Officials say a new law will be announced by this summer requiring a minimum percentage of software purchased by the government be produced in China. That’s crucial in a country where the government accounts for 25 percent of the $30 billion software market.

No one is saying what that minimum will be — some say it may be as high as 70 percent — but one thing is certain: Linux will be the beneficiary.

“When the government purchasing law comes out, Linux will win a piece of the market,” said Fang Xingdong, chairman of China Laboratory, an independent software consulting firm. “Of course, the party that will be most affected will be Microsoft.”

Microsoft did not respond to requests for comment. But the company has been actively trying to woo China. CEO Steve Ballmer visited last November and signed an agreement with the Ministry of Education to provide $10 million to promote computer use in schools.

China says it is merely trying to level the playing field for its own software companies.

“If a software program is dominant for a long time, it’s harmful for the development of the software industry,” said Li Wuqiang of the Ministry of Science and Technology.

China’s reasons for preferring Linux are many. Officials often say they feel safer with an open source operating system, because a proprietary system such as Microsoft’s Windows may contain hidden “back doors” that programmers can use to evade security and gain access. Microsoft tried to alleviate that concern last year by revealing its Windows source code to the government, as it has done with some other governments and universities.

Another big factor is cost. The Linux operating system is essentially free, while Windows is considered unreasonably expensive.

“I believe the era of exorbitant profit for software should end,” said Li, the science ministry’s deputy director in charge of new technology. “Basic software services should be cheap, just like water, electricity and gas.”

But the primary reason, one that is repeated by officials and in the media, is a nationalistic one. China believes that by developing its own operating system, it will have control over its destiny.

“An operating system determines the fate of the IT industry in a country,” Lu Shouqun, a former government official who now advises several software companies, told the state-run Guangming Daily.

It’s no secret that China’s goal is to have an internationally competitive software industry. Linux, it believes, may be the key to achieving that.

Over the years, China has been handing out grants to almost any company working on a Linux product. According to Fang, the Ministry of Science and Technology will invest more than $60 million by 2005 and the Ministry of Information Industry(cq) more than $12 million on all types of software.

So far, Linux has not made big inroads. IDC software analyst Jenny Jin estimates it has “a very small percentage” of the operating system market, probably less than 4 percent.