China Increases Export Subsidies for Bikes

BEIJING, China – Instead of lowering its export subsidy rate for bicycles which was still expected at the beginning of 2008, the Chinese government is raising it. In order to fight the global economic recession and to stimulate export the subsidy rate will rise from the current 9% to between 11 and 14%.

China dropped the export subsidy rate for bicycles in 2007 with 4% to 9%. Because of the World Trade Organization pleading for the elimination of tariff barriers en trade subsidies it was expected that China would drop the rate on bikes by another 4% this year.

That the Chinese government is to increase its export subsidy is because of the current global economic downturn. The Central government is, as reported by the financial press: “Like many governments globally, frantically trying to spend its way out of trouble”.

Stimulating the economy

China is to spend US dollar 586 billion (€ 455 bn) in all sorts of measures to stimulate its economy and its export. To safeguard its manufacturers from the economic downturn the Chinese government has raised export subsidies on over 3,700 products, including bicycles.

China’s export subsidy for bicycles is a big issue with regard to current anti-dumping duties that the European Union imposes on the import of bicycles from China. The European association for bicycles manufacturers, COLIBI, has repeatedly argued that because of the subsidized export the competition with Chinese manufacturers that export their products to Europe is unfair. The current 48.5% anti-dumping duty on bicycles imported from China is to be renewed July 2010.

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