On Sunday, the Chinese finance ministry published the full list of nearly 1,600 items on which tariffs will be slashed starting on November 1.
The average tariff rate on those goods will fall to 7.8% from 10.5% last year. The reduced rate is intended to assist domestic corporates in driving down production costs and increasing the supply of raw materials. The cuts, the ministry says, will help China import “advanced equipment and upgrade domestic industry”.
This is the official follow through of a plan that was tipped earlier this month and announced last week.
It’s not 100% clear how this fits into the overall equation vis-à-vis Beijing’s retaliatory tariffs against U.S. products. “In theory the same goods can receive a lower basic tariff and still have extra duties piled on by the response to President Donald Trump’s measures”, Bloomberg wrote last week.
As detailed in the first linked post above, this is just the latest in a series of measures announced over the past year. In that sense, Beijing probably hopes the move won’t be viewed domestically as China conceding anything to Trump.
“We note that these measures have been previously presented as reform measures, which were mostly set out in previous government documents such as the 3rd Plenary of the 18th Party Congress Report”, Goldman wrote, in a note dated September 27, adding that “they will not be seen as ‘loss of face’ simply because they are consistent with demands from the Trump administration.”
“This is not a new story”, BofAML’s Ethan Harris remarked a couple of days ago, on the way to reminding you that “China has a long-standing policy of gradually opening up its markets and lowering tariffs [and] back in April, President Xi gave a speech promising to increase imports, accelerate finance and insurance industry reform, increase protections for intellectual property, and both lower tariffs as well as reduce ownership restrictions for foreign car makers.”
