Global Fastener News

China Cuts Export Rebate On Fasteners To 5%

Jason Sandefur

China cut the 13% export rebate tax on steel fasteners to 5%, which applies to goods clearing customs starting July 1, Fastener & Fixing Europe reports. The move is likely to impact existing orders for importers since few factories will absorb the cost increase. The rebate change is expected to affect all popular fastener items, although definitive list has not yet been published.
The move is part of the Chinese government’s effort to reduce the export rebate tax on most goods. Overall 2,831 categories of goods, accounting for 37% of Chinese exported goods, are impacted. This includes the elimination of the tax on 553 high energy consuming, high polluting and resource-intensive goods. The rebate was cut on the remaining 2,268 other product types, including shoes, clothing and metal and plastic products.
Reducing domestic subsidies is aimed at easing the record trade imbalance between China and other countries. During the first five months of 2007 Chinese exports rose 23.7% to $801.3 billion, while imports increased 19.1% to US$357.8 million. The trade surplus of $85.7 billion surged 83.1% over the first five months of 2006.
F&FE editor Phil Matten reported that China aims to achieve a balance between imports and exports by 2010 as it attempts to boost domestic demand and rein in overseas sales of energy-intensive products.
“Sources (in China) noted potential for trade conflict with the U.S. and Europe and pressure for appreciation of the RMB by as much as 40%,” Matten stated.
Some have argued that other Asian countries with fastener capacity, such as Thailand and Vietnam, could now compete with the price of standard fasteners from China. But Matten noted that many of these countries are largely reliant on Chinese wire rod, so they will see increased costs for their raw material, offsetting fastener price increases from China. �2007 FastenerNews.com and Fastener & Fixing Europe