China unveils package to fight economic woes

BEIJING: China yesterday published a series of measures to boost exports and consumption, marking the latest attempt to tackle the worst economic outlook in a generation.

A hike in tax incentives to exporters of machinery and electronic products were among measures unveiled after a meeting of the State Council, or Cabinet, chaired by Premier Wen Jiabao, the China Daily said.

Participants in the meeting also decided to expand the list of product categories where foreign investment in processing trade is permitted, according to the paper.

As part of the same package, the government will increase subsidies for farmers buying household appliances in a bid to tap the potential of the 800 million consumers living in the countryside, Xinhua news agency reported.

Other measures include money spent on boosting retail outlets in urban and rural areas, according to Xinhua.

Evidence has been piling up that China is headed for harder times as its foreign trade sector takes a direct hit from the global crisis.

The nation's exports dropped 2.2 per cent last month from a year earlier, the first decline in more than seven years.

The Chinese economy, on the verge of officially becoming the world's third-largest, is likely to see growth slow to 7.5pc next year, the worst performance since 1990, according to the World Bank.

Meanwhile, China's State Reserves Bureau (SRB) has agreed to buy about 300,000 tonnes of aluminium at around 12,300 yuan ($1,800) per tonne next month to support producers, trading and industry sources said yesterday.

The price represents a premium of almost 10pc over the key Shanghai aluminium futures contract, which rose 60 yuan to 11,330 yuan yesterday, a three-week high, but still only just over half the peak reached in March this year.

The SRB will buy around half from Chalco, the listed arm of state metals firm Chinalco, and 20,000 tonnes from each of seven other smelters, the sources said.

One industry source named the smelters as Shanxi Guanlu, Yunnan Aluminium, Henan Shenhuo, Qingtongxia, Huolinhe, Henan Wanji and Qinghai Qiaotou - all state-controlled smelters based in different regions of China.

The SRB met the eight firms yesterday, one industry source familiar with the situation said.

Two industry sources put the total volume of sales at 290,000 tonnes, with Chalco providing 150,000 tonnes, and the price at 12,350 yuan rather than 12,300.

Several sources said officials were still discussing further purchases and could target one million tonnes in total.

Chinese officials have said they plan to buy up resources and materials to support producers, who are smarting from prices that have fallen below the cost of production.

The SRB has already bought 30 tonnes of indium, a minor metal used in making LCD screens, from a large Chinese smelter, a trade source said last week.

It also plans to buy 300,000 tonnes of zinc, a smelter official said last Friday.

China's aluminium companies, like their competitors worldwide and their peers in other base metals, have been forced to shut in some production to cope with the impact of the global economic crisis, which has crippled demand.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.