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Industrial associations should play a key role to cope with trade disputes with overseas competitors, a high-level trade official said yesterday.

Zhang Xiangchen, director of the WTO affairs department of the Ministry of Commerce, told China Daily that the government will offer only guidance.

Zhang praised shoe exporters in Wenzhou, a city in east China's Zhejiang Province renowned for its cheap shoes, saying they had been united under their industrial association.

But the country is lacking national industry associations, which can make a loud noise in international trade disputes, he said.

"Chinese exporters are hitting the US and European markets with cheaper goods," he said. "As a result, producers in those countries are suffering losses, which has hurt many traditional industries."

Zhang said Chinese exporters should keep this picture in mind.

When worldwide textile quotas ended at the beginning of last year, Chinese textiles flooded into US and European markets in such amounts that it sparked protests from producers in those areas.

Soon afterwards, special protection measures against Chinese textiles were brought in.

Zhang said fierce trade disputes like this would not happen again now a textile deal has been reached, but he said minor disputes could happen.

"As long as the Chinese economy maintains its fast growth, trade disputes are inevitable," he said.

But he told China Daily that many of the dumping charges faced by Chinese exporters would not seriously hamper the competitiveness of Chinese goods.

"Chinese-made furniture and shoes are better than in any other country," he said. "It's unimaginable that people abroad can live without them.

"The restrictive measures will be nothing but temporary."

Speaking of the producers who export their goods to Europe and the US via a third country, like Viet Nam and Indonesia, Zhang said this is by no means a good solution.

"If the final market countries find out you are doing this, they can still restrict you," Zhang said.

He encouraged companies to avoid dumping charges by investing in a third country.

"Overseas investment is a good way out," he said, "It's good for the target market because it helps local employment."

To diversify export destinations and avoid risk, the Chinese Government has been encouraging exporters to go to other markets for more than a decade, but with patchy results.

"The US and European markets are large and mature, and their legal environments are sound," he said. "It's much more difficult to explore new markets, but we have to keep doing this."

(China Daily March 28, 2006)