Textile Industry Downturn, Ministry Of Finance Research Cotton Slip Tax

along with

The slump of cotton has been raised and the cotton slip tax has been put on the agenda again.

The Ministry of finance is planning to amend the cotton slip tax and is preparing to investigate the textile industry in the second half of this year.

As for the location of research and how to adjust cotton sliding tax, the Ministry of finance has consulted with the Federation of China textile industry, but insiders from the Textile Industry Association told reporters that "the Ministry of finance wants to lower the sliding tax, while the Federation of textile industry has clearly pointed out that it is necessary to cancel the sliding tax.

The differences between the two departments are relatively large. "

Save the textile industry

Informed sources said that after the two sessions this year, the Shandong provincial government formally submitted to the relevant departments of the State Council the application to cancel cotton sliding tax, and Shandong is one of the key cotton planting areas in the country.

Meanwhile, at the beginning of April, Wang Tiankai, chairman of the Federation of textile industries, received representatives from the Ministry of Finance in his office.

"The Ministry of Finance plans to investigate cotton slipping tax reduction in the second half of the year, and seeks the research opinion of the Federation of textile industry," Wang Tiankai told reporters.

However, the reporter realized that the final discussion had not been achieved because there was no fundamental agreement in reducing or abolishing sliding duties.

It is understood that sliding tax policy is currently a financial system implemented by the Ministry of finance to stabilize China's cotton industry.

When the price of foreign cotton is lower, the higher tax rate will be imposed on it when imported, so as to achieve the purpose of consistency of domestic and foreign cotton prices in the Chinese market.

Statistics show that China began to levy a sliding tax on cotton import quotas outside the tariff quota since May 2005. The sliding rate ranges from 5% to 40%. The purpose of the levy is to reduce the impact of imported cotton on the domestic cotton market and ensure the benefit of cotton farmers when large quantities of cotton are imported.

This is equivalent to setting a minimum price for imported cotton and supporting the domestic cotton market price.

"Now China's

The price is much higher than the international cotton price, which is also one of the reasons why China's textile products are so expensive.

Wang Tiankai said.

According to the data released by China cotton information network, China's cotton price index in April 19th was 19349 yuan / ton, and the price of cotton in the United States has been hovering at 90 cents per pound and below (about 12489 yuan per ton).

If the latest sliding tax formula is used, according to the calculation of the US dollar exchange rate of US $1 to RMB 6.3004 yuan in April 19th, when the price of the outer cotton is below 51 cents / pound (about 7077.2 yuan / ton), China will pay a sliding duty rate of 40% on the imported cotton, while the import duty of 90 cents per pound is 6.3%.

This undoubtedly causes great cost pressure to the textile industry.

"Affected by the global economic downturn, orders for Chinese cotton textile enterprises are generally insufficient this year.

Some European and American orders have been pferred to other overseas countries with low labor costs, and the export status of textile enterprises is not optimistic.

Wang Tiankai told reporters that "in this case, further levying taxes will undoubtedly weaken the competitiveness of Chinese enterprises."

According to the data of the national customs administration, in February 2012, China exported about 9 billion 712 million US dollars in textile and clothing, a decrease of 7.01% compared with the same period last year, and a decrease of 54.87% in the ring ratio.

Recently, the textile material spot market, a major customer manager of the Wuxi textile material exchange, told reporters: "now we are stationed in more than 200 raw material sellers, but the buyers are very few.

The industry is in a bad state, and the demand for raw materials is particularly strong. "

According to the official website data of the trading center, domestic cotton prices have remained between 19000-19800 yuan per ton in the past 3 months.

New York futures March delivery price of 91.63 cents / pound (discount tax quasi tax 15341 yuan / ton), lower than the current domestic cotton price 3832 yuan / ton.

The average price of cotton in India is equivalent to RMB 12000 yuan / ton.

There is a price difference of 4000~7000 yuan per ton between domestic and foreign cotton prices.

The pain of cost

"In fact, as early as 2011, the Association put forward an application for exemption from sliding tax to the State Council," Wang Tiankai told reporters. "The document was approved by the State Council's top officials and pferred to the Ministry of industry for approval of the slip tax document, requiring the Ministry of industry to seriously refer to this requirement", but the application has not been finally implemented.

"The ministry does not support the abolition of the sliding tax."

Wang Tiankai said he had worked with the Ministry of industry and communications on this matter for many times.

"The Ministry of industry is worried about the interests of cotton farmers and the cotton industry."

Informed sources told reporters.

The historical fate of China's industrial soybean has become a warning for other industries.

It is understood that soybeans are the only grain varieties not restricted by quotas and low tariffs entering China.

In the past 10 years, China has changed from the net export of soybeans to a net importer. Due to the low price of foreign soybeans, the domestic soybean industry has gradually collapsed, and the dependence on imported soybeans has increased year by year. At present, the dependence rate of imports has reached 80%. The ministries concerned are very headache about this matter, and then take protective measures for other domestic agricultural products.

It is understood that as at the end of 11th Five-Year, China's dependence on imported cotton was 40%.

At present, China's cotton output is about 6 million tons and its import volume is 3 million 300 thousand tons.

The US Department of agriculture predicts that China's cotton consumption will account for half of world output in the future.

However, the protection of upstream raw materials has led to the high cost of industrial production enterprises.

A department official said: "the cotton textile market in 2012 will be more complicated.

High-end products are not sensitive to prices, while low-end products are profitable through sales, so terminal products are more vulnerable to the market.

The major economic indicators and commodity figures released by the China Federation of Commerce show that clothing prices rose significantly in 2011, but the volume growth rate declined.

The data showed that in 2011, the retail price of Chinese clothing goods increased by 2.4%, and the growth rate of retail sales declined by 5.9 percentage points over the same period.

A deputy director of the consumer goods industry department of the Ministry of industry and Commerce said: "the reasons for the profits of textile and garment enterprises are closely related to the low domestic cotton prices last year.

If the cost of raw materials is low and the raw materials of textile products are centralized for procurement, then profits will be realized when the prices of raw materials are high, otherwise they will lose money.

The above said, therefore, the fate of domestic cotton spinning enterprises depends on cotton prices.

Prior to September 2010, the Ministry of Finance had publicly stated that it is not appropriate to cancel the cotton import slip tax at this stage.

This disappointed the cotton textile industry, which had been looking forward to the abolition of the sliding tax.

However, it is undoubtedly a positive sign that the Ministry of finance has come to China Textile Industry Federation to discuss the issue of tax reduction and exemption.

Market participants believe that this is closely related to the report submitted by the Shandong provincial government once again to the State Council to cancel the slip tax. "This application report received the attention of the State Council and asked the Ministry of finance to implement it, hoping to succeed this time."

Wang Tiankai said.