New Steel Drawback Rate Will Take Effect Since May 1

/News from Ministry of Finance/ The drawback rate of steel will be decreased from 13 percent to 11 percent and relvant enforcement measures had been reported to State Council to be approved. The insiders analyzed that tax policy is a major measure for controlling domestic investment and export of high energy-consuming resource. Abolishing the steel drawback is a trend of this policy. Once the drawback rate decreased, steel export will be shrunk, so that the increase of domestic steel price will be slow down. After billet, steel will be the next item that will no longer be protected by drawback policy. Currently, it's trading companies and steel plants who do steel exporting business in China. Before the adjustments of drawback rate, steel exporter will get 13 percent of the deal amount as drawback value from the state government. But according to the new drawback policy, 25 percent of that 13 percent amount will be paid by local government since Jan. 1 2004. As steel export increased day by day, the new drawback policy brought a lot of pressure to bear on the local government. Then no local government were willing to support the company's steel exporting business. In order to solve the problem of scarcity of domestic resource and protect environment, China government is studying the subject of decreasing or abolishing the drawback policy of high energy-consuming resource. Since the forth quarter of last year, China government abolished drawback policy of copper, aluminum, nickel and other resource products. From Jan. 1 2005, drawback policy of electrolytic aluminium, ferroalloy etc had been abolished.