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Govt vows support for hard-hit industries

By Zheng Lifei (China Daily)
Updated: 2008-12-13 10:17

The government on Friday vowed to take more concerted measures to support the nine major industries hit by the economic downturn, in a bid to reverse the declining industrial output growth.

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The Ministry of Industry and Information Technology announced a package of seven measures to help industries such as steel, auto and shipbuilding weather the economic decline brought about by the global financial crisis.

China's annual industrial output growth tumbled from 16 percent in June to 8.2 percent in October, a decline that has worried policymakers and economists alike.

"In reversing declining economic growth, industry is the focal point and enterprises are the hardest nut to crack," Li Yizhong, minister of Industry and Information Technology, said at a press conference.

Li said industrial output growth slumped in November and may dive further in December, without elaborating.

The government will further reduce the tax burden on companies and increase credit support to ease their financial problems, the ministry said in a statement.

The government will encourage and support industrial restructuring and consolidation, especially in the steel, non-ferrous metal and building materials sectors, the industries worst hit by the economic slowdown.

In addition, the government will work to explore the potential of consumption in rural areas, and stabilize and increase export markets to seek more space for the nine industries, the ministry said in the statement.

The government is considering raising export tax rebates and buying some high-end steel products for its reserves to help the country's steel industry, the world's largest, which have suffered huge losses in recent months as steel prices have tumbled more than 40 percent.

"We suggest the export rebates on several high-end steel products could be raised by several percentage points," Li said.

The country will also beef up its financial support to steel mills' technological upgrading projects.

He said the government is preparing to earmark 15 billion yuan ($2.19 billion) to subsidize interest payments on loans taken out by companies for technological advancement.

But Li said the downturn also offered a chance for the fragmented steel industry to consolidate.

"We should work out preferential policies to encourage the consolidation among the 1,000-plus steel mills," Li said.

The steelmakers, Li said, should also seek more bargaining power in iron ore pricing by presenting a united front in negotiations.

As for the auto sector, the industry minister said the government may consider cutting sales taxes for low-emission cars and working out more favorable policies to encourage individual car purchases to support the car industry, which saw its first year-on-year drop in sales in three years in November.