China plans to raise export rebates on selected machinery and electronic products and will allow mainland trade with Hong Kong, Macau and South Asia to be settled in yuan - a move designed to boost overseas sales.
The country will raise rebates on exports of machinery and electronics with high-technology content and profit margins, the State Council, China's Cabinet, said Wednesday, without saying when the actions would begin or providing other details.
The yuan settlement will be piloted in trade between Guangdong Province, the Yangtze River Delta region and Hong Kong and Macau.
The Chinese currency will also be used in trade between the Guangxi Zhuang Autonomous Region and Yunnan Province and the members of the Association of Southeast Asian Nations on a trial basis.
The central government also plans to boost the size of a foreign-trade development fund that provides low-interest loans to export-oriented companies.
To shore up domestic consumption, the government will increase retail networks in rural areas and boost subsidies that will lower prices for farmers buying home appliances.
The global economic downturn has spilled over into China, resulting in shrinking exports, slowing foreign trade, declining industrial output as well as shrinking corporate profits and government fiscal income.
China has already drastically slashed interest rates, hiked tax rebates for exporters and required commercial banks to extend more credit to small and medium-sized companies to battle the economic slowdown.
The central government is studying additional measures to boost growth and support exports, Zhang Ping, head of the National Development and Reform Commission, told a meeting of the nation's legislature yesterday.
He told lawmakers that China will increase efforts to revive key industries, including steel, automobiles, shipbuilding, petrochemicals, textiles, light industry, non-ferrous metals, equipment manufacturing and information technology.
In a report to the Standing Committee of the National People's Congress, the NDRC also said China must prevent a drastic decline in property prices, although a "proper" reduction will benefit the industry's long-term growth.
The government will increase construction of housing for low-income families and control excessive gains in land prices, the report said.
Earlier this month, the government eased the tax burden on people selling their homes. Now, people who sell after owning their property for at least two years can escape the 5.55 percent business tax. The previous waiting period for a tax-free sale was five years.
(Shanghai Daily December 25, 2008)
