MNI INTERVIEW: China Seen Speed Reduction of Import Tariffs

--China May Cut Import Tariff To 3% Over Time 

--China Imports May Grow Two-digital in 2019 

--China Looks for "Equal and Reasonable Deal" With Trump

     BEIJING (MNI)  - China is likely to reduce tariffs faster and further to

boost imports, speed economic rebalancing and underpin the opening-up of the

economy, a leading trade expert told MNI in an interview.

     "We can expect China lowering average tariff to less than 3% over time from

7.5% currently," said He Weiwen, a former economic and commercial counselor at

the Chinese Consulates General in New York and San Francisco.

     President Xi Jinping pledged Monday at the China International Imports Expo

that China would increase imports and lower trade barriers, promising goods

imports will exceed $30 trillion over the next 15 years, with services imports

more than $10 trillion.

     He, now a senior fellow at Chongyang Institute for Financial Studies of

Renmin University, estimated that if Chinese goods imports increase at 4-5% per

year in the next 15 years, the total may even hit $40 trillion.

     "Imports for 2018 will be about $2.1 trillion due to a series of supporting

policies including tariff cuts," He said. "For 2019, imports are likely to have

a double-digit growth barring major events."

     --IMPORTS TO SPUR REFORM

     Greater imports will introduce new technologies, promote innovation and

push reforms, even though they may increase competitions for the  domestic

industry. 

     "The strategy will play a positive role in boosting the economy through

stimulating domestic consumption, upgrading industries and pushing governing

reforms in both companies and the government," He noted.

     Noticeable changes have already started, such as granting more equal

treatment to foreign, state-owned and private companies, He said.

     "The move will help set right the relationship between government and

market," He said.

     As imports increase while trade uncertainties limit exports, China's

current account surplus is likely to shrink further. Official data showed the

current account recorded a deficit of $12.8 billion in the first three quarters.

     "The current account will remain balanced over time, maybe with a slight

surplus in the future, although it's possible to have deficits in some years,"

He said.

     --XI-TRUMP MEETING

     He, who has studied Chinese and U.S. trade policies for decades, expressed

cautious optimism over the planned meeting between Presidents Xi and Donald

Trump at the G20 gathering later this month.

     The two leaders may hopefully agree to end the trade war and set the stage

for further negotiations, yet the result of the detailed talks largely depends

on the U.S side, said He. 

     China is looking for an "equal and reasonable deal" rather than a "great

deal", He said. "If the Trump administration defines a great deal based on a

thinking that China has been 'draining' the U.S., it will be difficult to reach

a consensus," He said.

     "The redline is our right of development as a sovereign state, including

our industry blueprint such as 'Made in China 2025'," He said. However, both

sides can discuss whether any measures in Chinese policies are non-compliant

with the World Trade Organization, and if so, China would be ready to make

adjustments, He said. 

     China holds that Section 301 investigations undertaken by the U.S. are not

WTO-compliant, He stressed.

     --WTO REFORM

     All negotiations should be conducted under the WTO framework, said the

former official. WTO rules should be updated and that China is open to talks on

WTO reform, as well as doubt over its continued status as a developing country,

He said.

     China has set up a vice-ministerial level joint working group with European

Union on WTO reform, and is also positively working with other WTO members to

push forward reform, but negotiations will continue for an extended period, He

said.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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