Chinese industry body rebuffs Mexico’s complaint over govt subsidies

By Song Shengxia Source:Global Times Published: 2012-10-17 0:25:05

A Chinese textile and clothing industry agency denied Tuesday charges by Mexico about alleged Chinese government subsidies to textile and clothing industries, saying Chinese companies only receive export tax rebate which is reasonable.

"The charges by Mexico are ungrounded. Chinese companies only enjoy export tax rebate which is justified under the current situation of volatile exchange rate and rising labor costs," Zheng Chen'ai, chairman of the Wenzhou Fashion Association, told the Global Times Tuesday.

The tax rebate is mostly used by companies to offset the rising labor costs and improve work conditions, Zheng said.

"We do not expect the government's subsidies to help a company," he noted.

"Mexico's argument supporting its charges against China is weak and irrational," Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times Tuesday

"The support it mentioned is actually public services that any government around the world may provide to help ease the burden on businesses,"he said.

"And these public services provided by the Chinese government are not merely targeted at exports but also domestic sales. They are not in violation of the WTO's rules," Bai noted.

Mexico filed a complaint Monday at the World Trade Organization (WTO), accusing China of supporting the production and exports of its clothing and textile products.

Mexico said it had requested consultations with China because "China appears to maintain a wide variety of measures that support producers and exporters of apparel and textile products, both directly and indirectly," a statement released by the WTO said.  

The range of measures cited by Mexico include alleged Chinese government subsidies to Chinese textile and clothing companies in the form of exemptions from income tax, value-added tax and local taxes, discounts on loans, land rights and electricity prices, according to the detailed list of potential issues released by the WTO.

The complaint also cited extended loan repayment periods and cash payments from Chinese government agencies, the WTO said.

In response, the Ministry of Commerce said Tuesday that the ministry has received Mexico's request for consultations and will properly deal with the dispute by abiding by the WTO's dispute settlement process.

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