China's Export Policy Shift — Chinese Information Asymmetry Strikes Again

Given the close trading relationships between China and the West, you'd think that news of changes in export policies, incentives and tariffs would travel fast. Guess again. Over the years of reporting on China sourcing and participating in China sourcing and trading deals, I've been struck by how slow words of policy shifts can tend to travel past China's shores. It's almost as if the proverbial great firewall that blocks Internet access to "questionable sites" also acts to slow the movement of information outside of China's borders regarding trade policy.

The most recent example of this comes courtesy of Spend Matters affiliate site, MetalMiner, which recently broke the news that China made changes in its export policies on raw materials. MetalMiner reports that they learned "that China had modified the export tax rates on June 22, effective July 1 [yet] ... Somehow, these changes failed to make the mainstream or even trade publication news." The changes are significant -- export taxes for a range of metals dropped by 50% or more. Lisa, my wife and author of the story, only learned about this through one of the people on the ground in China working on projects and research with them.

The situation seems remarkably similar to one from a couple of years ago when China made changes to its export VAT rebate, yet news was also slow to trickle out into Western media and Western companies. At the time, such news also had a direct impact on the pricing of Chinese goods and materials. At the time, Lisa and I actually worked with her people on the ground to find out about specific changes for categories of interest to us and we were fortunate enough to have the Shanghai office translate the entire list for us.

Today, it feels like the more things change regarding how news about Chinese export policy gets out, the more things stay the same. This information asymmetry is further proof that China plays by its own rules and that we can't leave it in the hands of our media to get to the bottom of important trade news quickly enough. While some of the challenges most certainly result from the language and translation barrier, others no doubt stem from a centralized authority that wants to keep the West out of the loop as much as possible.

Jason Busch

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