Before the opening of Beijing Olympic Games, some people cared about the economic policies of China after the Olympic Games. Now the 16 days’ Beijing Olympic Games has come to an end. More and more people begin to think about the adjustment of the economic policies of China.

When Beijing Olympic Games was over, many people diverted their attention to the following adjustment of the Chinese government. Some scholars thought that there would be no imposing uniformity on the adjustment of the relevant policies. The policy will incline for the enterprises in difficulty, which means there will be measurable accommodation for those enterprises which cannot overcome the difficulties by themselves.

Cui Dahu, a researcher of the Institute of World Economy of Shanghai Academy of Social Science pointed out recently that China’s recent increase of the export rebate in some industries was a positive example.

From this August on, the State Administration of Taxation and the Ministry of Finance raised the export rebate ratio of partial textile and clothes to 13%, and the one of partial bamboo products to 11%. However, the export rebate of partial pesticide products, partial organoarsenics products, paclitaxel and its products, partial coating products, partial products of battery and carbon anode has been cancelled.

Among these, the export rebate ratio of clothes decreased from 13% to 11% in 2007. Cui Dahu’s explanation for this is that many enterprises, including the textile enterprises, have developed homogeneous products with cheap labor force and competed with each other with the export at a low price for several years. This not only damaged China’s image but also caused the anti-dumping of the foreign countries. So last year China’s government adopted the policy of decreasing the export rebate ratio for the labor-intensive enterprises.

Cui Dahu said: “The export rebate policy coming out last year did not mean to break down those labor-intensive enterprises, but to urge them to upgrade their industries. The enterprises whose scale is too small should be merged; the ones that can’t survive should be eliminated. However, the shift of state-owned enterprises can not be finished in a very short time.”

Just during the “panic period of shifting”, those enterprises have to face the problems of the increase in the cost of the raw materials and labor and the appreciation of Renminbi. Those factors pushed the enterprises that cannot divert the exchange risk out (especially the small-scaled enterprises) to a situation where they could not survive.

Cui Dahu said: “China’s long-term macro-regulation is right. But micro-adjustment is still needed in a short time according to the actual complexion. Above all those enterprises should be urged to implement industrial integration and improve their technology through the adjustment of the policy. A kind of relatively looser environment should be given to them to make them survive, and then they can upgrade and improve themselves.”

According to the report from Outlook Weekly, the Department of Small and Medium-Sized Enterprises (SMEs) of the National Development and Reform Commission of China released the data showing that there were nearly 70 thousand up-scale SMEs (non-state-owned industrial enterprises with the annual sales income of more than 5 million Yuan (714.3 thousand USD)) going bankruptcy in the first half of 2008. Most of them were the export-oriented enterprises located in the southeastern coastal areas. And what’s worse is that the tendency of bankruptcy seems to be spreading.

It is believed to be the reason why Wen Jiabao, prime minister of China went south to Guangdong, Shanghai and Jiangsu to have investigations in July. It also can explain why Li Keqiang, vice-premier of China went to Wenzhou and Hangzhou and why the leaders of important national ministries often went to the Pearl River Delta Areas (hereafter PRD) and the Yangtze River Delta Areas (hereafter YRD).

Many enterprises in the YRD and PRD are export-oriented enterprises. But their difficulties are different from each other. In the common view, the problem of latter is more serious than the former.

According to Cui Dahu, during the early days of China’s economic opening, the main economic investment abutting by the Pearl Rive areas in South China had kinship with each other. The amount of the investment from Hong Kong, Taiwan and Macau is large. The number of the enterprises is large while the scale is small, and the technologic level is low. Let’s look at the two provinces and one municipality in the YRD. Shanghai previously laid emphasis on the advanced manufacturing industries such as the car and chemical industries. Jiangsu and Zhejiang took the textile industry. In Jiangsu Province, the foreign capital mainly came from southeastern Asia, Japan and Korea, while in Zhejiang Province the development of the economy is driven by the private entrepreneurs.

Initially, Both YRD and PRD developed the labor-intensive industries. “But the scale in the YRD was larger, and the cost could be relatively lower so that the salaries of the employees were higher. Then because it was included inside the global manufacturing system, the bottleneck of the production is relatively smaller,” said Cui Dahu.

Han Hualin, vice-director of Enterprise Development Center of Shanghai Academy of Social Science also thinks that the level of the industrial structure of the YRD is higher than the PRD. And its counter-risk ability is stronger. If the enterprises in the YRD, which have been included into the international purchasing, meet the problem of cash flow, their upriver partners are willing to help them and the banks are believed to be willing to lend loans to those enterprises with higher technology content.

Presently, the GDP of the YRD takes 22% of the whole country’s GDP, while the one of the PRD takes 10%. At the beginning of August, China’s State Council, or the cabinet, orientated the YRD as the developing economic system mainly based on the service. Someone thinks that China’s government has more confidence in the YRD than in the PRD.