Mike,
interesting article in SCMP which covers a number of issues at the same time, including a form of devaluation that had already happened.
Ramsey
Saturday March 13 1999
Beijing urges US to
reverse ban on US$450m
satellite
MARK O'NEILL in Beijing
The mainland's foreign trade minister has asked the
United States to reverse its ban on the export of a
US$450 million communications satellite and said the
only victims of such measures were US firms.
Shi Guangsheng was speaking at a news conference
during the annual session of the National People's
Congress, at which he reviewed export prospects for the
year.
He was asked for his reaction to President Bill Clinton's
decision this month to ban the export of the satellite,
manufactured by Hughes Corp, because of suspicions it
might have military uses.
"I was shocked and deeply dissatisfied when I heard
the news," he said. "It is wrong for the US to use
security as an excuse to stop normal trade. This satellite
was to be used for mobile telecommunications for China
and Asia. The US should prudently reconsider this
wrong decision."
Such restrictions by the US of hi-tech exports appeared
to hurt the mainland but in fact hurt US companies,
because the mainland could purchase them from other
countries, he said.
Mr Shi was asked about the mainland's export prospects
for this year. In the first two months, foreign trade was
US$41.02 billion, down 4.2 per cent on the same period
last year, with exports at $22.39 billion, down 10 per
cent, and imports at $18.63 billion, up 5 per cent.
"The outlook is very serious. With the Asian financial
crisis continuing, growth in the world economy slowing
down, protectionism getting worse and trade disputes
increasing," he said.
To boost exports, Beijing would raise by an average of
2.5 percentage points the tax rebate it pays to
exporters of several major categories of goods, Mr Shi
said.
The money is given to companies who export goods as a
rebate for the 17 per cent they have already paid in
value-added tax. Unwilling to devalue its currency, the
mainland uses the higher rebates as a form of export
subsidy.
Mr Shi's ministry increased the rebate on a wide range
of goods last year to try to offset a slowdown in
exports. The measures he announced yesterday would
extend the increase further.
The mainland would increase the supply of credit for
exporters, encourage those with the right conditions to
set up factories in foreign markets, upgrade the variety
and quality of goods and diversify into different
markets, he said.
The rapid increase of the mainland's exports over the
past 10 years has led to a surge in anti-dumping suits
against it. Mr Shi said the mainland faced 327
anti-dumping investigations, including 72 in the
European Union.
"The Chinese Government does not allow Chinese firms
to dump their goods overseas," he said. "Our firms do
not have the ability to do this. Our prices are low
because we have cheap labour and raw materials." |
