Industrial Production News
- Labor-intensive exports face curbs
Date: 26-Jul-2007 Sources: (Shenzhen Daily)
THE government will curb exports of cheap labor-intensive products to force manufacturers into making higher quality goods, in a move to narrow the world's largest trade surplus.
The Ministry of Commerce will expand its catalogue of processed goods that are subject to the export limit in the second half of this year, the ministry's industry director Wang Qinhua said yesterday at a press conference in Beijing.
'The new policy will add cost and affect the cash flow of exporters, especially those engaged in the labor-intensive part of the industry,'' she said. 'Our calculation shows that the impact will force these exporters to increase value to their products and upgrade their technology.''
A record US$112.5 billion first-half trade gap has fanned tensions with the United States and Europe, flooding the world's fourth-largest economy with more than US$1.3 trillion in foreign currency reserves. Cheap wages and lax environmental rules have attracted manufacturers, 50 percent of them invested by Hong Kong companies, to produce leather goods, metal smelters, toys and other products.
'Every nation wants to upgrade its technology, especially at a time of increasing global competition and rising raw material costs,'' said Huang Yiping, Citigroup Inc.'s Hong Kong-based China economist. 'Many companies in China already have been moving up the technology ladder and value chain, and this new policy will only accelerate this process.''
China on July 23 said it would raise the capital requirement for companies that import metals, plastic and textiles into China for use in products that will in turn be shipped abroad.
A total of 1,853 types of commodities including copper, lead, zinc and cloth will be added to the restricted category, and importers will have to deposit half of their payable levies, including duty and value-added tax, at the customs office, according to the trade ministry's statement.
The new limit may add about 8 billion yuan (US$1.06 billion) to the costs of exporters, 50 percent of which have been invested by Hong Kong-based companies, Wang said.
'Hong Kong-invested producers will probably be the hardest-hit by this move,'' she said. 'Due to the overall international trade situation, they will have to make the sacrifice and transform their structure. The government will provide some assistance and incentives to help them with this transition.''
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