China cuts trade duties, opens up markets
On Monday, the country’s finance ministry announced that it would cut tariffs on frozen pork, asthma and diabetes medications, integral boards and about 850 other products from January 1..
On Monday, the Chinese government reiterated its pledge to open the oil, telecommunications and electricity markets to private players. This is another move by the ruling Communist Party, which is trying to support the growth of a slowing state-dominated economy. China will cut tariffs on various imports next year as Beijing hopes to boost imports amid a slowdown and a trade war with the US.
The Cabinet of Ministers also promised to give private companies equal treatment with state-owned enterprises in a number of industries. The Cabinet’s statement does not say whether these changes apply equally to foreign companies..
The pledge adds a series of market opening and tariff cuts designed to help revitalize economic growth, which slowed to a three-decade low in the last quarter. The statement promised «introduce market competition» in key industries including power, telecommunications, railways, oil and natural gas. For the first time, private enterprises will be allowed to provide basic telecommunications services and invest in electricity generation and distribution. The private sector is critical to China’s growth, but these companies face greater financial hardship than their public sector competitors.
Beijing has already lifted restrictions on full foreign ownership in the electric vehicle manufacturing sector and says this approach will cover the entire auto industry by 2021. Regulators have also pledged to allow full foreign ownership in the banking, insurance and other financial sectors..
The skyrocketing price of pork – a staple in the diet of Chinese citizens – also explains why China is cutting tariffs on frozen pork from 12% to 8%. Official data showed that an outbreak of African swine fever that began in August last year has nearly halved the number of pigs in China, causing the cost of meat to more than double last month from a year earlier. Earlier this month, a spike in pork prices caused China’s consumer inflation to rise at the fastest pace in nearly eight years. The Chinese government said on Monday that the reduction in pork tariffs is necessary to «better meet people’s daily needs». Beijing has taken a number of measures to increase pig production while increasing imports of various types of meat to meet domestic demand. In November, 229,707 tons of pork were imported to China, which is 150% more than in the previous year. Pork imports in the first 11 months of this year amounted to 1.733 million tons, which is 58% more than a year earlier.
China will also cut temporary import tariffs on ferroniobium – used as an additive to high-strength low-alloy steels and stainless steel for oil and gas pipelines, cars and trucks – from 1% to zero in 2020 to support high-tech development. The country imported 35,909 tons of ferroniobium in 2018 and 37,818 tons in the first 10 months of this year.
Trade duties on some asthma and diabetes drugs will be set to zero, while duties on some wood and paper products will also be reduced.
Import tariffs on multicomponent semiconductors to be reduced to zero.
The ministry also said that from July 1, China will further reduce import duties for countries with the highest demand for some information technology products..
According to Alex Capri, senior research fellow and professor at the National University of Singapore, the move by China also signals that the country is trying to stimulate trade with other countries by resolving its disputes with the United States. Capri said Beijing likely wants to expand semiconductor ties with countries like South Korea and Japan..