Lower Costs and Tariffs, for Manufacturers & Consumers

Lower Costs and Tariffs, for Manufacturers & Consumers

China announced new tariff cuts on September 26, with a view to further lowering costs for manufacturers and consumers.
Together with the reductions announced earlier this year, China’s tariff cuts should lower import costs by RMB 60 billion (8.73 USD) in 2018.

The latest round of tariff cuts will go into effect on November 1, 2018 and will reduce tariffs on 1,585 taxable items.
Items affected by the tariff cuts include: machinery, textiles, paper products, and construction materials.

According to a statement released by the State Council, significant tariff reductions include:

  • Electronic equipment and other industrial products reduced from 12.2% to 8.8%
  • Textiles and building materials reduced from 11.5% to 8.4%
  • Paper and other resource products reduced from 6.6% to 5.4%

Compared to the last two rounds of significant tariff cuts, which mainly targeted consumer goods, this round lays greater emphasis on industrial products and materials often used for manufacturing.

In fact, in the first eight months of the year, China imported 632 billion USD worth of machinery and electrical equipment. The new tariff cuts should therefore partially offset the high US tariff impositions.

The timing of these cuts falls into China’s wider supply-side reform policy. China aims to boost its domestic consumption, lower the costs of doing business in the country, and upgrade its production capabilities.

This is a continuation of tariff cuts initiated by China since last year, on a range of consumer goods.

Thus, slashing import tariffs are just the latest in a series of moves that China is making to strengthen its macroeconomic foundations. Other moves include: expanding export tax rebates, tax cuts for small and micro enterprises, tariff cuts for select countries, and regional FDI incentives.