The fast-growing basic mechanical component sector has provided a boost to the growth of the machinery industry. The key components include fluid power products,power transmission and control, seals, bearings, powder metallurgy, fastenings, springs and gears.

"High-tech component products account for 40 per cent of the sales of
the whole industry," said Sha Baosen, vice-director of the basic
equipment department under the Ministry of the Machinery Industry.

Currently, the sector has about 1.1 million workers in 8,000
enterprises, with total sales topping 30 billion yuan ($4.5 billion)
last year.

The central government has granted substantial support to the sector
in terms of favourable policies and financing over the past few years.

To date, the industry has attracted foreign investment worth $500
million.

Sha predicted that sales in the component industry will exceed 48.5
billion yuan ($5.8 billion) in 2000, with exports expected to hit $1
billion.

In 1996, component exports earned $800 million in foreign exchange.

The ratios of the exports of bearings, fastenings and chains to the
total exports of mechanical components have risen to 25 per cent, 23
per cent, 40 per cent respectively from 6 per cent, 10 per cent and 7
per cent a decade before.

Domestic manufacturers have been able to provide complicated
precision powder metallurgy components to the car-making industry,
electric appliance sector and agricultural machinery manufacturers.

Currently, the industry is capable of producing 7,500 varieties of
bearings ranging from common types to precision bearings. The sales
of these products make up the lion's share of the mechanical parts
industry.

Last year, $400 million of bearings were exported thanks to their
high quality and technical content. This is the result of large-scale
technical renovation in the sector.

Fluid power components and systems are an essential element in
factory automation. In the next few years, it is expected that the
agriculture, energy, raw materials, construction and processing
sectors will require large amounts of mechanical equipment,
triggering a huge rise in demand for these components.

China sent an ApStar-2R telecommunications satellite belonging to
Hong Kong's Asia-Pacific Satellite Telecommunications into orbit with
a Long March 3b rocket at 03:13 Beijing time on October 17.

The rocket was launched at the Xichang Satellite Launching Centre in
Southwest China's Sichuan Province. The satellite separated from the
rocket after nearly 25 minutes of flight.

The Xi'an Satellite Monitoring Centre reported that the satellite has
entered its orbit with an apogee of 47,922 kilometres, a perigee of
201 kilometres, and a dip of 24.4 degrees.

The 3,700-kilogram ApStar-2R satellite, which has 28 c-band and 15
Ku-band transponders, is manufactured by US company Space System
(Loral). With a life span of 15 years, it will be positioned above
the equator at 76.5 degrees east longitude.

This is the third launch of a Long March 3b, the newest rocket
developed by the China Carrier Rocket Technology Institute. It has a
5,000-kilogram payload and is the most powerful rocket produced to
date by China.

The Long March 3b will be used to launch three more telecommunications
satellites in the near future.

The Law of Technology Contracts, which has been in place in China for
ten years, has significantly promoted the development of technology
markets, officials said.

Under the law's guidance, domestic technology trade volume has been
increasing by a large margin every year.

For example, the volume exceeded 30 billion yuan ($ 3.6 billion) by
the end of last year, almost 10 times the 3.3 billion yuan ($ 397
million) in 1987, when the law was instituted.

The progress of the technology market has greatly stepped up
industrial restructuring, upgraded the quality of products and
improved technology in enterprises, said Lu Shiliang, deputy-director
of China Technology Management and Promotion Centre, at a press
conference recently in Beijing.

"Technology contracts have provided a legislative basis for co-
operation among domestic and overseas enterprises, research
institutes and institutions of higher learning over the past 10
years," said Lu.

During the Eighth Five-Year Plan (1991-1995), technology trade income
across the country reached over 39 billion yuan ($4.7 billion),
double the State allocation for scientific research over the same
period.

The Law of Technology Contracts has also propelled co-operation
between domestic and overseas enterprises, Lu said.

Presently, about 70 per cent of domestic large-and mediumsized firms
use technologies that are imported from developed countries, and 20
per cent of small firms use Sino-foreign jointly developed
techologies.

Thanks to painstaking efforts of more than a decade, China's
biotechnological research activities have harvested a group of
important results enjoying international advanced levels. Now these
results are in the process of industrialization.

In the field of agriculture, bilinear hybrid rice developed by
Chinese researchers has contributed greatly to the increase of grain
yield; tomatoes of long storage life have made their appearance on
market; trans-genetic pest-resistant cotton has walked out from lab
research; potatoes resistant to yellow dwarf, powdery mildew and rot
have been successfully developed; the research and development of ox
embryo have entered the stage of practical utilization; and the
research of trans-genetic fish species has reached the world advanced
level. In the field of medical sciences, the successful development
of hepatitis B vaccine has greatly decreased the occurrence of the
disease and played a decisive role in curbing the spread of the
disease in China; China succeeded in making a interferon, g
interferon and white cell meson for curing viral diseases and
malignant tumour; in addition, research projects on necrosis,
hematopoietin, human auxin and urotinase have advanced into pilot
experiment stage; and hemophilia B and genetic treatment of malignant
tumors have seen encouraging results.

Through preparation efforts of one year and more, an international
enterprise incubator, the first of its kind in China, was put into
operation at Xi'an High and New Tech Development Zone on October 7,
1997. The incubator will assist small and medium S&T enterprises at
home and abroad to be directly involved in international competition.

With the support of UNDP, State Science and Technology Commission had
planned and prepared in the last three years for the establishment of
international enterprise incubators in China. In November 1996, it
officially authorized high and new tech development zones in Suzhou,
Fengtai Beijing, Chongqing and Xi'an to be the experimental bases for
such incubators. Chinese international enterprise incubators will
mainly provide efficient assistance to small and medium enterprises
at home and abroad in their direct involvement in international
competition. Their major objectives are: attract small and medium S&T
enterprises from abroad to cooperation with Chinese enterprises for
more market opportunities and mutual development through providing
internationally advanced basic facilities and conditions, quality
service and extensive working and information network at home and
abroad. In addition, it will help and support Chinese small and
medium enterprises in making their entrance into international market.
It will become a demonstration and guide to the future development of
China's high tech industrialization centers.

Xi'an International Enterprise Incubator is founded on the basis of
Xi'an High and New Tech Industrialization Service Center. Up to date,
it has established 3 enterprise incubators on a premises of 35,500
square meters. There are 150 enterprises in the process of incubation
with 26 enterprises graduated and allowed into development zones for
scale development. In the last four years, the center has seen fast
growth of target indicators and was rated one of the top ten service
centers by SSTC. In 1996, it was authorized as one of the first
eight entitled to establish international enterprises incubators in
the country.

China will honour its commitment to protect the ozone layer and
gradually ban ozone-demand substances (ODS) by 2010.

Wang Jirong, deputy director of the National Environmental
Protection Agency of China (Nepa) reaffirmed the government's
promise recently in Beijing.

Wang was attending a ceremony marking both International Ozone
Layer Protection Day and the 10th anniversary of the founding of
International Montreal Protocol on Ozone Demand Substances.

The ozone layer is an invisible sheet-like covering in the
stratosphere containing a high concentration of ozone, which
absorbs most of the sun's ultraviolet radiation.

Environmental experts believe ODS use depletes the ozone layer,
reducing the earth's protection from the ultraviolet rays.

Increased ultraviolet radiation will lead to a higher rate of
booth cancer and cataracts while lowering people's immunity to
diseases.

Scientists discovered a hole in the ozone layer, over the
Antarctic, a few years ago.

The protocol, initiated by 46 countries during a 1987 meeting in
Montreal, Canada, has been revised several times in accordance
with changing economic conditions.

The document calls on all nations to reduce using, and eventually
eliminate use of, chemicals which damage the ozone layer by 2010.

To data, 162 countries have signed the protocol. China joined in 1991.
Since then, Chinese officials have diligently worked to fulfill the
country's obligations, Wang said.

A national group was established in 1992 to lead China's efforts
in protecting the ozone layer. It comprises officials and experts
from 18 ministries and commissions.

The group developed a national strategy, and made public ODS
elimination plans, for eight chemical-processing and refrigerant-
manufacturing industries.

Nepa and eight government departments, in charge of chemical and
light industries, released a notice during the summer asking all
aerosol-product manufacturers to stop using chlorofluorocarbons
(CFCs) next year.

CFCs damage the ozone layer. However, such aerosol products are
used daily-including mousse, various cosmetics and pesticides.

China is proposing that manufacturers replace CFCs with
environmentally friendly substances; for example, liquefied
petroleum gas.

The notice said the government will not register aerosol products
containing CFCs after January 1. Also, factories manufacturing
these products will not be approved.

Existing factories, if violating the notice, will be dealt with
according to the law.

The ban also prohibits planning and economic departments, at all
levels, from approving projects if the products contain CFCs.

Li Lei, an air-pollution control official with Nepa, said China is
now co-operating with a dozen countries.

So far, China has received $ 150 million in grants from United
Nations' agencies and foreign countries-used to implement 210 ODS
elimination and replacement projects.

Publicity has been undertaken to enhance people's awareness about
the problem.

A recent national knowledge contest attracted 153,000
participants from across China.

The Regulations on Encouraging Foreign Business People To Invest
in High-Tech Industry will be issued soon, according to the
Beijing Economic Information Center.

Foreign-funded enterprises involved in high-tech areas will enjoy
priority in approval, registration, bank loans, customs
formalities, officials going abroad, establishment of overseas
enterprises and demand on public facilities. For foreign-funded
enterprises which have obtained land-use rights by direct sale,
payment for the sales is collected at 75 percent rate, and
resource fees are levied at a reduced 50 percent rate.

In line with the state industrial policy, the Beijing planning,
economic, economic and trade commissions have decided that the
proportion of products for the domestic market may be appropriately
enlarged, and products which are really in urgent need and can serve
as import substitutes are allowed to be all sold domestically.

The registered enterprises in the state-level Beijing Economic and
Technological Development Zone and the Beijing New-Tech Industrial
Development Experimental Zone, as well as their operations elsewhere
in China can also enjoy the preferential policies.

The above-said regulations apply to all foreign-funded, high-tech
enterprises set up in Beijing by overseas businesses, economic
organizations or individuals.

Beijing has 5,000 high-tech enterprises, 30 of which have over
100 million yuan in annual income each. At the top are the Legend,
Stone and Peking University Founder groups, whose annual incomes
are up to 1 billion yuan each. Twenty firms are listed among the
state's 100 successful high-tech enterprises.

China is likely to restore its preferential tariff policy for the
import of equipment by foreign-funded high-tech enterprises in
the early half of next year, a senior trade official announced in
Beijing on October 17.

China recently abandoned tariff incentives for equipment imported
by various foreign-funded firms in the hope of standardizing the
country's tariff policies towards domestic and foreign
enterprises.

Foreign investors in high-tech sectors stood to suffer most from
this tariff change, because imported equipment makes up a
considerable part of their total investment in China.

Foreign investors would have to pay nearly 40 per cent duties in
total, if value-added tax is included.

"At present, the government departments concerned are studying
which sectors can be classified as high-tech," vice-Minister of
Foreign Trade and Economic Co-operation Sun Zhenyu said in
Beijing on October 17.

Sun also pointed out that China has greatly improved its investment
climate, despite certain unresolved issues.

As for the violation of intellectual property rights, he said,
the best way is for foreign investors to resort to Chinese courts.

China is determined to crack down on copyright piracy and in the
past few years has set up a number of courts specialized in the
protection of intellectual property rights.