Trade Firms Set to have Lower Capital Threshold

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Last updated at: (Beijing Time) Friday, August 22, 2003

Trade Firms Set to have Lower Capital Threshold

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To open the trade sector wider, China will lower the capital demand for trading companies and offer an easier process for approval beginning September 1, said an official with the Ministry of Commerce.

Registered capital for professional trading firms will be lowered from 5 million yuan (US$604,000) to 1 million yuan (US$120,800); and the amount for manufacturing companies that want to conduct foreign trade will be dropped from 3 million yuan (US$362,450) to 50,000 yuan (US$6,040).

These companies only need to get approval from the provincial-level foreign trade departments or some city-level ones with special authorization from the ministry, the official, who declined to be named, said.

Previously, all of the foreign trading rights should be approved by the ministry.

The policy change has been made in accordance with China's World Trade Organization commitments, the official said.

China promised to grant full trading rights to all companies in three years when joining the world body in 2001.

The new regulation will boost the involvement of private companies in China's foreign trade, said an official with the Guangdong foreign economic and trade department.

"The lower registered capital makes the trading rights available to the small private companies," he said.

He expected a great number of private companies in Guangdong to apply for approval of their rights to conduct foreign trade.

But trade experts warned the majority of private businesses are not competitive in the world market, and the proportion of their exports in China's total is still small.

In Shanghai, 1,980 private firms had gained trading rights by the end of last year, but only 578 of them actually exported to other countries, making up a mere 1.02 per cent of the city's total exports, official statistics indicated. (Xinhua)

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