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FM HONG KONG 07084EZ JUN 22
TO IMMEDIATE F C O
TELEGRAM NUMBER 597 OF 7 JUNE
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HKK 121/9
INFO PRIORITY HONG KONG GOVERNMENT OFFICE LONDON, PEKING.-7
YOUR TELNO 420
CHINESE EXPORT DUTIES
No
24816
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WE HAVE NOT RECEIVED ANY OFFICIAL NOTIFICATION OF THE
INTRODUCTION OF EXPORT DUTIES BY CHINA. HOWEVER, ACCORDING TO THE LOCAL PRESS, THE NEW TARIFFS, EFFECTIVE FROM 1 JUNE 1982, WILL
AFFECT GOODS INCLUDING RICE, SOYA BEANS, SUGAR, FISH (ALL 20%), CHINESE MEDICINAL HERBS (40) 50%), COAL AND PIG IRON (20%). THE DUTY ON COAL IS 40 YUAN PER METRIC TON, WHILE THE DUTIES ON THE OTHER ITEMS RANGE FROM 10% TO 60% AD VALOREM. TRADE CONTRACTS SIGNED BEFORE 1 JUNE 1982 WILL NOT BE AFFECTED. WHEN ASKED HOW THE DECISION WOULD AFFECT EXPORT PRICES, A SPOKESMAN FOR THE MINISTRY OF FOREIGN ECONOMIC RELATIONS AND TRADE HAS BEEN QUOTED AS SAYING 'IN CHINA, TAXATION DOES NOT DIRECTLY AFFECT EXPORT PRICES. CHINA FIXES THE PRICES OF ITS EXPORT COMMODITIES BY TAKING INTO ACCOUNT THE INTERNATIONAL PRICES FOR THE SAME COMMODITIES AND THE SUPPLY AND DEMAND ON THE INTERNATIONAL MARKET. HE ADDED THAT THE PRINCIPLE WOULD CONTINUE TO APPLY IN RESPECT OF THE COMMODITIES AFFECTED BY THE NEW EXPORT DUTIES.
2. THE LOCAL PRESS HAVE ALSO QUOTED SOURCES IN PEKING AS INDICATING
THAT THE NEW MEASURES WOULD INHIBIT CHINESE EXPORTS AND HENCE AFFECT EARNINGS OF FOREIGN CURRENCY, BUT THAT THE CHINESE GOVERNMENT APPARENTLY FELT THAT SOME OF THE GOODS WERE IN SHORT SUPPLY AND THAT MEASURES NEEDED TO BE TAKEN TO CONSERVE DOMESTIC STOCKS.
3. IT WOULD SEEM TO US THAT THE NEW DUTIES HAVE BEEN IMPOSED LARGELY FOR INTERNAL REASONS WITH THE PROBABLY OBJECT OF REDISTRIBUTING FOREIGN EXCHANGE EARNINGS (THE EXPORT DUTIES COLLECTED PRESUMABLY WILL GO TO THE CENTRAL GOVERNMENT). AS TO WHETHER THEY WILL LEAD TO INCREASES IN EXPORT PRICES DEPENDS MAINLY ON HOW WELL THE PRODUCTS CONCERNED CAN COMPETE IN THE
INTERNATIONAL MARKET. IT SEEMS LIKELY, FOR INSTANCE, THAT THE EXPORT PRICES OF CHINESE MEDICINAL HERBS (EXPORT DUTIES 40 50 PERCENT) WILL PROBABLY GO UP SINCE THERE IS LITTLE OR NO INTERNATIONAL COMPETITION IN THE SUPPLY OF SUCH ITEMS. ON THE OTHER HAND COAL, THE SUPPLY AND PRICE OF WHICH IS SUBJECT TO A YEARLY CONTRACT BETWEEN THE HONG KONG ELECTRIC COMPANY AND THE CHINESE AUTHORITIES, SEEMS UNLIKELY TO BE AFFECTED UNTIL NEXT YEAR (1983). EVEN THEN IT WILL BE NECESSARY FOR CHINESE COAL TO BE COMPETITIVE WITH SUPPLIES. FROM E.G. AUSTRALIA OR SOUTH AFRICA.
THE CHINA LIGHT AND POWER COMPANY, FOR INSTANCE, IS OBTAINING ALL ITS COAL FOR THE NEW CASTLE PEAK POWER STATION FROM AUSTRALIA.
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