The Minister of Commerce told an international IT fair in Dalian that the software industry reported exports worth US$2.8 billion in 2004, over eleven times 1999's level of US$250 million, Shanghai Securities News reported yesterday.

Bo Xilai said total sales of China-made software grew from 44 billion yuan (US$5.32 billion) in 1999 to 220 billion yuan (US$26.6 billion) last year, an average annual growth rate of 38 percent, much higher than that of gross domestic product.

"The size of China's software market has exceeded 600 billion yuan (US$72.55 billion) over the past five years and will continue to grow over 30 percent annually by 2010," he predicted.

Bo was speaking at the 3rd China International Software & Information Service Fair that opened in the northeastern province of Liaoning on Thursday.

Lou Qinjian, vice minister of information industry, warned that domestic software producers, already on a fast track, still face the risk of derailment as problems for healthy growth remain.

Only 8.3 percent of electronics manufacturing revenue last year was generated by the software industry, which is still embryonic, he said, and its sales volume was three percent of the world's total.

Constrained by a shortage of core technologies, Lou said it has few advantages in the face of fierce global competition and thus is stuck producing middle and downstream products with little profitability.

Piracy and a talent deficit add to the industry's problems, he said, "Without innovative talent able to tap high-end software products, the growth of the domestic software industry can hardly be sustained."

"To help the software industry beef up its innovation capability, a special mechanism encouraging research and development for public use and a much easier financing environment have to be established," Lou added.

Bo also called on domestic companies to learn from their global peers, import advanced technology and management expertise and strengthen international cooperation. 

More than 800 companies from the Chinese mainland, Hong Kong, Taiwan, Japan, South Korea, Malaysia, Singapore and India have brought electronic products, software, telecommunications, integrated circuits, information services, digital entertainment and other technologies and products to the four-day fair.

Activities include a ministerial summit on international IT cooperation, an annual meeting on software outsourcing, an international IT job fair and a symposium on IT personnel training.

(Xinhua News Agency June 24, 2005)