China to increase resources export tax, cut import tax

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Beijing, Oct 27: China will raise export taxes on many types of metals, petroleum and steel as part of an ongoing crackdown on overinvestment in resource-intensive industries, but reduce tariffs on many raw material imports, the ministry of finance said on Friday. It will raise the export tax on copper, nickel, aluminium and other metal products to 15 percent, raise the export tax on crude oil, coal and coke to 5% and raise the export tax on pig iron, steel billet and other steel products to 10%.

It will cut import taxes on coal, oil products, alumina and other natural resources to between 0 and 3%, from their current levels of 3 to 6%, it said.

“These changes aim to curb exports of energy-intensive products, since the growth in exports of these materials effectively means that China is exporting energy, which it lacks,” said Feng Fei, a researcher with the Development and Research Centre of the State Council, China’s cabinet.

The changes take effect Nov. 1. They follow the reduction or elimination of tax rebates on steel and metals exports, announced in September.

The higher base metal and steel export tariffs are likely to lift international prices for the metals, especially aluminium, of which China is a net exporter. Beijing has repeatedly warned against over-investment, especially in the copper, aluminium and steel sectors, where capacity has expanded tremendously on the back of record high prices.

“Higher export taxes should reduce the incentive to import raw materials and only to process them into semi-finished commodities for export,” analyst John Kemp of Sempra Metals said in a research note Friday.