Developing township enterprises is an important strategy and a long-term, fundamental policy of China.

The good performance of township firms has fueled rural economic growth and boosted growth of the national economy.

Added value output of China's township enterprises in the first quarter hit 511.9 billion yuan (61.67 billion U.S. dollars), surging 14.7 percent year on year.

Township firms grew by 17.3 percent last year, contributing about three percentage points to the country's 7.8 percent growth.

However, the reform and development of China's township enterprises have entered a critical stage.

Exports by township firms only edged up by 2.5 percent in 1998 and more than 15 percent of business were running at a loss as a result of the sluggish market and the impact of the Asian financial crisis.

In the face of the difficulties, township firms should develop more in high-tech and environmental friendly industries to find their way out.

The firms are urged to upgrade substandard equipment and train or employ more qualified people.