China to increase export tax rebates on 397 products

BEIJING (Reuters) - China said on Friday it will increase export tax rebates for 397 items ranging from some steel products to electronic ones, in a bid to boost prospects for shipments amid its trade war with the United States.

A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration

The move comes as word is widely awaited on whether U.S. President Donald Trump will impose tariffs on another $200 billion of imports from China. A public consultation period in Washington on the proposal has just ended.

To date, the U.S. has imposed tariffs on $50 billion of Chinese products, and Beijing has reciprocated.

On Friday, China’s finance ministry said that effective Sept. 15, tax rebate rates for light-emitting diodes (LEDs), lithium batteries, multi-component semiconductors, machinery products, books and newspapers will be increased to 16 percent.

The ministry, in a statement on its website, did not say what the current rebate levels are on those products. China assesses a 16 percent value-added tax on some exports, so a rebate of 16 percent will mean exporters get back the full amount paid.

“This is in effect to negate the impact from U.S. tariffs,” said Mei Xinyu, a researcher at a think tank affiliated with the Commerce Ministry.

For some other products, the rebate will be increased but not to 16 percent. According to the statement, China will increase rebates for stainless steel products to 9 percent and steel pipes to 13 percent. It was not clear immediately what the level of current rebates are.

Rates for chemicals also being increased, the statement said.

Exports are one of China’s key growth drivers, and any loss of momentum for them will pile more pressure on its already cooling economy.

China’s export growth has exceeded analysts’ expectations for the past five months, with some analysts believing Chinese exporters are rushing out shipments to beat fresh U.S. tariffs.

Last week, China’s state council said that it decided to increase the rate of export tax rebates for some products to support the economy.

Reporting by Stella Qiu and Elias Glenn; Editing by Richard Borsuk