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China announces fresh import tariff cuts amid brewing trade war
CHINA on Wednesday unveiled plans to cut tariffs for products including machinery, electrical equipment and textile products beginning on Nov 1, as the country braces for an escalating trade war with the United States.
The cuts on over fifteen hundred industrial products are expected to lower costs for consumers and companies by about 60 billion yuan (S$12 billion) this year, the state Cabinet said in a meeting chaired by Premier Li Keqiang, according to the state radio.
The overall tariff level will be reduced to 7.5 per cent in 2018 from 9.8 per cent in 2017 as a result, the state Cabinet said.
The Chinese government has yet to detail how the general tariff cut will apply to US goods affected by retaliatory tariffs in the trade war.
In theory the same goods can receive a lower basic tariff and still have extra duties piled on by the response to US President Donald Trump's measures. Whether goods affected by the trade war receive this treatment will depend on precisely which items the government selects to cut duties on. The Chinese government hasn't released that list of the specific goods yet.
Beijing has pledged to take steps to increase imports this year amid rising tension with some of its biggest trade partners, such as the US. The decision follows on from similar moves earlier this year which were aimed at reducing prices of imports to stimulate consumption and is in line with China's pledge to boost imports.
Beijing accused Washington of "putting a knife to its neck" as US tariffs on US$200 billion worth of Chinese goods kicked in on Monday, prompting Beijing to retaliate with additional tariffs on US$60 billion of US products including liquefied natural gas (LNG).
Average tariffs for machinery and electrical equipment - one of China's biggest imports by value - will be reduced by nearly a third to 8.8 per cent from 12.2 per cent, the state Cabinet said.
China imported over US$632 billion worth of machinery and electrical equipment in the first eight months of the year, up 19.6 per cent year-on-year, official data showed.
Tariffs on textile products and construction materials will drop to 8.4 per cent from 11.5 per cent, while the tariff on paper products will be lowered to 5.4 per cent from 6.6 per cent.
Earlier in July, China reduced import tariffs on a range of consumer items including apparel, cosmetics, home appliances, and fitness products to fulfil pledges to further open China's consumer market. REUTERS, BLOOMBERG