China, the world’s biggest producer of commodities including coal and gold, is moving to reform its resources tax system, underlining Beijing’s determination to push ahead with environmental reforms under its five-year plan.
Broadly speaking, the tax reforms will shift from volume-based taxes, set years ago and generally very low, to value-based taxes that will fluctuate alongside commodity prices. The new system was implemented for oil and gas late last year, and is expected to be extended to coal and other commodities.
In pushing through environmental reforms such as the resources tax, Beijing faces a delicate balancing act as policymakers try to protect the balance sheets of powerful state-owned energy companies, including large industrial groups such as CNPC, Shenhua, State Grid and Sinopec.