SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2000

Commission File No. 0-24624

U.S.-CHINA INDUSTRIAL EXCHANGE, INC.

(Name of small business issuer in its charter)



|NEW YORK                                                       | 13-3097642                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer 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

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 $45,064,000.

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, 2001 was approximately $5,916,000.

The number of shares outstanding of each of the issuer's class of common equity, as of March 26, 2001, was 657,319 shares of Common Stock and 193,750 shares of Class B Common Stock.

|TABLE OF CONTENTS
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|Part I           
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|Part II          
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|Part III         
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|Signatures       
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PART I

ITEM 1. BUSINESS

GENERAL



U.S.-China Industrial Exchange, Inc., doing business as Chindex International, Inc. ("Chindex" or the "Company")* is a leading American company in the healthcare sectors of the Chinese marketplace, including Hong
Kong.  Founded in 1981, the Company provides United States, European and other manufacturers of health care products with access to the Chinese marketplace and offers a wide range of marketing, sales and technical services for its products.  The Company
also pr

Chindex is an American public company with its common stock traded on NASDAQ.  It is a New York corporation with company headquarters located in the Washington, D.C. metropolitan area.  Chindex has over 369 full-time employees worldwide, more than
355 of whom reside in China and Hong Kong. In China and  Hong Kong Chindex operates three representative offices, three subsidiary companies, and two joint ventures.

The Company's business activities are conducted throughout China, including Hong Kong.  Revenues are generated from the sale of healthcare products and the provision of healthcare services.  The Company's original core business since inception has
been its Capital Healthcare Equipment operations, in which, on the basis of exclusive agreements, Chindex markets, sells, and facilitates the export of select capital healthcare equipment and instrumentation throughout China.  It is the largest
independent

The Chindex growth plan includes continuing expansion of the capital medical equipment and instrumentation business, rapid expansion of the Products Distribution product portfolio, with an emphasis on increasing the number and variety of products
that are sold directly to retail pharmacies, and the development of a network of private family hospitals, based on the Beijing United Family Hospital model, to serve China's growing middle class.  Management continues to develop this growth plan, the
implem

Although the Company remains optimistic about the marketplace, there are continuing uncertainties as to the direction of China's on-going political and economic reforms, the possibility for future devaluation of the Chinese or Hong Kong currencies,
as well as China's relationship with the United States.  These uncertainties may influence the budgeting and purchasing process in China.  Any of the foregoing circumstances may impede trade with China, thus impairing the ability of the Company's customers

History

Chindex was founded in June 1981 to take advantage of the marketing opportunities presented by the commercial opening of China to the West in the late 1970s and early 1980s.  The Company opened initial offices in Beijing and New York in
order to provide representative services, including product marketing, sales, distribution, and technical support to Western manufacturers of electronic instrumentation and industrial machinery.

During its early years of operation, Chindex began work in the healthcare and industrial machinery market sectors.  Relationships were initiated with manufacturers of a variety of capital medical instrumentation and off-road construction and mining
machinery.  By the end of its second year, the Company had hired its first in-house technical support engineer in order to provide service in connection with its sales.  By 1985, the Company had developed an organizational structure which consisted of two

In response to the fast-paced development of the Chinese market-oriented economic reforms through the mid-1980s, the Company opened regional offices in Guangzhou (southern China) and Shanghai (central China) to expand its sales capabilities.  In
addition, to expand its technical service capabilities, Chindex opened its first joint venture, the Chindex Meheco Service Center, which provided access to bonded warehouse facilities for the importation of spare parts inventories utilized by the
Technical Se

In order to increase the Company's overall market access in China, Chindex opened its first foreign subsidiary, Chindex Tianjin, in the Tianjin Free Trade Zone in 1994.  A second subsidiary, Chindex Shanghai, was opened in the Waigaoqiao Free Trade
Zone of Shanghai, in mid-1998.  The subsidiaries are managed by the Products Distribution Department and provide Chindex with a unique nationwide distribution system for off-the-shelf medical devices and consumables used in hospitals as well as over the co

In early 1996, Chindex established operations in Hong Kong through another foreign subsidiary, Chindex Hong Kong.  This subsidiary has been staffed initially for sales and technical support in the healthcare sectors of the Hong Kong market.

To provide funding for growth initiatives and to capitalize on its sustained investment and long-term management expertise in China, Chindex has successfully completed two public offerings, the proceeds of which have allowed the Company to initiate
and develop a growth plan based on expansion of its traditional healthcare equipment sales and service operations, development of primary healthcare ventures, expansion of product distribution capabilities in healthcare products, and investment in the grow

To address the long-term financing needs of its customers in the China marketplace, Chindex has worked with the U.S. Government to utilize direct loan and loan guarantee programs to extend financing to Chinese buyers through the Chinese Ministry of
Public Health.  Chindex has utilized assistance from the Export-Import Bank of the United States (Ex-Im Bank) three times.  Chindex is now in the process of implementing its third loan program, with a total value of up to $30.0 million in medical equipment

In 1997, Chindex opened Beijing United Family Hospital (Beijing United), a joint venture between Chindex and a company affiliated with the Chinese Academy of Medical Sciences.  Chindex invested approximately $4.0 million in the Beijing United
project, which has brought an international-standard family hospital to China.  The Chindex multi-year development plan, which is subject to obtaining requisite financing among other conditions, includes a series of family hospitals and clinics in major
metropol

At the end of 1997, Chindex announced a significant restructuring of Company operations to focus exclusively on its strengths in the healthcare industry.  Chindex has substantially phased out its involvement in the industrial sector.  Chindex
believes that this strategic positioning allows it to focus its efforts and investment into healthcare-related products and services, thereby strengthening the Company's position as it enters the next century of growth in Asia.



HEALTHCARE PRODUCTS

On the basis of exclusive distribution agreements, Chindex offers manufacturers of top-quality capital healthcare equipment and healthcare consumable products access to the greater Chinese marketplace through a wide range of marketing,
sales, technical, and distribution services for their products.  Through a matrix of dedicated marketing and technical service departments, local area product and technical specialists, and local area territory representatives, the Company provides
comprehensiv

The healthcare product segment is divided into the capital healthcare equipment and healthcare products distribution market groupings.

Capital Healthcare Equipment

Since its founding in 1981, Chindex has invested in its operations in the marketing and sales of capital medical instrumentation.  Chindex is now the largest independent U.S. distributor of healthcare equipment in China.

The capital medical instrumentation business is managed by the Medical Department, which focuses on exporting top quality Western capital medical equipment to the China market.  These export sales are denominated in U.S. dollars and are made to
China's larger hospitals.  The Medical Department is organized both by clinical or therapeutic product specialty and by region.  Sales representatives are responsible for one or two related product lines and are assigned to one of six regional territory
teams.
by a territory manager, and is made up of six or seven sales representatives.  The Team's functions are to establish, maintain, and develop Chindex's presence in the market on a local level within a region, tap the existing customer base to identify
business opportunities, and ensure a high level of support to existing customers.

The Medical Department markets its products directly 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.  The Company's marketing is addressed to all relevant participants in the purchasing decision, including the doctors and hospital administrators.  Chindex has sold products to approximately 2,000
hospitals in Ch

Most purchases of the capital medical equipment sold by Chindex (as opposed to the sale of its off-the-shelf medical products and consumable 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
be

The entry of China into the World Trade Organization ("WTO") will be a very positive development from the Company's point of view. The Company believes this development will have a positive overall impact on the Company's business
including specifically facilitating the Company's distribution activities and its health care services business.

The Company maintains a separate technical service unit, which is closely tied to the Medical Department.  Chindex is responsible for the technical support of virtually all the medical equipment it sells.  To support its capital healthcare
equipment business, the Company owns and operates a full-service technical service center.  This service center supports spare parts inventories and factory-trained service engineers on a nationwide basis.  It also makes use of a joint venture
organization, the Chi

Chindex's Hong Kong subsidiary was opened in 1996 to address the local Hong Kong market.  In this market, Chindex offers marketing and distribution services similar to what it provides in the mainland, but tailored to the specific characteristics
of the Hong Kong marketplace.  On behalf of and in conjunction with its clients, Chindex Hong Kong participates in the tendering process for the sale of equipment to public hospitals.  In addition, Chindex Hong Kong also markets separately to the private
hos

Since 1995, Chindex has been utilizing loans and loan guarantees from Ex-Im Bank to help hospitals in China finance their purchases of medical equipment from Chindex.  While these transactions are primarily used to promote purchases of the products
that Chindex exclusively distributes in China, equipment manufactured by non-client suppliers has also been incorporated.  Some of the non-client manufacturers who have participated in Chindex's Ex-Im Bank-supported contracts include Siemens, Marconi Medic

Among its many clients, the Chindex Medical Department is proud to represent the following manufacturers of premier healthcare instrumentation and systems:

Acuson Corporation is a leading American manufacturer of diagnostic ultrasound imaging devices. Under the terms of a distribution agreement Chindex has been the exclusive Acuson distributor in China since Acuson entered the China market in
1987, and in Hong Kong since 1996.  The current agreement with Acuson is automatically renewed for successive one year periods on each January 1st, unless either party gives timely notice of intent not to renew.  When Siemens acquired Acuson in l

Bard Electrophysiology is the global technology leader in the manufacture of products which aid in the diagnosis and treatment of electrophysiology disorders.  Chindex assumed the exclusive distributorship of Bard's Computerized Labsystems
in China in 1999.

Nova Biomedical, Inc. is a leading American manufacturer of medical laboratory analysis equipment used in critical care as well as central laboratory environments in the hospital.  Chindex has represented Nova Biomedical in the China market
since 1986.

Ortho-Clinical Diagnostics, Inc., a Johnson & Johnson company, is the world's leading manufacturer of the Vitros (formerly Ektachem, a Kodak trademark) dry slide chemistry analyzer system developed originally by the Eastman Kodak
Company.  The dry slide reagents used in all of these analyzers are supplied to Chinese customers through the domestic logistics distribution network of the Chindex Products Distribution Department.

PLC Medical Systems, a wholly-owned subsidiary of PLC Systems, manufactures The Heart LaserÔ
 System, a patented technology for Transmyocardial Revascularization (TMR), a new cardiosurgical procedure with the potential to provide patients suffering from coronary artery disease with a third alternative to angioplasty and cardiac bypass surgery.
Chindex began to represent PLC in China in early 1998.

Steris Corporation is a leading provider of infection prevention, contamination prevention, microbial reduction, and surgical support systems, products, services, and technologies.  Since 1996, Chindex has marketed the Steris' line of Amsco
sterilizers, a leader in infection control and surgical equipment, services, and consumable products for the healthcare and scientific markets. In addition, Chindex markets Steris lines of surgical equipment in China.

Healthcare Products Distribution

Until a few years ago, foreign trade regulation in China made it nearly impossible for foreign companies to participate in domestic trading operations.  Foreign companies were, and to a large degree still are, prohibited from importing
goods themselves and selling them directly to the Chinese market, and have, by and large, been unable to invest in foreign trade enterprises.  When the regulations began to ease slightly in the mid-1990s, Chindex seized the opportunity to establish
Chindex Hold
de (Tianjin) Ltd. (Chindex Tianjin), a wholly foreign-owned enterprise (WFOE) chartered in the Tianjin Free Trade Zone with dedicated bonded and Customs-cleared warehouses.

Chindex Tianjin enabled Chindex to import certain types of foreign products denominated in U.S. dollars or other foreign currencies and to sell these products for the local Chinese currency, the "RMB", to domestic Chinese customers,
giving Chindex complete logistical control over the distribution process, including importation, Customs clearance, warehousing, marketing and sales, and physical distribution.  Moreover, Chindex Tianjin also provided the capability to establish
facilities for c

In order to increase the efficiency and effectiveness of the nationwide system, in mid-1998, Chindex opened a second WFOE distribution center in Shanghai, Chindex Shanghai International Trading Co., Ltd. (Chindex Shanghai), which now serves as the
main distribution facility for the Products Distribution network.  Additional local storage facilities were opened in Beijing and Guangzhou in 1999.  The Chindex Products Distribution Department is focused on supply chain management and sales to dealers
and

Marketing and sales of the products sold through the Chindex Products Distribution Department are managed by product managers dedicated to each main product line coupled with regional sales teams and a route sales force.  The regional sales teams
manage a network of over 600 value-added dealers which carry local stocks and target the hospitals in China with 500 or more beds.  Chindex also employs a route sales force to supply the emerging retail pharmacy market through the Chindex-managed direct
supp

The Chindex Products Distribution Department is comprised of three primary areas of focus: Hospital Dealer Sales, Retail Sales, and Logistics Services.

Hospital Dealer Sales

Through its Hospital Dealer Sales division, the Chindex Products Distribution Department taps the substantial and growing market for high quality imported medical consumables and low-priced instrumentation via a value-added network of
sub-distributors located throughout China.  The network was started in 1995 and has grown to encompass over 250 dealer partners who cover all of China's 350 hospitals with more than 500 beds.  These hospitals account for approximately 80% of the demand
for impor

Chindex provides marketing, logistical, and distribution services to the following manufacturers of medical instrumentation and consumables through its Hospital Dealer Sales division:

Tyco/Kendall Healthcare Products Company, is the second largest healthcare company in the world and a leading U.S. manufacturer of healthcare consumable products.  Chindex is the exclusive distributor throughout China and Hong Kong for
Kendall's product lines.

Guidant Corporation is a world leader in the design and development of cardiovascular products.  In 1999, Chindex assumed the exclusive distributorship for Guidant's line of vascular intervention products, including the products which
compose Guidant's Coronary Stent System.

Hudson RCI is a world leader in the development of disposable products for the respiratory care and anesthesia markets.  Since 2000, Chindex has distributed an increasingly wide range of Hudson RCI products, and, as of April 2001, will
distribute Sheridan catheters for Hudson, a product line previously manufactured by Tyco/Kendall.

Medex, Inc., a Furon company, is a major worldwide manufacturer of medical equipment and supplies used primarily in critical care environments.  Since 1997, Chindex has marketed, sold, imported, and distributed Medex's products, including
LogiCal pressure monitoring systems, PTCA inflation devices, disposable PCAs, and syringe pumps, in China and Hong Kong.

Truphatek is an Israeli manufacturer of laryngoscopes.  Chindex has been the exclusive distributor for Truphatek in China since 1993.  Since 1997, Chindex's Products Distribution Department has assumed responsibility for stocking, marketing,
and distributing these instruments throughout China.

Tuttnauer is a world leader in tabletop autoclave sterilization systems, which are used in many medical applications including opthamology, dentistry, and operating rooms.  Chindex and Tuttnauer began their partnership in the China
marketplace in 1993.

Retail Sales

Chindex is rapidly establishing a distribution network for branded healthcare and health-related consumer products to China's burgeoning retail pharmacy sector.  Sales began in mid-1998 in Shanghai and plans call for coverage of all of the
major pharmacies in the top 30 urban markets (accounting for about 80% of demand and purchasing power for imported consumer goods).  Chindex's personalized, high service approach calls for intensive coverage of all partner outlets by a field force of
custom

Chindex is paving the way into retail pharmacy distribution through a partnership with the world's largest producer of cosmetic products.  In 1998, under the partnership agreement, Chindex became the exclusive distributor of a prominent brand of
health-oriented cosmetics and skin care products.  Chindex's unique ability to closely control both the inventory and the distribution channels in China have proven successful in both the test market and expansion phases of distribution for this product
line.

Summer's Eve brand of feminine hygiene products, manufactured by C.B. Fleet Company, Inc.

Vichy Laboratories brand of skin care products, manufactured by the Cosmetique Active International division of L'Oreal

Logistics Services

Through its two established distribution centers in Tianjin and Shanghai, in late 1998, Chindex began offering custom logistics services on a third party basis to principals who wish to manage their own sales and marketing channels but need
assistance with physical distribution and financial management of their businesses in China.  Chindex offers these services only to providers of products related to our core healthcare and health-related markets, including:

BD (Becton Dickinson) is a leader in the design and worldwide delivery of healthcare devices, systems and services.  In mid-2000,BDdecided to outsource it's logistics function to Chindex, allowing BD to focus on
manufacturing, marketing, clinical education, and sales management.

Davis & Geck, owned by Tyco International, is a premier manufacturer of advanced surgical suture products.  In the role of logistics provider, Chindex has assumed responsibility for the import, storage under controlled conditions, and
distribution nationwide to Davis & Geck's established dealer network for Davis & Geck's entire product range.

Pari GmbH is an independent German company which manufactures nebulizers.  Pari manufactures these devices, used for aerosol delivery of drugs, in facilities in Germany as well as the United States.  Chindex is serving as logistics partner
to import both hospital and consumer-oriented base units, accessories, and spare parts to support Pari's network of regional dealers in China.

Whitney International, Inc. markets and sells Codonics medical printers and paper in China.  In early 2000, Chindex assumed the role of logistics provider for Whitney's Codonics business throughout China.

In conjunction with the growth and expansion of its products distribution infrastructure, Chindex is investigating new potential product areas in the healthcare sector, as well as new product lines that complement the products which are currently
imported and distributed by the Products Distribution Department.  Chindex has invested heavily in its products distribution capabilities and, as an integral part of the Company's growth plan, Chindex plans to continue to capitalize on that investment.

HEALTHCARE SERVICES

In 1994, using its extensive expertise in healthcare as a foundation, Chindex began a long-term program to establish a private hospital network in China.  In 1997, Chindex opened Beijing United Family Hospital (Beijing United), marking the
successful completion of the first phase of its program.  Beijing United is the first officially-approved private, international-standard hospital in China.  Future phases of Chindex's private hospital network program are planned to expand delivery of
inter

Beijing United Family Hospital

Beijing United is a unique, state-of-the-art, fee-for-service, 20-bed specialty hospital providing primary family care for expatriates and Chinese citizens in Beijing.  The hospital is housed in a modern facility in the eastern section of
Beijing, and features seven birthing suites, two operating suites, an inpatient pediatric ward, clinical laboratory and diagnostic imaging facilities, as well as a pharmacy and a large outpatient clinic. An affiliated dental clinic was opened in a
satellite

Plans to expand Beijing United to a 60-80 bed facility, offering a greater range of patient services, are in development. In addition, plans are underway to open one or more affiliated satellite clinics throughout Beijing to provide outpatient
services.

Emphasizing the need for well-care and patient-centered care, Beijing United offers a full range of top-quality family healthcare services, mental health services for men, women, and children.  The hospital is staffed by a mix of Western
and Chinese physicians and operates in accordance with international hospital standards.  Beijing United is also committed to community outreach programs and offers healthcare education classes, including CPR, Lamaze, and Stress Management.

Beijing United was the first officially approved healthcare joint venture to provide international-standard healthcare services in China.  It was formed as a 90/10 contractual joint venture between Chindex and the Chinese Academy of Medical
Sciences and received its initial national level approvals from the Chinese Ministry of Public Health (MOPH) and Ministry of Foreign Trade and Economic Cooperation (MOFTEC) in 1995.  The venture markets its services to the expatriate and affluent Chinese
communiti

Chindex Healthcare Network Expansion

Chindex's strategy is to provide quality specialty healthcare to affluent Chinese society.  The Chindex healthcare network would provide family healthcare to China's growing urban middle class population.  The Chindex strategic business
plan calls for the establishment of additional hospitals, each with affiliated satellite clinics, in selected urban cities throughout eastern China.  These hospitals would be networked with each other and with Beijing United through a central
administrative ar

An initial business plan for expansion of the Chindex healthcare network is currently under consideration and potential locations for the new hospitals are under evaluation.  The Chindex hospital development team has conducted its initial field
work which resulted in the identification of potential locations for the next phases of Chindex hospitals, the first of which is proposed to be in Shanghai.  Discussions are currently underway with potential partners in several of these locations, while
Chinde

COMPETITION

In the sale of products, the Company competes with other independent distributors in China that market similar products. 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 General Electric Corporation ("GE"), which maintains its own direct sales force in China as well as selling through distributors. In addition, since certain
manu
e Company believes that its products incorporate technologies that are more advanced than those available in products currently available from domestic Chinese manufacturers.

In the sales and distribution of off-the-shelf medical products and consumables, the Company's sales, marketing and logistical distribution networks also compete with similar distribution operations of other independent distributors, both foreign
and Chinese, joint ventures and foreign manufacturers. In addition, the products themselves supplied by the Company to the China market compete with similar products of foreign, joint venture and domestic manufacturers.

The Company's competitive position for product sales 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 Capit
Two of the Company's subsidiaries, Chindex Holdings International Trade (Tianjin) Ltd., and Chindex Shanghai International Trading Co., Ltd., sell goods and receive payment in local Chinese currency and use the currency to pay for local expenses.
Payments are generally required to be made in advance for consumable products. 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.
At the present time, there are no Western-owned hospitals in Beijing which compete with Beijing United Family Hospital in catering to the expatriate diplomatic and affluent local Chinese markets.  There are several Western operated clinics and a
variety of foreign-invested joint ventures which provide outpatient services.

EMPLOYEES
At December 31, 2000, the Company had 369 full-time salaried employees, and 46 part-time employees.  Of the full time employees, 355 are in China and Hong Kong. Of the full-time personnel in China and Hong Kong, 30 are expatriates and 325 are
Chinese or third country nationals. Of the Company's non-USA based full-time employees, 138 are employed at Beijing United Family Hospital.
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 2000 Annual Report to Stockholders are forward-looking statements
that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements about the Company's (i) performance goals, including successful conclusion of efforts to secure government-backed financing, (ii) future reve
ITEM 2. FACILITIES
The Company's representative headquarters in China are located at a 14,000 square foot facility in Beijing pursuant to a lease expiring June 30, 2001. The Company plans to extend this lease for a short period of time and has established a working
group to evaluate options for moving the Company headquarters in 2002.  The Company also leases regional offices in the Chinese cities of Shanghai, Guangzhou and Tianjin. The Company's executive and administrative offices are located in Bethesda,
Maryland, wThe Company leases a four story building of approximately 52,000 square feet in Beijing. This lease expires in 2010. In 1998, the Hospital entered into a five year lease for the building housing the dental clinic. This lease provides for a ten year
extension. The Company renovated the first two floors of the main building for the Beijing United Family Hospital, a family health center with birthing, pediatric and family medicine capabilities. The Company has subleased the remaining two floors. The
subleasThe Company believes that its facilities will be sufficient to satisfy the Company's current requirements for at least the next twelve months.

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
None
PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on Nasdaq under the symbol CHDX. The following table (from Nasdaq,IDC) shows the high and low Common Stock bid quotations in the over-the-counter market, as quoted on Nasdaq. Such quotations reflect interdealer
prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Quarter Ended
High Bid
Low BidMarch 31, 1999
$6.313
$2.000June 30, 1999
20.000
4.125September 30, 1999
13.250
6.500December 31, 1999
44.000
12.000March 31, 2000
24.250
11.591June 30, 2000
28.500
6.023September 30, 2000
15.625
8.693December 31, 2000
11.500
6.000



As of March 26, 2001, there are 14 record holders and there are estimated to be approximately 1,170 beneficial owners of the Company's Common Stock. There are 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 2000 compared to 1999

The Company's revenues for 2000 were $45,064,000, up 21% from 1999 revenues of $37,128,000. The largest single component in 2000 and 1999 was $9,396,000 and $11,723,000, respectively, due to sales attributable to shipments made under the Company's
EXIM loan transaction. The Company believes that this type of financing is important to its customers and the Company and will continue to try to offer such financings in the future. These financings can be very complex and their impact and timing on the
Co

The Company recorded net income in 2000 of $641,000 or 64% increase over 1999 net income of $392,000.

Healthcare Products

The healthcare products segment, consisting of medical equipment, medical consumables and personal healthcare products, had revenue growth of 18% to $39,049,000 in 2000 from 1999 revenues of $33,182,000. The 2000 revenues included $26,554,000 in sales
of medical equipment (68%) and $12,495,000 in sales of medical consumables and personal healthcare products (32%).  The sales of medical equipment are U.S. Dollar-based export sales often contingent on financing (see "Timing of R
Gross profit in 2000 rose to $9,529,000 from $8,234,000 in 1999. As a percentage of revenue, gross profit from the healthcare products segment declined in 2000 to 24% from 25% in 1999.
Expenses for the healthcare products segment in 2000 increased to $9,595,000 (25% of revenue) from $7,991,000 in 1999 (24% of revenue). Salaries increased $873,000 (salaries were 14% of revenue in 2000 and 1999), primarily due to increased hires. In
addition, travel and entertainment expense increased $238,000 (travel and entertainment was 5% of revenue in 2000 and 1999) as a result of increased marketing efforts and other costs increased $493,000.
Healthcare Services
The healthcare services segment consists of a Western style primary care hospital and outpatient facility. In 2000, the revenues from this segment increased to $6,015,000 or 52% over 1999 revenues of $3,946,000. During 2000, the Company expanded
the dental clinic and continued to offer services providing obstetrics, gynecology, pediatrics, birthing services and executive health care. All of these practice areas experienced continued growth. The Company is exploring the possibility of additional
satelHealthcare services costs increased in 2000 to $5,797,000 or 31% over 1999 costs of $4,410,000. This increase is due to the costs associated with increases in services. Salaries increased by $555,000 (salaries were 39% of revenue in 2000 versus 46%
in 1999), with all other costs increasing $832,000.
Other Income and Expenses
Interest income in 2000 declined to $200,000 from $308,000 in 1999. In addition, the Company incurred $94,000 in interest expense in 2000 and had no interest expense in 1999 (see "Liquidity and Capital Resources
").
Other income decreased slightly in 2000 to $558,000 from $588,000 in 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2000, total accounts receivable increased by $9,229,000 as compared to December 31, 1999. This was due to the EXIM transaction shipping at the end of the year ended December 31, 2000 while the 1998 EXIM transaction shipped
during the first half of the year ended December 31, 1999.
As a result of the shipment of the EXIM transaction the accounts payable and accrued expenses increased by over $7,000,000 of the $11,481,000 increase in liabilities as of December 31, 2000.  The remainder of the increase is related to increased
payment terms by suppliers for the consumable products. in the healthcare products group.
As of December 31, 2000, inventories were $9,120,000, rising $3,393,000 from the December 31, 1999 balance of $5,881,000. This increase was mainly attributable to new supplier relationships started by the healthcare products group.
The Company continues to consider various financing alternatives to satisfy its future expansion, capital improvements and equipment requirements.
TIMING OF REVENUES
The timing of the Company's revenues is affected by several significant factors. Many end-users of the capital equipment 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, including EXIM financing. 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.
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, the majority 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 or Hong Kong Dollar may have an impact on the Company's results of operations in the future. The Company's subsidiaries, Chindex TianjinAlso, the Company has purchased and will continue to purchase some products in Western 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
Contents of section:

| | Report of Ernst & Young LLP, Independent Auditors
| | -------------------------------------------------
| | Consolidated Balance Sheets                      
| | Consolidated Statements of Operations            
| | Consolidated Statements of Cash Flows            
| | Consolidated Statements of Stockholders' Equity  
| | Notes to Consolidated Financial Statements       



Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders

We have audited the accompanying consolidated balance sheets of U.S.-China Industrial Exchange, Inc. as of December 31, 1999 and 2000, and the related consolidated statements of operations, stockholders' 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 auditing standards generally accepted in the United States. 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
inancial 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, 1999 and 2000, and the consolidated results of its
operations and its cash flows for the two years then ended in conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young, LLP

McLean, Virginia

March 9, 2001



|U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
CONSOLIDATED BALANCE SHEETS
|----------------------------------------------------------------
|                                                                
|                                                                
|ASSETS                                                          
|Current assets:                                                 
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Property & equipment, net                                       
|Trade accounts receivable, long term                            
|Other                                                           
|                                                                
|LIABILITIES AND STOCKHOLDERS' EQUITY                            
|Current liabilities:                                            
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Stockholders' equity:                                           
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                

See accompanying notes

|U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|--------------------------------------------------------------------------
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Total sales and service revenue                                           
|                                                                          
|Cost and Expenses                                                         
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|(Loss) income from operations                                             
|Minority interest                                                         
|Other income and (expenses)                                               
|                                                                          
|                                                                          
|                                                                          
|Income before income taxes                                                
|Provision for income taxes                                                
|Net income                                                                
|Net income per common share - basic                                       
|Weighted average shares outstanding - basic                               
|Net income per common share - diluted                                     
|Weighted average shares outstanding - diluted                             

See accompanying notes

|U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS                 
|-------------------------------------------------------------------------------------------
|                                                                                           
|                                                                                           
|                                                                                           
|OPERATING ACTIVITIES                                                                       
|Net income                                                                                 
|Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
|                                                                                           
|                                                                                           
|Changes in operating assets and liabilities:                                               
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net cash provided by/(used in) operating activities                                        
|                                                                                           
|INVESTING ACTIVITIES                                                                       
|                                                                                           
|Net cash used in investing activities                                                      
|                                                                                           
|FINANCING ACTIVITIES                                                                       
|                                                                                           
|Net cash provided by financing activities                                                  
|Effect of foreign exchange rate changes on cash and cash equivalents                       
|Net increase/(decrease) in cash and cash equivalents                                       
|Cash and cash equivalents at beginning of year                                             
|Cash and cash equivalents at end of year                                                   
|Supplemental disclosure of cash flow information:                                          
|Cash paid for interest                                                                     
|Cash paid for income taxes                                                                 

See accompanying notes





|U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 2000
|---------------------------------------------------------------------------------------------------------------------------
|                                                                                                                           
|                                                                                                                           
|Balance at December 31, 1998                                                                                               
|Forfeit of escrow shares                                                                                                   
|Net income for 1999                                                                                                        
|Balance at December 31, 1999                                                                                               
|September Stock Dividend                                                                                                   
|Option Exercise                                                                                                            
|Foreign Currency Translation Adjustment                                                                                    
|Net income for 2000                                                                                                        
|Balance at December 31, 2000                                                                                               

See accompanying notes

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 and consumables. The Company markets and sells these
products in China and Hong Kong, and provides marketing, sales and technical services for the products. Substantially all direct sales, commissions and purchases of these products are denominated in U.S. dollars.

Two of the Company's subsidiaries, Chindex Holdings International Trade (Tianjin) Ltd., and Chindex Shanghai International Trading Co., Ltd., sell goods and receive payment in local Chinese currency and use the currency to pay for local expenses and
U.S. dollar imported goods. Payments are generally required to be made in advance for consumable products.

In 1996 the Company established the Beijing United Family Hospital, a contractual joint venture between the Company and a Company controlled by the Chinese Academy of Medical Sciences. This Hospital provides complete western standard primary care
health services including family practice, pediatrics, dental care, physical therapy, obstetrics, gynecology, neonatology and men's health care. Operations commenced in late 1997. Full-time operation began in March 1998. While Beijing United does
denominate its

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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) Ltd., Chindex Shanghai International Trading Co., Ltd., Chindex Hong Kong and
its 100% balance sheet interest and 90% earnings interest in the Beijing United Family Hospital. Significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

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

Revenues related to services provided by Beijing United Family Hospital are recognized in the period services are provided. Costs associated with such services are recognized in the period incurred.

Inventories

Inventory purchased to fill signed sales contracts and purchase orders that remain undelivered at year-end (merchandise inventory), service parts and inventory of peripheral components are stated at the lower of cost or market using the
specific identification method. In addition, two wholly foreign owned subsidiaries maintain merchandise inventory based on expected sales targets.

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.

Inventory items held by Beijing United Family Hospital are stated at the lower of cost or market using the average cost method.

Property and Equipment

Property and equipment, including such assets held by Beijing United Family Hospital, are stated at historical cost. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred.
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

The Company assesses the impairment of long-lived assets including intangible assets in accordance with Statement of Financial Standards No. 121, 'Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed of '
(Statement 121). Statement 121 requires impairment losses to be recognized for long-lived assets when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the assets' carrying amounts. Intangibles are also
evaluated for

Long Term Receivables and Payables

Long term receivables and payables are recorded at estimated present values determined based on current rates of interest and reported at the net amounts in the accompanying financial statements. Imputed interest is recognized using the
effective interest method and recognized as a component of interest income/expense in the accompanying financial statements.

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, 1999 and 2000.

Earnings Per Share

The Company follows Statement of Financial Accounting Standards No. 128, 'Earnings per Share' (Statement 128) whereby basic earnings per share excludes any dilutive effects of options, warrants and convertible securities and diluted earnings
per share includes such effects.  The Company does not include the effects of stock option, warrants and convertible securities for periods when the Company reports a net loss as such effects would be antidilutive.

Stock Based Compensation

The Company follows Statement of Financial Accounting Standards No. 123, 'Accounting for Stock-Based Compensation,' (Statement 123) which allows companies to either account for stock-based compensation under the provisions of Statement 123 or
under the provisions of Accounting Principles Board Opinion No. 25 'Accounting for Stock Issued to Employees' (Opinion 25), but requires pro forma disclosure in the footnotes to the financial statements as if the measurement provisions of Statement 123
had b

Dividends

The Company has not paid cash dividends to the stockholders of its common stock and any cash dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors. On August 25, 2000 the
Company declared a 10% stock dividend to holders of record on September 13, 2000.

Derivative and Hedging Activity

In June 1998, Statement of Financial Accounting Standards No. 133, 'Accounting for Derivative Instruments and Hedging Activities' (Statement 133), as amended, was issued and is effective for fiscal years beginning after June 15, 2000. Statement
133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize a



2. EXTENDED PAYMENT TERM SALES ARRANGEMENTS

The Company has entered into agreements with certain customers to provide extended payment terms related to the sale of high technology medical equipment. 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 6.35% for the year ended December 31, 1999.  All transactions in 2000 were in the current account and long term contracts are no longer
int

Long-term receivables and payables under these arrangements mature during the years ending December 31, as follows:

|                       | ---------- 1999 ---------
|---------------------- | -------------------------
|                       | Accounts
Receivable      
|2000                   | $2,892,000               
|2001                   | 211,000                  
|                       | 3,103,000                
|Less: imputed interest | 106,000                  
|                       | 2,997,000                
|Less: current portion  | 2,801,000                
|                       | $196,000                 

Amortization of imputed interest on long-term accounts receivable was $45,000 for the year ended December 31, 1999. Amortization of imputed interest on long-term accounts payable was $14,000 for the year ended December 31, 1999.

3. INVENTORIES

|Inventories consist of the following:
|-------------------------------------
|                                     
|1999                                 
|Merchandise inventory                
|Healthcare services inventory        
|Demonstration inventory, net         
|Parts and peripheral inventory       
|                                     



4. PROPERTY AND EQUIPMENT, NET

|Property and equipment, net consists of the following:
|------------------------------------------------------
|                                                      
|1999                                                  
|Furniture and equipment                               
|Vehicles                                              
|Leasehold improvements                                
|                                                      
|Less: accumulated depreciation and amortization       
|                                                      



5. STOCKHOLDERS' 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 stockholders and the holders of common
stock have one vote per share on each matter considered by stockholders. 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

The holders of the Class B common stock had placed 56,250 shares in escrow. These shares were not assignable or transferable (but could 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 escrow shares on March 31, 1999 were forfeited and contributed to the Company's capital on March 31, 1999.

Stock Option Plan

The Company's 1994 Stock Option Plan (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

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 t

The following is a summary of stock option activity during the years ended December 31, 1999 and 2000:

|                                        | 1999      | 2000    | Exercise Price Range
|--------------------------------------- | --------- | ------- | --------------------
|Options outstanding, beginning of year: | 38,856    | 46,318  | $7.48 - $36.00      
|                                        | Granted*  | 10,000  | 171,498             
|                                        | Exercised | 0       | (1,000)             
|Canceled                                | (34,106)  | (6,795) | $8.21 - $36.00      
|Repriced and Reissued                   | 31,568    | 0       | $8.21               
|Options outstanding, end of year        | 46,318    | 210,021 | $7.48 - $36.00      

* Granted in 2000 subject to shareholder approval at the 2001 annual meeting.  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 is $12.00 and $9.95 and the weighted average remaining contractual life of such options is 9.2 years and 9.4 years respectively as of December 31, 1999 and 2000.

Shares of Common Stock Reserved

At December 31, 2000 the Company has reserved 256,250 shares of common stock for issuance upon exercise of stock options and Class B common stock convertibility.

6. EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the basic and diluted Earnings per Share (EPS) computations for net income and other related disclosures:

|                               | For the Year Ended December 31, 2000
|------------------------------ | ------------------------------------
|Income
(Numerator)             | Shares
(Denominator)                
|Net income/Basic EPS           | $641,000                            
|Effect of dilutive securities: |                                     
|                               | Warrants and options                
|Net income/Diluted EPS         | $641,000                            





|                               | For the Year Ended December 31, 1999
|------------------------------ | ------------------------------------
|Income
(Numerator)             | Shares
(Denominator)                
|Net income/Basic EPS           | $392,000                            
|Effect of Dilutive Securities: |                                     
|                               | Warrants and options                
|Net income/Diluted EPS         | $392,000                            

Options to purchase 46,318 and 210,021 of common stock between $7.48 and $36.00 were outstanding during most of 1999 and 2000 respectively. See note 5.

7. INCOME TAXES

Provision for income taxes consists of the following:

|          | YEAR ENDED DECEMBER 31,
|--------- | -----------------------
|1999      | 2000                   
|Current: 
|          | Federal                
|          | Foreign                
|          | State                  
|          |                        
|Deferred:
|          | Federal                
|          | State                  
|          |                        
|          |                        

The net deferred tax assets and liabilities have been reduced 100% by a valuation allowance and consist of the following as of December 31:

|                                        | 1999        | 2000       
|--------------------------------------- | ----------- | -----------
|Deferred Tax Liabilities:               |             |            
|Rate differential on Hong Kong earnings | $0          | $(146,000) 
|Deferred Tax Assets:                    |             |            
|Allowance for doubtful accounts         | $225,000    | $225,000   
|Inventory write downs                   | 237,000     | 295,000    
|Net operating loss carry forwards       | 2,300,000   | 2,494,000  
|Foreign tax credit                      | 51,000      | 210,000    
|Other                                   | 3,000       | 3,000      
|                                        | Sub-total   | 2,816,000  
|Less valuation allowance                | (2,816,000) | (3,081,000)
|Net deferred tax asset                  | $ - -       | $ - -      



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

|                                       | 1999                                           | 2000  
|-------------------------------------- | ---------------------------------------------- | ------
|Statutory federal income tax rate      | 34.0%                                          | 34.0% 
|Adjustments:                           |                                                |       
|                                       | State income taxes, net of federal tax benefit | 3.5   
|Foreign tax rate differential          | (33.5)                                         | (31.5)
|Use of foreign net operating losses    | --                                             | (20.7)
|Change in valuation allowance          | 27.4                                           | 34.0  
|Other, including permanent differences | 9.0                                            | (1.5) 
|Effective income tax rate              | 40.4%                                          | 17.8% 

A valuation allowance has been recorded as of December 31, 1999 and 2000 to reduce the net deferred tax assets as it is more likely than not that the net deferred tax assets will not be realized for the foreseeable future.

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

The Company has U.S. Federal net operating losses of approximately $5.1 million of which $2.4 million expire principally in 2012 and $2.7 million expire in 2018. The Company also has foreign losses from China of approximately $1.2 million that expire
in 2002 and 2003.



8. 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 $700,000 per year until May 2001.



Leases

The Company leases office space, warehouse 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:

|YEAR ENDING DECEMBER 31:            |           
|----------------------------------- | ----------
|                                    | 2001      
|2002                                | 515,000   
|2003                                | 464,000   
|2004                                | 464,000   
|2005                                | 464,000   
|Thereafter                          | 2,218,000 
|                                    | 4,832,000 
|Less total minimum sublease rentals | 323,000   
|Net minimum rental commitments      | $4,509,000

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

Included in Other income for the year ended December 31, 1999 and 2000 is net sublease income of $379,000 and $512,000, respectively.

Rental expense was approximately $850,000 and $953,000 for the years ended December 31, 1999 and 2000, respectively.

9. CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, trade receivables and commission receivables. Substantially all of the Company's cash and cash equivalents
at December 31, 1999 and 2000 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

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

The Company has a $1,750,000 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. 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 $1,945,000. As of December 31, 2000, letters of credit issued by the bank amounted to approximately $400,000

The Company conducts its marketing and sales and provides its services exclusively to buyers located in China and Hong Kong. The medical services and products provided by Beijing United Family Hospital and the marketing of such services are performed
exclusively for/to patients in China. 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, 1999 and 2000, approximately $6,693,000 and $12,022,000, respectively, of such assets are located in China, consisting principally of cash, inventories, property improvements and equipment.

See Note 10 also.

10. 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
 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 $9,616,000 and $4,251,000 for the years ended December 31, 1999 and 2000, respectively. The Company has entered into a security arrangement to ensure the payment of such supplier's accounts payable.



11. SEGMENT REPORTING

The following segment information has been provided per Statement of Financial Accounting Standards No. 131, 'Disclosures about Segments of an Enterprise and Related Information':

For the year ended December 31, 2000:

|Segments                      | Healthcare Products | Healthcare Services | Total      
|----------------------------- | ------------------- | ------------------- | -----------
|Assets                        | $30,847,000         | $5,651,000          | $36,498,000
|                             
|Sales and service revenue     | $39,049,000         | $6,015,000          | $45,064,000
|Gross Profit                  | 9,529,000           | n/a                 | n/a        
|Gross Profit %                | 24%                 | n/a                 | n/a        
|Expenses                      | 9,595,000           | 5,797,000           | 44,912,000 
|Income/(loss) from operations | $(66,000)           | $218,000            | 152,000    
|Other income/expense, net     | 664,000            
|Minority interest             | (36,000)           
|Income before income taxes    | $780,000           



For the year ended December 31, 1999:

|Segments                      | Healthcare Products | Healthcare Services | Total      
|----------------------------- | ------------------- | ------------------- | -----------
|Assets                        | $19,708,000         | $4,676,000          | $24,384,000
|                             
|Revenue                       | $33,182,000         | $3,946,000          | $37,128,000
|Gross Profit                  | 8,234,000           | n/a                 | n/a        
|Gross Profit %                | 25%                 | n/a                 | n/a        
|Expenses                      | 7,991,000           | 4,410,000           | 37,349,000 
|Income/(loss) from operations | $243,000            | $(464,000)          | (221,000)  
|Other income/expense, net     | 896,000            
|Minority interest             | (18,000)           
|Income before income taxes    | $657,000           



Intersegment transactions were eliminated for the years ended December 31, 1999 and 2000



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

None.

PART III

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 2001 Annual Meeting of Shareholders, which the
Company intends to file with the Securities and Exchange Commission on or prior to April 30, 2001, and is incorporated herein by reference.

Item 10. Executive Compensation

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

Item 13. Exhibits and Reports on Form 8-K

|a. Exhibit listing:
|-------------------
|3.1                
|3.1A               
|3.2                
|4.3                
|4.4                
|10.1               
|10.2               
|10.3               
|10.4               
|10.5               
|10.6               
|10.7               
|10.8               
|10.9               
|10.10              
|10.11              
|10.12              
|10.13              
|10.14              
|10.15              
|10.16              
|10.17              
|21.1               
|23.1               
|27.1               

* Confidential treatment has been granted as to a portion of this Exhibit.

+ English translation of summary from Chinese original.



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 30, 2001 | By: /S/ Roberta Lipson               
|--------------------- | -------------------------------------
|                      | Roberta Lipson                       
|                      | President and Chief Executive Officer
|                      |                                      

|Dated: March 30, 2001 | By: /S/ Roberta Lipson                          
|--------------------- | ------------------------------------------------
|                      | Roberta Lipson                                  
|                      | Chairperson of the Board of Directors,          
|                      | Chief Executive Officer and President           
|                      |                                                 
|                      |                                                 
|Dated: March 30, 2001 | By: /S/ Elyse Beth Silverberg                   
|                      | Elyse Beth Silverberg                           
|                      | Executive Vice President, Secretary and Director
|                      |                                                 
|                      |                                                 
|Dated: March 30, 2001 | By: /S/	Lawrence Pemble                         
|                      | Lawrence Pemble                                 
|                      | Executive Vice President-Finance and Director   
|                      |                                                 
|                      |                                                 
|Dated: March 30, 2001 | By: /S/ Robert C. Goodwin, Jr.                  
|                      | Robert C. Goodwin, Jr.                          
|                      | Executive Vice President of Operations,         
|                      | Treasurer, General Counsel and Director         
|                      |                                                 
|                      |                                                 
|Dated: March 30, 2001 | By: /S/ Ronald Zilkowski                        
|                      | Ronald Zilkowski                                
|                      | Senior Vice President Finance and Controller