China is to raise tax rebates for certain textile and garment exports to help producers cope with the paper-thin profit margins squeezed by the yuan's appreciation and higher costs.

Export tax rebates for some textile and garment items would be increased by two percentage points to 13 percent from August 1, the State Administration of Taxation said in a statement on Thursday.

These items included silk, wool yarn, chemical fiber and cotton products.

However, export rebates for certain products, including pesticides, medicine, silver, paint, zinc and battery would be scrapped, it said.

The textile and garment industries had been plagued by the stronger Chinese currency, tight monetary policy that has made financing more expensive, higher labor costs and rising raw material prices, market analysts said.

The tax rebate increase would ease pressure and help boost exports, said Bai Jingming, deputy director of the Research Institute for Fiscal Science under Ministry of Finance.

The country's textile and clothing exports rose 11.1 percent to US$81.7 billion in the first half, but the growth rate was 6.4 percentage points less than the same period last year.

Investments in large projects (5 million yuan or more) totaled 126.7 billion yuan in the first half, up 14.24 percent from the same period last year. But the growth rate was 11.5 percentage points lower, according to the China National Textile and Apparel Council.

(Xinhua News Agency August 1, 2008)