A Chinese commerce official on Monday called for creating indigenous brands to reduce China's alarming trade deficit in intellectual property.

At the Intellectual Property Rights (IPR) Summit in Beijing, Ministry of Commerce official Wu Guohua noted China spends a large amount of funds on foreign intellectual property every year, adding that it is an imperative China create indigenous brands.

Wu said despite China's surplus in commodity trade, the nation suffers a huge deficit in services trade, with royalties and license fees being the second largest cause of the services trade deficit in 2009.

In 2009, China's services trade deficit stood at 29.6 billion U.S. dollars -- 1.6 times the 2008 level -- of which 10.6 billion U.S. dollars was royalties and licensing fees payments to foreign companies.

The China Consumer Protection Foundation's Liu Feng said many Chinese manufacturers are engaged in low-end processing with thin profit margins.

"For instance, the majority of vuvuzelas at the South Africa World Cup were made by Chinese producers. But they only made 0.015 US dollar from each one.

"Innovation cannot thrive unless there is a protective environment," said Zhang Yuncai, secretary general of the China Intellectual Property Society.

Zhang called for a greater government role in IPR protection.

"In other countries, it is companies that promote IPR protection. But in China, due to low IPR literacy, a number of companies still have only a vague understanding of IPR protection. Therefore the government still have to play a major role."

The IPR summit was a part of the ongoing fourth China Brand Festival being run by the Brand China Industry Union (BCIU).