Recently, market rumors that textile export tax rebate rate will rise significantly, viscose fiber up 10 percentage points, textile increased by 4 percentage points, clothing increased by 2 percentage points.

State Securities:

We believe that such a sharp increase in tax rebate rate is unlikely: the decline in textile export growth in 2008 is mainly due to the decline in the US and European economies, the acceleration of the labor contract law, the enhancement of environmental protection requirements, and the increase in production costs. The export tax rebate rate is not one of the main factors that affect exports. The mucilage is a serious environmental pollution industry, and the state has been strict with environmental protection requirements. In 2007, a 6 percentage point reduction is a concrete manifestation of the environmental protection policy. Since 2008, the textile export growth rate has increased compared with 2007, and the total export textile products in the first 5 months have increased by US $26 billion 700 million, an increase of 24.6% compared with the same period last year, while the cumulative growth rate in 2007 is only 15.4%.

From the statistical data, the textile did not increase the basis; before 2008, clothing export in May was 37 billion 600 million US dollars, an increase of 7% over the same period last year, the growth rate was significantly lower than that in 2007, and the garment industry has the possibility of raising the export tax rebate rate in May.

Even raising the export tax rebate rate has little effect on the improvement of the operation of enterprises. The main factor affecting the slowdown in export growth of textile products is not the export tax rebate rate. Once the increase is made, foreign investors will inevitably reduce their product quotations, to a certain extent, the state subsidize foreign investors. At present, the textile industry is facing difficulties in operation. The core factor is the high homogeneity of China's textile enterprises.

After more than 20 years of rapid development, the industry is in urgent need of integration and survival of the fittest. At present, the temporary difficulties of the market provide a very rare opportunity. We should not interfere with the normal adjustment of the market. The failure of textile enterprises to affect employment is different from that of the market. There is also a phenomenon of employees' job hopping resulting in the closure of enterprises. This shows to a certain extent that unemployment is less than imagined.

According to the possibility of sorting, the possibility of mucilage increase is the lowest, followed by textiles. We think that if the increase is possible, only the clothing will be increased by 2 percentage points.

With regard to the timing of the increase, we believe that the export situation has been restored since March, and the Olympic Games have affected many raw materials supply and distorted supply and demand of raw materials. It is best to wait until October when the export figures are released in September.