Not the earnings report, just more info -Ron
Monday August 10 1998
Beijing boosts rebates in bid to aid exports
MARK O'NEILL in Beijing
In a move aimed at increasing exports, Beijing has raised by two percentage points the rebate it pays on products that account for more than half the goods sold to other countries, according to industry sources.
After receiving approval from the State Council, the Finance Ministry and the National Tax Administration raised the level of rebate on 12 items to 11 per cent from 9 per cent, effective on July 1, the sources said.
Mainland manufacturers need to pay a value-added tax on their products, but they receive a rebate of some or all of this charge on exported goods.
In the first half of the year, Beijing raised the level of rebate on exports of coal, cement, ships, textiles, steel products and cotton from Xinjiang province.
In effect, raising the rebate is a form of export subsidy targeted at specific products and is a more precise way of increasing exports than a currency devaluation, which is a blunt weapon having effects across the entire economy and which Beijing has repeatedly ruled out.
In the move, which came on Friday, Beijing targeted seven kinds of electronics products and five types of light-industrial goods.
The electronics products are: telecommunications equipment, power generation and transmission equipment, data-processing equipment, high-quality electrical appliances, farm machinery, aircraft and aviation equipment, and car and motor cycle components.
The light-industrial goods are: bicycles, watches, photographic equipment, shoes and china products.
The sources said the government hoped the rebate increase would improve the international competitiveness of these products as well as encourage companies to export more.
In the first half, the mainland's trade surplus widened to US$22.6 billion from $17.81 billion a year earlier.
But export growth slowed sharply, by 7.6 per cent to $87 billion. Sales to Japan, South Korea and Southeast Asia slumped sharply.
Beijing is worried that exports could slow further this year.
The sources said Beijing also wanted the rebate to eliminate the excess supply of many of these goods in the domestic market, where demand was slowing.
They noted that the move would result in a heavy revenue loss for the Ministry of Finance. But they said it had decided that increased export earnings and reduced pressure for a currency devaluation was worth the price. |
