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Increase in tax rebate to have short term positive impact
02
Sep '08
The implementation of the adjustment in export tax rebate policy since August 1, 2008 will have short-term positive impact on Shandong, a province in China with the highest number of exports of textiles and garments from the country.

It is predicted that shipments of textile and garment from the province will increase approximately by 570 million Yuan due to export tax rebate adjustment in the next five months, but its long-term impact will be limited.

From a short term perspective, increase of tax rebate rate only slightly offsets RMB appreciation and the other pressure of rising costs; its long-term impact will be limited.

Overall current global economic growth has slowed down considerably due to which external demand obviously is showing a weakening trend. So increase of tax rebate rate will not change the declining trend in shipments of clothing.

Foreign buyers are expected to bargain for lower prices due to the tax rebate, so all in all the benefits that are supposed to accrue to the exporters will get nullified by these factors.

So it is hard to see the actual benefits of the rebate percolating down in to the bottom lines of these exporting companies.

Fibre2fashion News Desk - China

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