China to adjust export tax mechanism
(Xinhua)
Updated: 2006-07-23 09:08
Semi-manufactured goods
By increasing export tariffs and lowering
export rebates in 2005, the Chinese government enjoyed some success in curbing
exports of high energy-consuming, high-polluting and resource-intensive
products: coal exports dropped 12.7 percent, coke exports dropped 10.7 percent,
billet exports dropped 35.6 percent, and exports of non-forged aluminum dropped
20 percent year on year in the first six months of this year, according to the
National Bureau of Statistics.
However, to get round such restrictions,
many Chinese businesses found a new strategy: they began processing materials
slightly -- not completely -- for export. Thus the bulk of Chinese exports moved
from resource-intensive products to preliminary processed products and
semi-finished products.
China's exports of semi-finished aluminum
products, for instance, surged 57 percent year on year to more than 400,000 tons
in the first five months of this year, according to Chinese Customs statistics.
The new adjustment reported in Caijing therefore targets semi-finished
resource-intensive products with low added value, and for good reason.
"We must not go on selling resource-intensive materials to the overseas
market," said Zhang Ping, former deputy director of the National Development and
Reform Commission.
Unhappy exporters
The rebate cuts have not
pleased domestic firms. Chinese mills and exporters, with their narrowing profit
margins, argue the reduction of export rebates will hurt key Chinese industrial
sectors.
"We disagree with cutting the tax rebates because the country's
steel industry is still troubled with oversupply," says Qi Xiangdong, deputy
general secretary of China Iron and Steel Association. The Association has more
than 60 domestic steel mill members. In May 2005 China cut tax rebates on steel
product exports from 13 percent to 11 percent.
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