The Chinese Ministry of Science and Technology is investing 2 billion Yuan (USD $250 million) to improve the country's ability to produce specialty and bearing steels.

Part of the 2001-2005 Five-Year Plan, the ministry chose Jiangyin Xingcheng Iron and Steel Co., Ltd. to lead the project. Jiangyin currently produces approximately 1.2 million tons of high quality steel using European equipment.

The intention is to invest heavily, both to understand the technologies behind higher quality steel production and to use that understanding and build Chinese versions of the European equipment.

The project is expected to last approximately three years, after which the new technologies and equipment will be available to every Chinese specialty steel manufacturer. Reportedly, instructions are that the production technology developed must revolve around the use of electric furnaces.

Bearing manufacturers investigating Chinese production have often been held back by the limited availability of high-quality steel. Similarly, companies looking to source high quality bearings from China have also had to deal with the steel quality issue.

This new program illustrates the Chinese government's understanding of those problems, and that they must be answered if China's bearing manufacturers are going to continue to expand their markets. Chinese bearing companies also want higher quality steel so they can move more aggressively into manufacturing precision bearings. And when China joins the World Trade Organization, it wants to have the raw materials infrastructure in place to attract investments by foreign manufacturing companies.