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Recession winds chill exporters

By Diao Ying (China Daily)
Updated: 2008-12-09 07:29

Chill winds of global recession have started to blow across exporters in China with industry experts warning of more freezing conditions amid plunging growth rates.

"The situation will get even more complicated, and there will be more uncertainties in 2009," the Ministry of Commerce said in a report on trade outlook.

Experts forecast that the government will continue to stabilize exports by adjusting the renminbi exchange rate and export tax rebate. The fundamental way to maintain the competitiveness of China's exports is to adjust product structure and encourage enterprises to make more value-added products, rather than rely on low value-added products, they said.

The government has raised the export tax rebates for over 1,000 labor-intensive products and for mechanical and electrical products by 4 to 8 percentage points since the beginning of this month. This is the third time that the government has adjusted export tax rebates since August.

This is in sharp contrast to last year's policy objective of reducing surplus for which export tax rebates on many products were scrapped or reduced.

"There are still several leverages that the government could use to increase exports including the exchange rate, export tax rebates, and policies on processing trade," said Pei Changhong, a trade expert, in the Blue Book of China's Economy, released by the China Academy of Social Sciences.

Fan Jianping, an expert with the National Information Center, suggested that stabilizing the exchange rate will lessen the speculation on the appreciation of yuan, and give exports more competitive advantage.

Zhang Liqun, a researcher with the Development Research Center of the State Council, expected the government to continue with its previous policy of controlling energy consuming and polluting industries while optimizing the structure of exports.

Fan also said that the key should be to adjust the product structure and make enterprises more competitive.

"The government should support the export of high value-added products with self-owned brands, and help the SMEs to upgrade their enterprises by providing capital and technology," said Fan.