The lack of large homegrown firms is hindering the country's plans to develop hi-tech industries, according to a government official. Private companies were avoiding investing in areas such as computer chips, energy production and digital communication because of the huge capital costs involved and intense international competition, Ma Songde, Vice-Minister of Science and Technology, said at a seminar in Hong Kong yesterday. As a result, he said domestic production was weak with the country relying on imports. 'China does not have big and powerful corporations, such as in the United States, which have the resources to invest and develop such expensive technological advanced products,' Mr Ma said. 'We are struggling with how to promote the private development of such strategic areas.' Although China produces a huge amount of cheap products, it continues to lag in hi-tech, high-value-added goods, accounting for only 6 per cent of world production, Mr Ma said. He described the growth in investment as slow despite the government making the area a priority. According to Mr Ma, investment in research and development last year reached around 1.2 per cent of gross domestic product (GDP). About 60 per cent of that came from non-government sources. In 1996, the figure was 0.6 per cent of GDP. To protect the country's economic growth and security, Mr Ma said China must push for private investment in advanced technology and production facilities. 'The nation cannot simply rely on low-value industries for our economic growth. We must diversify.' He said the central government would increase funding for hi-tech research and development, citing Project 863 as an example. Launched in March 1986, the project was proposed by a group of leading scientists to Deng Xiaoping to refashion the country's hi-tech development by focusing on seven sectors, such as biology, information and energy. Mr Ma said Project 863's capital outlay from 1986 to 2001 amounted to 6 billion yuan (HK$5.64 billion) on civilian projects and 5 billion yuan for military-related items. From 2001 to 2005, Project 863 has a budget of 15 billion yuan for civilian projects. Mr Ma did not disclose the budget for the military portion.