China to boost export tax incentives as it battles crisis
Beijing (AFP) Nov 12, 2008
China said Wednesday it would boost tax incentives for more than a quarter of export products, in the government's latest move to help shield its economy from the global financial crisis.
The State Council, or Cabinet, agreed to hike tax rebates on 3,770 export items, or 27.9 percent of all products shipped by China, with effect from December 1, the central government said in a statement on its website.
China's government has been watching with anxiety as the nation's export growth has slowed, with many factories in its industrialised south closing and its economy expanding at the slowest rate in five years.
On Sunday, it announced a four-trillion-yuan (586-billion-dollar) stimulus package to be spent on infrastructure and other projects. The plan is aimed at spurring domestic consumption to counter slowing exports.
However, Wednesday's move showed China was also willing to take steps to ensure the viability of its export industry.
The State Council had gathered for a meeting, chaired by Premier Wen Jiabao, one day after China published trade figures for October that showed export growth had slowed to 19.2 percent, compared with 21.5 percent in September.
Weaker exports are cited as among the main factors why China's economic growth hit a five-year low of 9.0 percent in the third quarter.
"(The move) further raises export tax rebates for some labour-intensive products, machinery and electrical products, and other products that have felt the biggest impact," the Cabinet statement said.
The rebates mean that Chinese enterprises can get back a certain amount of the money they have paid in value-added tax for items that have gone into the production of export goods.
The measure followed a previous round of tax rebate hikes that took effect on November 1 and affected 3,486 items.
China has said that taking measures to boost its own economy is the biggest contribution it can make in the global battle to contain the financial crisis.
However, President Hu Jintao is likely to come under pressure to do more internationally, in light of China's huge forex reserves, when he joins other world leaders at an emergency summit on the crisis set for this weekend in Washington.
At over 1.9 trillion dollars, the reserves are the largest in the world by far -- nearly eight times bigger than the 250 billion dollar bail-out fund managed by the International Monetary Fund.
The State Council meeting on Wednesday also approved several domestic projects with a combined investment of more than 29 billion dollars in its bid to keep the economy humming along, Xinhua news agency said.
They included a gas pipeline linking the country's western region with the southern economic hubs of Guangzhou and Hong Kong, and nuclear power plants in eastern and southern China.
earlier related report
China's total new yuan loans for the year will exceed four trillion yuan, the Shanghai Securities News cited a senior central bank official as saying.
New yuan lending in the January-September period totalled 3.48 trillion yuan, up 3.6 percent from 3.36 trillion yuan during the same period last year, according to official figures.
The forecast published by the newspaper, a mouthpiece for China's securities regulator, indicated that despite the central bank's attempts to loosen lending restrictions, new loans would be smaller in the fourth quarter.
The central bank imposed strict loan controls last year and the first half of 2008 to rein in credit growth and prevent the economy from overheating.
But it has since relaxed those limits and lifted loan quotas for lenders recently as China's economic growth slowed to 9.9 percent in the first three quarters of the year from 11.9 percent in the whole of 2007.
An unnamed central bank official provided the figures in an interview detailing how it planned to help put into effect Beijing's newly announced economic four trillion yuan stimulus package, the report said.
The central bank will continue to adjust interest rates and bank reserve requirements to ensure ample liquidity and stable credit growth, the official was quoted as saying.
New loans were also down sharply in the final quarter of 2007 at 272.1 billion yuan from 817.8 billion in the previous quarter. But this was due the central bank's moves to tighten monetary policy to cap credit growth and curb excessive liquidity.
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Beijing (AFP) Nov 12, 2008
China will go to the G20 meeting in Washington with a pledge to be an active participant, but it is unlikely to offer itself as lender of last resort for countries reeling from the global downturn.
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