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The World Trade Organization (WTO) entry will bring both opportunities and challenges for China's township firms. Considering the fact that the rural enterprises have flexible operational mechanisms and that many of them are engaged in labor-intensive sectors, bureau sources believe that rural firms can run well.

Challenges for township firms

The World Trade Organization (WTO) entry will bring both opportunities and challenges for China's township firms to equally compete with the country's other types of businesses.

"Township enterprises will be able to expand the scale of using foreign funds through their advantages in resources , operational mechanisms and labor force", said Liu Zengsheng, director of Township Enterprise Management Bureau of the Ministry of Agriculture.

While in the past, township enterprises were always short of funds, partly because it was difficult for them to obtain bank loans, as compared with state-owned enterprises.

However, Liu added that the country's accession to WTO will also bring unprecedented challenges to the rural firms, such as the result of fierce competition and a more rigid market environment.

Advantages of township firms

Considering the fact that the rural enterprises have flexible operational mechanisms and that many of them are engaged in labor-intensive sectors, bureau sources believe that rural firms still can run well.

Most of China's rural enterprises have grown in the market economy system and have withstood its tests, said vice-minister of agriculture Qi Jingfa, adding that the rules of the WTO are based on the market economy, therefore the rules with regards to rural businesses match those of the WTO.

China's village and township businesses have become a driving force of the country's market economy. More than 20.8 million such enterprises employed 128 million rural residents last year, generating a combined export value of 940 billion yuan, according to recent statistics.