What is the infulence  with the cancellation of the aluminum export tax rebate policy by the Chinese government?

On November 15th, the Ministry of Finance and the State Administration of Taxation issued the "Announcement on Adjusting the Export Tax Rebate Policy", canceling the export tax rebates for aluminum products, copper products, and chemically modified animal, vegetable or microbial oils and fats and other products.

This move has sparked a great deal of heated discussion internationally. Moreover, various domestic enterprises are also talking about it a lot, because it will also have a certain impact on Chinese enterprises.

So, why did China suddenly decide to cancel the export tax rebate for the aluminum industry? What are the impacts and implications of this?

The cancellation of the aluminum export tax rebate policy by the Chinese government has several influences:

• Increased Costs and Reduced Profits:

  The cancellation of the 13% export tax rebate means that aluminum exporters will face increased costs. For example, based on current domestic aluminum prices and a processing fee of 4,000 yuan per ton, the production end cost will increase by nearly 3,000 yuan per ton. This leads to a reduction in export profits, and some enterprises may even face losses in the short term.

• Accelerated Industry Shuffle:

  This policy will accelerate the shuffling of the aluminum industry. Less competitive enterprises may be eliminated, while leading enterprises with core competitiveness are expected to become stronger, promoting the industry to move towards high-quality development.

• Promotion of Product Upgrading:

  Faced with the cancellation of tax rebates, enterprises will be forced to increase investment in research and development, improve product quality and added value, and accelerate the transformation and upgrading of the industry to enhance their competitiveness in the international market.

• Supply and Demand Adjustment:

  The cancellation of the export tax rebate may lead to a reduction in aluminum exports, which will help adjust the domestic aluminum market supply and demand relationship and stabilize domestic aluminum prices.

• Expansion of the Domestic Market:

  As exports are restricted, aluminum enterprises will pay more attention to the domestic market, which is conducive to further cultivating and expanding the domestic market, and promoting the formation of a new development pattern with the domestic cycle as the main body and the domestic and international double cycles promoting each other.

• Rise in International Aluminum Prices:

  China is a major global aluminum exporter, and the cancellation of tax rebates will lead to an increase in the export price of Chinese aluminum products. This may cause the international aluminum price to rise, especially for countries and regions highly dependent on Chinese aluminum imports.

• Reduction of Trade Frictions:

  The cancellation of the export tax rebate shows China's positive attitude in resolving international trade frictions. It helps to reduce trade disputes caused by aluminum product exports and creates a more stable and fair international trade environment.

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