So far, a series of policies have been issued by the municipal government, which include tax exemption and preferential land-using fees, discount loans and fiscal investment for huge projects.

"We especially welcome overseas companies and domestic small and medium-sized enterprises (SMEs) in Beijing to co-operate with local counterparts - co-operation methods may be flexible," said Liu Haiyan, Beijing vice-mayor.

Experts and insiders say that, in general, China's microelectronics industry lags behind developed nations, such as Japan and the United States, and most domestic microelectronic enterprises are on a small and medium scale. Whilst such enterprises have self-developed technology, they are short of funds.

So far, the Shougang Group has joined hands with an American-based enterprise to build a production base in Shijingshan District with a total investment of US$189 million. Two chip lines co-sponsored by Chinese and American companies, costing US$200 million, are expected to begin operating this year.

"All the projects are running smoothly and some larger co-operations are under negotiation," Liu said.

To promote Sino-foreign co-operation and to attract more SMEs with self-developed technologies, the government has pooled 500 million yuan (US$60.24 million) to build the Beijing Integrated Circuit (IC) Design Park, which will open on April 18.

Located in Zhongguancun and covering 25,000 square metres, the park boasts research and environment development resources, said Liu.

Meanwhile, a funding scheme for integrated circuit (IC) design has been launched this year and the government will offer 100 million yuan (US$12.05 million) to support the small and medium-sized firms in carrying out research and development.

"Beijing boasts a unique advantage in the microelectronics industry," Liu said.

In addition to scientific research institutes, universities and professionals, Beijing is traditionally known as the hub for large-scaled microelectronic enterprises.

According to official statistics, at the end of last year, the number of key IC design companies in Beijing reached 60, and those with self-developed products exceeded 150.

Last year, 83 microelectronics technologies with a total investment of 1.2 billion yuan (US$144 million) applied for specific research and development funds set up by the central government.

"The municipal government initiated its support to the microelectronic industry in 1998 and, after nearly four years of development, the industrial structure has been optimized and a sound and industrial chain, ranging from research and development, manufacturing to market promotion, has been established," Liu said.

"The next step for us is to further upgrade the industry and expand the scale via more opening policies."

(China Daily April 08, 2002)