Chinese govt likely to cut export rebate on textiles

18 May '11

2 min read

In recent days, rumours are circulating in the textile circles that, the government has taken a decision of cutting export tax rebate on textiles from 16 percent to 11 percent. The implementation is expected to formally start in June-July.

Secretary-General of the China Chemical Fiber Association, Mr Cheng says that it does not rule out the possibility of reducing export tax rebate from 16 percent to 11 percent. However, it is bound to affect related SMEs to a large extent, he added by saying.

Judging from past experience, the export rebate on textiles may be cut in all likelihood in July. Experts are of the opinion that, the government is unlikely to cut down five percentage points in one stroke, as the gross margins from textile exports of many SMEs is merely 1 to 2 percent.

It is expected that, many SMEs will lose money and even close down, once export rebate is reduced to 11 percent.

In contrast, those companies, who have channels, brands and sell clothing in domestic market, will be less affected.

The export tax rebate on textiles was reduced from 13 percent to 11 percent in July 2007. Then following the economic downturn, the rebate was increased from 11 percent to 16 percent within six months from August 2008.

Fibre2fashion News Desk - China

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