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China to Relax Trade Controls
The government's decision last week to relax its control over foreign-invested companies' import and export rights is a key way to boost slack export growth this year, experts said.

The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) will allow foreign-invested manufacturing companies to export any non-monopolized products not under quota or license management, regardless of who made the products, according to a notice last week.

Although MOFTEC also ruled that these companies must export at least US$10 million each year and must not have broken laws and rules on taxation, foreign exchange and foreign trade in the last two years, experts said the measure is extensive and could have considerable impact on China's export growth this year.

"Manufacture companies are the pillar force in foreign-invested companies' export and the threshold of US$10 million export each year is not very high for them,'' said Zhang Yaxiong, a researcher with the State Information Center.

He said the measure is a big step towards relaxing government control over trading rights.

"This could enable foreign-invested companies to make full use of their sales networks and channels abroad to boost China's exports,'' said Long Guoqiang, a researcher with the Development Research Center under the State Council.

China's export growth is expected to slow dramatically from last year's 28 percent increase due to weak external demand and last year's particularly large increase.

Some economists say there could be no growth year-on-year for 2001.

But the others say it could still up to 8 percent from last year if the government adopts more trade liberalization measures like this one.

Foreign-invested companies accounted for half of China's total exports in the first six months of the year. Their export volume increased 16.9 percent in that period to US$62.3 billion, while the overall increase for China was 8.8 percent.

"China's overall export growth could accelerate by a half of a percentage point for every 1 percentage point of extra growth by foreign-invested companies' export,'' Long said.

MOFTEC said the measure was taken to prepare China for its pending entry into the World Trade Organization (WTO).

China has promised to let all companies conduct foreign trade business within three years of WTO accession, widely expected by the end of the year.

(China Daily 07/24/2001)

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