China's cost spike

Since 1985, tax rebates given to exporters have allowed Chinese products to be fiercely competitive on the international market. But over the past few years, and particularly in the past 12 months, Beijing has been axing rebates for thousands of goods across a wide variety of industries in an attempt to reduce China's trade surplus.

More than 2,800 goods had their tax rebates cut in 2007, with highly polluting products first on the chopping block.

"We feel the Chinese government's rebate slashes every time our goods leave the country," says Jason Carr, who owns home fabrics distributor Softline Home Fashions. "It really impacts international distribution."

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