China cut export incentives for steel and textiles and increased them for high-technology and biomedical goods, seeking to curb a record trade surplus and encourage production of higher-value goods.
Export rebates on steel and textiles were cut by as much as 3 percentage points while incentives for technology and processed agricultural products were raised by up to 8 percentage points, the government said. The rebates reduce the amount of sales tax paid on exports.
The changes may help China fend off criticism that the world’s fastest-growing major economy uses an undervalued currency to boost exports of cheap goods. Group of Seven finance officials gathering in Singapore this weekend are expected to renew pressure on China to let the yuan gain more rapidly. [Full Text]