November 13, 2008

China slashes export taxes to give economy a heave


China will reduce their export tax on grain and steel and cut duties on thousands of other goods in an effort to boost economy, following the release of a multibillion-dollar stimulus plan (November 12, 2008).


The cut in export duties of grains, steel and chemical products are due to take effect December 1, 2008, will apply to some 3,770 types of exports, or about 28 percent of the total, according to online portal of China's Cabinet.


The steps are meant to expand domestic consumption and promote economic stability, the statement said. Tax cuts apply to labour-intensive goods, electrical products and other affected products.


The move adds to a series of urgent steps taken by Beijing to reverse a sharp downturn in economic growth. China's growth rate fell to 9 percent in the latest quarter, though still strong for a major economy, but well below last year's 11.9 percent.


A drop in global demand for Chinese goods has hit exporters hard, prompting layoffs and factory closures.


The RMB4 trillion (US$586 billion) stimulus package announced Sunday (November 9, 2008) calls for high spending on government construction projects, an aid to the poor and farmers and tax cuts for exporters.


The government also announced approval of two multibillion-dollar energy projects and a water conservancy project. It said they also were meant to help spur economic growth, though all three projects have been planned for several years.


The energy projects were a RMB93 billion (US$13.6 billion) pipeline to carry natural gas from China's northwest to Hong Kong, a RMB95.5 billion (US$14 billion) expansion of a nuclear power plant in Yangjiang in the southeastern province of Guangdong.


Also approved was a RMB17.4 billion (US$2.5 billion) water conservancy project in the northwestern region of Xinjiang, said the Cabinet.

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