After recently raising export tax rebates for manufacturers twice (in August for the textile industry, and in November for 3770 types of export products related to labour-intensive industries), China has again reduced export duties on some product categories in the steel, chemical and food industries, set to take effect from December 1 2008.

China has benefited from a significant current account surplus, yet exports contributed over 35% of China's GDP in 2007, which underlines why the Chinese economy is so vulnerable to a decline in exports. The recent declines in export orders has hurt Chinese manufacturers, and with the PPI on the rise, the financial crisis and the reduced purchasing power of foreign buyers have contributed to a rather complicated situation for China sourcing.

Yet the gloomy current outlook may only be temporary. The spate of tax rebates is an indication of the Chinese government's resolve to prop up the domestic manufacturing industry so it can withstand the drop in exports. And due to deepening impact of the financial crisis, more duty rate adjustments may well be in the offing. This is good news for those who purchase from China: A few months down the line there could be cheaper Chinese products on offer.