this crisis is above all a financial crisis, China's financial sector and financial markets have not suffered much in a crisisthe impact of China Industrial and Commercial Bank of China such as Chinese financial institutions in a crisis or even become the world's highest and most profitable market bank.Lehman bankruptcy in 2008 after just over a month, China's export growth rate appeared more than 20 percent decline.Thus, China and the rest of the world very different picture emerged.Wall Street, on weekdays in a suit white-collar, began holding cardboard boxes and had to leave once they have recorded a significant revenue office; in China, but those displaced, the total daily in overtime in the production line workers, helplesslycarrying bags and go home before the New Year.Export this past important China's economic growth momentum, it seems that overnight turned into a crisis in the United States and the world economy into China's fuse.

in the economyschool, the general view that economic policy directed at a problem only where the policy will have the best effect.China in this crisis, exports and external demand is undoubtedly the most serious problem, and is the source of crisis in China.So, China's anti-crisis policy efforts should be primarily on the stability of export policies and external demand spheres?

export sectorresulted in mass unemployment, it should be by encouraging exports to stabilize employment?China, through a wide range, greatly increased the export tax rebate rate to try to stabilize the export.2009 budget amounted to 670 billion yuan for export tax rebates, the actual likely to reach 800 billion yuan, the Chinese year of the funds accounted for 14% of tax revenue.Such a large amount of overhead, in the end will achieve what effect?And what problems?After the first anniversary of the Lehman bankruptcy, review and re-evaluate policies to encourage exports, and perhaps more conducive for us to see how China should deal with this crisis.

encourage exportscan not be stable external demand and the resumption of economic growth?

export declineled to the economic downturn, it is not on the need to restore the economy by encouraging export growth?

should be awarethat the reason for the sharp drop in exports, not because of external competition, caused by, nor is the rising costs of Chinese products due to, but mainly the external economic recession, caused by external income and purchasing power declined due.Clearly, China's policies on restoration of the world economy, stability, external income and purchasing power was somewhat powerless.Therefore," directed at the problem itself," the principle of this policy in stabilizing the external revenue does not apply.China wants to promote exports, only through the RMB devaluation, export subsidies, export tax rebates, increased costs and lower export prices approach.As the devaluation of the Renminbi by external imbalances restrictions, export subsidies under WTO rules limit it, so China's major export tax rebate rate by improving the ways to encourage exports.External demand in the current depressed, raising export tax rebates would be fully reflected in export prices, and through lower prices to promote exports.

Price Policysee the effect of price elasticity.Even the most strict accordance with our estimates, the overall price elasticity of China's exports, and only 0.65.In other words, export prices fell 1 percent, exports rose by only 0.65 percentage points, but exports will decline by 0.35 percentage points.If the export of the export tax rebate for lower export prices, all are seemingly encouraging exports of 800 billion yuan export tax rebates will actually lead to China's exports to the revenue derived from the 280 billion yuan.This means, come up with 800 billion national financial return to the export business, but actually only a 520 billion company, another 280 billion price cut subsidies by foreigners.Moreover, China's exports and 50% are foreign-funded enterprises completed.520 000 000 000 export enterprises received tax rebate, there will be a large part of the foreign investment income.Price leakage and leakage of foreign income will greatly reduced the effect of export tax rebates, export tax rebate, only about half of national income can be Chinese.

, of course,to increase export tax rebate and export prices will make the exports volume growth, growth in the number of export products through the demand for labor, raw materials and components such demand or investment demand has a multiplier effect on the economy stimulating role.However, some of these raw materials are imported spare parts requirements, which will reduce the part of the pull effect.Moreover, a substantial decline in exports and economic decline, the export growth was mainly the use of excess capacity, stimulating effect on investment is relatively weak.Considering the above, you can calculate the increase in the volume of these exports in driving GDP is about 1.2 times the multiplier.That is, a unit of real export growth could lead to 1.2 units of growth of real GDP.

total tosee, 800 billion yuan of export tax rebates, because the reasons for the lower price elasticity, can only generate 520 billion yuan of real exports, while 520 billion yuan of real exports, even if the multiplier effect, can only generate 624 billion yuanreal GDP growth.This is a clear lose money trading.Taking into account foreign-funded enterprises should also be part of their income in which the export tax rebate on the stimulating effect of GDP or less.

fundsThe use of the opportunity cost, if 800 billion increase in export tax rebates directly to the purchase, in accordance with the multiplier of 1.2 times, but also can produce 960 billion of GDP growth.Can be seen through the export tax rebates to encourage exports, although to some extent to achieve export volume growth, but very costly to the economy for a very limited role.As the export tax rebate will occupy other government spending money, so we can even think that the more export tax rebates, in fact, the less conducive to restoring economic growth.

encourage exportscan not solve the employment problem?

encourage exportsAnother important reason is to solve the employment problem in China is to prevent the influx of returning migrant workers may lead to social problems.

intuitive, China's exports to labor-intensive products.In the labor-intensive industry, producing the same output need to be more labor than other industries, the employment elasticity larger than other industries, the output growth can bring more employment growth, labor-intensive industries to support the most effectiveto promote employment.Therefore, to encourage exports of solving the employment problem of the most effective way.

The logiclook quite right, but in fact left out an important factor, which is mentioned above, the price elasticity of the problem.Low price elasticity of export incentives will not necessarily make an effective promotion of export growth, and therefore not necessarily effective in promoting employment growth.China mainly through the export tax rebate to encourage exports, while export tax rebates, lower export prices, mainly through the promotion of exports, therefore, the export price elasticity to evaluate the effect of incentives is critical.Although labor-intensive industry employment more flexible, but the export price elasticity may be very low, so by the export tax rebate to encourage the export of labor-intensive industry in fact does not necessarily effective in promoting employment growth.

example tosaid that China's apparel industry is a typical labor-intensive industries, the employment elasticity of about 0.43, or 1 percent of export growth can promote the industry's 0.43 percentage point increase in employment; the vehicles and their parts and components industry, capital-intensivemuch higher than the apparel industry, its fixed assets per capita is 4 times more than the garment industry, its employment elasticity correspondingly much lower than the garment industry, one percentage point only to promote export growth by 0.27 percentage points of the industry employment growth.Light from the employment elasticity of view, the support of the garment industry support than in the vehicle industry is more conducive to job growth.However, this is just taken for granted.

factChina's apparel exports of the sensitivity of demand to price is much lower than the vehicle industry.Non-knitted clothing exports price elasticity is only 0.25, while the vehicle industry, the export price elasticity is close to 1.0.This means that the price of 1 percentage point drop in the clothing industry can only have 0.25 percent of export growth, despite its relatively high employment elasticity, together can only lead to 0.1 percentage point increase in employment; and 1 percentage pointlower prices in the vehicle industry was able to bring a point of export growth, despite its relatively low employment elasticity, together can also cause employment growth by 0.27 percentage points.Even taking into account the size of the two industries is different from the export tax rebate through the vehicle industry to promote the employment of non-knitted apparel is more than 2 times.

addition to the priceflexibility will affect the export tax rebate on the role of employment promotion, the export tax rebate also affect the calculation of the effect of an important factor.In the face of shrinking demand for exports, large and efficient exporters of workers by reducing working hours, holidays, lower wages, etc. as far as possible to maintain employment, while the smaller, and less efficient companies will have to close insolvent,dissolution of the factory.It is a large number of small businesses closed bankruptcy has caused a serious unemployment problem.However, the export tax rebate for workers, but not directly, not by head count, but according to the number of exports calculated.Although many small businesses, unemployment is also more, but the proportion of total Chinese exports is not large, the main export is done by the large and medium enterprises, which mainly export tax rebate also large and medium enterprises obtain.Really need help to maintain a significant role in promoting employment and small enterprises in the export tax rebate can only be a small part.This factor also makes the export tax rebate on the greatly reduced role in promoting employment.

addition,In the long run, China can no longer rely on labor-intensive export industries to solve the employment problem.In fact, in recent years, labor-intensive manufacturing employment growth had not China a major source of employment growth.2004 to 2006, the scale labor-intensive manufacturing employment growth was only 236 million people, while the scale of employment growth in capital-intensive manufacturing sector has reached 474 million.At the same time, capital-intensive industry, total output, exports, Trade surplus and investment growth is also far more than labor-intensive industries.Over the past few years, China's manufacturing industry is no longer a labor-intensive industries developed.This reflects China's industrial structure is changing, China is a relatively affluent countries, the labor abundant country relative to the change in the capital, China's comparative advantage is also changing.For now this change will not be reversed, so even if China wanted to develop labor-intensive manufacturing industries to solve the employment problem, it has been difficult to achieve.

how to treatneutral tax rate?

implementationof tax rate seems to increase export tax rebate rate is one of the most compelling reasons.

countries around the worlddifferent tax system, some countries based on income tax, turnover tax mainly While some countries.Even if the turnover tax, some countries major part of final consumption in the product tax, some countries, mainly in the production part of tax.Which of the different tax rates and collection methods are different.In order to ensure products from different countries in the same country markets to fair competition and avoid the tax system and tax rate not the same as the tax burden caused by the product inconsistent with the international common practice is to be returned in the exports of the product in China, the turnover tax is levied.This can generally ensure that all exports are exclusive of tax.When the product to the destination, then re-importing country's tax revenue, making imported products and products of their own to keep the Chinese substantially the same tax (tariff exceptions).China is a country based value-added tax, VAT is levied in production turnover tax, China's exports to return the levy of VAT, customs duties on imported products at a value-added tax and also pay the additional levy.This is the internationally recognized common practice, so the export tax rebate will not be recognized as export subsidies and import VAT will not be recognized as import barriers.

according to theprinciple, the so-called neutral tax rate generally refers to the original number of value-added tax imposed on the number of value-added tax should be refunded, so that exports remain zero tax, that" the number of retired levy number," or call full refund.China's export tax rebate rate in the past and did not meet" the number of retired levy the number of" level.Especially from the substantial growth in 2005 after China's trade surplus, China has reduced the export tax rebate rate to curb the rapid growth of exports and trade surplus.Therefore, China's export tax rebate is not complete and did not realize so-called" number sign back the number of" neutral tax rate, which also led to China's still room for improving the export tax rebate rate.

However, the" How many retired levy number," Although China's products to achieve a fair tax burden in the international arena, but can not guarantee the export of products and Chinese products fair tax burden.As the tax system in many countries not to transfer tax-based, but mainly to income tax, turnover tax and therefore the burden of Chinese products is higher than many countries.If implemented fully tax rebates on exports, the same products sold in China and China contained turnover tax tax burden is much higher than exports.This is leading to the export prices of Chinese goods than China, an important reason for low prices.Increase export tax rebate rate, the implementation of full refund, looks like the so-called neutral equitable tax rebate, but actually it is an export promotion policy, and is a" legal but unreasonable" export incentives.Reason" legal" because of its compliance with international trade rules; reason" unreasonable" because it would have adverse consequences for the Chinese economy.

full refundThe first negative consequence will result in welfare losses, and reduce the efficiency of resource allocation.The same product, same consumption of resources, because tax is different than the overseas Chinese consumers to pay higher prices for consumers, or overseas consumers cheaper than Chinese consumers consume more resources in China.Not the same as the tax burden has led to more enterprises to enter the export market, increased Chinese enterprises with the industry's competitiveness in export markets, thus making it difficult by improving terms of trade (terms of trade means a country unit export prices and unit prices of imported goodsthe relationship between terms of trade improvement means that the country can export the same amount of goods in the international market in exchange for more imports.

In general, improved terms of trade means that China's increase in total supply of goods and people to improve the welfare of) to improve national welfare.Exports of low tax burden also make some inefficient enterprises are still able to survive, these companies without the export tax rebate can not profit or even losses.The existence of these enterprises will reduce the overall manufacturing productivity and efficiency of resource allocation.

full refundThe second negative consequence is exacerbated by the imbalance of China's economy.Lower export tax makes the resources more focus to the export sector, resulting in insufficient supply in China and supply of high prices, causing China's economic imbalances, and further lead to the external economic imbalances.

full refundThe third is easy to cause the adverse consequences of international trade friction.Although the full refund in line with international trade rules, but the objective form of the export price cheaper than the Chinese situation.The" lower than prevailing prices in China sold abroad" is a recognized standard of dumping practices.Foreign anti-dumping investigations certainly do not believe the low prices of Chinese exports is taken in line with international rules for the export tax rebate policy, so long as to confirm the export price lower than the Chinese market in China is sufficient.Therefore, Chinese products overseas anti-dumping investigations, in general, always check a prospective one.

showsneutral tax rate should not be only fair in the international tax, export tax rates on the principle of zero, should not be" the number of retired levy number," while China's exports should be considered a fair sales tax issue and should not distort the China Resourcesconfiguration principle.China has produced an excessive concentration of resources to the export sector, the tendency to further increase if the export tax rebate rate, it is the deviation from the true neutral tax rate is a solid in order to distort the allocation of resources at the expense of China's export incentives.In addition to this export promotion policy to give further trouble for the Chinese economy, the difficult to achieve other goals.

This articlepublished in published in the:China Trade Information (http://en.zgxu.com),detailed reference to the above website.