STOCK ESCROW AGREEMENT

         STOCK ESCROW AGREEMENT,  dated as of _________, 2005 ("Agreement"),  by
and  among  CHARDAN  CHINA  ACQUISITION   CORP.  III,  a  Delaware   corporation
("Company"),  LI ZHANG, KERRY PROPPER,  JIANGNAN HUANG, CHARDAN CAPITAL PARTNERS
and SUJG, INC.  (collectively  "Initial  Stockholders")  and  CONTINENTAL  STOCK
TRANSFER & TRUST COMPANY, a New York corporation ("Escrow Agent").

         WHEREAS, the Company has entered into an Underwriting Agreement,  dated
_____________,  2005 ("Underwriting  Agreement"),  with  EarlyBirdCapital,  Inc.
("EBC") acting as representative of the several underwriters (collectively,  the
"Underwriters"),  pursuant to which, among other matters,  the Underwriters have
agreed to purchase 5,000,000 units ("Units") of the Company.  Each Unit consists
of one share of the Company's  common stock, par value $.0001 per share ("Common
Stock"),  and two Warrants,  each Warrant to purchase one share of Common Stock,
all  as  more  fully  described  in  the  Company's  final   Prospectus,   dated
_____________, 2005 ("Prospectus") comprising part of the Company's Registration
Statement on Form S-1 (File No. 333-125018) under the Securities Act of 1933, as
amended ("Registration  Statement"),  declared effective on _____________,  2005
("Effective Date").

         WHEREAS,  the Initial  Stockholders  have agreed as a condition  of the
sale of the Units to deposit their shares of Common Stock of the Company, as set
forth opposite their respective names in Exhibit A attached hereto (collectively
"Escrow Shares"), in escrow as hereinafter provided.

         WHEREAS,  the  Company  and the  Initial  Stockholders  desire that the
Escrow Agent accept the Escrow  Shares,  in escrow,  to be held and disbursed as
hereinafter provided.

         IT IS AGREED:

    1.   Appointment   of  Escrow   Agent.   The   Company   and   the   Initial
Stockholders  hereby  appoint  the Escrow  Agent to act in  accordance  with and
subject to the terms of this  Agreement and the Escrow Agent hereby accepts such
appointment and agrees to act in accordance with and subject to such terms.

    2.   Deposit of Escrow Shares.  On or  before the  Effective  Date,  each of
the  Initial  Stockholders  shall  deliver  to  the  Escrow  Agent  certificates
representing his respective  Escrow Shares,  to be held and disbursed subject to
the  terms  and  conditions  of  this   Agreement.   Each  Initial   Stockholder
acknowledges that the certificate  representing his Escrow Shares is legended to
reflect the deposit of such Escrow Shares under this Agreement.

    3.   Disbursement of the Escrow Shares.   The Escrow  Agent  shall  hold the
Escrow  Shares  until the  third  anniversary  of the  Effective  Date  ("Escrow
Period"),  on which date it shall,  upon written  instructions from each Initial
Stockholder,  disburse each of the Initial  Stockholder's  Escrow Shares to such
Initial Stockholder;  provided, however, that if the Escrow Agent is notified by
the Company  pursuant to Section 6.7 hereof that the Company is being liquidated
at any time  during the Escrow  Period,  then the Escrow  Agent  shall  promptly
destroy the  certificates  representing  the Escrow  Shares;  provided  further,
however,  that if, after the Company consummates a Business Combination (as such
term is defined in the  Registration  Statement),  it (or the surviving  entity)
subsequently consummates a liquidation,  merger, stock exchange or other similar
transaction  which results in all of the  stockholders of such entity having the
right to exchange  their  shares of Common Stock for cash,  securities  or other
property, then the Escrow Agent will, upon receipt of a certificate, executed by
the Chief Executive Officer or Chief Financial  Officer of the Company,  in form
reasonably  acceptable to the Escrow Agent,  that such transaction is then being
consummated,  release  the  Escrow  Shares  to  the  Initial  Stockholders  upon
consummation  of the  transaction  so that they can similarly  participate.  The
Escrow Agent shall have no further duties  hereunder  after the  disbursement or
destruction of the Escrow Shares in accordance with this Section 3.
<PAGE>

    4.   Rights of Initial Stockholders in Escrow Shares.

         4.1 Voting Rights as a Stockholder. Subject to the terms of the Insider
Letter  described  in Section  4.4 hereof  and  except as herein  provided,  the
Initial  Stockholders  shall retain all of their rights as  stockholders  of the
Company during the Escrow Period,  including,  without limitation,  the right to
vote such shares.

         4.2 Dividends and Other  Distributions in Respect of the Escrow Shares.
During the Escrow  Period,  all  dividends  payable in cash with  respect to the
Escrow  Shares  shall be paid to the  Initial  Stockholders,  but all  dividends
payable in stock or other  non-cash  property  ("Non-Cash  Dividends")  shall be
delivered to the Escrow Agent to hold in accordance  with the terms  hereof.  As
used herein,  the term "Escrow  Shares"  shall be deemed to include the Non-Cash
Dividends distributed thereon, if any.

         4.3  Restrictions  on  Transfer.  During  the Escrow  Period,  no sale,
transfer  or other  disposition  may be made of any or all of the Escrow  Shares
except (i) by gift to a member of Initial Stockholder's immediate family or to a
trust,  the  beneficiary  of which is an Initial  Stockholder  or a member of an
Initial Stockholder's  immediate family, or to the beneficial owners or partners
of an  Initial  Stockholder  for no  additional  consideration  if such  Initial
Stockholder is an entity, (ii) by virtue of the laws of descent and distribution
upon death of any Initial Stockholder, or (iii) pursuant to a qualified domestic
relations  order;  provided,  however,  that such  permissive  transfers  may be
implemented only upon the respective  transferee's written agreement to be bound
by the terms and  conditions of this  Agreement and of the Insider Letter signed
by the Initial  Stockholder  transferring  the Escrow Shares.  During the Escrow
Period,  the Initial  Stockholders shall not pledge or grant a security interest
in the Escrow  Shares or grant a security  interest in their  rights  under this
Agreement.

         4.4 Insider  Letters.  Each of the Initial  Stockholders has executed a
letter  agreement  with EBC and the  Company,  dated as  indicated  on Exhibit A
hereto, and which is filed as an exhibit to the Registration Statement ("Insider
Letter"),  respecting the rights and obligations of such Initial  Stockholder in
certain events, including but not limited to the liquidation of the Company.

    5.   Concerning the Escrow Agent.

         5.1 Good Faith  Reliance.  The Escrow Agent shall not be liable for any
action  taken or omitted by it in good faith and in the exercise of its own best
judgment,  and may rely  conclusively  and shall be protected in acting upon any
order,  notice,  demand,  certificate,  opinion or advice of counsel  (including
counsel  chosen by the Escrow  Agent),  statement,  instrument,  report or other
paper  or  document  (not  only as to its due  execution  and the  validity  and
effectiveness of its provisions,  but also as to the truth and  acceptability of
any information  therein  contained) which is believed by the Escrow Agent to be
genuine  and to be signed or  presented  by the proper  person or  persons.  The
Escrow  Agent  shall  not be bound  by any  notice  or  demand,  or any  waiver,
modification,  termination or rescission of this Agreement unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties and,
if the duties or rights of the Escrow Agent are  affected,  unless it shall have
given its prior written consent thereto.

                                       2
<PAGE>

         5.2  Indemnification.  The Escrow Agent shall be  indemnified  and held
harmless by the Company from and against any  expenses,  including  counsel fees
and  disbursements,  or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding  involving any claim which in any way, directly
or indirectly,  arises out of or relates to this Agreement,  the services of the
Escrow Agent  hereunder,  or the Escrow Shares held by it hereunder,  other than
expenses or losses  arising from the gross  negligence or willful  misconduct of
the Escrow  Agent.  Promptly  after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action,  suit or proceeding,  the
Escrow Agent shall notify the other parties  hereto in writing.  In the event of
the  receipt of such  notice,  the Escrow  Agent,  in its sole  discretion,  may
commence  an action in the nature of  interpleader  in an  appropriate  court to
determine  ownership or  disposition  of the Escrow Shares or it may deposit the
Escrow  Shares  with the clerk of any  appropriate  court or it may  retain  the
Escrow Shares pending receipt of a final, non-appealable order of a court having
jurisdiction  over all of the parties  hereto  directing  to whom and under what
circumstances  the  Escrow  Shares  are  to  be  disbursed  and  delivered.  The
provisions  of this  Section  5.2 shall  survive in the event the  Escrow  Agent
resigns or is discharged pursuant to Sections 5.5 or 5.6 below.

         5.3  Compensation.  The Escrow  Agent shall be  entitled to  reasonable
compensation  from the Company for all services  rendered by it  hereunder.  The
Escrow  Agent shall also be entitled to  reimbursement  from the Company for all
expenses paid or incurred by it in the  administration  of its duties  hereunder
including,  but not  limited to, all  counsel,  advisors'  and agents'  fees and
disbursements and all taxes or other governmental charges.

         5.4 Further Assurances. From time to time on and after the date hereof,
the Company and the Initial  Stockholders shall deliver or cause to be delivered
to the Escrow Agent such further documents and instruments and shall do or cause
to be done such  further acts as the Escrow  Agent shall  reasonably  request to
carry out more  effectively  the provisions and purposes of this  Agreement,  to
evidence  compliance herewith or to assure itself that it is protected in acting
hereunder.

         5.5  Resignation.  The  Escrow  Agent  may  resign  at any  time and be
discharged  from its duties as escrow  agent  hereunder  by its giving the other
parties  hereto written notice and such  resignation  shall become  effective as
hereinafter provided.  Such resignation shall become effective at such time that
the Escrow Agent shall turn over to a successor  escrow  agent  appointed by the
Company,  the  Escrow  Shares  held  hereunder.  If no new  escrow  agent  is so
appointed  within  the 60 day  period  following  the  giving of such  notice of
resignation,  the Escrow  Agent may deposit the Escrow  Shares with any court it
reasonably deems appropriate.

         5.6  Discharge  of Escrow  Agent.  The Escrow Agent shall resign and be
discharged  from its duties as escrow agent hereunder if so requested in writing
at any time by the other parties hereto, jointly,  provided,  however, that such
resignation  shall become  effective  only upon  acceptance of  appointment by a
successor escrow agent as provided in Section 5.5.

                                       3
<PAGE>

         5.7 Liability.  Notwithstanding  anything  herein to the contrary,  the
Escrow Agent shall not be relieved  from  liability  hereunder for its own gross
negligence or its own willful misconduct.

    6.   Miscellaneous.

         6.1 Governing Law. This  Agreement  shall for all purposes be deemed to
be made under and shall be construed in accordance with the laws of the State of
New York, without giving effect to conflicts of law principles that would result
in the application of the substantive laws of another jurisdiction.

         6.2 Third Party Beneficiaries.  Each of the Initial Stockholders hereby
acknowledges  that  the  Underwriters  are  third  party  beneficiaries  of this
Agreement and this  Agreement  may not be modified or changed  without the prior
written consent of EBC.

         6.3 Entire Agreement.  This Agreement  contains the entire agreement of
the parties  hereto with  respect to the subject  matter  hereof and,  except as
expressly  provided  herein,  may  not  be  changed  or  modified  except  by an
instrument in writing signed by the party to the charged.

         6.4  Headings.  The  headings  contained  in  this  Agreement  are  for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation thereof.

         6.5 Binding  Effect.  This Agreement shall be binding upon and inure to
the benefit of the respective  parties  hereto and their legal  representatives,
successors and assigns.

         6.6 Notices. Any notice or other communication required or which may be
given  hereunder  shall be in writing and either be delivered  personally  or be
mailed,  certified or registered  mail, or by private  national courier service,
return receipt  requested,  postage  prepaid,  and shall be deemed given when so
delivered  personally  or, if  mailed,  two days after the date of  mailing,  as
follows:

         If to the Company, to:

               Chardan China Acquisition Corp. III
               625 Broadway
               Suite 1111
               San Diego, California 92101
               Attn:  Chairman

         If to a Stockholder, to his address set forth in Exhibit A.

         and if to the Escrow Agent, to:

               Continental Stock Transfer & Trust Company
               17 Battery Place
               New York, New York 10004
               Attn:  Chairman

                                       4
<PAGE>

         A copy of any notice sent hereunder shall be sent to:


               Blank Rome LLP
               The Chrysler Building
               405 Lexington Avenue
               New York, New York 10174
               Attn:  Robert J. Mittman, Esq.

         and:

               EarlyBirdCapital, Inc.
               275 Madison Avenue
               Suite 1203
               New York, New York 10016
               Attn:  David M. Nussbaum, Chairman

         and:

               Graubard Miller
               The Chrysler Building
               405 Lexington Avenue
               New York, New York 10174
               Attn:  David Alan Miller, Esq.


         The parties may change the persons and  addresses  to which the notices
or other  communications  are to be sent by  giving  written  notice to any such
change in the manner provided herein for giving notice.

         6.7 Liquidation of the Company. The Company shall give the Escrow Agent
written  notification  of the  liquidation and dissolution of the Company in the
event that the Company  fails to  consummate a Business  Combination  within the
time period(s) specified in the Prospectus.

                                       5
<PAGE>

         WITNESS  the  execution  of this  Agreement  as of the date first above
written.

                                       CHARDAN CHINA ACQUISITION CORP. III


                                       By:
                                           ------------------------------
                                             Jiangnan Huang, Chairman



                                       INITIAL STOCKHOLDERS:


                                       ---------------------------
                                       Li Zhang


                                       ---------------------------
                                       Kerry Propper


                                       ---------------------------
                                       Jiangnan Huang


                                       CHARDAN CAPITAL PARTNERS


                                       By:
                                          --------------------------------
                                          Name:
                                          Title:


                                       SUJG, INC.


                                       By:
                                          --------------------------------
                                          Name:
                                          Title:


                                       CONTINENTAL STOCK TRANSFER
                                         & TRUST COMPANY


                                       By:
                                          --------------------------------
                                          Name:
                                          Title:

                                       6
<PAGE>



                                    EXHIBIT A

<TABLE>
<CAPTION>
Name and Address of                                   Number           Stock               Date of
Initial Stockholder                                of Shares     Certificate Number     Insider Letter
-------------------                                ---------     ------------------     --------------
<S>                                                  <C>                 <C>            <C>
Li Zhang                                             151,013             1, 6           April 30, 2005
Chardan South China Acquisition Corporation
625 Broadway
Suite 1111
San Diego, California 92101

Kerry Propper                                        222,000             2, 7           April 30, 2005
Chardan South China Acquisition Corporation
625 Broadway
Suite 1111
San Diego, California 92101

Jiangnan Huang                                       151,013             3, 8           April 30, 2005
Chardan South China Acquisition Corporation
625 Broadway
Suite 1111
San Diego, California 92101

Chardan Capital Partners                             635,474             4, 9           April 30, 2005
c/o Dr. Richard D. Propper
Chardan South China Acquisition Corporation
625 Broadway
Suite 1111
San Diego, California 92101

SUJG, Inc.                                            90,500             5, 10          April 30, 2005
c/o Kerry Propper
Chardan South China Acquisition Corporation
625 Broadway
Suite 1111
San Diego, California 92101
</TABLE>