'Flexible' overhaul seen for low-value exports
Commerce ministry expands list of restrictions
Beijing will further its overhaul of industries producing low-value exports this year but will be 'flexible' in introducing measures, according to the minister of commerce.
Chen Deming said 'several thousand' types of exports produced by imported raw materials, known as processing trade, were among an expanded category of restrictions planned to cut resources-consuming and pollution-causing industries.
However, Mr Chen said the ministry would retain some labour-intensive, but environment friendly manufacturing, as part of the policy of protecting employment.
The planned measures follow a spate of austerity policies the Ministry of Commerce has unleashed in the past year, including lowering or cancelling tax rebates on about 3,300 types of products covering plastics, metals, textiles and furniture.
The measures, compounded by stubbornly high fuel prices and rising labour costs, have been blamed for scores of factory closures across the hinterlands of the Pearl and Yangtze river deltas. Many of the casualties were Hong Kong investors.
'The new processing trade policies have affected many Hong Kong, Taiwan and Southeast Asian investors on the mainland,' Mr Chen said on the sidelines of the National People's Congress. 'But our direction is right, and resources-consuming and highly polluting industries can no longer exist in the country.'
Premier Wen Jiabao vowed last week to hasten the transformation of the export-driven mainland into an environment friendly and service-based economy.
Pointing to the fickle economic climate as the United States subprime crisis spreads, he also said the nation would be flexible in launching macroeconomic measures.
Echoing that, Mr Chen said his department would be 'flexible in rolling out the measures given uncertain factors affecting trade'.
Last month, the State Environmental Protection Administration, which has now been upgraded to the Ministry of Environmental Protection, proposed cutting tax rebates and banning processing trade involving 141 products ranging from agricultural chemicals to paint coatings and batteries.
The Federation of Hong Kong Industries and the Hong Kong Small and Medium Business Association said the country's shifting industrial policies would intensify consolidation in the Pearl River Delta.
Guangdong provincial governor Huang Huahua said Hong Kong factory owners would have to upgrade their products, tap the mainland consumer market and climb the technology ladder if they wanted to stay in the province. Otherwise, they would have to move to remote parts of the country, where labour and energy costs were cheaper.