Beijing News (Reporter Wu Zhanyu, Yu Chunlai, Xue Li) As the end of the year approaches, attention has once again turned to the adjustments in import and export tariffs for next year. Starting from January 1, will the price of imported cars drop further? Will textile companies, which have repeatedly faced restrictions from Europe and the U.S., receive government support?
Yesterday, a reporter learned from the Office of the Customs Tariff Commission of the State Council that starting from January 1, 2006, China will stop collecting export tariffs on textiles. At the same time, China will further reduce tariffs on over 100 items based on its commitments after joining the WTO, covering products such as vegetable oils, chemical raw materials, automobiles, and auto parts.
What impact will these tariff changes have on people’s daily lives and business operations?
The overall tariff level remains at 9.9%.
According to an official from the Customs Tariff Commission, since China had already fulfilled most of its tariff reduction obligations, the rate of reduction and the number of tax lines in 2006 have significantly decreased, with minimal impact on the overall tariff level. In total, the average tariff rate in 2006 remained at 9.9%, consistent with 2005. The average tariff rate for agricultural products was 15.2%, while for industrial products it was 9.0%. In 2006, China also adjusted some tariff items, increasing the total number of tariff items from 7,550 in 2005 to 7,605.
In terms of different industries, China eliminated tariff quotas for soybean oil, palm oil, and rapeseed oil in 2006. It continued to implement tariff quota management on seven agricultural products like wheat and corn, as well as three fertilizers like diammonium phosphate. Cotton imports continued to be subject to sliding tariffs, and specific taxes and compound taxes were still applied to 55 types of products, including frozen chickens, beer, films, and cameras. Some specific tax rates were adjusted according to changes in average import prices. More than 200 imported goods were subject to provisional tax rates.
Import tariffs are decreasing.
Car prices may not be affected.
Next year, import tariffs on products like cars and auto parts will face a fifth reduction. Although the State Council's Customs Tariff Commission Office announced this news yesterday, they did not release specific reduction rates.
Auto analysts believe that this reduction will not have a significant impact on the current auto market. For consumers, this change may not necessarily lead to lower car prices.
According to China’s WTO accession commitments, the tariff on imported cars with engines under 3 liters will be reduced from 70% in 2001 to 25% as of July 1, 2006. For cars with engines over 3 liters, the tariff dropped from 80% to 25% by the same date. Auto parts tariffs fell from about 25% in 2001 to 10% in 2006. In this year’s latest adjustment, import vehicle tariffs were reduced to 30%, and auto parts tariffs to 13%.
However, Song Bingkun, an auto industry analyst at CITIC, believes that since the tariff reductions on cars started in 2002, the major impacts have already occurred in previous adjustments. Therefore, the tariff reduction next year is unlikely to have a major effect.
Additionally, most imported cars into China are high-end models. Their pricing is not determined solely by tariffs but by brand value and consumer perception. Hence, tariff cuts may not directly affect their prices.
Textile companies welcome the removal of export tariffs.
“It was about time,†said Lu Longsheng, general manager of Shanghai Pegasus Import & Export Trading Co., Ltd., expressing his relief: “Chinese enterprises can finally compete on equal footing.â€
Chinese textile companies are pleased with the news that China will stop collecting export tariffs on textiles from January 1, 2006.
It is understood that under WTO rules, global textile and apparel exports no longer face quota restrictions as of January 1, 2005. As a major textile producer, China voluntarily imposed export tariffs on six categories of 148 textile products, including clothing, skirts, non-knitted shirts, knitted shirts, pajamas, and undergarments, at a rate of RMB 0.2–0.5 per unit.
According to Ma Xinzheng, an analyst at Shanghai Shizhiwei Textile Consulting Co., Ltd., this is generally good news for Chinese companies. It reduces export costs and enhances international competitiveness. However, he also raised concerns: “If China’s textile exports grow too fast next year, there is a possibility that the EU and the U.S. could impose new restrictions.â€
Ma advised companies to manage expectations and avoid blind expansion in exports. Local authorities should also monitor the situation and guide companies to prevent short-sighted behaviors. Domestic textile firms can also adjust strategies, focusing on non-restricted markets outside Europe and the U.S., ensuring long-term stability and sustainable development.
Lu Longsheng added that most textile categories have already seen export tariffs removed, so the full cancellation in 2006 won’t greatly affect companies, as they have already adjusted their product structures.
Since late 2004, the State Council’s Customs Tariff Commission has made four decisions regarding China’s textile export tariffs. So far, 51 types of textiles are still subject to tariffs.
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