China has announced another round of tariff cuts, lowering import taxes on more than 700 goods starting Jan. 1 as part of its efforts to open up its economy and lower costs that the people who live there must pay.
There will also be cuts to some export tariffs, and temporary import tariff rates will be as low as zero for some goods, the Ministry of Finance said Monday.
The “temporary” rates can be changed ad hoc and can be lower than the current Most Favored Nation standard, though they are also available to all World Trade Organization members.
U.S. exports will get the benefit of the reductions as well, although most products will still be subject to retaliatory tariffs — established in the festering U.S.-China trade war — until there is a breakthrough in the talks between the two nations.
This is the third round of tariff cuts that China has announced this year.
With tariffs on U.S. soybeans stopping a key source of edible meal (often used for animal feed), China will implement zero tariffs on imports of a variety of meals, including sunflower and canola.
Some materials for pharmaceutical manufacturing will also be subject to zero tariffs, and taxes on high-tech imports will be set "relatively low," including at 1% for a type of generator for aircraft and at 5% for a type of welding robot used in car assembly lines.
The ministry also said Most Favored Nation tariffs will be further cut for a wide range of information technology imports starting July 1, including for medical diagnosis machines, speakers and printers.
China will also scrap export tariffs on 94 items starting in the new year, including fertilizers, iron ore, coal tar and wood pulp. Export tariffs on these goods are as high as 40% currently.
Imports from nations that have reached trade pacts with China will be levied at the rates agreed by both sides. China’s bilateral deals with Australia, Costa Rica, Georgia, Iceland, New Zealand, Peru, South Korea and Switzerland already included promises to further lower tariffs in 2019, as does the Asia-Pacific Trade Agreement.
Imports from Hong Kong and Macau will also enjoy lower taxes.
Also, last month China imported two tankers of U.S. liquefied natural gas, nudging open a doorway that had been shut for a month at a time when the United States is rapidly expanding its ability to export the heating fuel.
“U.S. natural gas with the tariff is still economical compared to other sources,” said Het Shah, founder of Analytix.AI, an energy market data analytics company in Calgary, Canada. “These tankers probably left the U.S. Gulf Coast in late October.”
Although the imports offer short-term hope, Chinese companies are still unlikely to cement long-term deals for more LNG unless Beijing and Washington take steps to resolve their trade war.
The world’s second-largest economy imported a record 5.99 million tons of LNG in November even as its reliance on American LNG fell. Imports from the United States reached 138,892 tons, according to data from China’s General Administration of Customs. That equates to about 6.3 billion cubic feet of gas, or two tankers’ worth, Shah said.