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Textiles see declining profits due to adjusted tax rebate

By Du Liaoxi (chinadaily.com.cn)
Updated: 2007-06-22 12:39

China's textile industry will witness a nearly 10 percent drop in profits
due to an adjustment to the country's tax rebates policy, according to
the Oriental Morning Post.

The government will eliminate or cut tax rebates for more than 2,800
export items starting July 1, in the boldest move to rein in exports
since it joined the World Trade Organization in 2001. The affected items
account for 37 percent of all export products, the Ministry of Finance
announced.

In the adjustment, tax rebate for garments is slashed to 11 percent from
13 percent. According to 2006 statistics, industrial profits will decline
by 4.6 percent when tax rebates fall one percentage point, said Wang Yu,
vice-chairman of the China Chamber of Commerce for Import and Export of
Textiles.

The textile industry is a major contributor to China's big trade surplus.
The country's textile sector saw US$129.2 billion of trade surplus last
year, accounting for 71 percent of the total trade surplus. In the first
quarter of 2007, the textile industry's trade surplus reached US$27.28
billion, accounting for nearly 60 percent of the total surplus. As a
result, the textile sector will bear the brunt of the tax rebate
adjustment.

(For more biz stories, please visit Industry Updates)

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