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Export Tax Rebates Or Textile Industry Will Be Raised

2008/6/20 14:53:00 17

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Export tax rebates or textile industry will be raised

China's textile industry is facing "the most difficult year in nearly ten years".

Since 2004, in order to reverse the huge trade surplus and alleviate the pressure of increasing fiscal deficit in China, the state has lowered the export rebate rate of the textile and garment industry for the two time, so as to promote the restructuring of the textile industry.

However, after two years of market practice, this policy still has little effect, but it suffers from the "cold winter" situation in the textile industry.

In June 11th, there was a news in a media. The new Ministry of information and industrialization has issued a letter of opinion to solve the current difficulties facing the textile industry and is actively seeking advice from all sides.

The "opinions" include the textile export rebate rate from 11% to 13%, the export rebate rate from 11% to 15%, the cotton import slip tax reduced to 570 to 357 (equivalent to 5% to 3%), which has been implemented since June 5th, to exempt some textile machinery and automatic winding machines from customs duties, take measures to moderately slow down the appreciation rate of the RMB exchange rate, and appropriately solve the problems of liquidity in the textile and garment industry.

Insiders said that if the suggestion in the opinion was finally approved by the relevant ministries and commissions, then the difficult situation of the textile industry could be alleviated, and the "warm winter" in the textile industry would see a warm sunshine.

The wave of collapse is coming and going.

Early this year, "cold winter" in China's textile industry, from south to north, many small and medium-sized private enterprises like Domino have collapsed.

Thousands of textile enterprises went bankrupt in Changshu and Suzhou, Jiangsu, and some of them were suffering from stop production or half stop production. In the Pearl River Delta region, thousands of small and medium-sized shoe enterprises went bankrupt, and dozens of businesses collapsed on average.

Not long ago, a reporter from Phoenix TV interviewed Zhejiang textile enterprises in Xiaoshan, and found that 2/3 textile enterprises in the region were in the process of shutting down production.

A female boss who is still producing clothing material said: "we are barely keeping with the small profits, and the orders for export are afraid to pick up.

More businesses simply stop production.

The bustling business of China's textile industry has been so rapid and brutal when it passed away, and many small businesses failed to struggle long enough to quit the industry quietly.

Experts say that the textile industry has suffered "the most difficult year in the past ten years" because the industry hollowing up has not been changed, and it has been hit hard by the harsh market environment at home and abroad. The reduction of the export tax rebate rate has made the textile enterprises' meager profit margins further compressed, almost becoming the last straw to crush camels.

It is in this situation that the export tax rebate rate reduction policy not only failed to achieve the expected revenue, but faced the pressure of appealed to the callback.

Before the export tax rebate rate was cut in 2006, the export tax rebate rate of the textile industry was 13%, when the general profit of the textile industry remained at around 5%.

After the tax rebate rate was adjusted to 11%, the average profit of the textile industry also shrank to 3%.

According to the China Textile Industry Association's follow up survey, in 2007, there was a loss in every six domestic textile enterprises.

Du Yuzhou, President of the China Textile Industry Association, believes that the profit margin of the textile industry after 2/3 is only 0.74%, "this industry is ruthlessly eliminating the weak."

Textile industry has no countermeasures

The subprime mortgage crisis in the United States began to surge in 2007, triggering violent upheavals in most of the world.

Not only the US economic growth rate has slowed down, but also the global economic growth expectations for 2008 have been lowered, and the consumption market of international textiles has been severely weakened.

In theory, if the US economic growth decreases by 1 percentage points, the corresponding imports will be reduced by 1.65 percentage points. Therefore, the decline in US consumption will directly lead to a decline in demand for imports. Correspondingly, the increase in barriers to trade protection in the US will weaken the international competitiveness of China's textile exporters, and at the same time, the EU and Japan's demand for commodity imports will also be reduced by the US economy.

In particular, the last point has greatly affected the export of China's textile industry.

In the first quarter of this year, the number of Chinese textiles and clothing imported by the United States dropped by 1.68% and 7.74% compared with the same period last year, according to the OTEXA.

The first textile editor, Wang Qian, speculated that the proportion of textile and garment exports this year will continue to decline.

Looking back at the Sino US textile trade frictions in 2005, a large number of China's export oriented textile and garment enterprises have fallen into a desperate situation.

Since then, China's export tax rebate rate adjustment policy has continued to tighten, and the hegemony of the global economy has suffered an economic recession. After two years, the US economy once again has an indirect impact on the survival and pformation of Chinese textile enterprises.