Liu made the comments at a seminar on the postal service, which, sponsored by China Post and the Universal Postal Union of the United Nations, ends today.

The event has attracted top postal officials from 21 countries and regions.

Universal service means providing for everybody in the country, whether rich or poor, as part of their rights, Liu said.

To provide this kind of service, China Post has set up 66,000 outlets all over the country, but 50,000 branches in the countryside lose money, he said.

China Post thus has to support these loss-making branches with money earned in the more prosperous cities.

But the emerging private parcel delivery companies and transport firms are severely eroding China Post's profits, he said.

"These private operators only establish retail outlets in the profitable large and medium-sized cities, breaking into a huge chunk of China Post's profitable markets," Liu said. "This creates difficulties for China Post, which needs city profits to make up for the cost of providing a universal services."

These private operators do not have an obligation to provide universal postal services so they avoid high costs.

With the globalization of the business, this kind of unfair competition will become fiercer, thus seriously influencing China Post, Liu said.

The government should establish a subsidy system to support China Post's universal postal service through national legislation, the official urged.

He added that China Post will soon launch more new services to cater for customers' needs.

"China Post will become the country's top logistic service provider in e-business," Liu said.

The bureau has already started some new services, such as a flower delivery service and delivering roast duck. But he said post office services are still not good enough.

China Post vows to get back to making profits this year, although it still has debts of 3 billion yuan (US$361 million), Liu said.

China Post split off from the telecom sector in 1998. The separation left it with a debt of 18 billion yuan (US$2.17 billion).

Over the past few decades, the low-charging postal sector had become used to getting cash handouts from the profit-rich telecom sector.

China Post was given a target of getting rid of its debts and making a profit within three years. This year is the last of that three-year agenda.

(China Daily 03/28/2001)