China's economic system is highly decentralized now and the implementation of policy is largely under the control of provinces. Hence, in the fast-growing provinces, provincial and local officials have been deeply involved in the development process in general and export promotion in particular. The role of local authorities in facilitating foreign investment has been described earlier. In addition, there are a number of ways in which local authorities promote exports.
First, the center gives mandatory targets or export quotas for only a limited number of items or in limited volumes. But in some provinces, for example Jiangsu, the export-quota-system is far more elaborate. Moreover, taking advantage of their monopsony power, FTCs are able to buy goods from enterprises at prices well below the corresponding domestic prices. Though
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the economic desirability of "exports at any cost" has been questioned, the FTCs have certainly been able to operate profitably on account of the monopsony power.
Second, operating within the center's guidelines, provincial authorities have been expanding Direct Export Rights (DERs) to enterprises. Because the criteria for obtaining such rights are stringent, the DERs have not expanded as rapidly as would have been desirable, however. Enterprises
with DERs account for only 5% of China's exports.
Third, within the State's guidelines, provincial and city governments
decide the allocation of raw materials imported by using locally retained foreign exchange earnings among enterprises, collectives and TVEs and across different sectors. Provinces and cities also provide indirect export subsidies through the provision of critical inputs such as electric power to export oriented enterprises. Further incentives are provided in the form of higher bonuses for managers and employees on the basis of export performance. Within the guidelines laid down by the State, provinces can confer rights to trade directly upon enterprises and enterprise groups.
Finally, local authorities establish joint ventures between FTCs and enterprises to promote exports. During the Seventh Plan, Wuxi City alone established 160 of these ventures. In the Eighth Plan, the city intended to establish another 200 such ventures.