China yesterday said it will support the stable growth of foreign trade and job creation as businesses come under pressure to increase exports.
Optimizing the foreign trade structure - including encouraging imports of technology and key parts, maintaining stable growth of goods trade and supporting services trade - is the central issue of a policy document issued by China's Cabinet, the State Council.
The document detailed the decision made at an executive meeting of the State Council on April 30.
"Foreign trade is not only critical to stable economic growth and job creation, but conducive to integration between the Chinese and global economies," said the State Council. Exports fell 2.3 percent in the first four months of this year to US$680 billion.
Export tax rebates will be accelerated, and companies are encouraged to merge and acquire foreign brands and production lines to improve their competitiveness. They are also encouraged to set up factories overseas. Efforts will be made to increase imports of scarce natural resources and boost exports of high-tech products with high value added and high profitability.
The customs inspection list of export products will be cut, and the clearance process streamlined. Companies will be helped in responding to anti-dumping and anti-subsidy probes.
Firms may need asset finance to free funds
China's manufacturing industry may need to turn to asset finance to free 1.37 trillion euros (US$1.88 trillion) of "locked liquidity" in the next five years, according to a new report by Siemens.
The companies need to unlock the capital tied up in the purchase of equipment to maximize available working capital as outright purchase of equipment and machinery makes little economic sense when they depreciate, according to the white paper released yesterday by the financial services unit of the German industrial conglomerate.
"For manufacturing companies, it makes little sense to commit capital to depreciating assets," the report said, adding that more small and medium-sized companies are turning to asset finance to free up locked liquidity.
Globally, locked liquidity levels could represent around 0.75 percent of manufacturing turnover on average.
As global net profit margins in manufacturing are around 10 percent to 11 percent, the 0.75 percent of turnover represents about 7 percent of profits, according to the report which is based on a survey of the industrial sector in 10 countries, including the United States and Russia.
Chinese currency to get more flexibility
The market is set to play a bigger role in deciding the exchange rate of the yuan as part of the government's efforts to stabilize trade, the State Council said yesterday.
"China will further improve the foreign exchange system and make it more market driven," it said in a statement.
"Our currency will have greater elasticity in its two-way movement," the statement said.
Exchange rates will stabilize at a "reasonably balanced" level, and the government encourages the creation of risk-hedging financial products to help traders control risks, it said.
Other efforts to stabilize trade include a further reduction of administrative red tape, the development of more model trade zones to nurture competitive importers and exporters, and optimizing the trade structure to give greater emphasis to higher- added-value products, such as those that use new technology or have a strong brand or broad distribution network. >>>More
