As China's foreign trade surplus set a record high of 14.5 billion US dollars in June, soaring 49 percent year on year, the issue of adjusting export tax rebate has once again become the focus on the market.

   It seems that to cancel or lower the tax rebate on export of some products has become an expedient measure to slash the huge trade surplus, reduce the tremendous foreign reserve, soothe the escalating trade frictions and ease the pressure on Renminbi appreciation.

   Earlier, a rumor spread in the market that China is likely to make an overall adjustment to the export tax rebate policy concerning many industries in August.  Industries concerned will include light industry, textile, metallurgical, iron and steel, and machine-building industry. Among them, the rebate rate of export tax on iron and steel products is likely to be adjusted down from 11 percent to 8 percent, and that on textiles and garments from 13 percent to 11 percent, and some products is likely to be delisted from the export tax rebate catalog.

   To cancel or reduce the tax rebate to export of some products is certain to be a trend, said Qin Chijiang, former director of the Research Institute of Finance under the People's Bank of China, but its main effect is to boost the upgrading of China's industrial structure and promote enterprises to improve the product quality and operation form to sharpen the competitive edge on the international market.

   Now foreign media attributes China's fast-growing trade surplus to the under-valuation of Renminbi, urging China to appreciate Renminbi quickly to ease the pressure of huge trade surplus.

   In such a situation, some experts held that it can yet be regarded as the best expedient to cancel or reduce the tax rebate to export of some products. Canceling or reducing export tax rebate rate is about equal to appreciating Renminbi indirectly. By reducing the export tax rebate, China can slow down the export growth, cut down the trade surplus and thus slash foreign exchange reserve, which is similar to ease the Renminbi appreciation pressure with a non-exchange means.

   But expert warmed at the same time that as for adjusting China's imbalanced foreign trade structure, it is a stopgap measure only, but not a radical measure.  The reduction of export tax rebate may ease the pressure on Renminbi appreciation in a short period of time, but reserving the imbalanced trade structure is not a thing that can be solved with one-sided effort of China in a short term.

   Li Huiyong, an analyst of the Shenying Wanguo Securities, refuted the review of foreign media, saying that it is unrealistic attempt to alleviate China's imbalance trade by revaluing Renminbi. On one hand, the space for Renminbi appreciation is limited and the small and gradual Renminbi appreciation has a limited effect on foreign trade; and on the other hand, China's trade imbalance is structural, with huge trade surplus originating from the processing trade. The trade surplus will not be changed substantially if China remains the world's processing center, stated the analyst.

   If the export tax rebate rates are to be adjusted as expected, iron and steel, textile and other primary product producing sectors will be affected most directly. And the textile industry, in particular, will be the biggest victim.