Mr. Song Jian, State Councilor and Minister of China State Science and Technology Commission recently expressed that the stability and strength of basic research activities shall be built upon the improved understanding of government at different levels on the importance of such activities and their support. We should nurture a group of scientific talents who are able to keep

abreast with the latest development of world scientific frontiers. He
stressed that high tech development shall be guided by addressing major
difficult issues, making demonstrations and establishing related new
industries.Future S&T priorities, he added, shall be oriented more in
the direction of localities and expansion of enterprises and weigh more
on the improvement of the nation's S&T level and S&T strength of
localities and enterprises. Those provinces enjoying fast economic
growth shall make breakthroughs in their S&T investment. The working
focus of SSTC shall be on preparation of relevant policies and
regulations and enhancing its macro-control capability.

Ms. Zhu Lilan, Executive Deputy Minister of SSTC aired the following
eight priority points on future work: 1) Strengthen basic research
sector and develop high technologies; improve knowledge production,
technical reserves and the nation's independent innovation capacity
and associate knowledge acquisition and utilization with highly
efficient knowledge production; 2) accelerate industrialization of
high technology results; associate the development of high tech
industries with the optimization of economic structures and create
new economic growth points, and assist industrial sectors, major and
pillar industries in particular to address their upgrading problems;
3) rejuvenate agriculture with science and education; develop "large
agriculture" and strive for major breakthroughs in water-saving,
ecologically oriented and efficient agriculture and reform of
circulation system of agricultural produce; 4)continuously alleviate
poverty with science and technology, enhance S&T capacity of
backward areas and assist township enterprises to step up on
a new stage; 5) promote the establishment of environment protection
oriented industries with the assistance of sustainable development
strategies; 6) promote the diffusion and utilization of research results,
associate the diffusion with the development of nation's economic
information system and fully utilize the results achieved in the
field of information technology; 7) associate the improvement of
laborers' quality with the nation's popularization of scientific and
technological knowledge; 8) open up more widely and strengthen S&T
cooperation with foreign countries to serve the enhancement of
international competitiveness.



RESEARCH AND DEVELOPMENT

Researchers working for the Department of Biology, Harbin Teachers
University have successfully introduced the cold resistant genes from
a kind of American fish into tomatoes and made them strong in cold
resistance and high in yield. The genetically changed species is
also able to pass the changed genetic properties to its following
generations.

Professors Huang Yongfen and Wang Qingyin of Dept. of Biology, Harbin
Teachers University, started their research on transgenetic tomato
breeding in 1990. They found out that a kind of American cold water
fish dwelling in temperate and cold zones is able to produce lager
quantity of cold resistant protein. Based on the said discovery, the
researchers derived genetically changed tomato seeds by separating
cold resistant genes from the fish and injected them into pollen
tubes of blooming tomatoes. Tested with molecule hybrid method, it
was proved that the cold resistant genes had been smoothly integrated
into tomato's chromosome. Thanks to 6-year continuous selections and
cultivation, a brand new tomato species carrying strong cold
resistant genes was developed.

Tests have shown that the lethal temperature of new species dropped
down by 2 degrees centigrade against that of ordinary ones with its
effective cumulative temperature also down by 125 degrees centigrade.
The new species is of strong cold resistant expression. Field
experiments carried out together with Harbin Green Vegetables Co. Ltd.
have produced the following facts: the new species can be
transplanted 15 days ahead of normal schedule in spring. When
attacked by a late frost, new species is able to survive the cold
while normal tomato seedlings will all be frozen to death. The more
interesting finding is that when autumn is fading away and vast land
turning pale yellow, only trans-genetic tomato are greeting people
with their green leaves and red fruits. Their harvest period can be
delayed as long as one month.

It is reported that the stem diameter of the trans-genetic tomato
doubles and its height goes up by one third than that of ordinary
species. Its yield may reach 10,000 or 13,000 kilos per mu, 70% more
than that of ordinary species with its largest fruit reaching 400
grams in weight. The new species tastes not only as delicious as the
normal one but also enjoys a 15% increase of its Vitamin C content.


INVESTMENT GUIDE

The responsible person of the Foreign Investment Department of the
State Planning Commission said recently at the symposium of Sino-
Korean Economic Prospects and Partnership during the 21st Century,
from now on the Chinese government will pay more attention to
optimizing industrial and regional structures of foreign capital.

The government will encourage foreign investors to make commitments
in projects of agricultural development, energy construction with
focus on electricity, transportation construction with emphasis on
highways as well as development of major raw materials, projects of
technological transformation which involve advanced technologies and
can improve product performances, and in projects which can upgrade
product quality and enhance the capacity to earn foreign exchange
through exportation. At the same time foreign investors will be
guided to have a presence in the central and western regions.

For the purpose of encouraging foreign investors to make commitments
in the central and western regions, projects in coastal areas which
are subject to restrictions will be given a freer rein. During the
period of the Ninth Five-Year Plan 1996-2000, advantages in energy,
raw materials and human resources in the central and western regions
shall be brought into full play and foreign investors be encouraged
to initiate resource-development-oriented projects. During the period
of the Ninth Five-Year Plan , while continuing their efforts to
concentrate on developing export-oriented economy, coastal areas
shall make great efforts to raise technological level and increase
added value in foreign-funded projects so as to fulfill the ladder-
shaped transfer of labor-intensive projects to the central and
western regions. At the end of the Ninth Five-Year Plan those regions
shall be able to absorb about 30% of total foreign investment in
China.

When referring to the sectors opening to foreign investment, the
responsible person said, since 1992 China has opened up such sectors
as retail business, civil aviation, and insurance; since 1996 China
has been establishment of Chinese-foreign joint ventures engaged in
foreign trade, chain-store operation, and pilot experiments of
foreign banks' handling RMB business. Hereafter, experiments in some
sectors such as value added telecommunications and tourism can be
conditionally opened up to foreign capital shall be conducted on
selective points. In terms of the source of foreign capital is
concerned, during the past 18 years, the foreign investment under
agreement has amounted to 470 billion US dollars, 70% of which comes
from Hongkong, Macao and Taiwan ( Of course, a part of the foreign
investment comes from Europe, USA and Japan and flows into China
via above-mentioned regions). From now on, pluralism of sources of
foreign capital shall be encouraged and investment from newly
industrialized countries and developing countries in particular be
welcomed.

This responsible person stressed, around the central task of
emphasizing transformation from quantity to quality in absorbing
foreign capital, China encourages foreign capital to flow into
infrastructures, basic industries, new and high-tech industries as
well as industries earning foreign exchange through exportation. In
order to satisfy the requests of readjusting structures and
strengthening opening up to the outside world, relevant organizations
under the Chinese government are working hard to formulate the
"Interim Regulations for BOT (Build, Operate and Transfer)
Agreements" and are supervising pilot experiments in BOT or project
financing in the fields of electric power , communications and urban
water plants after having issued the "Interm Regulations for Overseas
Project Financing" in April, 1997. This Year, the Chinese government
will set about modifying the " Guideline for Foreign-Funded
Industries" so that its various stipulations related to
encouragement, permission, restriction and prohibition will be even
more in line with national industry policy, the needs of market
economy and international practices.

The responsilbe person predicted, in the next five or fifteen years,
China will continue to remain a leader in scales of invetment and
consumption among all developing countries. However, future economic
development of China will still mainly depend on domestic capital.

Nevertheless, there is no denying the fact that China is still a
developing country with low income. With a view to supporting
sustained development of national economy, the Chinese government
will persist in opening up to the outside world so as to introduce
foreign capital, advanced equipment, technology and management
experience.

Q: What is the proper procedure for foreign investors to have a presence
in development zones?

A: When foreign investors intend to invest in development zones and
set up Chinese-foreign joint ventures or cooperative enterprises,
they can act in accordance with the following procedure:

The Chinese side and the foreign side shall sign a letter of intent
concerning joint venture or cooperation. The foreign investor shall
have consultation with the potential Chinese partner chosen by
himself in the development zone. When an agreement on intent for
joint venture or cooperation is reached, the legal persons of both
sides shall sign a letter of intent concerning joint venture or
cooperation.

Q: What should be included in a letter of intention concerning joint
venture or cooperation?

A: It should include:

(1) basic facts about both sides;

(2) investment scale and registered capital of the project; the
investment proportion for each side and the terms under which the
capital from each side is contributed;

(3) scope and scale of the project, proportion of domestic sales to
export scales and the way of marketing;

(4) duration of joint venture or cooperation;

(5) liabilities of each side as well as other issues that need
clarifying in the letter of intent.

Q: How should a project proposal be drawn up?

A: In accordance with the signed letter of intent, the Chinese side
should draw up a project proposal, which shall be submitted to the
foreign trade and economic cooperation department and the planning
departmet of the administration committee in the development zone
for approval or submission to the higher authorities. The proposal
should include:

(1) basic facts about both sides;

(2) necessity and feasibility of joint or cooperative production;

(3) technologies planned to be introduced and the terms under which
they are introduced;

(4) selection of products and orientation of development;

(5) scale of production and analysis of both domestic and overseas markets;

(6) provision of primary raw materials and matching parts;

(7) location and surroundings of the joint venture or cooperative
enterprise, measures to be adopted for environmental protection;
consumption of energy and municipal public utilities;

(8) the kind and duration of joint venture or cooperation;

(9) estimated number of staff and its source;

(10) estimated amount of total investment, registered capital,
investment share for of each side and the terms under which the
capital is contributed;

(11) financing and foreign exchange balance;

(12) estimated economic benefits and the way of benefit distribution.

Q: How shall examining and approving authorities handle the proposal
after receiving it?

A: The examining and approving authorities shall investigat the
credit of the foreign investor and the feasibility of the project .

If no reply given a month after the examining and approving
authorities received an investigative report in regard to the credit
of the foreign investor, the Chinese investor shall regard it as
tacit consent with no objection and may set about drawing up
feasibility study report. Proposals with regard to cooperatively-ran
or cooperatively-ran productive projects with investment exceding the
quota shall be examined and approved by the State Planning Commission,
excluding those stipulated separately by the State Council.

Proposals in regard to foreign-funded productive or non-productive
projects with investment below the quota and which can by themselves
achieve balance in capital (including both foreign currency and RMB),
resources, transportation, raw materials, energy and other conditions
for construction and operation and which are subordinate to local
authorities shall be examined and approved by the planning or
economic and trade departments provinces, autonomous regions,
municipalities directly under the central government, municipalities
listed in a separate plan and coastal open cities or by the
authorized administration committees in the development zone.

Projects, subordinate to ministries and commissions of the State
Council, shall be examined and approved by relevant ministries and
commissions. Major projects whose total amount of investment exceeds
100 million US dollars shall go through the procedure from the
administration committee of the development zone to the planning or
economic and trade departments of provinces, autonomous regions,
municipalities directly under the central government and
municipalities listed in a separated plan, and then to the State
Planning Commission, the State Economic and Trade Commission or the
Ministry of Foreign Trade and Economic Cooperation, and finally to
the State Council for examination and approval. The two cooperative
parties shall start working out the feasibility study report only after the
project proposal is approved by examining and approving authorities.