Quality is expected to become the most important factor for China's exports, as the central government increases its efforts to optimize export composition.

Deputies attending the 10th National People's Congress (NPC) and trade experts have hailed Premier Wen Jiabao's recent report to the 10th NPC, saying that it signaled the central government's determination to push through these changes.

"We should shift our focus from quantity to quality and abandon the blind pursuit of trade volume," said senior trade expert Zhou Shijian.

Premier Wen, in looking ahead to this year's foreign trade, called for it to continue growing at an "appropriate" rate, compete on "quality," and to optimize composition of its exports.

The State Development and Reform Commission, China's top economic regulator, set a target for this year's foreign trade to grow by 8 percent. This is compared to last year's explosive growth of 37.1 percent, the highest in the past two decades.

"The target is reasonable and helps to cool down many exporters' blind favor for export quantity," Zhou said.

He added that this viewpoint had led to unhealthy price competition and low profits.

For example, China exported a total of 5 billion pairs of shoes in 2003, up about 2 billion compared to 1998. But the average price dropped from US$5.79 to US$5.03, according to Zhou.

"So, it is important for our exporters to give higher priority to quality and high added value," Zhou said.

And the blistering increase in cheap and labor-intensive exports also sparked a critical reaction from overseas, leading to the imposition of an increasing number of trade barriers against China, said Zhou, who is often consulted by firms and governments on anti-dumping cases.

"Although these products are manufactured on the basis of market rules, many countries still considered China was dumping exports below the market value," Zhou said.

Liu Qingfeng, an NPC deputy from East China's Anhui Province, said high technology should be used to improve the country's export composition.

"High technology will make China a real trading power in terms of both volume and quality," said Liu, who is in the software business.

Around 25 percent of the nation's 2003 exports were high-tech-based, much lower than the average 70 percent in most developed countries.

"China is still weak in developing some core technologies," Zhou said.

Niu Huilan, a Shandong deputy, said her company, a medium-sized apparel producer, will press ahead with technological innovation to gain a better position in the highly competitive international market.

"We will be penalized if we don't lift the quality of our exports to a new level."

Zhou also urged Chinese firms to attach greater importance to building brands, which he believes is conducive to increasing the price and competitiveness of Chinese exports on the international market.

"Local enterprises are making the first steps in this regard," he said.

Kangnai Group, a Zhejiang-based shoemaker, is "one of the role models," according to Zhou. The company raised its profile and brand value by establishing more than 70 speciality shops in over ten countries, including France, Italy and the United States. Its exported shoes in 2003 had an average price of US$13.

In addition, Zhou wants governments at all levels to overhaul their "excessively simple and straightforward" export promotion strategies, such as giving the money back after goods are exported.

"Financial support should be given to the earlier stages of the manufacturing chain," Zhou said.

Research and development, intellectual property rights, and patent cultivation are some of the areas that government should make more efforts to promote, he said.

However, this strategic shift will take time, Zhou cautioned.

"We should be fully aware that the quality strategy cannot be achieved completely overnight," said Zhou. "It will take years and much effort."

(China Daily March 10, 2004)