Why China adjusted export tax rebate rates for some commodities?
Source: Xinhua Date: 2008-08-11
From August 1, China will increase tax rebate rates on some textile and clothing exports by 11%-13%. This is the first pullback since China largely cut down the enterprise export tax rebate rate in September 2006.
Enhance competitiveness of textile exports
An official with the Ministry of Finance said the weakened international market demand drove the appreciation of the RMB and rising prices of raw materials and labor costs this year; while bringing down the profits of enterprises exporting textiles. Given the slow down in export growth, enterprises face enormous operational pressure. Data showed that in the first half of this year, exports of textile and apparel totaled $83.851 billion, an increase of 11.11% percent over the previous year; and a decline of 6.4 percentage points compared with the growth rate of the same period last year. Under such circumstances, it is necessary to adjust the fiscal policy to help tide enterprises over in the crisis and maintain the steady, rapid development of foreign trade and exports in the country.
The Official maintained that raising the export tax rebate rate can directly reduce export costs and increase business profits, which will help to reduce pressure on export textile industries, alleviate the fund shortage resulting from the tight monetary policy, and play a positive role in improving the competitiveness of textile and clothing exports.
In addition, textile and garment enterprises belong to labor-intensive industries, which play an important role in absorbing labor. Raising the export tax rebate rate can enhance their ability to withstand market risks, support SMEs to overcome operational difficulties, and further develop healthy urban and rural labor employment.
Case by case treatment
According to the official, the central government's goal for economic work in the second half of year is to maintain steady and rapid economic growth and promote fast and sound economic and social development; while curbing the rapid price increase and striving to gain a reasonable range of price control. In order to achieve this goal, we must adhere to the focus, pace and momentum of macro-control; approach issues on a case by case basis; and provide flexible and accurate solutions.
In addition to raising tax rebates for some textile and clothing exports, China cancelled exports tax rebates for some products with high-energy consumption, high pollution and resource demand. Products affected include red pine nuts, some pesticide products, some organic arsenic products, some paint products, some battery products and carbon anode. The cancellation of export tax rebates for these products is conducive to reducing emissions, reducing wasted resources, and promoting economic restructuring.
