China will face severe challenges in industrial security in 2005 after its three-year transitional membership of the World Trade Organization (WTO) expired last year.

Foreign funds will be allowed to independently invest in most industries, including the banking and insurance sectors, said Gao Hucheng, vice minister of commerce, in an article on Monday's Economic Daily.

Some sensitive industries will face fierce competition from import of foreign goods and services when government measures to protect these sectors are called off, Gao said.

As a result, the in-depth and structural problems in China's economy will gradually emerge, and the potential risks in the nation's industrial security will be enhance, he said.

In the post-WTO transitional period, China will face a situation with many trade disputes and a more complex trade environment as its foreign trade expands, Gao said.

China has become a major target of international trade protectionism. For the sake of regional political and economic interests, the United States and EU have set limits on the export of Chinese goods, including textile products.

On the other hand, China's domestic market is partly occupied by foreign goods produced by companies with excessive production capacity, which pose a threat to the security of related national industries, Gao said.

The minister also noted that the on-going WTO multilateral trade negotiations in Doha will impose pressure on China to further open its market.The meeting is likely to reach agreements on further tariff reduction and the cancellation of export subsidy.

The new provisions will weaken the export capacity of China's small scale and less organized agriculture and cut profits of China's already low-tariff industrial products, he said.

In addition, the domestic industry will be less protected if the negotiation ends with stricter limits on the implementation of subsidy measures, Gao said.

Source: Xinhua