China will resume export tariffs on resources-related products and products which consume a large amount of energy such as aluminium, copper and nickel, from January 1 next year, according to the Ministry of Finance.

The export tariff on aluminium previously dropped to zero in 1999, while those on copper and nickel dropped to zero in 2000.

Economists said resumption of the tariffs on those products was mainly because of strong domestic demand.

"The strong demand has fuelled expansion of domestic production capacity," said Niu Li, a senior economist with the State Information Centre. The increased capacity already resulted in a strain on energy and resources, he said.

Aluminium was among the few sectors including steel which were targeted by the government in its macro-control efforts to control investment, he said.

"The government does not want to increase export of those products, since domestic demand is already very big," Niu said.

For similar reasons, the government will levy a temporary export tariff on urea for three months from January 1.

"China is expected to consume a large amount of urea, because farmers demand fertilizers for their crops during the spring," Niu said.

Aiming to ensure a smooth transition for textile integration following the end of the global textile quota system next year, the government will also start to levy export tariffs on textiles such as coat and skirts from January 1.

"Chinese manufacturers should prepare for increased trade protectionism against China and other difficulties following the end of textile quotas," Niu said.

Seeking a fundamental change in export growth patterns is a top priority facing China's textile sector, he said.

The tariff will help encourage the export of high value-added products and optimize the mix of Chinese textile exports, he said.

While resuming or levying export tariffs on China-made products, the government said it would reduce import tariffs next year.

The government will cut import tariffs to an average of 9.9 per cent next year from 10.4 per cent this year, the Ministry of Finance said.

The country will cut the average import tariffs on farm produce from 15.6 per cent to 15.3 per cent and those on industrial products from 9.5 per cent to 9.0 per cent, it said.

Tariffs on textiles and clothing will fall to 11.4 per cent; on transportation facilities to 13.3 per cent; and on electronics to 9.1 per cent, the ministry said.

"This was in line with the government's commitments to the World Trade Organization," said Zhang Peisen, a senior researcher with the Taxation Research Institute of the State Administration of Taxation.

The government needs to cut import tariffs, because it wants to integrate itself into the international market, he said.

Zhang and Niu agreed the tariff cuts would not have much impact on the country's tax revenue.

The import tariffs cut will be beneficial to further expanding China's foreign trade, especially imports, Niu said.

Figures from the State Administration of Taxation indicate that the country's tax revenues reached 2.2 trillion yuan (US$262 billion) during the first 10 months of this year.

Experts believe the country's tax revenue is expected to reach 2.5 trillion yuan (US$301 billion) this year.

(China Daily December 21, 2004)