The nation's freight rail operator says it needs 100,000 more cars to meet strong demand for power during cold winter months
China is suffering from a major shortage of trains to transport coal, a situation that follows a pause in construction of new rail cars and the scrapping of many old ones due to oversupply and weak demand over the past three years.
Beijing has embarked on a campaign to eliminate excess capacity in a number of industrial sectors, with coal and iron both set for sharp reductions. Much of the excess was built to feed China's hungry economy during years of breakneck growth, when annual expansion routinely reached 10% or more.
But a new phase of slower growth, sluggish demand and trade barriers overseas have prompted Beijing to reduce capacity in a bid to shore up sagging prices. Coal prices have jumped sharply as a result of those reductions, compounded by strong demand for electricity during the cold winter months.
As a result of those factors, the country now faces a shortage of about 100,000 rail cars for coal transportation, according Guo Yuhua, a senior official at China Railway, operator of the country's passenger and freight rail systems. He said that with a few exceptions, freight capacity is now being completely utilized on most of China's rail lines, creating a transportation crisis.
To address the shortage, China Railway has deployed 20,000 flatbed rail cars, and another 20,000 open cars, Guo said.
China Railway shipped 170 million tons of coal in October, up 6.6% from a year earlier. Beijing has set a reference shipping price of 15.51 fen (2.25 U.S. cents) per ton of coal, and the operator can charge up to 10% more than that rate based on demand.
The Bohai-Rim Steam-Coal Price Index, which measures domestic thermal coal prices, has risen more than 60% from the beginning of the year after the government ordered mines to cut production to trim overcapacity and fight pollution. This has led to a coal shortage heading into winter when demand typically peaks.http://m.english.caixin.com/m/2016-12-01/101021480.html?m_referer=aHR0cDovL20uY29tcGFuaWVzLmNhaXhpbi5jb20vbS8yMDE2LTEyLTAxLzEwMTAyMTMyNC5odG1sP2Zyb209c2luZ2xlbWVzc2FnZQ==
The path for tax reform put forward by House Speaker Paul Ryan and fellow House Republicans would appear — at least at first blush — to offer a clear answer: taxing imports but not exports, in a reversal of current policy that imposes corporate income taxes on exporters but not overseas producers with goods bound for the U.S.
Proponents go so far as to suggest that this is a neat way for Trump to shift the tide of trade without provoking a trade war by slapping punitive tariffs on goods from China and Mexico.
While the economic impact of the proposal is much more complicated, the immediate fate of the House GOP tax reform may rest on what Trump's working-class supporters find more alarming: anti-competitive U.S. tax policy or higher prices at Wal-Mart (WMT).
The National Retail Federation has begun sounding the alarm about the House GOP plan released in June, when a clean sweep in the election for Republicans seemed like a distant long shot.
Here's why retailers are girding for a fight: While cutting the statutory corporate tax rate to 20% from 35%, the House plan would no longer allow businesses to deduct the cost of imports from taxes. That means retailers such as Wal-Mart, Amazon (AMZN), Costco (COST), Dollar Tree(DLTR) and Starbucks (SBUX) would have to pay a tax equal to 20% of the cost of the clothing, televisions, toys and coffee they import.
Republicans in the U.S. Congress hope to convince President-elect Donald Trump to support an untested strategy of using the tax code to promote exports while slashing corporate taxes, framing it as a way to fulfill his campaign promises to restore blue-collar jobs.
The plan would be one way to help Republican lawmakers reconcile their long-standing goal of tax cuts with the often populist campaign rhetoric of Trump, who has attacked the North American Free Trade Agreement (NAFTA) and other trade deals as bad for U.S. workers.
Critics say it risks running afoul of global trade rules and increasing costs for U.S. consumers. Analysts also say that any export gains could be short-lived if the strategy causes the dollar to strengthen, wiping out any price advantage for U.S. products in international markets.
It is likely to undergo months of debate as part of a larger package of proposals offered in congressional Republicans’ “A Better Way” economic plan, but at least one Trump adviser already seems to have a favorable view of the export-focused "border adjustability" strategy.
"If we have a border adjustable tax system, that can solve a lot of these trade issues that Trump is talking about," economic analyst and Trump adviser Stephen Moore said in an interview.
“You’re going to tax what’s imported and not going to tax what’s exported. So we’re going to reduce the trade deficit and we’re going to have more companies come in here,” Moore said.
Border adjustability's details are not clearly explained in a summary of the “A Better Way” plan from House Speaker Paul Ryan and House tax committee chairman Kevin Brady. But the Tax Foundation, a think tank that closely studies business tax policy, said the strategy would be implemented by making revenue from sales to non-U.S. residents non-taxable, while preventing importers from deducting the cost of goods bought from non-residents.
Brady told Reuters that border adjustability would "virtually eliminate" any tax incentive for U.S. companies to move operations overseas and encourage foreign investment to return to the United States.
"We’ve got a great argument, I think,” he said.
Steven Mnuchin, Trump's pick for U.S. Treasury secretary and co-author of the president-elect’s tax plan, described tax reform on Wednesday as “something that happens absolutely within the first 90 days of this presidency.” Wilbur Ross, Trump's nominee for commerce secretary, did not mention tax policy directly but said the Trump administration’s aim would be to increase exports in part by getting rid of “non-tariff” barriers.
The perceived winners under a border adjustability approach would include U.S. manufacturers that export heavily, while large-volume importers, such as U.S. retailers, could be hurt. That distinction was already dividing corporate lobbying groups.
While retailers support an overhaul of the tax code, "the tax on imports proposed in the House blueprint is cause for concern for retailers," said Christin Fernandez, spokeswoman for the Retail Industry Leaders Association, a Washington group.
The industry group's members include Wal Mart Stores Inc, Home Depot Inc and Target Corp.
Some version of border adjustability could attract support from Democrats. Senator Ben Cardin, a Maryland Democrat who sits on the Senate Finance Committee and the panel’s tax subcommittee, said he strongly favors the idea. But he called the emerging House plan "very, very questionable" because it would use tax on corporate income rather than a consumption tax.
Tax lawyers and other experts have said such an approach risks violating long-standing world trade rules that allow countries to adjust their trading positions through indirect taxes, such as a sales tax, but not with direct taxes like the U.S. corporate tax. "It would lead to uncertainty on how it would be treated internationally. And that’s bad for business," Cardin told Reuters.
Trump's transition team and other Trump advisors on the economy did not respond to requests for comment.
Brady has said border adjustability would pass muster with the World Trade Organization, which polices global trade. The WTO declined to comment on the plan.
Border adjustability is only one component of the "A Better Way" blueprint. It would also slash the corporate income tax rate to 20 percent from a top rate of 35 percent; repeal the corporate alternative minimum tax; and let businesses write off capital investments immediately.
Russia plans to cut its oil output from November-December levels as a part of its agreement to stabilize global oil market together with OPEC, Energy Minister Alexander Novak told reporters on Thursday.
Novak said a day earlier Russia was ready to cut oil production by up to 300,000 barrels per day in the first half of 2017 as a part of its agreement with OPEC.
"It will be an equal approach, an equal cut by all (Russian) companies, but we will work out (details) additionally... In general, there is an understanding that this (cut) should be equal in percents for all," Novak said. He did not elaborate.
Rosneft is Russia's top oil producer, followed by Lukoil, Surgutneftegaz and Gazprom Neft. Rosneft and Gazprom Neft declined to comment, while Lukoil and Surgut did reply to Reuters requests seeking a comment.
Russia's oil output set a new post-Soviet era record high in October, rising 0.1 percent from September to 11.2 million barrels per day (bpd).