China will reduce tax rebates on exports of resource-intensive
and environmentally-harmful products, officials say.
An as-yet unreleased policy is scheduled to take effect around
September or October, despite strong protests from domestic
companies and traders, according to Caijing magazine.
The move reflects the government's drive to shift the nation
away from low-value-added exports.
"The government wants to see a trade balance. We're not
deliberately seeking rising surpluses," said Ministry of Commerce
spokesman Chong Quan.
Introduced in 1985, tax rebates for exports have made Chinese
products more competitive on the international market.
But it is now expected rebates will be cut by an average of two
percent for products such as textiles, iron and steel. Only
high-tech industries will avoid the cuts their rebate is
"Export rebates for high energy-consuming, polluting and
resource-intensive products should be stopped," said Fu Ziying,
assistant to the Minister of Commerce.
Booming exports have contributed significantly to the Chinese
In recent years, the cart of the Chinese economy has been hauled
by the two "strong horses" of investment and foreign trade, while
the "weak donkey" of domestic consumption totters in the
To sustain the steady development of the national economy,
policymakers aim to spur domestic consumption by increasing
consumer purchasing power.
The strategy could help rein in over-investment, ease pressure
on the renminbi and dissuade foreign anti-dumping lawsuits which
result from the mammoth trade surplus, industry officials say.
In the five years since China's accession to the WTO, the
country's foreign trade has grown at an average annual rate of more
than 30 percent.
In the first six months of 2006 foreign trade reached US$795.7
billion, up 23.4 percent year on year. China chalked up a trade
surplus of US$61.5 billion in the first half of this year, up 54.9
percent year on year, according to statistics from the General
Administration of Customs.
On this basis, China's trade surplus is set to exceed US$100
billion this year, industry officials say.
In the first half of this year, foreign-invested,
export-oriented processing firms generated total foreign trade of
US$465.3 billion, up 25.8 percent on the same period last year, and
accounting for 58.5 percent of China's total.
(China Daily July 24, 2006)