FORM 10-KSB
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                        
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

                   For the Fiscal Year Ended December 31, 1996
                                        
                           Commission File No. 0-24624
                          ----------------------------
                         U.S.-CHINA INDUSTRIAL EXCHANGE
                 (Name of small business issuer in its charter)
                                        
           NEW YORK                                         13-3097642
 (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                         Identification No.)

                              7201 Wisconsin Avenue
                            Bethesda, Maryland, 20814
                                 (301) 215-7777

Securities registered pursuant to Section 12(b) of the Act: NONE

        Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $.01 par value
                         Class A Warrants
                         Class B Warrants

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange  Act during the past 12 months  (or for such
shorter  period  that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
Yes    [ x ]       No [    ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of  registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ x ].

The issuer's revenue for its most recent fiscal year was $22,901,000.

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, the average bid and asked
prices of such stock,  as of March 26, 1997 was approximately $16,704,000.

The number of shares outstanding of each of the issuer's class of common equity,
as of March 26, 1997, was 4,772,500 shares of Common Stock and 2,000,000 shares
of Class B Common Stock.

Documents Incorporated by Reference:  Part III:  Proxy Statement


<PAGE>

PART I
Item 1.  Business

General

     The Company, founded in 1981, is an established independent marketing and
sales organization in China for certain Western products.  The Company provides
United States, European and other manufacturers with access to the Chinese
marketplace and offers a wide range of marketing, sales and technical services
for its products. The Company conducts its marketing and sales and provides its
services exclusively to buyers located in China, Hong Kong, and Macau.  The
Company is the exclusive sales representative for several major manufacturers of
high-technology diagnostic medical equipment, construction, mining and other
industrial machinery and scientific research instrumentation.  The Company also
sells certain products on a non-exclusive basis.  The Company's national sales
and technical support staff operates from its office in Beijing and regional
offices in Shanghai, Guangzhou, Tianjin and Hong Kong.  In addition to its sales
activities, the Company also provides marketing research and consulting services
to its manufacturers for a variety of business activities in China, and will
commence providing certain health care services in 1997.

     During 1996, the Company continued its business of selling Western products
to the China market, and expanded its activities through establishment of a
wholly owned subsidiary in Hong Kong, shipment of $8.4 million of medical
equipment pursuant to long term financing granted to Chinese purchasers by the
Export-Import Bank of the United States, hiring of additional staff and
extension of financing terms to selected buyers.  The Company also is entering
the business of providing health care services by establishing a joint venture
clinic, which when opened in 1997, will provide maternity and birthing services
and pediatric care to expatriate and diplomatic families in Beijing.

     On November 8, 1996, the Company closed an underwritten public offering of
securities resulting in net proceeds to the Company of approximately $9.8
million from the offering and subsequent sale of additional securities pursuant
to an over-allotment option held by the underwriter.  The proceeds of this
offering will be used for working capital purposes, including the funding of the
future expansion of the Company's marketing and sales operations in China and
Hong Kong and the development, commencement and possible expansion of the
Company's proposed health care services operations.

     In order to meet increased competition and difficult market conditions
caused by a restriction of credit available to domestic Chinese organizations
and to continue to expand its markets, the Company continued to offer certain
customers extended payment terms on purchases.  These sales were to familiar and
qualified purchasers and were structured to minimize the Company's risk of non-
payment.  In addition, the short term cash flow implications on the Company are
also minimized since in most cases the Company's suppliers participate in
extending reciprocal payment terms to the Company for a significant portion of
these extended payment arrangements. The Company believes that its decision to
undertake this financing initiative contributed substantially to the overall
increase in sales in 1996 and 1995, although there can be no assurance that this
financial initiative will continue to offset or reduce the continuing impact of
credit restrictions.

     In March of 1996 the Company established a wholly owned subsidiary in Hong
Kong, Chindex Hong Kong Limited.  This subsidiary initially has focused on the
sale of Acuson ultrasound machines to end-users in Hong Kong and was profitable
in 1996.  Chindex Hong Kong Limited currently has four employees.

     In 1996, the Company's wholly foreign-owned subsidiary, Chindex Holdings
International Trade (Tianjin) Ltd., which is registered in the special economic
Tianjin Free Trade Zone and which was established in 1995, continued its planned
expansion in the import, warehousing and distribution of products.  This
subsidiary supplies certain products and consumables directly to hospitals in
China for domestic currency and is serving as a platform for future distribution
activities.

     During 1996, the Company shipped $8.4 million of goods financed by the
Export-Import Bank of the United States.  This financing, involving the granting
of tied aid credits to Chinese organizations for the purchase of equipment sold
by the Company, initially had been scheduled to be completed in 1995 but was
delayed because of the expiration of the Export-Import Bank's legal authority to
make tied-aid loans and the shut down of the U.S. Government related to the
budget dispute between the Congress and the Clinton Administration.

     In 1995, the Company began a process of expansion into the related field of
the provision of health services which process continued in 1996.  The Company
has taken the initial steps to bring much needed western standard health care
services to specific, targeted segments of China by establishing the Beijing
United Family Health Center (Beijing United) a 90/10 joint venture between the
Company and the Chinese Academy of Medical Sciences Union Medical &
Pharmaceutical Group Beijing Union Medical & Pharmaceutical General Corporation
(Chinese Academy of Medical Sciences).  Beijing United expects to provide the
expatriate business and diplomatic community in Beijing with complete western
standard maternity and birthing services as well as neonatal and pediatric care.
The Company will consider establishing a series of clinics in other major
metropolitan centers in China over the next several years and has initiated the
evaluation and planning process for that undertaking.

     To date the Company's proposed health care services operations have been in
the development phase and the proposed clinic in Beijing has not yet opened.
Although the Company believes that the Beijing United clinic is the first
foreign-managed health care facility of its kind to have been granted the
necessary authorization to operate in Beijing by China's Ministry of Health, all
requisite approvals have not yet been obtained.  Following completion of
construction of the facility, the Company must obtain an occupancy permit and
medical license from the appropriate Beijing municipal authorities.  There can
be no assurance that all requisite approvals ultimately will be obtained or
continued in effect as necessary for clinic operations.

     The provision of health care services entails the risk of potential medical
malpractice and similar claims which may be asserted against Beijing United
and/or against the Company in the event that services rendered by Beijing United
or procedures performed at the Beijing United facility are alleged to have
resulted in injury or other adverse effects.  Although the Company intends to
obtain and to cause Beijing United to obtain liability insurance that it
believes will be adequate as to both risk and amounts, there can be no assurance
that any such insurance will be obtained or that successful malpractice claims
will not exceed the limits of the Company's insurance and thus have a material
adverse effect on the Company's business, financial condition or operating
results.

Marketing

     China, with more than one billion people, contains approximately one-fifth
of the world's population. It is the third largest economy in the world
according to the International Monetary Fund's (IMF) calculation methods for
Gross Domestic Product (GDP).  Using the IMF's Purchasing Power Parity method of
calculation, China's GDP is approximately $3.21 trillion, behind only the United
States and Japan.  China has expanding trade relations with the United States.
According to U.S. Department of Commerce statistics, China imported a total of
$14.5 billion from the United States in 1996.  The Company believes that there
exists a substantial and expanding market for its products in the China
marketplace and the further integration of the Chinese foreign trade system into
the established global economy through its application to the World Trade
Organization and other initiatives to further open the Chinese economy to
foreign participation will further enhance the market for the Company's
products.

     The medical products which the Company sells are marketed to hospitals,
through hospital administrators and the doctors who are the ultimate users of
the products.  There is virtually no private practice of medicine in China and
all physicians are affiliated with hospitals or similar institutions.  Each
hospital also has various economic and administrative forces at work determining
hospital policy and practice.  A hospital's decision to purchase the Company's
products depends on those economic and administrative forces.  The Company's
marketing is addressed to all relevant participants in the purchasing decision,
including the doctors and hospital administrators.

     The Company's non-medical products are marketed in a variety of ways
depending on the type of product involved.  Unlike sales of medical instruments,
the sale of this machinery is regulated and/or coordinated by the applicable
ministry or similar agency and usually involves national funding concerns and
interaction with centralized bureaucracies.  As such, the marketing efforts
related to these machinery sales are designed for extended involvement by the
Company over the full development cycle of a particular sale, which often
involves up to two years of pre-sale activity.  Other equipment sales can
involve extensive work at a particular end user site to identify needs and
assist in formulating specifications. Marketing activities can include
presentations to central Ministry officials, product seminars conducted at the
prospective end-user site and technical seminars given to end-users and other
pertinent entities in China.  In addition, the Company employs traditional
product marketing techniques such as advertising, sales seminars, exhibitions
and Chinese language promotional literature, among other things.

     Most purchases of the Company's products, regardless of the nature of the
end-user, are made through foreign trade corporations (FTCs).  Although the
purchasing decision is made by the end-user, which may be an individual or a
group having the required approvals from their administrative organizations, the
Company enters into formal purchase contracts with FTCs.  The FTCs make
purchases on behalf of the end-users and are legally authorized by the Chinese
government to conduct import business. These organizations are chartered and
regulated by the government and are formed to facilitate foreign trade.  The
Company markets its products directly to end-users, but in consummating a sale
the Company also must interact with the particular FTC representing the end-
user.  For this reason, the Company seeks to maintain ongoing relationships with
the FTCs in its industries.  By virtue of its direct contractual relationship
with the FTC, rather than the end-user, the Company is to some extent dependent
upon the continuing existence of and contractual compliance by the FTC until the
particular transaction has been completed.

Manufacturers and Products

     Acuson Corporation (Acuson), which manufactures only ultrasound imaging
devices, is the Company's largest supplier.  Sales by the Company of Acuson
products represented over half of total revenues during 1996 and 1995.  The
Company has an exclusive distribution agreement for China and Hong Kong with
Acuson.

     Other medical products which the Company sells in China include machines
and consumables manufactured by Johnson & Johnson Clinical Diagnostics that
utilize "dry slide" clinical chemistry technology, products manufactured by
Leibinger GmbH (a Pfizer company), a leading German manufacturer of
radiosurgical treatment planning and stereotactic systems, medical laboratory
analysis equipment manufactured by Nova Biomedical, Inc., electrodiagnostic
instrumentation manufactured by Nicolet Biomedical Inc., audiometric instruments
and middle ear analyzers manufactured by Grason-Stadler, Inc., medical laser
devices manufactured by Sharplan Lasers, and bone densitometry systems
manufactured by Lunar Corporation.

     During 1996, the Company initiated marketing of the products of  two new
medical manufacturers.  The first of these, Steris Corporation, manufactures
sophisticated sterilizers for hospital and research use as well as other medical
equipment such as special lights and tables for operating rooms.  The other new
manufacturer is Carl Zeiss Far East Company limited, which makes systems and
equipment for stereotactical operations.

     A large majority of the Company's sales of mining and construction
vehicles, and spare parts for those vehicles, are attributable to the sales of
the products of Volvo Construction Equipment Corp. (Volvo) and its joint venture
company Euclid-Hitachi Heavy Equipment, Inc. (EHHE).  Sales by the Company of
Volvo and EHHE products are on an agency, rather than direct sale, basis thereby
generating net commission income, rather than sales income. The Company
represents Volvo through an  exclusive sales representative agreement with Volvo
Construction Equipment Corp. in China and also undertakes independent consulting
responsibilities for Volvo.

     The Company also represents Clark-Hurth Components, recently acquired by
Dana Corporation, which manufactures a variety of transmissions and axles for
use in construction and mining vehicles.  The Company markets and sells the
Clark-Hurth products in China and also serves as consultant to Clark-Hurth for a
potential manufacturing joint venture project in China.

     In the industrial sector, in addition to the sale of construction and
mining vehicles and equipment, in recent years the Company has completed
industrial projects in mining conveyance systems, electric power generation
utilizing geothermal and waste heat sources, specialized valves for the
petroleum industry, ultrasonic flaw detection systems for metallurgical
applications, quality control instrumentation for the mining and metallurgical
industries, steel pretreatment systems, coal processing analysis
instrumentation, coal preparation equipment, industrial air conditioning and
specialized saws for industrial applications.  Recent activities in  scientific
instrumentation have included projects in optical spectrum analysis,
electrochemical analysis,  infrared analytical instrumentation and
instrumentation for laser beam analysis.

     During 1996, sales of products related to these projects included sales on
behalf of  Amdel Corporation, Australian Conveyor Engineering Pty. Ltd.,
Bioanalytical Systems, Inc., The Daniels Company, Dodge-Rockwell Automation,
Dynamic Systems, Inc., Electro Optical Industries, Inc., Krebs Engineers, Inc.,
Racine Railroad Products, and Stanford Research Systems.

Distribution Arrangements

     Where the Company functions as the exclusive sales representative of a
manufacturer, the contracts between the Company and each of its manufacturers do
not represent long-term obligations of the manufacturer and there can be no
assurance that the Company's manufacturers will not elect to change their method
of distribution into the China marketplace to a format that does not utilize the
services of the Company.

     Acuson Corporation

     The Company commenced its contractual relationship with Acuson in 1987.
Under the terms of its current agreement, the Company is the authorized
distributor of Acuson diagnostic ultrasound equipment in China and Hong Kong.
In addition, the Company's responsibilities include the training of all
customers, the maintenance and servicing of Acuson products and various
promotional activities within China and Hong Kong.  Acuson provides customers of
the Company with a parts warranty of up to thirteen months from the date of
product shipment from the United States.  In accordance with such guarantee,
Acuson will replace or repair any parts defective as a result of original
materials used or workmanship.  Servicing this warranty is the responsibility of
the Company.  The agreement with Acuson has been renewed regularly since 1987.
The current agreement with Acuson is automatically renewed for successive one
year periods from each March 31st, unless either party gives timely notice of
intent not to renew.

     Volvo Construction Equipment Corp.

     Since 1981 the Company has served as the representative for certain
products now marketed by Volvo Construction Equipment Corp.  The current
agreement between the Company and Volvo has been in effect since January 1,
1989.  That Agreement was entered into with VME International Sales AB (VME), a
joint venture company jointly owned by Volvo AB and Clark Equipment Company
(Clark).  In 1995, Clark sold its share of VME to Volvo AB and, since the
conclusion of the transaction, VME has been called Volvo Construction Equipment
Corp.  The Company serves as the exclusive sales representative in all but the
Guangdong and Hainan provinces of China (in which the relationship is non-
exclusive) for certain products now marketed by Volvo.  The products under this
agreement are wheel loaders, marked Volvo BM and/or Michigan, articulated
haulers marked Volvo BM, rigid haulers marked Euclid, excavator loaders marked
Volvo BM and replacement parts for such products.  Sales of the rigid haulers
are now made by Euclid-Hitachi Heavy Equipment, Inc.  The Company believes that
its arrangement with Volvo eventually will be modified to reflect the separate
sales undertaking for the rigid haulers.

Competition

     The Company competes with other independent distributors in China that
market similar products.  Although the Company believes that it is one of the
largest independent distributors in its markets, there may be other distributors
with greater resources or other competitive advantages over the Company.

     In addition to other independent distributors, the Company faces more
significant competition from direct distribution of established manufacturers.
In the medical products field, for example, the Company competes with Hewlett-
Packard, which maintains its own direct sales force in China.  In addition,
since certain manufacturers, such as Hewlett-Packard, market under one brand
name a wide variety of products in China to different market sectors, those
manufacturers may be better able than the Company to establish name recognition
across industry lines.  For example, Hewlett-Packard also manufactures and
markets computers in China as well as other medical instruments not sold by the
Company.  The Company believes that Hewlett-Packard, ATL, and Siemens
Corporation are the largest such direct competitors in the medical products
field.  The Company believes that its products incorporate technologies that are
more advanced than those available in products currently available from domestic
Chinese manufacturers.

     The Company also faces significant competition from the direct sales
operations of Caterpillar Inc. and other large, international companies active
in the same equipment sectors as the Company.  Certain competition is presented
by domestic Chinese entities in various product areas. Certain of the Company's
competitors, whether joint venture projects with foreign manufacturers or all-
Chinese groups, often receive preferential treatment by the government
regulatory authorities, who seek to curtail spending on imported equipment in
favor of domestic Chinese industrial development.

     The Company's competitive position depends in part upon its ability to
attract and retain qualified personnel in sales, technical and administrative
capacities.  In addition, many of the Company's various competitors have greater
resources, financial or otherwise, than does the Company.

     In response to increased competition, and, in an effort to expand its
business, the Company has entered into agreements with certain customers to
provide extended payment terms for purchase of goods.  These arrangements,
limited to selected purchasers qualified by the Company, have assisted the
Company in competing with financing offered by competing manufacturers and
governments.  See "Management's Discussion and Analysis or Plan of Operations-
Liquidity and Capital Resources" below.

     The Company's subsidiary, Chindex Holdings International Trade (Tianjin)
Ltd., sells goods and receives payment in local Chinese currency and uses the
currency to pay  for local expenses.  The Company recognizes that any
devaluation in the local currency may have a negative impact on the results of
operations but does not believe any loss would be significant.

Employees

     At December 31, 1996, the Company had 128 full-time salaried employees, 115
of whom are in China.  Of the full-time personnel in China, 13 are expatriates
and 102 are Chinese nationals.  Of the Company's China-based employees, 33 are
considered administrative personnel, 18 are engineering personnel and the
remainder are sales personnel.  No employee of the Company currently is
represented by a labor union.  Management considers its employee relations to be
good.

     The Company intends to add employees as necessary to meet its management,
marketing, sales and technical service needs from time to time.  To date, the
Company has been able to attract and retain highly qualified professionals and
other administrative personnel as required by its business.  The Company
believes that the future success and development of the Company is dependent to
a significant degree on its ability to continue to attract such individuals.

Forward-Looking Statements

     With the exception of historical information, the matters discussed or
incorporated by reference in this Report on Form 10-KSB and, if any, in the
Company's 1997 Annual Report to Shareholders are forward-looking statements that
involve risks and uncertainties.  These forward-looking statments include, but
are not limited to, statements about the Company's (i) performance goals, (ii)
future revenues and earnings, (iii) markets and (iv) proposed new operations.
Actual results could differ materially from such forward-looking statements
because of, among other things, the following factors: developments relating to
conducting business in China (including political, economic and legal matters),
the timing of the Company's revenues, risks relating to commencement of
healthcare services operations and dependence on certain suppliers.

Item 2.     Facilities

     The Company's representative headquarters in China are located at a 12,000
square foot facility in Beijing pursuant to a lease expiring June 30, 2001.  The
Company also leases regional offices in the Chinese cities of Shanghai,
Guangzhou and Tianjin comprised of approximately 700, 350 and 700 square feet,
respectively, each lease expiring yearly. The Company's executive and
administrative offices are located in Bethesda, Maryland, which provides access
to nearby Washington, D.C.  The lease for the Bethesda office, which consists of
approximately 3,800 square feet, expires on July 31, 2001.

     On November 8, 1995, the Company entered into a lease of a four story
building of approximately 43,500 square feet in Beijing.  On November 26, 1996
this lease was extended to 15 years, expiring on December 24, 2010.  The Company
is in the process of renovating two floors of the building for the Beijing
United Family Health Center, a birthing center and pediatric clinic to be
operated by a joint venture formed by the Company and the Chinese Academy of
Medical Sciences.  The Company has already subleased the remaining two floors.
The sublease expires on January 31, 1999, with the tenant having an option to
extend  the term of the sublease for an additional two years.

     On September 1, 1996, Chindex Hong Kong Limited entered into a two year
lease for approximately 600 square feet of office space.

     The Company believes that these facilities will be sufficient to satisfy
the Company's current requirements.  In its strategy to expand operations,
however, the Company will explore new territories in China and will seek to open
new offices. Although the Company believes that office space will be available
at affordable prices, no assurance can be given.  The Company believes that, in
the event any of the existing leases that expire within five years are not
renewed, adequate alternative space will be available in the same areas at
comparable rates.

Item 3.   Legal Proceedings

     There are no pending material legal proceedings to which the Company or any
of its properties is subject.

Item 4.    Submission of Matters to a Vote of Security Holders

     A special meeting of shareholders of the Company was held on October 28,
1996, for the purpose of voting on proposals to amend the Company's Certificate
of Incorporation to increase the number of its authorized shares of Common
Stock, $.01 par value, from 18,000,000 to 28,000,000.  Proxies for the meeting
were solicited pursuant to Regulation 14A of the Securities Exchange Act of
1934, as amended, and there was no solicitation in opposition.
     The proposal to increase the number of its authorized shares of Common
Stock was approved by the following vote:
                                                                  Non votes/
                          For                  Against           Abstentions
Votes/Abstentions    12,093,436 (87.4%)      38,300 (1.0%)          0 (0.0%)

PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder
Matters

     The Company's Units (one share of Common Stock, one Class A Warrant and one
Class B Warrant), Common Stock, Class A Warrants, and Class B Warrants have been
listed on the National Association of Securities Dealers Automated Quotation
Market ("NASDAQ") under the symbols CHDXU, CHDX, CHDXW, CHDXZ, respectively.
The following table shows the high and low common stock bid quotations in the
over-the-counter market, as quoted by NASDAQ.  Such quotations reflect inter-
dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.

          Quarter Ended                      High Bid         Low Bid

          March 31, 1995                       4-1/2            3-1/2
          June 30, 1995                          5              3-1/2
          September 30, 1995                   5-3/4            4-1/2
          December 31, 1995                    5-3/4            4-7/8

          March 31, 1996                       5-1/2              4
          June 30, 1996                        4-15/16          3-1/4
          September 30, 1996                   5-1/8            3-7/8
          December 31, 1996                    5-1/4            3-1/8

     On July 18, 1995, the Company received approval to begin trading its'
common stock on The NASDAQ National Market.  The Company's Units, Class A
Warrants and Class B Warrants continue to trade on the NASDAQ SmallCap Market.

     As of March 26, 1997, there were 8 record holders and there is estimated to
be approximately 1,000 beneficial owners of the Company's Common Stock, and
three owners of the Company's Class B Common Stock.
     The Company has not paid any cash dividends on its Common Stock since
inception, and it does not anticipate paying any cash dividends in the
foreseeable future.  The Company expects to retain earnings for use in its
business.

Item 6.  Management's Discussion and Analysis or Plan of Operation

Results of Operations

Fiscal year 1996 compared to 1995

     The Company's revenues are derived in two ways: net sales by the Company
for its own account and net commission income consisting of commissions on sales
made by manufacturers that are represented by the Company.  The Company often
elects the form of each transaction based on the circumstances of the
transaction, including the nature of the products and parties involved.
Consequently, the Company does not believe that the changes over periods in the
mix comprising total gross profit on sales and net commission income necessarily
reflect any trends.

     The Company's net sales for the year ended December 31, 1996 increased
$9,058,000 or 70%, and net commission income for 1996 decreased $1,274,000 or
60% over the year ended December 31, 1995. The significant increase in net sales
over the periods was substantially due to increased marketing efforts, the
Company's decision to offer extended payment terms to customers, and
availability of improved financing terms from the Export-Import bank.  Net sales
of $8.4 million were facilitated by the Export-Import Bank financing to certain
identified Chinese organizations for the purchase of equipment sold by the
Company.

     The Company believes that total gross profit on sales and net commission
income was negatively impacted during the year by restrictions imposed by the
Chinese government on the availability of credit from the Chinese banking system
to the Company's customers.  The Company believes the restrictions on the
availability of credit will continue to impact operations for the immediate
future.  While the Company continues to explore additional financing
opportunities, including with the Export-Import Bank, there can be no assurances
that any such financing will be available in the future. This financing
arrangement from the Export-Import Bank was the first of its kind for the
Company and, the Company believes, was the first of its kind for purchasers in
China. The Company has not received any further Export-Import Bank financing
commitments and there can be no assurance that any such commitments will be
obtained in the future.

     The Company's gross profit on sales as a percentage of net sales for 1996
was 32% compared to 26% for 1995.  This increase is attributable primarily to
improved pricing achieved on the Export-Import Bank financed sales.  The
Company's total gross profit on sales and net commission income was $7,823,000
for 1996. Of that amount $6,982,000 or 89% consisted of gross profit on sales
and $841,000 or 11% consisted of net commission income.  The Company's total
gross profit on sales and net commission income was $5,450,000 for 1995.  Of
that amount $3,335,000 or 61% consisted of gross profit on sales and $2,115,000
or 39% consisted of net commission income.  Since the Company generally elects
the form of transactions it does not believe that the changes over periods in
the mix comprising total gross profit on sales and net commission income
reflects any trends.

     Selling, general and administrative expenses for 1996 and 1995 were
$7,896,000 and $6,239,000 respectively, representing an increase of $1,657,000
or 27%. These expenses represent costs associated with increased staff bonuses
as a result of higher sales, senior management hirings, increased rent expense
related to the new building leased to house the proposed Beijing United
facility, and increases related to travel and entertainment.  These components
account for substantially all of the total increase over the year and are
attributable to expanded marketing efforts.

     Miscellaneous income of $501,000 for the year 1996 represents principally
the net sub-lease income received from sub-lease of a portion of the building
leased to house the Beijing United facility, net of proportionate rent expense.
Liquidity and Capital Resources

     In  November 1996, the Company completed a second underwritten public
offering of securities. The Company received net proceeds of approximately $9.8
million from the offering and subsequent sale of  additional securities pursuant
to an over-allotment option held by the underwriter.  Most of the proceeds are
currently invested in short-term government securities.

     As of December 31, 1996, the Company had working capital of $19,996,000,
including cash and cash equivalents of $13,374,000, as compared to working
capital of $6,595,000 with cash and cash equivalents of $3,599,000 as of
December 31, 1995.  During 1996 the Company spent approximately $1.3 million
toward equipment and building improvements for the Beijing United Family Health
Center (Beijing United).  The Company anticipates spending an additional amount
of approximately $1.7 million for completion of the Beijing United facility. The
Company believes that the Beijing United facility will provide much-needed
Western standard health care services, including maternity and birthing services
as well as neonatal and pediatric care, to specified target markets in China,
including the expatriate business and diplomatic community in Beijing. The
Company currently anticipates that the Beijing United facility will open in Mid-
1997. The Company intends to finance these capital expenditures principally from
its available sources, including cash and cash equivalents.

     Trade receivable increased $1,857,000 over prior year. This is principally
related to sales with extended payment terms. These extended payment terms have
been provided to select customers in the Company's more familiar markets and
under circumstances designed to reduce risk. These terms have involved the
extension to a later date or dates of the payment in full on product purchases.
A substantial payment is required at the time of delivery, on a prepayment or
letter of credit basis. The majority of extended payment arrangements have been
coordinated among the Company, the supplier and the end-user to minimize the
Company's risk of non-payment. In order to minimize its risks the Company offers
extended payment term opportunities only to familiar and reliable select
customers. However, the extension of payment terms has the effect of postponing
the receipt of cash by the Company, thereby negatively impacting cash flow and
liquidity in the short term.

     The availability of capital resources and liquidity has become increasingly
important as a result of continued restrictions by the Chinese government on the
availability of credit from the Chinese banking system to the Company's
customers. These restrictions, which were implemented in 1993 in response to
inflationary concerns and other economic factors, continue to negatively impact
the Company's operations. Although the Company believes that its offering of
extended payment terms contributed substantially to its results of operations
during 1996 there can be no assurances that the extended payment terms will
continue to offset or reduce the continued impact of the restrictions on credit
in China.

     Accounts payable increased $2,844,000 over prior year as a result of the
Company's ability to negotiate its extended term sales with its suppliers and
receiving reciprocal payment terms. During 1995 the Company developed a unique
escrow agreement with one supplier to help provide a future payment guarantee
without tying up any current working capital that allows the Company to continue
to expand the extended payment term program.

     In light of the uncertainty of available financing to the Company's
markets, the Company continues to search for alternate financing programs. The
recent tied aid credits from the Export-Import Bank for the purchasers of the
Company's products provides an attractive financing alternative and the Company
will continue to explore additional similar financing opportunities. There can
be no assurance that similar Export-Import Bank financing will be available in
the future.

     Inventories rose by $1,107,000 during the year as the Company continued to
build up inventories in response to various business conditions.  Almost half of
this increase involves a large sale to a Hong Kong hospital.  This sale is
expected to be completed in the second quarter 1997.

     On August 19, 1996, the Company increased its existing credit facility with
First National Bank of Maryland from $900,000 to $1,300,000 for short-term
working capital needs, standby letters of credit, and spot and forward foreign
exchange transactions. In addition, First National Bank of Maryland has provided
a $420,000 standby letter of credit as a separate credit facility apart from the
increased line of credit. The $1,300,000 credit facility and the $420,000
standby letter of credit are payable on demand, fully secured and collateralized
by government securities acceptable to the Bank having an aggregate fair market
value of not less than $1,911,112. As of December 31, 1996, the Company had
available approximately $1,300,000 under the credit facility. Generally, since
the Company's assets principally are located in China, the Company has
experienced difficulties in obtaining asset-based financing.

     Although the Company remains optimistic about the market place, there
continues to be uncertainty as to the direction of China's on-going political
and economic reforms as well as China's relationship with the United States.
This uncertainty may influence the budgeting and purchasing process in China.
Any of the foregoing circumstances may impede trade with China, thus temporarily
impairing the ability of the Company's customers to purchase the Company's
products.

     In order to complement its proposed expansion, the Company may acquire
businesses or assets that are consistent with the Company's current operations
or experience in China.  The Company currently does not have any agreements,
commitments, arrangements or understandings with respect to any proposed
acquisition and there can be no assurance that any suitable acquisition will be
discovered or consummated.  Any use of cash used to finance any such acquisition
would be derived principally from cash and cash equivalents.

Timing of Revenues

     The timing of the Company's revenues is affected by several significant
factors. Many end-users of the products sold by the Company depend to a certain
extent upon the allocation of funds in the budgeting processes of the Chinese
government and the availability of credit from the Chinese banking system. These
processes and the availability of credit are based on policy determinations by
the Chinese government and are not necessarily subject to fixed time schedules.
In addition, the sales of certain products often require protracted sales
efforts, long lead times and other time-consuming steps. Further, in light of
the dependence by purchasers on the availability of credit, the timing of sales
may depend upon the timing of the Company's or its purchasers' abilities to
arrange for credit sources. As a result, the Company's operating results have
varied  and  are  expected  to  continue  to  vary  significantly from period to
period and year to year. In addition, a relatively limited number of orders and
shipments may constitute a meaningful percentage of the Company's revenue in any
one period. Correspondingly, a relatively small reduction in the number of
orders can have a material impact on the Company's revenues in any year.
Further, because the Company recognizes revenues and expenses relating to
certain contracts as products are shipped, the timing of shipments could affect
the Company's operating results for a particular period.

     During 1996, the Company recognized $8.4 million in sales as a result of
the shipment of goods sold to end-users under an Export-Import Bank financing
arrangement. This financing arrangement was the first of its kind for the
Company and, the Company believes, was the first of its kind for purchasers in
China. The increase in the Company's sales in 1996 was facilitated by this
financing. Accordingly, the Company's results of operations for the twelve
months ended December 31, 1996 were significantly and positively impacted by the
timing of the payments from the financing.  The Company has not received any
further Export-Import Bank financing commitments and there can be no assurance
that any such commitments will be obtained in the future by the Company or the
end-users of its products.

     In order to meet increased competition and difficult marketing conditions
caused by a restriction of credit available to domestic Chinese organizations
and to continue to expand its markets, the Company has continued to make sales
to certain customers with extended payment terms. These sales were to familiar
and qualified purchasers and were structured to minimize the Company's risk of
non-payment. In addition, the short-term cash flow implications on the Company
were also minimized by obtaining reciprocal payment terms from the Company's
suppliers. There can be no assurance, however, that the Company's suppliers will
continue to so participate in the future, which would have a negative impact on
the Company's short-term cash flow. The Company believes that its efforts with
respect to financing initiatives contributed substantially to the overall
increase in sales in 1995 and 1996.  There can be no assurance however that
these financial initiatives will continue to offset or reduce the continuing
impact of credit restrictions or that the Export-Import Bank financing will
recur.

Foreign Currency Exchange and Impact of Inflation

      The results of operations of the Company for the periods discussed have
not been significantly affected by inflation or foreign currency fluctuation. To
date, substantially all of the Company's purchases and sales have been made in
U.S. dollars. Thus, the Company has not had extensive foreign currency risk.
However, changes in the valuation of the Chinese Renminbi may have an impact on
the Company's results of operations in the future. The Company's subsidiary,
Chindex Tianjin, sells products in Renminbi. The Renminbi is not a freely
convertible currency and accordingly exchange risks cannot be hedged.

     Also, the Company has purchased and will continue to purchase some products
in currencies other than U.S. dollars and has sold and will continue to sell
such products in China for U.S. dollars. To the extent that the value of the
U.S. dollar declines against such a currency, the Company could experience a
negative impact on profitability. The Company anticipates hedging transactions
wherever possible to minimize such negative impacts.


Item 7.   Consolidated Financial Statements

          The consolidated financial statements are shown after this page
numbered as follows:

                                                                Pages
          Report of Ernst & Young LLP, Independent Auditors      F-1

          Consolidated financial statements
             Consolidated Balance Sheets                         F-2
             Consolidated Statements of Operations               F-3
             Consolidated Statements of Cash Flows               F-4
             Consolidated Statements of Shareholders' Equity     F-5
             Notes to Consolidated Financial Statements       F-6 to F-11



<PAGE>

                Report of Ernst & Young LLP, Independent Auditors


The Board Of Directors and Shareholders
U.S.-China Industrial Exchange, Inc.

We have audited the accompanying consolidated balance sheets of U.S.-China
Industrial Exchange, Inc. as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of U.S.-China
Industrial Exchange, Inc. at December 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.




                                             Ernst & Young, LLP

Vienna, Virginia
March 5, 1997

                                      F-1


<PAGE>
                      U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                   DECEMBER 31,    DECEMBER 31,
                                                       1995            1996
                                                  ------------     -------------
                                    ASSETS
<S>                                               <C>             <C>
Current assets:
  Cash & cash equivalents........................  $  3,599,000     $13,374,000
  Receivables:
    Trade accounts, less allowance for doubtful
    accounts of $95,000 (1995) and $115,000 (1996)    3,725,000       4,626,000
    Current portion -- long term trade accounts..     2,396,000       3,612,000
    Commissions receivable.......................       962,000         449,000
  Inventories....................................     1,215,000       2,188,000
  Other current assets...........................       690,000         716,000
                                                   ------------    -------------
       Total current assets......................    12,587,000      24,965,000
  Property & equipment, net .....................       406,000       1,783,000
  Trade accounts receivable, long term...........     2,348,000       2,068,000
  Other..........................................        93,000         148,000
                                                   ------------    -------------
       Total assets..............................  $ 15,434,000     $28,964,000
                                                   ============    =============
</TABLE>

<TABLE>
<CAPTION>

                        LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                               <C>             <C>
Current liabilities:
  Accounts payable and accrued expenses..........  $  4,139,000     $ 6,118,000
  Accrued contract training......................       683,000         724,000
  Current portion-long term accounts payable, net       984,000       1,615,000
  Income taxes payable..........................        186,000         465,000
                                                   ------------    -------------
       Total current liabilities................      5,992,000       8,922,000
  Long term accounts payable, net...............        933,000       1,126,000
                                                   ------------    -------------
       Total liabilities........................      6,925,000      10,048,000

Shareholders' equity:
  Preferred stock, $.01 par value: Authorized --
    5,000,000 shares, none issued
  Common stock, $.01 par value
    Authorized -- 30,000,000 shares (including
    2,000,000 designated Class B);
    Common shares issued and outstanding; 1995 -
    1,840,000 shares, 1996 - 4,772,500 shares...         18,000          48,000
    Class B -- 2,000,000 shares issued and
    outstanding in each year....................         20,000          20,000
  Additional capital............................      7,477,000      17,278,000
  Foreign currency equity translation adjustment         (8,000)         (8,000)
  Retained earnings.............................      1,002,000       1,578,000
                                                   ------------    -------------
    Total shareholders' equity..................      8,509,000      18,916,000
                                                   ------------    -------------
    Total liabilities and shareholders' equity..   $ 15,434,000     $28,964,000
                                                   ============    =============
</TABLE>
                                 See accompanying notes

                                      F-2


<PAGE>
                      U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                -------------------------------
                                                       1995            1996
                                                   -----------     ------------


<S>                                               <C>              <C>
Net sales.......................................   $13,002,000      $22,060,000
Cost of goods sold..............................     9,667,000       15,078,000
                                                   -----------      -----------
Gross profit on sales...........................     3,335,000        6,982,000
Net commission income...........................     2,115,000          841,000
                                                   -----------      -----------
TOTAL GROSS PROFIT ON SALES AND
  NET COMMISSION INCOME.........................     5,450,000        7,823,000
Selling, general and administrative
Salaries and payroll taxes......................     2,682,000        3,536,000
Travel and entertainment........................     1,440,000        1,796,000
Other...........................................     2,117,000        2,564,000
                                                   -----------      -----------
                                                      (789,000)         (73,000)
Other income and expenses
Interest expense................................       (81,000)        (119,000)
Interest income.................................       427,000          408,000
Miscellaneous (expenses)/income - net...........        (6,000)         501,000
                                                   -----------      -----------
(Loss) income before benefit from/
  (provision for) income taxes..................      (449,000)         717,000
Benefit from/(provision for) income taxes.......       132,000         (141,000)
                                                   -----------      -----------
NET (LOSS)/INCOME...............................  $   (317,000)     $   576,000
                                                   ===========      ===========
NET (LOSS)/INCOME PER SHARE.....................        $(0.09)         $  0.15
                                                   ===========      ===========
Weighted average shares outstanding.............     3,390,000        3,818,034
                                                   ===========      ===========


</TABLE>

                                     See accompanying notes


                                             F-3

<PAGE>
                      U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                     ------------------------
                                                     1995                1996
                                                   ----------       -----------
<S>                                             <C>                <C>
OPERATING ACTIVITIES
Net (loss) income.............................   $   (317,000)      $   576,000
Adjustments to reconcile net (loss) income to
  net cash (used in) provided by operating
  activities:
  Depreciation & amortization.................        121,000           130,000
  Provision for doubtful accounts.............         20,000            20,000
  Provision for deferred taxes................         46,000          (161,000)
  Inventory write-down........................         95,000           134,000
  Amortization of discount from
  investment security.........................        (91,000)            --
Changes in operating assets and liabilities:
  Trade receivable............................     (3,602,000)       (1,857,000)
  Commissions receivable......................        (32,000)          513,000
  Inventories.................................       (652,000)       (1,107,000)
  Other current assets........................       (288,000)          133,000
  Other assets................................        119,000           (52,000)
  Accounts payable and accrued expenses.......      2,866,000         2,844,000
  Income taxes payable........................       (263,000)          279,000
                                                   ----------       -----------
Net cash (used in)/
  provided by operating activities............     (1,978,000)        1,452,000

INVESTING ACTIVITIES
  Sale of investment security.................      2,635,000             --
  Purchase of property and equipment..........       (189,000)       (1,508,000)
                                                   ----------       -----------
Net cash (used in)/
  provided by investing activities............      2,446,000        (1,508,000)

FINANCING ACTIVITIES
  Proceeds from issuance of common stock......          --            9,831,000
                                                   ----------       -----------
Effect of foreign exchange rate changes on cash
  and cash equivalents........................         (8,000)            --
                                                   ----------       -----------
Net increase in cash and cash equivalents.....        460,000         9,775,000
Cash and cash equivalents at beginning of period    3,139,000         3,599,000
                                                   ----------       -----------
Cash and cash equivalents at end of period....     $3,599,000       $13,374,000
                                                   ==========       ===========
Supplemental disclosure of cash flow information:
Cash paid for interest........................     $    3,000        $        0
                                                   ==========       ===========
Cash paid for income taxes....................     $   31,000        $   54,000
                                                   ==========       ===========
</TABLE>
                               See accompanying notes

                                       F-4


                     U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                   YEARS ENDED DECEMBER 31, 1995 AND  1996


<TABLE>
<CAPTION>
                                 COMMON STOCK       COMMON STOCK -- CLASS B
                               ------------------   ------------------------- ADDITIONAL  RETAINED     TRANSLATION
                               SHARES    AMOUNT     SHARES         AMOUNT      CAPITAL    EARNINGS     ADJUSTMENT      TOTAL
                              --------  --------   --------      ---------    ----------  ----------   ----------     -------
<S>                         <C>        <C>       <C>           <C>         <C>           <C>          <C>         <C>
Balance at January 1, 1995.. 1,840,000   18,000   2,000,000         20,000    7,477,000     1,319,000       --       8,834,000

Net loss for 1995...........     --       --         --               --         --          (317,000)  $ (8,000)     (325,000)

                             ---------  -------  ----------     ----------   ----------    ----------     --------   ---------

Balance at December 31, 1995 1,840,000   18,000   2,000,000         20,000    7,477,000     1,002,000     (8,000)    8,509,000

Issuance of common stock     2,932,500   30,000       --               --     9,801,000         --           --      9,831,000

Net income for 1996             --         --         --               --        --           576,000        --        576,000

                             ---------  -------  ----------     ----------   ----------    ----------    --------   ----------
Balance at December 31, 1996 4,772,500  $48,000   2,000,000     $   20,000  $17,278,000    $1,578,000   $ (8,000)  $18,916,000
                             =========   ======   =========     ==========   ==========     =========   =========  ===========

</TABLE>

                             See accompanying notes

                                      F-5

<PAGE>
                      U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

Organization and Description of Business

  U.S.-China Industrial Exchange, Inc. (the Company) is a sales representative
in China and Hong Kong for several major U.S., European, and other manufacturers
of high-technology medical equipment, construction, mining and other industrial
machinery and scientific research instrumentation. The Company markets and sells
these products in China and Hong Kong, and provides marketing, sales and
technical services for the products. Substantially all sales, commissions and
purchases are denominated in U.S. dollars.

  In 1996 the Company established the Beijing United Family Health Center, a 90%
-owned contractual joint venture between the Company and and a company
controlled by the Chinese Academy of Medical Sciences.  This clinic is being
designed to provide the expatriate business and diplomatic community in Beijing
with complete Western-standard maternity and birthing services as well as
neonatal and pediatric care.  There were no operations of the clinic in 1996.
Operations are expected to commence during 1997.

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Principles of Consolidation

  The consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries, Chindex, Inc., Chindex Holdings International Trade
(Tianjin), Chindex Hong Kong and its 90% interest in the Beijing United Family
Health Center. Significant intercompany accounts and transactions have been
eliminated in consolidation.

Revenue Recognition

  Sales and most commissions are recognized upon product shipment. Costs
associated with installation, after-sale servicing and warranty are not
significant and are recognized in cost of sales as they are incurred.

Inventories

  Inventory purchased to fill signed sales contracts that remain undelivered at
year-end (Contract inventory), service parts and inventory of peripheral
components are stated at the lower of cost or market using the specific
identification method. Certain items are purchased for demonstration purposes
and subsequent sale (Demonstration inventory). Management monitors the
salability of such demonstration inventory and reduces the carrying amount to
net realizable value when there is any impairment in value.

Property and Equipment

  Property and equipment are stated at cost. Depreciation is computed on the
straight line method over the estimated useful lives of the related assets.
Useful lives for office equipment, vehicles and furniture and fixtures range
from 5 to 7 years. Leasehold improvements are amortized by the straight-line
method over the shorter of the estimated useful lives of the improvements or the
lease term.  Certain medical equipment is depreciated over three years.

Long Term Receivables and Payables

  Long term receivables and payables are recorded at estimated present values
determined based on current rates of interest. Imputed interest is recognized
using the effective interest method.

Income Taxes

  Provisions for income taxes are based upon earnings reported for financial
statement purposes and may differ from amounts currently payable or receivable
because certain amounts may be recognized for financial reporting purposes in
different periods than they are for income tax purposes. Deferred income taxes
result from temporary differences between the financial statement amounts of
assets and liabilities and their respective tax bases.

Cash Equivalents

  The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Fair value of Financial Instruments

  The Company considers the recorded value of its financial instruments, which
consist of cash and cash equivalents, trade receivables, commissions receivable
and accounts payable, to approximate the fair value of the respective assets and
liabilities at December 31, 1996 and 1995.

Earnings Per Share

  Earnings per share is based on the average number of common and common
equivalent shares outstanding during the year. Shares of common stock placed in
escrow at completion of the initial public offering have been excluded from the
calculation of earnings per share. Other shares issuable upon the exercise of
stock options and warrants were included in the calculation according to the
provisions of Accounting Principle Board Opinion No. 15 (APB15).

Dividends

  The Company has not paid dividends to the shareholders of its common stock and
any dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.

Stock-Based Compensation

  In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
'Accounting for Stock-Based Compensation,' which is effective for the Company's
December 31, 1996 financial statements. SFAS No. 123 allows companies to either
account for stock-based compensation under the new provisions of SFAS No. 123 or
under the provisions of APB 25, but requires pro forma disclosure in the
footnotes to the financial statements as if the measurement provisions of SFAS
123 had been adopted. The Company intends to continue accounting for its stock-
based compensation in accordance with the provisions of APB 25. As such, the
adoption of SFAS No. 123 does not impact the financial position or the results
of operations of the Company.

Reclassifications
  Certain amounts for 1995 have been reclassified to conform to the 1996
presentation.

2. PROPERTY AND EQUIPMENT, NET

     Property and equipment, net consists of the following:
<TABLE>
<CAPTION>
                                       DECEMBER 31, 1995    DECEMBER 31, 1996
                                       -----------------    ------------------

<S>                                       <C>                  <C>
Furniture and equipment..............       $ 463,000           $1,358,000
Vehicles.............................         124,000              124,000
Leasehold improvements...............         195,000              807,000
                                         -----------------    ----------------
                                              782,000            2,289,000
Less: accumulated depreciation
  and amortization...................         376,000              506,000
                                         -----------------    ----------------
                                            $ 406,000           $1,783,000
                                         =================    ================
</TABLE>





3. INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                       DECEMBER 31, 1995    DECEMBER 31, 1996
                                       ------------------   ------------------
<S>                                       <C>                  <C>
Contract inventory...................      $    14,000           $  467,000
Demonstration inventory, net.........          616,000              769,000
Parts and peripheral inventory.......          585,000              952,000
                                       -----------------    ------------------
                                           $ 1,215,000           $2,188,000
                                       =================    ==================
</TABLE>

4. EXTENDED PAYMENT TERM SALES ARRANGEMENTS


     The  Company has entered into agreements  with certain customers to provide
extended payment terms. In conjunction  with these transactions the Company  has
negotiated  agreements with  certain vendors  to grant  matching extended terms.
Receivables and  payables under  these arrangements  were discounted  at 6.39%
for the years ended December 31, 1995 and 1996, respectively.

     At December 31, 1996, long-term receivables and payables under these
arrangements mature as follows:

<TABLE>
<CAPTION>
                                     ACCOUNTS RECEIVABLE    ACCOUNTS PAYABLE
                                     -------------------    ----------------
<S>                                   <C>                    <C>
1997.................................     $3,695,000           $1,672,000
1998.................................      1,634,000            1,033,000
1999.................................        559,000              231,000
2000.................................        144,000                 --
                                     -------------------    ----------------
                                           6,032,000            2,936,000
Less: imputed interest...............        352,000              195,000
                                     -------------------    ----------------
                                           5,680,000            2,741,000
Less: current portion................      3,612,000            1,615,000
                                     -------------------    ----------------
                                         $ 2,068,000           $1,126,000
                                     ===================    ================
</TABLE>


Amortization  of imputed interest on  long-term accounts receivable was $183,000
and $164,000 for  the years ended  December 31, 1995 and 1996, respectively.
Amortization  of imputed interest on long-term accounts payable was $78,000 and
$119,000 for the years ended December 31, 1995 and 1996, respectively.


5. SHAREHOLDERS' EQUITY

Common Stock

     The Class B common stock and the common stock are substantially identical
on a share-for-share basis, except that the holders of Class B common stock have
six votes per share on each matter considered by shareholders and the holders of
common stock have one vote per share on each matter considered by shareholders.
Each share of Class B common stock will convert at any time at the option of the
original holder thereof into one share of common stock and is automatically
converted into one share of common stock upon (i) the death of the original
holder thereof, or, if such shares are subject to a shareholders agreement or
voting trust granting the power to vote such shares to another original holder
of Class B common stock, then upon the death of such original holder, or (ii)
the sale or transfer to any person other than specified transferees.

      The holders of the outstanding 2,000,000 shares of Class B common stock
have placed 450,000 shares in escrow. These shares will not be assignable or
transferable (but may be voted) until such time as they are released from escrow
based upon the Company meeting certain earnings levels or the common stock
attaining certain price levels. All reserved shares remaining in escrow on March
31, 1999 will be forfeited and contributed to the Company's capital. In the
event the Company attains any of the earnings thresholds or stock prices for the
release of the escrowed shares to the original shareholders, the Company will
recognize compensation expense at such time based on the fair market value of
the shares released.

     On October 28, 1996, the shareholders of the Company voted to increase the
number of authorized shares of common stock from 18,000,000 to 28,000,000
(excluding common stock -- Class B).

Public Offering, Common Stock, Warrants

    On August 18, 1994 the Company completed its initial public offering selling
1,600,000 common stock units for net proceeds to the Company of approximately
$6,206,000.  Additionally, on September 13, 1994 the underwriters exercised
their overallotment option purchasing an additional 240,000 common stock units
for net proceeds to the Company of approximately $1,044,000.  Each unit
consisted of one common share, one Class A warrant and one Class B warrant.
Class A warrants entitle the holder to acquire one share of common stock and a
Class B warrant at an exercise price of $6.50.  Each Class B warrant entitles
the holder to acquire one share of common stock at an exercise price of $8.75.
Warrants are exercisable through December 31, 1999.  The underwriters and a
consultant have also been granted options to purchase an additional 144,000 and
16,000 units, respectively, at $6.75 per unit.  These options are exercisable at
any time during the four year period beginning August 18, 1995.

     On November 8, 1996 the Company completed a second underwritten public
offering of securities selling 2,550,000 common stock units and an November 21,
1996 the underwriters exercised their overallotment option purchasing an
additional 382,500 common stock units for net proceeds to the Company of
approximately $9,831,000.  Each unit is exactly the same as the original
offering described above.

    In April 1994 the Company issued 300,000 Class A and 300,000 Class B
warrants on a prorata basis to each shareholder of record.  The exercise prices
of these warrants are the same as  the warrants sold in the Company's initial
public offering.  These warrants are exercisable at any time through December
31, 1999.

Stock Option Plan

     In April 1994, the Board of Directors adopted and the shareholders approved
the Company's 1994 Stock Option Plan (the Plan).  On January 9, 1997, the Board
of Directors amended the Plan in accordance with changes to the rules and
regulations of the Securities and Exchange Commission governing such plans.  The
Plan provides for the grant, at the discretion of the Board of Directors, of (i)
options that are intended to qualify as incentive stock options (Incentive Stock
Options) within the meaning of Section 422A of the Internal Revenue Code to
certain employees, consultants and directors, and (ii) options not intended to
so qualify (Nonqualified Stock Options) to employees, consultants and directors.
The total number of shares of common stock for which options may be granted
under the Plan is 228,000 shares. On August 18, 1994, the Company granted 82,000
of these options to purchase shares of common stock to employees and a
consultant. Such options are exercisable, generally for a term of ten years, at
the IPO price. During the year ended December 31, 1995, the Company granted
17,500 options to employees. The options granted during 1995 are exercisable at
the fair market value on the date of grant and provide for a term of ten years.

     The Plan is administered by the Board of Directors, which determines the
terms of options, including the exercise price, the number of shares subject to
the options and the terms and conditions of exercise. No option granted under
the Plan is transferable by the optionee other than by will or the laws of
descent and distribution and each option is exercisable during the lifetime of
the optionee only by such optionee.

     The exercise price of options granted under the Plan must be at least equal
to the fair market value of such shares on the date of grant. With respect to
any participant who owns stock possessing more than 10% of the voting rights of
the Company's outstanding capital stock, the exercise price of any Incentive
Stock Option may be not less than 110% of the fair market value on the date of
grant. With respect to any Incentive Stock Option granted to a participant who
owns stock possessing more than 10% of the total combined voting power of all
classes of the Company's outstanding capital stock, the maximum term is five
years.

     The following is a summary of stock option activity during the years ended
December 31, 1995 and 1996:

<TABLE>
<CAPTION>
                                                                   Exercise
                                            1995         1996        Price
                                           ------       ------     --------
<S>                                       <C>         <C>       <C>
Options outstanding, beginning of year:    79,560       97,060       $5.00
  Granted                                  17,500       73,000   $3.375 - $5.31
  Cancelled                                  --         (2,000)
                                          -------      -------   --------------
Options outstanding, end of year           97,060      168,060   $3.375 - $5.31
                                          =======      =======   ==============

</TABLE>

The Company has not provided disclosures under FAS 123 for proforma net income
and proforma earnings per share, as such amounts are not materially different
from reported amounts.  The weighted average exercise price of options
outstanding at December 31, 1996 is $4.36 and the weighted average remaining
contractual life of such options is 8.6 years.

Shares of Common Stock Reserved

     At  December 31, 1996 the Company has reserved 12,378,000 shares of common
stock for issuance upon exercise of stock options and purchase warrants.


6. INCOME TAXES

     The benefit from/(provision for) income taxes consists of the following:

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                                          --------------------------
                                               1995           1996
                                            ------------   ------------
<S>                                         <C>           <C>
Current:
     Federal.................................$  180,000    $(165,000)
     Foreign.................................   (30,000)     (94,000)
     State...................................    28,000      (43,000)
                                            ------------   ------------
                                                178,000     (302,000)
Deferred:
     Federal.................................   (36,000)     133,000
     State...................................   (10,000)      28,000
                                            ------------   ------------
                                                (46,000)     161,000
                                            ------------   ------------
                                             $  132,000     (141,000)
                                            ============  =============
</TABLE>

     The net deferred tax asset is included in other current assets and consists
of the following as of December 31:

<TABLE>
<CAPTION>
                                                1995       1996
                                              --------   --------
<S>                                          <C>        <C>
Allowance for doubtful accounts.............  $ 30,000   $ 43,000
Inventory write downs.......................    44,000    105,000
Net operating loss carry forwards...........    44,000       --
Other.......................................     4,000     12,000

                                              --------   --------
                                               122,000    161,000
Less valuation allowance....................  (122,000)         0
                                              --------   --------
Net deferred tax asset......................  $   --     $161,000
                                              ========   ========
</TABLE>

     The  Company's effective income tax rate  varied from the statutory federal
income tax rate for the year ended December 31 as follows:

<TABLE>
<CAPTION>
                                                           1995        1996
                                                           -----      -----
<S>                                                       <C>        <C>
Statutory federal income tax rate.......................   (34.0%)     34.0%
Adjustments:
     State income taxes, net of federal tax benefit.....   ( 4.0 )      4.0
     Foreign tax rate differential                            -       ( 9.0)
     Change in valuation allowance                            -       (14.0)
     Other, including permanent differences.............     8.6        4.7
                                                            -----     -----
Effective income tax rate...............................   (29.4%)     19.7%
                                                            =====     =====

</TABLE>

     No valuation allowance has been recorded as of December 31, 1996 as the
Company believes it is more likely than not the Company's net deferred tax
assets will be realized.

     The Company and its subsidiaries file separate income tax returns; the
Company on a June 30  fiscal year and its subsidiaries on a December 31 fiscal
year.


7. COMMITMENTS

Employment Agreements

     The Company has entered into three-year employment agreements with four key
executives which, as amended or revised to date, provide for annual base
salaries amounting to an aggregate of $621,000 per year until May 1997.

Leases

     The Company leases office space and space for the Beijing United Family
Health Center under operating leases.  Future minimum payments under these
noncancelable operating leases consist of the following:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
-----------------------
<S>                                                       <C>
       1997.............................................    1,245,000
       1998.............................................      573,000
       1999.............................................      500,000
       2000.............................................      510,000
       2001.............................................      350,000
       Thereafter.......................................    1,429,000
                                                            ----------
                                                            4,607,000
       Less total minimum sublease rentals............ .   (1,644,000)
                                                           ----------
       Net minimum rental commitments...................   $2,963,000
                                                           ==========

</TABLE>

     The above leases require the Company to pay certain pass through operating
expenses and rental increases based on inflation.

     Included in miscellaneous (expenses)/income for the year ended December 31,
1996 is net sublease income of $540,000.

     Rental expense was approximately $348,000 and $929,000 for the years ended
December 31, 1995 and 1996, respectively.

8. CONCENTRATIONS OF CREDIT RISK

     Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
trade receivable and commissions receivable. Substantially all of the Company's
cash and cash equivalents at December 31, 1995 and 1996 were held by two U.S.
financial institutions. All of the Company's sales during the year were to end-
users located in China or Hong Kong. Most  of the Company's sales are
accompanied by down payments of either cash or letters of credit with one
Chinese financial institution. Sales on extended payment terms usually have down
payments in the form of a letter of credit and additional payments are secured
through several methods. Before extended payment terms are provided, the Company
performs a thorough review of the local operation, secures a guarantee from
higher authorities than the end-user, and performs other steps as needed.

     Extended payment term transactions are entered  into in the context of  the
Company's  sales activities in China and, as  such, the risks attendant to doing
business in  China  apply  to  such  transactions as  well.  The  absence  of  a
comprehensive  and  effective  legal  system  in  China,  among  other concerns,
requires alternative arrangements in order to reduce the Company's credit risks.
Guarantees from higher governmental authorities, for  example, usually  involve
requiring  customers to have a provincial or municipal governmental organization
sign a statement that the payment obligations will be satisfied. This  political
commitment  is,  in the  Company's experience,  an  effective method  in helping
ensure  payment  of  obligations  in  China.  These  commitments,  however, are
different  from traditional  commercial guarantees  in the  United States, which
guarantees are not available in China for transactions of the type engaged in by
the Company.

    The Company has a $1,300,000 credit facility with First National Bank of
Maryland for short-term working capital needs, standby letters of credit, and
spot and forward foreign exchange transactions. In addition, First National Bank
of Maryland has provided a $420,000 standby letter of credit expiring on April
30, 1997.  Balances outstanding under the facilities are payable on demand,
fully secured and collateralized by government securities acceptable to the Bank
having an aggregate fair market value of not less than $1,911,112. As of
December 31, 1996, no borrowings were outstanding under the credit facility.
Use of the credit facility will bear interest at 1% over three month London
Interbank Offered Rate ("LIBOR").

    The Company conducts its  marketing and sales and  provides its  services
exclusively  to buyers located in China, Hong Kong and Macau. The Company's
results of operations and its ability  to obtain  financing could  be adversely
affected if  there was  a deterioration in trade relations between the United
States and China.

    Of the Company's net assets at December 31, 1996, approximately $4,339,000
of such assets  are located in China, consisting principally of inventories and
property and equipment.

See also Note 9.

9. SIGNIFICANT CUSTOMERS/SUPPLIERS

     Substantially all China purchases of the Company's products, regardless of
the end-user, are made through Chinese foreign trade corporations (FTCs).
Although the purchasing decision is made by the end-user, which may be an
individual or a group having the required approvals from their administrative
organizations, the Company enters into formal purchase contracts with FTCs. The
FTCs make purchases on  behalf of  the end-users  and are  authorized by  the
Chinese  government to conduct import business. FTCs are chartered and regulated
by the government and are  formed  to  facilitate  foreign trade.  The  Company
markets  its products directly to end-users, but in consummating a sale the
Company must also interact with the particular FTC representing the end-user.
By virtue of its direct contractual relationship with the FTC, rather than the
end user, the Company is to some extent dependent on the continuing existence of
and contractual compliance by the FTC until a particular transaction has been
completed.

     Purchases from one supplier totaled approximately $7,568,000 and $4,816,000
for the years ended December 31, 1996 and 1995, respectively.  The Company has
entered into a security arrangement to ensure the payment of such supplier's
accounts payable.


Item 8.   Changes In and Disagreements with Accountants on Accounting and
          Financial Disclosure.

          None.



PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons

     The information relating to the directors, executive officers, promoters
and control persons of the Company will be included in the Company's Proxy
Statement (the "Proxy Statement") relating to its 1997 Annual Meeting of
Shareholders, which the Company intends to file with the Securities and Exchange
Commission on or prior to April 30, 1997, and is incorporated herein by
reference.


Item 10.   Executive Compensation

     Information required is set forth in the Proxy Statement, which is
incorporated herein by reference.

Item 11.   Security Ownership of Certain Beneficial Owners and Management
     Information required is set forth in the Proxy Statement, which is
incorporated herein by reference.

Item 12.   Certain Relationships and Related Transactions
     Information required is set forth in the Proxy Statement, which is
incorporated herein by reference.

Item 13.   Exhibits and Reports on Form 8-K

     a.    Exhibit listing:

          3.1  Restated Certificate of Incorporation of the Company.
               Incorporated by reference to Exhibit 3.1 to the Company's
               Registration Statement on Form SB-2 (No. 33-78446)(the "IPO
               Registration Statement").

          3.2  By-laws of the Company.  Incorporated by reference to Exhibit
               3.2 to the IPO Registration Statement.

          4.1  Form of Warrant Agreement (including forms of Class A and Class
               B Warrant Certificates).  Incorporated by reference to Exhibit
               4.1 to the IPO Registration Statement.

          4.2  Form of Amendment to Warrant Agreement.  Incorporated by
               reference to Exhibit 4.2 to the Company's Registration
               Statement on Form SB-2 (No. 333-12861)(the "Secondary
               Registration Statement").

          4.3  Form of Specimen Certificate of the Company's Common Stock.
               Incorporated by reference to Exhibit 4.2 to the IPO Registration
               Statement.

          4.4  Form of Specimen Certificate of Class B Common Stock
               Certificate.  Incorporated by reference to Exhibit 4.3 to the
               IPO Registration Statement.

          4.5  Form of Escrow Agreement.  Incorporated by reference to Exhibit
               4.6 to the IPO Registration Statement.

          10.1 The Company's 1994 Stock Option Plan, as amended.

          10.2 Lease Agreement, dated as of July 1, 1987, between the Company
               and the Yiqing Hotel, relating to the Company's Beijing, China
               Facility.*+  Incorporated by reference to Exhibit 10.3 to the
               IPO Registration Statement.

          10.3 Addendum to Lease Agreement between the Company and the Yiqing
               Hotel, relating to the Company's Beijing, China Facility.*+
               Incorporated by reference to Exhibit 10.3 to the IPO
               Registration Statement.

          10.4 Lease Agreement, dated as of March 1994, between the Company and
               Central Properties Limited Partnership, relating to the
               Company's Bethesda, Maryland facility.  Incorporated by
               reference to Exhibit 10.4 to the IPO Registration Statement.

          10.5 First Amendment to Lease, dated as of June 26, 1996, between
               the Company and Central Properties Limited Partnership, relating
               to additional space at the Company's Bethesda, Maryland
               facility.

          10.6 Employment Agreement, dated as of May 1, 1994, between the
               Company and Roberta Lipson.  Incorporated by reference to
               Exhibit 10.5 to the IPO Registration Statement.

          10.7 Employment Agreement, dated as of May 1, 1994, between the
               Company and Elyse Beth Silverberg.  Incorporated by reference to
               Exhibit 10.6 to the IPO Registration Statement.

          10.8 Employment Agreement, dated as of May 1, 1994, between the
               Company and Lawrence Pemble.  Incorporated by reference to
               Exhibit 10.7 to the IPO Registration Statement.

          10.9 Employment Agreement, dated as of May 1, 1994, between the
               Company and Robert C. Goodwin, Jr.  Incorporated by reference to
               Exhibit 10.8 to the IPO Registration Statement.

         10.10 Employment Agreement, dated as of September 6, 1994, between
               the Company and Ronald Zilkowski.  Incorporated by reference to
               Exhibit 10.11 to the Company's Annual Report on Form 10-KSB for
               the fiscal year ended December 31, 1994.

         10.11 Distribution Agreement dated as of April 29, 1996 between Acuson
               Corporation and the Company.  Incorporated by reference to
               Exhibit 10.10 to the Secondary Registration Statement.

         10.12 Agreement for Representation in the People's Republic of
               China dated as of January 1, 1989 between the Company and
               VME International Sales AB.  Incorporated by reference to
               Exhibit 10.13 to the IPO Registration Statement.

         10.13 Consulting Agreement, dated as of June 1, 1994 between the
               Company and Mr. Julius Oestreicher.  Incorporated by
               reference to Exhibit 10.14 to the IPO Registration Statement.

         10.14 Lease Agreement between the School of Posts and
               Telecommunications and the Company dated November 8, 1995.
               Incorporated by reference to Exhibit 10.14 to the Company's
               Annual Report on Form 10-KSB for the fiscal year ended December
               31, 1995.

         10.15 Amendments Numbers One, Two and Three to the Lease Agreement
               between the School of Posts and Telecommunications and the
               Company dated November 8, 1995, each such amendment dated
               November 26, 1996.

         10.16 Sublease Agreement between the Company and the Beijing
               International School dated March 4, 1996.  Incorporated by
               reference to Exhibit 10.15 to the Company's Annual Report on
               Form 10-K for the fiscal year ended December 31, 1995.

         10.17 Contractual Joint Venture Contract between the Chinese
               Academy of Medical Sciences Union Medical & Pharmaceutical
               Group Beijing Union Medical & Pharmaceutical General
               Corporation and the Company, dated September 27, 1995.
               Incorporated by reference to Exhibit 10.16 to the Company's
               Annual Report on Form 10-KSB for the fiscal year ended December
               31, 1995.

         10.18 First Investment Loan Manager Demand Promissory Note dated
               August 19, 1996 between First National Bank of Maryland and
               Chindex, Inc. * Incorporated by reference to Exhibit 10.15 to
               the Secondary Registration Statement.

         21.1  List of subsidiaries. Incorporated by reference to Exhibit 21.1
               to the Secondary Registration Statement.

         27.1  Financial Data Schedule.

-------------------

*   Confidential treatment has been granted as to a portion of this Exhibit.
+   English translation of summary from Chinese original.




         b.    Reports on Form 8-K

               None.



                              SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                              U.S.-CHINA INDUSTRIAL EXCHANGE, INC.


Dated:  March  27 , 1997      By: /S/ Roberta Lipson
                              Roberta Lipson
                              President and Chief Executive Officer





Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.


Dated:  March 27, 1997        By: /S/ Roberta Lipson
                              Roberta Lipson
                              Chairperson of the Board of Directors,
                              Chief Executive Officer and President


Dated:  March 27, 1997        By: /S/ Elyse Beth Silverberg
                              Elyse Beth Silverberg
                              Executive Vice President, Secretary and Director


Dated:  March 27, 1997        By: /S/ Lawrence Pemble
                              Lawrence Pemble
                              Executive Vice President-Finance and Director


Dated:  March 27, 1997        By: /S/ Robert C. Goodwin, Jr.
                              Robert C. Goodwin, Jr.
                              Executive Vice President of Operations,
                              Treasurer, General Counsel and Director


Dated:  March 27, 1997        By: /S/ Ronald Zilkowski
                              Ronald Zilkowski
                              Vice President Finance and Controller










<PAGE>

                                Index to Exhibits
                                        

Exhibits


10.1     The Company's 1994 Stock Option Plan, as amended.

10.5     First Amendment to Lease, dated as of June 26, 1996, between the
         Company and Central Properties Limited Partnership, relating to
         additional space at the Company's Bethesda, Maryland facility.

10.15    Amendments Numbers One, Two and Three to the Lease Agreement between
         the School of Posts and Telecommunications and the Company dated
         November 8, 1995, each such amendment dated November 26, 1996.

27.1     Financial Data Schedule.


<PAGE>
Exhibit 10.1:
                     1994 STOCK OPTION PLAN
                as amended as of January 9, 1997

                               of

              U.S.-CHINA INDUSTRIAL EXCHANGE, INC.


I.  PURPOSES OF THE PLAN.  This stock option plan (the "Plan") is designed
to provide an incentive to key employees (including officers and directors who
are key employees), Outside Directors (as defined in Paragraph 19) and
consultants of U.S.-China Industrial Exchange, Inc., a New York corporation (the
"Company"), and its present and future subsidiary corporations, as defined in
Paragraph 19 ("Subsidiaries"), and to offer an additional inducement in
obtaining the services of such individuals.  The Plan provides for the grant of
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified stock
options ("NQSOs"), but the Company makes no warranty as to the qualification of
any option as an "incentive stock option" under the Code.

II.       STOCK SUBJECT TO THE PLAN.  Subject to the provisions of Paragraph 12,
the aggregate number of shares of Common Stock, $.0l par value per share, of the
Company ("Common Stock") for which options may be granted under the Plan shall
not exceed 228,000.  Such shares of Common Stock may, in the discretion of the
Board of Directors of the Company (the "Board of Directors"), consist either in
whole or in part of authorized but unissued shares of Common Stock or shares of
Common Stock held in the treasury of the Company.  The Company shall at all
times during the term of the Plan reserve and keep available such number of
shares of Common Stock as will be sufficient to satisfy the requirements of the
Plan.  Subject to the provisions of Paragraph 13, any shares of Common Stock
subject to an option which for any reason expires, is canceled or is terminated
unexercised or which ceases for any reason to be exercisable shall again become
available for the granting of options under the Plan.

III.      ADMINISTRATION OF THE PLAN.  The Plan shall be administered by the
Board of Directors which, to the extent it shall determine, may delegate its
powers with respect to the administration of the Plan to a committee of the
Board of Directors (the "Committee") consisting of not less than two Directors
(or such greater number as required by law), each of whom shall be a "non-
employee director" within the meaning of Rule 16b-3 (or any successor rule or
regulation) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").  References in the Plan to determinations or actions by
the Committee shall be deemed to include determinations and actions by the Board
of Directors.  A majority of the members of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, and any acts approved in writing by all members
without a meeting, shall be the acts of the Committee.

               Subject to the express provisions of the Plan, the Committee
shall have the authority, in its sole discretion, to determine the key
employees, Outside Directors and consultants who shall receive options; the
times when they shall receive options; whether an option granted to an employee
shall be an ISO or a NQSO; the number of shares of Common Stock to be subject to
each option; the term of each option; the date each option shall become
exercisable; whether an option shall be exercisable in whole, in part or in
installments, and, if in installments, the number of shares of Common Stock to
be subject to each installment; whether the installments shall be cumulative;
the date each installment shall become exercisable and the term of each
installment; whether to accelerate the date of exercise of any installment;
whether shares of Common Stock may be issued on exercise of an option as partly
paid, and, if so, the dates when future installments of the exercise price shall
become due and the amounts of such installments; the exercise price of each
option; the form of payment of the exercise price; the amount, if any, necessary
to satisfy the Company's obligation to withhold taxes; whether to restrict the
sale or other disposition of the shares of Common Stock acquired upon the
exercise of an option and to waive any such restriction; whether to subject the
exercise of all or any portion of an option to the fulfillment of contingencies
as specified in the Contract (as described in Paragraph 11), including without
limitations, contingencies relating to entering into a covenant not to compete
with the Company and its Parent and Subsidiaries, to financial objectives for
the Company, a Subsidiary, a division, a product line or other category, and/or
the period of continued employment of the optionee with the Company or its
Subsidiaries, and to determine whether such contingencies have been met; to
construe the respective Contracts and the Plan; with the consent of the
optionee, to cancel or modify an option, provided such option as modified would
be permitted to be granted on such date under the terms of the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; and to
make all other determinations necessary or advisable for administering the Plan.
The determinations of the Committee on the matters referred to in this Paragraph
3 shall be conclusive.  No member or former member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted hereunder.

IV.       ELIGIBILITY; GRANTS.  The Committee may, consistent with the purposes
of the Plan, grant options from time to time, to key employees (including
officers and directors who are key employees), Outside Directors and consultants
of the Company or any of its Subsidiaries.  Options granted shall cover such
number of shares of Common Stock as the Committee may determine; provided,
however, that the maximum number of shares subject to options that may be
granted to any employee in any fiscal year of the Company under the Plan (the
"162(m) Maximum") may not exceed 100,000; and further, provided, that the
aggregate market value (determined at the time the option is granted) of the
shares of Common Stock for which any eligible employee may be granted ISOs under
the Plan or any other plan of the Company, or of a Parent or a Subsidiary of the
Company, which are exercisable for the first time by such optionee during any
calendar year shall not exceed $100,000.  The $100,000 ISO limitation shall be
applied by taking ISOs into account in the order in which they were granted.
Any option (or the portion thereof) granted in excess of such amount shall be
treated as a NQSO.

V.        EXERCISE PRICE.  The exercise price of the shares of Common Stock
under each option shall be determined by the Committee; provided, however, that
the exercise price shall not be less than 100% of the fair market value of the
Common Stock subject to such option on the date of grant; and further provided,
that if, at the time an ISO is granted, the optionee owns (or is deemed to own
under Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, of any of its
Subsidiaries or of a Parent, the exercise price of such ISO shall not be less
than 110% of the fair market value of the Common Stock subject to such ISO on
the date of grant.

               The fair market value of a share of Common Stock on any day shall
be (a) if the principal market for the Common Stock is a national securities
exchange, the average between the high and low sales prices per share of the
Common Stock on such day as reported by such exchange or on a consolidated tape
reflecting transactions on such exchange, (b) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), and (i) if actual sales price information is available with
respect to the Common Stock, the average between the high and low sales prices
per share of the Common Stock on such day on NASDAQ, or (ii) if such information
is not available, the average between the highest bid and the lowest asked
prices for the Common Stock on such day on NASDAQ, or (c) if the principal
market for the Common Stock is not a national securities exchange and the Common
Stock is not quoted on NASDAQ, the average between the highest bid and lowest
asked prices per share for the Common Stock on such day as reported on the
NASDAQ OTC Bulletin Board Service, National Quotation Bureau, Incorporated or a
comparable service; provided that if clauses (a), (b) and (c) of this Paragraph
are all inapplicable, or if no trades have been made or no quotes are available
for such day, the fair market value of a share of Common Stock shall be
determined by the Committee by any method consistent with applicable regulations
adopted by the Treasury Department relating to stock options.  The determination
of the Committee shall be conclusive in determining the fair market value of the
stock.

VI.       TERM.  The term of each option granted pursuant to the Plan shall be
such term as is established by the Committee, in its sole discretion, at or
before the time such option is granted; provided, however, that the term of each
ISO granted pursuant to the Plan shall be for a period not exceeding 10 years
from the date of grant thereof, and further, provided, that if, at the time an
ISO is granted, the optionee owns (or is deemed to own under Section 424(d) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, of any of its Subsidiaries or of a Parent,
the term of the ISO shall be for a period not exceeding five years from the date
of grant.  Options shall be subject to earlier termination as hereinafter
provided.

VII.      EXERCISE.  An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office (at present 7201 Wisconsin Avenue, Bethesda,
Maryland 20814, Attn: Chairman of the Board), stating which ISO or NQSO is being
exercised, specifying the number of shares of Common Stock as to which such
option is being exercised and accompanied by payment in full of the aggregate
exercise price therefor (or the amount due on exercise if the Contract permits
installment payments) (a) in cash or by certified check or (b) if the Contract
at the time of grant so permits, with the authorization of the Committee, with
previously acquired shares of Common Stock having an aggregate fair market
value, on the date of exercise, equal to the aggregate exercise price of all
options being exercised, or with any combination of cash, certified check or
shares of Common Stock.

                The  Committee  may, in its discretion, permit  payment  of  the
exercise  price of an option by delivery by the optionee of a properly  executed
exercise  notice,  together  with a copy of his irrevocable  instructions  to  a
broker acceptable to the Committee to deliver promptly to the Company the amount
of  sale  or loan proceeds sufficient to pay such exercise price.  In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.

               A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a shareholder with respect to such shares of
Common  Stock until the date of issuance of a stock certificate to him for  such
shares;  provided,  however, that until such stock certificate  is  issued,  any
option holder using previously acquired shares of Common Stock in payment of  an
option  exercise  price shall continue to have the rights of a shareholder  with
respect to such previously acquired shares.

VIII.          TERMINATION OF RELATIONSHIP.  Any employee to whom an option was
granted  under  the Plan whose employment with the Company (and its  Parent  and
Subsidiaries)  has terminated for any reason other than his death or  Disability
(as defined in Paragraph 19) may exercise such option, to the extent exercisable
on  the date of such termination, at any time within three months after the date
of  termination,  but not thereafter and in no event after the date  the  option
would otherwise have expired; provided, however, that if his employment shall be
terminated either (a) for cause, or (b) without the consent of the Company, said
option shall terminate immediately.  Options granted under the Plan shall not be
affected by any change in the status of the holder so long as he continues to be
a  full-time  employee  of the Company, its Parent or any  of  the  Subsidiaries
(regardless of having been transferred from one corporation to another).

                For  purposes of the Plan, an employment relationship  shall  be
deemed  to exist between an individual and a corporation if, at the time of  the
determination, the individual was an employee of such corporation  for  purposes
of  Section  422(a) of the Code.  As a result, an individual on  military,  sick
leave  or  other bona fide leave of absence shall continue to be  considered  an
employee  for purposes of the Plan during such leave if the period of the  leave
does  not  exceed 90 days, or, if longer, so long as the individual's  right  to
reemployment with the Company (or a related corporation) is guaranteed either by
statute  or  by contract.  If the period of leave exceeds 90 days and  the  indi
vidual's right to reemployment is not guaranteed by statute or by contract,  the
employment  relationship shall be deemed to have terminated on the 91st  day  of
such  leave.   In  addition, for purposes of the Plan, an optionee's  employment
with a Subsidiary or Parent of the Company shall be deemed to have terminated on
the date such corporation ceases to be a Subsidiary or Parent of the Company.

                The termination of an optionee's relationship as a consultant or
Outside  Director  of the Company or of a Subsidiary of the  Company  shall  not
affect the option except as may otherwise be provided in the Contract.

               Nothing in the Plan or in any option granted under the Plan shall
confer  on any individual any right to continue in the employ or as a consultant
or  director of the Company, its Parent or any of its Subsidiaries, or interfere
in  any way with the right of the Company, its Parent or any of its Subsidiaries
to  terminate  such  relationship at any time for any reason whatsoever  without
liability to the Company, its Parent or any of its Subsidiaries.

IX.       DEATH OR DISABILITY OF AN OPTIONEE.  If an optionee dies (a) while he
is  employed by the Company, its Parent or any of its Subsidiaries,  (b)  within
three  months  after the termination of his employment (unless such  termination
was  for  cause  or without the consent of the Company) or (c) within  one  year
following the termination of his employment by reason of Disability, the  option
may  be  exercised, to the extent exercisable on the date of his death,  by  his
executor,  administrator or other person at the time  entitled  by  law  to  his
rights  under  such  option, at any time within one year after  death,  but  not
thereafter  and  in  no  event after the date the option  would  otherwise  have
expired.

                Any  optionee  whose  employment has  terminated  by  reason  of
Disability may exercise his option, to the extent exercisable upon the effective
date  of such termination, at any time within one year after such date, but  not
thereafter  and  in  no  event after the date the option  would  otherwise  have
expired.

                The  death or Disability of a consultant or Outside Director  to
whom  an  option  has been granted under the Plan shall not affect  the  option,
except as may otherwise be provided in the Contract.

X.        COMPLIANCE WITH SECURITIES LAW.  It is a condition to the exercise of
any option that either (a) a Registration Statement under the Securities Act  of
1933,  as  amended (the "Securities Act"), with respect to the shares of  Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act  for  the  issuance of shares of Common Stock upon such  exercise.   Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act.

                The Committee may require the optionee to execute and deliver to
the   Company  his  representations  and  warranties,  in  form  and   substance
satisfactory to the Committee, that (i) the shares of Common Stock to be  issued
upon  the exercise of the option are being acquired by the optionee for his  own
account,  for  investment only and not with a view to the resale or distribution
thereof,  and  (ii) any subsequent resale or distribution of  shares  of  Common
Stock  by  such  optionee  will  be made only pursuant  to  (a)  a  Registration
Statement  under the Securities Act which is effective and current with  respect
to  the shares of Common Stock being sold, or (b) a specific exemption from  the
registration requirements of the Securities Act, but in claiming such exemption,
the  optionee shall prior to any offer of sale or sale of such shares of  Common
Stock  provide the Company with a favorable written opinion of counsel, in  form
and substance satisfactory to the Company, as to the applicability of such exemp
tion to the proposed sale or distribution.

                In addition, if at any time the Committee shall determine in its
discretion  that  the  listing or qualification of the shares  of  Common  Stock
subject  to such option on any securities exchange or under any applicable  law,
or  the consent or approval of any governmental regulatory body, is necessary or
desirable  as a condition of, or in connection with, the granting of an  option,
or  the  issuance of shares of Common Stock thereunder, such option may  not  be
exercised  in  whole or in part unless such listing, qualification,  consent  or
approval  shall  have  been  effected or obtained free  of  any  conditions  not
acceptable to the Committee.

XI.       STOCK OPTION CONTRACTS.  Each option shall be evidenced by an
appropriate  Contract  which  shall be duly executed  by  the  Company  and  the
optionee, and shall contain such terms and conditions not inconsistent  herewith
as may be determined by the Committee.

XII.      ADJUSTMENTS UPON CHANGES IN COMMON STOCK.  Notwithstanding any other
provisions  of  the  Plan, in the event of any change in the outstanding  Common
Stock  by  reason of a stock dividend, recapitalization, merger or consolidation
in   which  the  Company  is  the  surviving  corporation,  split-up,  spin-off,
combination or exchange of shares or the like, the aggregate number and kind  of
shares  subject to the Plan, the aggregate number and kind of shares subject  to
each  outstanding option and the exercise price thereof, and the number and kind
of  shares subject to the 162(m) Maximum shall be appropriately adjusted by  the
Board of Directors, whose determination shall be conclusive.

                In  the  event  of  (a) the liquidation or  dissolution  of  the
Company, (b) a merger or consolidation in which the Company is not the surviving
corporation,   or   (c)  any  other  capital  reorganization   (other   than   a
recapitalization) in which more than 50% of the shares of Common  Stock  of  the
Company entitled to vote are exchanged, any outstanding options shall terminate,
unless other provision is made therefor in the transaction.

XIII.          AMENDMENTS AND TERMINATION OF THE PLAN.  The Plan was adopted by
the  Board  of Directors on April 27, 1994 and amended by the Board of Directors
on  July 29, 1994 and January 9, 1997.  No option may be granted under the  Plan
after  April 26, 2004.  The Board of Directors, without further approval of  the
Company's shareholders, may at any time suspend or terminate the Plan, in  whole
or  in  part,  or  amend it from time to time in such respects as  it  may  deem
advisable,  including, without limitation, in order that ISO  granted  hereunder
meet  the  requirements for "incentive stock options" under the Code, to  comply
with  the  provisions of Rule 16b-3 promulgated under the Exchange Act,  Section
162(m)  of  the  Code  and  to conform to any change in  applicable  law  or  to
regulations  or rulings of administrative agencies; provided, however,  that  no
amendment   shall  be  effective  without  the  requisite  prior  or  subsequent
shareholder  approval which would (a) except as contemplated  in  Paragraph  12,
increase the maximum number of shares of Common Stock for which options  may  be
granted  under  the  Plan  or the 162(m) Maximum, (b)  materially  increase  the
benefits   to  participants  under  the  Plan  or  (c)  change  the  eligibility
requirements  for  individuals  entitled  to  receive  options  hereunder.    No
termination, suspension or amendment of the Plan shall, without the  consent  of
the  holder of an existing option affected thereby, adversely affect his  rights
under  such  option.  The power of the Committee to construe and administer  any
options  granted  under the Plan prior to the termination or suspension  of  the
Plan   nevertheless  shall  continue  after  such  termination  or  during  such
suspension.

XIV.      NON-TRANSFERABILITY OF OPTIONS.  No option granted under the Plan
shall  be  transferable  otherwise than by will  or  the  laws  of  descent  and
distribution,  and options may be exercised, during the lifetime of  the  holder
thereof,  only  by  him  or his legal representatives.   Except  to  the  extent
provided  above, options may not be assigned, transferred, pledged, hypothecated
or  disposed of in any way (whether by operation of law or otherwise) and  shall
not be subject to execution, attachment or similar process.

XV.       WITHHOLDING TAXES.  The Company may withhold cash and/or, with the
authorization of the Committee, shares of Common Stock to be issued with respect
thereto  having  an  aggregate fair market value equal to the  amount  which  it
determines is necessary to satisfy its obligation to withhold Federal, state and
local income taxes or other taxes incurred by reason of the grant or exercise of
an  option,  its  disposition, or the disposition of the  underlying  shares  of
Common  Stock.  Alternatively, the Company may require the holder to pay to  the
Company  such amount, in cash, promptly upon demand.  The Company shall  not  be
required  to issue any shares of Common Stock pursuant to any such option  until
all required payments have been made.  Fair market value of the shares of Common
Stock shall be determined in accordance with Paragraph 5.

XVI.      LEGENDS; PAYMENT OF EXPENSES.  The Company may endorse such legend or
legends upon the certificates for shares of Common Stock issued upon exercise of
an  option under the Plan and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as it determines, in its discretion, to
be  necessary  or appropriate to (a) prevent a violation of, or  to  perfect  an
exemption  from,  the  registration requirements  of  the  Securities  Act,  (b)
implement  the provisions of the Plan or any agreement between the  Company  and
the  optionee with respect to such shares of Common Stock, or (c) permit the Com
pany  to determine the occurrence of a "disqualifying disposition," as described
in  Section  421(b) of the Code, of the shares of Common Stock transferred  upon
the exercise of an ISO granted under the Plan.

                The  Company  shall pay all issuance taxes with respect  to  the
issuance of shares of Common Stock upon the exercise of an option granted  under
the Plan, as well as all fees and expenses incurred by the Company in connection
with such issuance.

XVII.          USE OF PROCEEDS.  The cash proceeds from the sale of shares of
Common Stock pursuant to the exercise of options under the  Plan shall be  added
to  the general funds of the Company and used for its general corporate purposes
as the Board of Directors may determine.

XVIII.         SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS.  Anything in this Plan to the contrary notwithstanding, the  Board
of  Directors may, without further approval by the shareholders, substitute  new
options  for prior options of a Constituent Corporation (as defined in Paragraph
19) or assume the prior options of such Constituent Corporation.

XIX.      DEFINITIONS.

A.        Subsidiary.  The term "Subsidiary" shall have the same definition as
"subsidiary corporation" in Section 424(f) of the Code.

B.        Parent.  The term "Parent" shall have the same definition as "parent
corporation" in Section 424(e) of t e Code.

C.        Constituent Corporation.  The term "Constituent Corporation" shall
mean  any  corporation  which  engages with  the  Company,  its  Parent  or  any
Subsidiary  in  a  transaction to which Section 424(a) of the Code  applies  (or
would apply if the option assumed or substituted were an ISO), or any Parent  or
any Subsidiary of such corporation.

D.        Disability.  The term "Disability" shall mean a permanent and total
disability within the meaning of Section 22(e)(3) of the Code.

E.        Outside Director.  The term "Outside Director" shall mean an
individual who, on the date of grant of a NQSO hereunder, is a director  of  the
Company  but  is  not a common law employee of the Company  or  of  any  of  its
Subsidiaries or its Parent.

XX.       GOVERNING LAW.  The Plan, such options as may be granted hereunder and
all  related matters shall be governed by, and construed in accordance with, the
laws of the State of New York.

XXI.      PARTIAL INVALIDITY.  The invalidity or illegality of any provision
herein shall not affect the validity of any other provision.


<PAGE>
Exhibit 10.5:

               THIS FIRST AMENDMENT TO LEASE made as of the 26th day of June,
1996 by and between CENTRAL PROPERTIES LIMITED PARTNERSHIP, a limited
partnership organized and existing under the laws of the State of Maryland
(hereinafter referred to as "Landlord"), and U.S.-CHINA INDUSTRIAL EXCHANGE,
INC. (hereinafter referred to as Tenant").

     WITNESSETH:

     WHEREAS, by Lease made the 16th day of March, 1994, (hereinafter the
"Lease"), Landlord leased unto Tenant certain premises (herein the "Existing
Premises") in the building known by street address as 7201 Wisconsin Avenue,
Bethesda, Maryland; and

     WHEREAS, Tenant desires to lease from Landlord and Landlord desires to
lease to Tenant certain additional premises located immediately adjacent to the
Existing Premises together with a portion of the Existing Premises to be
retained by Tenant (with the express understanding that Tenant will surrender
and vacate to Landlord all of the remaining portion of the Existing Premises)
all as more fully depicted on Exhibit "A-1" attached to this Amendment; and
     WHEREAS, the parties further desire to extend the term of the Lease, upon
the same terms and conditions contained in the Lease, except as modified
herein, and
     WHEREAS, Landlord and Tenant desire to modify the Lease to reflect the
foregoing.
     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which being hereby
acknowledged by the parties hereto, Landlord and Tenant hereby acknowledged by
the parties hereto, Landlord and Tenant hereby agree to amend the Lease as
follows:

     1.               Paragraph 1(A) of the Lease is hereby amended to provide
that effective as of July 15, 1996 (The "Additional Space Tender Date") (as
such date may postponed in accordance with the following provisions) the
Demised Premises under the Lease shall consist of approximately 3,810 rentable
square feet consisting of (i) that portion of the Existing Premises described
on Exhibit A-1 as the "Retained Space" and (ii) approximately 3,292 rentable
square feet adjacent to the Retained Space as outlined on Exhibit "A-1"
attached hereto (the "Additional Space").  Landlord and Tenant acknowledge that
Landlord must perform the work described in Paragraph 4 below (herein the
"Landlord's Work") in order to tender to Tenant the Additional Space.
Accordingly, Landlord and Tenant agree that in the event Landlord is unable to
deliver possession of the Additional Space to Tenant with the Landlord's Work
substantially completed by the Additional Space Tender Date then and in such
event, Landlord shall not be subject to any liability therefor.  In such event,
all references to the Additional Space Tender Date herein shall be deemed
modified to the date Landlord tenders possession of the Additional Space to
Tenant with the Landlord's Work substantially completed except for minor punch
list items.  Landlord and Tenant further expressly acknowledge and agree that
Tenant shall surrender and vacate unto Landlord sole and exclusive possession
of the remaining portions of the Existing Premises beyond the Retained Portion
no later than three (3) days following the Additional Space Tender Date, time
being of the essence.

     2.                    The term of the Lease is hereby extended to and
including the 31s day of July, 2001.

     3.               Effective as of the Additional Space Tender Date the
following revisions to the Lease are hereby made:

     (A)               Paragraph 1 (C) of the Lease is amended to provide that
the Basic Annual Rental which Tenant convenants and agrees to pay during the
balance of the term of the Lease shall be revised to equal EIGHTY-FIVE THOUSAND
SEVEN HUNDRED TWENTY-FIVE DOLLARS ($85,725.00) and the Basic Monthly Rental for
the Demised Premises shall be revised to equal SEVEN THOUSAND ONE HUNDRED FORTY-
THREE and 75/100 ($7,143.75).  In addition, the Rent Waiver of $1,760.92 per
month presently provided under Paragraph 1(C) of the Lease shall terminate
prospectively under the Lease with respect to all periods elapsing from and
after the Additional Space Tender Date.

     (B)               Effective as of the Additional Space Tender Date the
revised Basic Annual Rental and Basic Monthly Rental determined in subparagraph
3(A) above shall be subject to annual increases as presently required under
Article 3 of the Lease, but substituting 103% in lieu of 102.5%.  Such
increases shall occur on each August 1, with the first such increase occurring
August 1, 1997.

     4.               Effective as of the Additional Space Tender Date, Article
2 of the Lease is hereby modified to reflect the following:

     (A)     That Tenant's Proportionate Share of Real Estate Taxes under
Paragraph 2(A) (iii) shall be Two and 86/00 percent (2.86%) and Tenant's
Proportionate Share of Operating Expenses under Paragraph 2(A) (iv) shall be
Three and 23/100 percent (3.23%); and

     (B)     That the Base Taxes under Paragraph 2(B) shall be revised to
reflect the Taxes incurred with respect to the 1996 calendar year and the Base
Operating Expense thereunder shall be revised to reflect the Operating Expense
incurred with respect to the 1996 calendar year.

     5.               Landlord agrees that it will perform with respect to the
Additional Space, and to the extent reflected within such plans, the Existing
Premises, the work noted on the plans heretofore approved by Landlord and
Tenant, a copy of such plans being attached hereto as Exhibit "B" and made a
part hereof.  Said Exhibit includes both a description of the work to be
performed and the specifications of the particular materials to be used.  All
such work (such work being referred to in this Amendment as the "Landlord's
Work") shall be at the sole cost of Landlord.  Tenant agrees to promptly comply
with all of Landlord's reasonable requests in order to permit Landlord to
complete the Landlord's Work in an efficient and timely basis.

     6.               Tenant represents that it has dealt with no broker or
agent in connection with this First Amendment to Lease other than Lacy, Ltd.,
and Tenant shall hold Landlord harmless from and against any and all liability,
loss, damage, expense, claim, action, demand, suit or obligation arising out of
or relating to a breach by Tenant of such representation.  Landlord shall be
solely responsible to compensate Tenant's agent named herein in accordance with
the terms of a separate written agreement previously entered into by Landlord
and Tenant's agent.

     7.               Simultaneously with Tenant's execution of this Amendment,
Tenant shall deposit with Landlord the additional sum of Nine Hundred Twenty-
Eight and 75/100 Dollars ($928.75) as a security deposit to be held by Landlord
together with Tenant's original security deposit delivered to Landlord upon
execution of the Lease.  Such increased security deposit shall be held by
Landlord pursuant to the terms of Paragraph 38 of the Lease.

     8.               Following the initial leasing of the space on the seventh
floor of the Building immediately contiguous to the Demised Premises (after
consideration of the modification to the definition of the Demised Premises set
forth in Paragraph 1 above), and in the event such contiguous space
(Hereinafter the "Expansion Space") becomes available for occupancy, Landlord
agrees that Tenant shall be provided with the right to lease the expansion
Space upon the Expansion Space Terms (defined below), provided Tenant remains
an occupant for its own use of the Premises and is not in default under the
terms of this Lease, and further provided that there remains at least one full
year within the Lease term.  Subject to the foregoing, it is understood that
Tenant's rights to such Expansion Space shall be coterminous with the term of
the this Lease.  Tenant shall have a period of fifteen (15) days in which to
exercise its rights following written notice from Landlord (the "Landlord's
Expansion Notice") setting forth the date the Expansion Space is anticipated to
be made available for Tenant's occupancy.  For purposes hereof, the Expansion
Space Terms shall be defined to include (I) annual rent therefor at the same
per square foot annual rent as is payable for the Demised Premises from time to
time during the duration of the Lease Term (after consideration of the
applicable CPI increases), (ii) tender of same in "as-is" condition, without
the necessity of any work or materials by Landlord, other than cleaning of the
carpeting located therein and re-painting with Building standard paint (iii)
installation by Landlord of a passageway from the Premises into the Expansion
Space, (iv) an increase in Tenant's Proportionate Share for both Operating
Expenses and Real Estate Taxes pass-through purposes and to reflect the demise
unto Tenant of the Expansion Space and (v) an increase in the security deposit
to reflect one/twelfth of the basic annual rent attributable to the Expansion
Space.  Time shall be of the essence hereunder.  Should Tenant be disirous of
exercising its rights to the Expansion Space in accordance with the Expansion
Space Terms, Tenant must notify Landlord in writing within fifteen (15) days
following delivery by Landlord to Tenant of Landlord's Expansion Notice and in
the event Tenant exercises its rights thereto, all references herein to the
Demised Premises shall be deemed to include the Expansion Space as of the date
the Expansion Space is delivered to Tenant with performance of the items
described above in this paragraph.  In the event Tenant fails to accept such
terms within the foregoing fifteen (15) day period, Landlord shall be free to
lease to third parties the Expansion Space for which notice was previously
given to Tenant.  In the event Tenant shall exercise its rights to the
Expansion Space, at Landlord's request, Tenant shall execute and deliver to
Landlord within ten days following written request a lease amendment prepared
by Landlord reflecting the leasing by Tenant of the Expansion Space in
accordance with the Expansion Space Terms.

     9.               Except as modified herein, the Lease shall be and remain
in full force and effect.  Capitalized terms herein shall have the same meaning
as under the Lease unless expressly provided above to the contrary.

     IN WITNESS WHEREOF, Landlord has caused these presents to be signed and
sealed by its duly authorized general partner and the Tenant has caused these
presents to be signed and sealed in its corporate name by its duly authorized
officer, all as of the date first written above.


                      CENTRAL PROPERTIES LIMITED PARTNERSHIP



                    By:s/  David Q. Burka                  (Seal)

                    TENANT:

ATTEST:               U.S.-CHINA INDUSTRIAL EXCHANGE, INC.



                    By:s/  Robert C. Goodwin, Jr.          (Seal)



(Corporate Seal)

<PAGE>
Exhibit 10.15:

                   AMENDMENT NUMBER ONE TO THE LEASE AGREEMENT

     In accordance with the regulations provided in the Lease Agreement signed
November 8, 1995 by the Beijing Industrial School of Posts and
Telecommunications (the Lessor, Party A) and U.S.-China Industrial Exchange,
Inc. (the Lessee, Party B), the two parties agree to the following amendment
number one signed in Beijing in November 26, 1996:

Article 1     Party A agrees to rent the following areas and buildings to Party
B, which are within the campus of and belong to Party A, and of which Party B
has the exclusive use during the lease period:

1.     The garden to the south of the rented Premises indicated in the Lease
Agreement; the area of which is approximately 1,400 square meters;

2.     The warehouse to the west of the rented Premises indicated in the Lease
Agreement; the area of which is approximately 200 square meters, with a
permission of extending the using area up to approximately 65 square meters to
the south;

3.     The boiler room; the area of which is approximately 260 square meters;

4.     The coal yard; the area of which is approximately 200 square meters.

Each of the area or buildings described in paragraphs 1 through 4 above is
indicated, along with approximate dimensions, on the attached map (Schedule C).

Article 2     Party B shall execute upon the areas and buildings mentioned
above necessary design, construction, remodeling, environmental beautification
and greenization according to their respective usage, including the erection of
gates at the flower garden located on the southern side of the Premises,
however, the design must first be discussed with Party A.

Article 3     The lease term of the areas and buildings mentioned above starts
from August 1, 1996; the lease term is the same as that defined in the Lease
Agreement, terminating on December 24, 2000.

Article 4     Party B shall each year pay rent of RMB250,000.00 Yuan.  Party B
shall Pay Party A the rental amount for Year 1 of the rental term within 20
working days of the signing of this Amendment Number One to the Lease
Agreement; starting from Year 2 of the rental term, the rental amount for the
following year shall be paid before July 31 each year.  However, the final
rental payment of the rental term shall be paid on an actual monthly basis.
This yearly rental amount will not be increased during the term of the lease.

Article 5     The two parties agree that this amendment number one is
inseparable with and has the same force and effect as the Lease Agreement, and
that all the applicable terms and conditions of the Lease Amendment and the
rights and responsibilities of each of the parties under that agreement apply
to this amendment and the areas and buildings covered by this amendment.

Article 6     This amendment number one is written in both Chinese and English.
The two languages have equal validity and effect.

Article 7     This amendment number one shall come into force after the
authorized representatives of the two parties have attached their signatures
and seals.

Party A:     Beijing Industrial School of Posts and Telecommunications
Representative:

Party B:     U.S.-China Industrial Exchange, Inc.
Representative:


                   AMENDMENT NUMBER TWO TO THE LEASE AGREEMENT

     In accordance with the regulations provided in the Lease Agreement signed
on November 8, 1995, and Amendment Number One to the Lease Agreement signed on
November 26, 1996, both signed by the Beijing Industrial School of Posts and
Telecommunications (the Lessor, Party A) and U.S.-China Industrial Exchange,
Inc. (the Lessee, Party B), Party A and Party B of these agreements, after
consultation, agree to sign this Amendment Number Two to the Lease Agreement on
November 26, 1996 in Beijing:

Article 1     Party A and Party B, based on the principles of strengthening
economic cooperation, supporting the cause of education, and improving Party
A's teaching conditions, after going through friendly negotiations, have
reached the following agreement:  Party B shall pay 5,000,000 RMB to support
Party A's construction of a new training center building.

Article 2     With regards to this project involving Party A's construction of
a new training center building, Party B's payment shall be construed as a fee
paid as consideration for Party A's agreement to the terms set forth below, and
Party B shall not bear any risks, liabilities or responsibilities related to
this project.

Article 3     In consideration for the payment by Party B which will allow
Party A to undertake the construction of Party A's new training center
building, the parties agree that both the Lease Agreement of November 8, 1995,
and Amendment Number One to the Lease Agreement of November 26, 1996, are
hereby amended as follows:

     3.1     The rental term is hereby extended to a period of 15 years,
terminating on December 24, 2010.

     3.2     The lease shall include all of the Premises stipulated in the
Lease Agreement and all of the buildings and areas defined in Amendment Number
One to the Lease Agreement.

     3.3     In accordance with the Lease Agreement signed on November 8, 1995,
the annual rent for the first, second, third and fourth years of the rental
period shall be 2,000,000 RMB.  Starting from the fifth year of the rental
period and concluding at the termination of the rental agreement, the amount of
payment each year shall be the annual rental of that year minus 682,000 RMB.

     3.4     At the conclusion of Year 5 of the rental period, Party A and B
shall  discuss the adjustment of the annual rent; however, the annual rent
shall not be adjusted in an amount greater than plus or minus 10% of the annual
rent.  At the conclusion of Year 10 of the rental period, Party A and Party B
shall discuss the adjustment of the annual rent; however, the annual rent shall
not be adjusted in an amount greater than 50% of the annual rent.  If the price
index changes too much, Party B shall consider raising the upper limit of the
adjustment of the annual rent, but the Party A should give preferential
treatment to Party B in consideration of its support of Party B in the
construction of the new training center building.

     3.5     Starting from the sixth year of the lease term, Party A and Party
B shall discuss how to give a subsidy to Party A for inflation (price index
rise), which shall replace the "Hedge Allowance Rate" method described in
Article 3.3 of the original Lease Agreement,.  However, the subsidy method
shall be similar to the "Hedge Allowance Rate" method described in Article 3.3
of the original Lease Agreement.

Article 4     Party A shall as quickly as possible obtain the written approval
on this extension of the rental agreement from its main supervising
organization.  The acquisition of this document shall be a pre-condition to the
signature of this Amendment Number Two to the Lease Agreement as described
herein.

Article 5     After obtaining the written approval by the relevant authorities
(including Party A's main  supervising organization) of the amendments to the
Lease Agreement and of Party A and Party B's signing of this Amendment Number
Two to the Lease Agreement, as well as after Party A, in accordance with the
relevant stipulations, handles the relevant registration procedures of
Amendment Number One to the Lease Agreement and Amendment Two to the Lease
Agreement with the registration department where the Lease Agreement was
originally registered and obtains the relevant registration document and
presents Party B evidence of doing so, Party B shall pay Party A 3,000,000.00
Renminbi Yuan prior to the end of February 1997 and pay Party A 2,000,000.00
Reniminbi Yuan prior to the end of September 1997, which shall completely
fulfill the requirements outlined in Article 1 above.

Article 6     After signing this amendment (Number Two) to the original Lease
Agreement, Party A shall possess all usage and property rights to this newly
constructed training center building; Party B shall not hereafter submit any
demands of the free use of this building.

Article 7     Party A and Party B agree that this Amendment Number Two to the
Lease Agreement is inseparable with and has the same force and effect as the
Lease Agreement and the Amendment Number One to the Lease Agreement, and that
all the applicable terms and conditions of the Lease Agreement and Amendment
Number One to the Lease Agreement and the rights and responsibilities of each
of the parties under those agreements, apply to this Amendment.

Article 8     This Amendment Number Two to the Lease Agreement is written in
Chinese and English, with the two language texts having equal effect.

Article 9     This Amendment Number Two to the Lease Agreement come into force
after the authorized representatives of the two parties sign it and attach
their respective seals.

Party A:  Beijing Industrial School of Posts and Telecommunications
Representative:

Party B  U.S.-China Industrial Exchange, Inc.
Representative:

                  AMENDMENT NUMBER THREE TO THE LEASE AGREEMENT

     In accordance with the regulations provided in the Lease Agreement signed
on November 8, 1995 and in the Amendment Number One to the Lease Agreement and
the Amendment Number Two to the Lease Agreement signed on November 26, 1996 by
the Beijing Industrial School of Posts and Telecommunications (The Lessor,
Party A) and U.S.-China Industrial Exchange, Inc. (The Lessee, Party B), Party
A and Party B agree to the following Amendment Number Three to the Lease
Agreement in Beijing on November 26, 1996:

Article 1     During the term of the rented Premises indicated in the Lease
Agreement and all the rented areas and buildings indicated  in the Amendment
Number One to the Lease Agreement, Party B shall on an annual basis pay Party A
the fee of RMB150,000.00 as payment for all security services, parking, water,
electricity, heating, waste discharge, trash disposal, exterior cleaning of the
Premises and line/pipe and other equipment maintenance, and any fees that may
occur linked to increases in the supply of water, electricity and waste
discharge.  However, the expenditure for cleaning boiler residue and
maintenance fees for exterior lines of structures built by Party B for Party
B's use shall be borne by Party B.  Notwithstanding the foregoing, Party B
agrees that it will be responsible for arranging for the disposal of medical
waste, including any medical water waste which is required to be disposed of
separately under Chinese regulations.  When the availability of electricity and
water to the Premises is limited through the use of quotas assigned by the
relevant local government departments, Party A agrees to use its best efforts
to see that such quotas are increased if necessary to ensure that there is
adequate electricity and water for use by Party B.

Article 2     Party B shall install independent water and electricity meters to
measure the amount of annual usage of water and electricity by the Premises.
If the annual usage of water by the Premises exceeds 7,200T and the usage of
electricity by the Premises exceeds 50,000KWH, Party B shall pay for amounts in
excess of these levels.  however, the rate at which Party B for water and
electricity shall be the same rate which Party A pays for water and
electricity.

Article 3     If the real annual usage of water by Party B is less than 7,200T
(tons) and/or the real annual use of electricity  is less than 50,000KWH, Party
B shall still pay Party  A RMB 150,000.00 as stipulated in Article 1 of this
Amendment.

Article 4     The entire RMB 150,000.00 specified in this Amendment includes
the 7,200T of water at the 1996 annual average rate of RMB1.15/T and the
50,000KWH of electricity at the rate of RMB 0.95/KWH (This figure is the
average of RMB 0.80/KWH during summer and RMB 1.10/KWH during the winter).  If
the rate of the average unit price for water and electricity rises due to
government adjustment, thereby causing a rise in the unit price of water and
electricity specified in this Amendment, the following rule shall apply:  to
the extent that Party B's usage when computed at the higher rate results in an
amount of fee exceeding RMB 55,780.00, Party B will pay separately for this
additional amount.

Article 5     All the payment in the Amendment shall be paid once a year by
December 31.

Article 6     This Amendment Number Three to the Lease Agreement is written in
both Chinese and English, the two languages have equal validity and effect.

Article 7     This Amendment Number Three to the Lease Agreement shall come
into force when the authorized representatives of the two parties sign it and
attach their respective seals.

Party A:     Beijing Industrial School of Posts and Telecommunications
Representative:

Party B:     U.S.-China Industrial Exchange, Inc.
Representative:


<PAGE>

Exhibit 27.1:

US-China Industrial Exchange, Inc.
Computation of earnings per share


                                                     December 31,
                                                ----------------------
                                                  1995         1996

Common stock class B outstanding January 1      1,550,000    1,550,000

Common stock outstanding for full year          1,840,000    1,840,000

Weighted average shares from second public
   offering completed November 1996                  ---       419,078
                                                ---------    ---------
Common stock outstanding                        3,390,000    3,809,078
Options outstanding under APB25                      ---         8,956
                                                ---------    ---------
Common equivalent shares outstanding
   on December 31                               3,390,000    3,818,034
                                                =========    =========

Net (Loss) Income                                (317,000)     576,000
                                                =========    =========

Earnings per share                                 $(0.09)      $ 0.15
                                                =========    =========