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Big bonanza for logistics, metal firms
By Jiang Wei and Lu Haoting (China Daily)
Updated: 2009-02-26 07:53

The State Council, or the Cabinet, has approved fresh stimulus boosts to the country's non-ferrous metal and logistics industries as part of a larger effort to give a fillip to the domestic economy, which has been hit by the global financial crisis.

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This was the last set of stimulus packages, after similar efforts were announced for the automobile, steel, shipbuilding, textile, manufacturing, electronics, light and petrochemical sectors earlier.

Under the latest move, China will likely increase tax rebate rates on non-ferrous metal exports. The government would adjust the tax rebate system in the sector, the State Council said, without elaborating. The tax rebates on non-ferrous metal products vary from zero to 5 percent. "

China will also support exports of technology-intensive non-ferrous metal products with high added-value," it said.

The stimulus plan for the industry will speed up the establishment of a national reserve system for non-ferrous metals, it said without giving details.

Big bonanza for logistics, metal firms

The logistics center of the Shenyang East Railway Station. [CFP]

The government will also give credit to enterprises in the sector to upgrade their technology.

China also plans to restrict the total capacity of nonferrous metal producers, shut down small refiners and encourage restructuring among major metal makers, the Council said.

The stimulus plan will benefit the development of the sector and large enterprises are expected to benefit more from the support measures, said Huang Yu, analyst, Minsheng Securities.

The stimulus package for the logistics industry has also identified a series of key projects. This includes developing multimodal transport and transshipment facilities, building logistics parks, expanding logistics services for rural areas, establishing public information data platforms and developing emergency and bulk commodities logistics.

The government will also encourage the development of logistics for major industries such as energy, minerals, automobile, agriculture and pharmaceuticals.

"The overall level of China's logistics industry is still low and has put a strain on improving the efficiency of the national economy. We must speed up the development of modern logistics, which could ultimately spur the growth of other industries," the State Council said.

The government will also encourage mergers and acquisitions in the sector in a bid to create a number of large-scale modern logistics companies.

"The stimulus plan is definitely good news for the industry. China has a lot of logistics companies, but few can really compete with international rivals. We hope Chinese logistics firms will grow faster with government support," said Wang Shusheng, chairman of DTW Group, one of China's largest private logistics companies.

China's logistics industry is still fragmented. For example, there are about 2.7 million trucking companies in the country, many of which are mom-and-pop units with only one or two trucks.

The industry has been battered by rising operational costs and falling cargo transportation demand due to the export growth slowdown.

The State Council meeting also said that the central government and local government will pool 100 billion fund to assist and encourage the technological innovation efforts, which it said is of "great significance to cope with the on-going global financial crisis".

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