Voluntary Report - Public distribution

**Date:** 1/14/2008

**GAIN Report Number:** CH8001

CH8001

**China, Peoples Republic of**

**Agricultural Situation**

**2008 China Tightens Control on Grain and Flour Exports**

**Approved by:**

![](media/image1.wmf)William Westman

AgBeijing

**Prepared by:**

Jorge Sanchez, Mark Petry, and Jiang Junyang

**Report Highlights:**

To further discourage grain exports and curb domestic food price
inflation, the Government of China will levy provisional export taxes on
raw grains and their flour products beginning January 2008. According to
a separate notice by State Council on January 8, 2008, grain and flour
exports to Hong Kong, Macao and Taiwan will not be subject to export
taxes. This step follows the December 2007 removal of the VAT export
rebate for the same products (See GAIN Report 7093).

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Beijing \[CH1\]

\[CH\]

**Summary**

To further discourage grain exports, the Government of China announced
in early January 2008 that it would levy provisional export taxes on
grains and their flour products. This follows the December 2007 removal
of the VAT export rebate for these products. These policies are designed
to address concerns over rising domestic food prices and criticism that
food exports might be contributing to inflationary pressures (See GAIN
Report CH7093).

Food prices are estimated to account for a third of the weight used to
calculate the Consumer Price Index (CPI) in China. Moreover, price hikes
in grains, meat and vegetable oil were leading factors contributing to
the significant food price increase in 2007. New policy controls over
grain exports signal another government attempt to ease mounting
inflationary pressures in 2008.

The export tax rates range from 5 percent to 25 percent, with the rates
for wheat and wheat flour at 20 percent and 25 percent, respectively.
The export tax rate for corn, paddy rice, milled rice and soybeans is 5
percent and the rate for corn, rice, soy flour products is 10 percent.
However, according to a separate notice by the State Council on January
8, 2008, grain and flour exports to Hong Kong, Macao and Taiwan would
not be subject to export taxes.

In addition to the taxation measure, the Chinese government also
announced that exports of wheat, corn and rice flour products would be
subject to export license management beginning January 2008. The license
regime is intended to cap the export volume of such products in case
flour product exports were still be viable despite a high export tax
rate.

Post estimates that the combination of recent policy shifts will greatly
reduce China's exports of grains and flour products in MY07/08 and for
as long as the policy remains in place.

BEGIN UNOFFICIAL TRANSLATION:

**China to levy provisional export tax on raw grains and their flour
products in 2008**

December 30, 2008 Information Office, Ministry of Finance

Approved by the State Council, effective January 1 through December 31,
2008, China will levy provisional export taxes on 57 products with 8
digital HS codes including wheat, corn, paddy rice, milled rice,
soybeans and their flour products. The export tax rates range from 5
percent to 25 percent, including rates for wheat and wheat flour at 20
percent and 25 percent, respectively. The rate for corn, paddy rice,
milled rice and soybeans is 5 percent, and the rate for corn, rice and
soybean based flour products is 10 percent.

Attachment: List of New Export Tariff Rates

(Post Note: Soybeans are commonly used for processing traditional
Chinese food in China and is classified as raw grain, rather than an
oilseed.)

**Attachment: List of provisional export taxes for grains and their
flour products**

  --------- -------------- --------------------------------- ------------------
  * *       ***HS Code     ***Product Names***               ***Provisional Tax
            (2008)***                                        Rate***

  *** ***   ***1001***     ***Wheat***                       *** ***

  *1*       *10011000*     *Durum wheat*                     *20*

  *2*       *10019010*     *Wheat, seed*                     *20*

  *3*       *10019090*     *Other wheat and maslin*          *20*

  * *       ***1002***     ***Rye***                         *** ***

  *4*       *10020010*     *\-\-- Seed*                      *20*

  *5*       *10020090*     *\-\-- Other*                     *20*

  * *       ***1003***     ***Barley***                      *** ***

  *6*       *10030010*     *\-\-- Seed*                      *20*

  *7*       *10030090*     *\-\-- Other*                     *20*

  * *       ***1004***     ***Oats***                        *** ***

  *8*       *10040010*     *\-\-- Oat Seed*                  *20*

  *9*       *10040090*     *\-\--Other*                      *20*

  * *       ***1005***     ***Maize (corn):***               * *

  *10*      *10051000*     *Maize (corn) seed*               *5*

  *11*      *10059000*     *Other maize (corn)*              *5*

  * *       ***1006***     ***Rice:***                       * *

  *12*      *10061011*     *Rice in husk (paddy or rough),   *5*
                           Shien rice (long-grained          
                           nonglutinous rice), seed*         

  *13*      *10061019*     *Other rice in husk (paddy or     *5*
                           rough), seed*                     

  *14*      *10061091*     *Other rice in husk (paddy or     *5*
                           rough), Shien rice (long-grained  
                           nonglutinous rice)*               

  *15*      *10061099*     *Other rice in husk (paddy or     *5*
                           rough)*                           

  * *       * *            ***Husked (brown) rice***         * *

  *16*      *10062010*     *Husked (brown) rice, shien rice  *5*
                           (long-grained nonglutinous rice)* 

  *17*      *10062090*     *Other husked (brown) rice*       *5*

  *18*      *10063010*     *Semi-milled or wholly milled     *5*
                           rice, Shien rice (long-grained    
                           nonglutinous rice) whether or not 
                           polished or glazed*               

  *19*      *10063090*     *Other semi-milled or wholly      *5*
                           milled rice, whether or not       
                           polished or glazed*               

  * *       * *            ***Broken rice***                 * *

  *20*      *10064010*     *Broken rice, Shien rice          *5*
                           (long-grained nonglutinous rice)* 

  *21*      *10064090*     *Other broken rice*               *5*

  * *       ***1007***     ***Grain sorghum:***              * *

  *22*      *10070010*     *\-\--Seed*                       *5*

  *23*      *10070090*     *\-\--Other*                      *5*

  *** ***   ***1008***     ***Buckwheat, millet and canary   * *
                           seed; other cereals:***           

  *24*      *10081000*     *- Buckwheat*                     *20*

  *25*      *10082000*     *- Millet*                        *5*

  * *       * *            ***Other cereals**:*              * *

  *26*      *10089010*     *\-\--Seed*                       *5*

  *27*      *10089090*     *\-\--Other*                      *5*

  *** ***   ***1101***     ***Wheat or maslin flour:***      * *

  *28*      *11010000*     *Wheat or maslin flour*           *25*

  *** ***   ***1102***     ***Cereal flours other than of    * *
                           wheat or maslin:***               

  *29*      *11021000*     *- Rye flour*                     *25*

  *30*      *11022000*     *Maize (corn) flour*              *10*

  * *       * *            *- Rice flour*                    * *

  *31*      *11029011*     *Shien rice (long-grained         *10*
                           nonglutinous rice) flour*         

  *32*      *11029019*     *Other rice flour*                *10*

  *33*      *11029090*     *- Other*                         *10*

  *** ***   ***1103***     ***Cereal groats, meal and        * *
                           pellets:***                       

  * *       * *            *\-- Of wheat*                    * *

  *34*      *11031100*     *Wheat groats and meal*           *25*

  * *       * *            *\-- Of maize (corn)*             *10*

  *35*      *11031300*     *Maize (corn) groats and meal*    *10*

  * *       * *            *\-- Of other cereals*            * *

  *36*      *11031910*     *\-\--Of oats*                    *25*

  * *       * *            *\-\--Of rice:*                   * *

  *37*      *11031921*     *Shien rice (long-grained         *10*
                           nonglutinous rice) groats and     
                           meal*                             

  *38*      *11031929*     *Other rice groats and meal*      *10*

  *39*      *11031990*     *\-\--Other*                      *10*

  * *       * *            *-Pellets:*                       * *

  *40*      *11032010*     *Wheat pellets*                   *25*

  *41*      *11032090*     *\-\--Other*                      *10*

  *** ***   ***1104***     ***Cereal grains otherwise worked * *
                           (for example, hulled, rolled,     
                           flaked, pearled, sliced or        
                           kibbled), except rice of heading  
                           10.06; germ of cereals, whole,    
                           rolled, flaked or ground:***      

  * *       * *            *- Rolled or flaked grains:*      * *

  *42*      *11041200*     *\-- Of oats*                     *20*

  *43*      *11041910*     *\-- Of barley*                   *20*

  *44*      *11041990*     *\-\--Other*                      *5*

  * *       * *            *- Other worked grains (for       * *
                           example, hulled, pearled, sliced  
                           or kibbled):*                     

  *45*      *11042200*     *\-- Of oats*                     *20*

  *46*      *11042300*     *Maize (corn) otherwise worked*   *5*

  *47*      *11042910*     *\-\-- Of barley*                 *20*

  *48*      *11042990*     *\-\--Other*                      *5*

  *49*      *1104300*      *- Germ of cereals, whole,        *5*
                           rolled, flaked or ground*         

  *** ***   ***1108***     ***Starches***                    * *

  * *       * *            *- Starches:*                     * *

  *50*      *11081100*     *\-- Wheat starch*                *25*

  *51*      *11081200*     *\-- Maize (corn) starch*         *10*

  *** ***   ***1201***     ***Soybeans, whether or not       * *
                           broken:***                        

  *52*      *12010010*     *\-\--Seed*                       *5*

  *53*      *12010091*     *\-\-\--Yellow soybeans*          *5*

  *54*      *12010092*     *\-\-\--Black soybeans*           *5*

  *55*      *12010093*     *\-\-\--Green soybeans*           *5*

  *56*      *12010099*     *\-\-\--Other*                    *5*

  *** ***   ***1208***     ***Flours and meals of oil seeds  * *
                           or oleaginous fruits, other than  
                           those of mustard:***              

  *57*      *12081000*     *- Of soybeans*                   *5*
  --------- -------------- --------------------------------- ------------------