Global Economic Slowdown, China Will Relax Export Industry Containment

China's top officials on Saturday (April 26th) said at the sixth annual meeting of China's import and export enterprises that China needs to relax its containment efforts on exports of some low-end products in the wake of the global economic slowdown and the rising trend of trade protectionism.

Reuters reported that, as one of the ways to curb exports and reduce the expanding trade surplus, China has already lowered thousands of value-added tax rebates.

At present, China's huge trade surplus has been constantly criticized by the international community, and has led to an oversupply of domestic funds.

Zhang Xiaoqiang, deputy director of the national development and Reform Commission, said at the annual meeting that there was no need to further reduce export tax rebates for labor-intensive manufacturing industries. He believed that "stability" should be the key word in processing trade.

Labor costs rise and many toy and shoe businesses fail.

In order to curb the growth of processing trade, China implemented a lot of management policies and introduced various taxes to the processing industry last year, which reduced the profits of the industry.

In recent months, with the rise of labor costs, many shoe making, toy and plastic products companies in southern China have been forced to close.

Zhang Xiaoqiang said at the meeting that China should not be afraid to encourage exporters because of weaker demand from the US, EU and Japan.

"The problem you may worry about last year may be trade friction," he said. "But if you are worried about how to reduce corporate bankruptcy today, the primary task is to help them survive."

Trade frictions

Li Ling, director of the Fair Trade Bureau of the Ministry of Commerce and trade, pointed out at the meeting that global trade slowdown may lead to more trade complaints.

This year, global economic growth is slowing down. In some countries, trade protectionism is likely to rise. Chinese exports are expected to remain strong, which may trigger other countries to launch countervailing, anti-dumping and protective measures against China.

Zhang Xiaoqiang said that the rise in the RMB exchange rate remained an important issue for the export industry.

"Some exporters do not even want to take orders in the third quarter, because they do not know how much the renminbi will go up," he said. However, he also said that with the competitiveness of Chinese products still strong, Beijing needs to maintain its feet of reducing pollution and energy intensive industries.

"China is a good factory in the world, but it can not be the world factory of energy intensive and polluting products."

Fu Ziying, Vice Minister of Commerce, agreed with Zhang Xiaoqiang's view that policy stability should be a major measure to prevent a sudden sharp decline in exports.

"Premier Wen Jiabao once said that 2008 is the most difficult year for China's economy, and this is particularly reflected in the field of international trade," he said.

Li Ling expects that the EU and the US will still have the most frictional frictions with China this year, and the main industries that may trade friction include steel, textile, machinery and shipbuilding.

She said that 20 countries and regions launched 81 countervailing measures against China last year, and as of the end of March, 8 countries have launched 17 anti-dumping and countervailing investigations against China this year.

In response to this, she said that in addition to emphasizing the functions and roles of the government, enterprises should also participate in and cooperate with the whole industry and work together to resolve them.

US textile quotas may be cancelled by the end of this year.

It was also reported that Scott Quesenberry, the special textile negotiator of the US trade representative office, told participants at the beginning of the April 2008 Prime Source Forum in Hongkong that since the no successor plan had been followed and that the rules of the World Trade Organization (WTO) could not be changed, the US restrictions on textiles in China will end as stipulated in the original agreement.

At present, there are about 21 categories of textile products exported to the United States, with quota restrictions. The implementation is based on the 242nd paragraph of the report of the working group on China's accession to the WTO (that is, special restrictions on Textiles), which was determined by the two sides in 2005 and will end in January 1, 2006 this year.

China's top officials on Saturday (April 26th) said at the sixth annual meeting of China's import and export enterprises that China needs to relax its containment efforts on exports of some low-end products in the wake of the global economic slowdown and the rising trend of trade protectionism.

Reuters reported that, as one of the ways to curb exports and reduce the expanding trade surplus, China has already lowered thousands of value-added tax rebates.

At present, China's huge trade surplus has been constantly criticized by the international community, and has led to an oversupply of domestic funds.

Zhang Xiaoqiang, deputy director of the national development and Reform Commission, said at the annual meeting that there was no need to further reduce export tax rebates for labor-intensive manufacturing industries. He believed that "stability" should be the key word in processing trade.

Labor costs rise and many toy and shoe businesses fail.

In order to curb the growth of processing trade, China implemented a lot of management policies and introduced various taxes to the processing industry last year, which reduced the profits of the industry.

In recent months, with the rise of labor costs, many shoe making, toy and plastic products companies in southern China have been forced to close.

Zhang Xiaoqiang said at the meeting that China should not be afraid to encourage exporters because of weaker demand from the US, EU and Japan.

"The problem you may worry about last year may be trade friction," he said. "But if you are worried about how to reduce corporate bankruptcy today, the primary task is to help them survive."

Trade frictions

Li Ling, director of the Fair Trade Bureau of the Ministry of Commerce and trade, pointed out at the meeting that global trade slowdown may lead to more trade complaints.

This year, global economic growth is slowing down. In some countries, trade protectionism is likely to rise. Chinese exports are expected to remain strong, which may trigger other countries to launch countervailing, anti-dumping and protective measures against China.

Zhang Xiaoqiang said that the rise in the RMB exchange rate remained an important issue for the export industry.

"Some exporters do not even want to take orders in the third quarter, because they do not know how much the renminbi will go up," he said. However, he also said that with the competitiveness of Chinese products still strong, Beijing needs to maintain its feet of reducing pollution and energy intensive industries.

"China is a good factory in the world, but it can not be the world factory of energy intensive and polluting products."

Fu Ziying, Vice Minister of Commerce, agreed with Zhang Xiaoqiang's view that policy stability should be a major measure to prevent a sudden sharp decline in exports.

"Premier Wen Jiabao once said that 2008 is the most difficult year for China's economy, and this is particularly reflected in the field of international trade," he said.

Li Ling expects that the EU and the US will still have the most frictional frictions with China this year, and the main industries that may trade friction include steel, textile, machinery and shipbuilding.

She said that 20 countries and regions launched 81 countervailing measures against China last year, and as of the end of March, 8 countries have launched 17 anti-dumping and countervailing investigations against China this year.

In response to this, she said that in addition to emphasizing the functions and roles of the government, enterprises should also participate in and cooperate with the whole industry and work together to resolve them.

US textile quotas may be cancelled by the end of this year.

It was also reported that Scott Quesenberry, the special textile negotiator of the US trade representative office, told participants at the beginning of the April 2008 Prime Source Forum in Hongkong that since the no successor plan had been followed and that the rules of the World Trade Organization (WTO) could not be changed, the US restrictions on textiles in China will end as stipulated in the original agreement.

At present, there are about 21 categories of textile products exported to the United States, with quota restrictions. The implementation is based on the 242nd paragraph of the report of the working group on China's accession to the WTO (that is, special restrictions on Textiles), which was determined by the two sides in 2005 and will end in January 1, 2006 this year.