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Market Observation: China to Decontrol Foreign Trade Management Power
Liberalization of foreign trade management power has been the long-cherished hope of many Chinese enterprises, especially the private ones, and their wishes will soon become reality.
Sources say, beginning this year, China will, in three years, delegate foreign trade management power to enterprises which, in handling foreign trade commodities, no longer need approval from the government department in charge, they are only required to register with the industrial and commercial departments.
At present, there are altogether 160,000 foreign-invested enterprises and over 30,000 domestic businesses with foreign trade autonomy. Since 1999 when said power was transferred to private enterprises, more than 1,000 such enterprises have acquired the power.
In line with China's promises made for its entry into the WTO, China will, in the coming three years, gradually decontrol the management power over the import and export of other commodities, except for crude oil, grain and tobacco and other bulk products which are placed under the exclusive management of a few companies designated by the government, by then, enterprises of different forms of ownership, such as state-owned, foreign-invested, solely funded and private businesses, will be allowed to engage in foreign trade business.
Meanwhile, qualifications of import/export self-management rights for private enterprises will soon be lowered to the same level with state-owned ones, creating conditions for a registration system in this field.
Insiders say that after the delegation of power, the enterprise's import and export business scope will also be extended accordingly. Now these enterprises are only allowed to export their own products and import raw materials needed, but not to export purchased products or resell imports on domestic markets. After China's WTO accession, they will be permitted to handle import business and act as agencies.
Since January 1, 2001, private enterprises and research institutes have enjoyed the same treatment with their state-owned counterparts when applying for import/export self management power.
According to MOFTEC's notice issued at the end of last year, private enterprises each with a registered capital of over 5m yuan (over 3m yuan for those in minority ethnic and central and western regions); private research institutes, hi-tech enterprises and electromechanical producers each with a registered capital over 2m yuan are all qualified for applying import/export self-management. At the same time, the original standard for checking sales income and the quota of export goods supply are abolished. While before this, a registered capital over 8m yuan and export goods valued at over US$1m were required.
This is to bring about equal competition among enterprises of different types and push private businesses onto international market contests, experts say. This is another measure taken for China's reform of the foreign trade system and a preparation made for China's WTO entry.
By PD Online Staff Member Li Heng
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