China’s Low Tariff Opens Door for Ethanol Imports

China has agreed to lower the tariff on imports of ethanol to 5 percent from the previous 30 percent, which traders said could open the door for imports of fuel ethanol from countries like Brazil. The Chinese Finance Ministry announced this week that import taxes for alcohol and other spirits denatured of any strength would be 5 percent from January 1, 2010, and traders said the tax applied to imports of ethanol for fuel use as well.

“The low tariff appears to make imports (of fuel ethanol) viable. But we are studying if there are other restrictions,” said one trader with an international house.

Brazil, the world’s largest ethanol exporter, has been pushing China to import Brazilian-made fuel ethanol as a complement to China’s own production. China does not allow grain-based ethanol production on food security concerns, and expansion of the biofuel using feedstocks other than grains is restricted due to limited farmland and water resources.

Chinese companies are working to use cellulosic materials, but commercial production will still take years.

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