China to Cut Taxes in Effort to Help Exports

Shanghai Daily reports:

CHINA will reduce or eliminate export taxes on nearly 100 categories of goods including some agricultural products and fertilizers starting next month in its latest move to help the country's flagging trade sector.

The cuts are the first outright tax reductions since December 2008 and follow seven increases in export tax rebates since August.

While the policies give at least some relief to the nation's struggling exporters, they contribute little to fixing the main problem: restoring external demand, industry analysts said.

The Ministry of Finance said yesterday that 31 types of goods such as wheat, rice and soya beans will be exempted from export taxes starting July 1.

Direct, effective

Large tax reductions will apply to another 60 categories of products, including fertilizer and chemicals. The tax on phosphate fertilizer, for instance, will be cut from 75 percent to 10 percent.

"The move, similar to the previous increases in export tax rebates, is an obvious bid to counter the falling trade," said Xue Jun, an analyst at Changjiang Securities Co. "A tax cut is more direct and effective than rebates and enhances cash flow."