China has decided to lower the import tariffs on vehicles and auto parts from July 1, the State Council announced in a statement on May 22.
China will cut the import duty on 139 items to 15 percent, down from the current duties of 20 and 25 percent. Import tariffs on 79 items of auto parts will be lowered to 6 percent from the current tariffs of 8, 10, 15, 20 and 25 percent.
The average duty on imported vehicles will decrease from 21.5 percent to 13.8 percent, and the average duty on auto parts will drop from 10.2 percent to 6 percent, which is practical for Chinese auto industry.
Analysts say the move will benefit US carmakers such as Tesla, as well as European and Asian car manufacturers. According to Bloomberg, German luxury carmaker Porsche has welcomed the move, and is already weighing price adjustments for the Chinese market.
Further expand opening-up
Earlier in April, President Xi Jinping said China will “significantly lower” import tariffs on vehicles in the opening remarks of 2018 Boao Forum for Asia. Premier Li Keqiang also proposed to reduce import tariffs on vehicles in his government work report this year.
This year marks the 40th anniversary of China’s reform and opening-up. Xi said developing China’s high quality economy must be achieved in a more open environment. The move is one of the country’s new measures to further expand the reform and opening-up process.
“China safeguards a multilateral trade system. Lowering auto import tariffs is a major step to expand reform and opening-up,” said the Ministry of Finance (MOF).
Upgrading of auto industry
As integration between the auto industry and a new generation of technologies in areas such as information and communication, new energy and new materials is accelerating, the international competitiveness of Chinese auto industry will need to be improved.
The substantial cut on auto tariffs is conducive to the structural adjustment, transformation and upgrading of Chinese auto industry, thus improving competitiveness and quality of Chinese auto products, according to MOF.
Expectations from consumers
The move will also help enrich the domestic market supply, meet the diverse needs of the people, and provide domestic consumers with plentiful and affordable consumption experience.
“Reducing tariffs is a factor in price cuts, but whether or not prices of vehicles will be cut and how much the prices fall are based on market behaviors. We hope that cutting tariffs will help drive down prices of vehicles and give consumers more benefits,” said MOF.