TORCH PROGRAMME

I. NATURE AND PURPOSES

        The Torch Programme is a guidance programme for developing new/high tech industries in China, It was approved by the State Council and is implemented by the Minsitry of Science and Technology. The purposes of the programme are to Technology.The purposes of the programme are to implement the strategy "Promote the development of the country with science and education", carry out the general policy of reform and opening to the outside world, bring into full play the advantages and potenitial of Chnia's scientific and tecnnological forces, take market for orientation, promote the commercialization of new/hige tech achievements, industrialization of nnew/high tech good and internationalization of new/high tech industries.

II. THE MAIN CONTENTS

        I. Create a Proper Environment for the Development of New/high tech Industries

        Widely carry out advocating campaign for the Torch Programme formulate complete sets of policies, laws and reegulations for the develomet of new/high tech industries; create sound supporting environment and establish the managerial system and operational mechanism fit for the development of new/high tech industries; open up financing sources and build up risk investment mechanism ; open up domestic and overseas information chanesl and establish information networks; and formulate medium to long term oplans and implementation plans conforming to realities.

        2. Establish New/high tecn Industrial

        Development Zones and Pioneering Service Centres.
The establishment and developlment of new/high tech industrial development zones are an improtan component of the Torch Plrogramme and an inevitable outcome of reform, opening to the outside world and thd social development of the socialist market economy .The new/high tech industrial development zones are based on intensive intellingence and open envionment and mainly depent on China's own scientific and technological and economic strengty. They are concentrated zones estabilshed for pruposes of trasforming achievements of sicenc and technolgy into pracical produtive force to the maximum extent throuhg local optimization of soft and hard environments, orienting to both domestic and overseas markets and developing China's new/high tech in dustries.

        The new/high tech industrial development zones have the following seven functions;

        (1) Bases for the development of new/high tech nologies;
        (2) Sources of new/high technologies and products for traditional industries;
        (3) Windows opening to the outside world;
        (4) Experimental zones for close combination of science and technology with economy, and promotion of transformation of achievements of science and technology and technical innovation;
        (5) Demonstrative zones for close combination of sceence and technology with economy, and promotion of transformation of achievements of science and technolgy and technical innovation;
        (6) New urban areas of socialist modern civilization ;
        (7) Schools for training and bringing up high technology industrialist.

        The new high/new tech pioneering service centres are a new type of scientific and tecnnological service agencies of public good type, established by consulting the successful experiences of foreign countries in the development of "hatcher" and considering the conditions of China, Their purposes are to depend on the related polecies of the state and the necessary conditions provided by the governmnts at various levels to create locally optimized environeents, bring up new stating points of economic growth for the development of new/high technologies ,promote comerialization of achievements of new /high technologies so as so "hatch" new/high tech enterprises, and provide comprehensive services for the establishment of new/higeh tech enterprises

        The new/high tech pioeering service centres are an importan link in transformation of new/high tech industries, a starting point between laboratories and enterprises, a schoool for bringing up scientific and technological industrilists, links connecting the develoment zones and institutions of higher education and large and medium enterprise, and an impoortant comlponetn of the supporting service systems for the development of new/high tech industries

        3. Projects

        The projects of the Torch Programme are an important component of the programme, funcioning as the starting point and basis of the programme.

        The projecst of the Torch Programme are high technology projects oriented to domestic and overseas markets, based on the key research programmes of the state, localities and sectors, achievments of programmes for the research and development of new/high technologies and other research achievements, aimed dustries, selected and good economic benefits, Through the implementation of the programme new/higt tech enterprises and entrprise groups will be brought up.

        The key fields of development of the Torch Programme include: new materials, biological engineering, electronics and information, opto mechano electronics integration, new energies, high energy, efficiency, energy saving and environmental protection.

        4. Internationalization of New/high tech Industries

        Enhancing international cooperation and promoting the internationalization of China's new/high tech industries is one of the Torach Programme's major tasks. The approach to the internationalization is to establish wide cooperative relation with various countries and regions and enter into various forms of and tecnhnogical, financial, enterprise and comnmercial sectors in foreign countries through governmental or noo governmental channels, on the baisi of equality and mutual benefit, so as to help China's new/high tech products enter international markets and promote the devlpment to new/high tech in dustries towards internationalizatin.

        5. Traning

        Trainaing and attracting talents are one of the key factors for the dvevlopment of mew/high tech industries, and is the basic guarantee for the achivevment of commencialzation, industrialization and internationalization of new/high tecn products, To ghfoster a great number of talents of scientific and technolgical mangement and scientific and technological industries, who have mastery of technologies, are good at management, business handling,and innovation, and innovation, and meet the challenge of market competition, is a key task of the Torch Programme.

III. THE MAIN OBJECTIVES FOR YEAR 2000

        1. The Objectives of Cevelopment

        2. (1)Carry out construction and development of the new/high-tech industrial development zones to form a batch of bases for the development of new/hightech industries with clear-cut features of new/high-tech industries, adbanced managerial system, flexible operational mechanism, complete sets of policies, laws and regulations, perfect suppporting service systems and graceful environment.

        (2) Through the implementation of the projects of the Torch Programme, bring up a number of new a and developing mainstay new/high tecn industries, effectively promote rational adjustment of industrial strctures and promote the national productivity greatly.

        (3) Through the implementation of the key projects of the programme, emphatically develop a number of new/high tech enterprises with modernize enterprise systems and famous brand products; emphatically bring up a batch of large and medium demonstrative enterprises for the reform of traditional industries with new/high techologies, emphatcally promote the technical and managerial levels of a number of townshipenterprises that already have necessary conditions; and emphatically support a batch of private science and technolgoy enterprises and new/high tecn industries to expand scale.

        (5) Carry out all directions and whole process "hatching" service for medium and small science and technology enterprises through the new/high tech pioneering service centres, promote the transfromation of new/high tech products to commerical goods and transformation of the products, and continuously provide new starting points for the sustainable development of new/high tech industries.

        (6) Through the implementation of the programme, foster a great number of talents of the development, operation and management of new/high tech industries, who have mastery of technology, are good at management, business handling and innovation, and meet the challenge of market competition.

        3. Expectde Outcomes

        (1) Through the implementation of the Torch Programme, realize a total annual income of 600 billion yuan from technological development, industrial production and trade, in which 500 billion yuan will come form the sale of new/high tech products.

        (2) Through the construction and development of the new/high tech industrial development zones, realize a total annual income of 500 billion yuan form technological development, industrial production and trade, in which industrial output will occupy 400 billion yuan.

        (3) Through the implementation of the programme, realize a total annual income of 300 billion yuan form sale, The national level projects will total 3, 00 and the local level ones 9, 000.

        (4) Through the implementation of projects and key projects of the programme and the construction and development of the new /high tech industrial development zones foster and confirm 30, 000 new/high tech enterprises of all kinds.

        (5) Through the implementation of the programme, bring up 500.00 talents for development, operation and management of new/high tech industries.

IV.THE MAIN SUPPORTIVG CONDITIONS AND MEASURES

The implementation of the Torch Programme is domestic and overseas market oriented, adopts multiple methods to raise funds, including bank loans, self financing, absorbing social and foreign funds, etc., with the support of the state and local preferential policies, guide and promote the commercialization, industrialization and internalization of the achievements of China's new/high technologies

        1. Policies

        (1) If an enterprise in the development zone is confirmed as new/high tech enterprise the income tax will be collected at the reduced rate of 15% since the date of confirmation.

        (2) If the output value of export products of a confirmed new/high tech enterprise in the development zone accounts for more than 70% of the total output value in the same year, the income tax will be collected at the reduced rate of 10% after checked by the tax authority.

        (3) A confirmed newly opened new /high tech enterprise in the development zone can be exempted form income tax within the wto years since the year when it is put into production after an exemption application is made by the enterprise and approved by the tax authority

2. Financing Sources

        (1) The projects of the programme can use the special loan for scientific and technological development.

        (2) The projects of the programme have priority in getting financial support form the New Product Programme.

        (3) The projects, of the programme can get financial support from the Chinese Torch Foundation and the Chinese Scientific and Technological Development Foundation.

        (4) The new/high tech industrial development zone can use the special construction loan.

V.MANAGEMENT

        Two level management is implementde for the projects of the Torch Programme, The office of Torch Programme of Ministry of science and Technology is responsible for the organization, confirmation, institution and tracing management of the national level lprojects and the local science and technology commissions are responsible for the orbanization, confirmation, instiution and tracing management of the local projects, The management commissions of the national level new/high tech industrial development zones are responsible for the organization and management of the development zones, under the Ieadership and support of local govenments, receiving the guidance of corresponding local science and technology commission for professional matters, and the Office of Torch Programme of the Ministry of Science and Technology is responible for the overall management.

        1. Management Organizations

        The Ministry of Science and Technology
        Office of Torch Programme
        Division of Planning
        Division of Information and Investigation
        Division of Management of New/high tech Industrial Development Zones
        Division of Propaganda and Education
        Division of Project Management
        Division of Computer Software
        Division of International Development

        2. Functions of the Office of Torch Programme

        (1) Formulate the general and specific policies and plans for the implementation of the Torcn Programme in cooperation with reslated departments and agencies.

        (2) Raise funds for the Torch Programme, determine the scheme for the fuse of funds and monitor the use of funds.

        (3) Take charge of the confirmation, institution and management of the mational level lprojects of the Torch lProgramme, and the selection, tracing and examination and acceptance of the key projects of the programme.

        (4) Take charge of the overall management of the national new/high tech industrial development zones and new/high tech pioneering service centres.

        (5) Take charge of the overall management of propaganda, training, statistics, consultation and information and communication networks.

        (6) Take charge of the overall management of the Chinese Association of New/high tech Industrial Development.

        (7) Take charge of international exchange and cooperation soliciting merchants and investors, and opening up international markets.

        (8) Promote the development of computer software industry.

        (9) Take charge of the confirmation and supervision of new/high tech enterprises.

        (10) Take charge of the contact with private new/high tech enterprises.