China offers tax benefits on export of wild animals despite banning domestic trade to tackle COVID-19 pandemic
Chinese authorities may have shut down the trade of wild animals within the country amid the COVID-19 pandemic, but they are offering tax benefits to the tune of 9% on the export of a wide range of wild animals or animal products.
The Ministry of Finance has released a list that details which animals or animal products — fresh, cold or frozen — would receive a 9% tax rebate when shipped overseas.
This includes edible snakes, edible turtles, raptors, beaver, ostrich, civet, reptile meat, primate meat, camels, guinea fowl, whales, dolphins, porpoises, seals, sea lions, walruses and rhino horn.
The list goes on to name pig, lamb, sheep meat, horses, donkeys, mules, fresh or cold whole turkey and fresh or cold octopus. Some of the other animals on the list are rabbits, hares, turtles, chicken, duck, goose, geese, parrot-shaped bird, edible pigeon, and edible wild duck among many others.
Following the novel coronavirus outbreak in Wuhan, Chinese authorities had earlier banned the domestic trade and consumption of wild animals. The Chinese city of Shenzhen has also banned the eating of dog and cat meat in the wake of the coronavirus pandemic.
Experts believe that the COVID-19 virus was passed from bats to an animal species, which subsequently passed it on to humans. While scientists are yet to determine where the SARS-CoV-2 virus that causes COVID-19 originated, some believe that it may have originated in the wet markets of China.
Wet markets are places where meat, fish and other perishable goods are sold in an open-air setting.
Meanwhile, a report titled 'COVID-19: China medical supply chains and broader trade issues' has warned that the tax incentives on the export of wild animals could be risky for the global market.
The report by the Congressional Research Service states that owing to the coronavirus pandemic, Chinese firms and logistics operations have struggled to return to full capacity.
Experts say that China's economy depends on exports, the foreign exchange it earns through exports as well as on the large productive role that foreign firms play in the domestic market and as exporters. Accordingly, these tax rebates have been announced on a range of products, meant at supporting many industries.
"On March 17, 2020, China's Ministry of Finance announced it was increasing the export value-added tax (VAT) rebate for almost 1,500 Chinese products, effective March 20, 2020. Most of the products (1,084) are receiving a 13% rebate; a small number (380) is receiving a 9% rebate."
"The export VAT rebate is a focused policy tool with quick effects that China typically employs to boost targeted exports during times of slowdown. It typically reduces the export VAT on products down to or close to zero," states the report.
The rebates reflect a strong policy push for steel exports, as well as construction and building materials. The rebates encourage the export of agricultural products in categories for which China promised to increase purchases from the US — such as live breeding animals, meat and dairy — suggesting the government may be "incentivizing exports for industries that might face additional US imports."
"The export VAT rebates also appear to be incentivizing China's export of wild animals and their byproducts overseas. With assessments that COVID-19 could have originated in wild animals and potentially passed to humans in open-air markets that sell these animals, China's National People’s Congress announced on February 24 a ban on the sale and consumption of wild animals in China. While the export incentive might help the government to eradicate domestic markets by providing an economic incentive to export, this move could spread the risk to global markets," states the report.
Experts, however, add that absent in China's policy push are incentives to encourage the sale of pharmaceuticals, personal protective equipment (PPE) and other medical products overseas.