The Chinese government is preparing to cut the export tax rebate
on textile products to help balance the country's trade surplus,
the China Securities Journal reported on Friday.
The National Development and Reform Commission (NDRC) was
working with the ministries of commerce and finance to set a figure
on the reduction, a source was quoted as saying.
The rebate rate on textile products, covering the cotton
textiles and chemical fibre sectors, might fall from 11 to nine
percent, said the source, while the rate on garments would be
reduced from 13 to nine percent and on chemical fibre products from
nine to five percent.
The China National Textile Industry Council has lobbied to
maintain the original rebate rate on textile products and reduce
that on garments to 11 percent, claiming it would prevent
fluctuations in exports.
A council official was quoted as saying that an immediate cut
would exert "unbearable" pressure on exporters and the country's
The government has adjusted the rebate rate on textile products
and garments four times since 2001.
Analysts say low-value-added textile products and garments are
major exports and often spark trade disputes. The textile industry
would be a likely target in the government's campaign to suppress
the trade surplus.
It is estimated the growth in garment exports would fall from 25
percent to as far as 10 percent if the rebate rate was cut by two
percent. This would take US$1.6 billion from the revenues of
exporters, given the 2007 growth rate of garment exports is likely
to be around 15 percent.
Last year, customs sources said, China exported US$143.99
billion worth of garments and textiles, a growth of 25.2 percent,
and imported US$18.09 billion worth, up 5.6 percent.
The United States filed a complaint with the World Trade
Organization in February, alleging China was using export subsidies
to help its companies, including those in the clothing sector, on
The US, the largest destination of China's textile and clothing
exports, could impose a 27.5-percent tariff on Chinese clothing if
negotiations on the issue failed to produce results.
Vice Commerce Minister Gao Hucheng said on Tuesday the
government would decide on whether to readjust export rebates in
accordance with market changes.
The country's trade surplus soared to US$46.44 billion in the
first quarter, but plunged to US$6.87 billion in March, less than a
third of the February figure.
(Xinhua News Agency April 13, 2007)