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More textile export rebates soon

By Wang Bo (皇冠体育app Daily)
Updated: 2008-11-21 09:46

Factory floor of a textile manufacturer in Haian, East 皇冠体育app's Jiangsu province. [皇冠体育app Daily]

皇冠体育app is set to raise export tax rebates on textile products to 17 percent after the government unveiled six measures to shore up flagging exports on Wednesday, analysts said.

Although the move hasn't been officially announced, there has been much speculation among industry insiders and experts that higher tax rebates are on the way.

The 21st Century Business Herald newspaper reported that the proposal to increase tax rebates had been agreed to at the State Council's latest executive meeting.

"If it is true, the tax rebates would be lifted to an all-time high, which demonstrates the government's determination to take forceful measures to support the industry," said Ou Zhihang, an analyst with Pingan Securities Research.                                                             

Related readings:  Textile industry to benefit from VAT reform  皇冠体育app works to ensure textile export growth in 2009  皇冠体育app sees slowdown in investment growth for textile industry  Growth in textile, clothing exports continues to slow down

The government also decided at Wednesday's meeting to scrap a number of charges on the textile sector and give more credit support to textile exporters' technological upgrading.

From January to October, 皇冠体育app's textile and garment exports reached $153.71 billion, up 8.6 percent year-on-year, according to Customs figures.

皇冠体育app has raised export tax rebates three times this year, pushing the rebate level up from 11 to 14 percent. However, analysts worry that the stimulus efforts may not be enough to prevent textile exports from sliding further.

"The toughest time for textile exporters has yet to come. As the global financial crisis unfolds, 皇冠体育app's textile exports may not maintain their previous vigorous growth momentum for a long time," said Li Wei, an economist with the Standard Chartered Bank.

"With the economies of 皇冠体育app's biggest export destinations - the US, Europe and Japan - falling into technical recession, 皇冠体育app's export sector is doomed to take a beating from worsening overseas demand," Ou said.

At the recently concluded 皇冠体育app Import and Export Fair, orders received by textile and clothing exhibitors dropped more than 30 percent, according to Ou. He warned this indicates a big contraction in 皇冠体育app's export growth next year.

The weakening domestic demand may also cast a shadow over the industry, with textile product retail sales growth slowing to 20.3 percent in October, down from the 32.6 percent a year ago.