CBIChina

On 31 July, the State Administration of Taxation issued a circular concerning the adjustment of export rebate rates on certain textile and garment products. According to the circular, the export rebate rates on textiles and garments will be lifted to 13% from the previous 11% as of 1 August.
The increase in export rebate rates is good news to Chinese chemical fiber, textiles and garments industries, but most manufacturers retain a pessimistic outlook. China’s chemical fiber market has been bearish since the start of 2008, due largely to the sharp drop in demand and production from the downstream textile industry amid a stronger yuan, rising feedstock prices and labor costs as well as lower export rebate rates. These policy-oriented factors have hit the Chinese manufacturing industry hard.
Higher export rebate rates will provide the impetus for China’s ailing textile industry but it appears that it will have a very limited impact.
As for domestic textile producers, the raise in export rebate rates cannot ease their pressure, which is mainly coming from the volatile exchange rate of yuan.
Some chemical fiber companies have hinged their hopes on a better performance from downstream textiles and garment industries following the 2% increase in export tax rebates.
Whether the current changes in export rebate rates will stimulate China’s textiles and chemical fiber industries will depend on the order transactions in the Canton Fair due in September.