"We enjoyed stable development as the industry's total output achieved a year-on-year increase of about 28 percent," said Zhao Yuhai.

But the global high-tech industry is estimated to have contracted last year, said Zhao.

The center?s statistics indicate that the total output of China's high-tech industry reached 1.5 trillion yuan (US$180.7 billion) between January and September last year. The industry's export volume was 32 billion yuan (US$3.86 billion) during the same period, a year-on-year increase of 40 percent.

"But the expansion is a quantitative increase and China still needs to sharpen its high-tech enterprises' core competitive edge," said Zhao, director-general with the ministry's Torch High-tech Industry Development Center.

Zhao's center was established in 1988. As indigenous high-tech industries began to develop in the late 1980s, China initiated the Torch Plan in 1988 to promote the commercial utilization of high-tech achievements and to boost traditional industries by encouraging them to adopt advanced technology.

To develop the competitiveness of China's high-tech enterprises, the country is encouraging them to cooperate with advanced international firms, Zhao told a discussion meeting on the Torch Plan yesterday in Beijing.

Small and medium-sized Sino-foreign joint ventures and rural enterprises have become a main force in the country's technological upgrading, according to the center?s statistics.

More than 80 percent of the high-tech projects listed in the 2002 State Torch Plan are being carried out by some 1,100 small and medium-sized enterprises.

The ministry approved 1,358 Torch Plan projects last year, focusing on high-tech fields such as information technology, biological engineering, materials science and environmental protection.

The Torch Plan projects will enjoy preferential financial policies from the State and local governments, such as tax reductions or exemptions, as well as subsidies and low-interest loans.

After 15 years with the Torch Plan in place, some high-tech industries have become pillars of the local economy, such as the information technology industry in Beijing, Guangzhou and Shenzhen, and the new-materials industry in East China's Jiangsu, Zhejiang and Shandong provinces.

More than 25,000 projects at State and local level have been supported by the Torch Plan since 1988, Zhao said.

(China Daily January 23, 2003)