China reduces tariff rebates to rein in export

China reduces tariff rebates to rein in export
By Xiao Yu and William Bi (Bloomberg)
Updated: 2006-09-15 11:12
China Daily

China cut export tariff rebates on products including steel, textiles and some non-ferrous minerals to rein in overseas sales of energy-intensive industries and potentially curb the country’s record trade surplus.

The changes, effective Friday, include a reduction in tariff rebates on steel products to 8 percent from 11 percent, on textiles to 11 percent from 13 percent, and the removal of rebates on non-metal minerals such as coal and natural gas, a joint statement issued by five ministries said today. The rebate cuts will make exports more expensive.

China’s trade surplus grew to US$18.8 billion in August, a fourth straight monthly record, as exports reached an all-time high. It also fueled tension with trading partners including the US and European Union. Premier Wen Jiabao is touring Europe and central Asia, partly to improve relations with the partners.

The move "is one of the measures taken this year in line with State Council’s macro-economic controls," the ministries said, adding that it’ll "help optimize industrial and export structure and maintain balanced export growth."

The new rules, issued by the ministries of commerce, finance, customs and tax, and the planning commission, also cut export rebates on some non-ferrous metals to 5 percent, 8 percent and 11 percent from 13 percent.

It raised rebates on so-called large technical equipment, biomedical products as well as processed agricultural products to encourage exports in these sectors.

The ministries’ announcement comes four days after Commerce Minister Bo Xilai said that the country was "taking many steps to lower the trade surplus." A cut in export tax rebates was a "definite possibility," Bo said in an interview Sept. 11.

Below is a table of the changes in rebates.

*T New rebate % Old rebate %

Steel products 8 11

Ceramic 8 13

Leather goods 8 13

Cement 11 13

Glass 11 13

Textiles 11 13

Plastics 11 13

Cigarette lighter 11 13