OSNews.com has an interesting article up about a new Unix distribution called Kylin which the Chinese government claims to be producing. With a featureset like "Mach-like" kernel, Linux binary compatibility, and the ability to run KDE and GNOME, it sounds interesting. I was somewhat doubtful after reading all the material that this project is for real (especially since the download page doesn't seem to work). An OSNews reader also points to this 2002 article in which the Chinese government claimed to be working on a copy of Windows 98.
Until I actually see some binaries or source, count me as a skeptic on this one.