MNI: China Slashes Tariffs On Range Of Consumer Goods

     BEIJING (MNI) - China is reducing tariffs on a wide range of consumer goods

by an average of almost 10 percentage points, a move analysts say advances the

government's supply-side reform agenda while it opens domestic producers to more

competition. 

     The Ministry of Finance announced Friday that China will start to reduce

tariffs on 187 categories of consumer goods starting on Dec. 1, with an average

tariff rate for these products down to 7.7% from 17.3%.

     The consumer goods include food products, healthcare products, medicines,

daily necessities, garments, home appliances and entertainment products.

     The ministry said the tariff cuts meet the demands of Chinese consumers,

and are part of the government's attempt to restructure and upgrade product

supplies in China.

     The announcement came less than a month after China signaled a possible

move on tariff reductions in early November, a few days before U.S. President

Donald Trump visited China for the first time after his election.

     Trade experts interviewed by MNI, however, said China did not make the move

because of pressure from Trump, who has frequently criticized China's large

trade surplus with the United States. Instead, they said, the tariff reductions

are part of China's supply-side reforms.

     China is making efforts to introduce more competition into its domestic

market in order to restructure its industries and enhance the quality of its

supply of goods, Pei Jiansuo, associate professor at the University of

International Business and Economics in Beijing, told MNI.

     The government is also under some pressure from Chinese consumers to reduce

tariffs. In the face of high tariffs at home, Chinese consumers often resort to

using friends and family who travel overseas to purchase luxury products and

cosmetics for them -- a phenomenon known as "daigou."

     Yu Miaojie, an economics professor at Peking University with a focus on

international trade and China's economic development, said in an interview with

MNI that the tariff cuts are a signal that China is continuing to further open

up its market. He noted that the range of tariff reductions is relatively large

and offers a "high-level opening," and reflects China's increasing confidence in

its economy and industries.

     Yu said the impact of the tariff cuts would be small on overall trade, in

the context of its total trade volume of more than $3.31 trillion in the first

10 months of the year. He also said the 187 categories of consumer goods

included in this round of tariff cuts comprise only a small part of the nearly

7,000 categories in total.

     Pei, on the other hand, said reducing tariffs could hurt some domestic

manufacturers and employment, depending on how much domestic demand for foreign

consumer goods exists. He noted that some Chinese consumers would still be

willing to go abroad to purchase foreign goods, as they may be priced much lower

than if they are bought in China, despite the tariff cuts.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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