Tax and credit support pledged for exporters
To bolster China's troubled export industries, the government would take further measures as necessary, including more increases in export tax rebates and wider coverage of export credit insurance, Xinhua quoted Vice-Minister of Commerce Zhong Shan as saying.
Speaking in Shanghai at the weekend, Mr Zhong indicated more policies were on the way to help the country's weakening foreign trade.
'The policies that have been implemented so far are only a comma, not a full stop. We will alter the current foreign trade policies to lessen the burdens of companies and increase confidence, and improve policies according to the changing situation,' he said.
'The financial crisis has not bottomed out yet, which may reduce the country's international trade markedly. In addition, trade protectionism might escalate. Therefore, China's foreign trade this year will face a severe situation,' Xinhua quoted Mr Zhong as saying.
In January, exports fell 17.5 per cent, while imports plunged 43.1 per cent. For the whole of this year, Merrill Lynch forecast the country's exports would fall 5 per cent and imports would drop 11.7 per cent.
'There has to be more drastic action taken,' said Neeraj Sawhney, a director of Topnet International, a Hong Kong textile trading firm. 'Giving a few per cent in rebates doesn't help much if companies don't have business. Orders are not coming in. That is the big issue. If orders come in, rebates would help.'
Recently, the Chinese government has guaranteed up to 500,000 yuan (HK$568,000) of credit to businesses, but banks are still reluctant to lend, Mr Sawhney said.
'Companies are still not getting enough funds.'
Willy Lin Sun-mo, the chairman of the Hong Kong Shippers' Council, said: 'Many companies in China can't get trade financing, as the factoring rate is now very high.'
Mr Lin suggested China Export Import Bank, the country's leading import-export bank, extend more credit to small and medium-sized enterprises. Exim Bank's financing is mainly restricted to ships and capital goods.
Mr Zhong's announcement of more export credit insurance was in accordance with recent feedback given to him by Hong Kong industry, said Mr Lin, who is also vice-chairman of the Hong Kong Textile Council.
'We told him export insurance is very important for companies to decide whether to accept orders.' he said.