China May up Rebates on Exports of Base Metal Products

China, already the world's factory and keen to boost exports to solidify domestic economic recovery, may boost tax rebates on outflows of semi-finished and finished goods, including those made from nonferrous metals, during the next few months, industry sources said.

Larger rebates on the local 17 percent value-added tax on exports of metal products could spur domestic demand for the metals by 2-3 percent in China, the world's top consumer of most base metals, said Heng Kun, analyst for metal industry at Essence Securities.

"If China raises tax rebates on products exports, base metals products should be included," Heng said.

Heng said Beijing was unlikely to have preferential taxes on primary base metals given that the government was discouraging exports of the energy-intensive metals.

Wen Xianjun, vice chairman of the powerful government-picked China Nonferrous Metals Industry Association, said the industry body had been lobbying Beijing for full rebates of the 17 percent VAT on exports of aluminium products.

"High-energy exports like primary aluminium metal should be controlled. For aluminium products, the exports should be encouraged," Wen told Reuters late on Tuesday.

Beijing has already responded to the association's request with higher rebates on some aluminium products in the first half, such as a 13 percent rebate on aluminium profiles, which are used in construction. But Wen said a 13 percent rebate was still too low to make Chinese exports competitive abroad.

"Our competitiveness in (aluminium) exports has fallen because of policy changes," Wen said, referring to China's rebate cuts on aluminium products in previous years.

He added that reduced demand due to the global economic crisis and rising trade protectionism were also cutting into exports of Chinese aluminium products.