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5 White Paper on the Business Environment in China
China [Sinopec] in Ningbo led to “a spokesman for the Ningbo (for gasoline) and 32 percent (for jet kerosene). Facilitated by
government [saying] in a statement […] that there would be no arti cially-high prices (relative to the market) preceding the
further work done on the massive project […] pending further announcement, the restructuring—aimed to allow fuel prices
‘scienti c debate.’”64 Sinopec is a publicly-traded subsidiary of in China to uctuate more in line with the going rate on the
the state-owned China Petroleum Corporation. global market and to discourage conspicuous consumption—
aimed to result in better e ciency in the long term, more
Although the facility’s expansion would appear to have organic control over consumption in general, and a more eq-
been halted—at least temporarily—by the local citizenry’s uitable distribution of tax burden among users.67
discontent, Reuters reported that the $8.8 billion project
will likely proceed “once the public furor dies down”, and e historically tight control of fuel pricing was by many
that public concern might simply lead to the project being parties attributed to a preference for maintaining social stabil-
renamed in order to “downplay or disguise [it].”64 ity over wasteful consumption.68
Similar demonstrations in Qidong (near Shanghai), Da- e timing alluded to by China Daily above is often
lian, Xiamen in 2012, 2011 and 2007, respectively, also de- attributed to the large discrepancy between extremely low
layed or de ected industrial projects due to concerns over international crude oil prices at the end of 2008 and the
hazardous chemicals.64 arti cially-in ated rate for fuel paid by Chinese consumers,
which was, according to Reuters, “roughly equivalent to
Seemingly in response to these surprisingly e ective cam- $83.50 crude.”68
paigns by local citizenry, Environmental Protection Minister
Zhou Shengxian went on the record as saying that, “ e gov- Over the course of 2009, six types of fees for road mainte-
ernment will increase transparency and public involvement in nance and management were abolished and revenue from fuel
decisions regarding major projects with a potential environ- consumption tax was reported to exceed 355 billion yuan.69
mental impact” and that “his ministry will make concerted
e orts with other government agencies to ensure that the Resource Tax Pilot and Expansion
requirement [for all large projects to undergo stringent risk In July 2010, the NRDC indicated that it would expand
assessments] is fully honored.”65 the resource tax pilot program introduced a month prior in
the Xinjiang Uighur autonomous region to “all 12 of the
Minister Zhou’s attention is unsurprising; China Society western provinces and autonomous regions.”70 is program
for Environmental Sciences’ Yang Zhaofei indicated earlier in was later reported to be planned to be put into e ect nation-
2012 that “the number of environmental ‘mass protests’ [had] wide by November 1, 2011.71
been growing by 29 percent annually in recent years.”65
is tax, which will reportedly be based on price of com-
Increased scrutiny from both the public as well as mu- modities rather than their volume, will have a benchmark rate
nicipal authorities’ provincial- and central-level masters will of 5 percent and will vary by item (including oil, natural gas,
likely have positive e ects for the environment. Whether this coal and water).
scrutiny has any substantive e ect on foreign investment or
the relative ease of completing large-scale chemical and energy Furthermore, the list of taxable resources was widened from
projects will be seen in coming years. its original scope to include rare earths, salts and metals.71
Notable Policy Activity A China Daily-quoted analyst suggests that the new tax
was “de nitely [bene ting] the nation’s plans for sustainable
Fuel Tax Increases growth by discouraging the exploitation of resources,” and
Perhaps China Daily said it best: ‘You pay as you ll up the that “it will also help to solve the developmental imbalances
tank. In other words, the more you drive, the more it costs in di erent regions by boosting local scal revenues.”70
you – and the planet. is is a simple market rule but it has
taken nearly two decades for the government to pick a “proper Another researcher later told Reuters that the new tax
time” to implement it.’66 system “would shift pro ts from companies to governments
in poorer provinces.”71
e announcement of the reform of fuel taxation, and the
attendant price cuts, were a welcome change to the environ- Cleaner Gasoline Production
ment upon their announcement in late December of 2008. In September 2013 it was reported that Sinopec would
begin producing cleaner gasoline ahead of the January 2014
While tax rates on gasoline, diesel, naphtha, solvents, lu- regulatory deadline enforcing a new cleanliness standard
bricants and jet kerosene on January 1, 2009 increased by named “National IV.”72
nearly seven- to eight-times their former amounts, the chang-
es were accompanied by price cuts of between 14 percent e new standard, which was announced in 2011 and is
described as similar to Europe’s “Euro IV,” puts a 50 parts-
122 per-million upper limit on sulphur content in gasoline. Prior
China [Sinopec] in Ningbo led to “a spokesman for the Ningbo (for gasoline) and 32 percent (for jet kerosene). Facilitated by
government [saying] in a statement […] that there would be no arti cially-high prices (relative to the market) preceding the
further work done on the massive project […] pending further announcement, the restructuring—aimed to allow fuel prices
‘scienti c debate.’”64 Sinopec is a publicly-traded subsidiary of in China to uctuate more in line with the going rate on the
the state-owned China Petroleum Corporation. global market and to discourage conspicuous consumption—
aimed to result in better e ciency in the long term, more
Although the facility’s expansion would appear to have organic control over consumption in general, and a more eq-
been halted—at least temporarily—by the local citizenry’s uitable distribution of tax burden among users.67
discontent, Reuters reported that the $8.8 billion project
will likely proceed “once the public furor dies down”, and e historically tight control of fuel pricing was by many
that public concern might simply lead to the project being parties attributed to a preference for maintaining social stabil-
renamed in order to “downplay or disguise [it].”64 ity over wasteful consumption.68
Similar demonstrations in Qidong (near Shanghai), Da- e timing alluded to by China Daily above is often
lian, Xiamen in 2012, 2011 and 2007, respectively, also de- attributed to the large discrepancy between extremely low
layed or de ected industrial projects due to concerns over international crude oil prices at the end of 2008 and the
hazardous chemicals.64 arti cially-in ated rate for fuel paid by Chinese consumers,
which was, according to Reuters, “roughly equivalent to
Seemingly in response to these surprisingly e ective cam- $83.50 crude.”68
paigns by local citizenry, Environmental Protection Minister
Zhou Shengxian went on the record as saying that, “ e gov- Over the course of 2009, six types of fees for road mainte-
ernment will increase transparency and public involvement in nance and management were abolished and revenue from fuel
decisions regarding major projects with a potential environ- consumption tax was reported to exceed 355 billion yuan.69
mental impact” and that “his ministry will make concerted
e orts with other government agencies to ensure that the Resource Tax Pilot and Expansion
requirement [for all large projects to undergo stringent risk In July 2010, the NRDC indicated that it would expand
assessments] is fully honored.”65 the resource tax pilot program introduced a month prior in
the Xinjiang Uighur autonomous region to “all 12 of the
Minister Zhou’s attention is unsurprising; China Society western provinces and autonomous regions.”70 is program
for Environmental Sciences’ Yang Zhaofei indicated earlier in was later reported to be planned to be put into e ect nation-
2012 that “the number of environmental ‘mass protests’ [had] wide by November 1, 2011.71
been growing by 29 percent annually in recent years.”65
is tax, which will reportedly be based on price of com-
Increased scrutiny from both the public as well as mu- modities rather than their volume, will have a benchmark rate
nicipal authorities’ provincial- and central-level masters will of 5 percent and will vary by item (including oil, natural gas,
likely have positive e ects for the environment. Whether this coal and water).
scrutiny has any substantive e ect on foreign investment or
the relative ease of completing large-scale chemical and energy Furthermore, the list of taxable resources was widened from
projects will be seen in coming years. its original scope to include rare earths, salts and metals.71
Notable Policy Activity A China Daily-quoted analyst suggests that the new tax
was “de nitely [bene ting] the nation’s plans for sustainable
Fuel Tax Increases growth by discouraging the exploitation of resources,” and
Perhaps China Daily said it best: ‘You pay as you ll up the that “it will also help to solve the developmental imbalances
tank. In other words, the more you drive, the more it costs in di erent regions by boosting local scal revenues.”70
you – and the planet. is is a simple market rule but it has
taken nearly two decades for the government to pick a “proper Another researcher later told Reuters that the new tax
time” to implement it.’66 system “would shift pro ts from companies to governments
in poorer provinces.”71
e announcement of the reform of fuel taxation, and the
attendant price cuts, were a welcome change to the environ- Cleaner Gasoline Production
ment upon their announcement in late December of 2008. In September 2013 it was reported that Sinopec would
begin producing cleaner gasoline ahead of the January 2014
While tax rates on gasoline, diesel, naphtha, solvents, lu- regulatory deadline enforcing a new cleanliness standard
bricants and jet kerosene on January 1, 2009 increased by named “National IV.”72
nearly seven- to eight-times their former amounts, the chang-
es were accompanied by price cuts of between 14 percent e new standard, which was announced in 2011 and is
described as similar to Europe’s “Euro IV,” puts a 50 parts-
122 per-million upper limit on sulphur content in gasoline. Prior
