The high-tech fleet includes a Volkswagen-like car and a bus, both of which were designed and produced by Chinese scientists.

Experts at Tongji University laid out a fuel cell-powered engine and other systems into the Volkswagen body while those at Qinghua University named the bus Line No. 863 after the state high- tech development program, code-named Project 863, which finances their research.

While the first fuel cell fleet was traveling Beijing's streets, the Chinese government signed a contract with the Global Environment Facility and the United Nations Development Program on purchasing fuel cell buses via global bidding.

The demonstration project agreed by the three sides on clean energy transport for the 2008 Beijing Olympics costs 32.36 million US dollars, 45 percent of which is from the Chinese government.

One successful bidder, DaimlerChrysler, will sell to Beijing three Mercedes-Benz Citaro fuel cell buses, the same as the 30 Citaros running in ten European cities.

Commuters in Beijing might run into one of the three Citaros from September 2005 on. About ten such vehicles are expected to serve the Beijing Olympics and the World Expo 2010 in Shanghai.

Fuel cells are able to convert hydrogen to power. Compared with traditional vehicles, fuel cell cars are more efficient and pollution free.

Developed countries and multinational automakers have invested huge funds into the fuel cell car research and development.

Mao Zongqiang, the leading scientist for China's hydrogen energy program, said China produces eight million tons of hydrogen yearly, ranking the second in the world.

Large-scale manufacturing of hydrogen makes the development of fuel cell vehicles possible, Mao said.

Analysts estimated that China might have 150 million vehicles by 2020. Energy-saving and clean energy-consuming cars are desperately needed by the Chinese.

"The development of fuel cell cars is not only a business question, but also part of the state's energy safety strategy," said Xu Jing, an official with the Ministry of Science and Technology who oversees the electronic car research and development program.

The government has already poured 900 million yuan (108 million US dollars) into developing electronic cars. Most funds were channeled to fuel cell cars.

Ouyang Minggao, chief designer of the Qinghua bus, said, "I'm confident that Chinese-made fuel cell passenger cars might be highly competitive at home and even international markets."

He said the low research and development cost as well as competitiveness of Chinese passenger car manufacturers would make the difference. "We spent only one fourth of the average cost of our international competitors," he said.

"We will produce at least three fuel cell buses for the Beijing Olympic fleet," Ouyang said.

Ouyang and his team have an ambitious goal: the industrialization of their products would be realized by 2010.