WANG LILI, a plump lady in a yellow uniform, stands next to the freezer holding the soya bean juice and cakes her company sells in a supermarket in central Beijing. "Do not worry, there is no genetically modified (GM) material in our products. Look at the label certifying it," she said. "Last month, with all the stories in the media about GM food, we had a drop in sales because people were worried about it. Since we put the labels on from the end of March, sales have picked up again."

The label is the result of a regulation by the Ministry of Agriculture which took effect on March 20, ordering food that contained GM ingredients to be labelled to let consumers know the contents.

Mrs Wang's company, Dou Dou Chu (the Soya Bean Kitchen), labels its products not because they contain GM beans but because China has since 1996 imported millions of tonnes of GM soya beans - which makes consumers think its juice might be made from them.

The debate over the safety and nutritional value of GM products has started in earnest on the mainland, later than in the US, Europe, Japan and Hong Kong.

The scientific community is strongly in favour, eager to raise the output of food in a country that had shortages and rationing as recently as 20 years ago. The general public remains sceptical.

On the outcome of this debate hangs a market potential of hundreds of millions of dollars for domestic and foreign producers.

"GM products are bad for you," Mrs Wang said. "They are like mad cow disease and damage your health." The label on Mrs Wang's juice reads: "This product is made of carefully chosen black soya bean that is not genetically modified. You can drink it with your heart at ease."

Some customers in the shop agreed with Mrs Wang. "I do not buy GM food because I do not know its impact on my health and that of my family," said Liu Xiuhao, a middle-aged housewife.

"But it is hard to know. An upmarket place like this has labels but street markets outside do not ... Many people shop there, especially the poor."

According to the Beijing press, most manufacturers, shops and markets ignored the ministry's March 20 regulation and did not start using labels, either out of ignorance or because they did not want to give consumers a reason for not buying their products.

China is full of GM products, with more than 20 million tonnes in the food chain and nearly all imported, according to official media estimates. A professor at the Foreign Trade University, Xia Youfu, said China had grown only a small amount of GM items such as grain, oilseeds and pest-resistant cotton, but they had not entered the food chain.

He said China started importing GM food in 1996, with 80,000 tonnes of GM soya beans, rising to 7.5 million in 2000 and more than 10 million last year. "These are conservative figures. Recent tests by quarantine stations show that the vast majority of imported soya bean, rapeseed and corn were GM," he said. "This means that, on the dining table of consumers, the three main GM items are corn, rapeseed and soya bean oil, beancurd and soya milk."

According to one industry estimate, about half the vegetable oil on sale in China is GM. The high level of imports is due to China not growing enough, while the imports are of good quality.

A survey of 7,000 people in Guangzhou published earlier this year found that the vast majority had no clear idea about GM food, while nearly 30 per cent believed that it could have side-effects. More than 70 per cent said China should pass laws on such food.

"For educated, middle-class people in the cities, GM food is an issue," said the manager of one Beijing supermarket. "But for millions of rural people and the urban poor, there is no issue. If it is cheap and tasty, they will buy it. The debate in the West over GM products is the luxury of the rich."

China's scientific community appears enthusiastic about GM food.

More than 60 per cent of China's rice crop is grown from hybrid seeds. The deputy director of the Genomics Institute under the Chinese Academy of Social Sciences, Yu Jun, said China hoped to complete genetic sequencing of rice this year and could turn to soya beans.

A professor at East China Agriculture University and a member of the Chinese Academy of Science, Zhang Qifa, said GM technology could ensure continuity of the development of agriculture and solve the problem of feeding and clothing the world. "We must seize this opportunity to advance China's GM technology and promote research and development in this field," he said.

The vice-president of Beijing University and a leading advocate of GM technology, Chen Zhangliang, recently has been appointed as president of China Agriculture University, the country's top college in this field, a sign of the Government's approval.

"The scientific community in China supports GM research and believes it has great potential," said his assistant, Li Ling.

Mark O'Neill is a member of the Post's Beijing bureau.