Several measures on cards to promote exports

29 Dec '08

2 min read

The Ministry of Commerce and Foreign Exchange Bureau have introduced measures to support exports, but will not promote exports through RMB devaluation, instead, they will adopt other means, like export tax rebate and pre-payment of export goods. The Commerce Ministry has come out with five measures with regards to exports and imports.

The ministry will speed up the transformation and development of foreign trade by increasing support, by means of financial and taxation policies; put more efforts for exploring new markets; optimize the structure of export commodities and try to develop exports from service industry.

The Ministry will steadily promote transformation and up gradation of processing trade; improve financial environment for exports in coordination with financial sector; increase credit support to enterprises; improve security conditions of corporate finance and the export credit guarantee mechanism.

The Foreign Exchange Bureau will support enterprises in import and export trade by relaxing external debt management systems. It has recently made adjustment on the relevant provisions of external debt register management by allowing pre-payment ratio of export goods to be adjusted from original 10 percent to 25 percent and delayed payment ratio of import goods be adjusted along the same lines.

The Foreign Exchange Bureau will focus mainly on measures like export tax rebate which is expected to be further increased next year. Comprehensive tax rebate rate on textiles, clothing, light industry and some electronic products has increased 1.6 percentage points and the tax rebate on labour-intensive products, high-tech and high value-added products is expected to increase further next year.

The second focus could be the devaluation of the Renminbi. In the situation of shrinking external demand, the effect will be very limited to stimulating exports by way of depreciation of exchange rate which is not justified. Recent depreciation of currencies in some countries has not yet reversed the declining trend in exports, so the bureau may not promote exports by relying on Yuan devaluation.

The third focus and one of the most important is economic restructuring. The country has in the last thirty years focused on an export oriented development, but the crisis has proved to be a wake-up call to China's export-oriented economy. Global markets are facing shrinking demand. Under this backdrop, the up-lifting of China's economy lies in expanding domestic demand and building a consumer-oriented society.

Fibre2fashion News Desk - China

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