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China to slap export taxes on grains

31 December, 2007

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BEIJING (AFP)-China said on Sunday it will levy taxes on grain exports in 2008 in the latest move apparently aimed at reining in galloping inflation and ensuring stable domestic food supplies.

The rates would range from five to 25 percent, according to a brief announcement posted on the website of the Ministry of Finance.

The move goes even further than one China announced just two weeks ago, when it said it would eliminate export tax rebates on 84 categories of grain and grain products.

The new tax rates for wheat and wheat products were set at 20 percent and 25 percent, respectively. Processed corn, rice and soybean products will be taxed at 10 percent, while the tax on unprocessed grains will be five percent.

In all, 57 categories of grain will be affected, the ministry said.

Soaring prices, and their potential for social disruption, have emerged as one of the key concerns facing China's stability-conscious ruling Communist Party as it seeks to foster a long-running economic expansion.

It recently announced a slew of measures in response, ranging from policies that boost agricultural and oil sector output to increases in retiree pensions.

The government also has warned rampant property development was cutting into supplies of arable land, threatening China's ability to feed itself.

However, China exports only a tiny fraction of what its grain sector produces.

Total grain production for 2006 was 497 million tonnes, according to government statistics, and has been forecast to top 500 million tonnes in 2007.

By contrast, just 4.87 million tonnes of corn and 1.85 million tonnes of wheat were exported in the first 11 months of 2007, state-run Xinhua news agency said.

Those figures, however, were up sharply, according to Xinhua, which blamed the export rebates and high international grain prices.

Soaring food prices drove the consumer price index to an 11-year high of 6.9 percent in November.

A key government economic policy-setting gathering earlier in December had said controlling inflation would be a key goal for 2008.


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