China’s cancellation of tax relief on exports has left the aluminum industry scrambling to assess the impact on supply flows, with Chinese companies suffering steep stock declines while their international peers rally.late on Friday, announcing plans to remove a 13% tax rebate on overseas sales of aluminum, copper, and also cutting relief to batteries and solar panels.
“This is one measure to tackle the long-standing low profitability of Chinese enterprises after investment-led stimulus fueled significant overcapacity,” said Li Xuezhi, head of Chaos Ternary Futures Co.’s research institute. “In the near term, it will hit exports. But in medium-to-long term, it will be beneficial as excess capacity will need to be cleared in some ways.”
The tax tweak comes ahead of President-elect Donald Trump’s return to the White House with a vow to ramp up tariffs to defend American industry. It was also unveiled as President Xi Jinping met US President Joe Biden in Peru, emphasizing China’s desire for cooperation between the word’s top two economies.
Zhejiang Hailiang Co., a major producer of copper tubes and rods, said the impact would be limited and the company would respond by accelerating overseas investments in places like Vietnam, Germany, the US and Morocco.For solar manufacturers, the long-term impact of the rebate reduction will likely be minor. China dominates global production, so exporters should be able to pass on increased costs to overseas buyers.