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China's tariff changes a boon to domestic enterprises

By Xin Zhiming (China Daily)
Updated: 2008-12-19 08:00

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China's move to adjust tariff rates on selected products will both help the country reduce its trade surplus and help domestic enterprises cut costs at a time of reduced profits, analysts said.

The country will lower import tariffs on some raw materials next year and raise the export tariffs for high energy-consuming and pollution-producing sectors, the Ministry of Finance said on Wednesday.

Those measures will help reduce China's foreign trade surplus, said Xu Bin, analyst with the Anbound Group, a Beijing-based consulting firm.

More than 670 items will enjoy lower interim import tariffs, including energy-related products such as coal, fuel oil, and stone materials, raw materials, hi-tech products, machinery parts and some household appliances.

Low import tariffs for raw materials will enable China's textile, steel and fertilizer industries to better weather the economic downturn, the ministry said.

The measures will also encourage imports of hi-tech products, which will contribute to domestic upgrading of technology.

In November, China's imports of hi-tech products increased by 7.5 percent, compared with 16.5 percent in the previous year.

"The measure will not only help improve the technological level of domestic enterprises, but, given the strong demand for such products, help stimulate domestic demand," said Dong Xian'an, analyst with China Southwest Securities.

Higher interim export tariffs will be imposed on such products as petroleum, coke, iron alloy and steel billet.

China has made it a point of policy to reduce energy consumption and pollutant emissions. The tariff hikes will help that drive, Dong said.

"The traditional export mode, which exports many products whose production consumes energy heavily and leads to much pollution, must be changed as soon as possible."

Special tariffs on some fertilizer products will continue next year, which analysts said is mainly aimed to discourage exports of those products to satisfy domestic demand.

Meanwhile, the country will adopt special preferential tariffs on imports for the 41 poorest nations from Asia and Africa, the ministry said.

The Ministry also said it would continue to cut tariffs on products from nations including Chile, Pakistan, New Zealand and Singapore according to a series of free-trade and tariff agreements.

After the adjustment, the overall average import tariff rate will remain unchanged at 9.8 percent in 2009.

The average tariff on agricultural products will be 15.2 percent while that on industrial items will stand at 8.9 percent.