Police have busted a fake cigarette manufacturing and sales network in north China’s Hebei Province and detained 93 suspects, local authorities said Thursday [4 January 2018]. About 17.6 tonnes of tobacco, three machines, and more than 76,000 cartons of counterfeit cigarettes worth 780 million yuan (around 120 million U.S. dollars) were confiscated, according to police in Hengshui city in Hebei…Full Article: Xinhua Jan 2018

Key Point

  • Since the summer of 2016, Chinese law enforcement authorities in roughly a dozen provinces including Hebei, Heilongjiang, Jiangsu, and Zhejiang carried out investigations on fake cigarette distribution networks. The cigarettes were distributed and sold online.

ChinaAg Comments

  • In September 2016, the Director of the Department of Taxation Studies at the National Academy of Economic Strategy of the Chinese Academy of Social Sciences noted that over 90% of China’s consumption tax revenues are collected from tobacco, liquor, oil and automobiles. China’s consumption tax covers 14 goods including tobacco, alcoholic drinks and alcohol, cosmetics, jewelry and precious stones.
  • In January 2015, according to an official of the NDRC’s price department, leaf tobacco only accounts for 5-10% of retail cigarette prices.
  • From 2014 to 2015, the tobacco industry’s contribution to China’s state revenue increased 20.2% to CNY 1.1 trillion (~USD 170 billion). In 2014, 6.49% of China’s state revenue originated from the tobacco industry. Approximately 50% of Chinese men smoke, while only 2.7% of Chinese women smoke. In total, China has roughly 316 million smokers.
  • From 2000 to 2012, Chinese tobacco production rose from 2.5 million MTs to 3.4 million MTs or by 33%. During that same time period, the percentage of farm land dedicated to tobacco production increased from 1.4 million hectares to 1.6 million hectares, meaning that China’s tobacco yields rose from 1.78 MTs per ha to 2.13 MT per ha. A large share of Chinese tobacco production takes places in the southwestern provinces of Yunnan, Guizhou, and Sichuan (~53% of total output by volume in 2012). Other producers of note include the central provinces of Henan (9% of output) and Hunan (7.3%). In general, approximately 90% of the tobacco grown in China is flue-cured or destined for cigarette production.

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