Control of Exports

The 7th International Fine Chemicals Market Seminar was held in
Nantong, Jiangsu province of eastern China May 29th - 31st.
Around 200 delegates from Korea, Russia, India, Japan, China and
other nations attended the annual seminar. "REACH will increase
Chinese companies' cost 5% when exporting goods to EU," by Liu
Lianke, an officer of United Nations Industrial Development
Organization commented on the seminar, "which can also cause a
cost rise of 6% when Chinese players are importing goods from
EU. Impacted by this, the total import/export value between
China and EU will decline by 10%, a 0.4% drop is estimated on
the total production value of China's chemical industry that
will reduce employment by around 200 thousand." It is true that
a great challenge is placed on the table. Clean production has
been the important topic to be discussed in the fine chemical
seminars. An officer from SEPA also introduced the detailed
procedures for registering new chemicals in Chinese market.
Lonza, one of the most famous fine chemicals makers active in
China, announced its development strategy and R&D plans in
China.
    REACH was also widely discussed in the China Chemical Summit
2007 held in April this year. Experts from Rhodia and McKinsey
& Company spoke about the development of China's chemical
industry. Rhodia is strengthening its presence in China by
setting up a joint venture and optimizing its assets structure.
What is more important for Rhodia is improving its social
responsibility with regard to environmental protection, healthy
and safety. China will become the biggest chemicals market
worldwide by 2015, an analyst from McKinsey suggested. He said
that the production of chemicals in China is overly diversified,
with the increased share of private companies. The first 20
largest chemical makers accounted for 40% only of the total sales.
The analyst suggested transnational companies should augment
the local production in China.
     "The false export during August - December 2006 resulted
in an increase of US$17.5 billion favorable foreign trade
balance," reported by the NDRC, "accounting for 17% of the total
favorable balance." NDRC attributed the false export to three
factors including appreciation of RMB/US$. In April the total
export amount exceeded the total import amount by US$16.88
billion, twice as much as in March.  The report suggested the
government adjusts the current policies on foreign investment
and foreign trade to control the excessive exports. (False
export: To defraud Customs of rebating tariffs, some local
companies submit fictitious export trades bills or report a
fictitious export price that is higher than the actual
settlement price. To carry out speculation in betting the
appreciation of RMB to US$, some local companies help their
foreign partners to transfer US dollars into China illegally
through export trade that does not take place actually.)
    China started to levy export tariffs on those products with
high energy consumption, high pollution and high resource
consumption, effective June 1st, 2007. Local banks have started
to check their loan plans strictly in order to help government
reduce investment in high energy consumption projects.
    Recently permission to build a large new PX project was
stopped by the Xiamen government, although PX (para-xylene) is
urgently needed by PTA manufacturers. This may be the first
project to be denied by local government in China, under the
pressure of citizens.
    PBC increased the deposit reserve requirement rate for
commercial banks again by 0.5%, to 11.5% effective June 5th.

Zhong Weike
June 6th, 2007