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COLUMN - China lags on Y2K bug, foreign firms worry

10:10 p.m. Aug 10, 1999 Eastern

BEIJING, Aug 11 (Reuters) - There may not be complete chaos in China when the Y2K bug hits, but expect temporary power shortages and telecommunication breakdowns, analysts say.

Many Western companies working with China are prepared for common problems such as annual floods and misrouted shipments, and often keep stocks to keep them going for weeks, even months.

But with just five months to go before the clock ticks over to 2000 and with the authorities bemoaning a lack of funds to fix all the problems, foreign firms are getting worried.

``British companies in China are concerned that Chinese suppliers have not given any assurances to them about uninterrupted provision of power, water and heating,'' said Nick Wheeler, managing director of the British Chamber of Commerce in Beijing.

``Chinese companies say it will be fine, but there is scant evidence so far.''

Y2K efforts faced a critical lack of funds and inadequate coordination, Zhang Qi, senior Y2K planner at the Ministry of Information Industry (MII) said in April.

The millennium, or Y2K, bug could cause chaos when computers programmed to recognise only the last two digits of each year confuse the year 2000 with 1900.

China's financial institutions have taken the initiative with two millennium-bug tests so far this year, which were reported to have been successful.

They plan at least one more and the rapidly-modernising securities and banking systems are reckoned to be the best prepared for the big moment.

Beijing has spent five billion yuan ($600 million) to ensure trading and banking systems will not crash and domestic banks have changed their year-end settlement date from December 31 to December 30 to curb possible losses.

``I do not foresee any short-term or long-term shortages resulting from the Y2K bug in China that would cause severe dislocations commercially in the world,'' said David Wolf, managing director of Claydon Gescher, a Beijing consultancy.

WORRY SECTORS

But with all the attention focused on banking and transportation, the worry sectors are power, water and telecommunications, analysts say.

They predicted sporadic outages of power and temporary breakdowns in telecommunications in the first few weeks of 2000.

``We anticipate short-term minor glitches,'' a U.S. embassy official said.

A new Y2K compliant power grid will soon go on-line in China's northern and northeast provinces and some 60 percent of other grids have been made bug-free, the Ministry of Information Industry has said.

``Most of our Chinese customers are eager to solve Y2K bug problems,'' said a Chinese Y2K expert at the Beijing office of a U.S.- based computer firm.

But most of them were banking and aviation companies, he said.

``There are very few utilities customers.''

For small Chinese firms using standard commercial non-Y2K-compliant software, fixing the problem is easy.

All it takes is 15 yuan ($1.9), the cost of the latest pirated bug- free software readily available on the streets of Beijing and other cities.

But industries using old or pirated software programmes that are more complicated, including billing software used by telecom firms and airline reservation systems, are going to stumble in the race to clear the bug.

``The problem is not in the danger, but in the inconvenience,'' Wolf said.

Copyright 1999 Reuters Limited. All rights reserved.

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-- Linkmeister (link@librarian.edu), August 10, 1999.

China has the largest standing military with a lot of WWII style weapons, unaffected by Y2k, and they have an agenda.

I don't think Y2k remediation is their number one priority right now.

Mike

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-- Michael Taylor (mtdesign3@aol.com), August 10, 1999.