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China to slap export taxes on grains
Beijing—China’s Ministry of
Finance said on Sunday that it would levy export taxes on wheat, corn,
rice, soybeans and various processed grains in 2008.
The move is apparently aimed at reining in surging domestic prices,
which have driven up the inflation rate, and it comes just a week after
China scrapped tax rebates for grain exports. The export tax rates will
range from 5-25 percent and affect 57 types of grain and grain products.
The rates for wheat and wheat products are 20 percent and 25 percent,
respectively. The rate for corn, rice and soybean is 5 percent, while
that for processed corn, rice and soybean products is 10 percent. The
move “will contribute to preventing the country from importing high
international grain prices and will lower price expectations in the
domestic market,” said Cheng Guoqiang, a senior researcher with the
State Council think tank — the Institute of Market Economy, Development
Research Center of China’s cabinet
Several factors have driven up global grain prices this year: rising
demand, adverse weather in key growing nations and increased use of
grains for fuel. On the prospect of rising global demand, soybean prices
have surged by about 75 percent since the beginning of the year. Wheat
prices hit a record high in Chicago on strong global demand and shrunken
output after bad weather hit the world’s major producers such as
Australia and Canada.
Buoyed by demand from the ethanol industry, prices of corn have also
risen. By Friday on the Chicago Board of Trade, the price of corn for
March delivery rose to 4.55 U.S. dollars a bushel from 4.43 dollars the
previous week. A week ago, the ministry said that it would scrap a 13
percent export tax rebate on 84 categories of grain and grain products,
effective December 20. Those rebates, together with high international
grain prices, have boosted Chinese grain exports this year.
The nation exported 4.87 million tons of corn and 400,000 tons of
soybeans in the first 11 months of 2007, up 85.3 percent and 23.8
percent, respectively, from the previous year. Exports of rice rose 5.8
percent to 1.13 million tons and exports of wheat soared 206.51 percent
to 1.85 million tons. Bumper grain crops this year, however, offer hope
of slower price hikes in the world’s most populous nation. Grain
production, which has increased continuously since 2004, is expected to
exceed 500 million tons this year.
Analysts said discouraging grain exports would be a new option to limit
domestic grain prices since the lengthy grain production cycle could not
be changed. Soaring food prices drove the consumer price index (CPI) to
an 11-year high of 6.9 percent in November. The prices of food, which
has a 33 percent weighting in the CPI, soared 18.2 percent last month.
The high inflation rate, well above the target of 3 percent set by the
government for 2007, has become a major issue for the government, which
is concerned about its impact on the poor. The grain tax move was the
latest in a series of government efforts to ease the impact of higher
consumer prices, including quintupling the tax on arable land used for
non-farm purposes and lifting the individual income tax threshold.
Analysts said the government had given the tax system a larger role in
protecting the area of land under cultivation, which has shrunk to about
122.6 million hectares, only slightly above the baseline of 120 million
ha that has been designated by the government as necessary to provide
sufficient food. South-east coastal regions, which used to be major
grain producers, have become major consumers as that region of the
country has industrialized.—Xinhua |
