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China's Yao Ming of the NBA's Houston Rockets celebrates as they beat Serbia and Montenegro 67-66 to advance to quarter finals. [AP]

Yao Ming is in good form (Xinhua Photo/Li Yue)

China advanced into the quarter-finals of the men's basketball tournament at the Athens Olympic Games with an amazing 67-66 upset over world champion Serbia & Montenegro.

China, who collected seven points with two wins and three losses, moved on with Spain, Italy and Argentina from group A of the preliminary round. Serbia and New Zealand were eliminated with one win and four losses each.

In group B, Lithuania finished first with the maximum five wins with Greece, Puerto Rico and the United States advancing as well. Australia and Angola were eliminated from this group.

Yao calmly buried four free-throws down the stretch, including a go-ahead one, to help China win the do-or-die match.

Serbia, then Yugoslavia, slashed China 128-61 in the 1996 Atlanta Olympic Games, where China took unprecedented eighth place.

The Houston Rockets center scored 27 points and pulled down 13 rebounds to storm China into the quarter-finals for the second time in China's basketball history.

"The Olympics is the place to create miracle. Today we made the miracle by beating the world champions," said China's point guard Liu Wei.

Zelimir Obradovic, head coach of the Serbia team, apparently could not accept the results and kept his head down for the whole post-game news conference.

"This is a big shock to me. This is the hardest moment in my career," Obradovic said.

China led only once after the first quarter until Yao drilled in his third free-throws in a row to make it 64-63 with 28 secondsto go.

Du Feng made another two free-throws of his 12 points to give China a commanding 67-63 lead with just three seconds left in game.Milos Vujanic scored a consolation 3-pointer on the buzzer.

Predrag Drobnjak led Serbia with 17 points and Dejan Tomasevichad nine points and 11 rebounds.

"The meaning of the game is not just triumph. It is a precious treasure to China's basketball and the young generations," Yao said. "I'd like to thank coach (Del) Harris for his contribution to China."

Harris, former assistant coach of the Dallas Mavericks of the NBA, took the role of the team in May.

"I've never coached a group of players that I have more respects for to the way they worked and the way they are as human beings as this group of young men. This is the best win I've ever had," Harris said.

Spain wrapped up the round with five wins after beating New Zealand 88-84 to finish atop of the group.

Italy took the second place with a 76-75 win over Argentina with the South Americans finishing third.

Greece vaulted to the second place of group B after a 78-58 win over Puerto Rico, who finished third ahead of the U.S. team.

In Monday's other games, Lithuania defeated Australia 100-85, while the United States crashed Angola 89-53.

Editor: Donald