The Chinese government plans to reduce the current tax rebates on some steel products by 4 percent in an effort to motivate the steel industry to achieve its energy-saving target, the Economic Observer, citing an unnamed source, reported Sunday.

"The news about cutting tax rebates on steel products is not just a market rumor," the anonymous source said. "The Ministry of Finance is taking the lead in doing this."

According to the source, the cut to the export tax rebate plan is part of the government's policy package to save energy and reduce emissions. Any industry that has a high pollution rate, consumes large amounts of energy or manufactures resource-dependent products will see its tax rebates lowered.

"Some products' tax rebate rate may be cut from 13 percent to 9 percent. Some may be cut from 9 percent to 5 percent,” the source said. “Some products may see its tax rebates reduced to an even lower level."

In the long run, tax rebate cuts may improve industry structure. In the short term, though, the steel industry could get hit hard.

China's business press carried the story above on Sunday. China.org.cn has not checked the stories and does not vouch for their accuracy.