More Export Tax Cuts Announced for Next Month
Jun. 23 – China will implement more tax cuts next month to help the struggling export market.
The substantial cuts will cover around 100 categories of goods that include fertilizers and agricultural products. One example of a deep tax cut is the discount on phosphate fertilizer now set at 10 percent from the previous 75 percent.
The country is the second largest exporter in the world and custom bureau figures show that exports dropped by a huge 26.4 percent to US$88.8 billion in May. Beijing has been quick to give more tax cuts, and rebates but the measures are only a salve to the real root of the problem – depressed export demand caused by global economic crisis.
A tax cut at least will be better for exporters as opposed to tax rebates because the effect on cash flow is immediately felt.
“China’s trade will suffer a retreat this year and experience slow growth in the coming years,” Vice Commerce Minister Zhong Shan said in an article published in the Economic Daily. “We should go all out to stabilize trade. The focal point should be to avoid losing share in the global market. It is of great importance to keep companies alive and make jobs available, which lays the foundation for the expansion of domestic demand.”
As of the first quarter of the year, China has announced rebates worth about RMB102.9 billion, an increase of 18.4 percent compared to last year’s figures.
China’s export industry is a vital part to its economy, contributing 40 percent of GDP and comprising of 8.86 percent of the world’s total export value.