China needs to work on branding and the services sector in order to optimize foreign trade and ensure its sustainability, Xinhua reported.   The first half of 2006 witnessed further optimization of export trade structure and widening of imports with a year-on-year increase of 21.3 percent. The second half is expected to have stable growth in exports.   Characteristics of export structure With the aim to transform the export structure and raise the quality of export as well as improve efficiency, government incentives and macro controls have had preliminary effects on the export phenomenon in the first half of this year. Electronics and high-tech products had a 30.5 and 32 percent year-on-year growth respectively, which accounted for 56.9 and 28.8 percent of the total amount of export in the first half of the year.   Private-owned enterprises have become a major engine of export with a 34.9 percent year-on-year increase and amounting to 17 percent of total exports in the first half of 2006.   Exports to new markets were also on the rise. Excluding the 10 biggest economic regions (EU, America, Japan, East Asia, Hong Kong, Korea, Taiwan, Russia, Australia and Canada), the imports and exports to other new markets totaled 1636.9 million US dollars, which is a 38.9 year-on-year increase.   Foreign trade structure is in need of reforms Although China has become one of the biggest players in foreign trade, the growth of foreign trade still suffers from poor quality and inefficiency.   The scale of foreign trade continues to rise but the results do not go parallel the growth. Electrical appliances, textiles, shoes and toys remain the dominating exports. These are low added-value products with a low level of technology, which do not bring much profit. On the contrary, imported resources and products are all of high cost and technological level.   China’s exports compete based on price. Other core values remain backward. The country’s manufacturing sector is the fourth biggest in the world. However, its research, development and sales are still controlled by foreign investors. In 2005, only 3 percent of Mainland enterprises had their own patents or core technologies with a 50 percent reliance on foreign technology while 80 percent of high-tech products are imported.   Most Mainland enterprises are not familiar with the advanced branding techniques, nor the sales and marketing strategies that most multinational corporations have. Not even 40 percent of the companies have their own patents and the exports of branded goods do not reach 10 percent.   The Ministry of Commerce said that optimization of export structure is crucial to foreign trade sustainability. China needs to work on the development of services sector, striving for the cultivation of such service sectors as modern logistics, design consultancy, e-commerce, outsourcing as well as information services.

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