Zhou Junsheng: Saving coal and reducing tariffs also need to reduce production capacity

The Ministry of Finance recently decided that from January 1 next year, the tax rate on coal export tariffs will be appropriately reduced. Although the Ministry of Finance has not announced the extent of the tax rate decline, the industry generally believes that this tax rate may be reduced to 3%. If this forecast is accurate, then the decline is still relatively large compared to the current 10% coal export tariff rate.

The motive for the Ministry of Finance to introduce this tax reduction policy is obviously to promote exports to resolve the problem of overcapacity in China. In recent years, China's coal exports have continued to decline. Since 2012, it has fallen below 10 million tons. From January to October this year, it was only 5.83 million tons. At the same time, China's coal imports have continued to grow, and in recent years it has been at a level of 200 million to 300 million tons.

This serious "upside down" on imports and exports is caused by the price difference between domestic coal and imported coal. At present, the lack of competitive advantage of China's coal in the international market is already a very serious problem. In the case of 5,500 kcal thermal coal, the price of China's coal after export tax rebate is about 450 yuan / ton, plus Shanghai freight 30 yuan / ton, the price shipped to Japan is 480 yuan / ton, and the same product from Australia The price shipped to Japan is only 440 yuan / ton. Therefore, for exporting coal, the reduction of export tariffs should be increased, and even zero tariffs can be implemented.

Significantly reducing tariffs or implementing zero tariffs will, on the surface, reduce the fiscal revenue of the country. However, the high coal backlog capacity actually requires state subsidies. Therefore, if the general ledger is to be calculated, the reduction of tariffs and the improvement of the competitiveness of export coal in the international market will not only play an active role in resolving the production capacity, but also be beneficial to alleviating the pressure on the state to bear the financial subsidies.

For China's coal industry, it is very important to reduce taxes and even implement zero tariffs. However, it is more urgent to make great efforts to reduce excess capacity. At present, there are only four enterprises with coal export qualifications in China, namely Shenhua, China Coal, Minmetals and Shanmei. They are large state-owned enterprises and lack sensitivity to market pressure. Therefore, it is necessary for these state-owned enterprises to achieve integration with the market through the introduction of private capital, and establish a mechanism to adjust production capacity with market demand.

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