BIZCHINA / Top Biz News
Gov't plans export tax rebate slash
(China Daily)
Updated: 2006-07-24 08:32
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 per cent
for products such as textiles, iron and steel. Only high-tech industries
will avoid the cuts their rebate is being increased.
"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 economic
miracle.
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 middle.
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 per
cent.
In the first six months of 2006 foreign trade reached US$795.7 billion,
up 23.4 per cent year on year. China chalked up a trade surplus of
US$61.5 billion in the first half of this year, up 54.9 per cent 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 per cent on the same period last year, and accounting for 58.5 per
cent of China's total.
(For more biz stories, please visit Industry Updates)
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