BIZCHINA / Center
Tax rebates removed, cut to curb exports
By Gong Zhengzheng (China Daily)
Updated: 2007-06-20 08:17
The government will eliminate or cut tax rebates for more than 2,800
export items from July 1 - in the boldest move yet to rein in exports
since it joined the World Trade Organization in 2001.
The affected items account for 37 percent of all export products, the
Ministry of Finance announced yesterday.
Export tax rebates for 553 "highly energy-consuming and
resource-intensive" products, such as cement, fertilizer and non-ferrous
metals, will be eliminated, the ministry said.
Rebates for another 2,268 products, described as "easy to trigger trade
frictions", will be slashed from 8-17 percent to 5-11 percent. They
include garments, toys, steel products and motorcycles.
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Yesterday's announcement follows the imposition or raising of export
tariffs on 142 categories of goods effective June 1. The products include
steel billets and non-ferrous metal minerals.
Both steps are part of the policy package designed to control soaring
exports and the bloated trade surplus.
From January to May, exports surged 27.8 percent year-on-year to $443.5
billion; and the trade surplus rocketed 83.1 percent to $85.7 billion,
according to Customs statistics.
The huge surplus has aggravated such problems as trade conflicts with
other countries and pressures on China to revalue the renminbi, as well
as excessive liquidity at home, the ministry said.
Liu Xueqin, a researcher with the Chinese Academy of International Trade
and Economic Cooperation affiliated to the Ministry of Commerce, said:
"The new policy will restrain exports because it affects a broad range of
products."
Domestic producers say they are already feeling the pressure from the
export control measures.
"Our steel companies are at threat (of losing foreign markets). But we
can understand the overall significance of the policy," Qi Xiangdong,
deputy secretary general of the China Iron & Steel Association, told
China Daily.
The association predicted earlier that, as a result of the export
disincentives, the country - the world's top steel producer - would this
year export no more or even less than last year.
Steel exports totaled 43 million tons in 2006, a growth of 110 percent
over 2005.
The finance ministry said the new policy will also help slow down
investment in fixed assets and reduce over-capacity; and lead to
sustainable development.
Many industrial sectors, such as steel, cement and motorcycles, are
believed to have excessive production capacity in relation to domestic
demand.
(For more biz stories, please visit Industry Updates)
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