With State Council approval, starting from Jan. 1, 2001, China further lowered its tariffs, the general tariff level dropping down from 16.4 percent to 15.3 percent. In this readjustment, 3,462 tax items are involved, 49 percent of the national total.
After the reductions, the new tariff rate will be 3 percent for mineral products, 10.6 percent for chemical productions, 19 percent for farm products, 21.1 percent for textile products, 17.8 percent for building materials and 24 percent for goods used in transport networks.
The move echoes the promise President Jiang Zemin made at the fourth informal summit of APEC leaders in the Philippines in 1996 to “cut the country’s overall tariff level to about 15 percent by 2000.”
To suit the demands of national economy and the country’s forthcoming WTO accession, the Chinese government has stepped up its efforts to promote tax reductions over the past few years. On April 1, 1996, 4,971 tax items were reduced from an average 35 percent to 23 percent. In 1997, import tariffs for 4,874 items were lowered to 17 percent from 23 percent
For a long period, China adopted high tariffs to protect its national industry. Yet, trade protectionism hampered the introduction of foreign advanced technology and equipment, as well as Sino-foreign enterprise cooperation. In addition, trade barriers encouraged smuggling and provoked disorder in foreign trade.
As the world economy sees more rapid integration, tariff barriers have gradually disappeared. Developed countries have reduced their tariffs to 4 percent while many developing countries have dropped to 13 percent. Although China has made efforts in this regard, its tariff level was higher than the average among developing countries.
Lower tariffs will draw more foreign commodities into the country, posing a great impact on domestic enterprises. With WTO accession around the corner, Chinese enterprises should take the initiative to embrace the challenge and hone their competitive edge to find a niche in the international market.