Posted on 19 Nov 2024
China will lower tax rebates for lithium battery exports from December 2024, amid a shift in policy that also cancels the rebates on copper, Kallanish learns from the country’s finance ministry.
According to a statement last week, the export tax rebate rate for some products, including lithium batteries and some non-ferrous mineral products will be reduced from 13% to 9%.
Specifically, products to be included for this reduction are lithium-ion batteries (HS code 85076000), all-vanadium flow batteries (HS code 85078030), parts of manganese dioxide primary cells or primary batteries (HS code 85069010) and other related components. Export tax rebate for copper has also been removed.
The tax rebates were introduced in 1985 to make Chinese products more competitive in international markets and over the years the policy has been through several changes. “By refunding export taxes, Chinese companies could offer their products at lower prices in international markets, increasing their attractiveness to foreign buyers, while also boosting China’s exports volume and supporting economic growth,” analysts at ING explain.
Last week’s announcement could be a “strategic power move,” they add. It would demonstrate “China’s crucial role in global markets and its ability to influence prices and demand, in the context of trade tensions following Donald Trump’s win in the US presidential elections, which China might use as a leverage in trade negotiations.”
Chinese media Caixin says that at a time when the domestic industry is facing overcapacity, this move is aimed at preventing internal product circulation, boosting export prices, and guiding domestic price recovery. At the same time, the move should ease international trade tensions and encourage international export competitiveness.
An unnamed source was quoted as saying that in the short term, the number of customs declarations will surge. However, some companies will not have enough time to declare customs, potentially affecting their fourth-quarter performance.
“In the future, companies that can go abroad will accelerate their efforts to build factories overseas, and companies that cannot go abroad will have to stay competitive in China,” the source adds.
Source:Kallanish
