The directive, released this month by the Ministry of Industry and Information Technology, calls on banks to “provide necessary financial support” to companies that transfer production to central and western China.
According to a notice on the ministry’s website, the policy aims to remedy increasing “structural problems” in the textile industry. Costs, particularly labor, are rising in the east and Beijing wants to promote a shift to more high-tech manufacturing in its coastal provinces.
Meanwhile, “the advantages in central and western regions have not been fully explored”.
The directive builds on earlier initiatives designed to create more jobs in China’s hinterland. But despite strong government support, many companies say they have no plans to move inland.
“We still like the southern part of China,” said Andrew Lo, chief executive of Hong Kong’s Crystal Group. “It might be a bit more expensive but it’s much more flexible in terms of fabric delivery. We can do more high value-added products. For lower value added we will just move overseas.”
Many garment factories have already moved production to other countries to benefit from lower wages. In China, wages have been rising by 10-15% annually in recent years.