CHINA and two major pro-Beijing forces in the territory are set to fall out over the pension scheme. The powerful Federation of Trade Unions (FTU) and the Democratic Alliance for the Betterment of Hong Kong (DAB) have given clear indications that they are ready to support the scheme, although Beijing has grave reservations about it. DAB secretary-general Cheng Kai-nam said: ''We are not confronting China. It [the pension issue] is one of the livelihood issues that will come up sooner or later. We're not afraid [of being seen as confronting China].'' He said there was no way the party could retreat from its position on retirement protection stated in its manifesto launched two years ago. ''It has nothing to do with votes . . . We can't just change our stance,'' said Mr Cheng. The fledgling political party, which is fielding 83 candidates in next month's district board polls, is canvassing the public's views on the pension scheme through its territory-wide district offices. But DAB leaders including vice-chairman Tam Yiu-chung, who is also an FTU vice-chairman, have made clear the government plan is acceptable as a basis to improve the well-being of senior citizens. China, however, has become more sceptical about the government initiative. Although officials say they remain open-minded and want to hear more from the public, they have increasingly pointed to the negative side of the debate on the scheme since it was publicised on July 12. A mainland official cast doubts on the sincerity of the Government in seeking their views on the scheme, citing the delay in handing out copies of the Wyatt consultancy report on the plan to the Chinese Government. ''What I've found is that there is more opposition than support for the scheme,'' the official said. The official argued that it was generally accepted that a compulsory retirement system should be introduced as a long-term solution to care for the elderly. ''What [Acting Governor] Anson Chan Fang On-sang has argued has little support in the community,'' he said. Directly responding to China's insistence that welfare and retirement protection should be treated separately, Mrs Chan last week questioned whether there would be strong public support for the creation of two parallel systems. Mr Cheng admitted it was inevitable that Beijing would fear the political ramifications of the pension scheme. But he was confident his group would be able to influence China's views on important matters such as pensions and participation in the district board polls. FTU chairman Cheng Yiu-tong said he was not embarrassed about the union's vocal support for the scheme. ''We'd feel embarrassed if we kept our mouths shut about the scheme. We've been fighting for [the setting up of a central provident fund] for more than 20 years. We now find the scheme acceptable and want further improvement,'' he said. He maintained the union would not accept hasty rejection of the scheme without prior analysis and studies on the data and proposals. ''I don't think the fight for improvement of welfare for the elderly and a long-term retirement protection scheme is contradictory. Why do we battle to put out the fire in the distance but not the fire at our doorsteps?'' he asked.