SteelOrbis Shanghai
At the executive meeting of the State Council presided over by China's premier Wen Jiabao on December 24, premier Wen has set up several strategic plans aiming at helping domestic exporters to tide over the current economic sluggishness and realizing steady growth of foreign trade.
1. Intensifying assistances through fiscal and taxation policies: The export tax rebates on certain high value-added mechanical and electrical products with high technology content would be raised. Additionally, China's central government would magnify the foreign trade development fund.
2. Pushing forward the transformation and upgrading of processing trade steadily: Some non high energy-consumptive and non high pollutive products or products with high technology content in line with the national industrial strategy should be deleted from the export forbidding catalog, while certain labor-intensive products, eco-friendly and energy-conserving products as well as products with high technology content should also exempt from the export restricting catalog.
3. Improving imp & exp financial service: Efforts will be made to enlarge the buyer's credit of policy banks, encourage the commercial banks to carry out banking trust loan business of export Rebate account, expand the financing scale of insurance scale, relieving the financing problem of small and medium sized foreign trade enterprises. RMB settlement pilot program will be carried out for the foreign trades between Guangdong Province, Yangtze River Delta region and Hongkong and Macao, Guangxi Province, Yunnan Province and ASEAN.
4. Enlarging imports of the domestic needed: Priority will be given to the imports of advanced technologies, main infrastructures and major energy materials.
5. Propelling investments and interactive trades: More offshore investments will be encouraged to pour into the high-tech industry, energy-saving industry and modern service industry.
6. Enhancing foreign trade convenience: The Customs and Entry & Exit Inspection and Quarantine Bureau would implement round-the-clock clearance reservation.
7. Reinforcing the bilateral and multilateral business ties, resolving the foreign trade friction in an active way and supporting enterprises to exploit emerging markets:
The conference has projected two highlights. One is the adjustment of processing trade catalog. During 2007 and 2008, many professionals and scholars appealed for the restriction on processing trade due to the high speed growth of exports and the surging amount of foreign currency at that time. As a result, the Chinese government promulgated a series of restriction measures, which had cause many labor-intensive processing enterprises leaving China. However, under the background of export decrease and rising jobless rate, Chinese government has to cause attentions to the processing trade and loosen the policy confinement.
The other highlight in question is to launch RMB settlement pilots for foreign trades. China has always adopted more cautious attitude towards RMB internationalization, worrying that it would disturb Chinese financial policy and the domestic demand. In the face of the current financial crisis, RMB exchange rate has fluctuated dramatically, but if the foreign traders were able to use RMB to finish the settlement, the majority of enterprises would have exempted from the related anxiety. As regards the exporters, they wouldn't need to worry about losses from currency swap. And for the importers, this currency will be a superb and competitive one. In the meantime, the strong RMB must be in the favor of Southeast Asian market.