EXPORT-DEPENDENT cities and provinces are scrambling to provide relief to exporters, stabilize employment as an intensifying trade dispute with the United States threatens to further erode business. Guangdong, China’s biggest province by gross domestic product, last week offered to cut corporate taxes, slash electricity prices and reduce transport and land costs as additional U.S. tariffs since July exposed Chinese manufacturers to the prospect of empty order books. The tariffs have come at a time when the province is in the midst of an economic restructuring as it tries to move away from low-end, labor-intensive manufacturing. Fujian, another exporting province on the coast, unveiled a similar package of measures in August to soften the blows of the trade war. “To some, this is a microcosm of what could happen to other export-dependent provinces should Trump roll out the full tariffs,” said Jonas Short, head of Beijing office at brokerage Everbright Sun Hung Kai. “It’s also structural — cost rises due to land usage, as well as social security and funding pressures. But also the shock of these tariffs acted as a double whammy.” Guangdong’s exports fell 2 percent in the first seven months from a year earlier, with shipments of machinery — accounting for more than half of its exports — up only 2.2 percent. Three Guangdong cities — Zhongshan, Foshan and Shenzhen — are racing to meet criteria for a program under which exporters, both domestic and foreign-owned, are exempted from a value-added tax of 16 percent. Small firms with no export licenses can also bundle their products with trading firms that have permits. Zhongshan is especially vulnerable, being one of the Chinese cities most dependent on U.S. customers. Directly in the line of fire is Zhongshan’s Guzhen District, the largest production base of lighting fittings in China.(SD-Agencies) |