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Analysts view on policy change to boost Chinese steel exports |
| WRITER |
administrator |
DATE |
2009-05-11 09:33:21 |
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Analysts view on policy change to boost Chinese steel exports
10 May 2009
China reported that since the 1990s the Chinese government has implemented a series of policies to stimulate China's steel product exports, which led to exports increasing rapidly when the global economy started to accelerate in 2003. China was a net steel product importer in 2003 with 36.4 million tonnes of steel product imports, but by 2007, it had become a net exporter with 62.65 million tonnes of steel product exports.
In June 2007, the government levied export taxes of between 5% and 15% on more than 80 types of Chinese steel product exports, in order to limit steel products from flowing out of the country. By controlling the outflow of steel products, the government aimed to reduce the impact on the domestic environment and resources, as well as to upgrade the domestic steel industry. Although the taxes had some effect, rising global inflation continued to bolster Chinese steel product exports in the H1 of 2008. For the whole of 2008, China's steel product exports stood at 59.19 million tonnes.
However, the outbreak of the global economic crisis in the second half of 2008 severely impinged on China's steel product exports. China exported 3.17 million tonnes of steel products in December 2008 and in March 2009, that monthly figure fell to 1.67 million tonnes which caused China to once again become a net steel product importer.
The sharp decline in steel product exports since the Q4 of last year has pushed China's steel production capacity into heavy surplus. Although falling steel product exports were caused by the downbeat global economy, China's export policies also played a major role and therefore the government should examine them closely.
The sluggish global economy poses a challenge as well as an opportunity for Chinese steel producers to enhance their competitiveness in international markets, thus it is important for them to maintain market share during the economic downturn. In the government's recent stimulus plan for the domestic steelmaking industry, it specified that it would adjust trade policies to boost steel product exports.
On April 1st the government raised value added tax rebates on exports of steel products including cold rolled steel, silicon steel and stainless steel to 13% but policies on other steel product exports were left unchanged and some steel products still had export taxes of more than 10% levied against them. In such economic times, a country would not normally impose tax on steel product exports, and may even provide more rebates. Currently, the Chinese government is still levying taxes of between 10% and 13% on exports of construction steel, section steel and certain shipbuilding steel. Due to significant falls in exports, only four domestic shipbuilding steel producers are still in operation.
The analysts said that “The rapid devaluation of many currencies across the globe has also impeded Chinese steel product exports. Therefore, I think it is imperative that the government further adjusts taxes to boost steel product exports to help domestic steel mills better weather the economic downturn.”
Resourced from Interfax |
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