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Mixed views on export tax rebates

Mar '07
Several hundreds billion yuan of annual export tax rebates have become a heavy burden on the central finance. It has indirectly affected the competitiveness of Chinese enterprises in international market. It is necessary to carry out another reform in the export tax rebate system, which started its implementation since 2004.

“Another reform in China's export tax rebate system has been imperative,” Gao Peiyong, Deputy Director, Economic Research Institute of Finance and Trade under the Chinese Academy of Social Sciences, said recently.

During the '10th Five-Year Plan' period, China's export tax rebates amounted to 1.194447 trillion yuan. The tax revenue from private sector in the same period only marked 770.557 billion yuan. In 2006, China's total export tax rebates reached a record of 430 billion yuan, accounting for 2 percent of the total GDP.

Sources inform that due to trade frictions, a lot of orders shifted to Vietnam, Pakistan and other neighboring countries. If the rebate is reduced, the profit margin of the enterprises would decline further.

Meanwhile, experts from Foreign Trade and Economic Institute under the Ministry of Commerce believe, lower the competitiveness of domestic export products, greater the reliance on rebates. The lowered the export tax rebate rate will help China wash out some inferior production capacities, curb the growth of surplus industries, meanwhile it will also contribute to the optimization and upgrading of industrial structure.

Fibre2fashion, News Desk - China

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