China hikes export rebates on certain textiles

China hikes export rebates on certain textiles At the beginning of August, China's Ministry of Finance increased export rebates on certain categories of textiles and garments in order to give beleaguered suppliers a chance to succeed in an increasingly profit-squeezed market.
   The strengthening yuan and rising operating costs for garment and textile factories meant many were facing the real threat of closing. One in six apparel factories in the PRD lost money in 2007, according to John Cheh, vice chairman and CEO of the Esquel Group of Companies, a global maker of cotton apparel. And exports are down to such an extent that the government felt compelled to offer its exporters relief.
   Export rebates will now be raised from 11 percent to 13 percent, the first increase since China began reducing export rebate levels in late 2006 to help curb growing trade imbalances with Western nations.
   The items subject to the 2 percent hike in export rebate are silk, wool yarn, chemical fiber and cotton products.
   “An official with the Ministry of Finance said the weakened international market demand drove the appreciation of the RMB and rising prices of raw materials and labor costs this year; while bringing down the profits of enterprises exporting textiles,” China’s state-run news agency Xinhua said in a report Wednesday. “Given the slow down in export growth, enterprises face enormous operational pressure. Data showed that in the first half of this year, exports of textile and apparel totaled $83.85 billion, an increase of 11.1 percent over the previous year; and a decline of 6.4 percentage points compared with the growth rate of the same period last year. Under such circumstances, it is necessary to adjust the fiscal policy to help tide enterprises over in the crisis and maintain the steady, rapid development of foreign trade and exports in the country.”