Daily Management Review

China opens to import


06/29/2018


In response to accusations of restricting activities of foreign companies on the domestic market, the Chinese authorities promised not to dwell on tariff cuts agreed upon when joining the WTO in the new trade strategy and to additionally cut duties on 1,400 commodity items from July 1. In addition, Beijing has confirmed plans to further open the financial sector, as well as remove restrictions on the share of foreign investors in certain industries, including the automotive industry.



The State Council of China on Thursday presented a plan for liberalizing the country's trade regime, described in the white paper titled "China and the World Trade Organization". The document’s authors indicate that reducing tariffs to the level agreed upon when joining the WTO has never been the ultimate goal, and the country will continue to open the domestic market. Among the objectives of the trade strategy are improving quality and added value of exports, "proactive" increase in imports (mainly consumer goods) and growing participation in world supply chains. "China has never intentionally aimed at trade surplus, but the authorities of the country objectively assess the deficit in trade in services," the document says.

Recall that the PRC's accusations in illegitimate trade practices became the basis for introduction of protective duties on supplies in the amount of $ 50 billion, announced by the United States. Tariffs for deliveries for $ 34 billion will be raised as early as July 6. In addition, the United States is considering a possibility of limiting technology exports to the country and strengthening control over transactions with foreign investors in technology sectors (it is not directed against the PRC as such, but an investigation of the theft of intellectual property was conducted only against China). Brussels, which is criticizing the protective duties of the United States together with Beijing, is nevertheless dissatisfied with the restrictions in the domestic market of China.

The State Council indicates that China's average import tariff is 4.4% (1.5-2% higher than in developed countries), while duties on the import of drugs (including cancer treatment) have already been zeroed. On July 1, tariffs for 1,449 items (consumer goods) will be updated. The average rate on them will decrease from 15.7% to 6.9%. The revision, in particular, will affect the import of cars, previously taxed at 25% (this tariff caused extreme dissatisfaction in the US, where the rate is 2.5%). Fees for cars will be reduced to 15%, for auto parts - from 25% to 6%.

The Chinese authorities promise to significantly expand the access of foreign investors. In 2016, Beijing has already approved a reform that replaced approval of transactions with foreign participation by a notification order. This regime applies only to sectors that are not on the "black list" (sectors where investors' access is partially or completely limited). In the White Paper, the PRC authorities promise to liberalize access to the financial sector (investors will be able to own a 51% stake in certain niches) and the services sector, and to simplify investors' access to the agricultural sector, shipbuilding, aircraft building, automotive industry (it is assumed that restrictions on the share of foreign capital in all joint ventures can be lifted within a few years). The "black list", however, remains broad and includes minig industries, energy, infrastructure, transportation and professional services.

source: bloomberg.com






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