In an effort to ease the pressure on its export sector, China is again increasing the export tax rebate for a wide range of products, including some plastic resins as well as finished products.
According to an announcement jointly issued by China's Ministry of Finance and State Administration of Taxation, starting April 1, 2009, the export value-added tax rebate will rise to 11 percent or higher for "a selection of plastic materials and processed products."In fact, the rebate rate will reach 13 percent for some plastic resins, including certain grades of unplasticized PVC, polyolefins, nylon, PET, etc.A detailed tax chart (in Chinese) is available at http://cws.mofcom.gov.cn/accessory/200903/1238153268800.xlsChina's export rebate for processed plastic products was cut from 13 percent to 11 percent in September 2006, and further down to 5 percent in July 2007. Due to the impact of the global recession, Chinese exporters have seen sharp declines in demand from particularly the U.S. and Europe.Beijing beefed up the tax rebate for certain plastic products to 9 percent on November 1, 2008. However, exports of plastic products still continued to drop at a double-digit pace in January and February.SEARCH
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China raises export subsidies for plastics, again
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COMMENTS (7)
Steve Redlich:
Our government needs to wake up and realize that the U.S manufacturing sector is one of the engines that drives our economy. Its bad enough that China pegs their currency, does not participate in the green philosphy, and does not invest in their workers safety or benefits.
Now the field becomes even more uneven with their government assistance in competing with the U.S.
I am suggesting that for every percentage of rebate the Chinese government supports exports to the U.S., we in turn impose an import duty.
We have been taken advantage of mush too long.
Nina Ying Sun 
:
:
I fully agree. The reality is that Washington still hasn't given the attention, protection and support that the U.S. manufacturing sector deserves. I'm not sure about the feasibility of punishing a trade partner's non-tarriff trade barrier (e.g. export subsidies) by imposing higher tariffs though. There should be other, better options. By the way, the Obama administration has recently limited the scope of the Buy American rules in stimulus spending to allow products sold to the government to contain components made overseas.
Posted by Nina Ying Sun |
April 1, 2009 9:28 AM
James Haworth:
Attention has not been given to the U.S. manufacturing sector for too many years. Support by the government to help U.S. manufacturing compete in a global environment through tax modification,strong reaction to excessive tarrif's and nationalistic posture has helped lead us to the government supporting manufacturing trought large stimulus aid. What is different with a stimulus and China's rebate package? At least someting is produced and sold before money is exchanged...
Nina Ying Sun :
:
How much stimulus aid is the U.S. plastics manufacturing receiving from the government, in what forms?
In China, manufacturers not only receive export tax rebates, but also have easier access to commercial credit, government loans, and direct benefits from public projects.
Unlike the US stimulus package, the Chinese stimulus spending mostly goes directly into manufacturing, because their economy is not plagued by a troubled financial industry at this moment. That's the most fundamental difference I see.
Posted by Nina Ying Sun |
April 1, 2009 10:25 AM
Tamsin Ettefagh:
I agree, our Government is missing the boat. Our manufacting is what this country grew to a super power on and China gets it and is doing something about it. We also grew because of our ability to use secondary materials which saves resources and energy. China is buying all our our plastic scrap at prices we domestically cannot compete with to be able to sell for parity or below prime resin. Secondary materials replace fuel derived products. Isn't that what our current administartion wants to relieve our dependency on? Letting it go to China helps them, not us conserve fuel.
David A. Frecka:
China is now paying the price for their ability
in the past to create artificial cost advantages and export to the U.S billions of
dollars worth of finished goods now in retailers store.Many new manufacturing
companies in china came to be from strong
demand for cheap goods.Only problem being,
they never thought out what would happen to
their total manufacturing capacity should
demand weaken substantially. It is the same old
problem- china has only one big customer- the
U.S.How many times have companies gotten into
trouble having only one big customer?
Quick, easy, and fast entry into U.S. markets
comes with a price, and china now knows this !
Nina Ying Sun :
:
David, your point is well taken. Actually,the European Uinion has been China's laregst trading partner for years, followed by the U.S. and Japan. In Feb 2009, about 18 percent of China's monthly total export was destined to the U.S. I wouldn't say 18 percent makes China immune to changes in the U.S. market, but the number is certainly much lower than many assume.
Posted by Nina Ying Sun |
April 1, 2009 3:08 PM