In late March 2025, China implemented new regulations aimed at tightening steel export controls. These regulations, issued by five key government departments, focus on improving tax compliance, curbing price manipulation, and increasing transparency in the steel export market. The move comes in response to growing concerns over tax evasion and low-priced exports, which have strained China’s trade relations with other countries.
The Chinese steel industry has been facing challenges with its export practices, particularly since the removal of tax rebates on steel exports in 2021. This change led to a rise in “proxy exports”, where third-party intermediaries were used to circumvent tax obligations, allowing exporters to sell steel at lower-than-market prices. This practice not only undermined global steel prices but also resulted in significant revenue losses for the Chinese government.
Key Aspects of the New Regulations:
1. Tax Registration and Compliance Checks:
One of the central components of the new regulations is the requirement for a tax registration check on all steel export declarations. This ensures that companies comply with the country’s tax laws and eliminates loopholes that allowed tax evasion. The regulation makes it more difficult for firms to avoid paying taxes on their exports, closing the “proxy export” loophole that has been exploited by some companies.
2. Stricter Oversight of Company Closures:
Another significant aspect of the new rules is the enhanced supervision of company closures. In the past, some businesses exploited quick registrations and closures as a means of avoiding tax obligations. The new regulations require more stringent controls to ensure that businesses do not close or re-register solely for the purpose of avoiding tax responsibilities or penalties.
3. Penalties for Fraudulent Export Activities:
Under the updated regulations, companies found engaging in fraudulent export activities, such as illegal price manipulation or evasion of tax payments, will face severe penalties. These penalties include the possibility of criminal liability, further reinforcing the seriousness with which the government is addressing this issue. The penalties are designed to discourage companies from participating in unfair trade practices and to promote transparency in the sector.
4. Ensuring Fair Market Pricing and Preventing Price Wars:
One of the primary goals of the new policy is to prevent price wars in the global steel market. By ensuring that exporters comply with tax laws and regulations, the Chinese government aims to prevent the practice of dumping, where products are sold at unfairly low prices to undercut competitors. This practice has led to growing concerns from other countries about unfair competition in the global steel market.
5. Optimizing Export Structure:
The new regulations also aim to optimize the overall structure of China’s steel exports. This includes prioritizing exports of higher-quality steel and reducing the volume of low-priced steel exports. By focusing on quality over quantity, China hopes to improve its reputation in international steel markets and position itself as a leader in producing premium-quality steel products.
Impact on China’s Steel Industry and Global Markets
The implementation of these regulations marks a significant shift in China’s approach to managing its steel exports. While these changes are largely aimed at improving compliance with domestic tax policies, they are also designed to address long-standing concerns about unfair export practices that have affected the global market.
By targeting price manipulation and tax evasion, China is working to optimize its export structure and ensure that its steel products are competitive based on quality, not just low prices. This shift is expected to benefit both the domestic market and the global market by promoting fairer competition and sustainable trade practices.
Additionally, the move to cut low-priced exports aligns with the broader strategy of the Chinese government to restructure its steel industry, as previously announced in early March 2025. The plan includes reducing steel production by up to 50 million metric tons per year to cut down on excess capacity, which has been a source of global trade tension.
Global Reaction and Long-Term Implications
The new regulations come at a time when the global steel market is already grappling with fluctuating demand and oversupply issues. Countries like the United States and members of the European Union have long accused China of dumping steel at artificially low prices, which undermines local industries and threatens global steel prices.
With China moving to restrict these practices, it could lead to more stability in the global steel market, providing an opportunity for other steel-producing nations to compete on a more level playing field. Moreover, the focus on higher-quality steel could bolster China’s position in the global market for premium-grade steel products, which are in high demand in industries such as automotive manufacturing, construction, and shipbuilding.
In the long term, these changes could help reshape global steel trade dynamics, as China shifts from being a low-cost exporter to a provider of high-value steel products. This could potentially enhance China’s reputation as a responsible and high-quality steel producer, strengthening its ties with countries that value sustainable and fair trade practices.
Key Takeaways:
• China introduced new export regulations in March 2025 aimed at strengthening compliance with tax laws and reducing price manipulation.
• The regulations target tax evasion through stricter tax registration checks and supervision of company closures, closing loopholes previously exploited by exporters.
• Severe penalties will be imposed for fraudulent export activities, including potential criminal liability, to promote fair trade practices.
• The new policy seeks to prevent price wars and optimize the export structure, focusing on higher-quality steel exports and improving China’s global reputation.
• China plans to cut steel production by up to 50 million metric tons per year as part of a broader strategy to restructure the industry and reduce excess capacity.
• These changes are expected to stabilize the global steel market, improve fair competition, and boost China’s role in the high-quality steel sector.
