2002 to See Greatly Cut Auto Tariffs/Restrictions by China

Home>>Business

Last updated at: (Beijing Time) Tuesday, December 04, 2001

2002 to See Greatly Cut Auto Tariffs/Restrictions by China

According to sources from the Ministry of Foreign Trade and Economic Cooperation, China's auto tariffs on auto imports will be cut to a 25% level starting from 2002 to July 1, 2006. Of these the biggest cut will be seen in 2002 and scrapping of auto quota licensing in 2005.

An official with the Ministry of Foreign Trade and Economic Cooperation said that WTO entry legal documents include "China WTO Entry Group's Report", "Protocol on China's WTO Entry" and annex, and these along with related commitments or promises to be honored therein will be released by China in December.

The official talked specifically about tariff cuts on auto imports as: Starting from January 1, 2002, tariffs on 3-litre less discharge sedans will be cut to 43.8% from present 70% and tariffs on over 3-litre discharge cars will be cut to 50.7 % from present 80%. Also, a yearly tariff cut from 2002 will be made to a level of 28% until January 1, 2006 and to 25% on July 1 same year. Tariffs on accessories will have to be cut to a 10% level by 2006.

Auto quota licensing on non-tariff auto imports will also have to be scrapped in 2005 and a year-on-year 15% increase in auto quota imports has to be chalked by the end of 2004. The trial quota from 2000 on was fixed at an import worth of US$6 billion and by 2000 the quota with whole autos and accessories included as in the field of cargo trade will run to a worth of about US$8 billion.

Auto trade service mainly refers to auto wholesale and retail sale. Chain car selling will be licensed and joint ventures launched in China from 2002 on. No control share by foreign investor would be excluded when a selling chain should be run with over 30 chain retailers as has been stipulated in China and this restriction in vogue will be dropped by 2006.

About issuance of credit loans, foreign non-financial institutions will be admitted in to go in for issuance of car credit loans.

The official further noted that there are also some other commitments to be honored as compulsory. One is related to a complete scrapping of preferential policies honoring domestic auto products. Two is for a repeal of man-made restrictions on manufacturers' investment, auto models and types to be developed by 2003, making sure every manufacturer has the right to produce the types or auto models of their own choice. However, on our part, we still retain the right to decide on the production of heavy- or light-type vehicles and that a manufacturer licensed to produce cars cannot make sedans. As things are with a provincial government given the power to approve a US$30m less investment item at present. It will have the right to approve a US$60m less investment item by 2002, a US$90m less project in 2003, and a US$150m item by 2005.

Aside from the above said, limits to a fixed JV share not over 50% by foreign partners will also be cancelled immediately after China's entry of the WTO.

By People's Daily Online

China's Auto Tariff to Be Cut to 25% in 2006 after WTO Entry