Transcript B Current Target of China`s Steel Trade Policy

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Outlook for China’s Steel Trade Policy
Industrial Development Research Institute,
National Development & Reform Commission of China
Director Hu Chunli Professor
Shanghai, 17 April, 2007
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Outlook for China’s Steel Trade Policy
A Preconditions of China’s Steel Trade Policy Decision
Orientation
B Current Target of China’s Steel Trade Policy
C Effects and Determinants of China’s Steel Trade
Policy Implementation
D Trend on China’s Steel Trade Policy Decision
Orientation
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A
Preconditions of China’s Steel Trade Policy
Decision Orientation
1 Steel Trade Policy Subject to the Target of
National Macroeconomic Economic Adjustment
2 Steel Trade Policy Subject to Steel Industry
Development Policy
3 Steel Trade Policy Subject to the Overall Policy
of China’s International Trade
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A Preconditions of China’s Steel Trade Policy Decision Orientation
1、 Steel Trade Policy Subject to the Target of
National Macroeconomic Economic Adjustment
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A
1、
Preconditions of China’s Steel Trade Policy Decision Orientation
Steel Trade Policy Subject to the Target of National Macroeconomic Economic Adjustment
 Control the excessive growth of investment and
prevent economic overheating
——As of 2003, China's annual fixed asset investment and credit growth
have been continuing to exceed 25%, aroused fears of inflation.
 Adjust the economic structure, reduce excess
production capacity, including raw materials
——Control the momentum of excessive growth of steel iron, aluminum,
copper, lead-zinc, cement, glass, calcium carbide, coke, electricity.
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A
1、
Preconditions of China’s Steel Trade Policy Decision Orientation
Steel Trade Policy Subject to the Target of National Macroeconomic Economic Adjustment
Reduce energy consumption per unit
output and the emission of pollutants
——Through controlling of high energy consumption and high emission
industrial growth, closing of non-standard energy consumption and emission
enterprises, eliminating backward technical equipment, to achieve the goal
of reducing energy consumption and emissions.
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A Preconditions of China’s Steel Trade Policy Decision Orientation
2、Steel Trade Policy Subject to Steel Industry
Development Policy
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A Preconditions of China’s Steel Trade Policy Decision Orientation
2、 Steel Trade Policy Subject to Steel Industry Development Policy
Steel Industry Development Policy stipulates:
 National steel production capacity to maintain a reasonable scale；
 Meet the basic needs of the development of economic sectors;
 Productivity increases combine with the backward production
capacity elimination, and in principle，no more significant expansion
of steel production capacity;
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A Preconditions of China’s Steel Trade Policy Decision Orientation
2、 Steel Trade Policy Subject to Steel Industry Development Policy
Steel Industry Development Policy stipulates:
 Significantly lower energy and water consumption;
 No Operation Permission for pollutant emission
exceed the approved gross targets
 Eliminate backward techniques, products and
technologies.
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A Preconditions of China’s Steel Trade Policy Decision Orientation
3、Steel Trade Policy Subject to the Overall Policy
of China’s International Trade
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A Preconditions of China’s Steel Trade Policy Decision Orientation
3、 Steel Trade Policy Subject to the Overall Policy of China’s International Trade
Overall Policy of China’s International Trade:
 Abide by the demands of the WTO
 dependence on international trade, control the
growth of total exports
——The total value of China's imports and exports as a proportion of GDP
rose from 38.5% in 2001 to 65.2% in 2006. Exports as a proportion of GDP
rose from 20.1% in 2001 to 35.9% in 2006.
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A Preconditions of China’s Steel Trade Policy Decision Orientation
3、 Steel Trade Policy Subject to the Overall Policy of China’s International Trade
Dependence on international trade of China’s economic growth
Total I&E as a
2000
2002
2003
2004
2005
%
2006
38.5
42.7
51.9
59.8
63.8
65.2
20.1
22.4
26.7
29.0
34.4
35.9
proportion of GDP
Exports as a proportion
of GDP
Resources：China Statistics Abstract 2006, Statistical Gazette 2006
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A Preconditions of China’s Steel Trade Policy Decision Orientation
3、 Steel Trade Policy Subject to the Overall Policy of China’s International Trade
 Avoid trade friction
——With the continued increase in China’s exports, trade partners has increasingly
rose the anti-dumping investigations over China; for steel trade, there are 11
countries conducted 27 anti-dumping, countervailing investigations over China’s steel
enterprises since 2006,.
 Not to encourage the export of primary products or
products with high energy
——Energy consumption of China's export products has accounted for 20% of total
energy consumption.
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B
Current Target of China’s Steel Trade Policy
1、General policy targets
2、Key policies
3、Specific measures
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B Current Target of China’s Steel Trade Policy
1、General policy targets：Strictly control the export increase of steel
products.
2、Policy emphases: Prevent those enterprises that violate the "Steel
Industry Development Policy" and productivity that should be reduced
from maintaining its operation rely on exports.
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B Current Target of China’s Steel Trade Policy
3、Specific
measures: By reducing the export tax rebate rate and levy
more tax on certain products to show that the Chinese government
does not encourage export-oriented steel products, particularly the
long products, billets, and other low value-added products.
——After China's steel products increased significantly since the beginning of 2004, the Chinese
government has lowered the export tax rebate rate for five times, the export tax rebate rate for
steel products from 15% down to 8%, and some products are imposed 10% export tax.
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B Current Target of China’s Steel Trade Policy
Steel Production, Exports and Change rates of Export Tax Rebate
（million tones，%）
2000
Production 13146
2001
2002
2003
2004
2005
2006
16068
19252
24018
31976
39691
47339
19.3
Growth rate
8.6
22.2
19.8
25.2
32.6
24.1
Exports
620
474
545
695
1423
2052
4301
Growth rate
—
-23.5
15.1
27.5
104.7
44.2
109.6
Export tax
rebate rate *
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15
15
11
8
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*years base on the time rebate rate announced
Resources：China Customs Statistics , China Customs Gazette
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C
Effects and Determinants of
China’s Steel Trade Policy Implementation
1、Effect
2、Three decisive factors for steel exports
3、Export motivation
4、To control steel production, Co-Action of
Policies is needed
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C Effects and Determinants of China’s Steel Trade Policy Implementation
1、After
the reduction in the export tax rebate rate, the trend
of a rapid increase in steel exports has no obvious
changes.
—— As of the Reduction in the export tax rebate rate in 2004, China's
exports of steel products have not been reduced, but a substantial increase.
2、Three decisive factors for steel exports: Market supply and demand
(domestic and abroad), Chinese steel enterprise profits, China's export
tax rate and other countries’ import tax rate, the interaction between
the three factors.
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Three decisive factors for steel exports
Tax rate of
I&E
Market
supply and
demand
Enterprise
profits
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C Effects and Determinants of China’s Steel Trade Policy Implementation
3、
Demand in the international market, domestic
prices gap of steel products in and abroad is the
main driving force of export.
4、
For a long-term perspective, the interaction among the China's
macro-economic policy, the steel industry policy, steel trade could
have a significant effect on the growth of China's steel production
and exports.
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C Effects and Determinants of China’s Steel Trade Policy Implementation
•Due to the macroeconomic control policy and the policy of the
steel industry, China's steel exports witness a downward trend
in investment, the investment shows a negative growth in 2006.
Change Rates of Investment Growth of Steel Industry
（’00 million RMB，%）
2000
2001
2002
2003
2004
2005
2006
Investment
363.7
469.5
690.3
1289.7
1780.3
2281.5
2247.0
Growth rate
-8.6
29.1
47.0
86.8
38.0
28.2
-2.5
Resource：China Statistics Yearbook 2001-2006
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C Effects and Determinants of China’s Steel Trade Policy Implementation
 On March 5, 2007, China’s Premier reiterated to
reduce 100 million tons and 55 million tons of
iron making capacity and steel making capacity
in 2005, respectively. And in 2007, to reduce
another 30 million tons and 35 million tons
respectively, this will have a direct impact on
China's ability to export steel products.
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D Outlook for China’s Steel Trade Policy
1、Control the Continued production growth
2、Long-term policies
3、Overcome the difficulties caused by
production
4、Further control the export growth
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D 对中国钢铁贸易政策的展望
1、Control the Continued production growth
 According to the overall economic contradictions, structural contradictions,
resources as well as the environment condition, China's steel industries
should not increase unlimitedly. China will take more effective measures to
ensure the production and export of steel to maintain a reasonable level.
2、Draw up long-term policies
 By lowering the tax rebate rate to restrict steel exports is the recent
emergency measures, and mainly deal with sudden significant export
growth. Since the effect is not remarkable, however, long term and more
effective policies are highly required.
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D 对中国钢铁贸易政策的展望
3、Reducing steel production encountered difficulties
 Closure of enterprises encountered difficulties in capital and debt handling, personnel
allocation as well as economic compensation.
4、Despite the reduced steel production will face some difficulties in
practice, but in order to achieve the goal of the steel industry policy
and to fulfill the government's commitments, China will certainly take
more stringent policies and measures. More people will call for the
abolition of export rebates, levy more taxes, raise export tariffs and
other measures to increase export business access threshold.
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