"Peng Peng", which has a roundworm fat gene, weighed in at 5.74 kg when it was born on March 26 in a laboratory in China's far western region of Xinjiang.

"It's growing very well and is very healthy like a normal sheep," lead scientist Du Yutao at the Beijing Genomics Institute (BGI) in Shenzhen in southern China told Reuters.

Du and colleagues inserted the gene that is linked to the production of polyunsaturated fatty acids into a donor cell taken from the ear of a Chinese Merino sheep.

The cell was then inserted into an unfertilized egg and implanted into the womb of a surrogate sheep.

"The gene was originally from the C. elegans (roundworm) which has been shown (in previous studies) to increase unsaturated fatty acids which is very good for human health," Du said.

China, which has to feed 22 percent of the world's population but has only 7 percent of the world's arable land, has devoted plenty of resources in recent years to increasing domestic production of grains, meat and other food products.

But there are concerns about the safety of genetically modified foods and it will be some years before meat from such transgenic animals finds its way into Chinese food markets.

"The Chinese government encourages transgenic projects but we need to have better methods and results to prove that transgenic plants and animals are harmless and safe for consumption, that is crucial," Du said.

Apart from BGI, other collaborators in the project were the Institute of Genetics and Developmental Biology at the Chinese Academy of Sciences, and Shihezi University in Xinjiang.

The United States is a world leader in producing GM crops. Its Food and Drug Administration has already approved the sale of food from clones and their offspring, saying the products were indistinguishable from those of non-cloned animals.

U.S. biotech firm AquaBounty's patented genetically modified Atlantic salmon are widely billed as growing at double the speed and could be approved by U.S. regulators as early as this summer.

(Editing by Paul Tait)

• A Permanent Economic Emergency