Source: China Daily

07-26-2007 17:21

The government has pledged to further curb exports of cheap labor-intensive products and enlarge imports, narrowing the bloating trade surplus.

China will again expand the list of processed goods subject to export limits by the end of this year, Wang Qinhua, director with the Ministry of Commerce (MOFCOM)'s department of Mechanic, Electronic and Hi-Tech Industry, said yesterday.

The announcement followed a similar expansion of the list announced on Monday by MOFCOM and the General Administration of Customs. Enterprises who work processing certain items will have to deposit half of the levy, including duty and value-added tax, to customs.

"The new policy will add to the cost burden on exporters and will affect their cash flow. Those engaged in the labor-intensive part of the industry will be most affected," Wang said.

She said she expected the new policy would force exporters to increase the value to their products, upgrade technology and move up the industrial value chain.

She added that the changes will not apply to western and central China, giving regions with cheaper labor a chance to develop processing bases previously clustered in the coastal provinces.

Processed goods are regarded as a major source of China's record high trade surplus, which hit $112.5 billion in the first half of 2007.

While restricting exports of labor- and resource-intensive products, China is also adopting various measures designed to enlarge imports and help balance the trade surplus, said Wang Shouwen, director of MOFCOM's foreign trade department.