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China bans trading of energy for processing

By Winny Wang (Shanghai Daily)
Updated: 2007-04-06 13:58

China for the first time will ban the import and export of diesel oil for processing from April 26 as part of efforts to tighten trading of energy resources.

According to a list issued jointly yesterday by the commerce ministry, the customs department and environment protection authorities, energy products including fuel oil and heavy oil, will also be barred from being imported or exported for processing.

Processing trade, which became popular in China from the 1990s, accounts for a significant part of the country's total exports. But Chinese processors earn only a low processing fee while higher added value products are exported.

Some countries have criticized China by saying that its high demand for oil had stoked global oil prices, while a lot of the oil China imports is used for processing, said Niu Li, an economist with the State Information Center.

The export of processed goods also added to the country's growing trade surplus, Niu said.

China began limiting import and export of products for processing in 2004 to decrease energy-consumption, protect the environment and reduce the trade surplus, Niu said.

The latest announcement lists 990 products used for processing, including the fur of rare wild animals and disposable chopsticks.