Na­tion low­ers tax rate on heavy rare earths to sup­port in­dus­try

Global Times US Edition - - BIZUPDATE -

The Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy has for­mal­ized a new law that re­duces the re­source tax on heavy rare earths from 27 per­cent to 20 per­cent, a move that an­a­lysts said shows China’s re­solve to sup­port the in­dus­try’s devel­op­ment amid a heated trade war.

Heavy rare earths, where China has a dom­i­nant po­si­tion in the global mar­ket and widely used in the de­fense sec­tor, are widely re­garded some­thing that Bei­jing could weaponize to threaten US eco­nomic and na­tional se­cu­rity.

The new law was passed by the 12th meet­ing of the Stand­ing Com­mit­tee of the Na­tional Peo­ple’s Congress, China’s top leg­isla­tive body, on Au­gust 26, and it will take ef­fect on Septem­ber 1, 2020. The re­source tax on light rare earths re­mains un­changed.

Wu Chen­hui, a Bei­jing-based in­de­pen­dent rare-earth an­a­lyst, told the Global Times on Thurs­day that the new pol­icy aims to ease the tax burden of rare-earth en­ter­prises and en­cour­age them to in­vest in and re­search more ad­vanced ex­trac­tion tech­niques and mar­ket ap­pli­ca­tions, to ce­ment China’s po­si­tion as a lead­ing sup­plier in the mar­ket.

“The new tax will also pro­vide ad­di­tional liq­uid­ity for these com­pa­nies as they cope with the coun­try’s stronger en­vi­ron­men­tal pro­tec­tion,” Wu said.

Amid an es­ca­la­tion of the China-us trade war, in­dus­try in­sid­ers have hinted that China could cut rare-earth ex­ports to in­flict mas­sive dam­age to var­i­ous US in­dus­tries and de­fense ca­pa­bil­i­ties.

Rare-earth com­po­nents are in­dis­pens­able in the man­u­fac­tur­ing of elec­tronic de­vices such as lap­tops and smart­phones. They are also of vi­tal im­por­tance to US mil­i­tary equip­ment, such as radar, night vi­sion gog­gles, mis­sile guid­ance sys­tems and tank ar­mor. The US from 2014 to 2017 sourced 80 per­cent of its rare-earth im­ports from China, ac­cord­ing to US gov­ern­ment sta­tis­tics.

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