Export Tax Rebate Adjustment under Discussion

As early as the beginning of 2010, it was said that several departments were discussing the abolishment or decline of some high-energy, high-pollution and resource-based products’ export tax rebate. Finance Department put a program in Mar and discussed it with Development and Reform Commission and Commerce Department in Apr.

Recently, rumors about export rebate rate became more and more detailed. Some media reported that export rebate rate of aluminum products may be lowered from 13% to 9%. Rumors in textile industry went as the rate may be lowered by 5%.

None of the news was confirmed by government or industrial associations. Officials from financial department recently pointed out that adjustment on export rebate rate is still under discussion.

Attitude from officials
June 14, in a meeting of the Standing Council of China Bast and Leaf Fibres Textile Association, Du Juezhou, the chairman of China National Textile And Apparel Council, said that the reduction of export tariff rebate rates was unlikely, it was just rumor; the authority was not going to make that kind of changes.

June 15, according to spokesperson for the Ministry of Commerce Yao Jian, export tax rebate rates would not change much as a whole. But it was quite likely that rates would be reduced for a few types, such as high energy-consuming, high-polluting products. He added that, in the past few years, export tariff rebate rates had been blamed by some for its frequent changes. As a policy, the rates should be kept relatively stable, said Yao.

Reasons for adjustment
The Gov and analysts are both commit themselves to stabilize export rebates policy. But, there is still dispute on whether stabilizing at current high level or after correcting down to a suitable level.

One the one hand, though China export value progressively kicked the new high level, the export growth has been down for two months. The exported plants faced unstable market expectation and hiking cost, including RMB appreciation, raw materials and labor cost. Under this situation, export-oriented plants were unwilling to see export rebates correction down.　

On the other hand, high export rebates weighted on financial pressure. According to the Ministry of Finance, China export rebates totaled 732.7 billion in 2010, up 13% (84.1billion) comparing to 2009. It held the same line with expenses on education, social security, employment and housing in 2010.
In order to control the export of energy-consumption and high-pollution products, starting from Jul 15, China cancelled the export tax rebate for some commodities (6 categories, 406 codes) including some steel products, silver, medicine, chemicals, plastics, rubber products and so on.

Adjustments in recent years
Chinese government has raised export tax rebate for seven times since economic crisis, referring to over 8000 H. S. codes. Full export tax rebate has been granted to 1971 codes.

The export tax rebate for many products that are rumored revised down recently rose greatly during economic crisis. The rebate for aluminum extrusions was cancelled in 2007, which was adjusted up to 13% during economic crisis. The rebate for some textiles and clothing was raised from 11% to 16%.