Beijing, February 9:

China will grant tax rebates on imports of parts and materials for the production of advanced equipment in a bid to cut its huge foreign trade surplus, state media reported today.

Altogether 16 industries, including large power-generating plants and transmission equipment, will benefit, the China Daily reported, citing State Administration of Taxation. It is ai-med at balancing the country’s trade with the US and the EU who suffer yawning deficits with China but are also major prov-iders of such parts and equipment, according to the report.

“The impact on boosting imports is obvious,” said Peng Longyun, a senior economist with the ADB. China’s trade surplus last year hit a record $177.5 billion, up by 74 per cent from the previous record of $101.9 billion set in 2005 and sky-rocketing more than five-fold from around $32 billion in 2004.

“Cutting the huge trade surplus is the priority task for 2007,” commerce minister Bo Xilai said last month. He warned the figure would widen to $300 billion and turn ‘an economic problem into a political one’, if measures were not taken.

On the other hand, as a rule that ‘shoots two birds with one stone’, Peng said import tax rebates could also clear bottlenecks in the manufacturing of key equipment and bolster the development of whole industry.

Lost charm

BEIJING: Textile products from China are losing competitiveness as export tax rebates are being lowered and the currency is gradually rising. The whole industry will lose strength in overseas markets if the yuan rises too much. A growing nu-mber of anti-dumping cases against Chinese textiles filed by trading partners also makes conditions tou-gher for the industry. The average profit margin of the textile sector was under 3.7 per cent, or about two thi-rds of average national industrial profit margin. — AFP