China Unveils Plans to Spur Key Industries

The State Council has unveiled support plans for the machinery and textile industries. The plans include increasing export rebates for textile producers and supporting technological upgrades for machinery makers.

    At a State Council meeting on Wednesday presided over by Premier Wen Jiabao, a series of plans to revitalize the machinery and textile industries were announced.

    Tax rebates for exporting textile and garment makers will increase to 15 percent from 14 percent. This is the third increase since last year. The textile industry is recognized as a pillar of the national economy and still enjoys advantages in international competition. But according to the meeting the industry needs urgent structural adjustments and technological upgrades. A special fund will be set up to provide for these needs.

    The meeting also decided that high-polluting and low-efficiency factories should be closed. Old factories are encouraged to relocate to inland provinces and to the western regions to help boost the local economies. Financial institutions are asked to support the growth and consolidation of local textile firms.

    The machinery part of the plans aims to reduce reliance on imported parts. Currently 70 percent of important machinery parts in China are imported from overseas. China seeks to change this situation by offering huge incentives for innovation and R&D. As the country expands infrastructure construction, machinery firms should take the opportunity to upgrade their technology and raise their competitiveness. The government will also promote the integration of research institutions so that research results can be put into action in a timely manner. The government will also use tax policies to encourage machinery exports and imports of key technologies and machinery parts.

    The move is part of the central government's overall campaign to support its slowing economy. Premier Wen Jiabao said earlier that China is looking to keep its 2009 growth rate at around 8 percent.