On March 5, Premier Li Keqiang stated in the government work report that the scale of tax reduction and reduction in 2019 will reach 2 trillion yuan. Among them, the most intriguing is the reform of the value-added tax on deepening the value-added tax, reducing the current 16% tax rate in industries such as manufacturing to 13%, and reducing the current 10% tax rate in the transportation, construction and other industries. To 9%.

The reduction of value-added tax can be said to have captured the "bovine nose" under pressure from small and medium-sized enterprises. It is another downward adjustment after the "reform of the camp" and the base tax rate dropped from 17% to 16% last May.

From the feedback of enterprises with sufficient competition and low profit margins such as cotton, cotton textiles, clothing and foreign trade companies, a drastic reduction in the VAT rate will help reduce the burden, enhance the competitiveness of products, and stimulate the vitality of China's economy. It has a positive effect on the growth rate of investment in the industry, the stabilization of cotton planting area and the enhancement of the confidence of SMEs.

What are the direct and indirect effects of such a significant reduction in VAT on foreign cotton imports?

According to industry analysis, both textile mills and trading companies will benefit from the purchase of foreign cotton-----Imported value-added tax reduction, transportation value-added tax reduction and others, and the tax-deductible dividends enjoyed are not less than domestic cotton, short-term to China Buyers importing foreign cotton has a certain stimulation and boosting effect. This is a red-hot February/March import business that “adds salary and adds firewood”; but the medium and long-term foreign cotton imports are gradually diluted, and foreign cotton imports will return. Calm and even dull.

First, the direct result of China's large-scale signing of imported US cotton and the sharp reduction of the planting tax is to stimulate the ICE and foreign cotton stocks to rise sharply. The domestic and foreign cotton price gaps have narrowed or even “upside down”, and the competitiveness of foreign cotton has declined. Judging from the information released by the negotiators of China and the United States, cotton has been included in the list of China's procurement of US agricultural products, but it is not clear whether it is directly receiving storage or imported by the society; at this time, the tax reduction policy will be introduced, and the import of cotton will be good. Say it;

Second, April-June is the cotton planting period in the northern hemisphere. The tax cuts stimulate the continuous expansion of China's foreign cotton imports. In the United States, India, Central Asia, Africa and other countries, the cotton planting area in 2019 may rise or rise in full. The weather will be smooth, and it will be a pattern of “overtaking three or five fights”. The phenomenon of “ICE suppression of the inner disk” is inevitable;

Third, the transformation and upgrading of the textile industry is facing a severe test. How to achieve cotton gauze and clothing downgrades is the key. With the substantial reduction of value-added tax, cotton textiles, clothing and foreign trade companies, which are representatives of small and medium-sized enterprises, are in great competitive pressure, and the vitality of the labor force is sufficient, but the profit of the company is expected to recover continuously. It is necessary to improve the product quality and improve the profit level to solve the problem. Otherwise, it will return to the side of a large amount of cotton (including low-quality cotton), low-cost and low-quality export textiles, only earning a processing fee, hard to spend the old road, so India, Pakistan and other places of low spinnability It is more and more difficult for low-index cotton to enter the Chinese market.