Companies that had been competing for domestic textile sales may again turn to overseas markets, the cotton industry researcher said in a report on its Web site today.
China had lowered export rebates on textiles and clothing incentives in the past two years as trading partners protested against its ballooning trade surplus. The appreciation of the yuan and record commodity prices also lifted production costs, forcing many makers to close.
``This policy will effectively mean more profits and stimulate exports,'' the report said. ``It's undoubtedly great news to companies in dire condition.''
Over two-thirds of Chinese textile and clothing producers were either incurring losses or making little profit since March, the report said, citing studies by government and industry groups.
The rising value of the yuan has had the biggest impact on the industry and if the rate of appreciation accelerates, it may negate any benefits from the tax changes, CNCotton said.
China's production of cotton yarn, the world's biggest, has expanded at a slower rate this year as growth in clothing exports cooled, the top economic planner said June 23.
