The circular, however, is silent on the issue of allowing the establishment of other political parties, and multi-party elections at the village-level elections.

``While promoting the open and democratic management of village affairs in the countryside, we will also make active efforts to seek proper ways to introduce the practice of open administration to government bodies at the township level,'' Xinhua said, quoting the circular. ``Open and democratic management of village affairs is conducive to developing grassrootsdemocracy in the rural areas, and will guarantee the direct exercise of democratic rights by the farmers.''

The circular comes before U S president Bill Clinton's visit to China later this month, and observers say it will enable Beijing to partially offset criticism in the U S of the continued one-party authoritarian rule in the world's most populated country.

MILITARY COOPERATION: China will send military observers to watch the U S military exercises in Hawai and Alaska as part of the confidence-building measures between the respective defence establishments, foreign ministry spokesman Zhu Bangzao has said.

``The U S has invited the Chinese military to send a delegation to observe naval military exercises and confrontational air force exercises,'' the spokesman said on Tuesday. ``Both sides are still discussing this matter."

China is also likely to agree to a U S plan to jointly conduct a first ever simulated military drill on paper. The Pentagon hopes the two countries will agree to hold suchan exercise by the end of 1999 so that it may be officially announced during the forthcoming Sino-US presidential summit here later this month. Media reports said while the U S was keen on the joint exercise, China was not ready to make a commitment on the timing of such drills.