BEIJING, June 23 (Xinhuanet) -- China's software industry reporteda combined export volume of 2.8 billion US dollars in 2004, nearly eleven times the 1999 year level of 250 million US dollars, the Shanghai Securities News reported here Thursday.

Citing commerce minister Bo Xilai who attended a global forum in Dalian of northeast China's Liaoning Province, the newspaper said that the total sales volume of China-made software has grown from 44 billion yuan (5.32 billion US dollars) in 1999 to 220 billion yuan (26.6 billion US dollars) last year, witnessing an annual average growth rate of 38 percent, much higher than that of the gross domestic product.

'The size of China's software market has exceeded 600 billion yuan (about 72.55 billion US dollars) over the past five years and will continue to grow over 30 percent annually by 2010,' Bo predicted.

Lou Qinjian, vice minister of information industry, warned thatthe domestic software industry, already on a fast track, still faces the risk of derailment as problems restraining its healthy growth remain.

Firstly, he said, China's software industry is still in an embryonic stage. Although the country's electronics manufacturing industry raked in a combined revenue of 2.65 trillion yuan (320.44billion US dollars) last year, only 8.3 percent was generated by the software industry. Meanwhile, the sales volume of the domestic software industry took up only a tiny fraction of three percent of the world's total.

Secondly, China's software industry, strained by the shortage of core technologies, has few advantages in the face of fierce global competition and thus is stuck in the production of middle and downstream products with thin profitability.

Thirdly, the problem of pirated software in China still damages the confidence of the global market, negatively affecting the growth of domestic software industry. To remedy the situation, efforts on the protection of intellectual property rights must be doubled, Lou said.

Another major factor, as Lou acknowledged, is the shortfall of talent with software development expertise.

'Without innovative talent able to tap high-end software products, the growth of the domestic software industry can hardly be sustained,' he said.

Last but not the least bottleneck faced by the sector was the 'improper business environment', Lou said. 'To help the software industry beef up its innovation capability, a special mechanism encouraging research and development for public use and a much easier financing environment have to be established,' he said.

Bo Xilai also called on domestic companies to learn from global peers, import their advanced technology and management expertise and strengthen their international cooperation.