"We have sent a draft proposal to the State Council for approval," an official with MOFTEC's Foreign Investment Administration Department told China Daily on condition of anonymity.

He said the ministry has allowed some foreign-invested companies to export products that are not their own and bought from other manufactures.

According to China's WTO agreement, about 50,000 foreign-invested companies are to be granted full foreign trade rights in the first year after its accession.

"These foreign-invested companies will then be able to import and export all products that are not subject to State trading or designated trading," said Li Yushi, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation, MOFTEC's think-tank.

The vast majority of these companies will be minority-held by foreign investors.

On joining the WTO on December 11 of 2001, China has agreed to grant full trading rights to joint-venture enterprises with minority share foreign-investment in 2002 and to majority share foreign-invested joint-ventures in 2003.

Within three years after the WTO accession, all enterprises in China would be granted the full right to trade, according to China's WTO commitment.

Allowing more enterprises to conduct foreign trade business has contributed a lot to the rapid increase in China's foreign trade volume and especially export, said experts.

From January to November of last year, exports of foreign-invested companies increased 11.5 per cent to US$120.71 billion and import rose 7.3 percent to US$114.14 billion, according to customs statistics.

Collectively owned and private companies increased their export by 46.9 percent to US$17.64 billion and import by 58.3 percent to US$12.47 billion.

Meanwhile, exports of State companies decreased 3.5 percent to US$103.23 billion and import climbed 5.8 percent to US$94.59 billion.

Li said greater availability of foreign trade rights and the decreasing amount of State trading and designated trading products, while expanding China's foreign trade business as a whole, create competition for State foreign trade companies.

But State companies have reformed themselves to face the challenges as China started to relax its control on trading rights since the 1980s, he said.

At present, all 180,000 foreign-invested manufactures are given the "limited" right to import for production purposes and to export their own products when registering at the State Administration of Industry and Commerce.

But MOFTEC has so far approved only six foreign-invested trading companies.

These include four in the Shanghai Pudong New Area and two in Shenzhen. The ministry had granted foreign trade rights to 42,000 domestic companies by December 20.

In order to accelerate this approval process and increase the availability of trading rights, China agreed to reduce the minimum registered capital requirement for domestic enterprises to obtain trading rights to 5 million yuan (US$603,800) in 2002, 3 million yuan (US$362,300) in 2003 and 1 million yuan (US$120,000) in 2004.

(China Daily February 1, 2002)