Business     

China's import tariffs cut praised

China.org.cn, April 6, 2012

• China's decision to cut import tariffs, against the backdrop of lurking protectionism in "too many" countries, has been hailed by the World Trade Organization.

  China takes measures to promote imports as the nation's economy slows down. [File photo]

  "At a time when too many governments are reverting to trade restrictive measures, news of China's market-opening initiative is most welcome," WTO spokesman Keith Rockwell said in Brussels.

  Rockwell was speaking after China announced a package of measures cutting import tariffs last week.

  The measures will see duty reduced on "some energy products, raw materials, consumer goods closely related to people's lives, and key items that China does not produce".

  And the Chinese government will encourage more purchases from countries and regions that have signed free trade agreements with China.

  Boosting imports will entail a more open market for a range of goods, Rockwell said. The Ministry of Commerce will announce details of the measures soon.

  Former deputy minister of commerce Wei Jianguo siad last month that tariffs on a wide range of consumer goods, including luxury items, will be reduced at least twice this year.

  "Time is crucial for China to take measures to promote imports as the nation's economy slows down," said Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation with the Ministry of Commerce.

  Import growth has dropped since late last year. In January and February, imports grew 7.7 percent to US$268.6 billion, according to the General Administration of Customs.

  China cut its economic growth forecast to 7.5 percent for this year. Some analysts predict that the economy might have grown 8.4 percent in the first quarter, the slowest since the second quarter of 2009.

  Minister of Commerce Chen Deming said on March 18 that China, now the world's second-largest importer, will become the biggest in a few years.

  China not only provides the world with high-quality products at low cost, but also buys high-end goods supplied by global brands, Chen said.

  The country's trade surplus narrowed 14.5 percent year-on-year to US$155.14 billion in 2011, with imports up 24.9 percent to US$1.74 trillion.

  The latest import-boosting measures follow last month's annual session of the National People's Congress, the top legislature.

  The NPC approved the restructuring of the economy by boosting domestic consumption and balancing exports and imports.

  The international community will benefit from this restructuring, Zhou Shijian, a senior expert at Tsinghua University, said.

  "I don't think anybody would be foolish enough to say no to China boosting imports."

  Rockwell said these measures will help China's balance of trade.

  China had been criticized by some developed nations over its trade surplus but ironically some countries, led by the United States, actually set export curbs on China.

  "However, trade balances are largely driven by broader macroeconomic factors," said Rockwell, listing factors such as savings and consumption in particular countries.

  Chinese companies will also benefit, Rockwell said.

  "China is deeply integrated in global supply and production chains. To be competitive in such arrangements, companies need to be able to access imports at the lowest prices possible," Rockwell said. "Remember that tariff reductions are tax cuts, which mean lower prices for these valuable imports."

  Duncan Freeman, a senior researcher with the Brussels Institute of Contemporary China Studies, said import duty reductions will help European companies in targeted sectors.

  But this is only one element and providing credit to importers will also help, he said.

  "China has a lot measures to adopt to ease access to its market. The bigger question will be how import demand develops," Freeman said.

  This will depend on the sustained growth of the economy and rising living standards, which will create demand for technology and raw materials, as well as consumer goods, he said.

  Ade Onitolo, director of Political Risk Forecasting at the London-based Exclusive Analysis, said China has already embarked on an ambitious roadmap in its 12th Five-Year Plan (2011-15) to remodel its economy.

  "China made progress in this regard last year," Onitolo said.

Copyright © China.org.cn. All Rights Reserved