Monday, May 9, 2016

CHINA TO BOOST EXPORTS

China Introduces Proposals to Boost Exports

Government suggests greater lending by banks, expanded tax rebates


Chinese cars wait for export at a port in Dalian, Liaoning province. The government’s plans to boost exports come as April showed a worse-than-expected 1.8% decline in exports and a 10.9% drop in imports. ENLARGE
Chinese cars wait for export at a port in Dalian, Liaoning province. The government’s plans to boost exports come as April showed a worse-than-expected 1.8% decline in exports and a 10.9% drop in imports. Photo: Reuters
BEIJING—China is rolling out new measures to try to boost exports, adding to the inducements the government offers companies that are meant to bolster growth but are exacerbating trade friction.
In policy guidelines released Monday, the State Council, the government’s cabinet, called for greater lending by banks to support small-scale and profitable exporters and said it would expand rebates of value-added taxes. It also promised to reduce short-term rates for export credit insurance, which protects exporters against nonpayment by foreign customers.
Though short on details, the government said the measures are in response to a complex and deteriorating trade outlook that has heavily weighed on the world’s second-largest economy.
“Presently, the foreign trade situation is complicated and severe, elements of uncertainty and instability are increasing and downstream pressures are continuously growing,” the State Council said.
Robust foreign trade, particularly exports, has been a key feature of China’s economic growth over the past four decades, with the government looking to the sector to provide jobs and bring in revenue. Today many exporters are struggling amid an anemic global economy and rising competition from cheaper competitors in Asia and elsewhere.
China’s exports and imports performed worse than market analysts expected last month. Exports fell 1.8% from a year ago, reversing an increase of 11.5% in March, while imports fell 10.9% from a year earlier, according to official data released Sunday.
The government’s latest plans come on top of billions of dollars in subsidies already disbursed to support exporters and other companies each year. The assistance, which includes reduced electricity prices, cash grants and other inducements for exporters, has grown at a rapid clip in recent years even as the China economy has decelerated from its boom years.
One result has been a torrent of Chinese goods flowing onto global markets, contributing to trade tensions and rising accusations that China unfairly aiding its exporters. U.S. authorities are grappling with a flood of new complaints from businesses that say the tide of exports is threatening U.S. jobs and run counter to China’s promises to the World Trade Organization.
China denies any wrongdoing. It repeatedly has said that overcapacity and falling prices for many commodities are a result of slow global growth, not its subsidies. The government has described recent U.S. antidumping tariffs against steel and other Chinese products as protectionist.
Monday’s new policies include measures to encourage more imports of technologically advanced equipment and to cut tariffs on some imported consumer goods to support domestic consumption.
For China, the latest measures reflect concern over protecting jobs in its manufacturing sector. While the government pledges to shift to a higher-value, services-driven growth model, economists say it is a process that will take years or decades to complete. Meanwhile, they say, basic industries and factories employing tens of millions of Chinese will need to be supported and exports encouraged.
Among the targeted new measures are promises to help exporters of higher-value products such as combustion engines by rebating value-added taxes in full.
Write to Brian Spegele at brian.spegele@wsj.com