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China is gearing up to increase high-tech content in its exports as officials from eight administrations under the State Council met yesterday to discuss how best to increase competitiveness.

The presence of vice-premier Wu Yi and eight high-ranking officials from every authority underlined the importance attached to this initiative.

Wu said different government departments have made plenty of efforts since a strategy for increasing high-tech exports was outlined five years ago.

Low value-added exports have long been a headache for Chinese manufacturers who earn little returns from simple, low-tech production and are often troubled by anti-dumping charges.

The vice-premier said different departments governing foreign trade, science, finance and taxation should deepen co-operation ties.

China's exports of high-tech products reached US$110 billion last year, an average growth rate of 40 per cent in the past five years.

Officials from eight departments all promised to provide help to local enterprises involved in high-tech development by providing funds and more lenient policies.

Zhang Shaochun, assistant minister of finance, said his ministry will increase funds to support the undertaking to the extent allowed by rules of the World Trade Organization.

Deng Nan, vice-minister of science and technology, said local companies will be disadvantaged if they do not devote more efforts to research and development.

"Two thirds of high-tech patents and inventions were registered by foreign companies last year," Deng said.

Local companies say the government's push is necessary to lead their peers to place more importance on technological development.

"It is foolish to export numerous socks and then import one Boeing plane. We should develop something by ourselves,'' said Zhang Jiuying, vice-general manager from the Ningxia Orient Tantalum Industry Co Ltd.

Zhang's company, which owns patents on tantalum production, was one such company that saw increasing returns from high-tech development.

"It is difficult for a company based in western China to get export orders if we do not have anything special," he added.

Li Yushi, an expert on foreign trade, agrees it is time for China to upgrade its exports.

He explained that China has been a manufacturing centre of low-end exports for years and some less developed countries are increasingly becoming competitors in that sector.

"China may lose its advantages on low-end products manufacturing in the near future as its costs grow. It should move on to higher-end products," Li said.

"China's manufacturers will suffer more in exports if they can not master technologies," Li added.

For example, exporters of machinery electronics suffered a loss of 20 billion yuan (US$2.4 billion) in 2002 because of low technical standards, nearly one third of the year's profits in the field.

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