China to adjust import, export taxes

2014-12-17 10:24Global TimesWeb Editor: Qin Dexing

Lower tariffs will help struggling companies: analysts

China will adjust its import and export duties on certain products starting from January 1, 2015 amid a broader effort to guide industrial upgrading and consumption of resources, the Ministry of Finance (MOF) said in a statement on Tuesday.

Each year, the ministry makes some adjustments to provisional duties, which are set at a level even lower than the rate for countries in the Most Favored Nation (MFN) category. The low MFN tariff rate is generally granted only to China's most valued trading partners.

Items that will be included in the adjusted provisional import duties include optical fiber-equipped communication devices, advanced machinery and electric car parts, according to the statement, which was posted on the website of the Ministry of Finance on Tuesday.

The adjustment also includes the removal of items such as refrigerator compressors, car radios, and ink jet printers from the list of items that currently enjoy the lower provisional import duties in 2014.

But the statement provided no details on what the actual tax rates will be following the revision.

"The gradual fine-tuning of the list ensures the consistency of the guiding role that government policies play in industry development. The tariff change could mean a lot to companies that are currently struggling to break even," Zhang Ning, a research fellow with the National Academy of Economic Strategy at the Chinese Academy of Social Sciences, told the Global Times Tuesday.

"The revision, which will make certain imports cheaper, could assist key domestic sectors in their battle to move upward in the industrial value chain," Ma Hong, an analyst with Shanghai-based CBI Research Center, told the Global Times on Tuesday.

"Aside from benefiting directly from reduced costs for certain products and components, domestic companies, many of which now possess impressive capability in absorbing advanced technologies and producing secondary innovation, will benefit indirectly from improved access to high-tech products," Zhang said.

Allowing more environmentally friendly technologies and products to be imported at a cheaper rate will also help to satisfy demand in China for green technologies and products, which has been rising amid growing pollution concerns, Zhang noted.

The ministry said it would also reduce import taxes on commodities including ethylene and ferro-nickel, while import tariffs for natural rubber will be raised.

China will also lower the tax rates for coal exports in accordance with market supply and demand dynamics, read the statement.

"China is a big importer of coal but since 2013 it has been facing a supply glut in overall coal production," Ma noted.

The tariff revision could help with the destocking of low-quality coal resources that power firms do not wish to use and improve the chances of exporting these resources, Ma said.

China currently imports metallurgical coal for its massive steel-making industry but has an excessive supply of steam coal, which is used to generate power.

More than 70 percent of China's coal producers made losses in the first three quarters of this year, data from the China National Coal Association showed in October, mainly because of falling demand, high inventories and falling prices.

By the end of September, China had reported inventories of over 300 million tons of coal for 34 consecutive months.

Zhang said the lower export tariff for coal will help domestic coal producers, but their survival will depend on their ability to cut costs and improve performance.

In 2014, China levied import and export tariffs on 8,277 categories of goods. After the adjustment, the number will be extended to 8,285 categories in 2015, according to the MOF.

Ma said the adjustment will complement other measures taken by the central government in the past year.

"A set of newly settled currency swap programs between China and its major trading partners will help reduce risks in foreign exchange," Ma said.