»Issue 6, Volume 07                          www.scarbrough-intl.com                                         » June 2007  

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BUSINESS MONITOR

Chinese Government Cuts Tax Rebates on Exported Goods

On July 1^st 2007 the Chinese government will be reducing and, in some cases, removing the available tax rebates on exported goods. The major tariff categories will include some metal products, textiles, shoes and other manufactured goods.

Exports from china could potential increase dramatically in the coming week with shippers and importers trying to move product prior to the imposition of the rebate cuts.

Importers should anticipate an influx of freight, potentially causing delays at domestic and origin ports. The announcement also declared that no grace periods should be expected except ship sections and some construction equipment, since previous grace periods on export-policy changes resulted in many cases of fraudulent export contracts.

These cuts will be implemented for several reasons.

• A concern in china is the high level of pollution created from the production of the goods. China has reached the top of the ladder producing the highest output of pollution. These high energy-consuming industries will burden the majority of the rebate cuts.
• The trade surplus in china is high on the ministries priority list and ministry officials intend to balance the trade economy that is currently lagging a $216.7 billion trade surplus.

• The Chinese government intends on pushing industry away from the production of low-value-added exports. High-tech industries will, actually, see an increase in tax rebates.

Chinese manufacturers may offset the rebate cuts by increasing the cost of goods produced to balance the loss on their already minimal profit margins.

For questions regarding the impact of these rebates, please contact your Scarbrough Customer Service Representative or e-mail us your questions to info@scarbrough-intl.com.

-- Scott Woods, Marketing

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