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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (7471)	2/9/2004 3:09:18 PM
From: russwinter	Read Replies (6) \| Respond to of 110194

Molding products and Chinese imports: immnet.com China While China contemplates an adjustment to the value of its currency, other changes may bring some relief for North American molders battered by Chinese imports. A minor change in Chinese tax law may slow the growth in Chinese sales to the United States. The tax law changes that take effect Jan. 1, 2004 cut the rebates on tax payments that businesses could claim for products sold outside of China. This should lead to an increase in prices of Chinese goods in the U.S. For instance, on microwaves, small appliances, and air conditioners, the tax rebate will drop from 17% to 13%. It will not be evident if Chinese manufacturers will truly raise prices until February or more likely March 2004. However, not boosting prices could essentially erase very thin profit margins for many Chinese plastics manufacturers. Some in Washington claim that this change in tax law is a back-door evaluation of the yen, but if the change will truly be observed remains to be seen. The change could be dramatic. According to a published report, major microwave oven supplier Galanz Electronics (Guangdong, PRC)—which sold about 2 million microwave ovens to the U.S. in 2003—will have to increase prices on exports by at least 4%. Just how much U.S. molders will benefit from this remains to be seen. In the meantime, regardless of the comments made by China’s leadership, we see no immediate adjustment.