The increase in the export tax rebate rate increased profits by about 100 million yuan, and the decline of the textile industry is still difficult to reverse.

On October 21, the Ministry of Finance announced that starting from November 1, 2008, the export tax rebate rate for some textiles and clothing would be increased to 14%, an increase of 1 percentage point from the previous 13%. Industry analysts believe that this adjustment can increase the profits of the textile industry by more than 5 billion yuan, but the benefits are still limited and it is difficult to help the textile industry get out of the “cold winter”.
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​​​The textile industry increased profits by about 5.7 billion yuan
 
This increase in the export tax rebate rate is the second increase this year. On August 1, 2008, the export tax rebate rate for some textiles and clothing was raised from 11% to 13%. The 1 percentage point increase this time was not only lower than the previous one, but also lower than industry expectations. Before the increase, there were widespread rumors in the industry that this would happen again. Increased by 2 percentage points.
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The industry said that judging from the timing of the introduction of this policy, the increase in the export tax rebate rate is a positive measure for the country to adopt a more flexible fiscal policy to ensure economic stability; judging from the scope of the adjustment, this adjustment covers almost all textile and clothing products, including those that were previously identified as Viscose fiber products are products of “two highs and one capital” (high energy consumption, high pollution, resource-based); the “general adjustment” shows the country’s judgment on the textile export situation and its attitude of supporting foreign trade.
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With the rapid spread of the subprime mortgage crisis around the world, the weakening of external demand has become increasingly serious, which has directly led to the decline of my country’s textile and clothing exports. The driving effect of exports on the growth of the textile industry is about 45%, and the entire industry has entered a “cold winter”. Data show that from January to September 2008, my country’s textile and apparel exports totaled US$136.94 billion, a year-on-year increase of 8.12% in 2007. From January to now, the export growth rate has shown a sluggish pattern of decline for eight consecutive months. Among them, the cumulative exports of textiles were US$49.86 billion, and the cumulative exports of clothing were US$87.08 billion, with growth rates of 21.34% and 1.76% respectively, which were 7.14 percentage points faster and 21.24 percentage points lower than the same period in 2007.
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Regarding this adjustment, the industry believes that it will give textile and garment enterprises a “boost” in the short term. Shi Hongmei, a researcher at Orient Securities, said that the impact on industry profits and exports is directly positive, especially providing another chance to breathe for a large number of export-oriented small and medium-sized enterprises on the verge of bankruptcy that are involved in this adjustment of products.
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Industry websites predict that the growth rate of textile and clothing exports in 2008 will be within 5%, and that textile and clothing exports will experience a negative growth of 5% in 2009. It is comprehensively estimated that the total textile and clothing exports in 2009 will be around US$167.5 billion. In 2009, the average exchange rate of RMB against the U.S. dollar was estimated to be 6.5. The export tax rebate rate for textile and apparel products was increased by 1 percentage point, providing a tax rebate of RMB 7.6 billion for textile and apparel export enterprises. Without taking into account other changing factors, if the enterprise implements a 25% income tax, the increase in the export tax rebate rate will increase the net profit of the textile industry by approximately 5.7 billion yuan.
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It is difficult to reverse the industry’s decline
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Although there will be a direct impact, the industry generally states that the impact of this fine-tuning on the entire industry is still limited. It is not ruled out that there will be further “benefits” in the future, but there is no glimmer of hope that can reverse the overall decline of the industry.
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On August 1, 2008, the policy of increasing the export tax rebate rate by 2 percentage points did not have a timely and obvious impact on exports. In August and September, textile and apparel exports grew by 1.68% and 1.80% respectively, continuing the growth rate at the beginning of 2008. It has been declining month by month since then.
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Industry insiders say that the bargaining power of my country’s textile export enterprises is relatively poor. After the policy is announced, foreign importers will lower their quotations based on the adjustment of the export tax refund rate, and part of the benefits of the increase in the export tax refund rate will be “shared” by foreign businessmen.
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&#p##e#nbsp; Shi Hongmei said that the current downturn in the textile and apparel industry is mainly caused by factors such as the continued appreciation of the RMB, rising costs and expenses, and the slowdown in domestic and foreign demand growth. In the past few years, the industry A large number of hidden dangers accumulated by extensive rapid growth (oversupply of production capacity, serious product homogeneity, profits concentrated in the low-end links of the industrial chain, etc.) are also an inducement.
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For my country’s textile and apparel industry, which relies heavily on foreign markets, the deterioration of exports will undoubtedly further expand as the U.S. economy continues to deteriorate and the European economy is weak due to the subprime mortgage crisis. It is difficult to extricate enterprises from low profits by slightly increasing the textile and apparel export tax rebate rate.
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Shi Hongmei analyzed that in the long run, the increase in the export tax rebate rate will not be conducive to the industry’s industrial transformation and upgrading. Only through naturalThe survival of the fittest can enhance the overall development environment and competitiveness of the industry. The launch of the domestic demand market in the future is very important to the development of the textile industry.