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| New policies taking shape to support Chinese textile industry |
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| February 27, 2009 |
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The State Council of China adopted a national plan of supporting the country's textile and apparel industry in its latest regular meeting on February 4.
The meeting also decided to increase export rebates for textile producers to 15% from the current rate of 14% effective since last November. Areas of concerns that will draw further attention in the future policy-making are:
· Balancing markets overseas and at home --The government will take a proactive attitude to enlarge domestic consumption, innovate new production, expand rural markets and promote the use of textile products in relevant industries, while stabilize international market by expanding export destinations.
· Technological improvement and proprietary brand development -- Special projects and funds will be established to support the technological development of yarn making, textile printing and dyeing, in addition to chemical fibers.
· Phasing out obsolete capacity -- Steps will be taken to phase out obsolete capacity, eliminate energy-intensive, polluting equipment and technology. Supports will be given to stronger enterprises that acquire those in difficulties.
· Industry relocation -- The government will encourage textile and garment makers to relocate from southeastern parts of China to central and western areas. Under this plan, eastern coastal areas will later focus on the development of advanced, value-added and less impacted products of textiles and apparel; while Central and West China will pick up more work of textile and apparel processing. Manufacturing of quality cotton yarns and textile products will be developed in Xinjiang province.
· Strengthening financial and taxation support -- Export rebates for textile producers will increase to 15% from now 14%. Credit support will be offered to enterprises with solid foundation but facing temporal difficulties in operation and financing. The support towards small- to med-sized enterprises will be increased, especially in credit and financing. The central and regional governments as well as enterprises will further acquire cotton and silk yarns.
The above measures for the Chinese government to ensure employment in the country and reduce unstable risks among the population.
Domestic enterprises were reportedly pleased with the measures, especially financial incentives (e.g. subsidies on loans) to support technological upgrade of stronger enterprises, according to Chinese media reports.
Statistics from the Chinese authorities showed that only one-third of enterprises in the textile and apparel industry (usually of a larger size with a registered capital over RMB 5 million) reported profits last year. The rest were making a loss or on the verge of that.
President of China National Textile And Apparel Council (CNTAC), Du Yuzhou, said: "These two-thirds are suffering a larger impact in the present economic crisis, as they mainly engage with outsourced processing jobs from sizable textile enterprises (i.e. those with a registered capital over RMB 5 million). Now that sizable textile enterprises are adversely affected, outsourcing jobs were cut down and smaller enterprises were among the first to be impacted."
These smaller textile enterprises (with a registered capital below RMB 5 million) collectively employ close to 10 million people in China. Moreover, central government officials at the Chinese rural areas predicted that about 20 million people in rural China will return to the countryside this year due to a lack of working opportunities in cities. As a consequence, support to the labor-intensive textile industry is essential to ease rural employment pressure.
In the long run, Du added that the government's supportive measures to the textile and apparel industry also serves as a catalyst to turn China into a strong textile manufacturing country (in qualitative sense) by the end of the 13th Five-Year Plan (i.e. 2020).
Source: Adsale Industry Portal 2456.com |
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