SINGAPORE/BEIJING, Oct 18 (Reuters) – China’s biodiesel imports are surging, displacing local diesel sales as some trading companies take advantage of tax and trade incentives the government provides to boost usage of the blended fuel in the world’s second-largest oil consumer.

As imported biodiesel takes up more of the local market, it could cut into the market share of state-owned refiners, in turn boosting their diesel exports, industry sources said.

Top state refiners Sinopec Corp and PetroChina are already expected to boost shipments of the fuel after Beijing approved large export quotas for the fourth quarter.

At least one state-owned refiner has complained to local authorities that some of the biodiesel shipped in contains a far lower biofuel component than what is required by Chinese customs law, a source close to the matter said.

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