New China import tax might take the heat out of coal

Kanika Saigal
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On September 3, Beijing announced a 3% tax on coal imports with low calorific value. Some market analysts are concerned that the tax might have a negative impact on Indonesian exports of thermal coal as the levy could remove any price advantages. Between January and July this year, Indonesia accounted for 97% of China’s lignite imports.

The move would reinforce beliefs that China’s appetite for imported coal is waning. Over the past three decades, China has enjoyed an investment-driven economic boom averaging around 10%, fuelled by commodities. But China’s growth has slowed over the past couple of years and in 2012 GDP growth eased to 7.8%. Indeed, analysts have been...