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Planned tariff cuts to slash importation costs

By Fang Yunyu (Global Times)

08:03, May 02, 2012

The Chinese government is planning to cut tariffs on some imported products, a move experts said could directly boost imports and intensify competition in some industries.

The State Council, in a statement released Monday, called on all agencies and local governments to "actively widen" the imports of advanced technology equipment and energy products, and "appropriately enlarge" the purchase of consumer goods.

The cabinet said the suggestion was aimed at alleviating pressures on China's resources and environment, augmenting domestic consumption, and reducing trade tensions with other countries and regions.

"Lower tariffs can boost imports substantially, as reduced tariffs, along with accompanying cuts in other taxes, can help bring down the costs of imported products," Wang Surong, a professor of taxation at Beijing-based University of International Business and Economics, told the Global Times yesterday.

The statement comes three days before the meeting of the Chinese and US officials tomorrow in Beijing for the fourth round of China-US Strategic and Economic Dialogue.

"Given the timing of the statement, a suggestion to cut tariffs shows the Chinese authorities are adopting a positive approach on furthering trade relations with the US," Liu Shengjun, deputy director of Lujiazui International Finance Research Center at the China Europe International Business School, told the Global Times yesterday.

The world's second largest economy reported an unexpected trade surplus of $5.35 billion in March, a turnaround from February's monthly deficit of $31.5 billion, according to figures released by the General Administration of Customs last month.

"The country used to focus on exporting heavily, which has created a massive trade surplus for a long time. It's time to shift the policy as a way to balance trade with other countries and regions," said Liu, noting that lowering taxes would be beneficial to the consumers.

Although the statement did not provide details on by how much tariffs will be cut, it said the authorities will offer supportive financing services to boost imports.

Wang said the new policy, if implemented, will present huge business opportunities for foreign countries, given the size of the Chinese market.

He also said that if the tariffs are reduced, some domestic companies will encounter greater competition from their foreign rivals.

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