Since China started to relax controls on domestic private businesses' entrance to the foreign trade sector in 1999, about 20,000 enterprises have gained trading rights, according to official statistics.

Private companies have become an important force in foreign trade, notching up high annual growth rates.

The trade volume of private companies increased by 57 percent year-on-year last year to US$53.2 billion, accounting for 8.6 percent of China's total trade, according to customs statistics.

Exports rose 66.5 percent to US$32.77 billion and imports climbed 44 percent to US$20.44 billion.

Private companies' exports accounted for 30 percent of the total exports of east China's Zhejiang Province and increased six-fold in Shanghai.

The majority of these companies are in the textile, food, light industry, chemicals, construction materials, machinery, electronics, metals, computers, software and high-tech sectors.

These newly granted rights have increased private companies' exports, but trade experts said the majority of private businesses are slow to start trading and their share of China's total exports remains small.

By the end of last year, 1,980 private firms in Shanghai had gained trading rights, but only 578 of them have sold to other countries, making up a mere 1.02 percent of the city's total exports, according to official statistics.

A questionnaire issued by the Shanghai Association of Foreign Trade and Economic Cooperation Firms, which was responded to by 195 private firms, revealed that many complain of delays in tax rebates for exports, difficulties in raising funds, lack of market information and unfamiliarity with trading practices as major obstacles.

A recently issued regulation from the Ministry of Foreign Trade and Economic Cooperation said China will start to examine and approve Sino-foreign joint venture trading firms starting from March 2, 2003.

Trade experts doubt that foreign trading firms will wait until they are allowed majority shareholding rights or granted full trading rights.

On its accession to the World Trade Organization, China promised to grant full trading rights to all companies within three years.

Foreign companies can hold between 25 percent and 49 percent shares of joint venture trading firms, according to the new regulation.

(China Daily February 25, 2003)