Tax rebate program expanded

China lends further support to exporters

China rolled out an expanded export tax rebate pilot program on Thursday to support the country's exporters, in a move to further stabilize its trade growth.

Exporters at eight domestic ports will enjoy more convenience in collecting export tax rebates starting from September 1, according to a statement jointly released by the Ministry of Finance, the General Administration of Customs (GAC) and the State Administration of Taxation.

The new program will save around two weeks for exporters at eight ports in cities including Nanjing, Suzhou, Qingdao and Wuhan, as the new policy allows exporters to apply for tax rebate immediately after the goods left the port of departure, an official from the Shanghai Municipal -Transportation Commission told the Global Times Thursday, speaking on condition of anonymity.

Only container goods for export in the eight ports that were transshipped to Yangshan Free Trade Port in Shanghai are covered by this policy, the statement said.

Shanghai is set to play an increasingly important role in China's foreign trade in the future. Boosted by the establishment of the China (Shanghai) Pilot Free Trade Zone, total trade volume in Shanghai increased by 7.1 percent year-on-year in the first seven months of 2014, which is 5.1 percentage points higher than the nation's average, data from Shanghai customs showed Thursday.

The current tax rebate program is an expansion of a previous pilot program launched in August 2012, which brings tax refund convenience for transshipments from the ports of Qingdao and Wuhan to the Yangshan port.

Experts noted that the new policy will help streamline the procedures for granting tax rebates to exporters and increase their capital efficiency.

"The new program allows exporters to choose closer ports and to get tax refunds faster, which will help to save cost," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times on Thursday.

Tian Yun, a research fellow with the China Society of Macroeconomics at the National Development and Reform Commission, noted that similar support policies are expected to follow in the near future to spur the country.

Earlier in May, the State Council unveiled a slew of broad measures, including creating better financing conditions for exporters and improving the tax rebate system, to boost the country's trade growth.

China reported encouraging trade data in July, helped by the government's stimulating policies as well as a recovery in external demand. Total trade volume in the month rose 6.9 percent year-on-year to around $378.48 billion. Exports surged 14.5 percent to $212.89 billion, compared with 7.2 percent growth in June, according to the GAC.

However, Tian noted that it is likely that the July export growth was inflated by hot money, and the outlook on foreign trade may not be that rosy.

Also, slowing investment and credit growth indicate that China's economic recovery is still patchy.

New yuan loans came in at 385.2 billion yuan ($62.54 billion) in July, well below the June figure of 1.08 trillion yuan, the central bank said Wednesday.

Urban fixed-assets investment increased by 17 percent year-on-year in the first seven months this year, cooling from a 17.3 percent growth in the January-June period, data from the National Bureau of Statistics showed Wednesday.

Tian noted that China is suffering from severe oversupply, and as it will take a long time to boost domestic consumption, the country needs to further explore the overseas market. "Exports still play a crucial role in absorbing -China's overcapacity," he said.

Bai agreed that a rise in exports will help ease the downward pressure on the economy, but noted that relying too much on policies to drive exports is not a sustainable strategy in the long term.