China would begin levying higher tariffs on some auto parts imports starting April 1, in an effort to further regulate the country's auto import market, the General Administration of Customs said.

Based on the government's classification, some auto parts imported into China would be charged the same tariff as a complete vehicle, the customs administration said in a statement posted on its Web site.

These included imported parts that are completely knocked down, or CKD, and semi-knocked down, or SKD, said the statement, which was issued jointly with the Ministry of Finance and the Ministry of Commerce.

Except for those specified in the rule, other forms of auto parts imports will continue to be eligible for a much lower tariff of between 13 percent and 17 percent, compared with a tariff of up to 30 percent on complete vehicles.

Starting from July 1, 2006, the higher tariff rule would be extended to any imports of auto parts valued at 60 percent or more of the total price of a complete vehicle, the statement said.

China's favorable tariff policy has greatly encouraged automakers to import parts from overseas before reassembling them in the country to take advantage of cheaper freight fees, lower tax payments and cheaper labor costs, an official at the Ministry of Commerce said.

While the new rule might in the short term push up the total costs of some auto firms due to higher tax payments, it should help the healthy development of the local industry in the long run, the official at the ministry's Department of Import & Export of Electromechanical Products said.

(Shenzhen Daily March 7, 2005)