Circular of The State Economy And Trade Commission on The Promulgation of The Guidance of Recent Development in The Industrial Sector
GuoJingMaoHangYe [2002] No.716

September 28, 2002

The economy and trade commissions （economy commissions） of all provinces, autonomous regions, municipalities directly under the Central Government and municipalities separately listed on the State plan and Xinjiang Army Corps of Production and Construction, all associations directly under the State Economy and Trade Commission:

In order to carry out the spirit of the "Outline of the Tenth Five-Year Plan for National Economic and Social Development" and of the industry and sector planning of the Tenth Five-Year Plan, the State Economy and Trade Commission, upon the requirement of many enterprises and financial and securities departments and other departments, proposes after study the recent development directions for such industries as machinery, automobiles, metallurgy, nonferrous metal, petroleum, petrochemical industry, chemical industry, medicine, coal, building materials, light industry, textile, etc…… It aims to strengthen the macro-control, guide the direction of the investments with the fixed assets in the whole country, optimize the allocation of resources, reduce the repeated construction, and promote the healthy and stable development in all industries, and thus to improve the integral competitive power of China''s industry. The recent development of the industrial sector must adhere to five principles, namely, the principle of market orientation, that of giving prominence to the key points, that of technical progress, that of coordinative development and that of sustainable development. We should proceed from the market to give full scope to the basic function of the market mechanism in allocating resources, and shall, by taking the adjustment of product structure, technical structure and enterprise organizational structure as the point of penetration, focusing on the development of new products, improvement of product quality, technical progress and reduction of costs, and prevention of pollution, intensify greater efforts in technical renovations, improve the level of process and technical equipment, and thus to form independent intellectual properties and products of famous brand with key technology. We should give full scope to the integral advantages of industry, optimize the distribution of industrial productive forces and the regional economic structure. We should continue eliminating the outmoded equipment, technologies and process, compress the superfluous and outmoded production capacity of some sectors, and promote the optimization and upgrading of the industrial structure. We have printed the Guidance of Recent Development in the Industrial Sector and hereby distribute it to you. Please abide by and implement it.

Guidance of Recent Development in the Industrial Sector

In order to carry out the spirit of the "Outline of the Tenth Five-Year Plan for National Economic and Social Development", it is proposed in the "Outline of the Tenth Five-Year Plan for Industrial Structure Adjustment Planning" that the overall development target is to improve the integral quality and international competitive power of the industry, and to strengthen the ability of sustainable development. During the Tenth Five-Year Plan, we should, taking the enterprises as the main body, the market as the orientation, the development as the topic, the structural adjustment as the motif, and the improvement of the competitive power as the target, reasonably direct the contribution of public funds and foreign investments, adjust the public investment structure, improve the efficiency and benefits of using funds, so as to promote the structural adjustment of the industrial sector, and guarantee the realization of the target under planning. It is both the requirement of promoting industrial optimization and upgrading, and the urgent need in enlarging the domestic needs and stimulating the economic growth. The recent development orientation of the industrial sector is hereby proposed pursuant to the industrial development direction clarified in the industry and sector planning of the Tenth Five-Year Plan for the sake of strengthening the macro-control, leading the acts of market subjects, and optimizing the allocation of resources.

The basic principles that we must adhere to, in the recent development of the industrial sector, are as follows:

I. The principle of market orientation. Since 1990s, in respect of the market environment of China''s economic development, the sellers'' market has changed into the buyers'' market, and the restriction by supply has changed into that by demands. The formation of the buyers'' market marks that China''s industrial economy is entering into an environment of an overall competition, and the economic development has transited to a new stage. Therefore, each industrial sector must strengthen the analysis on market environment, foresee the development trend of both domestic and international technology economy, and determine according to the demands on the market the key direction of sector development and structure adjustment.

II. The principle of highlighting key industries and products. We should accelerate the development of the industries and products with rapid growth in market demands, those of great impact to the overall situation of the development of national economy, those whose domestic production is presently unable to meet the demands, those closely connected with the industry, those with strong impetus, or those that are potential new points of economic growth, and should regard them as the key points of the recent development. Meanwhile, we should firmly stop the unreasonable repeated construction, and should, by supporting the advantageous enterprises to the realization of a certain large scale, high level and high quality, promote the structure adjustment of products. We should rectify the market and economic order, set up and improve the mechanism of selecting the superior and eliminating the inferior, as well as accelerate the elimination of the outmoded production capacity which wastes resources and pollutes the environment.

III. The principle of technical progress. We should adhere to the principle of combining independent innovation with introduction of technologies, and emphasizing hardware transformation and software transformation, and should support the joint development of common industrial technologies, key technologies and perspective technologies. We should strengthen the information-based management of enterprises and the construction of marketing network, accelerate the training of the contingent of talented people, increase the necessary input, and raise the management level of enterprises. We should accelerate the transformation and upgrading of the traditional industries by using hi-techs and advanced suitable technologies, and make greater efforts to transform the traditional industries with wide market demands. We should also optimize the product and technical structure, improve the labor productivity, give scope to the advantages of scale economy, raise the level of technical equipment, and strengthen the enterprises'' ability of prompt reaction. We should not carry out the general transformation with the main targets to fill up vacancies and to enlarge production capacity.

IV. The principle of coordinative development. We should give scope to the integral advantages of the industrial sector, increase the proportion of independently produced major equipment, and meet the demands in other manufacturing sectors in respect of reducing the cost of investment and raising the technical level; the reorganization and upgrading of energy industry and raw materials industry must aim at improving their international competitive power, and creating conditions for the downstream industries to participate in the international competition; we should make greater efforts in technical breakthrough and innovation, eliminate the "bottle-neck" restrictions in the industrial chain that impacts the integral competitive power; we should earnestly strengthen the geological prospecting, do well in the construction of mines, make full use of domestic and foreign resources, so as to provide guarantees to the continuing development of the basic raw materials industry and energy industry; we should give full scope to the comparative advantages, enable the industries in the eastern, the central and the western regions to develop coordinately, and assist the old industrial bases and western regions to accelerate their adjustment of industrial structure and industrial upgrading.

V. The principle of sustainable development. We should give a prominent strategic position to saving the resources and protecting the environment, promote the technologies beneficial to saving energy, environmental protection and clean production. We should also adopt the strategy of controlling the source, reduce by a big margin the pollution caused by pollutants and poisons to the environment.

According to the above principles and upon study, we have proposed the recent development orientation for machinery, automobiles, metallurgy, nonferrous metal, petroleum, petrochemical industry, chemical industry, medicine, coal, building materials, light industry, textile, etc., which is offered to all investors and the financial, securities and public consulting departments for reference.

Recent Development Orientation for Machinery Industry

I. Major Technical Equipment

（a） Electric Power Equipment.

（1） Industrialization of Cleaner Coal Generating Equipment.

We should give priority to developing projects of industrializing supercritical machine sets of 600,000 KW or more, re-circulating fluidized bed boilers of 300,000 KW and large gas turbines, and to transforming supercritical boilers of 600,000 KW to 1,000,000 KW and their auxiliary high-pressure heaters and valves, large re-circulating fluidized bed boilers, steam-gas cycle exhaust heat boilers, as well as productive technology conditions of gas turbines and process test equipment.

（2） Improvement of Productive Technology Conditions for Large Hydroelectric Equipment.

We should, depending on the Three Gorges Project, improve the manufacturing capacity of large hydroelectric equipment, with the annual output to be 3,800,000 to 4,000,000 KW （including 4 machine sets of 700,000 KW for the Three Gorges Project）, meanwhile carry out the economic and technical cooperation with foreign parties in respect of the pump storage groups, transform the manufacturing engineering of key components, and improve the processing capacity for large components.

（3） Industrialization of Ultra-High Tension DC Transmission Equipment.

We should give priority to the localized manufacturing of convertor transformers, flat-wave reactors and convertor valves, improve the conditions for insulation processing and clean assembling of large products; we should accelerate the mass production of high-power thyristor elements of 8000 V and 3000 A with the diameter of 125 mm, and improve the reliability thereof; we should improve the means of digital board design under direct current system, add large digital timing analog devices; we should improve the experimental conditions, and achieve the ability of experimenting 500 KV convertor valves under high voltage and in operation.

（4） Automation of Electric Power System and Industrialization of Intelligent Electricity Transmission Equipment.

We should accelerate the industrialization of the software and hardware for digital protection system and equipment, eliminate as soon as possible the control by high-pressure direct current convertor stations and valve systems, adjust the technical bottleneck; we should meet the demands in the indoor and outdoor dense and intelligent switching equipment for electric network rebuilding; we should accelerate the transformation of the production lines of composite fibre-optical aerial earth wires, and make great efforts to develop such new communication equipment in electric power system as photo-communication, etc.; we should promote the first and second strategic restructuring of enterprises in equipment production, improve the market share and service ability of intelligent, systematized and complete equipment.

（b） Heavy-Duty Metallurgical and Mine Equipment.

（1） We should, by depending on the construction projects of technical renovations, water conservancy and hydroelectricity, etc. in the industries of large metallurgy, non-ferrous metal, petrochemistry, environmental protection, coal, building materials, automobile and shipbuilding, etc., realize as soon as possible the localized production of a group of major equipment.

We should develop such mine machinery as large grinding machines, multi-rope elevators, underground scrapers, rotary cement kilns, large mine dumpers, etc. and extend their service life; we should, on the basis of further improving the quality of traditional metallurgical equipment, make great efforts to develop automation equipment and energy-saving process and technical equipment, and improve the capacity of producing whole sets of short-flow equipment; we should realize the industrialization of the 300000-saloon car production lines of punching structural components; we should develop such new artificial board equipment as equipment elaborately processed with non-metals, middle-density fabric boards and oriented flakeboards, etc.; we should improve the capacity of producing hydrogenation reactors of 500 to 1000 tons, large cranes, equipment for integrally molding high-speed railway locomotive wheels and solid garbage treatment equipment.

（2） Making Great Efforts to Raise the Technical Level for Producing Large Cast and Forged Components.

We should develop large purified liquid steel vacuum pouring process, raise the level of forging precision and computer control; raise the level of automation of weighing and adding materials with electric stove, and encourage the adoption of advanced technical process and equipment for heat treatment.

（c） Petrochemical Equipment.

We should, in response to the demands in the development of land and sea petroleum and natural gas, the West-East natural gas transmission project, the industrial sectors of large petrochemistry, electric power, metallurgy, large water power projects, environmental protection and news press, etc., develop a group of high-temperature, high-pressure, high efficiency and precise equipment, and improve the capacity of producing whole sets.

We should emphasize desert and sea petroleum equipment, natural gas gathering and transportation pipeline equipment, hydrogenation reactors, etc., and develop high efficiency power-driven drilling machines and top-driven drilling systems; we should develop deep-well oil extraction equipment, underground oil and gas separation equipment, gathering and transporting equipment and network forming equipment for oil and gas pipelines; we should develop valves for distance transportation of petroleum and natural gas with pipelines, large-caliber spheric valves, metal sealed plate valves, etc.; we should develop hydrogenation reactor of a thousand tons, key catalytic cracking equipment and other special oil refining equipment.

We should emphasize the development of ethylene cracking furnaces, such ethylene production equipment as large ethylene propylene spheric jars, etc., and such fertilizer process equipment as ammonia convertors, heat exchangers, etc.; we should continue developing the process compressors suitable for key projects and for the three chemical industries, such as new hydrogen compressors, circulating compressors, butadiene screw compressors, carbon dioxide compressors, hydronitrogen gas compressors, coal gas compressors, and meanwhile develop petroleum and natural gas compressors.

We should accelerate the development and application of high efficiency and energy-saving new products and new technologies, and improve the use efficiency of various pumps, fans, compressors, valves, refrigeratory air-conditioning equipment, space-division equipment, vacuum equipment and heat exchanging equipment.

（d） Complete Environmental Protection Machinery.

（1） New-Style Environmental Protection Machinery.

In respect of the equipment for the prevention and control of atmospheric pollution, we should support the development of equipment for dust elimination and desulfurization of flue gas from coal burning with large thermal power machine set. In respect of the equipment for the prevention and control of water pollution, we should emphatically develop the urban sewage treatment equipment with a capacity of treating 200,000 cubic meters per day, and raise the level of manufacturing such equipment as grilling, aeration, mud scraping and sucking, sludge concentration and dewatering, sludge methane generating equipment, etc.; we should develop complete sanitary sewage treatment equipment suitable for medium and small towns and small areas with a capacity of treating 100,000 cubic meters per day, and complete high concentration industrial waste water treatment equipment. In respect of solid wastes treatment equipment, we should emphatically develop complete house refuse burning and compost equipment, etc., closed poisonous and harmful wastes storage and transportation equipment, such complete monomeric or compound equipment as special high temperature oxidation burning equipment, industrial wastes collecting, selecting, washing, smashing, packing, transporting and recycling equipment.

（2） Localized Demonstration Projects.

We should support the localized demonstration projects in such key areas as urban sewage treatment, high concentration industrial waste water treatment, thermal power plant desulfurization of flue gas from coal burning, urban house refuse treatment, etc…… We should solve antiseptic, automatic control, energy-saving and whole-set-forming technologies, and improve the single-machine as well as systematic reliability.

（e） Large Construction Machinery.

（1） Accelerating the Development of a Group of Products Urgently Needed in the Market.

Upon the needs in the "West-East natural gas transmission project", the "South-to-North water diversion" project, Qinghai-Tibet railway, the urban subway and urban and rural infrastructure construction projects, etc., we should emphatically develop such large earthwork engineering machinery as hydraulic excavating machines of 40-85 tons, wheeled loaders of 6-10 tons, caterpillar soil shifters of 320 horsepower or more; high-quality highway ground construction and maintenance machinery as complete road stone joint smashing equipment of 100 tons or more per hour; and such tunnel digging machinery as ground cranes and cross-country cranes of 25 tons or more; large shield machines with the diameter at 5-10 meters, tunnel entry-driving machines of 160 KW or more.

（2） Improving the Reliability of Key Parts and Components.

We should make great efforts to improve the work efficiency, reliability and service life of dynamic power-shift gear boxes, hydraulic pitch controllers, wet-braking closed driving bridges, and braking friction plates; we should raise the technical level of planetary reducers and hydraulic element-controlled meters, and improve the comfortableness of the driver''s cabs; we should extend the service life of such high-abrasive materials as mixing arms, lining boards and spouts in bucket teeth or concrete equipment, wear-resisting conveyers in ground machinery, and drill rods, drill bits, etc. in rock drilling and smashing machinery.

II. Agricultural Machine

（a） Stressing the Development of a Group of New Products with Great Market Potentiality and Good Future.

In respect of the mechanical equipment in the planting industry, we should emphatically develop wheeled tractors of 100 horsepower or more and the auxiliary operation machine for less or exempted cultivation or deep loosing, straw and stubble smashing and field returning machine, joint operation machines for precise fertilization and seeding, complete equipment for cultivating sprouts of and for planting rice, maize, cotton and oil crops in factories, plant protection machinery, joint reapers, cotton pickers and complete agricultural equipment, etc……

In respect of new-style water-saving and irrigating equipment, we should emphatically develop complete high efficiency equipment for sprinkling irrigation and drip irrigation, irrigating equipment prevention and control of sand, rain-collecting and irrigating equipment for arid and half-arid areas, distance automatic check and control system composed of looped network wells for well irrigation areas, key parts of water-saving and irrigating equipment and automatic control systems, etc……

In respect of complete equipment for extractive processing of agricultural by-products, we should emphatically develop complete equipment for processing high-grade flour, special flour and starch, complete equipment for processing long-staple cotton and machine-picked cotton, complete equipment for cleaning, classifying, sterilizing, storing and transporting fruit and vegetables and for retaining them fresh, complete equipment for cleaning, classifying, and drying foods, and complete equipment for disinfecting rapeseeds and cottonseeds, etc……

In respect of complete equipment for intensive breeding and grass lands construction, we should emphatically develop complete equipment for new-style breeding in hogpens and cattle farms of scale, and that for processing milk products, complete equipment for treating faecal and organic fertilizers in large breeding farms, equipment for harvesting, storing and transporting ensiles, complete equipment for reaping, bundling, piling, storing and transporting pastures, as well as the development of garden machinery.

（b） Strengthening the Constructure of the Enterprises'' Technical Development Ability.

We should strengthen the construction of technical centers in enterprises, encourage the manufacturing enterprises to cooperate with institutions of scientific research and institutions of higher education, and should develop products with independent intellectual properties. We should raise the technical level of such key products as tractors of 80 horsepower or more and their auxiliary farming tools, rice cultivating, planting and harvesting machinery, maize reapers, and equipment for harvesting cotton and processing machine-picked cotton, etc……

III. Basic Machinery

（a） Improving the Market Competitive Power of Products from Numerical Control Machines.

We should emphatically develop popularized type of numerical control machines, set up and improve China''s platform and technical criteria for the open-end numerical control system by taking advantage of the open-end numerical control system which is greatly needed by popularized type of numerical control machine and which has independent intellectual property, and thus create conditions for networking of enterprises and accession to network by numerical control machines. We should further research on shunt processing technologies, integrated technologies, build up the industrialization base with numerical control systems of batch scale, and support the development of key auxiliary functional parts at the same time. We should improve the functions and quality of such key auxiliary functional parts as high-speed principal axis, tool magazine manipulators, numerical control cutter frames, dynamic chucks, high-speed ball-screws, high-speed prevention systems, numerical control cutting tools, numerical control systems and servo, etc……

（b） Improving the Quality and Functions of Products of Mechanical Basic Parts.

In respect of the bearing industry, we should develop high-grade bearings and special bearings for automobiles （motorcycles）, railway, high-power agricultural machines and engineering machinery, and precision equipment, etc., and support the projects of fine finishing of blank bearings and industrialization of such parts and components as bearings and rolling parts at the same time. In respect of the hydraulic airtight industry, we should set up development bases of hydraulic system products, and develop servo proportion technology, technologies integrated with mechanism, electron, and hydraulic-pressure, and bus control technologies, as well as raise the level of designing and manufacturing hydraulic and pneumatic devices. In respect of the general parts and components industry, we should give support to some important enterprises and enable them to improve their check conditions, to improve their product quality, and to develop a group of such products as high-speed hard face gears, high-intensity, deformed fixing components, etc…… In respect of the mould industry, we should develop the moulds, stamp dies and forging dies, and set up and improve the mould development system.

（c） Vigorously Developing the Instrument Meter Manufacturing Industry.

We should, around the state''s key projects and major technical equipment projects, emphatically support the products of digital, networking and intelligent technologies and the projects on improving the precision and reliability of products. In respect of the industrial automation area, we should emphatically support the master control devices of on-the-spot bus technologies and such products as intelligent meters, technical electric energy meters with a long service life, electric network control systems, etc…… In respect of scientific testing instruments area, we should develop such products as process testing and analyzing instruments, automatic testing systems and global positioning systems （GPS）, etc…… In respect of office machinery area, we should develop such products as digital duplicators, digital cameras and their auxiliary developing and enlarging equipment, etc…… In respect of meter element materials, we should emphatically support the development of such meter elements as new-style sensors, etc. and of new-style compound materials. Meanwhile, we should enhance the setup of the research and development system.

（d） Providing Dynamic Guarantee for Replacing Old Machinery and Automobile Products with New Ones.

We should develop low-emission and good-performance engines used for new-style vehicles, and develop such key parts and components as oil pump flow nipples （e.g., oil distribution pumps, electrically controlled injection systems, P-shape pumps, and so on）, friction components and post-emission treatment components used in highly reliable large and medium horsepower diesel engines, diesel engines in economic-type saloon cars or minitype vehicles, environmental-protection diesel engines in new-generation agricultural transport vehicles in large tractors, joint reapers, engineering machinery and new-style diesel engines.

Recent Development Orientation for Auto Industry

I. Saloon Cars

We should develop economical type of saloon cars complying with the regulations on state security, energy saving and emission as well as the requirements of private individuals on using cars, and should increase the proportion of economical type of saloon cars in the total output of automobiles. We should develop saloon cars of green environmental protection used as taxies. By the end of the Tenth Five-Year Plan, petrol engines must reach Euro-II emission control standard, while medium and high-grade products shall reach Euro-III emission control standard.

We should appropriately develop diesel engines of saloon cars, single fuel and gas engines and hybrid dynamic systems. We should give support to the advantageous enterprises and enable them to have the capacity of mass production by cooperating with foreign parties, and to make their products reach Euro-II and III emission standards.

We should encourage the advantageous enterprises to carry out the platform strategy by extending international cooperation, and to develop products in the series of economical type of saloon cars through combining joint development and independent development on the basis of utilizing present product platform. We should make use of such soft and high-efficiency manufacturing technologies as numerical control equipment and processing centers, etc. to transform and construct the production lines of new-style engines of economical type of saloon cars.

II. Large and Medium Passenger Vehicles

We should develop the chassis of special large and medium passenger vehicles, and accelerate the development of low-floor chassis of urban passenger vehicles. We should emphatically develop hi-tech parts and components used for axle and suspension systems of large and medium passenger vehicles, engines of such gaseous fuel as liquefied petroleum gas （LPG） or compressed natural gas （CNG）, multiple dynamic installation systems, automatic speed transmission systems of large and medium passenger vehicles, and so on.

III. Cargo Vehicles

（a） High-Powered Heavy-Duty Cargo Vehicles and Tractors

We should give support to the advantageous heavy-duty automobile enterprises and enable them to adjust their product structure, increase the proportion of their high-powered heavy-duty cargo vehicles among heavy-duty cargo vehicles, improve the functions and quality of present products by making use of the present basis and through joint venture and cooperation, so as to make China''s heavy-duty automobile products achieve or approach the international advanced level. By the end of the Tenth Five-Year Plan, new heavy-duty vehicle products must be installed with anti-skid brake system （ABS）, and their emission shall reach Euro-III emission standard. We should emphatically develop high-grade heavy-duty cargo vehicles and tractors of 300 horsepower or more, which are suitable for high-speed highway transportation, serialized driver''s cabs of medium and high-grade heavy-duty automobiles, and heavy-duty special automobile chassis. We should extend the adoption of such devices as ABS and ASR, EBS, hydraulic decelerator, etc., and improve the safety, comfortableness and reliability of the products.

（b） Heavy-Duty Automobile Engines

We should extend such technologies as high-speed direct injection, multi- spiracle, common rail and cooled EGR, etc., and should emphatically develop products in the series of new-style engines with the emission at 9 liters or more and the output power at 300 horsepower or more, which reach Euro-II and Euro-III emission control standards, so as to form the capacity of mass production. We should extend the product series, and appropriately develop engines fueled with electric sprayed single compressed natural gas （CNG） and liquefied petroleum gas （LPG）.

IV. Special Automobiles

We should raise the proportion of special automobiles among the output of cargo vehicles and the proportion of special heavy-duty automobiles among special automobiles. We should emphatically develop hi-tech and high value added products, which mainly include: heavy-duty semitrailers and special semitrailers suitable for high-speed highway transportation; urban environmental hygiene vehicles such as road clearing vehicles, garbage transport vehicles, sewer dredging vehicles and mud absorption vehicles, etc.; construction engineering vehicles, such as vehicles carrying cement in bulk, concrete mixing transport vehicles, concrete pump vehicles, heavy-duty crane trucks and various other engineering vehicles; urban services vehicles, such as aerial ladder fire trucks, ambulances, etc.; airport special vehicles, such as heavy-duty airplane fuelling vehicles, airport snow sweeping vehicles, deicing vehicles, etc.; special automobiles used in oil fields and deserts; multifunctional road maintenance vehicles, such high-grade highway management vehicles as emergency ambulances, etc.; various special high-level and high-quality national defense automobiles which meet the requirements in national defense modernization. Meanwhile, we should, by taking advantage of developing special chassis and special devices, emphatically develop good-performance, highly reliable and serialized special automobile chassis meeting the conditions for high-speed highway use. We should develop hi-tech special devices combined with applied electronic information technologies, sensing technologies, automatic control technologies, technologies integrated with mechanism, electron, and hydraulic-pressure or intelligent technologies.

V. Automobile Parts and Components

We should improve the abilities to develop automobile parts and components, to provide auxiliary items and to supply modularized goods, and should try to make the functions of key products reach or approach the international advanced level. We should increase foreign exchange earnings from exports, and raise the proportion of providing auxiliary items to the international automobile market. We should raise the rate of localized auxiliary items for automobile products, and realize the simultaneous development with the host engine. We should support and encourage some advantageous enterprises to strengthen international cooperation, to make use of hi-tech to raise the level of products and the manufacturing level, and to enter the system of international auxiliary items. We should emphatically develop the following three categories of products:

The first category includes key parts and components of automobiles which are at their starting stage considered as a gap in China and represent the technical development trend of automobile industry, such as anti-skid brake systems, safety gas bags, electrically controlled fuel injection devices, exhaust purification devices, and automatic speed transmissions, etc……

As for the second category, China has attracted many investments and has formed a good basis, thus through efforts, we may have the advantage in automobile key parts and components, such as braking systems, steering systems, speed transmissions, clutches, compound meters, automobile electric machines, etc……

The third category includes the products for which China has comparative advantages, which are mainly material-intensive, labor-intensive automobile parts and components, automobile parts and components not convenient for long-distance transportation, and other automobile parts and components with comparative advantages, such as automobile wheel hubs, electric wire bundles, chairs, shaped blankets, and storage batteries, etc……

VI. Motorcycles

We should emphatically develop updated motorcycles aiming at high reliability, durability, low-emission and low consumption of oil, which could help the large and medium cities meet the requirements of green environmental protection （such as electric spray vehicles with catalytic converter, double fuel vehicles, electric motor cars, etc.） and new-style engines. We should give scope to the comparative advantages, develop advantageous products, and enlarge exports.

VII. Agricultural Transport Vehicles

We should improve the safety and environmental protection function of agricultural transport vehicles, try to reach Euro-I emission control standard by the end of the Tenth Five-Year Plan; we should also develop and research on, as soon as possible, low-emission, low-noise, new-style, single cylinder or small diameter multi-cylinder diesel engines which meet the national environmental protection standards, so as to meet the needs in the auxiliary production of agricultural transport vehicles; further improve the drive systems of three-wheeled agricultural transport vehicles, and promote the upgrading and updating of the products.

VIII. Scientific Research and Development Ability

We should invest to establish and improve the national centers for technical development of automobiles, parts and components and motorcycle products. We should encourage the advantageous enterprises to improve their ability of product development by various means like joint development, technology introduction, cooperation with foreign parties, and purchase of foreign specialized development institutions, etc…… We should, on the basis of vehicle body development, strengthen the research and development of chassis matching technology, and lead the development of the parts and components towards systematic development.

We should extend and popularize such technologies as Computer Aided Design （CAD） / Computer Aided Manufacturing （CAM） / Computer Aided Engineering （CAE） / Computer Aided Testing （CAT）, etc., and accelerate the establishment and improvement of databases, so as to form a network platform. We should encourage the joint venture enterprises in China to join the development network of large international companies, so as to shorten the development period. We should encourage and give support to the advantageous enterprise enable them to actively develop new technologies, new materials and new sources of energy urgently needed by automobile products.

IX. Purchasing and Sales Service System

We should support and lead the advantageous enterprise and enable them to apply Internet technology, optimize purchase system and sales service system, and gradually set up new business relationships with their clients, dealers and suppliers, etc., as well as reasonably and effectively utilize resources, so as to provide the consumers with all-round services, and set up a sales system and purchase network basically integrated to the international practices as soon as possible. We should give support to the advantageous enterprises and enable them to utilize public resources and invest to set up brand automobile stores engaging in the sale of new vehicles, recycle of old vehicles, maintenance services, supply of parts and components as well as information feedback, to set up electronic commerce websites combining purchase and sales services and information for providing services to the whole industry and backbone enterprises, and to set up the sales service system with distributing, transport and manageme