The Ministry of Finance and the State Administration of Taxation announced on the 29th that they will increase the export tax rebate rate for some mechanical and electrical products with high technical content and added value from January 1, 2009. This is the fourth time this year that China has raised its export tax rebate rate, following the increase of 3770 export tax rebate rates on December 1st of this year.
Since the beginning of this year, China has repeatedly used tax measures to adjust its trade policies, which is a necessary measure to maintain stable and rapid economic development in the context of the financial crisis, "Bai Jingming, Deputy Director of the Institute of Finance of the Ministry of Finance, said in an interview with reporters.
Bai Jingming pointed out that the adjustment of the export tax rebate policy involves two types of products, one is high-tech products in the aviation industry, and the other is products with export advantages and high added value, such as motorcycles. China is the world's largest exporter of motorcycles. Under the pressure of shrinking domestic and international market demand, the development of the motorcycle industry is facing great pressure. Increasing the export tax rebate rate can help alleviate the export burden of enterprises and maintain stable growth in foreign trade.
For China, whose dependence on foreign trade is as high as 60%, 2008 was the year when China's foreign trade encountered the biggest setback in the past decade, and it was also a year of frequent adjustments in trade policies.
From the "maintaining stable export growth" at the beginning of the year to the clear proposal at the Central Economic Work Conference at the end of the year to "adhere to the combination of expanding domestic demand as the mainstay and stabilizing external demand", the adjustment of foreign trade policies highlights China's intention to stabilize foreign trade growth and maintain economic growth under the influence of the financial crisis.
According to statistics from the General Administration of Customs, following a year-on-year increase of less than 20% in China's export volume in October 2008, the export volume in November only increased by -2.2% year-on-year, marking the first negative growth in seven years.
The significant decline in foreign trade exports and the difficulties faced by some export enterprises have attracted the attention of the central government and relevant departments. In response to the risks and pressures faced by the export industry, as well as changes in the international economic situation, China had already raised the export tax rebate rates for textiles, clothing, light industry, and some mechanical and electrical products three times before this adjustment. The comprehensive tax rebate rate was increased by 1.6 percentage points.
Starting from August 1st this year, the export tax rebate rate for some textiles and clothing was increased from 11% to 13%. From November 1st, 2008, China once again increased the export tax rebate rate for some textiles and clothing to 14%. In addition, the export tax rebate rate for some toy products will also be increased to 14%. At the same time, China has also increased the export tax rebate rate of high-tech and high-value commodities such as anti AIDS drugs, with the tax rate rising to 9% to 13%.
Since December 1, 2008, China has further increased the export tax rebate rates for 3770 items of labor-intensive products, mechanical and electrical products, and other products that have been greatly affected. At the same time, some export tariffs on steel, chemicals, and grain will be cancelled, some export tariffs on fertilizers will be reduced, and the taxation methods will be adjusted. Export tariffs will be imposed or increased on individual products.
Experts point out that from the policy of increasing the export tax rebate rate four times within the year, although China's foreign trade policy continues to increase its support for enterprises, the main thread behind the policy adjustment is always to adjust the industrial structure and accelerate the upgrading and transformation of the foreign trade industry.
The State Council executive meeting held on the 24th proposed seven policy measures to alleviate the difficulties faced by export enterprises and maintain stable growth in foreign trade. Among them, in terms of increasing financial and tax policy support, it was clearly proposed to increase the export tax rebate rate for some high-tech and high value-added mechanical and electrical products, and emphasized the need to steadily promote the transformation and upgrading of processing trade.
Bai Jingming said that, as emphasized by the Central Economic Work Conference, we need to "further enhance our ability to resist external economic risks". Against the backdrop of the continuous adjustment of the international economic structure, adjusting the export tax rebate rate policy is also an important measure for China to adjust its industrial structure and transform its economic development mode. It is of great significance for addressing the challenges of slowing economic growth, especially for improving the competitiveness of enterprises in exports.