take obligation under the operation and
offtake contract may be reduced in proportion to periods of power plant shutdown
or curtailment of generation due to events of force majeure or breach of the
operation and offtake contract by the Joint Ventures, provided that in no event
will the payments to be made under the operation and offtake contract be reduced
below the amount necessary to allow the Joint Ventures to pay all applicable
financing costs under the Joint Ventures' loan agreements.

         Since the commencement of commercial operation of the simple cycle
unit, Anhui Power has failed to purchase the required minimum amount of
electricity under the operation and offtake contract. Accordingly, Anhui Power
is required pursuant to the operation and offtake contract to compensate the
Joint Ventures for the shortfall based on the 1997 approved tariff less approved
generation cost. The relevant pricing bureau approved only the tariff and not
the generation cost assumed for purposes of setting the tariff. The Joint
Ventures and Anhui Power, the operator of the plant, have disagreed over
determination of the generation cost to be used for the calculation of the
minimum take compensation. The minimum take compensation will be subject to
finalization of the generation cost issue, which is currently under negotiation
between Anhui Power and the Joint Ventures.

         Construction. The power plant is being designed, engineered and
constructed pursuant to a fixed-price construction contract between the Joint
Ventures and Anhui Mingda Power EPC Contract Company ("Mingda"), a wholly owned
subsidiary of Anhui Power. Pursuant to the construction contract, Anhui Power is
the principal contractor and is responsible for the timely and successful
completion of the power plant. Mingda is eligible for a bonus for on-time
completion of the gas turbine unit and early or on-time completion of the steam
turbine unit but must pay penalties in the event of late completion or not
meeting performance guarantees, including heat rate and capacity guarantees. The
gas turbine unit and steam turbine unit have been ordered from GEC Alsthom
Centrales Energetiques S.A. ("GEC Alsthom"). GEC Alsthom will also provide the
conceptual design as a subcontractor to Mingda. If Mingda fails to complete the
gas turbine unit by August 1, 1997 and the steam turbine unit by July 1, 1998,
Anhui Power's minimum take or pay obligation for the minimum amount under the
operation and offtake contract nonetheless commences. An independent engineering
company, Black & Veatch International Company, has been retained by the Joint
Ventures to monitor construction.

         Interconnection and Dispatch. The power plant is interconnected to the
Anhui power grid and is subject to dispatch by Anhui Power pursuant to an
interconnection contract between the Joint Ventures and Anhui Power. Under the
operation and offtake contract, Anhui Power, as the operator, is required to
indemnify the Joint Ventures for any loss or cost as a result of the breach of
the interconnection contract.

         Fuel. As part of its obligations under the operation and offtake
contract, Anhui Power is required to supply such fuel as may be necessary to
allow the power plant to generate electricity to be purchased under the
operation and offtake contract.

         Operations. Pursuant to the operation and offtake contract, Anhui Power
is responsible for the operation, maintenance and management of the power plant
and is responsible for satisfying all operating costs of the power plant. In
return, Anhui Power is entitled to deduct the approved generation cost from the
electricity fee to the Joint Ventures. Due to disagreement between Anhui Power
and the Joint Ventures over the determination of generation cost as indicated
above, the total electricity fee for 1997 has not yet been finalized. Anhui
Power is responsible for ensuring that the power plant generates the minimum
amount and is required to compensate the Joint Ventures for any resulting
shortfall in the minimum amount, unless, as indicated above, the shortfall is a
result of force majeure or the failure of the Joint Ventures to perform their
obligations under the operation and offtake contract.

         Wuxi Tin Hill

         The Power Plant. The Wuxi Tin Hill power plant is an oil-fired combined
cycle power plant which consists of a 2 x 24 MW gas turbine generating plant and
a 15 MW heat recovery steam turbine generating plant located in Xishan City
(previously known as Wuxi County), Jiangsu Province. The gas turbine generating
plant was completed and commenced commercial operation in March 1996 and the
heat recovery steam turbine generating plant commenced commercial operation in
the first quarter of 1997.

         Joint Ventures. The Wuxi Tin Hill power plant is owned by
Wuxi-AES-CAREC Gas Turbine Power Company Ltd. ("Wuxi-AES-CAREC") and
Wuxi-AES-Zhonghang Power Co. Ltd. ("Wuxi-AES-Zhonghang"), two 16-year
cooperative joint ventures formed among the Company, China National Aero-Engine
Corporation ("CAREC") and Wuxi Power Industry Company ("Wuxi Power"). In
accordance with the joint venture contracts, the Company is entitled to appoint
four of the eight members of the board of directors, including the chairman of
the board, for each of the Joint Ventures, while CAREC and Wuxi Power each is
entitled to appoint two members. The chairman of the board of directors of each
Joint Venture has the right to break any tie board votes.

         Financing. The approved total investment in Wuxi-AES-CAREC is $29.5
million. The approved total investment in Wuxi-AES-Zhonghang is $10.5 million.
The approved registered capital of Wuxi-AES-CAREC is $11.8 million and the
approved registered capital of Wuxi-AES-Zhonghang is $5.0 million. As of
November 30, 1996, the estimated total cost of this project was in line with the
approved total investment. The Company has contributed $6.5 million to the
registered capital of Wuxi-AES-CAREC and $2.8 million to the registered capital
of Wuxi AES-Zhonghang. CAREC and Wuxi Power each has contributed $2.7 million to
the registered capital of Wuxi-AES-CAREC and each has contributed $1.1 million
to the registered capital of Wuxi-AES-Zhonghang. The Company, CAREC and Wuxi
Power entered into shareholder loan agreements with the Joint Ventures pursuant
to which they provided loans to the two Joint Ventures pro rata in accordance
with their ownership interests.

         In January 1998, the Wuxi Tin Hill replaced the shareholder loans
provided by the Company and CAREC with a $12.5 million loan from ING Bank,
Shanghai Branch and RMB(Y)26 million (about $3.1 million) in loans from two
local Chinese banks in Wuxi. The shareholder loans from the Company and CAREC
were fully paid off, leaving a $4.4 million shareholder loan from Wuxi Power.

         Power Purchase. Power generated by the power plant is purchased by the
Xishan Electricity Management Office ("Xishan Office") under a 16-year power
purchase contract, effective May 1995, between Wuxi-AES-CAREC and Xishan Office.
Wuxi-AES-CAREC sells the electricity generated by the steam generating plant to
Xishan Office on behalf of Wuxi-AES-Zhonghang under a services agreement with
Wuxi-AES-CAREC.

         The power purchase contract requires Xishan Office to purchase a
minimum amount of 186 gigawatt hours ("GWh") of electricity per calendar year
from the power plant and to compensate the Joint Ventures for any shortfalls in
the purchase of such minimum amount based on the most recent tariff for
electricity less fuel costs. Pursuant to the power purchase contract, the
minimum amount of electricity which Xishan Office is required to purchase from
the Joint Ventures may be reduced by the number of peak time shutdown hours
which exceeds an agreed number of hours permitted for outages related to the
power plant.

         During 1996, Xishan Office failed to purchase the required minimum
amount of electricity under the power purchase contract and, accordingly, is
required to compensate the Joint Venture for the shortfall. The parties had a
disagreement over the amount of the required minimum take for 1996. Xishan
Office paid 88% of the amount the Joint Venture believed was due but disputed
the balance. In March 1997, the Joint Venture reached agreement with the power
purchaser on the amount of payment for required minimum offtake of electricity
for 1996. The agreement included the deferral of certain amounts scheduled to be
paid in 1996 and a corresponding adjustment upward of future scheduled payments
of capital return.

         During 1997, Xishan office also failed to purchase the required minimum
amount of electricity and has paid 89% of the shortfall to the Joint Venture.
The company expects settlement of the outstanding balance in the near future.

         Construction. The construction of the power plant has been managed by
the Joint Ventures. The gas turbines were supplied by United Technologies Inc.
("United Technologies"). Pursuant to a maintenance contract with the Joint
Ventures, United Technologies will provide 10 years of service and maintenance
for the gas turbines. The balance of the plant has been provided by Chinese
manufacturers.

         Interconnection and Dispatch. The interconnection facilities were
completed in March 1996 and the power plant is connected to the East China Power
Grid. The power plant is currently dispatched under an agreement between Wuxi
AES-CAREC and Jiangsu Provincial Power Bureau Dispatch Center signed in August
1997.

         Fuel. Wuxi-AES-CAREC has signed 16-year fuel oil supply contracts with
two local State-owned oil companies under the administrative control of the
Xishan municipal government. The fuel suppliers are obligated, under the
contracts, to pay damages for any failure to supply the power plant with
adequate quantities of fuel or fuel not meeting certain specifications. The
price of fuel oil to be supplied under these supply contracts is to be
negotiated annually. The oil companies are obligated to arrange for the
transportation of the fuel to the power plant.

         Operation. The power plant is operated by Wuxi-AES-CAREC.

         Aixi Heart River

         The Power Plant. The Aixi Heart River power plant is a 50 MW coal-fired
circulating fluidized bed power plant located in Nanchuan, Sichuan Province.
Construction of the power plant commenced in February 1996, and is expected to
be completed in the second quarter 1998.

         Joint Venture. The Aixi Heart River power plant is owned by Sichuan
Fuling Aixi Power Company Ltd. ("Fuling Aixi"), a 25-year cooperative joint
venture formed by Sichuan Fuling Banxi Colliery ("Banxi Colliery") and a wholly
owned subsidiary of the Company. The Company appoints three of the five members
of the board of directors as well as the chairman, the general manager and
financial controller.

         Financing. The approved total investment in the Joint Venture is $30.4
million ($30.0 million based on the Renminbi to US dollar exchange rate at the
time the approval was granted). The Joint Venture's approved registered capital
is $12.1 million. As of November 30, 1997, it is estimated that the total cost
of Aixi Heart River will be approximately $39.1 million. The Company has
contributed $8.5 million to the registered capital of Fuling Aixi and Banxi
Colliery has committed to contribute $3.6 million to the Joint Venture's
registered capital. As of January 30, 1998, Banxi Colliery has contributed $3.4
million to the registered capital of the Joint Venture. Pursuant to the
construction and term loan agreement with Fuling Aixi, the Company has committed
to provide a loan in the principal amount of up to $23.5 million to Fuling Aixi.
Any difference between the estimated total cost and the committed shareholder
loan and approved registered capital will be funded by additional equity
contributed pro rata by the shareholders.

         Power Purchase. Electricity generated by the power plant will be sold
to Sichuan Fuling Power Company ("Sichuan Power") under a 25-year power purchase
contract. The power purchase contract requires Sichuan Power to purchase a
minimum of 270 GWh of electricity per calendar year. In the event that Sichuan
Power fails in any calendar year to purchase such minimum amount, Sichuan Power
is required by the power purchase contract to make payment for any shortfall at
the then current power price less fuel costs. Pursuant to the power purchase
contract, if Fuling Aixi fails to deliver electricity to Sichuan Power by the
construction completion date specified in the construction contract, it is
obligated to pay a penalty to Sichuan Power for each day of delay.

         Construction. Fuling Aixi has entered into a construction contract with
Shanghai Electric to construct the power plant. Certain critical components of
the equipment of the power plant (including the coal fluidized bed boilers and
their design) are being supplied by Pyropower, Inc. ("Pyropower") pursuant to a
supply contract between Shanghai Electric and Pyropower. The balance of the
plant is being provided by Chinese manufacturers. Shanghai Electric will provide
a one-year warranty of its work. If Shanghai Electric fails to complete
construction of the power plant by February 1998, the guaranteed completion
date, the contractor will be required to pay liquidated damages to Fuling Aixi
for each day of delay in an amount sufficient to compensate the Joint Venture
for penalties due to Sichuan Power under the power purchase contract for delayed
commercial operation of the power plant. Under the construction contract,
Shanghai Electric has guaranteed all the performance specifications of the power
plant, including output, heat rate and emissions. If the power plant fails to
achieve the performance specifications, Shanghai Electric will be obligated to
pay liquidated performance damages to Fuling Aixi.

         Interconnection and Dispatch. Sichuan Power is responsible for
construction, and has guaranteed the completion, of the interconnection facility
by the power plant's performance testing date. If a delay in the completion of
the interconnection facility results in delays in commencement of the commercial
operation of the power plant, Sichuan Power is obligated to pay Fuling Aixi a
penalty for each day of delay. The dispatcher of the power plant has agreed to
dispatch the power plant at 100% of its operational capacity during peak hours
and at 75% of its operational capacity during off-peak hours.

         Fuel. Fuling Aixi has entered into a 25-year coal supply contract with
Banxi Colliery. Any increase in the price of coal to be paid by Fuling Aixi will
only become effective under the coal supply contract when the price of
electricity payable by Sichuan Power has been increased to reflect the increased
coal cost. The occurrence of a force majeure event will not excuse Banxi
Colliery's obligations under the coal supply contract. Banxi Colliery is also
obligated to supply coal to the power plant in the case of non-payment by Fuling
Aixi for such coal if such non-payment was caused by a failure of Sichuan Power
to make a payment to Fuling Aixi under the power purchase contract. If the coal
supply contract is terminated by Fuling Aixi on account of Banxi Colliery's
default, Banxi Colliery is required to pay a termination charge to Fuling Aixi.

         Operation. Fuling Aixi will operate the power plant.

         Chengdu Lotus City

         The Power Plant. The Chengdu Lotus City power plant is a 2 x 24 MW
natural gas-fired power plant located in Chengdu, Sichuan Province. Construction
of the power plant commenced in October 1996 and commercial operation commenced
on July 5, 1997.

         Joint Venture. The Chengdu Lotus City power plant is owned by
Chengdu-AES-Kaihua Gas Turbine Power Co. Ltd. ("Chengdu AES-Kaihua"), a 16-year
cooperative joint venture formed by the Company, Chengdu Huaxi Electric Power
(Group) Shareholding Company Ltd. ("Huaxi"), Huachuan Petroleum & Natural Gas
Exploration Company ("Huachuan") and CAREC. The Company is entitled to appoint
three members of the nine-member board of directors of Chengdu AES-Kaihua and
the general manager.

         Financing. The approved total investment in the Joint Venture is $29.8
million. The Joint Venture's approved registered capital is $11.9 million. As of
November 30, 1997, the estimated total cost of Chengdu Lotus City was
approximately $34.2 million, $3.2 million less than the original budget. The
Company has contributed $4.2 million to the registered capital of Chengdu
AES-Kaihua. The Company's joint venture partners have contributed the following
amounts to the registered capital of the Joint Venture: Huaxi has contributed
$3.0 million; Huachuan has contributed $1.2 million; and CAREC has contributed
$3.5 million. The Company, Huaxi and CAREC have entered into support contracts
with Chengdu AES-Kaihua pursuant to which they have provided loans to Chengdu
AES-Kaihua in the principal amount of $22.3 million in addition to their
registered capital contributions.

         Power Purchase. Electricity generated by the power plant is to be sold
to Huaxi under a 15-year power purchase contract. The power purchase contract
requires Huaxi to purchase, in each calendar year, 3,000 hours of electric power
based on the net station capacity of the power plant declared by Chengdu
AES-Kaihua to be available in such year. If Huaxi fails, for any reason
(including due to the failure of the interconnection facilities or natural gas
pipeline to be completed), to accept electric power which is made available by
Chengdu AES-Kaihua, Huaxi is required by the power purchase contract to pay
Chengdu AES-Kaihua for the electricity made available at the then current power
price less fuel costs.

         The tariff payable by Huaxi under the power purchase contract is
established annually by the board of directors of Chengdu AES-Kaihua in
accordance with a budget which estimates the costs of generating the minimum
amount in the following year and the tariff adjustment method as specified in
the power purchase contract. In 1997, the approved tariff for Chengdu Lotus City
was less than the tariff requested by the Joint Venture, which was based on a
formula set forth in the Power Purchase Contract. Due to the priority return
structure in the Joint Venture Agreement for Chengdu Lotus City, the Company's
dividends from Chengdu Lotus City related to its 1997 operations will be as
expected.

         Construction. Chengdu AES-Kaihua entered into a construction contract
with CAREC to construct the power plant. The principal equipment for the power
plant, the gas turbine generator sets, was provided to Chengdu AES-Kaihua
pursuant to a supply contract between CAREC and United Technologies. All
performance guarantees (including damages for failures to meet heat rate and
output guarantees) and warranties of United Technologies under the supply
contract have been assigned by CAREC to Chengdu AES-Kaihua. The balance of the
plant was provided by Chinese manufacturers. An independent engineering company,
Duke/Fluor Daniel International, was retained by the Joint Venture to manage
scheduling and to ensure equipment performance compliance.

         Interconnection and Dispatch. The interconnection facility was
constructed by Huaxi. Chengdu AES-Kaihua has provided Huaxi with a loan of
RMB(Y)14.0 million for the construction of the interconnection facilities. The
Joint Venture has entered into a dispatch contract with the Sichuan Dispatch
Center, pursuant to which the dispatcher of the power plant has agreed to
dispatch the power plant.

         Fuel. Chengdu AES-Kaihua has entered into a 15-year gas supply contract
with Huachuan for the supply of natural gas to the power plant. The gas supply
contract requires Huachuan to provide a minimum annual quantity of natural gas
to the Chengdu facility which meets certain specifications at a price set by the
Chengdu municipal pricing bureau. Any increase in the price of gas to be paid by
Chengdu AES-Kaihua will only become effective under the gas supply contract when
the price of electricity payable by Huaxi under its power purchase contract has
been increased to reflect the increased cost. If Huachuan fails, on any
occasion, to deliver gas in the quantities and specifications required by
Chengdu AES-Kaihua, Huachuan is obligated under the gas supply contract to
indemnify Chengdu AES-Kaihua for the total revenue lost by Chengdu AES-Kaihua
due to such failure. Huachuan is also obligated to continue supplying natural
gas to the power plant in the case of non-payment by Chengdu AES-Kaihua for such
natural gas if such non-payment was caused by a failure of Huaxi to make payment
to Chengdu AES-Kaihua under the power purchase contract.

         Chengdu AES-Kaihua may terminate the gas supply contract for Huachuan's
breach of contract, including its failure to deliver natural gas. If Chengdu
AES-Kaihua terminates the contract, Huachuan must pay a termination charge
similar to the termination charge payable under the power purchase contract. If
Huachuan pays this termination charge, the termination charge for which Huaxi
would be liable under the power purchase contract as a consequence of Huachuan's
default is not applicable. Upon any such payment, Chengdu AES-Kaihua is
obligated to transfer the power plant and related gas interconnection facility
to Huachuan.

         Operation. Chengdu AES-Kaihua operates the power plant.

         Cili Misty Mountain

         The Power Plant. The Cili Misty Mountain power plant, located in Cili
County, Hunan Province, consists of a 5.2 MW hydroelectric generating unit
("unit 1"), and two 10.5 MW hydroelectric generating units ("unit 2" and "unit
3"). Unit 1, the original power plant, has been in commercial operation since
1979. Unit 2 went into commercial operation in May 1996 and unit 3 went into
commercial operation in February 1997.

         Joint Venture. The Cili Misty Mountain power plant is owned by Hunan
Xiangci-AES Hydro Power Company Ltd. ("Xiangci-AES"), a 25-year joint venture
formed by Hunan Cili Electric Power Company ("Cili Electric Power") and the
Company. The Company appoints three of the five members of the Joint Venture's
board of directors, and appoints the general manager and the chief accountant.

         Financing. The approved total investment and approved registered
capital of Xiangci-AES is $14.7 million. The Company contributed $7.5 million to
the registered capital of Xiangci-AES and Cili Electric Power contributed all of
the assets of the previously existing and operating unit 1 and all of the
equipment and materials purchased for the construction of unit 2 and unit 3
which, at the time of the Company's equity contribution to Xiangci-AES, were
being incorporated into the project by Cili Electric Power. All liabilities of
the power plant incurred prior to the establishment of Xiangci-AES are the sole
obligation of Cili Electric Power. The estimated total cost of this project is
in line with the approved total investment.

         Power Purchase. In 1994, Xiangci-AES and Cili Electric Power entered
into a 25-year power purchase contract for the sale of electricity generated by
the power plant. Cili Electric Power was required by the terms of the power
purchase contract to purchase all of the electricity generated by the power
plant and to use its best efforts to purchase electricity in excess of 120 GWh.
Since the power plant utilizes hydro power, the extent to which the power plant
is able to generate electric power depends upon the flow of river water. Cili
Electric Power has indicated to the Joint Venture that load growth in Cili
County is likely to be less than anticipated in the near future. Because the
power plant is located in an area served by an isolated transmission grid, the
Joint Venture has connected a 36 kilometer low voltage transmission line to the
Hunan provincial grid and the larger market it serves. Since January 1998,
Xiangci-AES has been selling electricity to Zhangjiajie Electricity Power Bureau
("Zhangjiajie Power"). Xiangci-AES and Zhangjiajie Power are negotiating a new
power purchase contract. Zhangjiajie Power has been making payments at a tariff
rate set in the power purchase contract with Cili Electric Power and the
Company's expects the tariff set forth in the new power purchase contract to be
the same as the one with Cili Electric Power, which is the higher of a minimum
rate and a market rate. However, there can be no assurance that Xiangci-AES will
successfully negotiate a new power purchase contract.

         As of January 31, 1998, the amount due from Cili Electric Power was
$0.8 million for the electricity sold during 1997. The payment of the
outstanding balance is in negotiation between the Joint Venture and Cili
Electric Power.

         Construction. Pursuant to the terms of the joint venture contract, all
of the capital contributed by the Company to Xiangci-AES was to be used to
complete construction of unit 2 and unit 3. Cili Electric Power was responsible
under the terms of the joint venture contract for completing the construction of
unit 2 and unit 3. Xiangci-AES subsequently entered into an agreement with Cili
Electric Power pursuant to which the Joint Venture directly assumed the work of
completing the construction of unit 3 and Cili Electric Power was discharged
from any further obligation to complete the power plant.

         Interconnection and Dispatch. The power plant was originally
interconnected to the Cili County power grid and was dispatched by Cili Electric
Power. Following the completion of the transmission line to connect the power
plant with the Hunan provincial grid, the power plant is being dispatched by the
Zhangjiajie Power.

         Operation. Xiangci-AES operates the power plant.

         Yangchun Sun Spring

         The Power Plant. The Yangchun Sun Spring power plant, located in
Yangchun, Guangdong Province, consists of one existing 8.6 MW diesel engine
generating facility which was constructed prior to the Company's involvement,
and another 6.5 MW Stork-Wartsila diesel engine generating facility which
commenced commercial operation in April 1996.

         Joint Venture. Yangchun Sun Spring is owned by Yangchun Fuyang Diesel
Engine Power Co. Ltd. ("Yangchun Fuyang"), a 12-year cooperative joint venture
formed by Yangchun Municipal Power Supply Company ("Yangchun Power Supply"),
Shenzhen Futian Gas Turbine Power Co., Ltd. ("Shenzhen Futian") and a wholly
owned subsidiary of the Company. The Company has the right to appoint one of the
four members of the board of directors of the Joint Venture.

         Financing. The Company and Shenzhen Futian each has contributed $2.3
million in cash to Yangchun Fuyang for their respective 25% ownership interests.
Yangchun Power Supply has contributed land use rights, and all the fixed assets
of the existing plant and all the equipment and materials purchased for the unit
then under construction as its registered capital for a 50% ownership interest
in Yangchun Fuyang.

         Power Purchase. The electricity generated from the power plant is
purchased by Yangchun Municipal Power Supply Bureau ("Yangchun Power Bureau")
under a 12.5-year power purchase contract. The Yangchun Power Bureau is required
by the power purchase contract to purchase at least 34.4 GWh each year
commencing on January 1, 1995 and at least 58 GWh each year after December 31,
1995. The Yangchun Power Bureau is required to pay for such minimum amounts of
electricity even if it does not or cannot purchase such minimum amounts. The
Yangchun Power Bureau's payment obligation is secured by a pledge of the annual
profit from a 13 MW hydro power plant owned by the Yangchun City People's
Government.

         Construction and Management. Yangchun Fuyang and Yangchun Power Supply
have entered into a 12.5-year construction and management contract. The contract
calls for Yangchun Power Supply to assume full responsibility for the operation
and maintenance of the power plant on behalf of Yangchun Fuyang in compliance
with the power purchase contract, and to supply fuel to the power plant. The
construction and management contract provides for scheduled distributions to the
Company and Shenzhen Futian beginning on March 31, 1996 and continuing on a
semi-annual basis for the remainder of the contract term. The amounts are
adjusted if the foreign exchange rate between the U.S. dollar and Renminbi
exceeds or falls below specified thresholds. Yangchun Power Supply has pledged
its registered capital interest in Yangchun Fuyang as security for its
obligations to make scheduled distributions to the Company and Shenzhen Futian
under the construction and management contract.

         Interconnection and Dispatch. The power plant is interconnected to the
Yangchun municipal power grid. The power plant is dispatched by the Yangchun
Electric Dispatch Office pursuant to a dispatch contract between the Joint
Venture and the Yangchun Power Bureau.

         Fuel. Fuel oil required for the power plant is supplied by Yangchun
Power Supply.

         Operation. Yangchun Fuyang operates the power plant.


Employees

         At January 31, 1998, the Company employed 33 people, who are involved
in operations or construction.


Item 2.  Properties

         The Company leases its principal office in Hong Kong and its
representative office in Beijing, People's Republic of China. The lease for the
Company's office in Hong Kong expires in March 2000. The Beijing lease expires
in July 1998.

         The following table shows the material properties which the Company's
subsidiaries and other joint ventures in which the Company invests lease or for
which they have land use rights.

<TABLE>
<CAPTION>

                                                                Expiration or        Approximate     Plant
Plant or Project       Location               Land Use Rights   Term of Land Use     Area            Description
                                                                Rights
---------------------  ---------------------  ----------------  -------------------  --------------  ---------------
<S>                    <C>                    <C>               <C>                  <C>             <C>

Anhui Liyuan-AES       7 Dang Shan Road,      Lease of Land     March 28, 2012       13,850 m2*      Oil-fired
Power Company Ltd.     Hefei City, Anhui      Use Right                                              Combined
                       Province, People's                                                            Cycle
                       Republic of China                                                             Gas-steam
                                                                                                     Turbine
                                                                                                     Facility

Chengdu AES-Kaihua     Sichuan Sino-US        Acquisition of    March  2045          21,722 m2       Natural
Gas Turbine Power      (Foreign) Medium &     Land Use Right                                         Gas-fired
Co. Ltd.               Small-sized                                                                   Simple Cycle
                       Enterprises                                                                   Gas Turbine
                       Development Zone,                                                             Facility
                       Jin Tang County,
                       Sichuan Province,
                       People's Republic
                       of China

Hefei Zhongli          7 Dang Shan Road,      Lease of Land     March 17, 2012       13,850 m2*      Oil-fired
Energy Company Ltd.    Hefei City, Anhui      Use Right                                              Combined
                       Province, People's                                                            Cycle
                       Republic of China                                                             Gas-steam
                                                                                                     Turbine
                                                                                                     Facility

Hunan Xiangci-AES      Chao Wang Ta Yi        Transfer /        October 7, 2019      48,110 m2       Hydroelectric
Hydro Power Company    Zu and Pi Pa Zhou      Assignment of                                          Facility
Ltd.                   Tou, Chengguan,        Land Use Right
                       Cili County,
                       Hunan Province,
                       People's Republic
                       of China

Jiaozuo Wan Fang       Zhao Zhang Gong        Transfer /        April 25, 2019       481,490 m2      Pulverized
Power Company Ltd.     Village, Dong Kong     Assignment of                                          Coal-fired
                       Zhuang Village,        Land Use Right                                         Facility
                       Daiwang Town,
                       Machun District,
                       Jiaozuo City, Henan
                       Province, People's
                       Republic of China

Sichuan Fuling Aixi    Qiaobang Village,      Acquisition of    March 24, 2026       140,977 m2      Coal-fired
Power Company Ltd.     Longhua Town,          Land Use Right                                         Circulating
                       Nanchuan City,                                                                Fluidized Bed
                       Sichuan Province,                                                             Boiler
                       People's Republic                                                             Facility
                       of China

Wuhu Shaoda            Xi He Shan, Wuhu       Lease of Land     July 10, 2008 +      41,658 m2       Coal-fired
Electric Power         City, Anhui            Use Right                                              Facility
Development Company    Province, People's
Ltd.                   Republic of China

Wuxi-AES-CAREC Gas     Xi Zhang Village       Acquisition of    November 22, 2012    73,103 m2*      Oil-fired Gas
Turbine Power          and Sheng Feng         Land Use Right                                         Turbine
Company Ltd.           Village, Qianqiao                                                             Facility
                       Town, Xishan City,
                       Jiangsu Province,
                       People's Republic
                       of China

Wuxi-AES-Zhonghang     Xi Zhang Village       Acquisition of    November 22, 2012    73,103 m2*      Heat Recovery
Power Company Ltd.     and Sheng Feng         Land Use Right                                         Steam Turbine
                       Village, Qianqiao                                                             Facility
                       Town, Xishan City,
                       Jiangsu Province,
                       People's Republic
                       of China

Yangchun Fuyang        Side of Kongdong       Transfer /        March 26, 2045       624 m2          Diesel Engine
Diesel Engine Power    110kV Substation,      Assignment of                                          Facility
Co. Ltd.               Chuncheng Town,        Land Use Right
                       Yangchun City,
                       Guangdong Province,
                       People's Republic
                       of China

Yangcheng              Jincheng City, Shanxi   Acquisition of   Application pending  870,000 m2       Coal-fired
International Power    Province, People's      Land Use Rights  for land use rights                   Facility
Generating Co. Ltd.    Republic of China

</TABLE>

---------------------------


*    Land use rights shared by two plants or projects at the same location.

+    The lessor is Wuhu Energy Development Company ("WED") which is granted the
     land use rights of the site by the State for a term of 40 years up to April
     16, 2036. WED guaranteed to extend the lease term with the joint venture
     prior to its expiration, and obtain the required registration with the Land
     Bureau to ensure that the joint venture has the land use right of the site
     for its entire term of operations.



Item 3.  Legal Proceedings

         The Company is not a party to any material legal proceedings.


Item 4.  Submission of Matters to a Vote of Security Holders.

         Not applicable.


<PAGE>


                                     PART II

Item 5.  Market for the Company's Common Equity and Related Stockholder Matters

         All outstanding equity securities of the Company are owned by The AES
Corporation.


Item 6.  Selected Financial Data.

<TABLE>
<CAPTION>

                                                                       (in thousands, except per share data)
--------------------------------------------------- ------------------ ----------------- ------------------ ----------------
For the Years Ended November 30, 1997, 1996 and
1995 and For the Period from December 7, 1993
(inception) to November 30, 1994                          1997               1996              1995              1994
--------------------------------------------------- ------------------ ----------------- ------------------ ----------------
<S>                                                 <C>                <C>               <C>                <C>   
STATEMENT OF OPERATIONS DATA
Revenue                                             $        18,703    $          9,212  $         1,382    $            38
Operating costs and expenses                                 16,500               8,867            9,894              6,995
Operating income/(loss)                                       2,203                 345           (8,512)            (6,957)
Income/(loss) before taxes and minority interest              9,276               4,804            2,223               (368)
Net income/(loss)                                             9,470               4,140            2,138               (371)
Net income/(loss) per share                                  789.17              345.00           178.17             (30.92)
Cash dividend per share                                      181.42                   -                -                  -

--------------------------------------------------- ------------------ ----------------- ------------------ ----------------

As of November 30                                         1997               1996              1995              1994
--------------------------------------------------- ------------------ ----------------- ------------------ ----------------

BALANCE SHEET DATA
Total assets                                        $       512,798    $        280,698  $       229,871    $       210,870
Long-Term Obligations                                       217,806              34,933            6,666                  -
Shareholders' equity                                        198,305             190,355          187,585            201,584
</TABLE>



Item 7.  Discussion and Analysis of Financial Condition and Results of
         Operations.

         The Company, directly and through its wholly owned offshore
subsidiaries, engages in the development, construction, operation and ownership
of electric power generating facilities in the PRC by means of its participation
in joint ventures. The Company currently owns interests in nine power plants
with an aggregate nameplate capacity of approximately 2,918 MW. See "Description
of the Current Projects."

         Because of the significant magnitude and complexity of constructing
electric power plants in the PRC, construction periods generally range from one
to five years, depending on the size of the power plant, the technology utilized
and the location. A power plant does not produce revenues until it is completed.
If construction is delayed, revenues from the power plant will be similarly
delayed and perhaps, if the delay is extended, lost. Additionally, the cost of
developing power plants is substantial.

         The construction of an electric power generation plant, including its
ancillary facilities such as a transmission line or substation, may be adversely
affected by many factors commonly associated with the construction of
infrastructure projects, including shortages of equipment, materials and labor,
as well as labor disputes, adverse weather conditions, natural disasters,
accidents and other unforeseen circumstances and problems. Any of these could
cause completion delays and cost overruns. Delays in obtaining requisite
licenses, permits or approvals from government agencies or authorities could
also increase the cost or delay or prevent the commercial operation of a
project. Construction delays can result in the loss or delayed receipt of
revenues and, if completion is delayed beyond the completion date specified in
the power purchase contract, the payment of penalties. Additionally, the failure
to complete construction according to specifications can result in reduced plant
efficiency, higher operating costs and reduced or delayed earnings.

         The economics of any electric power project, once in commercial
operation, are primarily a function of the tariffs to be paid and the quantity
of electricity which is purchased. The Company shares in the net income of the
Joint Ventures for the duration of their terms. The Joint Ventures generate
revenues through the sale of electricity to power purchasers pursuant to
long-term power purchase contracts. These contracts require the power purchaser
to purchase and pay for minimum quantities of electricity annually or to pay for
such quantities if not purchased, in either case at prices determined according
to tariff formulas set forth in the power purchase contracts. These tariff
formulas are designed, based on the minimum take obligation of the power
purchaser, to be sufficient to pay the operating costs and financing costs of
the project and to enable the Company to realize a return on its investment.

         While the relevant PRC pricing bureaus have committed to utilize the
Joint Ventures' formulas in establishing and adjusting tariffs, there can be no
assurance that the relevant pricing bureaus will calculate and adjust tariffs in
accordance with these tariff formulas. On April 1, 1996, a new law governing the
electric power sector in the PRC came into effect. The law establishes, among
other things, broad principles with respect to the methodology of calculating
and setting electric power tariffs. Detailed regulations with respect to tariff
calculation and tariff setting are expected to be promulgated in the near future
by the Central Government. There can be no assurance that such regulations, when
promulgated, will not adversely affect the tariff structures which the Company's
Joint Ventures have adopted.

         The approved tariff for Wuhu Grassy Lake for 1997 was less than the
tariff requested by the Joint Venture, which was based on a formula set forth in
the Power Purchase Contract. As a result, Wuhu Grassy Lake's revenue for 1997
was insufficient for the Joint Venture to pay the projected return to its
shareholders. The Joint Venture plans to make up such shortfall by means of a
tariff adjustment in 1998. However, there is no assurance that the relevant
pricing bureau will approve it.

         In 1997, the approved tariff for Chengdu Lotus City was less than the
tariff requested by the Joint Venture, which was based on a formula set forth in
the Power Purchase Contract. Due to the priority return structure in the Joint
Venture Agreement for Chengdu Lotus City, the Company's dividends from Chengdu
Lotus City related to its 1997 operations will be as expected.

         Demand for power produced by a power plant is determined by the demand
for electric power in the area served by the power plant and the degree to which
the power plant is dispatched. If the plant is dispatched above the minimum
quantity required to be purchased under the power purchase contract, these sales
will generate additional income for the joint venture and enhance its
profitability. If demand is significantly below the minimum level, the joint
venture can look only to the credit of the power purchaser to pay the required
amount.

         Some regions or cities in the PRC have experienced slower economic
development in recent years. As a consequence, load growth in the PRC, while
generally increasing in the country overall, has exhibited uneven development.
Some of the Joint Ventures' power plants are designed to provide peaking power.
Such plants are dispatched only after base load power stations have been brought
on-line and reached maximum capacity. If electric power demand proves less than
expected in an area, additional peak or base load power may not be required in
the area or may be required at lower than expected levels. The Company's Joint
Ventures seek to mitigate this risk by entering into take-or-pay power purchase
arrangements and by entering into dispatch contracts with PRC electric power
dispatching authorities which obligate the dispatchers to dispatch the power
plants at their full capacity for a minimum number of hours each year. There can
be no assurance, however, that the Joint Ventures will not experience difficulty
in enforcing take or pay contract obligations or such dispatch contract
obligations if electric power in an area proves not to be needed by the affected
power purchaser and dispatcher.

         In 1997, the growth rate in demand for power fell and the construction
of additional electrical generation capacity resulted in over supply in certain
areas. The electric power demand in Henan Province, Anhui Province and Xishan
City has been less than expected and the power purchasers for Jiaozuo Aluminum
Power, Wuhu Grassy Lake, Hefei Prosperity Lake and Wuxi Tin Hill have failed to
purchase the minimum amount of electricity under their respective power purchase
contracts. Accordingly, those power purchasers are required to compensate the
Joint Ventures for any shortfall. The power purchasers have attempted to
negotiate the payment of the shortfall or have disagreed over the generation
cost to be used for the calculation of the minimum take compensation. The Joint
Ventures are in negotiation with the power purchasers. The total minimum take
compensation for 1997 for the four power plants, after adjustment for the
Chinese partners' interests in the Joint Ventures, was approximately $4.5
million of which $2.8 million was outstanding as of January 31, 1998. The
Company has recorded a provision of $0.7 million (net of the Chinese partners'
interests) to reduce the receivables accrued for the balance of the minimum take
compensation as of November 30, 1997. The Company is vigorously pursuing its
rights under the contracts and believes the final resolution of these issues
will not materially affect the Company's financial position or results of
operations.

         The operation of an electric power generation plant may be adversely
affected by many factors such as the breakdown or failure of equipment or
processes, performance below expected levels of output or efficiency, labor
disputes, operational errors, natural disasters, and the need to comply with the
directions of the relevant government authorities, the dispatcher and power
purchaser of a power plant. In addition, such operation may be hampered by
insufficient or poor quality fuel caused by either inadequate supply or
transportation or arrangements therefor.

         In all of its projects, the Company and its Joint Ventures are relying
on the reliability and creditworthiness of PRC entities such as its partners,
contractors, customers, suppliers, operators, guarantors, lenders and others who
are parties to agreements with the Company or its Joint Ventures. While the
Company believes that these counterparties have the ability to perform and will
perform their obligations, the reliability and creditworthiness of PRC entities
are difficult to ascertain. In most cases, the Company, in assessing the
reliability and credit standing of counterparties, is relying on financial or
other information provided to the Company or its Joint Ventures by such parties
or others, or from information and sources publicly available in the PRC. The
Company can offer no assurance that this information is accurate or that these
counterparties will meet their contractual obligations. The failure of any one
of these counterparties to fulfill its obligations to a Joint Venture could have
a substantial negative impact on such Joint Venture's operations.

         In a number of cases, the Company's partner in a Joint Venture controls
or is affiliated with the power purchaser, contractor, operator and/or fuel
supplier of the project. It is possible, in these cases, that such arrangements
may result in one or more of these parties having a conflict of interest in a
project, which could have an adverse effect on the Joint Ventures' operations.

         Pursuant to the Operation and Offtake Contracts between Wuhu Grassy
Lake and Anhui Power and between Hefei Prosperity Lake and Anhui Power, Anhui
Power is the power purchaser as well as the operator of the power plants. Anhui
Power is responsible for satisfying all operating costs and is entitled to
deduct the approved generation costs from the electricity fees to the joint
ventures. In 1997, the relevant pricing bureau approved only the tariffs but not
the generation costs assumed for purposes of setting the tariffs. The Joint
Ventures and Anhui Power have disagreed over the determinations of the
generation costs. As of November 30, 1997, the aggregate amount of the
generation costs in dispute after adjustment for the Chinese partners' interests
in the Joint Ventures was approximately $0.5 million. The Company is vigorously
pursuing its rights under the contracts and believes the final resolution of
these issues will not materially affect the Company's financial position or
results of operations.

         The Company receives cash from the Joint Ventures in the form of equity
distributions and payments of principal and interest on shareholder loans made
by the Company or by its wholly owned subsidiaries to the Joint Ventures. In a
number of cases, the Company has, or anticipates having, priority in the payment
of dividends over the Chinese partners to the Joint Venture. The Company's
shareholder loans rank as general obligations of the Joint Ventures, except in
some instances in which third party financing has been secured or will be
secured for the Joint Venture. Under these circumstances the shareholder loans
generally are, or will be, subordinated to such third party debt.

         As of January 30, 1998, the amount of approximately $0.1 million
representing the recoupment of the Company's investment in Yangchun Sun Spring
was outstanding.

         The Company's revenue growth will depend in large part on the Company's
ability to bring the Joint Ventures' power plants currently under construction
into commercial operation.

         On January 26, 1998, Standard & Poor's announced that it had placed its
BB- rating of the 2006 Notes on CreditWatch with negative implications. Standard
& Poor's noted a number of factors contributing to this action, including
decline in growth rates in demand for power and construction of new capacity
resulting in oversupply in some areas, failure of purchasers of power from the
Company's Joint Ventures to purchase the minimum offtake of electricity they
were contractually required to purchase, uncertainty concerning the performance
by the power purchasers of their obligations to compensate the Company's Joint
Ventures for their failure to purchase such minimum offtakes, receipt of
dividends from the Company's joint ventures in 1997 that were less than the
amounts expected, erosion of distributable profits of the Company's joint
ventures due to higher than expected generating costs incurred by third party
operators, higher than expected corporate overhead expenses in 1997 resulting
from non-recurring charges and higher than expected expenditures on technical
staffing at construction sites and development costs.

Results of Operations

         The discussion set forth below relates to the results of operations and
financial condition of the Company for, and as of the end of, the years ended
November 30, 1997, 1996 and 1995 and the following should be read in conjunction
with the Consolidated Financial Statements of the Company included elsewhere in
this Annual Report on Form 10-K.

         Years ended November 30, 1997 and 1996

         Revenues and Costs of Sales. Total revenues increased from $9.2 million
to $18.7 million from 1996 to 1997. Costs of sales, which include fuel,
operations and maintenance expenses, depreciation and amortization, increased
from $5.4 million to $13.5 million from 1996 to 1997. The increases in revenues
and costs of sales were due primarily to the Wuxi Tin Hill facility and Unit 2
of the Cili Misty Mountain facility having been in operation for all of 1997,
Unit 3 of the Cili Misty Mountain facility having been in operation for almost
all of 1997 and the commencement of operation in 1997 of Unit 1 of the Jiaozuo
Aluminum Power facility and the simple cycle unit of the Hefei Prosperity Lake
facility.

         Development, Selling, General and Administrative Expenses. Development,
selling, general and administrative expenses decreased from $3.5 million in 1996
to $3.0 million in 1997. The decrease was primarily due to a reduction in the
costs associated with development activities as a result of AES funding the
development costs following the financial closing of Yangcheng Sun City, and a
corresponding increase in costs associated with the operational management of
the Company's existing projects in China.

         Interest Income. Interest income increased from $6.4 million to $13.1
million from 1996 to 1997. The increase was primarily due to the proceeds
received from the public offering of the Company's 2006 Notes in December 1996
being available for investment in marketable securities in 1997, interest income
earned on a note receivable with respect to Jiaozuo Aluminum Power and interest
income earned on shareholder loans provided to Wuhu Grassy Lake and Chengdu
Lotus City.

         Interest Expense. Interest expense increased from $1.1 million to $7.4
million from 1996 to 1997. The increase was primarily due to (i) the interest
expense and amortization of costs associated with the issuance of the 2006 Notes
in December of 1996, offset in part by capitalization of interest incurred
during the development and construction of the Company's projects, and (ii) an
increase in interest on two minority shareholder loans to Wuxi Tin Hill,
interest on a minority shareholder loan to Jiaozuo Aluminum Power and interest
on a bank loan to Hefei Prosperity Lake. The Company capitalizes interest
accrued during the development and construction of the facilities of its Joint
Ventures. Capitalized interest was approximately $17.9 million for 1997 and $3.2
million for 1996.

         Amalgamation Cost. The Company incurred amalgamation costs of $0.4
million and $1.4 million for 1997 and 1996, respectively, related to expenses
incurred in connection with the Amalgamation.

         Years ended November 30, 1996 and 1995

         Revenues and Costs of Sales. Total revenues increased from $1.4 million
to $9.2 million from 1995 to 1996. Costs of sales, which include fuel,
operations and maintenance expenses, depreciation and amortization, increased
from $0.6 million to $5.4 million from 1995 to 1996. The increases in revenues
and costs of sales were due primarily to the commencement of operations of the
Wuxi Tin Hill project. The increase in revenues generated in 1996 from the
operations of the Wuxi Tin Hill project was offset, in part, by a decrease in
revenues generated pursuant to the payment of construction delay fees paid by
the contractor of the Cili Misty Mountain project. The Company was entitled to
construction delay payments from the contractor through March 11, 1996 to
compensate for the lost generation.

         Development, Selling, General and Administrative Expenses. Development,
selling, general and administrative expenses decreased from $9.3 million in 1995
to $3.5 million in 1996. The decrease was primarily due to the capitalization of
a higher proportion of development costs associated with projects which have
achieved financial closing or which have achieved certain project-related
milestones.

         Interest Income. Interest income in 1996 and 1995 was primarily
generated by income from marketable securities purchased with the proceeds
received from the Company's 1994 initial public offering. Interest income in
1996 decreased $4.1 million from $10.5 million to $6.4 million compared with
1995. The decrease in interest income for 1996 was primarily due to a lower
average amount of funds available for marketable securities investment due to
capital investments in Joint Ventures, as well as the repurchase of a portion of
the outstanding shares of the Company's Class A Common Stock.

         Interest Expense. In 1996, interest expense of $1.1 million related
primarily to the interest on two minority shareholder loans to Wuxi-AES-CAREC.

         Amalgamation Cost. In 1996, amalgamation cost of $1.4 million related
to expenses incurred in pursuing the proposed Amalgamation with AES announced in
November 1996.

Liquidity and Capital Resources

         The Company's business has required substantial investment associated
with the development, acquisition and construction of electric power plants and
related facilities through its joint ventures. Since commencing business, the
Company has entered into commitments to invest a total of approximately $357.8
million in the form of equity contributions and loans to its joint ventures
including approximately $17.7 million of interest during construction and
provision for potential cost overruns, of which $234.2 million has been invested
as of January 31, 1998. As of January 31, 1998, the Company had approximately
$96.9 million available in cash and cash equivalents and marketable securities
and expects to generate cash flow from operations over the course of the
anticipated investment period to fund any such commitments. In the event of a
shortfall between the amount of the Company's commitments and the foregoing
sources of funds, the shortfall may be made up by loans or equity contributions
from AES, but AES is not obligated to provide any such loan or equity
contribution for such purpose and there are no assurances that AES would decide
to provide any such loan or equity contribution.

         As a result of the Amalgamation, the Company is subject to the AES Debt
Covenants, including those contained in the documents governing AES's 10-1/4%
Subordinated Notes due 2006, 8-3/8% Senior Subordinated Notes due 2007 and $425
million credit facility due 1999. Due to recent amendments to the terms of the
AES Debt Covenants, certain material restrictions previously applicable to AES
Chigen, including a prohibition on direct investments in future projects, are no
longer applicable. However, no assurance can be given that AES Chigen will
invest in any additional future projects.

         Both the AES Debt Covenants and the covenants contained in the
Indenture for AES Chigen's 2006 Notes require the repayment or purchase of
indebtedness under specified circumstances involving asset dispositions. Insofar
as separate repayments are required at the AES and the Company levels with
respect to a single asset sale, this covenant may tend to cause the Company not
to make an asset sale under circumstances where it otherwise would.

         The Company is permitted, pursuant to the terms of the Indenture under
which its 2006 Notes were issued, to pay dividends to AES, provided that the
Company satisfies certain conditions.

         One of the results of the Amalgamation has been the termination of the
Non-Competition and Non-Disclosure Agreement, dated as of December 29, 1993 and
amended and restated as of February 1, 1994, between the Company and AES, which,
among other things, prohibited the Company from developing, constructing,
owning, managing and operating electric power generation projects in any part of
Asia other than China. The Company may consider investing through its
subsidiaries in power projects outside of China.

         Years ended November 30, 1997 and 1996

         Cash from Operations. Net cash used in operating activities totaled
$8.1 million for 1997 as compared to $1.5 million for 1996. The increase in 1997
was primarily due to a higher proportion of net income being derived from
undistributed earnings from affiliates, cash payments for interest on the 2006
Notes and an increase in the components of working capital. These factors offset
an increase in net income before depreciation due to the commencement of
operation of Jiaozuo Aluminum Power and Hefei Prosperity Lake in 1997.

         Cash from Investing Activities. Net cash used in investing activities
totaled $173.0 million during 1997 as compared to $66.6 million during 1996. The
1997 amount primarily reflected the purchase of property, plant and equipment
and other project related investments of $118.5 million, the purchase of
short-term investments (net of any proceeds from the maturity or sale of
short-term investments) of $27.2 million and the deposit (net of withdrawal) of
$27.3 million in debt service reserves.

         Cash from Financing Activities. Net cash provided by financing
activities aggregated $183.5 million during 1997 as compared to $1.4 million
used in financing activities during 1996. During 1997, the Company received
proceeds, net of underwriting discounts and commissions and offering costs, of
$174.1 million from the issuance of the 2006 Notes, proceeds of $8.8 million
from bank loans available to subsidiaries and $3.4 million of loans and
contributions made to subsidiaries by minority shareholders, which were
partially offset by repayment of bank loans of $1.7 million and repayment of
$1.4 million of loans from minority shareholders.

         Years ended November 30, 1996 and 1995

         Cash from Operations. Net cash used in operating activities totaled
$1.5 million for 1996 as compared to $0.8 million used in operating activities
for 1995. The increase in 1996 resulted primarily from an increase in net income
due to the commencement of operations of Wuxi Tin Hill offset by an adjustment
of the provision for project development costs and a net reduction in the
components of working capital.

         Cash from Investing Activities. Net cash used in investing activities
totaled $66.6 million during 1996 as compared to $22.8 million provided by
investing activities during 1995. The 1996 amount primarily reflected the
purchase of property, plant and equipment and other project related investments
of $101.3 million which was partially offset by cash of $34.7 million provided
by the maturity of short-term investments (net of purchases). The 1995 amount
primarily reflected cash provided by the maturity of short-term investments (net
of purchases) of $64.5 million. This amount was partially offset by the cash
used in purchases of property, plant and equipment and other project related
investments of $41.7 million.

         Cash from Financing Activities. Net cash used in financing activities
aggregated $1.4 million during 1996 as compared to $8.2 million provided by
financing activities during 1995. During 1996, the Company repurchased shares of
its Class A Common Stock for $11.4 million which was partially offset by $8.5
million of loans and contributions made to subsidiaries by minority shareholders
and net proceeds from notes payable of $1.9 million. The 1995 amount reflected
cash of $13.5 million provided to the Company's subsidiaries by minority
shareholders and $1.0 million from notes payable, less $6.4 million in cash used
for the repurchase of shares of Class A Common Stock.

Inflation

         Over the last few years, the PRC economy has registered high growth
rates and high rates of inflation. In response, the PRC Government has taken
measures to curb inflation. These measures, along with other factors, have
reduced inflation in the PRC in 1996 and 1997. However, there can be no
assurance that these austerity measures alone will succeed in controlling
inflation, nor that they will not result in severe dislocations in the PRC
economy in general.

         The Company will attempt, whenever possible, to take measures to hedge
its projects against the effects of inflation. Generally, this will be done by
structuring the tariff formulas in its power purchase contracts to pass through
increased costs resulting from inflation.

Foreign  Currency Exchange

         The Company anticipates that its Joint Ventures will receive nearly all
of their revenues in Renminbi. A significant portion of this revenue will need
to be converted to other currencies, primarily US dollars, and remitted outside
of the PRC to meet foreign currency obligations to equipment suppliers, to repay
borrowings from foreign third party lenders and to make payments to the Company
in respect of equity distributions and shareholder loans. However, the Renminbi
is not freely convertible into US dollars. Although the receipt of approvals to
convert Renminbi into foreign currencies and to remit foreign currencies outside
of the PRC is routine for approved foreign investment enterprises such as the
Joint Ventures, there can be no assurance that the PRC Government will continue
to provide such approvals. Moreover, while in the last three years foreign
currency has been readily available, no assurance can be given that the Joint
Ventures will in the future be able to convert sufficient amounts of Renminbi to
foreign currency in China's foreign exchange markets to meet their foreign
currency obligations, or that the Joint Ventures will freely be able to remit
foreign currency abroad.

         Prior to 1994, the Renminbi had experienced a significant net
devaluation against most major currencies, and during certain periods,
significant volatility in the market-based exchange rate. Since the beginning of
1994, the Renminbi to US dollar exchange rate has largely stabilized. While the
Joint Ventures will receive nearly all of their revenues in Renminbi, the
Company expects its Joint Ventures to have significant US dollar obligations
with respect to distributions to the Company. Under the terms of all of their
power purchase contracts, the Company's Joint Ventures are entitled to obtain
tariff adjustments for future Renminbi devaluation. While the Company expects
that its Joint Ventures will be able to pass on increased costs resulting from a
devaluation of the Renminbi by means of such tariff adjustments, no assurance
can be given that the Joint Ventures will be able to obtain approval for a
sufficient tariff adjustment.

Year 2000

         The Company has developed plans to address issues related to the impact
on its computer systems of the year 2000. Financial and operational systems have
been assessed and plans have been developed to address systems modification
requirements. The financial impact of making the required systems changes is not
expected to be material to the Company's consolidated financial position,
results of operations or cash flows.

Special Note Regarding Forward-Looking Statements

         Certain statements in this Discussion and Analysis of Financial
Condition and Results of Operations and under the caption "Business" and
elsewhere in this Annual Report on Form 10-K constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 ("Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the following: political and economic considerations,
restrictions on foreign currency convertibility and remittance abroad, exchange
rate fluctuations and developing legal system, in each case pertaining to the
PRC; holding company structure of the Company; regulation and restrictions;
tariffs; governmental approval processes; environmental matters; construction,
operating and fuel risks; load growth, dispatch and transmission constraints;
reliance on and creditworthiness of PRC counterparties; conflict of interest of
contracting parties; control by and reliance on AES; limitations resulting from
the Amalgamation and adherence to the AES principles; and other factors
referenced in this Annual Report on Form 10-K.


Item 8.  Financial Statements and Supplementary Data.

         The following financial statements of the Company and its consolidated
subsidiaries are attached to this Annual Report on Form 10-K following the
signature page:

         -       Report of Independent Auditors.

         -       Consolidated  Statements of Operations for the fiscal years
                 ended November 30, 1997, 1996 and 1995.

         -       Consolidated Balance Sheets as of November 30, 1997 and 1996.

         -       Consolidated Statements of Shareholders' Equity for the
                 fiscal years ended November 30, 1997, 1996 and 1995.

         -       Consolidated  Statements of Cash Flows for the fiscal years
                 ended November 30, 1997, 1996 and 1995.

         -       Notes to Consolidated Financial Statements for the
                 fiscal years ended November 30, 1997, 1996 and 1995.


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         Not applicable.


<PAGE>


                                    PART III

Item 10.  Directors and Executive Officers of the Company.

         (a) Directors of the Company

         The current directors of the Company are listed below:

 Name                                Age     Position
 Roger W. Sant*...................   66      Chairman of the Board and Director
 Dennis W. Bakke*.................   52      Vice Chairman and Director
 Robert F. Hemphill, Jr*..........   54      Vice Chairman and Director

         Roger W. Sant has been the Chairman of the Board and a Director of the
Company since December 1993. In 1981, Mr. Sant and Dennis Bakke co-founded AES.
Mr. Sant has been Chairman of the Board and a Director of AES since its
inception, and he held the additional office of Chief Executive Officer through
1993. He is currently Chairman of the Board of Directors of The World Wildlife
Fund U.S. and serves on the Boards of Directors of Marriott International Inc.,
The World Resources Institute, and The World Wide Fund for Nature and serves on
the National Council for The Environmental Defense Fund. He was Assistant
Administrator for Energy Conservation and the Environment of the Federal Energy
Administration ("FEA") from 1974 to 1976 and the Director of the Energy
Productivity Center, an energy research organization affiliated with The Mellon
Institute at Carnegie Mellon University, from 1977 to 1981.

         Dennis W. Bakke has been Vice Chairman and a Director of the Company
since December 1993. Mr. Bakke co-founded AES with Mr. Sant in 1981 and has been
a Director of AES since 1986. He was named President and Chief Executive Officer
of AES in January 1994, and from 1987 through 1993, Mr. Bakke held the office of
President and Chief Operating Officer of AES. From 1982 to 1986, he served as
Executive Vice President of AES and from 1985 to 1986 he also served as
Treasurer of AES. Mr. Bakke served with Mr. Sant as Deputy Assistant
Administrator of FEA from 1974 to 1976 and as Deputy Director of the Energy
Productivity Center from 1978 to 1981. He is a trustee of Geneva College.

         Robert F. Hemphill has been Vice Chairman of the Company since February
1995 and has been a Director of the Company since December 1993. From December
1993 to February 1, 1995, Mr. Hemphill was President and Chief Executive Officer
of the Company. Mr. Hemphill was named a Director of AES in June 1996. From 1987
to such appointment, Mr. Hemphill served as Executive Vice President of AES.
From 1984 to 1987, he was Senior Vice President of AES and from 1982 to 1984 he
served as Vice President for project development of AES. He also has served as
President and Chief Executive Officer of AES Transpower Pvt. Ltd.
("Transpower"), a subsidiary of AES, since 1989. Prior to joining AES, he was
the Deputy Manager of Power of the Tennessee Valley Authority, the largest
electric utility in the United States. He also served with the U.S. Department
of Energy as Deputy Assistant Secretary for Planning and Evaluation, and with
the FEA where he assisted in drafting several major energy statutes, including
the National Energy Act. He serves on the Board of Directors of the Friends of
the U.S. National Arboretum and is a member of the Arlington County
Transportation Commission.

         (b) Chief Executive Officer of the Company

         Paul T. Hanrahan, 40 years old, has been President and Chief Executive
Officer of the Company since February 1995. From December 1993 until such
appointment, Mr. Hanrahan was Executive Vice President and Chief Operating
Officer of the Company. From December 1993 until April 1994, he was Secretary of
the Company. He has been a Vice President of AES since December 1993. Prior to
December 1993, he was the general manager of Transpower, leading development
efforts in China, India, the Philippines and Eastern Europe. He has also played
a leading role in development of several AES projects, including the Belfast
West and Kilroot projects in Northern Ireland, the AES Barbers Point project in
Hawaii and the AES Thames project in Connecticut. Mr. Hanrahan graduated with a
mechanical engineering degree from the U.S. Naval Academy and with a Master of
Business Administration from the Harvard Business School.


Item 11.  Executive Compensation.

         Not Applicable.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

         Not Applicable.

Item 13.  Certain Relationships and Related Transactions.

         Not Applicable.


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

         (a) Financial Statements, Financial Statement Schedules and Exhibits.

             (1)   The following financial statements of the Company
                   and its consolidated subsidiaries are attached to
                   this Annual Report on Form 10-K following the
                   signature page:

                   -       Report of Independent Auditors.

                   -       Consolidated  Statements of Operations
                           for the fiscal years ended November 30, 
                           1997, 1996 and 1995.

                   -       Consolidated Balance Sheets as of Novembe
                           30, 1997 and 1996.

                   -       Consolidated Statements of Shareholders'
                           Equity for the fiscal years ended November
                           30, 1997, 1996 and 1995.

                   -       Consolidated Statements of Cash Flows for
                           the fiscal years ended November 30, 1997,
                           1996 and 1995.

                   -       Notes to Consolidated Financial Statements
                           for the fiscal years ended November 30,
                           1997, 1996 and 1995.

             (2) Financial Statement Schedules

                   -       Schedule I - Condensed Financial Information.

                           Schedules other than that listed above are
                           omitted as the information is either not
                           applicable, not required or has been
                           furnished in the financial statements or
                           notes thereto included in this Annual Report
                           on Form 10-K.

             (3) Exhibits

              3.1    Memorandum of Association of the Company is incorporated
                     herein by reference to Exhibit 3.1 to the Registration
                     Statement on Form S-1 (Registration No. 33-73668).

              3.2    Bye-laws of the Company, as revised effective May 8, 1997.

              4.1    Indenture dated as of December 19, 1996 between the Company
                     and Bankers Trust Company, as Trustee is incorporated
                     herein by reference to Exhibit 4.1 to the Annual Report on
                     Form 10-K of the Company for the fiscal year ended November
                     30, 1996.

              4.2    Form of 2006 Note is incorporated herein by reference to
                     Exhibit 4.2 to the Annual Report on Form 10-K of the
                     Company for the fiscal year ended November 30, 1996.

              4.3    Security Agreement, dated as of December 19, 1996, among
                     the Company, Bankers Trust Company, as Trustee, and Bankers
                     Trust Company, as Collateral Agent is incorporated herein
                     by reference to Exhibit 4.3 to the Annual Report on Form
                     10-K of the Company for the fiscal year ended November 30,
                     1996.

              10.1   Project Services Agreement, dated as of December 29, 1993,
                     between the Company and AES is incorporated herein by
                     reference to Exhibit 10.2 to the Registration Statement on
                     Form S-1 (Registration No. 33-73668).

              10.2*  Joint Venture Contract, dated August 1996, by and among
                     North China Electric Power Group Corporation, Jiangsu
                     Province Investment Corporation, Shanxi Energy Enterprise
                     (Group) Company, Jiangsu Provincial Power Company ("Jiangsu
                     Power") and the Company to establish Yangcheng
                     International Power Generating Company Limited ("Yangcheng
                     Power") is incorporated herein by reference to Exhibit 10.5
                     to the Company's Quarterly Report on Form 10-Q for the
                     quarter ended August 31, 1997.

              10.3   Assignment and Assumption dated as of December 29, 1993
                     between AES and certain subsidiaries of AES and the Company
                     is incorporated herein by reference to Exhibit 10.11 to the
                     Registration Statement on Form S-1 (Registration No.
                     33-73668).

              10.4   AES China Generating Co. Ltd. Incentive Stock Option Plan,
                     as amended March 27, 1995, is incorporated herein by
                     reference to Exhibit 10.12 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended February 28,
                     1995.

              10.5   Cooperative Joint Venture Contract for the Establishment of
                     Sichuan Fuling Aixi Power Company Limited dated February 9,
                     1995 between Sichuan Fuling Banxi Colliery and AES Tian Fu
                     Power Company Limited is incorporated herein by reference
                     to Exhibit 10.17 to the Annual Report on Form 10-K of the
                     Company for the fiscal year ended November 30, 1994.

              10.6   Joint Venture Contract to Establish Xiangci-AES Hydro Power
                     Company Ltd. dated July 21, 1994 between China Hunan Cili
                     Power Company and the Company is incorporated herein by
                     reference to Exhibit 10.19 to the Annual Report on Form
                     10-K of the Company for the fiscal year ended November 30,
                     1994.

              10.7   Power Purchase Contract dated as of July 21, 1994 between
                     China Hunan Cili Electric Power Company and Xiangci-AES
                     Hydro Power Company Ltd. (effectiveness certified on
                     September 9, 1994) is incorporated herein by reference to
                     Exhibit 10.20 to the Annual Report on Form 10-K of the
                     Company for the fiscal year ended November 30, 1994.

              10.8   Cooperative Joint Venture Contract for the establishment of
                     Yangchun Fuyang Diesel Engine Power Company Ltd. dated
                     December 4, 1994 among Yangchun Municipal Power Supply
                     Company, Shenzhen Futian Gas Turbine Power Company Ltd. and
                     ABC Yangchun Company Limited is incorporated herein by
                     reference to Exhibit 10.22 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended February 28,
                     1995.

              10.9   Chengbao (Responsibility) Management Contract for Yangchun
                     Fuyang Diesel Engine Power Company Ltd. dated December 31,
                     1994 between Yangchun Fuyang Diesel Engine Power Company
                     Ltd. and Yangchun Municipal Power Supply Company and
                     Supplemental Contract dated March 6, 1995 are incorporated
                     herein by reference to Exhibit 10.23 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended
                     February 28, 1995.

              10.10  Power Purchase Contract dated May 24, 1995 between Wuxi
                     County Sandianban and Wuxi-AES-CAREC Gas Turbine Power
                     Company Limited is incorporated herein by reference to
                     Exhibit 10.24 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended May 31, 1995.

              10.11  Cooperative Joint Venture Contract for the establishment of
                     Wuxi-AES-Zhonghang Power Company Ltd. dated May 4, 1995
                     among Wuxi Power Industry Company, China National
                     Aero-engine Corporation and the Company is incorporated
                     herein by reference to Exhibit 10.25 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended May 31,
                     1995.

              10.12  Cooperative Joint Venture Contract for the establishment of
                     Wuxi-AES-CAREC Gas Turbine Power Company Ltd. dated May 4,
                     1995 among Wuxi Power Industry Company, China National
                     Aero-engine Corporation and the Company is incorporated
                     herein by reference to Exhibit 10.26 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended May 31,
                     1995.

              10.13* Power Purchase Contract dated December 11, 1995 among Power
                     Supply Company of the Fuling Prefecture of Sichuan
                     Province, Sichuan Fuling Grid Management Department and
                     Sichuan Fuling Aixi Power Company Limited is incorporated
                     herein by reference to Exhibit 10.21 to the Annual Report
                     on Form 10-K of the Company for the fiscal year ended
                     November 30, 1995.

              10.14  Addendum Number One of Cooperative Joint Venture Contract
                     to Establish Sichuan Fuling Aixi Power Company Limited
                     dated July 11, 1995 between Sichuan Fuling Banxi Colliery
                     and AES Tian Fu Power Company Limited is incorporated
                     herein by reference to Exhibit 10.22 to the Annual Report
                     on Form 10-K of the Company for the fiscal year ended
                     November 30, 1995.

              10.15  Addendum Number Two of Cooperative Joint Venture Contract
                     to Establish Sichuan Fuling Aixi Power Company Limited
                     dated August 29, 1995 between Sichuan Fuling Banxi Colliery
                     and AES Tian Fu Power Company Limited is incorporated
                     herein by reference to Exhibit 10.23 to the Annual Report
                     on Form 10-K of the Company for the fiscal year ended
                     November 30, 1995.

              10.16* Construction and Term Loan Agreement dated December 21,
                     1995 between AES Tian Fu Power Company (L) Ltd. and Sichuan
                     Fuling Aixi Power Generating Company Limited is
                     incorporated herein by reference to Exhibit 10.24 to the
                     Annual Report on Form 10-K of the Company for the fiscal
                     year ended November 30, 1995.

              10.17* Cooperative Joint Venture Contract to Establish Jiaozuo Wan
                     Fang Power Company Limited dated March 27, 1996 between
                     Jiaozuo Power Partners, L.P. and Jiaozuo Aluminum Mill is
                     incorporated herein by reference to Exhibit 10.26 to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended May 31, 1996.

              10.18* Shareholder Loan Contract dated April 26, 1996 between
                     Jiaozuo Wan Fang Power Company Limited and Jiaozuo Aluminum
                     Mill is incorporated herein by reference to Exhibit 10.27
                     to the Company's Quarterly Report on Form 10-Q for the
                     quarter ended May 31, 1996.

              10.19* Shareholder Loan Contract dated April 26, 1996 between
                     Jiaozuo Wan Fang Power Company Limited and AES China Power
                     Holding Co. (L), Ltd. is incorporated herein by reference
                     to Exhibit 10.28 to Amendment No. 1 on Form 10-Q/A to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended May 31, 1996.

              10.20* Power Purchase and Sale Contract dated April 26, 1996
                     between Jiaozuo Wan Fang Power Company Limited and Jiaozuo
                     Aluminum Mill is incorporated herein by reference to
                     Exhibit 10.29 to Amendment No. 1 on Form 10-Q/A to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended May 31, 1996.

              10.21* Power Purchase and Sale Contract dated April 25, 1996
                     between Jiaozuo Wan Fang Power Company Limited and Henan
                     Electric Power Corporation is incorporated herein by
                     reference to Exhibit 10.30 to Amendment No. 1 on Form
                     10-Q/A to the Company's Quarterly Report on Form 10-Q for
                     the quarter ended May 31, 1996.

              10.22  Assignment and Assumption Contract dated April 26, 1996
                     between Jiaozuo Wan Fang Power Company Limited and Jiaozuo
                     Aluminum Mill is incorporated herein by reference to
                     Exhibit 10.31 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended May 31, 1996.

              10.23  Equity Joint Venture Contract dated February 12, 1996 among
                     China Power International Holdings Limited, AES China
                     Holding Company (L) Ltd., Anhui Liyuan Electric Power
                     Development Company and Wuhu Energy Development Company is
                     incorporated herein by reference to Exhibit 10.32 to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended August 31, 1996.

              10.24* Operation & Offtake Contract dated July 5, 1996 between
                     Wuhu Shaoda Electric Power Development Company Limited and
                     Anhui Provincial Electric Power Corporation is incorporated
                     herein by reference to Exhibit 10.33 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended August
                     31, 1996.

              10.25  Undertaking and Subordination Deed dated June 26, 1996
                     among AES China Holding Company (L) Limited, Anhui Liyuan
                     Electric Power Development Company Limited, China Power
                     International Holding Limited, Wuhu Energy Development
                     Company, Wuhu Shaoda Electric Power Development Company
                     Limited and CCIC Finance Limited is incorporated herein by
                     reference to Exhibit 10.34 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended August 31, 1996.

              10.26  Junior Subordination Agreement among China Power
                     International Holding Limited, AES China Holding Company
                     (L) Limited, Anhui Liyuan Electric Power Development
                     Company Limited, Wuhu Energy Development Company and Wuhu
                     Shaoda Electric Power Development Company Limited is
                     incorporated herein by reference to Exhibit 10.35 to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended August 31, 1996.

              10.27  Subordinated Insurance Assignment between Wuhu Shaoda
                     Electric Power Development Company Limited and AES China
                     Holdings Company (L) Limited is incorporated herein by
                     reference to Exhibit 10.36 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended August 31, 1996.

              10.28  Subordinated Borrower Charge Over Accounts between Wuhu
                     Shaoda Electric Power Development Company Limited and AES
                     China Holdings Company (L) Limited is incorporated herein
                     by reference to Exhibit 10.37 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended August 31, 1996.

              10.29  Subordinated Project Contracts Assignment between Wuhu
                     Shaoda Electric Power Development Company Limited and AES
                     China Holdings Company (L) Limited is incorporated herein
                     by reference to Exhibit 10.38 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended August 31, 1996.

              10.30  Subordinated Mortgage Contract between Wuhu Shaoda Electric
                     Power Development Company Limited and AES China Holdings
                     Company (L) Limited is incorporated herein by reference to
                     Exhibit 10.39 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended August 31, 1996.

              10.31* Cooperative Joint Venture Contract dated March 18, 1996 by
                     and among Anhui Liyuan Electric Power Development Company
                     Ltd., Hefei Municipal Construction and Investment Company
                     and AES Anhui Power Company Ltd. establishing Anhui
                     Liyuan-AES Power Company Ltd. is incorporated herein by
                     reference to Exhibit 10.40 to the Company's Annual Report
                     on Form 10-K for the fiscal year ended November 30, 1996.

              10.32* AES Loan Contract by and between Anhui Liyuan-AES Power
                     Company Limited and AES Chigen Company (L), Ltd. is
                     incorporated herein by reference to Exhibit 10.41 to the
                     Company's Annual Report on Form 10-K for the fiscal year
                     ended November 30, 1996.

              10.33* Cooperative Joint Venture Contract dated March 18, 1996 by
                     and among Anhui Liyuan Electric Power Development Company
                     Ltd., Hefei Municipal Construction and Investment Company
                     and AES Anhui Power Company Ltd. establishing Hefei Zhongli
                     Energy Company Ltd. is incorporated herein by reference to
                     Exhibit 10.42 to the Company's Annual Report on Form 10-K
                     for the fiscal year ended November 30, 1996.

              10.34  AES Loan Contract by and between Hefei Zhongli Energy
                     Company Limited and AES Chigen Company (L), Ltd. is
                     incorporated herein by reference to Exhibit 10.43 to the
                     Company's Annual Report on Form 10-K for the fiscal year
                     ended November 30, 1996.

              10.35  Operation and Offtake Contract between Anhui Provincial
                     Electric Power Corporation, Anhui Liyuan-AES Power Company
                     Ltd. and Hefei Zhongli Energy Company Ltd. is incorporated
                     herein by reference to Exhibit 10.44 to the Company's
                     Annual Report on Form 10-K for the fiscal year ended
                     November 30, 1996.

              10.36* Cooperative Joint Venture Contract by and among Chengdu
                     Huaxi Electric Power (Group) Shareholding Company Ltd.,
                     China National Aero-engine Corporation and the Company is
                     incorporated herein by reference to Exhibit 10.45 to the
                     Company's Annual Report on Form 10-K for the fiscal year
                     ended November 30, 1996.

              10.37* Support Contract dated as of August 12, 1996 between AES
                     Tian Fu Power Company (L) Ltd. and Chengdu AES KAIHUA Gas
                     Turbine Power Co., Ltd. is incorporated herein by reference
                     to Exhibit 10.46 to the Company's Annual Report on Form
                     10-K for the fiscal year ended November 30, 1996.

              10.38  Power Purchase Contract between Chengdu Huaxi Electric
                     Power (Group) Shareholding Company Ltd. and Chengdu AES
                     KAIHUA Gas Turbine Power Co., Ltd. is incorporated herein
                     by reference to Exhibit 10.47 to the Company's Annual
                     Report on Form 10-K for the fiscal year ended November 30,
                     1996.

              10.39* Agreement of Amendment to the Cooperative Joint Venture
                     Contract and Articles of Association of Chengdu AES KAIHUA
                     Gas Turbine Power Co., Ltd. is incorporated herein by
                     reference to Exhibit 10.48 to the Company's Annual Report
                     on Form 10-K for the fiscal year ended November 30, 1996.

              10.40* On-lending Agreement on Using US Export Credit by Yangcheng
                     International Power Company Ltd. by and between Yangcheng
                     Power, as the borrower, and Shanxi Branch of China
                     Construction Bank, as the lender is incorporated herein by
                     reference to Exhibit 10.49 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended August 31, 1997.

              10.41* On-lending Agreement on Using German Export Credit by
                     Yangcheng International Power Company Ltd. (the "German
                     Export Loan Contract") by and between Yangcheng Power, as
                     the borrower, and Shanxi Branch of China Construction Bank,
                     as the lender is incorporated herein by reference to
                     Exhibit 10.50 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended August 31, 1997.

              10.42* On-Lending Agreement by and between Shanxi Branch of the
                     China Construction Bank, as the lender, and Yangcheng
                     Power, as the borrower is incorporated herein by reference
                     to Exhibit 10.51 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended August 31, 1997.

              10.43* RMB Fund Loan Contract of State Development Bank by and
                     between the State Development Bank, as the lender, and
                     Yangcheng Power, as the borrower is incorporated herein by
                     reference to Exhibit 10.52 to the Company's Quarterly
                     Report on Form 10-Q for the quarter ended August 31, 1997.

              10.44* Power Purchase Contract between Yangcheng Power and Jiangsu
                     Power is incorporated herein by reference to Exhibit 10.53
                     to the Company's Quarterly Report on Form 10-Q for the
                     quarter ended August 31, 1997.

              25.1   Power of Attorney.

              27.1   Financial Data Schedule.

              99.1   Statement Re: Computation of Fixed Charge Coverage Ratio

              99.2   "Business-Narrative Description of Business" on pages 2-19
                     of the Registrant's Annual Report on Form 10-K for the
                     fiscal year ended November 30, 1996, which is incorporated
                     by reference in Item 1 hereof.

--------
* The Company has requested confidential treatment for certain identified
information in this exhibit.

         In lieu of filing certain instruments with respect to long-term debt of
the kind described in Item 601(b)(4) of Regulation S-K, Registrant agrees to
furnish a copy of such instruments to the Securities and Exchange Commission
upon request.

         (b) Reports on Form 8-K.

         No reports on Forms 8-K have been filed during the last quarter of the
Company's fiscal year ended November 30, 1997.



<PAGE>


SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

Date:  February 27, 1998

                                                AES CHINA GENERATING CO. LTD.
                                                           (Company)



                                                By: /s/ Paul T. Hanrahan
                                                   --------------------------
                                                Paul T. Hanrahan
                                                President and
                                                Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated.

Signature                      Title                        Date
----------------------------   --------------------------   -------------------

/s/ Roger W. Sant*
----------------------------   Chairman of the Board and    February 27, 1998
Roger W. Sant                  Director

/s/ Dennis W. Bakke*
----------------------------   Vice Chairman and            February 27, 1998
Dennis W. Bakke                Director


----------------------------   Vice Chairman and
Robert F. Hemphill, Jr.        Director

/s/ Paul T. Hanrahan.*
----------------------------   President and                February 27, 1998
Paul T. Hanrahan               Chief Executive Officer

/s/ Kitty, Fung Kin Yee     
----------------------------   Group Finance Director       February 27, 1998
Kitty, Fung Kin Yee            (Principal Financial and
                                Accounting Officer)

*/s/ Jeffery A. Safford
----------------------------
Jeffery A. Safford
Attorney-in-Fact


<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



TO THE SHAREHOLDER OF
AES CHINA GENERATING CO. LTD.

We have audited the accompanying consolidated balance sheets of AES China
Generating Co. Ltd. and subsidiaries as of November 30, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended November 30, 1997. Our
audits also included the financial statement schedule listed at Item 14(a)(2).
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of AES China Generating Co. Ltd. and
subsidiaries as of November 30, 1997 and 1996, and the results of their
operations and cash flows for each of the three years in the period ended
November 30, 1997 in conformity with accounting principles generally accepted in
the United States of America. Also in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.




DELOITTE TOUCHE TOHMATSU


Hong Kong
February 27, 1998


<PAGE>
                         AES CHINA GENERATING CO. LTD.

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                          For the year ended November 30,
                                          -------------------------------

                                      1997             1996            1995
                                      ----             ----            ----
                                     (in thousands, except per share amounts)

Revenues:
  Electricity sales...............    $18,703        $8,812            $702
  Construction delay fee..........       -              400             680
                                      -------       -------         -------

      Total revenues..............     18,703         9,212           1,382
Operating costs and expenses:
  Costs of sales..................     13,480         5,360             635
  Development, selling, general
    and administrative expenses...      3,020         3,507           9,259
                                      -------       -------         -------

      Total operating costs and
        expenses..................     16,500         8,867           9,894
                                      -------       -------         -------

Operating income / (loss).........      2,203           345          (8,512)
Other income / (expense):
  Interest income.................     13,050         6,360          10,529
  Interest expense................     (7,397)       (1,120)            -
  Equity in earnings of affiliates      1,838           663             206
  Amalgamation cost ..............       (418)       (1,444)            -
                                      -------       -------         -------

Income before income taxes and
 minority interest................      9,276         4,804           2,223
  Income taxes....................       (398)         (387)            -
  Minority interest...............        592          (277)            (85)
                                      -------       -------         -------

Net income........................     $9,470        $4,140          $2,138
                                      -------       -------         -------

Net income per share..............    $789.17       $345.00         $178.17
                                      -------       -------         -------



Weighted average number of shares.         12            12              12
                                      -------       -------         -------






                 See notes to consolidated financial statements.



                                      F-2
<PAGE>
                         AES CHINA GENERATING CO. LTD.

                           CONSOLIDATED BALANCE SHEETS


                                                        As of November 30,
                                                      1997              1996
                                                      ----              ----
                                                          (in thousands)

ASSETS
Current Assets:
  Cash and cash equivalents........................   $58,576           $56,200
  Debt service reserves - held-to-maturity.........    18,225               -
  Investments - held-to-maturity...................    35,324             8,995
  Accounts receivable - The AES Corporation........       363               -
  Accounts receivable from related parties.........    10,271             6,809
  Accounts receivable - trade......................     2,498               -
  Note receivable - current portion................     1,427               -
  Interest receivable..............................     1,962               286
  Inventory........................................     2,496               765
  Prepaid expenses and other current assets........     2,145               874
                                                      -------           -------

      Total current assets.........................   133,287            73,929

Property, Plant and Equipment:
  Electric and steam generating facilities.........   194,159            64,185
  Equipment, furniture and leasehold improvements..     3,446             2,646
  Accumulated depreciation and amortization........    (8,514)           (3,143)
  Construction in progress.........................    82,778            98,912
                                                      -------           -------

      Total property, plant and equipment, net.....   271,869           162,600

Other Assets:
  Deferred finance costs, net......................     5,526               407
  Project development costs........................      -                3,352
  Investments in and advances to affiliates........    79,887            33,202
  Note receivable..................................     8,476             6,626
  Investment - available-for-sale..................     3,002              -
  Debt service reserves - held-to-maturity.........     9,113              -
  Deposits and other assets........................     1,638               582
                                                      -------           -------

      Total other assets...........................   107,642            44,169
                                                      -------           -------

      TOTAL........................................  $512,798          $280,698
                                                      -------           -------





                 See notes to consolidated financial statements.



                                      F-3
<PAGE>

                         AES CHINA GENERATING CO. LTD.

                     CONSOLIDATED BALANCE SHEETS (Continued)


                                                        As of November 30,
                                                      1997              1996
                                                      ----              ----
                                                          (in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable - The AES Corporation............  $  -              $1,185
  Accounts payable..................................    4,500            2,199
  Accounts payable for construction.................   16,437              -
  Accrued liabilities...............................    2,892            2,618
  Accrued interest for notes payable................    8,264              -
  Accrued liabilities for construction..............    8,804            4,259
  Loans from minority shareholders - current portion    8,519            1,365
  Bank loans........................................    2,993            2,861
                                                      -------          -------

      Total current liabilities.....................   52,409           14,487

Long-Term Liabilities:
  Notes payable, net................................  179,844             -
  Loans from minority shareholders..................   30,962           34,933
  Bank loan.........................................    7,000             -
  Deferred income taxes.............................      785              387
                                                      -------          -------

      Total long-term liabilities...................  218,591           35,320

Minority Interest...................................   43,493           40,536

Commitments and contingencies

Shareholders' Equity:
  Common stock - par value $1 per share
    (authorized and issued shares:
    1997 - 12,000; 1996 - Nil)......................       12             -
  Class A common stock - par value $0.01 per share,
    (50,000,000 shares authorized; issued and
    outstanding: 1997 - Nil; 1996 - 8,134,100)......     -                  81
  Class B common stock - par value $0.01 per share,
    (50,000,000 shares authorized; issued and
    outstanding: 1997 - Nil; 1996 - 7,500,000)......     -                  75
  Additional paid-in capital........................  184,566          183,980
  Retained earnings.................................   13,200            5,907
  Cumulative translation adjustment.................      527              312
                                                      -------          -------

      Total shareholders' equity....................  198,305          190,355
                                                      -------          -------

      TOTAL......................................... $512,798         $280,698
                                                      -------          -------


                 See notes to consolidated financial statements.



                                      F-4
<PAGE>
                         AES CHINA GENERATING CO. LTD.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                   Class A                   Class B
                                                      Common Stock              Common Stock              Common Stock
                                                  Shares       Amount        Shares       Amount       Shares       Amount
                                                                   (in thousands, except share amounts)

<S>                                             <C>         <C>           <C>         <C>            <C>        <C>
Balance at January 1, 1995................            -     $      -      10,216,000  $       102    7,500,000  $        75
Purchase of treasury stock................            -            -            -            -            -            -
Foreign currency translation..............            -            -            -            -            -            -
Net income for the year...................            -            -            -            -            -            -
                                                ----------   ----------   ----------   ----------   ----------   ----------

Balance at November 30, 1995..............            -            -      10,216,000          102    7,500,000           75
Purchase of treasury stock................            -            -            -            -            -            -
Retirement of treasury stock .............            -            -      (2,081,900)         (21)        -            -
Foreign currency translation .............            -            -            -            -            -            -
Net income for the year ..................            -            -            -            -            -            -
                                                ----------   ----------   ----------   ----------   ----------   ----------

Balance at November 30, 1996 .............            -            -       8,134,100           81    7,500,000           75

Issuance of Class A common stock under benefit
  plans and exercise of stock options.....            -            -          37,168            1         -            -
Cancellation of Class A and B common stock
  upon effectiveness of the amalgamation..            -            -      (8,171,268)         (82)  (7,500,000)         (75)
Issuance of Common stock upon effectiveness
  of the amalgamation.....................          12,000           12         -            -            -            -
Foreign currency translation..............            -            -            -            -            -            -
Net income for the year ..................            -            -            -            -            -            -
Dividends.................................            -            -            -            -            -            -
                                                ----------   ----------   ----------   ----------   ----------   ----------

Balance at November 30, 1997..............          12,000  $        12         -     $      -            -     $      -
                                                ----------   ----------   ----------   ----------   ----------   ----------
</TABLE>






                 See notes to consolidated financial statements.



                                      F-5
<PAGE>
                         AES CHINA GENERATING CO. LTD.

           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - continued
<TABLE>
<CAPTION>


                        Retained
  Additional            Earnings            Cumulative
    Paid-In           (Accumulated          Translation                    Treasury Stock                       Shareholders'
    Capital             Deficit)            Adjustment               Shares                 Amount                 Equity
                                            (in thousands, except share amounts)
 <S>                  <C>                   <C>                    <C>                    <C>                    <C>        
 $  201,762           $     (371)           $       16                   -                $     -                $  201,584
       -                    -                     -                (1,912,600)               (16,371)               (16,371)
       -                    -                      234                   -                      -                       234
       -                   2,138                  -                      -                      -                     2,138
  ---------            ---------             ---------              ---------              ---------              ---------

    201,762                1,767                   250             (1,912,600)               (16,371)               187,585
       -                    -                     -                  (169,300)                (1,432)                (1,432)
    (17,782)                -                     -                 2,081,900                 17,803                   -
       -                    -                       62                   -                      -                        62
       -                   4,140                  -                      -                      -                     4,140
  ---------            ---------             ---------              ---------              ---------              ---------

    183,980                5,907                   312                   -                      -                   190,355


        441                 -                     -                      -                      -                       442

        157                 -                     -                      -                      -                      -

        (12)                -                     -                      -                      -                      -
       -                    -                      215                   -                      -                       215
       -                   9,470                  -                      -                      -                     9,470
       -                  (2,177)                 -                      -                      -                    (2,177)
  ---------            ---------             ---------              ---------              ---------              ---------

 $  184,566           $   13,200            $      527                   -                $     -                $  198,305
  ---------            ---------             ---------              ---------              ---------              ---------

</TABLE>






                 See notes to consolidated financial statements.



                                      F-6
<PAGE>
                         AES CHINA GENERATING CO. LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  For the year ended November 30,
                                                                          1997                 1996                 1995
                                                                          ----                 ----                 ----
                                                                                          (in thousands)
<S>                                                                        <C>                  <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net cash used in operating activities (note 13)...............            (8,133)              (1,507)               (812)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from issuance of notes...........................           174,100                 -                   -
  Contributions and loans from minority shareholders............             3,435                8,497              13,535
  Repayment of loans from minority shareholders.................            (1,354)                (270)               -
  Proceeds from bank loans......................................             8,812                2,861               1,000
  Repayment of bank loans.......................................            (1,680)              (1,000)               -
  Proceeds from issuance of Class A common stock
    upon exercise of stock options..............................               224                 -                   -
  Repurchase of Class A common stock............................              -                 (11,443)             (6,360)
                                                                           -------              -------             -------

      Net cash provided by / (used in) financing
        activities..............................................           183,537               (1,355)              8,175

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and construction in progress............           (77,978)             (69,205)            (29,544)
  Purchase of investments - held-to-maturity....................           (48,945)             (29,176)           (154,630)
  Purchase of investments - available-for-sale..................           (14,361)             (16,797)            (14,557)
  Proceeds from the maturity of investments - held-
    to-maturity.................................................            24,569               63,656             219,086
  Proceeds from the sales of investments - available-
    for-sale....................................................            11,541               16,969              14,609
  Investments in and advances to affiliates.....................           (36,230)             (22,990)             (2,360)
  Recoupment of investment in affiliate.........................               253                  216                -
  Project development costs and other assets....................            (1,313)              (2,669)             (2,269)
  Deposit to debt service reserves..............................           (36,248)                -                   -
  Withdrawal from debt service reserves.........................             8,961                 -                   -
  Investment in note receivable.................................            (3,277)              (6,626)             (7,500)
                                                                           -------              -------             -------

      Net cash (used in) / provided by investing
        activities..............................................          (173,028)             (66,622)             22,835
                                                                           -------              -------             -------

      Increase / (decrease) in cash and cash
        equivalents.............................................             2,376              (69,484)             30,198

CASH AND CASH EQUIVALENTS,......................................
  Beginning of year.............................................            56,200              125,684              95,486
                                                                           -------              -------             -------

  End of year...................................................          $ 58,576             $ 56,200            $125,684
                                                                           -------              -------             -------
</TABLE>




                                      F-7
<PAGE>
                         AES CHINA GENERATING CO. LTD.

                CONSOLIDATED STATEMENTS OF CASH FLOWS - continued


Supplemental disclosure of non cash investing and financing activities:

In 1997, the Company's joint venture partner in Jiaozuo Wan Fang contributed
shareholder loans of $0.6 million in the form of construction in progress.

In April 1996, the Company's joint venture partner in Jiaozuo Wan Fang
contributed capital and shareholder loans of $38.4 million in the form of land
use rights, construction in progress, equipment and receivables, net of accounts
payable.

In 1995, the Company's joint venture partners in Wuxi-AES-CAREC and
Wuxi-AES-Zhonghang contributed capital in the form of work-in-progress and
equipment of $5.3 million. At November 30, 1995, the Company had recorded the
purchase of investments and the purchase of treasury stock for $3.0 million and
$10.0 million, respectively. Payments for such purchases were made subsequent to
year-end.



                 See notes to consolidated financial statements.



                                      F-8
<PAGE>
                         AES CHINA GENERATING CO. LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         AES China Generating Co. Ltd. ("AES Chigen" or the "Company"), a
         Bermuda company, was incorporated on December 7, 1993, to develop,
         acquire, finance, construct, own and manage electric power generation
         facilities in the People's Republic of China (the "PRC"). On May 8,
         1997, the amalgamation of a wholly-owned subsidiary of The AES
         Corporation ("AES") with AES Chigen (the "Amalgamation") was completed
         and the Company became a wholly-owned subsidiary of AES. Prior to the
         Amalgamation, the Company was a controlled affiliate of AES, which
         owned approximately 48% of the outstanding common stock of the Company.

         Accounting Principles - The Company has prepared its financial
         statements on the basis of United States generally accepted accounting
         principles.

         Principles of Consolidation - The consolidated financial statements of
         the Company include the accounts of AES Chigen and its subsidiaries.
         Investments in 50% or less owned affiliates over which the Company
         exercises significant influence, but not control, are accounted for by
         the equity method. Intercompany transactions and balances have been
         eliminated. In the second quarter of 1996, a subsidiary of the Company
         acquired a controlling interest in Jiaozuo Wan Fang Power Company
         Limited ("Jiaozuo Wan Fang") for cash which approximated the fair value
         of net tangible assets acquired. The acquisition was accounted for as a
         purchase.

         The Company's joint venture partners in certain 50% or less owned
         affiliates have guaranteed a minimum return on the Company's
         investment. The Company recognizes such guaranteed return in excess of
         its equity in the earnings of the affiliates to the extent it believes
         it is probable that the guaranteed return will be realized.

         Cash and Cash Equivalents - The Company considers cash on hand,
         deposits in banks, certificates of deposit and short-term marketable
         securities with an original maturity of three months or less to be cash
         and cash equivalents. Cash equivalents exclude amounts held as debt
         service reserves. Cash and cash equivalents consists mainly of
         short-term commercial paper and US Treasury bills.

         Investments - Debt and equity securities which the Company has both the
         positive intent and ability to hold to maturity are classified as
         held-to-maturity and carried at amortized cost. Debt and equity
         securities which might be sold prior to maturity are classified as
         available-for-sale and carried at approximate fair value. Material
         unrealized gains and losses, if any, related to available-for-sale
         investments, net of applicable taxes, are reflected in a separate
         component of shareholders' equity. The Company determines the
         appropriate classification of securities at the time of purchase and
         evaluates such classification as of each balance sheet date.
         Transactions in investment securities are accounted for on the trade
         date.




                                      F-9
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


1.       GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

         Inventory - Inventory, valued at lower of cost (principally weighted
         average method) or market value, consists of coal, oil, raw materials,
         spare parts and supplies.

         Property, Plant and Equipment - Property, plant and equipment is stated
         at cost including the cost of improvements. Depreciation, after
         consideration of salvage value, is computed using the straight-line
         method over the estimated composite lives of the assets, which range
         from 3 to 25 years. Maintenance and repairs are charged to expense as
         incurred.

         Construction in Progress - Construction progress payments, engineering
         costs, insurance costs, wages, interest and other costs relating to
         construction in progress are capitalized. Construction in progress
         balances are transferred to electric and steam generating facilities
         when the related assets or group of assets are ready for their intended
         use. Capitalized interest during construction was $20.4 million in
         1997, $3.2 million in 1996 and $0.3 million in 1995.

         Deferred finance costs - Financing costs are deferred and amortized
         using the straight-line method over the related financing period, which
         does not differ materially from the effective interest method of
         amortization. Deferred costs are shown net of accumulated amortization
         of $0.6 million in 1997.

         Project Development Costs - Project development costs generally
         represent costs incurred after achieving certain project related
         milestones prior to the acquisition of generating assets or the start
         of physical construction. These costs represent amounts incurred for
         professional services, salaries, permits, options and other related
         costs. These costs are transferred to construction in progress during
         the construction phase and to electric and steam generating facilities
         after commencement of operations.

         Revenue Recognition - Revenues from the sale of electricity are
         recorded based upon output delivered and capacity provided at rates as
         specified under contract terms. Most of the Company's power plants rely
         primarily on one power sales contract with a single customer for the
         majority of its revenues. Five customers accounted for 48%, 23%, 13%,
         10% and 6% of electricity sales revenues in 1997. Two customers
         accounted for 87% and 13% of electricity sales revenues in 1996 and one
         customer accounted for 100% of electricity sales revenues in 1995. The
         failure of any customer to fulfill its contractual obligations could
         have a substantial negative impact on AES Chigen's revenues. Fees for
         construction delay paid by Cili Power Company, the contractor of
         Xiangci-AES Hydro Power Company Ltd. ("Xiangci-AES"), to compensate the
         Company for lost generation in respect of an expansion facility, are
         recognized as revenue when earned.



                                      F-10
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


1.       GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

         Income Taxes - Income taxes are provided based on an asset and
         liability approach for financial accounting and reporting of income
         taxes. Deferred income tax liabilities or benefits are recorded to
         reflect the tax consequences in future years of differences between the
         tax basis of assets and liabilities and the financial reporting amounts
         at each year end. A valuation allowance is recognized if it is more
         likely than not that some portion of, or all of, a deferred tax asset
         will not be realized.

         Net Income Per Share - Net income per share for each of the three years
         ended November 30, 1997 was computed based on the 12,000 shares
         outstanding after the Amalgamation.

         Foreign Currency Translation - The Company's financial reports are
         prepared using the United States dollar as the reporting currency. For
         subsidiaries whose functional currency is deemed to be other than the
         United States dollar, asset and liability accounts are translated at
         period-end rates of exchange and revenue and expenses are translated at
         average exchange rates prevailing during the year. Translation
         adjustments are included as a separate component of shareholders'
         equity. The functional currency of all the Company's current
         subsidiaries and affiliates is the Renminbi Yuan, the lawful currency
         of the PRC ("Renminbi").

         Use of Estimates - The preparation of financial statements in
         conformity with generally accepted accounting principles requires the
         use of estimates. Actual results could differ from those estimates.

         Reclassifications - Certain reclassifications have been made to prior
         period amounts to conform with the 1997 presentation.


2.       INVESTMENTS AND DEBT SERVICE RESERVES

         At November 30, 1997 and 1996, the Company's investments and debt
         service reserves were classified as either held-to-maturity or
         available-for-sale. The amortized cost and estimated fair value of the
         investments and debt service reserves at November 30, 1997 and 1996
         classified as held-to-maturity and available-for-sale were
         approximately the same. All investments in debt securities had maturity
         dates within one year from the balance sheet date except for $3 million
         of available-for-sale investments which mature within three years. The
         investments were invested as follows:

                                                                As of
                                                             November 30,
                                                         1997           1996
                                                         ----           ----
                                                            (in thousands)
         Held-to-maturity
         US Treasury and government agency securities..  $ 37,449       $  1,000
         Foreign certificates of deposit...............     8,000           -
         Commercial paper - discounted.................    13,313          7,995
         Corporate bonds...............................     3,900           -
                                                          -------        -------

                                                         $ 62,662       $  8,995
                                                          -------        -------

         Available-for-sale
         US Treasury and government agency securities..  $  3,002       $   -
                                                          -------        -------



                                      F-11
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


3.       ACCOUNTS RECEIVABLE - TRADE AND FROM RELATED PARTIES

         During 1997, some of the power purchasers failed to purchase the
         required minimum amount of electricity under the respective power
         purchase contracts and, accordingly, are required to compensate the
         Company's joint ventures for the shortfall. The power purchasers have
         attempted to negotiate the payment of the shortfall or have disagreed
         over the generation cost to be used for the calculation of the minimum
         take compensation. The joint ventures are in negotiation with the power
         purchasers. The total minimum take compensation for 1997 for the
         projects after adjustment for the Chinese partners' interests in the
         joint ventures was approximately $4.5 million of which $2.8 million was
         outstanding as of January 31, 1998. The Company has recorded a
         provision of $0.7 million (net of the Chinese partners' interests) to
         reduce the receivables accrued for the balance of the minimum take
         compensation as of November 30, 1997.

         For two of the joint ventures the power purchaser is also the operator
         of the project and is entitled to deduct the approved generation cost
         from the electricity fee to the joint venture. In 1997, the relevant
         pricing bureau approved only the tariff but not the generation cost
         assumed for purposes of setting the tariff. The joint ventures and the
         power purchaser have disagreed over the determination of the generation
         cost. As of November 30, 1997, the aggregate amount of the generation
         cost in dispute, after adjustment for the Chinese partners' interests
         in the joint ventures, was approximately $0.5 million.

         The Company is vigorously pursuing its rights under the contracts and
         believes the final resolution of these issues will not materially
         affect the Company's financial position or results of operations.




                                      F-12
<PAGE>
4.       INVESTMENTS IN AND ADVANCES TO AFFILIATES

         As of November 30, 1997 and 1996, the Company's investments in and
         advances to affiliates included a 25% ownership interest in Yangchun
         Fuyang Diesel Power Co. Ltd. ("Yangchun Fuyang") as well as a 25% and
         35% ownership interest in, and loans to, Wuhu Shaoda Electric Power
         Development Company Ltd. ("Wuhu Shaoda") and Chengdu AES-Kaihua Gas
         Turbine Power Co. Ltd. ("Chengdu AES-Kaihua"), respectively.

         As of November 30, 1997, the Company's investments in and advances to
         affiliates also included a 25% ownership interest in Yangcheng
         International Power Generating Company Limited ("Yangcheng
         International Power").

         Summarized financial information for equity method affiliates on a
         combined 100% basis is as follows (in thousands):

                                                1997                 1996
                                                ----                 ----

         Sales...........................       $ 37,434            $  4,820
         Operating income................         12,354               1,672
         Net income......................          5,350                 324
         Current assets..................         74,341              19,775
         Non-current assets..............        302,754             111,092
         Current liabilities.............          8,264              13,291
         Non-current liabilities.........        230,934              75,329
         Stockholders' equity............        137,897              42,247

         The amount of consolidated retained earnings that represent
         undistributed earnings of affiliates was $1.6 million and $0.2 million
         for the years ended November 30, 1997 and 1996, respectively.




                                      F-13
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


5.       NOTE RECEIVABLE

         As of November 30, 1997 and 1996, Jiaozuo Wan Fang had provided loans
         in the aggregate amount of $9.9 million and $6.6 million through
         Zhongyuan Trust and Investment Company to Henan Electric Power
         Corporation for the construction of interconnection and transmission
         facilities. The loans are unsecured and bear interest at 15.3% per
         annum. The interest is payable in arrears and the principal and
         interest are payable in 15 semi-annual installments, beginning in
         December 1997.


6.       NOTES PAYABLE

         As of November 30, 1997, notes payable consisted of $180 million
         principal amount Notes due on December 15, 2006 (the "2006 Notes"), net
         of unamortized discount on issuance of the notes. The 2006 Notes bear
         interest at the rate of 10-1/8% per annum. Interest is payable on June
         15 and December 15 of each year, commencing on June 15, 1997. The 2006
         Notes rank at least pari passu in right of payment with all existing
         and future senior unsecured indebtedness of the Company. The holders of
         the 2006 Notes have a claim to amounts on deposit in debt service and
         interim reserve accounts that is prior to the claims of other creditors
         of the Company. The 2006 Notes are redeemable at the Company's option,
         in whole or in part, beginning December 15, 2001 at redemption prices
         in excess of par and are redeemable at par beginning December 15, 2003.

         The terms of the 2006 Notes contain certain covenants and restrictions.
         The most restrictive of these covenants include a requirement to
         maintain certain reserves and limitations on the payment of dividends,
         redemption of equity interests, redemption of subordinated
         indebtedness, making of certain investments, incurrence of certain
         indebtedness, certain assets sales and the incurrence of indebtedness
         to refinance existing indebtedness, among other things.




                                      F-14
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


7.       LOANS FROM MINORITY SHAREHOLDERS

         As of November 30, 1997 and 1996, loans from minority shareholders
         included debt of $9.3 million and $10.6 million, respectively, provided
         by the Company's joint venture partners, Xishan City Power Industry
         Company and China National Aero-Engine Corporation ("CAREC") to
         Wuxi-AES-CAREC Gas Turbine Power Co. Ltd. ("Wuxi-AES-CAREC") and
         Wuxi-AES-Zhonghang Power Co. Ltd. ("Wuxi-AES-Zhonghang"). The loans are
         secured by the land use rights and all assets of the joint venture
         companies and bear interest at 13% per annum through the end of 1995
         and 15% per annum thereafter. Principal and interest are repayable in
         20 semi-annual installments beginning July 1, 1996. The balance of the
         loans consisted of a loan from Jiaozuo Aluminum Mill to Jiaozuo Wan
         Fang. This loan is unsecured and bears interest at 15.3% per annum plus
         a service fee to the lender of 3% per annum. The loan is divided into
         two tranches in equal amounts. Interest on the first tranche of the
         loan is payable quarterly in arrears from January 1997. Interest on the
         second tranche of the loan is payable quarterly in arrears following
         commercial operation of unit two. Principal of the first tranche is
         repayable in 27 quarterly installments beginning January 1, 1998 and
         the principal of the second tranche is payable in 25 quarterly
         installments beginning July 1, 1998.

         Scheduled maturities of loans from minority shareholders as of November
         30, 1997 are as follows (in thousands):

         1998..........................................                $  8,519
         1999..........................................                   5,188
         2000..........................................                   5,188
         2001..........................................                   5,188
         2002..........................................                   5,188
         Thereafter....................................                  10,210
                                                                        -------

                                                                       $ 39,481
                                                                        -------



                                      F-15
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


8.       SHORT-TERM BANK LOANS

         At November 30, 1996, short-term bank loans totaling $0.4 million to
         Xiangci-AES were outstanding. The loans are secured by the buildings of
         the joint venture and bear interest from 10.7% to 14.5% per annum. In
         1997, $0.2 million of the bank loans were renewed for another year with
         interest at 10.593% per annum. In addition, at November 30, 1996, a
         short-term bank loan of $1.5 million to Anhui Liyuan-AES Power Company
         Ltd. ("Anhui Liyuan-AES") was outstanding. The loan was unsecured, bore
         interest at the prevailing lending rates in the PRC which ranged at
         November 30, 1996 from 6.8125% to 7.49% per annum and was repaid in
         1997. Short-term bank loans at November 30, 1996 also included a $1
         million bank loan to Wuxi-AES-CAREC. The loan is guaranteed by Xishan
         City Power Fuel Company. In 1997, this short-term bank loan was renewed
         for another year with average interest at 7.7% per annum.

         At November 30, 1997, there were other short-term bank loans totalling
         $1.8 million to Wuxi-AES-CAREC outstanding. The loans are unsecured,
         bear interest at 11.088% per annum, are repayable within one year and
         are guaranteed by Xishan City Power Fuel Company and Xishan City
         Electricity Management Office.

         The accounts payable for construction are interest bearing. The
         interest rate at November 30, 1997 was 7.25% per annum.

9.       LONG-TERM BANK LOAN

         As of November 30, 1997, a long-term bank loan of $7.0 million to Anhui
         Liyuan-AES Power Company Ltd., a joint venture of the Company, was
         outstanding. The loan is unsecured, bears interest at the prevailing
         lending rates in the PRC and is guaranteed by Anhui Liyuan Power
         Development Company. The interest rate for year ended November 30, 1997
         was approximately 8.25% per annum. Scheduled maturities of the bank
         loan as November 30, 1997 are as follows (in thousands):

         1999..........................................                $  2,000
         2000..........................................                   2,000
         2001..........................................                   3,000
                                                                        -------

                                                                       $  7,000
                                                                        -------



                                      F-16
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


10.      INCOME TAXES

         The Company's PRC joint ventures are entitled to a two-year tax
         exemption from state and local income taxes commencing from the first
         profitable year of operations, after taking into account any losses
         brought forward from prior years, followed by a 50% reduction in tax
         rates for the next three years ("tax holidays"). No PRC income tax was
         incurred during 1997, 1996 and 1995 as the joint ventures were either
         within the exemption period of the tax holidays or had not yet
         commenced commercial operations.

         As of November 30, 1997 and 1996, a deferred tax liability amounting to
         approximately $0.8 million and $0.4 million, respectively, was provided
         for, mainly for timing differences arising from deferred expenses and
         accelerated depreciation of property, plant and equipment under the PRC
         tax rules.


11.      COMMITMENTS AND CONTINGENCIES

         The Company leases premises under various operating leases which
         contain renewal options and escalation clauses. Rental expense under
         operating leases was $0.7 million, $0.6 million and $0.6 million for
         the years ended November 30, 1997, 1996 and 1995, respectively.

         Subsidiaries of the Company entered into various long-term contracts
         for the purchase of fuel subject to termination only in certain limited
         circumstances. These contracts have remaining terms of 13 years to 26
         years.

         In April 1996, Wuhu Shaoda entered into a $65.0 million term loan
         facility (the "Term Loan") with a syndicate of lenders to finance the
         construction of the power plant. The Company has guaranteed to the
         lenders of the Term Loan certain obligations of its wholly owned
         subsidiary under the joint venture contract, including an obligation to
         fund an $18.0 million subordinated loan and certain other liabilities
         which, in the aggregate, do not exceed $6.0 million.

         Wuhu Shaoda had entered into a lease contract with Wuhu Energy
         Development Company, one of the PRC partners in the joint venture, for
         land use rights of the site over its entire term of operations at an
         annual lease fee of $0.2 million. As of November 30, 1997, total
         commitment under the land use rights lease contract amounted to $5.1
         million.

         As at November 30, 1997, the Company was obligated under operating
         leases requiring minimum rentals as follows (in thousands):

         Year ending November 30,
           1998......................................                  $    777
           1999......................................                       603
           2000......................................                       126
                                                                        -------

         Total                                                         $  1,506
                                                                        -------



                                      F-17
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


11.      COMMITMENTS AND CONTINGENCIES - continued

         Since the commencement of operations, the Company has entered into
         commitments to invest a total of approximately $357.8 million in the
         form of equity contributions and loans to its joint ventures. As of
         November 30, 1997, the total outstanding commitment to its joint
         ventures was $129.5 million.

         Pursuant to the Payment and Milestone Schedule agreed between Sichuan
         Fuling Aixi Power Company Ltd. ("Sichuan Fuling") and Shanghai Electric
         Corporation ("Shanghai Electric"), a portion of the price of the
         Engineering, Procurement and Construction Services Contract (the "EPC
         Contract") for Sichuan Fuling can be deferred. Interest shall accrue on
         the amount of the deferred payments as set forth in the Payment and
         Milestone Schedule. AES Chigen guaranteed to pay Shanghai Electric up
         to $19.2 million, representing 60% of the price of the EPC Contract,
         plus the interest accrued thereon. As of November 30, 1997, the amount
         of the deferred payment with interest accrued thereon was $16.4
         million.


12.      SHAREHOLDERS' EQUITY

         Common Stock

         Since May 8, 1997, the effective date of the Amalgamation, the capital
         of the Company has consisted of 12,000 authorized, issued and
         outstanding shares of Common Stock, par value $1.00 per share.

         Class A Common Stock

         On March 2, 1994, the Company issued 10,000,000 shares of Class A
         common stock in a public offering. On April 4, 1994, the underwriters
         for the offering exercised a portion of the over-allotment option
         granted to them in connection with the initial public offering and the
         Company sold an additional 216,000 shares of Class A common stock. In
         connection with the offering, the Company registered its Class A common
         stock with the United States Securities and Exchange Commission and its
         shares were approved for quotation on the National Association of
         Securities Dealers Automated Quotation National Market System. The net
         proceeds of the offering amounted to $151.9 million.

         Upon the effectiveness of the Amalgamation on May 8, 1997, each issued
         and outstanding share of Class A common stock of the Company was
         canceled in consideration of the right to receive 0.29 of a share of
         common stock of AES and cash in lieu of any fractional shares (the
         "Consideration"). All such shares of Class A common stock are no longer
         outstanding and were automatically canceled and retired and ceased to
         exist and each holder of a certificate representing any such shares of
         Class A common stock ceased to have any rights with respect thereto,
         except the right to receive the Consideration, without interest.





                                      F-18
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


12.      SHAREHOLDERS' EQUITY - continued

         Class B Common Stock

         On December 29, 1993, AES, pursuant to a Stock Purchase and
         Shareholder's Agreement (the "Stock Purchase Agreement") between AES
         and the Company, purchased 7,500,000 shares of Class B common stock.
         The net proceeds of the sale amounted to $50.0 million.

         Upon the effectiveness of the Amalgamation on May 8, 1997, each share
         of the Class B common stock was automatically canceled and ceased to
         exist and no consideration was delivered in exchange therefor.

         Treasury Stock

         On April 4, 1995, the Company announced a plan to repurchase up to an
         additional 2,042,000 shares of its Class A common stock. Prior to the
         announcement of the plan, the Company had purchased 168,000 shares of
         Class A common stock through unsolicited block transactions. As of
         November 30, 1995, the Company had repurchased a total of 1,912,600
         shares of its Class A common stock. During the year ended November 30,
         1996, the Company repurchased a further 169,300 shares of Class A
         common stock. The aggregate repurchase of shares approximates 20% of
         the shares of Class A common stock issued and were acquired at an
         average price of $8.55 per share. As of November 30, 1996, the Company
         had retired all the shares of treasury stock.

         Transfer of Funds from Subsidiaries and Affiliates

         Nearly all of the monetary assets of the Company's subsidiaries and 50%
         or less owned affiliates are denominated in Renminbi. The conversion of
         Renminbi into US dollars and the remittance of US dollars abroad
         require PRC government approvals. At November 30, 1997, the Company's
         share of the net assets of its subsidiaries in the PRC amounted to
         $86.7 million. In addition, the ability of Wuhu Shaoda to pay dividends
         to the Company is subject to certain restrictions under the terms of a
         bank loan facility which has been entered into by the joint venture. No
         dividend distributions by the joint venture are permitted if certain
         debt service coverage ratios are not met.




                                      F-19
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


12.      SHAREHOLDERS' EQUITY - continued

         Stock Options

         In 1994, the Company adopted the AES China Generating Co. Ltd.
         Incentive Stock Option Plan (the "Option Plan"). In March 1995, the
         Company's shareholders approved an increase in the total number of
         shares available for issuance upon exercise of options granted to
         employees from 875,000 to 2,000,000 shares of Class B common stock and
         an increase in the maximum number of shares issuable upon exercise of
         options that can be granted to an individual from 250,000 to 500,000
         shares of Class B common stock. Upon the effectiveness of the
         Amalgamation on May 8, 1997, all outstanding options issued under the
         Option Plan automatically and without any action on the part of the
         holders thereof became options for shares of AES common stock. The
         Option Plan remains in full force and effect. A summary of stock option
         activity is as follows:

         Options on Class B common stock        Year Ended November 30,
         -------------------------------        -----------------------
                                                 1997       1996         1995
                                                         (in shares)

         Outstanding at beginning of year...   1,408,560   1,451,059     752,500
         Exercised during the year..........     (23,995)        -
         Forfeited during the year..........        (401)   (290,388)        -
         Granted during the year
           (from $8.50 to $16.00) ..........     161,641     247,889     698,559
         Conversion to options on
           AES common stock.................  (1,545,805)        -           -
                                               ---------   ---------   ---------

         Outstanding - end of year
           (from $8.50 to $16.00)...........         -     1,408,560   1,451,059
                                               ---------   ---------   ---------



         Eligible for exercise - end of year.        -       379,112     150,500
                                               ---------   ---------   ---------





                                      F-20
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


13.       RECONCILIATION OF NET INCOME TO NET CASH USED IN OPERATING ACTIVITIES
<TABLE>
<CAPTION>

                                                                                     Year Ended November 30,
                                                                           1997               1996                 1995
                                                                           ----               ----                 ----
                                                                                         (in thousands)
         <S>                                                               <C>                  <C>                 <C>         
         Net income.............................................            $9,470               $4,140              $2,138
         Adjustments to reconcile net income to net
           cash used in operating activities:
           Depreciation and amortization........................             5,161                2,071                 476
           Provision for deferred taxes.........................               398                  387                -
           Minority interest....................................              (592)                 277                  85
           Equity in earnings of affiliates.....................            (1,838)                (663)               (206)
           Dividend from affiliate..............................               446                  626                -
           Decrease in provision for project
             development costs..................................              -                  (2,298)               -
           Loss on sale of property, plant and
             equipment..........................................                26                 -                   -
           Amortization of deferred costs.......................               608                 -                   -
           Amortization of discount on issuance of
             notes..............................................                17                 -                   -
           Amortization of discount/premium on
             investments - net..................................            (2,186)              (2,038)             (3,543)
           Capitalization of interest on notes payable,
             net of amortization................................           (13,102)                -                   -
           Changes in assets and liabilities:
             Accounts receivable from related parties...........            (3,462)              (6,346)               (422)
             Interest receivable................................            (1,676)                   7                 683
             Inventory, prepaid expenses and other
               current assets...................................            (8,040)              (1,186)                (55)
             Accrued interest income from affiliates............            (2,158)                (333)               -
             Deposits...........................................            (1,077)                  28                 (82)
             Accounts payable and accrued liabilities...........             9,872                3,821                 114
                                                                           -------              -------             -------

               Net cash used in operating activities............            (8,133)              (1,507)               (812)
                                                                           -------              -------             -------
</TABLE>




                                      F-21
<PAGE>
                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


14.      RELATED PARTIES

         AES Chigen has entered into a Project Services Agreement with AES (the
         "Services Agreement") whereby AES will exclusively provide development,
         construction management and operations services to the Company. The
         Services Agreement has an initial term of five years commencing
         December 1993 with three five-year renewal terms. Management fees under
         the Services Agreement totaled $0.2 million, $0.3 million and $0.1
         million for the years ended November 30, 1997, 1996 and 1995,
         respectively.

         As of November 30, 1997 and 1996, accounts receivable from related
         parties consisted primarily of amounts due from Cili Power Company, for
         sale of electricity, amounts due from the Xishan City Electricity
         Management Office, an associated company of the joint venture partner
         in Wuxi-AES-CAREC, for sale of electricity, and a short-term loan to a
         Chinese partner in Wuxi-AES-CAREC bearing interest at an average rate
         of 7.7% per annum during 1997.

         As of November 30, 1996, accounts receivable from related parties also
         consisted of amounts due from Cili Power Company for the payment of
         construction delay fees.

         As of November 30, 1997, accounts receivable from related parties also
         included amounts due from Jiaozuo Aluminum Mill for sale of
         electricity.


15.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying values of financial instruments, including cash and cash
         equivalents, debt service reserves, investments, note receivable and
         short-term bank loans were equal to their approximate fair values as of
         November 30, 1997 and 1996 because of the relatively short maturities
         of these investments. As of November 30, 1997 and 1996, the carrying
         value of loans from minority shareholders and the long-term bank loans
         approximated fair value determined by the estimated discount rate a
         prospective seller would pay to a credit-worthy third party to assume
         the obligation. At November 30, 1997 the fair value of notes payable
         was $177 million based on quoted market prices.




                                      F-22
<PAGE>

                         AES CHINA GENERATING CO. LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


16.      SUBSEQUENT EVENTS

         The Company changed its accounting year end date to December 31,
         effective for the period ending December 31, 1998.

         In November 1997, the board of directors of Wuxi-AES-Zhonghang and
         Wuxi-AES-CAREC passed a resolution that would allow the replacement of
         the shareholder loans provided by the Company and CAREC with bank
         loans. The transaction was completed in early January 1998 with three
         bank loans of $5.6 million, $6.9 million and $3.1 million,
         respectively. The $5.6 million and $6.9 million bank loans are secured
         by the electric and steam generating facilities of the joint venture
         companies and bear interest at LIBOR plus 1.75% per annum. Principal
         and interest are repayable in 10 semi-annual installments beginning
         June, 1999. The $3.1 million bank loan is unsecured, bears interest at
         9.5% per annum and repayable within one year, and is guaranteed by
         Xishan City Power Fuel Company. Accordingly, the shareholder loans from
         the Company and CAREC were fully paid off, leaving a $4.4 million
         shareholder loan from Xishan City Power Industry Company.

         In December 1997, Hefei Zhongli Energy Company Limited, a joint venture
         of the Company, raised a long term bank loan of $7 million. The loan is
         unsecured, bears interest at the prevailing lending rates in the PRC
         and is guaranteed by Anhui Liyuan Power Development Company.



                                      F-23
<PAGE>


                                                                      SCHEDULE 1


                          AES CHINA GENERATING CO. LTD.

                         CONDENSED FINANCIAL INFORMATION

                     STATEMENTS OF UNCONSOLIDATED OPERATIONS



                                              For the year ended November 30,


                                          1997            1996          1995
                                          ----            ----          ----
                                                     (in thousands)

Revenues..............................      $   -         $   400       $   680
Equity in earnings of subsidiaries....       16,616         3,724           465
                                            -------       -------       -------

      Total revenues..................       16,616         4,124         1,145
                                            -------       -------       -------

Operating costs and expenses:
  Costs of sales and services.........        2,502           557           524
  Development, selling, general and
    administrative expenses...........        3,077         3,463         8,616
                                            -------       -------       -------

      Total operating costs and
       expenses.......................        5,579         4,020         9,140
                                            -------       -------       -------

Operating income (loss)...............       11,037           104        (7,995)
Interest income.......................        3,515         5,480        10,133
Interest expense......................       (4,664)          -             -
Amalgamation cost.....................         (418)       (1,444)          -
                                            -------       -------       -------

Income before taxes...................        9,470         4,140         2,138

Income taxes..........................          -             -             -
                                            -------       -------       -------

Net income............................      $ 9,470       $ 4,140       $ 2,138
                                            -------       -------       -------




                             See notes to Schedule 1



                                      S-1
<PAGE>


                                                                      SCHEDULE 1

                          AES CHINA GENERATING CO. LTD.

                         CONDENSED FINANCIAL INFORMATION

                          UNCONSOLIDATED BALANCE SHEETS


                                                         As of November 30,
                                                       1997             1996
                                                       ----             ----
                                                           (in thousands)

ASSETS
Current Assets:
  Cash and cash equivalents.........................   $  1,241         $26,190
  Debt service reserves - held-to-maturity..........     18,225             -
  Investments - held-to-maturity....................      1,529           8,995
  Accounts receivable - The AES Corporation.........        363             -
  Accounts receivable from related parties..........        -             1,231
  Prepaid expenses and other current assets.........        933             630
                                                        -------         -------

      Total current assets..........................     22,291          37,046

Investment in subsidiaries (on the equity method)...    350,534         153,024

Office Equipment:
  Cost..............................................      1,429           1,220
  Accumulated depreciation..........................       (604)           (653)
                                                        -------         -------

      Total property, plant and equipment, net......        825             567

Other Assets:
  Deferred finance costs, net.......................      5,526             407
  Project development costs.........................        -             3,352
  Debt service reserves - held-to-maturity..........      9,113             -
  Deposits and other assets.........................        636             565
                                                        -------         -------

      Total other assets............................     15,275           4,324
                                                        -------         -------

TOTAL...............................................   $388,925        $194,961
                                                        -------         -------




                             See notes to Schedule 1



                                      S-2
<PAGE>
                                                                      SCHEDULE 1

                          AES CHINA GENERATING CO. LTD.

                         CONDENSED FINANCIAL INFORMATION

                          UNCONSOLIDATED BALANCE SHEETS


                                                         As of November 30,
                                                      1997              1996
                                                      ----              ----
                                                          (in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
  Accounts payable - The AES Corporation....     $      -            $   1,185
  Accounts payable..........................          1,407              1,114
  Accrued interest for notes payable........          8,264                -
  Accrued liabilities.......................          1,105              2,307
                                                    -------            -------

      Total current liabilities.............         10,776              4,606

Long-term Liability:
  Notes payable, net........................        179,844                -

Shareholders' Equity:
  Common stock..............................             12                -
  Class A common stock......................            -                   81
  Class B common stock......................            -                   75
  Additional paid-in capital................        184,566            183,980
  Retained earnings.........................         13,200              5,907
  Cumulative translation adjustment.........            527                312
                                                    -------            -------

     Total shareholders' equity............         198,305            190,355
                                                    -------            -------

TOTAL.......................................       $388,925           $194,961
                                                    -------            -------




                             See notes to Schedule 1


                                      S-3
<PAGE>
                                                                      SCHEDULE 1

                          AES CHINA GENERATING CO. LTD.

                         CONDENSED FINANCIAL INFORMATION

                     UNCONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                            Year Ended November 30,
                                                                           ---------------------------------------------------------
                                                                               1997                1996                  1995
                                                                           ---------------     ----------------     ---------------
   <S>                                                                     <C>                 <C>                  <C>         
   CASH FLOWS FROM OPERATING ACTIVITIES:
          Net cash used in operating activities                             $   (12,583)        $       (40)           $   (1,370)

   CASH FLOWS FROM FINANCING ACTIVITIES:
      Net proceeds from issuance of notes                                       174,100                  --                    --
      Proceeds from issuance of Class A common stock
         upon exercise of share options                                             224                  --                    --
      Repurchase of Class A common stock                                             --             (11,443)               (6,360)
                                                                           ---------------     ----------------     ---------------
          Net cash provided by / (used in) financing activities                 174,324             (11,443)               (6,360)

   CASH FLOWS FROM INVESTING ACTIVITIES:
      Additions to property, plant and equipment                                   (510)               (224)                 (445)
      Purchase of investments - held-to-maturity                                     --             (29,176)             (154,630)
      Purchase of investments - available-for-sale                                   --             (16,797)              (14,557)
      Proceeds from the maturity of investments - held-to-maturity                9,000              63,656               219,086
      Proceeds from sales of investments - available-for-sale                        --              16,969                14,609
      Investments in and advances to subsidiaries                              (168,393)           (104,714)              (28,453)
      Recoupment of investment in subsidiaries                                    1,813                 871                    --
      Project development costs and other assets                                 (1,313)             (2,625)               (1,327)
      Deposit to debt service reserves                                          (36,248)                 --                    --
      Withdrawal from debt service reserves                                       8,961                  --                    --
      Investment in note receivable                                                  --                  --                (7,500)
                                                                           ---------------     ----------------     ---------------
          Net cash (used in) / provided by investing activities                (186,690)            (72,040)               26,783
                                                                           ---------------     ----------------     ---------------
          (Decrease ) / increase in cash and cash equivalents                   (24,949)            (83,523)               19,053

   CASH AND CASH EQUIVALENTS,
      Beginning of year                                                          26,190             109,713                90,660
                                                                           ===============     ================     ===============
      End of year                                                          $      1,241        $     26,190             $ 109,713
                                                                           ===============     ================     ===============


Supplemental disclosures:

Cash dividends from:
     Consolidated subsidiaries                                               $       --        $         --           $        --
     Affiliates                                                                     446                 626                    --

</TABLE>

                             See notes to Schedule 1



                                      S-4
<PAGE>


                          AES CHINA GENERATING CO. LTD.


                               NOTES TO SCHEDULE 1



1.       APPLICATION OF SIGNIFICANT ACCOUNTING PRINCIPLES

         Accounting for Subsidiaries - AES China Generating Co. Ltd. (the
         Company) has accounted for the earnings of its subsidiaries on the
         equity method in the unconsolidated condensed financial information.

         Revenues - Construction and operation management fees earned by the
         parent from its consolidated subsidiaries are eliminated.


2.       GUARANTEES

         The Company has guaranteed to the lenders of a $65.0 million term loan
         facility at Wuhu Shaoda certain obligations of its wholly owned
         subsidiary under the joint venture contract, including an obligation to
         fund an $18.0 million subordinated loan and certain other liabilities
         which, in the aggregate, do not exceed $6.0 million.

         The Company has guaranteed the payment of accrued interest on the
         construction payable at Aixi Heart River which amounted to $0.7 million
         at November 30, 1997.



                                      S-5

<PAGE>


                                  EXHIBIT INDEX

Exhibit                                                        Sequentially
Number         Document                                        Numbered Page
------         --------                                        -------------
3.2            Bye-laws of the Company, as revised
               effective May 8, 1997.

25.1           Power of Attorney.

27.1           Financial Data Schedule.

99.1           Statement Re:  Computation of Fixed 
               Charge Coverage Ratio

99.2           "Business-Narrative Description of
               Business" on pages 2-19 of the
               Registrant's Annual Report on Form 10-K
               for the fiscal year ended November 30,
               1996, which is incorporated by reference
               in Item 1 hereof.