Full Trading Rights to be Granted to Foreign Firms: Report

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Last updated at: (Beijing Time) Friday, February 01, 2002

Full Trading Rights to be Granted to Foreign Firms: Report

The Ministry of Foreign Trade and Economic Co-operation (MOFTEC) is drafting detailed rules on allowing foreign-invested companies full trading rights. "We have sent a draft proposal to the State Council for approval," an official with MOFTEC's Foreign Investment Administration Department said on condition of anonymity.

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50,000 foreign companies to be granted full rights

He said the ministry has allowed some foreign-invested companies to export products that are not their own and bought from other manufactures.

According to China's WTO agreement, about 50,000 foreign-invested companies are to be granted full foreign trade rights in the first year after its accession.

"These foreign-invested companies will then be able to import and export all products that are not subject to State trading or designated trading," said Li Yushi, a senior researcher with the Chinese Academy of International Trade and Economic Co-operation, MOFTEC's think-tank.

The vast majority of these companies will be minority-held by foreign investors.

On joining the WTO on December 11 of 2001, China has agreed to grant full trading rights to joint-venture enterprises with minority share foreign-investment in 2002 and to majority share foreign-invested joint-ventures in 2003.

Within three years after the WTO accession, all enterprises in China would be granted the full right to trade, according to China's WTO commitment.

Full rights granting to benefit China in foreign trade

Allowing more enterprises to conduct foreign trade business has contributed a lot to the rapid increase in China's foreign trade volume and especially export, said experts.

From January to November of last year, exports of foreign-invested companies increased 11.5 per cent to US$120.71 billion and import rose 7.3 per cent to US$114.14 billion, according to customs statistics.

Collectively owned and private companies increased their export by 46.9 per cent to US$17.64 billion and import by 58.3 per cent to US$12.47 billion.

Meanwhile, exports of State companies decreased 3.5 per cent to US$103.23 billion and import climbed 5.8 per cent to US$94.59 billion.

Li said greater availability of foreign trade rights and the decreasing amount of State trading and designated trading products, while expanding China's foreign trade business as a whole, create competition for State foreign trade companies.

But State companies have reformed themselves to face the challenges as China started to relax its control on trading rights since the 1980s, he said.

China to quicken step on rights permission

At present, all 180,000 foreign-invested manufactures are given the "limited" right to import for production purposes and to export their own products when registering at the State Administration of Industry and Commerce.

But MOFTEC has so far approved only six foreign-invested trading companies.

These include four in the Shanghai Pudong New Area and two in Shenzhen. The ministry had granted foreign trade rights to 42,000 domestic companies by December 20.

In order to accelerate this approval process and increase the availability of trading rights, China agreed to reduce the minimum registered capital requirement for domestic enterprises to obtain trading rights to 5 million yuan (US$603,800) in 2002, 3 million yuan (US$362,300) in 2003 and 1 million yuan (US$120,000) in 2004.

China More Attractive to Foreign Investors

China has become a "safe island" in the eyes of numerous international investors, although the year 2001 witnessed the first drop of global investment in the last decade. An investigation by the American magazine Fortune shows that 92 percent of multinational corporations have a plan to set up their business headquarters in China.

According to latest figures from the Chinese Ministry of Foreign Trade and Economic Cooperation, China approved 22,915 new enterprises backed by foreign direct investment (FDI) in the first eleven months of 2001, up 16.32 percent from the same period of last year. Full Text

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Source: China Daily

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