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China enlarges processing trade ban, diesel oil, fuel on list
2007-04-05 15:29:05 Xinhua English

BEIJING, April 6 (Xinhua) -- China has banned processing trade companiesfrom exporting and importing heavy diesel oil and fuel for the first time amid rising concern from home and abroad on the country's hefty energy consumption, Xinhua learned Friday from the Ministry of Commerce.

Processing trade often involves import of raw materials and export of finished products.

Heavy diesel oil can be used for basic raw material for petrochemical products and fuel are mostly used for generating power, transportation vehicles, metallurgy and chemical industry.

China has imported a large amount of energy resources, especially petroleum, causing some countries' complaint that China's soaring energy demand led to the energy price hike in the global market, said Niu Li, economist with the State Information Center (SIC).

Chinese companies have been earning little profits from the processing trade and export from processing trade contributed to China's ever-increasing surplus, which causing trade disputes between China and some European and American countries, he said.

According to customs data, the processing trade accounted for 80 percent of China's trade surplus, of which foreign-funded enterprises made up an overwhelmingly large proportion.

This prohibition list can help China reduce energy consumption,protect environment and trim trade surplus, he said.

Under the 2007 Prohibited List for Processing Trade which will take effect on April 26, processing trade companies will not be allowed to deal with 990 products with 186, mostly unrenewable resources, newly added on.

The Chinese government have been issuing similar prohibited lists since 2004, hoping to curb exports of products with high energy consumption, high pollution and low added value.

Under the list, companies are not allowed to import or export disposable wooden chopsticks, a move after China imposed a five-percent consumption tax on the products last April, which, according to Gao Huiqing, an official with SIC, indicates the government is paying more attention to sustainable development.

The companies will be prohibited to export natural or simple-processed softwood and whole pieces of endangered animal skins and furs under the list.

Import of seeds, seedlings, chemical fertilizers, feed and antibiotics to grow plants and raise livestocks for export purpose will also be barred.

Companies that signed contracts involving the 186 products before April 26 are allowed to register with files from the customs. Those with contract approvals can only conduct the trade within time limits.

The prohibition was jointly released by the Commerce Ministry, the General Administration of Customs and the State Environmental Protection Administration.

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