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Support Policy for Companies Urged
Township and village businesses, major contributors to Chinese exports, should be given more supportive policies to sustain their competitive strength in the global market, a Ministry of Agriculture official said Sunday.
These enterprises, with weaker competitive conditions compared to State-owned firms, contributed 37.8 per cent of the country's total exports in 1999, with export goods valued at 774.4 billion yuan (US$93.3 billion), indicate the latest ministry statistics.
If the country enters the World Trade Organization (WTO) as expected, rural firms could play an even larger role in exports if they are given support in financial services and foreign trade arrangements, said Chen Jianguang, a division director with the ministry's Township Management Bureau.
Chen said 130,000 township-run firms were engaged in foreign trade last year. They have so far conducted business with 6,631 companies abroad, with accumulative investment reaching 8.8 billion yuan (US$1.1 billion).
"Most of these industries are labour intensive and capable to react and adapt to market changes since they have weathered intense domestic competition to emerge in the world market, meaning they are well able to brave the challenges brought forth by the WTO entry,'' said Chen.
Chen said a fair and sound environment is needed for township enterprises to further prosper in foreign trade.
The official said fund shortages have bottlenecked export expansion.
"Township firms contributed 30.3 per cent to the country's gross domestic product in 1999, however, the loans granted to them accounted for merely 5 per cent of the country's total available loans last year,'' Chen said.
It is difficult for rural enterprises to handle financing by themselves, he said.
"More than 1,000 township companies have met the requirements for being listed. However, only 40 have been approved to do so, representing a meagre 4 per cent of the country's total listed companies,'' he said.
Securities authorities should treat township firms equally, and recommend more competent firms for listing, Chen said.
Considering the nature of township enterprise production, the Township Management Bureau suggested that the tax refund rate should be improved for agricultural products from the current 5 per cent to 10 per cent. Bureau officials also suggested that the refund rate for processed farm produce should increase from 13 per cent to 17 per cent.
"Also, the number of township enterprises bestowed with independent import and export rights should increase,'' Chen said.
Currently, 1,600 township firms have such rights even though 48,000 each exceeded 1 million (US$120,000) in export volume last year.
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