China to increase export rebates to stimulate growth

China to increase export rebates to stimulate growth The Chinese government said Wednesday it will raise export rebates for 3,700 products in a bid to lift the gloom over the country’s export sector, Xinhua reported.
   With demand for Chinese-made goods falling — evidenced by relatively moribund cargo volumes across the transpacific and falling throughput at some of China’s major container terminals — the emphasis is on reinvigorating exports. It’s the second such move in recent weeks, with Beijing raising export tax rebates on another 3,486 items beginning Nov. 1 — products that included everything from textiles to high-tech components.
   It marks a pronounced change from China’s export policy earlier in the year, when the government decreased export rebates as it attempted to curb low-value exports to even out trade imbalances with Western nations. But as U.S. exports have grown in 2008, Chinese exports started tailing off as the credit crunch fully gripped Western economies.
   Just this week, Chiwan, one of the terminals in the Port of Shenzhen, reported that October volume was down nearly 20 percent compared to the same month in 2007. Analysts are predicting that Chiwan’s volume for the year could decrease from 2007 levels — an unthinkable prospect a year or two ago, but one led primarily by closures of hundreds of factories in South China.
   The export rebates have probably come too late for many of those shuttered factories, and are anyway designed to help new production areas cope with uncertain short-term demand. By eliminating export rebates and strengthening labor laws at the beginning of 2008, Beijing wanted to discourage the country’s reliance on exports from factories in the provinces near Hong Kong and Shenzhen by encouraging production to move to less developed regions. That long-term stance won’t shift just because volume is down in the second half of this year. ' Eric Johnson