New China Export Rebate Sure to Fuel the Trade Wars

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The trade wars continue to rage on as China has just offered a new 9 percent VAT rebate for flat-rolled steel products and hot rolled ferro-alloy products starting June 1, according to this article. The tax changes extend beyond steel to include more than 600 items according to this report. These changes were implemented as part of an overall Chinese economic recovery plan.

The new rebate for steel, however, will have the effect of two things. First, it will promote exports of steel products (vs. production for domestic consumption) as the 9% can only be claimed if goods are exported. It will further stimulate aggressive anti-dumping action on part of the US domestic steel industry (we have another anti-dumping case to report shortly).

In all fairness, China was a net importer of steel products for the months of April and May and has seen a huge drop in demand (like all other global steel producers mind you) since the beginning of this year.  We knew it was only a matter of time before China would begin tinkering with the VAT scheme again.

–Lisa Reisman

Comments (3)

  1. Bjorn says:

    Few people seem to understand the Chinese export rebate system. China has a different VAT system compared to Europe. In my country Sweden the VAT deduction rules for companies are far more beneficial as companies are allowed to deduct 100% of the VAT, where as in China companies are only allowed to deduct a part of it. No one is rustling about boycotting Swedish steel exports are they? US power play and xenophobia in an unattractive mix!

  2. admin says:

    I think part of the problem is that “partial” rebate in China can only be had by exporting. So in effect it creates an export incentive only. And yes, xenophobia is very unattractive but seems to be gaining in stature here! LAR

  3. akbar says:

    what is current rebate on export in china.
    reply email akbar.siddiqui@sscltd.com.pk

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