China Continues to Lower General Tariff

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Last updated at: (Beijing Time) Monday, December 23, 2002

China Continues to Lower General Tariff

China's State Council has approved a reduction in the country's general tariff level from 12 percent to 11 percent, effective Jan. 1, 2003, with more than 3,000 tariff items involved.

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China's State Council has approved a reduction in the country's general tariff level from 12 percent to 11 percent, effective Jan. 1, 2003, with more than 3,000 tariff items involved.

The reduction will be carried out as part of China's commitments to the World Trade Organization and also in order to restructure both tariff items and rates, the Tariff Policy Commission of the State Council said Sunday.

A total of 129 new items will be added to the import tariff item list, which will exceed 7,445 by 2003.

The average tariff on agricultural products will be cut from 18.1 percent to 16.8 percent, while the average tariff on industrial goods will be reduced from 11.4 percent to 10.3 percent.

In 2003, China will impose provisional yearly import tariffs on about 200 types of commodities on the term of most-favored-nation treatment and continue to impose quotas on a dozen of agricultural products including wheat and soybean oil and three kinds of chemical fertilizers including diammonium phosphate.

China will continue to impose specific and compound duties on such products as frozen chicken, beer and tele-cameras, and single specific duty on newsprint.

Tariff rates under the Bangkok Agreement will be followed for products of 755 tariff items made in the Republic of Korea, Sri Lanka, Bangladesh and Laos, while concessionary rates will be available to commodities of 20 tariff items made in Bangladesh.

China has promised to cut the average tariff level to 10 per cent by 2005.

Economists said the tariff cut is "necessary," because China is yet to integrate into the international market.

"The cut in the import tariffs will further expand China's foreign trade, especially imports," said Li Jingwen, a senior economist with the Chinese Academy of Social Sciences.

The tariff cut will not have much effect on China's fiscal revenue or the country's sound economic development, he said.

Zhang Peisen, a senior researcher with the Taxation Research Institute under the State Administration of Taxation, said China's fiscal system is strong enough to deal with any further tariff cuts in the coming years.

During the first 11 months of this year, China's total tax revenue reached 1,551.8 billion yuan (US$186.9 billion), an increase of 13.6 per cent or 186 billion yuan (US$22.4 billion) compared with the same period last year.

"China's WTO accession will further stimulate the national economy, which will give more resources to the taxation administration," Zhang said.

During the first nine months of this year, China's gross domestic product (GDP) grew by 7.9 percent year-on-year.

Earlier this month, the State Economic and Trade Commission said that China's economy is likely to grow by 8 per cent this year.

"The growth in GDP stemming from the WTO entry will naturally lead to more tax revenue," Zhang said.

And because an increasing number of foreign companies will invest in China in the coming years, the country will collect more company and individual income taxes, he said.

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