Can Rain And Dew Alleviate The Thirst Of Textile Enterprises?

Experts estimate that the export tax rebate rate increased by 2 percentage points, the textile industry will increase 13 billion 200 million yuan net profit.

A notice from the Ministry of Finance and the State Administration of Taxation shows that it is like a timely rain in the hot summer season, which has brought policy moistening to the Chinese textile enterprises with a long drought.

On the morning of July 31st, the Ministry of Finance and the State Administration of Taxation issued the notice on adjusting the export tax rebate rate for some textiles and garments, which raised the export tax rebate rate of some textiles and clothing from 11% to 13%.

Affected by this good news, some Chinese textile and apparel stocks such as Dayang creation and Lu Tai on the day of the Chinese capital market turned red, and Chinese clothing increased by 2.7%.

This is the first pullback since China launched the foreign trade policy of lowering the export tax rebate rate in 2006.

Experts estimate that the 2 percentage point increase in the export tax rebate rate will increase the net profit of the textile industry by about 13 billion 200 million yuan.

Reasonable and timely adjustment

On the same day, after hearing the news, the reporter immediately telephoned Dai Haibo, general manager of Zhejiang Shaoxing AI Wen textile limited company. He didn't wait for the reporter to finish his speech. He laughed and interrupted: "do you know?"

Dai Haibo told reporters: "the increase in export tax rebates is conducive to the capital turnover of enterprises, while the export tax rebate rate callback is one percentage point, equivalent to 1% of the total export volume of enterprises directly increased to the profits of enterprises."

For the export-oriented enterprise he runs, the positive effect of the callback rate of export rebates is direct and rapid.

His cheerful voice said, "this is indeed a good news, policy effect, immediate results".

In 2007, China's textile and apparel exports totaled $167 billion 900 million, of which general trade accounted for 70%. According to the estimated annual export growth of 10%, the total export volume of textiles and clothing in 2008 amounted to US $184 billion 700 million, of which the total export volume of general trade mode was around us $130 billion.

Some experts estimate that without considering other factors, the 25% tax on enterprises will increase the net profit of the textile industry by about 13 billion 229 million yuan because of the adjustment of the export tax rebates, which accounts for about 11.4% of the total profits of Enterprises above the textile scale in 2007.

On the evaluation of this policy, in July 31st, an official of the Ministry of Commerce who did not want to be named in the interview with our newspaper reporter described it as "significant", especially for the restoration of the international competitiveness of China's textile industry.

Zhang Yansheng, director of the Foreign Economic Research Institute of the national development and Reform Commission, responded to the same question of our reporter, commented: "the policy is adjusted in a timely and reasonable manner."

Prudent decisions must be avoided.

The export tax rebate adjustment is not the first time for the textile industry. As early as 1995 and 1996, the export tax rebate rate dropped from 11%, 13% and 17% to 3%, 6% and 9% respectively. At that time, the loss of the textile industry and the large-scale slide of exports also appeared. Finally, the impact of the textile industry was alleviated by raising the export tax rebate rate.

Since 2006, the central government has repeatedly reduced the export tax rebate rate of some industries in order to change the growth mode of enterprises, enhance competitiveness and reduce the large trade surplus.

Especially since this year, under the pressure of the US economic slowdown and the acceleration of RMB appreciation, many textile enterprises in the southeast coast of China have slowed down their exports and profits have dropped sharply.

In the month of May, China's export textile and apparel grew by 5.7 percentage points less than 1-5 months, and with larger cost expenditure, the profits of garment export enterprises shrank seriously.

In addition to the appreciation of the renminbi, the continuous increase in interest rates by the central bank has greatly increased the financing cost of textile enterprises.

The sharp rise in electricity, freight, labor and water charges has left the textile industry with a gross profit margin of only about 10% at a time of zero profit or even a loss.

According to the relevant experts, the profit rate of 2/3 of the textile industry is only 0.62% at present.

In the interview, some experts also put forward different views on the policy. It was considered that the export tax rebate policy could play a very limited role. "Only drizzle" and preferential interest loans could really quench thirst for textile enterprises.

Zhang Yansheng reminded that textile industry like this should be regulated step by step in order to regulate the market order. Drugs should not be too fierce, and should not be repeated and raised too much. That will not only affect the stability of the policy, but also affect the expected purpose of the policy -- promoting the pformation and upgrading of the industry.