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China may impose resource taxes on technology metals after

unfavorable WTO ruling

China- the world’s top producer and consumer of technology metals, is planning

dramatic changes in its domestic technology metals industry following an

unfavorable verdict by the World Trade Organization. After the WTO ruling on

export policies, the country is planning new counter measures.

The WTO ruled that China had used export restrictions on tech metals to control

key markets, push prices higher, and force the global industry to move operations

to China. As an immediate response to the ruling, China is removing export taxes

on tech metals. Instead, the country will concentrate on raising Chinese tech

metal producers’ prices China is likely to impose a resource tax in order to

compensate for any effect that the WTO ruling could have and keep prices at

sustained levels.

“Once the export tariffs are removed by the Chinese Government, a resource tax

is likely to be levied on the valuable resource, which is in line with WTO

regulations and has been adopted by other countries,” said Chen Weidong, a

professor in law at the Beijing-based University of International Business and

Economics.

Another major change in the government’s strategy is to shift its focus from

controlling exports to controlling production. China’s government is forcing many

of the smaller, unproductive operations to shut down and is focusing on

consolidation with the aim of solving the massive overcapacity in China’s industry.

The government has accelerated the push for consolidation in the industry by

giving its approval for three major producers to become conglomerates by year-

end to fortify available resources, combat smuggling and alleviate overcapacity.

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The establishment of tech metals conglomerates will improve the allocation of

China's tech metal resources.

Investors should benefit from this much-needed consolidation in the Chinese

industry. Output control measures of China should regulate production and help

increase prices. Chinese government’s proposed purchase of over 10,000 metric

tons of stock will also play to this effect

About Electio Middle East

Electio Middle East is an international commodity brokerage focusing primarily on

Technology Metals. Electio is the largest brokerage in its sector and the first

company worldwide to offer a niche investment platform enabling judicious

investors to diversify their portfolios into the Tech Metals Sector.