"We have been considering allowing more foreign businesses to join the restructuring of the city's State-owned trade firms by setting up joint ventures," said Wang Xiaohua, an official with the Shanghai Municipal Foreign Economic Relations and Trade Commission.

Wang, director of the business administration department at the commission, said the city has applied for this appeal to the Ministry of Foreign Trade and Economic Co-operation, the country's top foreign trade authority.

But the appeal is still pending final approval and there is no telling when it would take effect, Wang said.

"We hope the ministry will see Shanghai as a pilot city in the reform of State-owned firms by giving it more freedom for policy-making," said Wang.

Shanghai took the initiative in the mainland to set up three join venture trade firms in its Pudong New District in July 1997 with the approval of the State Council.

The new trade firms were the "first step" in trade firms opening on the mainland, experts have said.

Since then, no joint venture trade firms have been approved by the central government in Shanghai.

Other Chinese cities, excluding Shenzhen, a port city in South China's Guangdong Province, have not set up such joint venture trade companies.

Wholly-owned foreign export and import companies are currently forbidden in the mainland, according to the commission.

Exports by State-owned foreign trade firms, which account for around one-third of the city's total, witnessed an increase of 8.18 percent in the first half of this year, although most of them saw a drop in business in June.

In contrast, local foreign-invested and private businesses, with the rights to trading, witnessed a high export growth of 24 percent and 64 percent respectively in the first half of this year.

Reforming State-owned foreign trade enterprises has become an "urgent and essential" task, said Vice-Mayor Jiang Yiren.

The reform of State-owned foreign trade companies will focus on diversifying their ownership and spinning off their non-performing assets, according to the commission.

(China Daily September 24, 2002)