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China_sConfidence

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China_sConfidence

hina s Con fiden ce C

December 2008 China Textile 28

    By Shang Lin’aiyi

    With the spread of the global financial

    turmoil, China is under growing tension

    from its large population, limited resource, e n v i r o n m e n t p r o b l e m s , a n d l o s i n g i t s

    competitive edge in the world as exports

    a r e b e i n g d r i v e n d o w n b y s h r i n k i n g

    demand abroad as well as higher costs.

    Despite challenges, China still has a great potential to develop its domestic demand

    a n d a s o l i d f i n a n c i a l s y s t e m . U n d e r

    such circumstance, we should enhance

    c o n f i d e n c e . I t i s i m p e r a t i v e f o r u s t o

    perceive favorable conditions and positive factors for acting against the negative

    o u t s i d e e n v i r o n m e n t a n d p r o m o t i n g

    development in a scientific way.

    December 2008 China Textile 29

     nfocus I

    4 trillion yuan stimulus to boost domestic demand A stimulus package estimated at four trillion yuan (about 570 billion U.S. dollars) will be spent over the next two years.

    China will adopt active fiscal and moderately active monetary policies and map out more forceful

    m e a s u r e s t o e x p a n d d o m e s t i c demand, speed up the construction

    of public facilities and improve living standards of the poor to achieve steady and relative fast economic growth.

    The active fiscal policy alone would not bear much fruit without the coordination of easing monetary

    T h e t w o s h o u l d w o r kp o l i c y . s far as Chinese textile industry is concerned, as

    mic together to confront the econolong as we take the right measures in a resolute

    complexity of home and abroad. and timely way to grasp the chance and rise A The policy change comes out to the challenges, we will surely secure steady growth.

    t i m e a s t h e g l o b a l f i n a n c i a l i n So where do those confidences come from and how to

    c r i s i s b e g i n s t o a f f e c t C h i n a s minimize negative external economic impact and help

    real economy. The adjustment is Chinese textile companies better tide over difficulties?

    more resolute and timely and was We have plenty of evidences to prove it: China adopts

    expected to prevent big ups andactive fiscal and moderately active monetary policies and downs in the economy.map out more forceful measures to expand domestic

    T h e p a s t t h r e e m o n t h s h a v e demand; a stimulus package estimated at four trillion yuan

    seen a series of stimulus policies: will be spent to finance programs in 10 major areas, such

    i n e r e s t r a e c u s , l o w e r b a n k tttas housing, rural infrastructure, transportation, environment,

    r e s e r v e r e q u i r e m e n t r a t i o s , t a x rebuilding from disasters and technological innovation which

    changes, higher credit quotas and are expected to have positive effects on textile producers

    the injection of central government amid a boom in this infrastructure investment; the country

    funds to infrastructure construction. would also provide medium-sized and small companies

    Higher investment must be able better access to getting loans and encourage enterprises to

    to facilitate economic restructuring, increase investment and push forward technical progress,

    p r o m o t e g r o w t h p o t e n t i a l b y accelerated industrial restructuring in the development

    channeling investment to where mode. Besides, China may further increase export tax

    its most needed and spur privaterebates for light industry…

    December 2008 China Textile 30

    consumption. Rural infrastructure: Speeding western areas. Urban power grids A l t h o u g h t h e e c o n o m y h a s up rural infrastructure construction. will be upgraded. maintained double-digit growth for R o a d s a n d p o w e r g r i d s i n t h e Health and education: Beefing

    years, fixed-asset investment and countryside will be improved, and up the health and medical service exports have dwarfed consumption efforts will be stepped up to spread b y i m p r o v i n g t h e g r a s s r o o t s a s t h e t w o p i l l a r s o f e x p a n s i o n . the use of methane and to ensure medical system. Accelerating the W i t h g l o b a l r e c e s s i o n c l e a r l y i n drinking water safety. This part of development of the cultural and view, China must sustain itself by the plan also involves expediting education sectors and junior high exploiting the domestic market o the North-South water diversion school construction in rural esern twtoffset weaker demand abroad. p r o j e c . R i s k y r e s e r v o i r s w i l l b e a n d c e n r a l a r e a s . M o r e s p e c i a l tt

    The ongoing world economic reinforced. Water conservation in education and cultural aciliies. ftadjustment as a new opportunity E n v i r o n m e n t : I m p r o v i n g f o r C h i n a t o s p e e d i n d u s t r i a l e n v i r o n m e n t a l p r o t e c t i o n b y restructuring, introduce advanced enhancing the construction of technologies and talents from sewage and rubbish treatment abroad. f a c i l i t i e s a n d p r e v e n t i n g

    D e s p i t e c h a l l e n g e s , C h i n a w a t e r p o l l u t i o n i n k e y a r e a s . has a great potential to develop A c c e l e r a t i n g g r e e n b e l t a n d its domestic demand and a solid natural forest planting programs. financial system, I n c r e a s i n g s u p p o r t f o r e n e r g y

    As long as we take the right conservation and pollution-control measures in a resolute and timely projects.

    way to grasp the chance and rise Industry: Enhancing innovation to the challenges, we will surely and industrial restructuring and secure steady and relative fast s u p p o r t i n g t h e d e v e l o p m e n t economic growth. o f t h e h i g h - t e c h a n d s e r v i c e

    industries.

     10 major steps to Disaster rebuilding: Speeding spark growth reconstruction in the areas hit by C h i n a w i l l t a k e t e n m a j o r the May 12 earthquake.s t e p s t o s t i m u l a t e d o m e s t i c I n c o m e s : R a i s i n g a v e r a g e consumption and growth as it incomes in rural and urban areas. turns to an active fiscal policy R a i s i n g n e x t y e a r ' s m i n i m u m and moderately easy monetary large-scale irrigation areas will be grain purchase and farm subsidies. policy. strengthened. Poverty relief efforts Increasing subsidies for low-income

    Here are the ten major steps: will be increased. urban residents. Increasing pension H o u s i n g : B u i l d i n g m o r e Transportation: Accelerating the f u n d s f o r e n t e r p r i s e e m p l o y e e s affordable and low-rent housing expansion of the transport network. and allowances for those receiving and speeding the clearing of slums. T h a t i n c l u d e s m o r e d e d i c a t e d special services. A p i l o t p r o g r a m t o r e b u i l d r u r a l passenger rail links and coal routes. Ta x e s : E x t e n d i n g r e f o r m s housing will expand. Nomads will Tr u n k r a i l w a y s w i l l b e e x t e n d e d i n v a l u e - a d d e d t a x r u l e s t o a l l be encouraged to settle down. and more airports will be built in industries, which could cut the tax

    December 2008 China Textile 31

     nfocus I

    corporate burden by 120 billion yuan (about 17.6 billion U.S. the crisis deepened. Labor-intensive

     dollars). Technologicalupgrading will be encouraged. a n d e x p o r t - o r i e n t e d b u s i n e s s e s

    F i n a n c e : E n h a n c i n g f i n a n c i a l s u p p o r t t o m a i n t a i n would be hurt as prices of energy economic growth. Removing loan quotas on commercial and raw materials would continue lenders. Appropriately increasing bank credit for priority fluctuating.

    p r o j e c t s , r u r a l a r e a s , s m a l l e r e n t e r p r i s e s , t e c h n i c a l F i g u r e s r e v e a l e d t h a t s i n c e innovation and industrial rationalization through mergers t h e b e g i n n i n g o f l a s t y e a r, r a w and acquisitions. material price for Chinese SMEs T h e s e t e n m o v e s a r e e x p e c t e d t o h a v e p o s i t i v e has increased by 11 to 15 percent effects on textile, iron and steel producers amid a boom in year on year, while that of average infrastructure investment. product ex-factory price is up only

    about 5 percent.

     China's VAT reform to shed The country might further raise corporate tax burden by 120 bln t h e t a x r e b a t e s r a t e f o r s o m e

    l a b o r- i n t e n s i v e i n d u s t r i e s i n t h e yuan

    near future to help them cope withChina announced it would spread a reform of its value-

    shrinking profit margins because added tax regime to all industries nationwide, which could

    o f s l a c k i n g m a r k e t d e m a n d s , cut the tax burden on enterprises by 120 billion yuan.

    the yuans appreciation and risingThe reform was aimed at a shift from the exising t

    production costs.production-based value-addedta x regime to a consumption-

    C h i n a r a i s e d t a x r e b a t e s o n based one, which enables Chinese companies to get tax

    November 1 for 3,486 items ranging deductions on spending on fixed assets and would help

    from labor intensive industries such encourage technological upgrading at Chinese companies.

    as textile, garment, toy, hi-tech and

     China mulls more support to high added value sectors like ani- t

    AIDS drugs.SMEs amid uncertainty

    China is poised to provide a series of measures to China further increase export tax help small and medium-sized enterprises (SMEs) to cope rebates for light industry

    w i t h c h a l l e n g e s b r o u g h t Ta x r e b a t e s f o r C h i n a s l i g h t

    about by the global economy i n d u s t r y s h o u l d b e i n c r e a s e d t o

    uncertainty. alleviate cost burdens on exporters.

    T h e g o v e r n e n t w o u l d C h i n a a l s o p l a n s o r e o v e mtm

    s u p p o r t t h e s e c o m p a n i e s unreasonable administrative fees

    e f f o r t s o f t e c h n o l o g y and charges on industry players and

    i n n o v a t i o n , p r o d u c t m i x offer more.

    upgrading and getting a bigger T h r o u g h t h e f o r e i g n t r a d e

    share of the global market. d e v e l o p m e n t f u n d , s e t u p b y

    Chinese industry faced a t h e c e n t r a l g o v e r n m e n t , a c t i v e

    grim situation. The imbalance assistance will be made to boost

    between weakening demand e x p o r t s a n d h e l p c o m p a n i e s

    and expanding capacity would promotion and acquisition efforts in

    become more problematic as the international market.

    December 2008 China Textile 32

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