China is ready to cut import tariffs on a wide range of goods including food and parts for manufacturing smart-phones, continuing Beijing’s drive to spur domestic demand and demonstrating its desire to open its economy as it pursues a trade deal with President Donald Trump.
On Monday, the Ministry of Finance in China published a list of 859 types of products that will enjoy tariffs lower than the standard rates for this year. Frozen pork was included as a key item aimed at alleviating shortages of the meat due to the outbreak of African swine fever. According to some calculations made by Bloomberg, in 2018 imports of the listed items totalled $389 billion, which was about 18% of China’s total imports of $2.14 trillion.
Even though the move is not directly related to the United States-China trade war, it gives an impression that the government is willing to embrace commerce more. A few weeks ago, there were reports that economic growth is seen slowing next year to 6% or below; for this reason, officials are interested in lowering the cost of imported consumer goods. Over the weekend, the government released further measures to shore up the private sector, including opening previously closed industries to non-state investors.
Gary Ng, an economist at Natixis in Hong Kong said, “The move in lowering import tariffs reflects that the government wants to reaffirm its stance to the world on freer trade amid the trade war. Domestically, lowering import tariffs are helpful in reducing business and consumer costs.”
It has been reported that since two years ago, China has been cutting import tariffs on consumer goods including wine, baby products, whiskey and seafood, items that remain on the expanded list for 2020. Drugs for treating asthma and diabetes have also been added to the list. Smart-phone camera sensors, glass used in liquid crystal displays and organic light-emitting diode (OLED) screens found in high-end TVs and smart-phones, and semiconductor testing and sorting equipment are also included in the list.
According to the statement issued by the ministry, the list allows lower tariffs on goods coming from World Trade Organization members. For countries with which China has free-trade agreements, duties can still be made lower. These countries include New Zealand, Peru, Costa Rica, Switzerland, Iceland, Singapore, Australia, South Korea, Georgia, Chile and Pakistan. The statement further said that the tariff reduction is a measure that is been taken to facilitate the open economy to a new level.
According to a report by Bloomberg, this year, China’s import growth has stalled even with the broader slowdown in the economy, thus helping to boost the trade surplus. As part of the phase, one trade deal agreed with The United States this month, the nation has committed to ramping up purchases from there by as much as $200 billion over the next two years.