Beijing vows helping hand for exporters hit by strong yuan
Vice-Minister of Commerce Gao Hucheng confirmed yesterday that Beijing is considering moves to help struggling exporters, but stopped short of promising a widely expected rise in tax rebates.
Mr Gao said the ministry was aware of the pain felt by low-end exporters, which have been particularly hard hit by tighter credit and the appreciation of the yuan, and would study how to target policy support.
But he also said that fears over slowing export growth, which fell by 5.7 percentage points in the first half of the year, were overplayed. 'We have quite optimistic and positive forecasts for exports in the second half of this year,' he told reporters.
Export growth slowed to 17.6 per cent in the year to June, roughly 7 per cent in real terms and well below the sizzling pace of recent years.
This prompted calls for a looser monetary policy to give exporters access to cheaper credit and even demands for a halt in yuan appreciation, which has made Chinese exports more expensive.
However, a more widely expected policy is restoration of value-added tax rebates on targeted sectors such as textile and garment exporters.
'VAT rebate increases are almost certain now,' said Standard Chartered economist Stephen Green.
VAT rebates may be raised as much as 4 percentage points to 15 per cent, according to industry insiders.
While not specifically raising the issue of tax rebates, Mr Gao said the ministry would consider providing targeted policy support to industries that have been suffering under tighter credit conditions and a stronger domestic currency.
But he said the official policy of discouraging exports of highly polluting and energy-intensive products remained in place, while balancing the trade surplus was still an official policy.
Separately, the Ministry of Commerce said yesterday that China reserved its right to appeal against last week's World Trade Organisation ruling that its vehicle-parts import tariff system violated global trade regulations.
'China does not fully agree with the content and the conclusion provided by the expert's report group,' the ministry said in a statement.
The WTO ruled on June 19 that requirements forcing vehicle manufacturers to buy most components from local suppliers or face higher tariffs broke international trade regulations. It is the first case the mainland has lost since it joined the global trade body seven years ago.
Under WTO rules, Beijing can change its policy or appeal against the decision. But China may face retaliatory tariffs on its exports if the WTO upholds the ruling on appeal.
The ministry defended the tariffs, which it said were aimed at fighting tax evasion. 'The auto-part tariff measures were put in place to prevent attempts to evade tariffs on complete vehicles,' it said.
