At an executive meeting chaired by Premier Wen Jiabao, the State Council decided Wednesday that halting irrational expansion of steel production is a matter of urgent importance.

 

To that end, domestic steel companies will no longer be handed tax rebates on exports of low-end steel billet and ingot products, the government ruled yesterday.

 

The sector consumes vast amounts of funds and energy resources, and analysts said the measure is a continuation of the drive to protect the environment. In the fourth quarter of 2004, the government cut off the tax rebate on copper, aluminum and nickel exports.

 

Currently, the rebate rate on steel billet and ingot is 13 percent.

 

Earlier reports indicated the gap between China's steel imports and exports narrowed in 2004. It imported 29.3 million tons of steel products, down 7.9 million tons or 21.2 percent year-on-year.

 

However, steel product exports leapt 104.6 percent, or 6.1 million tons, to 14.2 million tons last year. Nearly 60 percent of exports were low-value-added products such as ingot.

 

Also at the executive meeting, the State Council told local governments to clamp down on growth in fixed asset investment, especially in projects connected with urban expansion and real estate.

 

The measures are the latest in China's effort, launched in mid-2003, to use macroeconomic controls to slow economic growth.

 

The State Council said that although China's social and economic development is satisfactory overall, it also called attention to a number of problems.

 

Unstable and unhealthy factors should be eliminated from the national economy to build a harmonious country with each element of society well developed.

 

(China Daily, Xinhua News Agency March 31, 2005)