Tax Rebates to Boost China’s Formulation Exports
23 May 2017 China’s government is set to create higher pesticide formulation tax rebates, which is likely to lead to a surge of exports, more competitiveness in international markets and new investments and innovation, according to Tranalysis, a Chinese commodity trade data aggregator and analysis firm.
Currently, manufacturers are mainly exporting technical-grade pesticides, as opposed to formulations, in international markets due to the tax rebate gap. This issue is a long-time thorn in the eyes of China’s industry, lowering motivation for value-added processing of technical into formulations and slowing down development, the article said.
“In November 2016, the Chinese government revealed it would increase the export tax rebates for more than 400 commodities. The idea behind that step was an improvement for Chinese exporters in the international markets. However, pesticides formulation was not included, which caused them to fall behind in preference of manufacturers for technical pesticides,” according to the article.
China has been seen traditionally as a large exporter of low-value pesticides. Value-added pesticide formulations were rarely seen in international markets. However, huge enhancements in production technology and investments in pesticides formulations by Chinese manufacturers is set to reverse the situation. One of the main reasons for Chinese producers to stick to technical pesticides is the higher export tax rebate, the article said.
“In fact, many overseas manufacturers have used the higher tax rebate of technical pesticides in order to negotiate low prices, process the cheap products into higher valued formulation, and sell them back to China’s market. This situation has depressed Chinese manufacturers and caused calls for higher tax rebates in recent years,” according to Tranalysis.
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