MercoPress. South Atlantic News Agency

China limits exports of energy intensive commodities

China plans to increase taxes on exports of metals, oil and steel in an effort to contain excess investment in energy intensive industries, and simultaneously will reduce tariffs for the import of commodities reported the Finance Ministry in Beijing.

Beginning November first export taxes on copper, nickel, aluminum and other metals will be raised 15%; for petroleum, coal and coke 5% and for iron ingots, steel bars and other steel by products, 10%.

Tariffs on imports of coal, petroleum, aluminum and other mineral resources will be cut to between 0 and 3% from their current levels of 3 and 6%.

"These changes are geared to limit export of energy intensive products since the growth of these resources effectively means China is exporting energy, which it lacks", argued Feng Fei a researcher at the Development and Research Center of the State Council, the Chinese cabinet.

The decision follows the reduction or elimination of tax refunds for steel and metal exports, which was announced last September.

Beijing has insistently warned about excessive investments particularly in the copper, aluminum and steel sectors, where capacity has strongly expanded because of the elevated international prices.

"Higher taxes on exports should reduce the incentive to import commodities for the sake of processing them and having them re-exported as semi processed", said analyst John Kemp from Sempla Metals in a report released this week.

"This should also help to limit the voracious appetite of China for such commodities as iron, copper concentrates, etc and help reduce international prices", he added.

The long expected fiscal changes on steel should help contain the world flood of Chinese exports which threatened to generate commercial disputes.

"The new tax on exports will push steel foundries to cut their production since they will be receiving less benefits from the export of iron ingots and rods", underlined Yang Yi, general manages for the steel sector in Sinochem International Co. Ltd.