China Imposes Cuts on Tax Rebates To Curb International Trade Surplus

China recently enforced cuts on tax rebates in an effort to ease its growing international trade deficit with the United States and the European Union. Tax rebates, which is expected to hit 17.5 percent, had already been implemented in leather, fertilizers, and wood products. However, economists say that the new measure will not cause a major shakeup in the international trade deficit since bumper profits will continue to rise. Likewise, Chinese manufacturers can simply pass on higher costs to consumers in areas where the competition is not stiff.

In the past few months, the United States and the European Union has been complaining about their internal trade deficit, which will hit $400 billion and $170 billion euros, respectively. On the other hand, China expressed its disappointment on the recent international trade sanction which the United States imposed on high-technology military gadgets being shipped to China. Mr. Bo Xilai, Chinese Commerce Minister, said that the measure was against the spirit of economic cooperation.