East China's Jiangsu Province, a major exporter, will feel the sting the most from China's cancellation of a tax rebate Thursday.

China's Ministry of Finance and the State Taxation Administration will cancel export tax rebates for 406 commodities, including steel, nonferrous metal building materials and chemicals, from July 15, as China draws down stimulative policies introduced to combat the effects of the global financial crisis on the nation's exports.

The tax rebate was increased seven times in a row from the beginning of the crisis until the second half of 2008.

Zhang Xin, analyst at the municipal customs house in Nanjing, Jiangsu's capital, said that steel, nonferrous metal building materials and chemicals account for a significant share of Jiangsu's exports.

The new policy's impact on Jiangsu will likely be more severe than that on other coastal regions, Zhang believes.

According to the local customs house, in the first half of the year, Jiangsu exported 1.47 billion U.S. dollars worth of commodities that will be affected by the new policy. Those exports were up 110 percent from the previous year.

That export volume accounted for 15.8 percent of Chinese exports that will be affected by the new policy, which is higher than the other two major exporting regions, Guangdong Province and Shanghai, both of which were at 6 percent, according to Zhang.

The new policy targets high-pollution and energy-intensive products like steel, nonferrous metal materials, silver powder, alcohol, corn starch, pesticides, medicines, chemicals, plastic products, rubber and rubber products, as well as glass and glass ware, according to Bai Jingming, deputy head of a finance research institute under the Ministry of Finance.

Bai said the policy change is China's latest move to save energy and reduce carbon emissions.

Shi Dan, head of the energy research center under the Chinese Academy of Social Sciences, said the new policy will lead to a drastic decrease in Chinese exports, and in the long run, will encourage manufacturers to adjust their product mix.

Jiangsu is already beginning to adjust the structure of its exports.

In the first half of this year, the province saw new- and high-tech products outdo traditional labor-intensive products in terms of growth in exports.

In the Jan. to June period, Jiangsu exported 56.59 billion U.S. dollars of new- and high-tech products, up 51.3 percent year on year, and 19.31 billion dollars of traditional labor-intensive products, including clothing, textiles, shoes, plastic products, toys and furniture, up 24.7 percent.