Henan Textile Company Calls for Cancellation of "High-Zero Low-buckle"

"The price of cotton has risen up and down, and textile companies have been hit hard, calling for policy support and abolishing the 'high and low deduction'." This is the consensus reached at the “2011 Textile High-Level Forum” held in Kaifeng, Henan from August 18th to 19th.

The forum was sponsored by Henan Textile Industry Association, Zhu Buna, Chairman of China Cotton Textile Industry Association, head of related departments of Henan Provincial Development and Reform Commission, Provincial Ministry of Industry and Information Technology, Provincial Federation of Industry and Economics, Provincial General Trade Union, Provincial Association for Science and Technology, and 100 from Henan Province. Leaders of many key textile companies attended and spoke.

Zhu Beina said that the ups and downs of the cotton price have made it difficult for the textile companies that were originally profitably weak. Since May of this year, yarn prices have been sluggish, cotton and cotton yarn prices are hanging upside down, and companies are selling at a loss. Coupled with tightening monetary conditions, rising labor costs, and rising energy prices, many textile companies, especially small and medium-sized enterprises, are in the state of suspension of production and semi-discontinued production, and the degree of difficulty of enterprises has exceeded that of the international financial crisis.

The delegates expressed their opinions. Chairman of the Wugang Yinlong Group, Lu Yaohong, believes that the sudden rise and fall in cotton prices this year and the difficulties in the survival of textile companies are the concrete manifestations of China's immature market economy and the inadequacy of state control measures. On the one hand, textile companies should fight hard to meet challenges, on the other hand, they must actively reflect objective conditions and strive for national policy support.

Shao Jiaxiang, president of Nanyang Textile Group, said that as a production company, it should face the eyes and actively respond to it. According to the actual situation of the company, it should speed up the transformation and upgrading, and enhance the company's ability to withstand market risks. He put forward three suggestions: First, unified cotton import tax. At present, China's cotton import tax has zero tariffs, sliding tariffs and other three, should be unified into one. Imported cotton should be uniformly purchased by the country, which will help stabilize prices. The second is to severely suppress the malicious speculation of cotton circulation. The third is to adjust the policy of collecting and storing cotton. The implementation of reunification and combination of income and expenditure is the means, and it is the purpose. It is fundamental to stabilize cotton prices and promote industrial development. When formulating relevant policies on cotton imports, tariffs, and quotas, the state should refer to the voices of key textile enterprises so as to make the policies more fair, reasonable, and operational.

The chairman of Shangqiu Galaxy Cotton, which has been engaged in cotton business for more than 30 years, believes that domestic cotton production cannot meet market demand and China's cotton is always the seller's market. In order to protect the interests of cotton farmers, the country has introduced a policy a few days ago. The State Reserve Cotton has opened an acquisition at a price of 19,800 yuan/ton. However, it should point out that it is the price of lint purchased from cotton farmers in order to prevent them from buying prices.

At the forum, the delegates unanimously recommended that the state cancel the "high-learning and low-buckling" policy for value-added tax on cotton procurement and processing. At this stage, the state implements an input tax of 17% for textile enterprises, a 13% output tax, and an input tax of 4 percentage points higher than the output tax. The delegates unanimously suggested that they should be adjusted to the tax support policy of "equal input tax and output tax."