China's textile companies say the government should slow yuan gains and raise tax rebates to assist exporters weathering a decline in global demand.
The currency has risen 7 percent against the dollar this year, more than double the pace of appreciation for the same period in 2007, and that, coupled with higher costs, is hurting earnings, Du Yuzhou, President of China Chamber of Commerce for Import and Export of Textiles, said at an industry conference in Shanghai.
Most textile companies had been unprofitable for the first five months of the year, he added.
"We'll all be dead if the government doesn't increase tax rebates and slow the appreciation," Tang Zhenya, a salesman at the Changshu Shengtian Knitting & Clothing Co Ltd, told Bloomberg News. He estimates that up to 30 percent of the more than 10,000 textile manufacturers in eastern China's Changshu City have shut down this year.
The yuan yesterday dropped the most in seven weeks on speculation that China's leaders will slow its advance to protect exporters after the government reported the weakest economic growth since 2005.
The Ministry of Commerce has urged China's cabinet to rein in currency gains and boost the amount of tax returned to companies selling abroad, a ministry official said on Monday.
"Not every company is able to overcome the difficulties," Du said on Tuesday at the China Textile Industry's Top 500 conference in Shanghai. "Two-thirds of the companies have improved labor efficiency but are still unable to offset the negative impact of higher costs and a stronger currency."
