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What is the impact of lowering import tariffs?

2018-06-02 08:19 Source: Guangming Daily

The State Council executive meeting held recently pointed out that the import tariffs on daily consumer goods should be lowered in a larger scope to meet the diversified consumer demand of the masses better. At the State Council policy briefing held by the State Council Information Office on June 1, Vice Minister of Finance Zhu Guangyao introduced the situation.
On May 31, the State Council Customs Tariff Commission issued an announcement to reduce import tariffs on consumer goods, which will be implemented from July 1 this year.
Why is it necessary to reduce the import tariffs on consumer goods in a larger scale? In this regard, Zhu Guangyao said that daily consumer goods and the people's good life needs are closely related. At present, the average MFN tariff rate for daily consumer goods in China is 14.5%, which is higher than the total tariff level of 9.8%. In 2017, the general trade import of consumer goods in China was 65.7 billion US dollars. Since 2015, in order to attract overseas consumption and meet the needs of household consumption upgrades, China has approved the import tariffs on consumer goods four times, with the approval of the State Council, mainly considering the quality of products that the people’s overseas consumption is relatively concentrated and that cannot be supplied domestically, including Wool clothing, some shoes, sunglasses, mugs, diapers, some specialty foods and health products.
It is reported that this tax reduction, in addition to the appropriate tax reduction for some products that have been significantly reduced in the previous period, intends to significantly expand the scope of tax reduction and tax reduction for other consumer goods, including relatively less overseas consumption but abroad. Products with distinctive advantages, as well as products with relatively high import tax rates, involve 1,449 tax items, which is seven times the total of the first four tax reductions. The average tax rate dropped from 15.7% to 6.9%, with an average drop of 55.9%.
"Reducing import tariffs on consumer goods is conducive to expanding the import of special advantage products, meeting the needs of the people's better life, better embodying the people-centered development concept; helping to create a fair competitive market environment and deepening the structural reform of the supply side of consumer goods. Conducive to further opening up is a major initiative and practical action for us to open the market on our initiative." Zhu Guangyao said.
For this reduction of import tariffs, everyone is very concerned about whether the price of consumer goods with more concentrated needs of the people will continue to decline. In this regard, Zhu Guangyao explained that lowering tariffs does reduce import costs to a certain extent, and in general helps to lower the price of the domestic market.
"At the same time, it must be objectively observed. Tariffs are levied on the import price of goods rather than domestic market prices. Tax reduction for mass-based pricing of mass consumer goods can promote market price cuts. But for mid- to high-end consumer goods, The market sales price is usually several times the import price," Zhu Guangyao said.
"After lowering the tariff, whether the daily consumer goods are reduced, and how much the price is reduced, there is indeed market behavior. We hope to enrich domestic consumption choices by reducing import tariffs, expanding imports of consumer goods, and hope that the price reduction of daily consumer goods can be reduced through tax reduction. Let the policy dividends be truly transmitted to consumers, so that our consumers get more benefits." Zhu Guangyao said
(Reporter Yang Liang)