China should slow its currency appreciation and increase export tax rebates to help lift its textile industry out of current difficulties, according to a government paper.
The proposals were drafted by the recently formed Information and Industrialization Ministry and based on recommendations from a range of bodies including the Ministry of Commerce, the China National Textile and Apparel Council (CNTAC) and the China Cotton Association, reported the China Securities Journal.
The policy paper recommends lifting the export tax rebate on textile products to 13% from the current 11%. The tax rebate on garment exports should be increased to 15% from 11%, it says.
The ministry paper also suggests cancelling import duties for some textile machinery to help the industry increase efficiency in the face of rapidly rising costs.
Labour costs have increased by up to 40% this year because of a new labour law. The appreciation of the yuan is also hurting Chinese exporters.
Local media reported in April that the CNTAC had submitted a request to the State Council calling for an increase in tax rebates. CNTAC spokesman Sun Huaibin declined to comment when contacted by just-style.
However Professor Gu Qing Liang, a textiles expert from Donghua University in Shanghai, said that raising tax rebates will have no long-term benefit on the industry, merely allowing textile firms to continue operating at low prices.
"What we should do is lower costs by improving on technology and also promote high-value textile products," he told just-style.
"Companies that are not competitive should be eliminated through competition."
