China said on Wednesday it will pay export tax rebates faster and grant more loans to exporters, as well as increase export credit insurance to small companies, in the latest move to prop up growth in the world’s second-largest economy.
Growth in the world’s second-biggest economy has slowed for six straight quarters, and is at risk of missing this year’s target of 7.5 per cent, as demand slows at home and abroad.
“China will speed up the issuing of export rebates to make sure companies get tax rebates adequately and promptly,” the State Council said on its website, www.gov.cn, after a regular weekly meeting of China’s cabinet chaired by Premier Wen Jiabao.
Speeding up rebate payments will be of help particularly to smaller firms, which sometimes wait up to three months for money to be refunded. Such a measure also avoids irritating trade partners, which might protest at any changes in actual rebate levels that could make exports more competitive.
“Speeding up export rebates will be greatly helpful for companies’ cash flow and improve their operational environment,” said Long Guoqiang, a trade researcher with the Development Research Centre of the State Council.
Beijing will widen the range of export credit insurance, especially for small-scale enterprises and increase loans to exporters, it said.
It will also cut red tape to quicken customs clearance for exporters and encourage companies to sell to emerging countries.
The State Council added that it would encourage imports, particularly of machinery and technology, to help balance trade.
Chinese imports dropped 2.6 per cent on year in August, coming in far below expectations and raising worries of sharply weakening domestic demand. August exports grew 2.7 per cent year-on-year, again below expectations of 3 per cent.
Wen said on Tuesday that if needed the government could utilise a 100 billion yuan ($15.79-billion U.S.) fiscal stability fund to boost growth. Last month he said the government would launch new measures to stabilise export growth in the third quarter.
Mr. Wen’s comments came after China’s President Hu Jintao warned at the weekend that the world economy was hampered by “destabilising factors and uncertainties” and that the 2008/09 financial crisis was far from over.
Hu promised China would do all it can to foster a global recovery by rebalancing its economy.
China’s economy expanded at its slowest pace in more than three years in the second quarter, growing 7.6 per cent on year as demand at home and abroad slackened.