The China Daily business weekly quoted officials at the State Economic and Trade Commission (SETC) as saying that it was drafting plans to shift units of several products in the light industry and machinery sectors to foreign locations.

Officials said the planned measures would be integrated with China's efforts to upgrade its industrial structure.

China's industrial sector has been plagued by redundant capacity that has caused widespread price undercutting on the domestic markets, which has resulted in specifying price level and punitive measure for under-selling, the report said.

Statistics revealed that about 500 products in China were manufactured at below 60 per cent capacity and a large chunk of these good contained technology levels and quality hitherto unseen in manydeveloping countries.

Compared with those of developed countries, the Chinese products also have considerable price advantages, the report said.

Overseas investment expert Xing Houyuan said Chinese products had immense potential in global markets and Beijing can aid transfer of its technologically superior industries to Middle East, Gulf, Latin America, Africa and Central Asia.

Various firms like the Qingdao Haier Group, the leading Chinese household electrical appliance maker, have already set up four assembly plants in Southeast Asia.

The Shanghai Radio and Television Co Ltd. has established a wholly-owned assembly plant in South Africa five years ago and the black and white TV sets manufactured by it have seized 40 per cent of the local market there.

The paper said the company was now investing in colour television production in Sudan and Saudi Arabia.

China's motor cycle producers, currently suffering from a glut in the domestic market, are also exploring overseas markets forsurvival.

Chinese companies have invested $6 billion abroad by setting up 6,000 business ventures in 140 countries and regions, the report said.

However, most of these firms were small-scale and badly managed, it said while calling for wise investment decisions.

If encouraged and managed wisely, it is hoped that the new trend of overseas investment would produce better results than previous efforts, the official newspaper added.