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The government plans to use stronger regulation to prevent enterprises from exporting at "unreasonably low prices," in a bid to ensure the growth of export.

China's Ministry of Commerce released yesterday a draft provisional regulation on investigation and penalties of unreasonably low-priced export.

The ministry said the move aimed to "safeguard the normal order of foreign trade, protect the rights of enterprises and avoid the bad practices of unreasonably low-priced export."

The move comes as China has become an increasing target of dumping investigations.

The regulation stipulates that any person, enterprise and association in China could file complaints with the Ministry of Commerce against others for low-priced exports.

Products will be regarded as "unreasonably low-priced export" if they are sold at prices 2 percent lower than their average costs during the investigation. The costs refer to the total payout for production, management and sales.

An enterprise charged with exporting such goods could be fined up to 30,000 yuan (US$3,750), or prohibited from exporting anything for up to 12 months.

The previous regulation, which took effect in 1996, gives less detail on the definition of low-priced exports and weaker punitive measures.

Experts said the new regulation fills the void that the country's Anti-Unfair Competition Law and the upcoming Anti-monopoly Law have failed to address.

The new regulation is expected to help reduce anti-dumping cases against China, said Zhou Shijian, a trade expert with China Association of International Trade.

China has been the most frequent subject of anti-dumping investigations for the 11th year in a row.

In 2005, 40 new anti-dumping measures and 55 new investigations into allegations of dumping were directed at China, according to the statistics of the World Trade Organization.

By the end of last year, dumping charges targeting China totaled 663.

Many Chinese companies used to compete with a low-price policy, which was likely to bring about dumping claims, due to the lack of efficient governmental oversight.

Zhou said if the new regulation is well enforced, it would help to ease the low-price competition, which he described as "a cancer" of foreign trade.

"It takes time and the government must make up its mind (to implement the enforcement of the regulation)," he said. "An important step is to make the chamber of commerce and industrial associations play a bigger role among exporters."

Zhou said an industrial association should not only supervise the industry to avoid the bad practices of low-price competition but also to help implement the new regulation.

The expert also noted that the fundamental way to guide exporters to change their method of export growth is by improving the quality and added-value of their products.

However, experts also pointed out that some problems remained behind the new regulation.

For example, although the regulation is modeled after the World Trade Organization's method of anti-dumping investigations, there is a gap in the ways of calculating the "normal value" of an export, said a scholar with Chinese Academy of Social Sciences who declined to give his name.

Since a number of countries do not regard China as a full market economy, they use costs of a third country when calculating a "normal value."

(China Daily May 12, 2006)