China Raises Garment, Textile Export Tax Rebate Rate to 15%

China will increase the tax rebate rate for textile and garment exports from 14 percent to 15 percent, an executive meeting of the State Council (Cabinet) announced Wednesday.

The move would reduce exporters' costs and support the textile industry, the Council said. The effective date of the new rate wasn't specified.

In a national plan to invigorate China's textile industry adopted by the State Council Wednesday, the government would allocate funds for companies that produce textiles or fibers, or operate in the textile printing and dyeing sector, to upgrade technology and develop domestic brands.

Government departments were told to provide financial support and insurance services to small and medium-sized textile plants.

The government would also announce steps intended to phase out obsolete capacity, eliminate energy-intensive, polluting equipment and technology, and encourage textile and garment makers to relocate from southeastern parts of China to central and western areas.

According to the plan, the government will take a proactive attitude to enlarge domestic consumption, innovate new production, expand rural markets and promote the use of textile products in relevant industries, while expanding export destinations to stabilize the share in the international market.

The textile sector is the country's traditional pillar industry and enjoys an advantage in international competition.

However, the textile industry suffered severe difficulties since last year.

Figures from the country's customs showed textile and garment export of China was 185.17 billion U.S. dollars in 2008, up 8.2 percent year-on- year, but the growth rate was 10.7 percentage points lower than in 2007.

Experts from the Commerce Ministry (MOC) attributed the downturn to appreciation the yuan, industry liquidity shortage and production material costs surge.

China has raised the export tax rebate rate for textiles three times since last August. The previous increase in November took the rate from 13 percent to 14 percent.

The work meeting also discussed measures to support the machinery manufacturing industry as the government highlighted the importance of innovation.

Enterprises are encouraged to raise competitiveness through strengthening technological innovation. Mergers and acquisition between backbone enterprises were also encouraged.

China hopes to research and develop strategic projects in machinery for high speed railways, natural gas transfer, mining, steel and iron production, the automobile and textile industries.

This plan was seen as the country's latest move toward bolstering its economy. In early November, China announced a 4 trillion yuan (586 billion U.S. dollars) stimulus package to boost domestic demand in both infrastructure investment and consumption.

China's economic growth slowed to 6.8 percent in the fourth quarter of 2008, dragging down the annual rate to a seven-year low of 9 percent, as the global financial crisis takes a toll on the national economy.

Xinhua News