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China Textiles Hit

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China’s decision to cut or do away with export tax rebates for over 2,800 items from July 1 will affect the profit margins of many industries, including textiles.

Chinese companies are rushing to meet their export commitments. They are worrying about the future industrial strategy, reports said. "There has been a lot of talk about tax rebate cuts since June. So, most manufacturers are operating at full capacity, expecting to export as much as possible before the deadline," an official from an export firm said.

Shipment schedules are full till July 1, a freight agency in east China¡¯s Jiangsu province said, adding that freight cost has rocketed because of increased demand.

The move is an effort to "suppress overheated export growth and ease frictions between China and its trade partners," the ministry of finance said.

The last export-tightening move, which imposed extra export tariffs and cut import duties, led to an export boom, boosting May’s trade surplus by 73 per cent to $22.45 billion over the corresponding period in the previous year.

This time the policy was announced just 10 days before it came into effect and manufacturers with full order books have little possibility of increasing production, Chinese media reports said.

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