China to slap export taxes on grains

(Xinhua)
Updated: 2007-12-30 16:28

The Ministry of Finance of China said on Sunday that it would levy export taxes on wheat, corn, rice, soybeans and various processed grains in 2008.

The move is apparently aimed at reining in surging domestic prices, which have driven up the inflation rate, and it comes just a week after China scrapped tax rebates for grain exports.

The export tax rates will range from 5-25 percent and affect 57 types of grain and grain products.

The rates for wheat and wheat products are 20 percent and 25 percent, respectively. The rate for corn, rice and soybean is five percent, while that for processed corn, rice and soybean products is 10 percent.

A week ago, the ministry said that it would scrap a 13 percent export tax rebate on 84 categories of grain and grain products, effective December 20. Those rebates, together with high international grain prices, have boosted Chinese grain exports this year.

The nation exported 4.87 million tons of maize and 400,000 tons of soybeans in the first 11 months of 2007, up 85.3 percent and 23.8 percent, respectively, from the previous year. Exports of rice rose 5.8 percent to 1.13 million tons and exports of wheat soared 206.51 percent to 1.85 million tons.

Soaring food prices drove the consumer price index (CPI) to an 11-year high of 6.9 percent in November. The prices of food, which has a 33 percent weighting in the CPI, soared 18.2 percent last month.

The high inflation rate, well above the target of three percent set by the government for 2007, has become a major concern of the government, which is concerned about its impact on the poor.

Bumper grain crops this year, however, offer hope of slower price hikes in the world's most populous nation. Grain production, which has increased continuously since 2004, is expected to exceed 500 million tons this year.

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