China doubles tax on a third of sugar imports

Oversupply overseas and currency depreciations of major exporting countries makes domestic China sugar 50pc more expensive than imported

PUBLISHED : Tuesday, 23 May, 2017, 3:08pm
UPDATED : Tuesday, 23 May, 2017, 10:53pm

China has more than doubled its tax on a third of imported sugar, in an attempt to protect its “seriously damaged” domestic mills.

The new regime, designed to narrow the gap between sugar prices at home and abroad, could take a heavy toll on overseas growers, particularly Brazil and Thailand, which have fuelled an exponential growth in China’s sugar imports over the last six years.

The move, by the world’s largest sugar importer, marks the end of a year of lobbying by Chinese domestic mills, who have long cried foul over their continued struggle for market share, blaming foreign competition.

“The home-grown sugar industry has been seriously damaged by a spike in imports,” said a notice by the Customs Tariff Commission of the State Council dated Monday.

“Due to a slump in international prices...more and more Chinese sugar factories have been forced to cut output or even close.”

Out-of-quota sugar imports for the first year will now be subject to a hefty 95 per cent tariff, a 45 per cent increase, which will decline to 90 per cent and later 85 per cent in the two subsequent years, according to the notice.

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Imports accounted for nearly half of China’s sugar output in 2015, a 66 per cent jump from four years earlier.

Its own sugar production, meanwhile, has been on a downward spiral, with 90 per cent of domestic producers now loss-making, according to the United States Department of Agriculture.

China’s domestic sugar is over 50 per cent more expensive than that shipped from countries such as Brazil and Thailand, driven by an oversupply in, and currency depreciations of, major exporting countries. Customs figures showed that Brazil, Thailand, Australia and Cuba are the top four sugar exporters to China

China’s previous tax rules stipulate that quantities inside its tariff quota were subject to an import duty rate of 15 per cent, while those outside would be charged a levy of 50 per cent.

That is compared with an average 97 per cent duty on sugar imports imposed by members of World Trade Organisation.

Domestic industry lobby groups last year argued that only a 156 per cent tariff on imports of the sweetener would ensure a “fair competition environment.