Following the conclusion of the annual Parliament meeting on Mar 15, Premier Li Keqiang said in a post-event news conference China would be cutting value-added tax (VAT) for manufacturing and other sectors on April 1 and lowering social security fees on May 1 2019, which values nearly 2 trillion yuan.
1. From the medium-to-long term perspective
The tax and fee cut reduces almost all enterprises’ costs in China, and compared with the international market with no reduction, Chinese commodity will be more competitive, which of course includes China’s textile and apparel for exports. From the angle of the industry, the VAT cut rate for agricultural and industrial products is different. According to current news, the VAT of agricultural products will be reduced by 1% from 10% to 9%, and that of industrial products will be cut by 3% from 16% to 13%. Cotton belongs to agricultural products, while PSF and VSF belong to industrial products, meaning that tax cut rate for PSF and VSF, the competitive products for cotton, is higher than cotton. Therefore, the demand for cotton may reduce somewhat affected by higher competitiveness of PSF and VSF.
2. From the short-term perspective
Market players can gain short-term profits by time difference, through controlling the time to make out an invoice of input tax and output tax. For cotton, no matter the domestic sales or import/export sales, the tax cut rate is only 1%, and the operating space is about 150-160yuan/mt. Nevertheless, the operation space for downstream industrial products is#??# 6% at the highest. The VAT cut will give enterprises more profits in short term, or enterprises will have larger bargaining power. For most inland cotton yarn mills, selling cotton yarn after Apr 1 is favorable while for those in Xinjiang, purchasing cotton before Apr 1 and selling cotton yarn after Apr 1 is the most favorable. For downstream fabric plants, it is the same. If they purchase cotton yarn before Apr 1 and sell grey fabric after Apr 1, they can enjoy the 13% VAT and 16% input tax deduction.
Without external stimulus, Chinese cotton market continues to be in a period of “loose supply and cost support”, and the market is mainly dominated by demand. Currently, through tax cut, downstream sector, especially weaving, printing and dyeing sectors, increases the profits in short term. Therefore, the speculative demand for cotton may increase, but the time is short, and the industrial pattern will have no significant change.#??#
Acelli will supply two new ‘Iridium mod. 8105’ printing machines to Chinese company Foshan Huahan Sanitary Material, which is specialised in flexo printing process of baby diapers. The machines will be installed in Foshan’s branch in December 2019. Using Acelli Iridium press, Foshan can quickly respond to customers’ production needs for short and long runs.
Among other features, the Acelli ‘Iridium mod. 8105’ is equipped with the new Acelli Nexus film re-winder patented by Acelli nonwovens allowing the automatic alignment of the multi slitting and core device with the printing path, said Acelli in a media statement. This solution minimises the set up time and waste during the start up. The patented splice device, installed on Acelli Nexus film re-winder, allows optimised splice without tape and reduce the waste to zero during the doffing cycle.
In addition, the machine incorporates quick job changes, automatic fast job set up, an automatic washing system, 100 per cent video camera that includes quality control and dynamic repeat length adjustment and controls that reduce waste due to inhomogeneous material.
Acelli ‘Iridium mod. 8105’ drying system is designed to improve environmental protection and energy savings, and can switch from solvent-based to water-based inks to meet the trend of green production and zero volatile organic compound (VOC) emission. Maintenance is easier and more accessible, as the machine incorporates an automatic CI washing system and it is possible to disassemble the drying boxes from the side for cleaning.#??#
Acelli Iridium HMIs give relevant production information on a user friendly data screen.
The platform for Industry 4.0, developed by Extreme Automation (an Acelli group company), includes information such as daily job tasks, printing job length completed and roll printed, machine down time, and it enables the implementation of remote troubleshooting, a wide range of predictive maintenance programmes and e-service which improves the uptime.
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China's sustained efforts to lower the corporate burden will help stabilize employment, investment and growth expectations, said Bai Jingming, vice-president of the Chinese Academy of Fiscal Sciences.
Following colossal tax and fee cuts of around 1.3 trillion yuan ($194 billion) in 2018, China will reduce the tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan this year.
Small and micro companies, which provide the majority of jobs, would be the major target of such cuts in 2019, showing a clear pro-employment policy tendency, Bai told the People's Daily on Monday.
This year, China will reduce the current value-added tax rate of 16 percent for manufacturing and other industries to 13 percent, and lower the rate for such industries as transport and construction from 10 to 9 percent.
A universal tax cut will greatly ease the tax burden of companies in purchasing fixed assets like machinery equipment and save costs for equipment manufacturers, resulting in more room for investment, Bai said.
The massive corporate tax cuts this year showcased the central government's efforts to inject more energy into economic development and to make sure market entities receive benefits, which will help stabilize market expectations of the economy, according to Bai.
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Bai believes the move will unleash Chinese people's unlimited potentials in innovation and creation and boost the nation's high-quality development.
China's economy, the second largest in the world, expanded 6.6 percent to exceed 90 trillion yuan last year. The growth target for 2019 was set at 6-6.5 percent.
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