China: An International Journal

Cui, Zhiyuan.
China's Export Tax Rebate Policy
China: An International Journal - Volume 1, Number 2, September 2003, pp. 339-349

NUS Press Pte Ltd

Zhiyuan Cui - China's Export Tax Rebate Policy - China: An International Journal 1:2 China: An International Journal 1.2 (2003) 339-349 China's Export Tax Rebate Policy Cui Zhiyuan Since the launch of the economic reforms in 1978, China's exports have been growing phenomenally, from $9.8 billion that year to $325.6 billion in 2002. The average annual growth rate was 15.6 per cent, or six per cent higher than the average annual GDP growth rate (9.5 per cent) over the same period. China's share in world exports increased from less than one per cent in 1980 to five per cent in 2002, making China the fifth largest export country in the world (see Table 1). To encourage exports, the Chinese government formulated and implemented a series of policies of which the export tax rebate is one of the most important. At the same time, however, this rebate scheme has become a heavy fiscal burden on the central government. Export tax rebate refers to the money the tax authority returns to exporting enterprises for the indirect tax they pay in the production and distribution process. It is commonly practised in international trade. To ensure fair competition, every country requires imported goods to be subject to the same tax rate as its domestically-produced counterparts. Therefore, regardless of whether export goods have been taxed by the exporting country, the importing country will still tax them. Thus, the main purpose of the export tax rebate policy is to avoid...