Foreign Trade Policy Alleviating The Pressure Of Processing Trade

A notice issued recently by the Ministry of Finance and the State Administration of Taxation has increased the confidence of many foreign trade enterprises under heavy financial turmoil.

Since December 1st this year, the export tax rebate rate of some labor-intensive products, mechanical and electrical products and other more influential products has been further raised.

The adjustment involved a total of 3770 commodities, accounting for 27.9% of the total export products. This is the largest and broadest in the three export tax rebate rate increase in the second half of this year.

The notice of the Ministry of Finance and the State Administration of Taxation on improving the export tax rebate rate of value-added commodities such as labour intensive products has clearly defined the specific scope of 3770 commodities that raise the tax rebate rate.

Among them, part of the rubber (11135, -315.00, -2.75%, bar) products such as tires, the main body or all of them will be raised from the current 5% to 9%, and the rebate rate of some moulds and glassware will increase from 5% to 11%. The tax rebate rate for some of the aquatic products such as shrimps and frozen crabs will be raised from 5% to 13%.

In addition, the tax rebate rate of labour intensive commodities such as bags, shoes, hats, umbrellas, furniture, bedding, lamps and clocks and watches will be increased from 11% to 13%. The tax rebate rates of products such as toothpaste and other non-ferrous metal processing products such as chemical products, stone materials, aluminum strips and belts will increase from 5% to 9% to 11% and 13% respectively.

In addition, the tax rebate rates of some electromechanical products such as agricultural pumps, motorcycles, bicycles and household appliances increased from 9% to 11%, 11% to 13%, and 13% to 14%.

Recently, the Ministry of Commerce and the General Administration of Customs jointly issued a notice to suspend the "real pfer" policy for processing trade restricted margin accounts.

At this point, including raising the export tax rebate rate, reducing export tariffs and special export tariffs, last year, a number of foreign trade policies were almost "callback".

In July 1, 2007, China lowered the export tax rebate rate for 2831 commodities. In August of that year, the bank margin account of Guangdong's Restricted Commodities was pferred to "real turn" management.

The so-called "real turn", that is, before the enterprise with processing trade manual to apply for imported raw materials, do not pay import duties and value-added tax.

However, it is necessary to deposit a deposit in the bank account designated by the customs with the amount of import duty and value added tax, and be returned by the Customs after the cancellation of the export.

Nowadays, most enterprises do not need to pay the deposit again, which is called "idling".

The total number of export products and imported textile products in the processing trade restriction catalogue amounts to 2125 ten digit commodity codes, accounting for 95% of the total number of goods restricted by processing trade.

These commodities exported 30 billion US dollars in processing trade in 2007 and US $4 billion.

It is estimated that the "real turn" will turn back to "idling", which will help enterprises reduce their youth funds by about 18 billion 500 million yuan.

Last year, the export tax rebate rate of 2831 commodities was reduced, and the implementation of the "real turn" management of margin accounts, especially for Guangdong, the country's largest foreign trade province and processing trade accounted for more than 40% of the total processing trade volume.

As a result, the export power of Guangdong's processing trade is obviously insufficient this year. In 1-10 months, the export volume of 220 billion 600 million US dollars increased by 11.1% compared with the same period last year, an increase of 1.9 percentage points lower than that of Guangdong's overall export growth in the same period, which is 3.6 percentage points lower than that of the national processing trade export growth in the same period.

Among them, Guangdong's processing trade exported 24 billion 120 million US dollars in October, an increase of only 3.6%, the lowest in every month since the beginning of this year.

In 1997, the Southeast Asian financial crisis hit China's exports. China raised the export rebate rate in 1998, from 3%, 6% and 9% to 5%, 13%, 15% and 17% four, which played a very important role in stabilizing foreign trade.

Some enterprises believe that the current export situation is more severe than before. It is still to be observed that a series of policies that are being promulgated will play a big role.

As the export policy tightened last year, some enterprises voluntarily abandoned part of the order. Now, though "loosening up", under the current global economic downturn, it is not easy to get the orders back.

It is learnt that with the launch of the value-added tax reform, the export tax rebate policy will also change. Although it seems that the policy callbacks are immediate, the role of export tax rebate as a policy tool will become weaker and weaker in the future.

"Even though there is room for policy now, the external environment is not good enough to force enterprises to make the initiative to adjust, and the goal of the government is also to hope that enterprises can upgrade and pform."

Experts from the Ministry of Commerce think that after last year's two policies, enterprises turned to the domestic market, turned to the service industry, and reduced some excess capacity, which reduced their current difficulties.

In July 2007, when the Ministry of Commerce and the General Administration of Customs jointly promulgated the catalogue of processing trade restrictive commodities, the products of more than 1500 tax numbers in the textile industry were included in the restricted category.

This means that when importing raw materials, these products require a considerable amount of margin to be deposited in the customs designated accounts, and the security will be recovered after the export verification.

The introduction of this policy has brought huge financial pressure to the export oriented enterprises in the industry, which has increased the operating costs of enterprises.

Under the influence of the financial crisis this year, many processing enterprises have called for improving the export ledger system, hoping to adjust the processing trade in a more moderate way.

According to industry statistics, the liquidity of processing trade ledger margin is up to 8 billion yuan per year in the textile industry.

To ensure that the cash pfer policy has tightened the capital chain of textile enterprises in export difficulties, some enterprises have closed down due to the broken capital chain.

This "real pfer" system can be loosened, which will bring loose funds to textile enterprises and release a large amount of liquidity for the textile industry.

According to statistics, from 1 to October this year, China's textile exports were 13 billion 700 million US dollars, an increase of 8.6% over the same period last year, an increase of 15 percentage points.

Textile trading volume has dropped by 15.5% at the just concluded Canton Fair.

The wholesale volume of the one week in October was 1.8 percentage points down from September, 1.2 percentage points lower than in August.

Of the 46 thousand enterprises, 2 / 3 of the enterprises had an average profit margin of only 0.1%, the total profit accounted for only 1.77% of the whole industry, the deficit reached 21.3%, the loss reached 15 billion 700 million yuan, and the loss increased 66% over the same period last year.

Experts believe that adjusting the export tax rebate rate at this time will help ease the tension of capital chain of foreign trade enterprises, and is expected to further reduce the pressure of labor-intensive export enterprises.