By intern reporter Yu Hairong

(Caijing.com.cn) China has increased tax rebates for exporters for the seventh time since August 2008 as part of the effort to support exporters hit by the collapse in overseas demand.

Export volumes dropped nearly 20 percent year-on-year in the first quarter.

The Ministry of Finance boosted the tax rebate for exporters in labor-intensive industries in a move designed to minimize job losses, the ministry said in a statement posted on its Web site on June 8.

Food companies, electronic and digital media product makers, as well as the ceramics and plastics industries will benefit from the policy, according to the ministry's statement.
The new rebates are effective from June 1.

Nearly half of the new items eligible for the tax rebate are food products, an industry not included in the previous six raises.

Rebates on canned foods and fruit juices were increased to 15 percent from 13 percent. Some food products will get as high as an 8 percentage point increase in rebate.

The inclusion of food items on the list - demand for which is mostly inelastic and produced by an industry not directly hit by the financial crisis - suggests the government intends to use the tax rebate as a policy tool to curb unemployment, said an official from a foreign trade department in Shandong Province. Shandong exports more agricultural products than any other Chinese province.

The rebate is on payments of the 17 percent value-added tax.

Rebates on products in labor-intensive light industries such as toys, shoes and hats, luggage and bags, and furniture have been raised from to 15 percent from 13 percent.

Toy exports fell 13 percent year-on-year in the four months to April, while bag and luggage exports fell 0.8 percent and shoes exports fell 0.6 percent, according to customs data.

Full export tax rebates, at 17 percent, are available to the hard-hit electronic products and digital media sectors, makers of products such as television transmitters, sewing machines, compact disks and CD-ROMs, generators, motors, and information processors.

From January to April, motor and generator exports fell by 30 percent year-on-year, while information processor exports fell 22.8 percent, according to customs data.

Export rebates on certain ceramic products have been lifted to 13 percent, while the alcohol rebate was pushed up to 5 percent.

The rebate on textiles and garments, which had already been raised to 16 percent in previous increases, was not included in the latest list.
The increase in the rebate is designed to stabilize external consumption demand, the State Council said May 27.

On the projected effect of the rebate policy, Xu Xiaonian, a professor of economics at the China Europe International Business School, said external demand will not bounce back until western economies resume growth.

Vice commerce minister Zhong Shan has also said China's exports are unlikely to rebound anytime soon.

China's exports have fallen for six consecutive months, with the February figure down 25.7 percent year-on-year -- the worst drop in more than a decade.

April exports fell 22.6 percent year-on-year to 91.9 billion yuan, according to customs data.

This latest rebate hike will cost the government 25.2 billion yuan, the State Administration of Taxation projects.

Full Chinese article：http://www.caijing.com.cn/2009-06-08/110179889.html