The Chinese government, on the one hand, is pruning value-added-tax (VAT) refund for low-value, labor-intensive plastic exports; on the other hand, it is offering tax incentives for plastic irrigation equipment, in order to encourage the production and use of water-saving drip irrigation.

According to the modified resin subcommittee of the China Plastics Processing Industry Association (CPPIA), China is waiving the 17 percent VAT for manufacturers, wholesalers and retailers of drip irrigation pipes and tubing, starting July 1st.

The subcommittee said in a news story on its web site, the number of manufacturers of plastic water-saving equipment in China has soared from six in 1998 to more than 110 this year, annual capacity from 30,000 metric tons in 1998 to 1 million tons.

However, only a handful of firms are capable of making high quality microsphere drip systems, with combined annual capacity of less than 30,000 tons. "That's far below the market demand," the story said.