Further tariff reductions to boost China’s domestic consumption

2018-07-02
cgtn.com

Average tariffs on about 1,500 consumer imports have been reduced by an average of some 56 percent starting from July 1. Clothing, home appliances, food and cosmetics will see different levels of reductions, but all aim to boost the country’s consumption sector.

The lowering of duty is also expected to give confidence to retailers. A survey by the Ministry of Commerce showed that 31 percent of Chinese consumers have plans to increase their consumption of imported products which including imported cosmetics, jewelry and baby products.

“Chinese customers travel more abroad. When they have tried abroad what they like, they want to try them at home. As the Chinese government is lowering the importation tax, that absolutely provides more opportunities to just give more better things for customers,” said Thomas Woo, president of City Super Group.

The tariff cuts are just one of several rounds of reductions carried out in the past few years.

The previous one was in last December, when the government cut import tariffs on 187 items, including foods, health supplements, pharmaceuticals, garments and recreational products.

Gao Liqun, tax partner of Deloitte China, said this round of duty reduction is also part of the efforts to boost domestic consumption and industrial transformation.

“With the development of Chinese economy, Chinese consumers’ purchasing power has become much stronger. According to public information, Chinese consumers spent $200 billion every year on overseas consumption, with most of the amount spent on daily consumer products. So the Chinese government has been announcing several rounds of duty reductions since 2015, in an effort to attract consumption back to China,” Gao added.

Last year, consumer spending made up almost 59 percent of China’s GDP. With this round of reductions in import tariffs, analysts expect the country’s consumption sector to greatly expand.