A Comparison Between Effect Of Export VAT Refund And Currency Exchange Rate On Steel Export Market

Through a study of China steel import and export statistic, together with an observation of VAT refund rate, currency exchange rate and steel price at the same time, this paper analysis the different effect on steel export market between export VAT refund and currency exchange rate.The rate of China VAT refund has been cut down from 17% to 13% since later half of year 2004. This trend keeps down to 8% step by step, In year 2008, the rate of VAT refund has become much lower in some products (include steel), this amount reaches 5%, even been cancelled. Theoretically, low VAT refund rate will reduce the export amount. But in fact, the export amount keeps up when the VAT refund rate down. At the same time, the exchange rate between China Yuan and US dollar has become from fixed 8.26:1 to 7.1:1 in first Quarter of year 2008. This will also reduce the export amount in economic theory, but the fact is the export amount keeps up. Lots of Scholars analysis the export amount from the view of VAT refund and Exchange rate separately, but there lack of study of actual market. This paper select steel market as target, using data from the latest two years, try to find out the effect of VAT refund and exchange rate to export is the same or not. And give guess for further study.