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on Thursday, 11 January 2018
in Business in China

China Slashes Import Tariffs on Consumer Goods

Beginning December 1st, 2017, The Ministry of Finance has stated that there will be a cut on import tariffs on a diverse range of consumer products. This initiative comes as an effort to facilitate the increasingly varied domestic demand and to aid the “consumption upgrade”. As foreign imported good are seen as higher quality and safer than locally produced products, they are currently more desirable to consumers hence, and this initiative is hoped increase consumer spending.

The average tariff rate will decrease to around 7.7 percent from 17.3 percent. The reduction in import tariffs will affect 187 codes which include items in food, health supplements, pharmaceuticals and recreational products to name a few. The most dramatic drops will be seen on products such as infant milk formula which will drop from 20 percent to zero. The tariff cuts directly reflect they country’s economic policy to boost domestic consumption of consumer goods.

It is evident that the introduction of these decreases on import tariffs is a direct reflection of the Chinese government’s drive to support and call for globalization. “It will help expand china’s imports as well as share benefits from the fast growth of the domestic consumer market with developing countries… providing more choices for the Chinese consumers on diversified and personalized goods” stated Ouyang Cheng, director of the Alibaba Cross-Border E-Commerce Research Center.

Some of the most relative reductions that will be seen include:

1.Infant milk formula: 20% → 0%.

2.Mineral water: 20% → 10%.

3.Cosmetics: 10% → 5%.

4.Home appliances: 30% → 15%.

5.Foreign made apparel: 20-25% → 10%.

This means that for that international market place, foreign brands will now be able to compete more in Shanghai as they will be on par cost wise with the domestically manufactured goods. This reform also indicates China’s recent shift in their economy from a manufacturing and exports focus to a more determined approach on consumption and services. This move could indicate a precautionary measure from the Chinese government in an attempt to prevent citizens from going abroad to purchase products sold domestically from cheaper markets. It is also likely that this reform was to form a political stance demonstrating to the world that Chinas economy is continually opening and growing suggesting that the Chinese consumer is not just buying more, but buying quality.

If you want to see the full list of changes, please click here (in Chinese only)

Sources: http://www.chinadaily.com.cn/business/2017-11/25/content_34969467.htm

https://www.reuters.com/article/us-china-trade-tariffs/china-cuts-import-tariffs-on-food-drugs-and-apparel-idUSKBN1DO0T3

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