The US State Department reported in September that developed coastal cities were most at risk, but the authorities had focused their efforts here. As a result, it concluded that these cities were "generally well-prepared to deal with the Y2K problem".

The report added, however, that there was a risk of potential disruption in the key sectors of banking and finance, telecommunications, medical services, and in electrical power and infrastructure systems outside of the coastal cities.

A UK Foreign and Commonwealth Office report issued at the same time pointed to potential difficulties in the power industry, saying it was wrestling with embedded chips.

Latest FCO report

Piracy a problem

One particular problem it does have, however, is that up to 90% of its software is estimated to be pirated. This has made it difficult, if not impossible, to contact the original manufacturer for help.

In addition, much of the country's hardware and software has come from a big range of countries and companies - making the eradication of the Y2K problem a nightmare.

The US embassy in Beijing has reported that, "many old computer systems, running half-forgotten program languages and complex systems configurations, increases Chinese exposure to the Year 2000 bug".

'It will not fail'

In 1998, the government ordered state ministries to complete any system changes by this March, but only 15% had even begun to do so by May.

Y2K supremo Zhang Qi has indicated that half of China's state-owned businesses have software problems and one third hardware problems.

One of the main areas of concern is the state power grid, though Zhang famously declared in April that although there were difficulties: "By order of the State Council, the power grid will not fail."