China Exports Could Start to Slow

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China’s export juggernaut is likely to show signs of slowing, but the shift is likely to come from a change in tax policy rather than from mounting concerns about the safety of Chinese goods, economists say, the Wall Street Journal reports.


The expected slowdown in export growth could start to appear in July trade data to be released as soon as this week, economists say. The change comes amid scandals involving safety problems with food and other products, which have triggered recalls in the U.S. of goods ranging from tainted seafood to toys covered with lead paint.


But those issues are likely to have little impact on China’s broader trade performance, because the affected product categories form a small part of China’s overall exports, and because sourcing alternatives for importers are limited, economists say.


Instead, the anticipated slowing of export growth likely came from Chinese exporters front-loading their shipments in recent months to minimize the impact of a Chinese tax change. That change, which took effect July 1, reduces longstanding rebates on taxes paid by exporters — in effect raising their costs.


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