Beijing News (Reporter Wu Zhanyu, Yu Chunlai, Xue Li) As the end of the year approaches, attention is once again turning to the adjustments in import and export tariffs for next year. Starting January 1, will the price of imported cars drop further? Will textile companies, repeatedly restricted by 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 January 1, 2006, China will stop collecting textile export tariffs. At the same time, China will further reduce tariffs on more than 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 adjustments 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 were significantly lower, with minimal impact on the overall tariff level. The total tariff level in 2006 remained at 9.9%, consistent with 2005. The average tariff for agricultural products was 15.2%, while for industrial products it was 9.0%. In 2006, China also adjusted some tax items, increasing the total number of tax 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, while continuing to implement tariff quota management on seven agricultural products like wheat and corn, and three fertilizers like diammonium phosphate. A certain amount of imported cotton continued to be subject to sliding tariffs, and specific taxes and compound taxes were still applied to 55 products such as 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. However, car prices may not be affected. The import tariffs on products like cars and auto parts will face a fifth reduction next year. Although the State Council’s Customs Tariff Commission Office announced this news, they did not release specific reduction rates.
Auto analysts believe that this reduction won’t significantly impact the current auto market. For consumers, this change doesn’t necessarily mean a drop in car prices. According to China’s WTO commitments, the tariff on imported cars with less than 3 liters dropped from 70% in 2001 to 25% as of July 1, 2006. For cars over 3 liters, the tariff fell from 80% to 25%. Auto parts tariffs dropped from about 25% to 10%. This year's adjustment brought the import vehicle tariff down to 30%, and auto parts to 13%.
However, Song Bingkun, an analyst at CITIC, believes that since the tariff reductions started in 2002, the major impacts came from earlier steps. Therefore, the upcoming reduction is unlikely to have a significant effect. Moreover, many imported cars are high-end models, whose prices are determined by brand and market positioning, not just by tariffs. Thus, the reduction has little effect on pricing.
Textile companies are happy about the decision to stop collecting export tariffs. Lu Longsheng, general manager of Shanghai Pegasus Import & Export Trading Co., Ltd., said, “It was time to do this. Chinese enterprises can finally enjoy an equal market position.â€
China’s textile companies welcomed the news that they would no longer pay export tariffs starting January 1, 2006. According to WTO rules, global textile and apparel exports no longer faced quota restrictions after January 1, 2005. To maintain stability in the global textile industry, China voluntarily imposed export tariffs on 148 types of textiles, including clothing, skirts, non-knit shirts, knitted shirts, pajamas, and undergarments, charging RMB 0.2-0.5 per unit.
Ma Xinzheng, an analyst at Shanghai Shizhiwei Textile Consulting Co., Ltd., said this move is generally good for Chinese companies, as it reduces export costs and enhances international competitiveness. However, he raised concerns: “If China’s textile exports grow too fast next year, there is a possibility that the EU and the U.S. might impose new restrictions.†He advised companies to manage their expectations and avoid blind expansion, while local authorities should guide and regulate potential short-sighted behaviors. Domestic textile companies could also adjust strategies, focusing on exporting to non-restricted markets outside Europe and the U.S. to ensure long-term stability.
Lu Longsheng added that most textile categories had already removed export tariffs, so the full cancellation next year won’t greatly affect companies, as they’ve already adapted their product structures. Since late 2004, the State Council’s Customs Tariff Commission has made four decisions on textile export tariffs. So far, 51 types of textiles are still subject to tariffs.
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