China will raise export taxes on 74 sorts of textile products, with a 400-percent hike for most of the products, on June 1, the Customs Tariff Commission of the State Council announced yesterday.
The announcement came after the United States imposed quotas on imports of Chinese textiles. The European Union also is pressing China to restrain the growth of its textile exports.
Tariffs will be raised on the 74 textile products from the 0.2 yuan to 0.3 yuan per piece that has been charged since January 1, to 0.5 yuan to 4 yuan (48 US cents) per piece starting next month, according to the announcement.
The government will also start charging an export tax of 3 yuan for every 1 kilogram of combed cotton yarn sold abroad. Currently, no export tax is charged on combed cotton yarn.
Most of the textile products to be affected by the new tariff increase are exported to the United States and the European Union, which include the seven kinds of products restricted by the United States, according to the China National Textile and Apparel Council.
The council's Vice President Gao Yong said the Chinese government had made the decision "independently and voluntarily" in a bid to curb the rapid development of textile export, after listening to advises from Chinese textile companies and chambers of commerce.
Gao said his council had suggested the government earlier that the tariff rate be raised by a modest margin, and the tariff hike not affect too many products.
According to the China Textile Industry Council, Chinese textile companies would have to "make sacrifice" as a result of the export tariff hike.
Sun Huaibin, spokesman for the council, said that the council understood the decision of the government, as "it is for the purpose of helping establish a new world textile trade order and ease the trade friction."
The American Chamber of Commerce in China welcomed China's drastic hike of the export tariffs, saying "this voluntary step demonstrates that China is adopting a constructive approach and is sensitive to the very real hardships which the removal of quotas has brought for some American workers."
"We are encouraged by this move that the United States and China may be able to resolve other trade differences with a similar sense of fairness and moderation," said Charlie Martin, president of the chamber.
However, China Textile Industry Council spokesman Sun said that the tariff hike would surely result in an increase of cost and decrease of profits for domestic companies. Some companies might sustain losses and textile workers might lose their jobs.
"This is what we don't want to see," said Sun. Chinese exporters said the export tax increase will deal a big blow to their businesses and cause some small companies to shut down.
"The latest increase in export taxes will largely increase our costs and hurt the company's profits," said Liu Ling, chairman of Jiangsu Soho International Group Corp, a major apparel exporter.
She said many small companies won't be able to afford the higher taxes and will have to stop exporting affected products.
Zhang Peisen, head of a policy research group under the State Administration of Taxation, said the government move, though painful for Chinese manufacturers and workers, could also help the country's textile sector readjust their export strategies and introduce more advanced technology to increase the added value of their products.