China's latest round of export controls will be enforced from today as the mainland continues its crackdown on the production of cheap goods that fuel pollution and drive up its trade surplus.
Exporters in the coastal provinces must now pay a deposit of up to half the amount they spend importing thousands of raw materials such as metals, plastics and textiles.
The ruling comes after last month's cut in export tax rebates that from July 1 made it costlier to export products that required more energy to make or were in a high pollution category.
That decree caused a spike in exports and forwarders reported chaos at several ports, including Shanghai, as cargo owners scrambled to get their shipments off early to try to beat the deadline.
However, the director of a European logistics company told Cargonews Asia that the latest ruling had not caused the same rush to export.
"We have known the regulations were coming for weeks now, and anyway, those contracts already signed will not be affected," he said.
What will be affected are Hong Kong-owned factories in the Pearl River Delta. They will be required to pay the raw materials deposits that can run into millions of US dollars a month, depending on the factory products and the scale of production.
Beijing wants the manufacturers of low value goods to shift production to the western provinces where they will not be held to the new ruling.
Sunny Ho, executive director of the Hong Kong Shippers' Council, said this could be an attractive incentive to some factories.
"The transport costs will be substantially higher, but they will be compensated by lower land and labour costs," he said.
The European logistics company director also did not believe Hong Kong factory owners would struggle under the new policy, but for different reasons.
"Hong Kong factories are rich enough to finance the raw materials deposits," he said. "And if any can't, government support will definitely come in some form."