China has increased the export tax rebate by two to three percentage points, based on different export products.

exporter of Zhejiang Yunhe County said "Since the end of last year, our confidence has been hit by rising material costs, the rising RMB exchange rate, as well as some foreign trade barriers. The government tax policy has helped us regain the confidence that we can survive this crisis."

In Guangdong province alone, more than three thousand toy factories have closed up this year. Only strong and efficient factories have survived and are winning contracts from their failed competitors. And their business has been enhanced with the higher tax rebate.

Ouyang Kun, Manager of Yongqing Industries of Guangdong said "The tax rebate for us has been raised from 11 percent to 14 percent, which is really helpful. Many firms have failed, but we have survived and will do better."

Exporters benefiting from the tax policy include both low-value added, labor-intensive factories and high-value added, high-tech firms. Experts say this reflects the government's awareness of the fact that China's productivity transition will take time. Meanwhile, exporters can only temporarily rely on the tax policies and will have to improve their efficiency and upgrade their product structures to be sustainable in the long-term.

(CCTV November 11, 2008)