The Chinese Government is considering ending its ban on private foreign trading companies.he tested technique of using pilot businesses of this kind to pioneer the practice is being considered, official sources said.

The tested technique of using pilot businesses of this kind to pioneer the practice is being considered, official sources told Business Weekly last week.

"We will try to put it into practice early next year," said a trade official who asked not to be named.

Voices favouring opening of the entire foreign trading sector have been building in China in recent years and the Chinese Government has already loosened its reins on the monopoly of State-owned foreign trading corporations.

In addition to giving large and medium-sized State-owned enterprises easy access to foreign trading rights, the government eased its controls affecting private manufacturing enterprises engaged in the direct import and export business last October.

Enthusiasm for direct trading rights has been high in private manufacturing enterprises since they were given access.

Statistics from the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) indicate that by the end of October, more than 380 private manufacturing enterprises and research institutes had been granted direct import and export rights.

The government has also organized seminars and training classes to stimulate the growth of this fledgling group of foreign traders.

But complaints about the high threshold for entry are often heard.

All private manufacturing companies applying for foreign trade rights must possess 8.5 million yuan (US$1.02 million) both in registered capital and net assets.

In addition, their annual sales volumes are expected to exceed 50 million yuan (US$6.02 million) before they can be considered eligible to submit an application.

"The minimum standards for private manufacturing enterprises and research institutes to obtain foreign trading rights may be reduced next year," said the trade official.

He said a fixed threshold will be set for the establishment of private foreign trading companies.

"But it will not be as high as that required for private manufacturing enterprises," he said.

Other trade experts have suggested equal treatment for all State-owned, private and foreign-invested companies in the international trading arena.

But many also fear that liberalization in the foreign trading sector could adversely affect gigantic State-owned trading companies, which have sunk into the mire of red ink.

"The influence has already been felt," said a professor from the University of International Business and Economics.

He said that lots of underground private trading businesses have been scrambling for markets with State-owned companies.

"Why not let them emerge? The government can collect taxes from them," said the professor.

(Business Weekly - China Daily)