Beijing, Apr 27 China needs to relax its drive against some low-end exports because of deepening global economic gloom and gird for growing trade protectionism, senior government officials said at the weekend. China has cut refunds of value added tax (VAT) on thousands of products as part of a campaign to rein in exports and so reduce its bulging trade surplus, which is a source of both diplomatic tension and uncomfortably strong domestic money growth.

“For labour-intensive manufacturing sectors, further reductions in export tax rebates are not needed,” Zhang Xiaoqiang, vice-chairman of the National Development and Reform Commission, told a conference of importers and exporters on Saturday.

Zhang, who is in charge of trade-related issues with the economic planning agency, said “stability” should also be the watchword for the processing trade. Beijing introduced a plethora of tax and administrative policies last year to deter such trade, whereby Companies transform imported materials and components into finished export articles, adding relatively little value in the process. Many Companies in southern China in sectors such as footwear, toys and plastics have been forced to close in recent months as a result of the government’s policies and fast-rising labour costs.

With some exporters now struggling to stay afloat, Zhang said China should not be shy about encouraging exports as demand from the United States, the European Union and Japan weakened.

“You might have worried about trade rows last year,” he said. “But now if you’re worried about going bankrupt, your priority is how to survive. If a trade dispute crops up, let’s just deal with it then.”

Li Ling, the Ministry of Commerce official in charge of fair trade, told the conference that slowing international trade could make China’s exports a bigger target for complaints.

“This year global economic growth has slowed, and in some countries trade protectionism may lift its head,” she said, according to a report on the Caijing business magazine website. “China’s exports may remain vigorous, and this may lead other countries to take anti-subsidy, anti-dumping and protective measures against China,” she said.

Zhang said the rising yuan was also a concern to business. “Some exporters don’t even want to take export orders for the third quarter because they have no idea how much the yuan will appreciate,” he said. But he said the overall competitiveness of Chinese products was still strong, and Beijing should keep up its drive against...

Posted online: Monday , April 28, 2008 at 2255 hrs IST

Source: www.financialexpress.com