According to China’s Ministry of Industry and Information Technology (MIIT) last week, it is considering cutting tax for lead-acid battery exporters in order to stop them from laying off workers.

An MIIT official said they are discussing the report but no conclusion has appeared. His team is waiting for industry figures from last year and will decide whether to propose the stimulus plan a few weeks after that.

It was reported by the Shanghai Securities News, the China Electrical Equipment Industrial Association is trying to persuade the government to cut taxes on lead-acid battery exports.

It is said that global economic recession has forced one third of Chinese battery exporters in Guangdong, Fujian and Zhejiang provinces to stop production. About half of Chinese battery exporters are said to be considering a move to foreign markets such as India and Vietnam where will cost less. The imminent move will probably lead to 200,000 layoffs.

However, the MIIT official said China’s battery industry is better than the reports. The export figures show that from September to November last year, China’s battery industry did not drop so much as the estimation.

Lead-acid batteries are mainly used in autos and motorcycles, the products of which have been cut down significantly by the global financial crisis.

MIIT figures show China’s battery exports increased 17.6 percent in the first 11 months of 2008. But the growth was 4 percentage points lower than that of the first 10 months.

Wang Zhengjie, general manager of Neata Battery Manufacture, a lead-acid battery company in Zhongshan, Guangdong province, said he has cut about 120 of his 350 employees this year to tackle with the shrinking demand. He expects the unfavorable market situation could help him surmount smaller competitors rather than the government providing any help.

China, the world’s largest battery producer, cancelled 15% export refund on tax in 2006 to damp down the country’s overheating passion on high energy-consuming enterprises investment. But experts forecast that the move, as well as RMB appreciation and increasing raw material prices, has forced Chinese battery manufacturers to suffer half more costs than their foreign competitors.

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