More support likely for China exports by year-end, analysts say

Special Report:Global Financial Crisis

BEIJING, Dec. 6 (Chinese media) -- Analysts here expect the

government will announce new policies to support the ailing export sector, with

the top decision-makers to meet soon to outline next year's economic plan.

Zhao Yumin, a researcher with the Ministry of Commerce, told Chinese media on Saturday that a major trade slowdown would have a great impact on employment and related infrastructure. Such a slowdown would also affect economic growth.

Two women make beds on a production line of the small private firm Nangang Shoemaking Factory in Foshan, Guangdong province.Analysts expect the government will announce new policies to support the ailing export sector, with the top decision-makers to meet soon to outline next year's economic plan. (Photo: China Daily)
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November export figures are due for release next

week.

China's top decision makers hold routine economic

policy meetings at the end of every year.

Last year's conference shifted China's monetary

policy from "prudent," an approach it had followed for the previous 10 years, to

"tight," in a bid to avoid overheating and reduce inflation, which were the top

economic concerns at that time.

This year's meeting, however, will have to address

slowing economic growth caused by weaker export and investment conditions.

Exports have been a powerful engine of the world's

fastest-growing economy for years, but the sector has struggled this year as

external demand weakened amid the global financial turmoil.

China's foreign trade has been growing at an

annualized rate of28.5 percent over the past five years. It expanded to

contribute more than 66 percent of the total domestic output last year.

But trade growth slowed to a year-on-year rate of

24.4 percent in the first 10 months, and analysts said the worst was yet to

come.

At the most recent Canton Trade Fair, a venue where

foreign buyers have traditionally come to make purchasing orders, trade volume

fell about 10 percent year-on-year. The decline at that event in October in the

southern export center of Guangdong Province indicates lower export sales ahead.

Premier Wen Jiabao and other top leaders have paid

several visits to the manufacturing centers of Zhejiang and Guangdong, while

President Hu Jintao noted that China was losing its competitive edge in the

world market as international demand was eroded by the widening financial

crisis.

The government has already introduced several

measures to support the export sector, including raising tax rebate rates three

times since late July.

Zhao Yumin said there was still room for further

policy support, such as relaxations on processing trade and the leverage of tax

rebates. She said that policy support should focus on areas that can help

upgrade the trade structure.

Zhao cited encouraging enterprises to venture into

high-end marketing, merger or cooperation agreements among companies that have

brands, technological innovation at smaller enterprises, and the exploration of

new markets.

"The crisis can be turned into an opportunity for

restructuring," she said.

Zhou Shijian, a director of the China World Trade

Organization Research Society, told the Guangzhou-based 21st Century Business

Herald that there could be another round of tax rebate increases after the

Spring Festival, which falls on Jan. 26.

Zhou said China's export growth could reach nearly 10

percent in 2009 if there was substantial policy support. He expected the worst

would be over by the second quarter of next year, since there was a time lag

before policies could take effect. His forecast for this year's export growth

was below 15 percent.

Government moves also indicated the determination to

boost the export sector, making further policy support more likely.

An executive meeting of the State Council on

Wednesday vowed to support trade by facilitating investment in trade and offer

easier access of trade financing for smaller enterprises.