Reducing China'S Foreign Trade Surplus And Clothing Export Reduction

In order to gradually reduce China's foreign trade surplus, the Ministry of development and reform, Ministry of Commerce and the Ministry of finance are discussing a plan to reduce the export rebate rate from 11% to 9%, reduce the export rebate rate from 13% to 9%, and the export tax rebate rate of chemical fiber filament products from 9% to 5%.

According to the China Securities Daily, "the export tax rebate rate for textiles and clothing is down to 9%, and the government intends to step up efforts to reduce the export tax rebate rate."

People familiar with the matter said that in order to avoid having too much impact on the export situation, the China Textile Industry Association has proposed that the export rebate rate of textiles will remain unchanged, while the export rebate rate of clothing exports will be reduced from 13% to 11%.

He said: "if the export tax rebate rate is reduced to 9%, it has exceeded the expectations and affordability of many enterprises, and the short time will have a great impact on the textile industry".

Since 2001, the state has adjusted the export rebates of textiles and garments for the 4 time.

Insiders said that low value-added textile and clothing is an important part of China's export commodities, and easily lead to international trade disputes.

If the government is determined to control the high trade surplus, the textile and garment industry will be doomed.

He predicts that if the clothing tax rebate rate is reduced by 2%, the export growth of clothing will drop from 25% last year to 15% or even 10%.

According to Li Jun, an industry analyst, the total value of clothing exports in 2006 was 67 billion 822 million US dollars. According to the export tax rebate rate of 2%, the profits of the garment industry will be reduced by nearly 1 billion 360 million dollars, equivalent to 10 billion 472 million yuan.

In 2006 1-12, the sales revenue of clothing and footwear industry in China was 580 billion 200 million yuan, with a total profit of 25 billion 930 million yuan.

If the export tax rebate is reduced by 2 percentage points, the profits of the garment industry will shrink to 15 billion 458 million yuan, which will have a huge impact on the industry.

Considering that garment exports increased by about 15% in 2007, the garment industry will reduce revenues by nearly US $1 billion 600 million, which is affected by the reduction of the export tax rebate rate.