Mainland lines up more tax rebates to aid small exporters
Beijing is expected to further raise value-added tax rebates on labour-intensive exports as part of escalated efforts to help exporters stay afloat amid the global financial turmoil.
Wang Liming, the director-general of the small and medium-sized enterprise department of the Ministry of Industry and Information Technology, revealed a central government plan to raise the VAT rebate on labour-intensive exports by 1 percentage point as a key part of new measures to relieve the burden of smaller companies, according to media reports.
Other new measures would focus on relaxing bank lending to smaller firms and raising government subsidies on loan interest payments, Mr Wang said.
The new VAT rebate would reduce the costs for producers hit by slumping overseas orders and the cash crunch as many had gone under in the Pearl River Delta and the Yangtze River Delta, he said.
It would follow a round of VAT rebates restored on November 1 involving about 3,400 types of products ranging from textiles, garments and toys to plastic goods and furniture.
VAT rebates on many of the products at stake were reinstated to 14 per cent last week, compared with a VAT of 17 per cent on average.
Hong Kong Chamber of Small and Medium Business president Dennis Ng Wang-pun welcomed the impending rise in VAT rebates. 'It's certainly good news,' Mr Ng said yesterday. 'Exporters will have more breathing space. Our biggest problem now is a lack of orders and cash resources.'
Premier Wen Jiabao said last month that about 60,000 small and medium-sized companies had been snared by factors including the global financial crisis, credit crunch, higher raw material and fuel costs, a new labour regulation and yuan appreciation.
The mainland's export-led economy is vulnerable to the global turmoil, which has affected the country's three core markets - the United States, the European Union and Japan.
Economists estimate that growth in the country's exports and imports tapered off sharply last month as manufacturers raced to 'destock' before the consumer downturn.
Morgan Stanley chief economist Wang Qing estimates last month's exports grew 17 per cent, down from 21.5 per cent in September, while imports increased 15 per cent, lagging the 21.3 per cent expansion a month earlier.