Should china increase pesticide export rebate

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It is reported that the government is planning to increase export rebate to promote export, but is it really necessary?

It is reported that the government is planning to increase export rebate to promote export, but is it really necessary?

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  • 1. Should China increase pesticide export rebate?Summary: It is reported that the government is planning to increase export rebate topromote export, but is it really necessary?Tags: export rebate, blacklist system, highly toxic pesticide, anti-dumping investigation,pyridine, seed coating agentChinas economy has already showed a slowdown and the GDP growth may be under 8% thisyear. It is reported that the government is planning to release economic stimulus measuresincluding increasing export rebate as the country relies on export much. However, is it reallynecessary, according to CCM’s October issue of Crop Protection China News.According to the General Administration of Customs, Chinas export value in Aug. this yearincreased by 2.7% year on year. The figure was up slightly from 1% in July, but it was still lowerthan expectation. Besides, due to the weaker demand from foreign customers, especially theones from Europe, the situation may continue in the next few months this year.As for pesticide, the export situation is a little better. Chinas pesticide export volume and valueran up in the first half of 2012. The total pesticide export volume and value in this period realizedgrowth rates of 11% and 15% over H1 2011, reaching 473,200 tonnes and USD1.48 billionrespectively (Crop Protection China News, 1217). However, the total export value in July 2012reached USD176.94 billion, down 1.8% over June 2012. Some domestic analysts predicted thatthe export data in Aug. will not be optimistic for the export value in Aug. may continue to face anegative growth.The growth rate of Chinas export value may be lower than the target of 10% set for this year,which will pose challenge to Chinas economy. Many companies expect the government to launchpolicies such as increasing export rebate to promote export.Export rebate, a general and widely used financial strategy to encourage or adjust product export,has played an important role in the past years.Based on the past experience, it is possible for the government to increase export rebate. Since2008, Chinese government has raised the export rebate for seven times to promote export,including raising the export rebate for some pesticides in 2008 and 2009.
  • 2. However, for pesticides, the government does not always raise export rebate. In fact, thegovernment reduces export rebate for pesticide more than increasing export rebate in recentyears.On 15 Sept., 2006, China abolished the export rebate of 25 pesticides and intermediates.On 1 Aug., 2008, China further reduced and abolished the export rebate of over 20 pesticides.In late 2008, China raised the export rebate of some pesticides, aiming to boost pesticide exportunder the global economic depression.In 2009, China raised the export rebate for some pesticides as the industry was still hit hard bythe weak export.On 15 July, 2010, China abolished export rebate again for some pesticides, including the mostimportant pesticide in China, glyphosate (technical).Although some pesticides companies very look forward to the increase of export rebate, CCMthinks that there is no need for the government to do so.First, with the increase of export rebate, domestic producers may reduce the export price, andtheir competitiveness in the market will be strengthened, but not too much. The global demand ofpesticide more relies on the occurrence of the pests and disease and the price of crops, but isimpacted less by the slight change of the pesticide price.Second, Chinas pesticide price is very low at present and it has brought about anti-dumpingaccusation in overseas markets. Raising export rebate will only worsen trade friction.Third, lower export rebate will pose pressure on domestic pesticide industry in the short term, butit is a piece of good news for the healthy development of domestic pesticide industry in the longterm. Low industry threshold and lack of government administration had led to severeovercapacity and irrational market competition of pesticide in China, resulting in extremely lowprice and slim profit. As China aims to accelerate the industry integration and then forms arelatively rational market, maintaining the current export rebate or even reducing it is expected tobe an inevitable measure.
  • 3. According to the export rebate policies released by the government in recent years, most of theproducts that with export rebate reduced or abolished are high-energy consuming, high pollutionor resource-intensive products. With export rebate reduced or abolished, some companies withbad performance are expected to exit pesticide business, thus easing the serious overcapacityproblem.Although the export rebate raise for pesticides is not recommended, CCM thinks the governmentshould adjust the export rebate policy of pesticide technical and pesticide formulation. At present,the export rebates for most pesticide technical is 9% and for pesticide formulation is 5%, which isunreasonable.Domestic enterprises still more act as pesticide technical suppliers in the chain of internationalpesticide trade and the profit is slim. Meanwhile, the pollution caused by producing pesticidetechnical is very serious in China, compared with the production of pesticide formulation.The government should adjust the export rebate policy of pesticide technical and pesticideformulation to better facilitate its own formulation brand products to enter international terminalmarket.In 2011, Chinas pesticide formulation export volume exceeded the export volume of pesticidestechnical for the first time, a remarkable achievement for domestic pesticide industry. However,Chinas pesticide formulation still stays in a poor status in global market, and more policies areneeded to promote it.Source: Crop Protection China News 1218http://www.cnchemicals.com/Newsletter/NewsletterDetail_16.htmlContent of Crop Protection China News 1218:Should China increase pesticide export rebate?Hunan sets up pesticide business blacklist systemSelling highly toxic pesticide now faces arrestHuayang Groups withdraw from Huayang Technology finallyChina initiates anti-dumping investigation on imported pyridineShandong pesticide companies should make full use of capital market
  • 4. Seed coating agent eyes bright prospectNeeds special agents for unmanned helicopter urgently in ChinaSome pesticide techncials firstly registered by domestic companiesCrop Protection China News, a monthly publication issued by CCM on 15th&31th of everymonth, offers timely update and close follow-up of China’s Crop Protection industry dynamics,analyzes market data and finds out factors influencing market developmentAbout CCMCCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff ofmore than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis,Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its newproprietary product ValoTracer.Please visit http://www.cnchemicals.com for more informationGuangzhou CCM Information Science & Technology Co., Ltd.17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou510070, ChinaTel: 86-20-37616606Email: econtact@cnchemicals.comSource: http://www.cnchemicals.com/Detail/Release_1226.html