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Chinese are paying more for 'made in China' products

By Cai Muyuan (chinadaily.com.cn)
Updated: 2010-05-05 17:33

As the world's largest manufacturing base, China is exporting countless different products to the world. However, it is Chinese consumers themselves who pay most for products stamped "made in China." According to business owners and experts, export tax rebate policies are the main reason for the phenomenon, the Beijing News reported on May 5.

According to economist Chen Zhiwu, not only are the prices of foreign-made luxury goods higher in China, but domestic-made products such as clothes, computer and commodities are also more expensive here than in the US market.

Luo Jianping, general manager of a toy company in Guangdong told the reporter that the cheap "made in China" products in foreign markets are mostly from labor-intensive industries. Since the products are mostly cheap and low-ended, they are often used in sales promotions or as free gifts.

China's export value-added tax (VAT) rebate policy once promoted the country's exports and fueled economic growth. However, the side effect of the policy is growing and appropriate adjustment is needed, said Liu Kegu, former deputy president of China Development Bank.

The export tax rebate policy can only help keep prices competitive; it cannot assure that profits are made. In the end, the labor-intensive industries producing these goods are not the "winners" in the export market, and the tax rebate is the only support to keep them afloat. In 2009, China has handled 130 billion yuan of export tax rebates, a big stress to the country's taxation, the newspaper said.

"The tax rebate must be adequate, but it should be reduced," Liu said in a forum in late April. According to him, today the side effect of the policy has surpassed its positive impact.