"Those foreign circulation businesses without approval from the government have violated relevant Chinese laws and created unfair competition, so we hope those qualified firms will apply as soon as possible," said Xu Ming, deputy director-general of the Department of Foreign Economic Coordination under the State Economic and Trade Commission (SETC).

The move, which aims to create a fair competitive environment for commercial businesses after China's accession to the World Trade Organization (WTO), is mainly targeted at some 300 businesses approved by local governments.

The statistics from SETC show that 356 foreign-invested commercial companies have been operating in China since 1992, but only 40 were approved by the state.

According to Xu, foreign businesses which operate in China without the state's authorization can still be approved as long as they meet qualifications.

The SETC ordered the businesses to register by the end of this year. However it did not reveal what punishment would be dealt out if the businesses do not register.

The measure is widely believed to be a move by China to prepare for the intense competition that is likely to begin after it enters the WTO.

"We will relax restrictions on the regions, quantity and conditions on foreign investment in commerce sectors and prompt Chinese businesses to cooperate with their international partners," Xu said.

According to statistics from SETC, only 1 per cent of China's foreign investment was directed to commerce and the number of foreign-invested commercial projects accounted for about 0.1 percent of the country's total at the end of June 2001.

Since large cities have already attracted the majority of this kind of investment, SETC will encourage foreign businesses to invest in China's medium-sized cities and western regions.

Xu said SETC and other related government departments have been busy formulating preferential policies to persuade foreign commercial giants to shift their focuses.

It was revealed at the fair that the telecommunications sector, once strictly controlled by the state and another important sector of service, is also warming up for the WTO entry.

The cooperation between Chinese and foreign telecommunications operators will have more opportunities and the forms and scales of cooperation will see breakthroughs in the 10th Five-Year Plan period (2001-05), said Zhang Chunlin, deputy director-general of the Department of Overall Planning under the Ministry of Information Industry.

(chinadaily.com.cn 09/11/2001)