The Ministry of Commerce proposes to increase the export tax rebate rate for various commodities, including textiles and clothing.

Facing the overwhelming global financial tsunami, the Chinese government decided to swim a prudent and flexible “freestyle”. Increasing the export tax rebate rate to stimulate exports is an effort to “hit the water in the middle”.
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We learned from the Ministry of Commerce and several chambers of commerce that a proposed adjustment plan for export tax refund rates covering multiple categories of export commodities and tax items has been sent by the Ministry of Commerce to the Ministry of Finance. However, this news has not yet received a positive response from the two ministries and commissions.
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A relevant official revealed that the plan was prepared and submitted about two months ago. However, the specific launch time is not yet known. An official from the foreign economic and trade system also confirmed that he had received advice from relevant departments of the Ministry of Commerce and reported products that were “unreasonably lowered” when the export tax rebate rate was lowered in 2007 – “the restoration of unreasonable lowering” may be this time. The guiding ideology of the Ministry of Commerce’s program.
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The plan mainly includes increasing the export tax rebate rates for textiles, clothing, some light industrial products, and some mechanical and electrical products. It is expected that after the adjustment, the export tax rebate rate for textiles and clothing will reach 15%, and the export tax rebate rate for light industrial products and mechanical and electrical products will basically return to the level before the adjustment in 2007. The export tax rebate rates for products with high energy consumption, high pollution, and resources (hereinafter referred to as “two high energy sources and one capital”) will not be adjusted.
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On October 17, Premier Wen Jiabao presided over an executive meeting of the State Council and pointed out that targeted foreign trade policies will be introduced to maintain steady growth in imports and exports. Among them, we will increase the export tax rebate rate for labor-intensive products such as clothing and textiles and high value-added electromechanical products, support advantageous enterprises and product exports, increase the import of domestically needed products, and promote a basic balance of international payments. Judging from this statement, the Ministry of Commerce’s plan has generally been adopted.
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At the 104th China Import and Export Fair (hereinafter referred to as the “Canton Fair”) held at the same time, the purchase volume from Europe and the United States dropped significantly. This most effective weathervane for China’s import and export has shown a danger signal. Among them, mechanical and electrical products, which account for half of China’s exports, are also showing signs of weakness. Liu Meikun, executive vice president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said in an interview that judging from the transaction results of this Canton Fair and the feedback from enterprises, the situation in 2009 is not optimistic. “The turnover of this session’s mechanical and electrical products only increased by 1.2% compared with the previous autumn fair, which is a rare slow growth in many years.”
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However, the effect of increasing the export tax rebate rate is still controversial among the industry and scholars. In fact, in the middle of the year, many departments, including the Ministry of Commerce and the National Development and Reform Commission, solicited policy suggestions from various industry associations and chambers of commerce. However, the export tax rebate policy does not occupy a key position in most of the recommendations, and content such as stabilizing the exchange rate and relaxing foreign exchange controls receive more attention.
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As China’s most important labor-intensive products and bulk export products, textiles, clothing, and light work still occupy the most important position in this increase in export tax rebate rates.
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Textiles and clothing will be raised by another 2% after the 2% increase at the end of July. “At the beginning of the year, we proposed to the relevant national departments to increase the textile and clothing export tax rebate rate by 4 points.” Chen Shujin, vice president of the China Textile and Apparel Industry Association, said.
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Previous increases in tax rebate rates have had little effect. According to China Customs statistics, my country’s textile and apparel exports in September 2008 were US$18 billion, a decrease of 3.18% from the previous month. Compared with the same period in 2007, the increase was only 1.75%, which is still in a sluggish state. Among them, the export of clothing and clothing accessories in a single month was US$12.055 billion, a year-on-year decrease of 3.25%.
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Under such circumstances, continuing to increase the textile and clothing export tax rebate rate has been put on the government’s agenda. There are two more opinions#p##e#: One is to continue to implement the general adjustment-that is, except for some “two highs and one capital” chemical fiber products, all other products are included in the adjustment; the other is to selectively increase the adjustment for clothing and home textiles Export tax rebate rates for products with high added value and impact on the entire industrial chain.
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Relevant officials revealed that in the Ministry of Commerce’s plan, textiles and clothing may still be mainly popular.
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According to industry website estimates, only the export tax rebate rate for clothing and home textiles will be increased by 2% before the end of the year. It is also expected that textile and clothing export companies will receive a tax rebate of 10.6 billion yuan in 2009, adding 8 billion yuan to the net profit of the entire industry.
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Among labor-intensive products, the export tax rebate rate for light industry, mainly luggage, shoes and hats, is�It is also expected to return to 2007 levels, which will be raised from the current 9% to 13%.
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There is a precedent in China for raising the tax rebate rate when exports are in a downturn, focusing on maintaining the stability of exports of labor-intensive products. Before 1998, China’s textile and apparel export tax rebate rate was once reduced to 6%, but since then, in order to get rid of the negative impact of the Asian financial crisis, it has gradually risen to 13%.
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“Two High Schools and One” products are not included in
 
                   However, frequent adjustments to export tax rebate rates have left manufacturing companies, importers and exporters at a loss as to what to do, and policy expectations have always been difficult to stabilize. The debate on the pros and cons of the export tax rebate rate for China’s export structure adjustment has never been concluded.
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An expert from the Development Research Center of the State Council said that the export tax rebate rate is not a subsidy for export products, but an international practice that takes into account that the products are subject to value-added tax in the importing country, so the country’s value-added tax is refunded when exported to avoid double taxation. , therefore it should not be used as a policy means to adjust the scale of exports. The government should strengthen the stability and consistency of foreign trade policies.
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In June 2007, the Ministry of Finance and the State Administration of Taxation jointly issued Caishui (2007) No. 90, which stipulated that the export tax rebate rates for 533 items of “two highs and one capital” products such as steel and chemicals were cancelled, and the export tax rebate rates for 2,268 items such as clothing, shoes and hats were reduced. Export tax rebate rate for friction products. The adjustment involves a total of 37% of the products in the customs tariff lines, and the scope and magnitude of the adjustment are unprecedented.
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At that time, the Ministry of Finance made it clear that the main purpose of the adjustment to the export tax rebate rate was to curb the excessive growth of exports and ease the pressure on the macroeconomy caused by excessive surpluses.
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“ However, with the rapid deterioration of the U.S. financial crisis and the impact of various factors, China’s exports have gradually shown weakness. In less than half a year, the main goal of foreign trade policy has changed from “suppressing the surplus” to “stabilizing exports.”
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The government’s “rescue” this time is due to the significant decline in the role of foreign trade in driving China’s economy, and the decline in exports of some labor-intensive industries, which may lead to an increase in the registered unemployment rate, which will not contribute to social stability.
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On October 20, National Bureau of Statistics spokesperson Li Xiaochao publicly stated that according to preliminary estimates, the import and export of goods and services contributed 12.5% ​​to economic growth in the first three quarters, a decrease of 8.9 percentage points from the same period in 2007, driving economic growth by 1.2%. percentage points, a year-on-year decrease of 1.2 percentage points. Since the beginning of the year, the Ministry of Commerce has focused its research on labor-intensive industries and agriculture-related industries.
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​​​ Judging from this Ministry of Commerce plan, labor-intensive industries are indeed the focus. The “two high-energy and one-invested” products whose export tax rebate rates were lowered in 2007 are not included.
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This may indicate that while stabilizing exports, the government has not changed its determination to adjust the foreign trade structure.