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Speculation keeps abounding about whether China will weaken its currency has been on the rise, lately, for entirely understandable reasons. China’s own growth is slowing. It still depends heavily on exports for growth. Its leaders need good growth to maintain the job creation that’s crucial to the nation’s political stability (and their stranglehold on power). The world economy to which China needs to sell is slowing, too (except so far the United States). And last year, the yuan experienced its first year of decline versus the U.S. dollar since its 2005 revaluation.

Since the yuan’s exchange rate affects the price of everything sold by China, and the price competitiveness of whatever its trade partners want to sell to China, depreciating the currency is an obvious way for Beijing to keep its economy humming adequately. At the same time, it’s crucial to remember that it’s not the only way. Hats off, as a result, to India’s Business Times for just calling attention to another: manipulating the rebates China provides to many exporters with its value-added tax (VAT).

VATs affect trade flows significantly because they’re imposed on goods and services consumed in the taxing country (including imports), and rebated to domestic producers for products sold abroad. So they act just like a tariff on imports and a subsidy for exports. And if the rate is high enough, the subsidy effect can be even greater than that created by currency undervaluation.

But VATs aren’t subject to any international trade disciplines because they’re considered to be domestic taxes that sovereign governments have every right to impose. Significantly, the United States is the only major trading power that doesn’t use VATS, which creates huge disadvantages for all American producers facing foreign competition anywhere in the world.  That’s why Business Times deserves such credit.

The paper reports an announcement that China has removed entirely the rebate on boron steel. That would be good news for steel companies and steel producers everywhere, and for the global economy in general, since the rebate helped push China’s steel exports to record highs as Beijing sought to maintain production (and job) levels threatened by slower demand at home by dumping product abroad. In fact, the Chinese steel industry trade association reportedly is predicting that the rebate’s removal could depress overall steel exports by between 20 and 30 percent.

But there’s a catch. Business Times also reports that the same trade association is asking Beijing to increase VAT rebates on other kinds of steel. And as if the VAT-related distortions to trade flow aren’t already complicated enough, it’s apparently also possible to get the rebate by substituting chromium for boron in the steel.

If China agrees to its steel producers’ request, the effect of the boron steel rebate’s elimination could be completely offset. And if this practice is replicated throughout the Chinese manufacturing sector, Beijing could reap many or all of the gains generated by the much higher profile and more controversial practice of currency devaluation, without catching any of the flak or risking retaliation.

Think this is far-fetched? It’s exactly what Beijing did during the late-1990s Asian financial crisiswhen it won applause from President Bill Clinton among many others on the currency front for acting like a responsible international citizen. I have no doubt that China’s leaders remember this episode well. And that America’s leaders don’t.