Central gov't set to take over tax rebate process

Containers being loaded at the Nansha Port in Guangzhou, Guangdong province. (Photo/Xinhua)

Move intended to support firms selling abroad and spur economic growth

The central government has assumed full responsibility for paying export tax rebates to companies, the latest measure to reverse a slump in exports and spur growth.

The State Council, China's cabinet, said on Tuesday in an online statement that the change is retroactive to Jan 1.

For any rebates still due for 2014, local governments remain responsible for their share, which was 7.5 percent.

Previously, the central and local governments split the burden of export tax rebates. The local governments submitted their share of the rebates to the central government, which then added the other 92.5 percent and reimbursed companies.

Zhao Zhongxiu, a trade professor at the Beijing-based University of International Business and Economics, said that some local governments had been reluctant to develop export-oriented companies due to the subsequent burden of rebates.

"By assuming the full burden of rebates, the central government will sweep clean the obstacles that discourage local governments from developing exports," said Zhao. "There is hope that this policy will reduce the burden of provinces with export advantages and boost overall exports."

The latest measure comes as Beijing seeks to put trade growth on a firmer footing in 2015.

Amid weak global demand and rising domestic costs, China's total foreign trade growth missed its target of 7.5 percent in 2014. Actually growth was less than half that level, at just 3.4 percent.

Exports rose 4.9 percent to 14.39 trillion yuan ($2.32 trillion), while imports fell 0.6 percent to 12.04 trillion yuan.

Weakness in exports has persisted this year. In January, exports slid 3.2 percent year-on-year to 1.23 trillion yuan, according to General Administration of Customs data released in February.

Zhang Beilei, general manager of Wenzhou Gaotian Shoe Co, said: "The new export tax rebate policy will ease certain burdens on companies by obtaining rebates faster, although getting export tax refunds hasn't been much of a problem thus far."

Wenzhou Gaotian had to lay off 10 percent of its employees to cut costs after export orders sank by about 20 percent in 2014.

"Government support involving tax policies and recent interest rate cuts will bring hope to export companies that have been expecting a bounceback in the trade environment. It's been miserable for the past two years," Zhang said.

Other smaller adjustments to the export tax rebate system have been made recently, including further delegation of approval authority, a simplified application process and faster rebates.