October 24, 2008

In its latest move to help stimulate the country’s export sector, China this week announced a one percent tax rebate increase—the second rise this year.

Producers of textiles and clothing will benefit from a 14 percent tax rebate effective November 1, the Ministry of Finance said in a statement. The government will raise export tax rebates for 3,486 products including textiles, clothing, furniture, and toys. In July, the tax rebate was raised from 11 to 13 percent to help exporters cope with lower demand.

Rebates lead to lower costs for producers, but they do not directly affect demand from overseas. “The move may help some companies, but how much it benefits exporters remains questionable as the trend of shrinking foreign demand is unlikely to reverse,” remarked one analyst.

During the first 9 months of this year, China’s exports grew 22.3 percent year-on-year, almost 5 percent less than a year ago.