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China should use

credit to boost

exports paper

BEIJING: China should use favourable credit and tax policies and lower interest rates on loans made to trading companies to boost plummeting exports, the China Daily Business Weekly said on Sunday.

The value of China's exports plunged 30.8 percent year-on-year in the first quarter of 1996, leaving Beijing with a trade deficit of $1.16 billion.

"It is time for the state to use its credit and tax leverage more efficiently to curtail the consecutive drops in general trade," the newspaper quoted Ministry of Foreign Trade and Economic Cooperation spokesman Hu Zhaoqing as saying.

"Export rebates should be paid sooner so that exporters have more funds on hand to reduce the burden of credit interest," he said.

Financial institutions should also stop charging punitive interest on loans whose repayment was delayed by more than three months, Hu said.

Exports had been squeezed by a 1.2 percent appreciation of the yuan against the dollar in 1995, the newspaper said.

Depreciation of the yuan would help boost exports, it said but gave no details.-Reuter