China will abolish export duties on some grains and industrial products and cut the duties for chemical fertilizers and nonferrous metals from July 1 to promote exports, the Ministry of Finance said in a statement on Monday.
The move follows several increases in export tax rebates to support overseas sales amid the global downturn. Since last August, China has increased export tax rebates seven times.
The Customs Tariff Commission of the State Council will eliminate the export tariffs for wheat, rice, soybeans, vitriol and steel wire. Grains are now subject to a 3% export levy.
Special export tariffs of 50% on chemical fertilizer and fertilizer raw materials including yellow phosphorus, phosphate rock and phosphoric acid are expected to be canceled.
Export duties for some nonferrous metals including molybdenum, tungsten and indium will be halved to 5%, the statement said.
China's exports fell by a record margin in May as the global slump battered trade, down 26.4% from a year earlier to US$88.758 billion, following a decline of 22.6 percent in April. Exports in the five months to May totaled $426.14 billion, down 21.8%.
In order to spur exports, China has announced a series of policies, including expanded export credit insurance, tax breaks and more financial access.
Premier Wen Jiabao presided over an executive meeting of the State Council in late May, noting China would keep the yuan basically stable at a reasonable and balanced level to help exporters avoid exchange risks.
The Chinese government would also provide $84 billion worth of short-term export credit insurance to trading companies to help increase exports.
Preferential policies and tax breaks will mainly go to labor-intensive and high-tech industries to protect world market share.
Smaller companies would get more financing guarantees from financial institutions, as the government promised to allocate unspecified extra funding from the central budget.
Shrinking external demand that lead to export declines would remain the biggest difficulty facing the economy, participants to the meeting agreed.
China's trade collapsed in late 2008 as the global crisis cut demand for exports, and Chinese leaders have warned that the recovery is still tentative and is vulnerable to global economic conditions.
The full economic impact of China's stimulus-driven infrastructure expansion will likely become more apparent in the second half of 2009, Jing Ulrich, JP Morgan's chairwoman of China equities, said in a report. Policymakers must take steps to ensure that consumption remains on a firm growth trajectory.