The New Policy Affects the Processing Trade Industry Faces Broad Reshuffle

stantial reduction in export tax rebate rate ofDongguan, open forum, Hongkong and Taiwan
"earthquake" effect has not dissipated, theenterprises in one voice crying, said the cost
processing trade restrictions, "Thunder," come oneincreases, pressure accounting for funds, operational
after another.difficulties. These enterprises have hoped that
On the 23rd of this month about a new version ofrelevant departments in the implementation of
the national implementation process restrictedrelated policy process, can provide more flexible
category, the PRD has aroused strong repercussionsoperation, minimize losses and the enterprise that if
related industries. Two days before yesterday, seventhe measure is not perfect in matching the time of
ministries and commissions jointly organized by thethe cancellation of "SMEs often," then there will be
national research team went nonstop.more companies unbearable.
Guangzhou, Dongguan and Shenzhen, the processing"Big reshuffle" will be staged.
trade enterprises with foreign investment toGuangzhou Municipality Director Luo Kunming
communicate and listen to feedback.processing trade that ultimately put the new
Yesterday morning, the Guangzhou municipaldirectory, and compared to the original rumors of the
government policy specifically hold special briefings forpolicy, there are many liberal areas, such as restricted
representatives of more than 400 processing tradeitems than the export tax rebate reduction of more
enterprises Interpretation of the New Deal.than 2000 categories to be less Guangdong proud
At the press interview, no matter experts ordeep processing carry-over restriction, this also did
government officials, all said the new policy onnot immediately halt "SMEs often", it is important that
processing trade industry, the impact of the Pearlthis policy adjustment to the most up to a Year
River Delta is not small, the industries will lead to atransition period.
major reshuffle survival of the fittest, how the crisisThis year, the state regulation of import and export
into the transformation and upgrading of power,trade, a portfolio of applied frequency, first published
enterprises are facing difficult choice and even lifein April, "Catalogue Prohibited for Processing Trade",
and death.then notice "to strengthen management of
"New policy" extensive influence.processing trade", followed in mid-June announced a
July 23 this year, the Ministry of Commerce, Generalvariety of products to reduce export tax rebate
Administration of Customs jointly issued the "Noticerate, and is now new 1853 restrictions on processing
No. 44", provides processing trade restricted catalogtrade products, all aimed at the same goal???
of 2247 10 Customs commodity code, 394 of whichoptimize the export structure, and low value-added,
have been issued for the goods before the yearhigh energy consumption, high pollution, the excessive
2007, 1853 for the new products, also provides forgrowth of exports and reduce trade friction to
the inclusion of restricted goods will implement thepromote transformation and upgrading of processing
bank deposit account, "real change" management.trade.
The new policy will be Aug. 23, 2007 formally"For the weak or a crisis, with the transformation
implemented.and upgrading of the capacity of the enterprise is a
The 1853 New restrictions on products mainly ofturning point for the strong, the winner is a historical
plastic raw materials and products, textile yarn,opportunity for development." Xiao Zhenyu pointed
fabrics, furniture and other labor-intensive industries,out sharply.
accounted for 15% of customs commodity code.Customs investigations showed that from January to
Under the new policy, business managementJune this year, Guangdong involve new version of
category by Customs to pay security deposit. A"list of restricted processing trade" in the actual
Class B Class and subject to a 50% margin business;import and export of processing trade enterprises
C class of business by all bonded imported materialsrecorded a total of 7647, accounting for the same
and import duties payable on imports and 100% ofperiod the actual import and export records in
value added tax levied margin.Guangdong have the total number of processing
According to Guangzhou Customs investigation, fromtrade enterprises 23.9%.
the structure of export commodities of view,Among them, foreign-invested enterprises are the
affected the amount of Guangdong is the biggestmost affected groups. Data show that from January
textile yarn, fabrics and products, affecting theto June this year, foreign-funded enterprises import
widest range of plastic products. Structure ofand export of processing trade in Guangdong list of
imported goods from the point of view, the greatestrestricted goods worth 73.5 billion U.S. dollars,
amount of Guangdong affected as steel, textile yarnaccounting for the new directory by the impact of
and fabrics and products, primary plastics.the total value of goods 79.2%, accounting for the
"Shock wave" quite a lot.same period under the processing trade in
"Policy adjustment in the short term part of theGuangdong foreign-invested enterprises into 5.3% of
processing trade enterprises will have some negativetotal exports.
impact, especially in Guangzhou Textile shoes, hats,"Transitional period" should have strokes.
jewelry, leather, chemicals, feed, etc. have certainHow the new policy while avoiding disadvantages?
impact on traditional industries." Guangzhou ForeignGuangzhou Municipality Director Luo Kunming
Trade Secretary Dr Xiao said that Guangzhou hasprocessing trade enterprises to Return Weapon: First
more than 470 enterprises of processing trade policy44 Notice to make full use of "transition." It is
adjustments by the impact of last year's estimatedreported that, according to policy, August 23, has
import and export volume of processing trade inbeen approved and registered in the processing trade
Guangzhou, with 2.587 billion U.S. dollars (not includingcontract can still be valid according to the contract
the deep processing carry-over) included in the new(six months to 1 year) is finished, so that businesses
restricted category, accounting for Guangzhoucan get up to one year transition period.
Processing exports worth as much, and theHe suggested that had not yet engaged in
enterprises to increase the burden of 1.245 billionprocessing trade enterprises have the right to
yuan of bonds.operate the door as soon as possible to the MOFTEC
From Guangzhou Customs statistics show that duringfor the record, the relevant contracts should organize
the first half of this year, total imports and exportsas soon as possible, as the exhaustion of one-year
of processing trade in Guangdong 179.22 billion U.S."transition period."
dollars, up 16.6% over last year, accounting for theIn addition, enterprises can take advantage of the
same period the total value of imports and exportsfavorable terms of Notice No. 44, such as deep
of Guangdong 62.7%, although the impact ofprocessing carry-over model as far as possible in
Guangdong affected by the new directory importorder to import materials or export goods between
and export value of processing trade accounted forthe two small side to declare the amount of deposit
5.2% of GDP, lower than the average impact ofso as to reduce the margin of the burden.
China's level of 2.5 percentage points, but as theEnterprises should also accelerate the pace of
largest province of China's processing trade, theproduction logistics and reduce the stock of imported
introduction of restricted catalog of adjustment, willmaterials, the use of public-type and own bonded
be the processing trade in Guangdong long-termwarehouses, on the margin of the burden of heavy
development and industrial restructuring have a majorimport duties on goods to make use of a large
impact.decrease in alternative commodities, for the State
Dongguan Foreign Investment EnterprisesExport-Import Bank lending interest rate support,
Association, the official said, seven ministries andmargin pressure will be lower.
research group called processing trade enterprises in