China’s Customs Tariff Commission of the State Council recently announced adjustments to import tariffs on 859 commodities, set to take effect from January 1, 2020. These modifications will entail reduced tariffs compared to the most-favored-nation (MFN) rates for the year. The altered tariffs are anticipated to notably affect consumer goods, raw materials essential for pharmaceuticals, and those crucial for the manufacturing of high-tech products.
This strategic move by Beijing reflects China’s developmental priorities. The selected imported items aim to address gaps in domestic production or technological capabilities, aligning with China’s ambitions to bolster its manufacturing and service sectors.
The timing of this tariff adjustment, shortly following the Phase One trade deal between China and the US, suggests China’s intent to diversify its global trade relations while pursuing comprehensive agreements with the Trump administration.
The reduced tariffs indicate China’s willingness to open its economy further, catering to the needs of businesses impacted by the ongoing trade tensions. Notably, this year’s proposed tariff adjustments cover 153 more products than the preceding year, demonstrating an expanded scope of tariff reduction initiatives.
Moreover, China intends to extend tariff reductions in accordance with its free trade agreements with several countries, emphasizing its commitment to global trade openness. However, certain commodities, like wheat, fertilizer, corn sugar, and wool, will maintain their existing tariff quota management systems.
Seven provisional tax rates on information technology products will be eliminated, while import tariffs on 176 IT products will see a reduction effective July 1, 2020, indicating China’s efforts to promote technological imports and development in this sector.
The revised tariffs aim to address specific areas where China faces domestic shortages or substantial demand for foreign goods. For instance, the reduction in tariffs on frozen pork intends to stabilize prices and augment domestic supply, crucial amidst China’s pork supply crisis due to African swine fever.
Additionally, China plans to lower tariffs on raw materials essential for medications used in treating conditions like diabetes and asthma. This move aims to reduce medicine costs and foster the development of new drugs to meet the needs of its aging population.
Further tariff adjustments target commodities like ferroniobium, crucial for high-strength steel used in pipelines and trucks. Additionally, the plan includes provisions for importing advanced technology equipment and spare parts to support high-tech industry development.
Considering China’s economic slowdown, these tariff adjustments represent a strategy to counteract downward economic pressures. The reductions offer benefits to Chinese businesses, consumers, and foreign exporters by lowering costs and facilitating access to specialized imported products.
These tariff adjustments align with broader objectives, supporting the qualitative development of free trade zones and bolstering trade networks associated with China’s Belt and Road Initiative.
This step by China showcases a deliberate move to stimulate imports in crucial sectors, enhance technological capabilities, and manage economic challenges while signaling openness to global trade opportunities.
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