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China Stimulus - Sector By Sector



  • In addition to stimulus plans announced in November, State Council has announced additional sector specific ones relating to auto, steel, textile, machinery manufacturing, shipbuilding, light industries, electronics, petrochemical industry, logistics, and non-ferrous metal sectors. General focus is to try to reduce overcapacities and foster encourage consolidation (long term goals), though doing so may be difficult, particularly as some of the funds may just add to overcapacities. Additional real estate and energy focused support has not been included (federal and regional govt already rolled out real estate supportive policies in late 2008) but are being discussed at the party conferences.
  • Auto and Steel: lower purchase tax on certain cars, especially fuel efficient; $730m in one-off allowances to farmers to upgrade vehicles; encourage industry consolidation;and establish a 10b-yuan government fund in steel. However it may be more difficult to phase out surplus and consolidate than expected - China currently has a steel glut as producers reversed production cuts too soon
  • Non-ferrous metal: increase tax rebates; support high-value added exports of non-ferrous metal products; create and expedite national reserves; give credit to upgrade the technology. total capacity of nonferrous metal producers will be controlled
  • Textile: increase tax rebate; phase out obsolete capacity; eliminate energy-intensive equipment and technology; and encourage relocation to central and western areas (these plans have been under way for some time but may not be key priority)
  • Shipbuilding: increase credit extend the financial support for oceangoing vessels until 2012; suspend construction of new docks and the expansion of slipways
  • Electronics: promoting the 3G mobile services and digital TVs; develop national science and technology projects and improve public technological service platforms; and promote outsourcing and increase tax rebates
  • Light industries: subsidize farmers' purchase of TVs, refrigerators, washing machines and mobile phones, microwave ovens; increase export tax rebates; and remove restrictions on some labor-intensive and hi-tech processing trade
  • Petrochemical: speed up of oil refining and ethylene projects construction; limit development of the coal-to-chemical industry and stop approvals for production expansion
  • Logistics: develop transport and transshipment facilities; build logistics parks esp in rural areas,; encourage the development of logistics for major industries such as energy, minerals, automobile, agriculture and pharmaceuticals.
p/s Elanne Kong Yuk Lam

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