China has been paving the way for the rapid development of its processing trade in recent years.

An official with the Processing Trade Department under the General Administration of Customs (GAC) said the administration has established a network with 1,490 processing trade enterprises to ensure a closer relationship between them and the government.

The GAC provides various methods of supervision tailored for each enterprise, in a bid to bring more convenience during customs procedures, the official said.

He called the network a "strategic relationship" with both sides sharing liabilities.

"With an overall information management, the administration provides the customs requirements to enterprises, so that enterprises can follow the requirements during their manufacturing process, which makes the customs procedures smoother and faster," he added.

Enterprises have benefited largely from the closer relationship with the GAC.

For example, Motorola (Tianjin) Corporation achieved exports worth US$5 billion last year, compared with a value of US$2.7 billion in 2003, before the firm joined the network.

The growth of Shenzhen-based Foxconn Electronics Inc is even greater.

The firm's export value grew from US$800 million in 2000 to US$10 billion last year.

Enterprises in the network accounted for 41.5 percent of last year's total processing trade.

And such a percentage will grow to 50 percent this year, the official predicted.

The second measure the GAC has carried out is to combine bonded areas and ports, in order to develop the advantages of bonded areas.

Logistics services are offered at such areas to increase added-value at ports.

The customs official said: "With the rapid development of globalization, foreign trade has extended from general trade to the service trade and transit."

"The demand for storage, transportation and delivery at ports increases. Bonded areas, usually located closed to ports, can be of great importance to the development of processing trade."

Shanghai Waigaoqiao Bonded Area is a pilot area for this measure.

By the end of October, 50,000 square meters of warehouses had been constructed and containers covering 140,000 square metres had been built in the area.

World famous logistics and shipping firms, such as OOCL Logistics (China) Co Ltd and Mitsui OSK Lines, have set up offices at Waigaoqiao Bonded Area.

Logistics firms in the area can carry out the businesses of international transshipment, delivery, purchasing and transit trade.

Those firms can separate and assemble containers which are going to exported or trans-shipped, so that transportation efforts can be largely saved.

Bonded areas at Qingdao, Ningbo, Dalian, Zhangjiagang, Xiamen, Shenzhen and Tianjin are the next slated for this reform.

The GAC also has reinforced administrations on the entry threshold of processing trade enterprises.

Companies which generate high pollution, consume large amounts of energy and produce low add-valued products are prohibited from conducting processing trade business.

China's processing trade sector has enjoyed healthy development in recent years, witnessing volume increases and an improved utilization of foreign capital.

The processing trade volume hit US$550 billion in 2004, up about 36 percent year-on-year, according to the Ministry of Commerce.

In terms of volume, it remains the backbone of China's imports and exports, accounting for about 50 percent.

And the sector continues to be a major magnet for foreign investment. Foreign-invested companies achieved more than 80 percent of last year's total processing trade volume.

(China Daily February 22, 2005)