In recent news announcements, China has announced that it will start giving back tax rebates to factories who manufacture furniture and more than 600 other industries.  So, Chinese furniture manufacturers can remain competitive.

What I love is how fast Beijing can implement their policy.  Two years ago, they raised taxes, before the big drop in exports and sales worldwide.  Last year, they lowered some taxes to get more competitive, and now, it seems that exports will be given 15% of the 17% VAT they paid when they were purchasing the materials.   This means only 2% VAT paid to the government.  Factories who sell to local market and export will need to have good records to prove to the government that they exported the goods they are going to claim a VAT rebate on.

This is almost back to the original VAT free systems and rebates from years ago designed to stimulate exports while China built their economy up.  It seems the local economy still cannot support the 1.4 billion people?  Well, China is doing nothing different than other Asian countries (Indonesia and Vietnam), so it is a good move on their part to attract more business.

So, will we see lower prices being quoted soon?