China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year as Beijing looks to boost imports amid a slowing economy and a trade war with the United States.
Next year, China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, the finance ministry said on Monday. By comparison, 706 products were taxed at temporary rates in 2019.
The tariff changes were made to “increase imports of products facing a relative domestic shortage, or foreign specialty goods for everyday consumption,” the ministry said in a statement on its website.
China and the United States cooled their drawn-out trade war earlier this month, announcing a Phase 1 agreement that would reduce some U.S. tariffs in exchange for more Chinese purchases of American farm products and other goods.
The finance ministry said the tariff rate for frozen pork will be cut to 8 per cent from the most-favored-nation duty of 12 per cent, as China tries to plug a huge supply gap after disease decimated its hog herd.
However, meat industry insiders in both China and the United States said the measure did not appear to affect the retaliatory tariffs in place for U.S. pork.
Beijing has waived extra tariffs on some U.S. soybean and pork cargoes in recent weeks, in a goodwill gesture to Washington, as the two countries move closer to signing a trade deal.
The tariffs on U.S. pork, currently up to 72 per cent, will go down to 68 per cent when the tax rate cut takes effect in the new year.
“U.S. pork will remain at a significant disadvantage compared to competing products until China’s retaliatory duties are addressed,” the U.S. Meat Export Federation said in a statement.
But the measure will help boost China’s overall pork imports and ease the domestic shortage, analysts said.
“This is part of the Chinese government’s serious effort to increase pork supplies. It will definitely help,” said Jim Huang, chief executive at China-America Commodity Data Analytics.
The tax rate cut applies to frozen hams, shoulders and cuts of swine, with bone in, and other frozen meat of swine. It does not affect other pig products, including offal, carcasses and chilled pork, according to the government notice.
An outbreak of African swine fever that began in August last year has nearly halved China’s pig herd, official data showed, sending pork prices soaring to record levels.
Beijing has issued a series of measures to boost pig production, while increasing imports of various meats to meet domestic demand.
China brought in 229,707 tonnes of pork in November, up more than 150 per cent from the previous year. Pork imports <CNC-PORK-IMP> for the first 11 months of the year stood at 1.733 million tonnes, up 58 per cent from a year earlier.
Almost all of the pork shipments coming to China are frozen pork. The European Union, Canada and the United States are among the top exporters.
China will also lower temporary import tariffs for ferroniobium - used as an additive to high-strength low-alloy steel and stainless steel for oil and gas pipelines, cars and trucks - from 1 per cent to zero in 2020 to support its high-tech development.
The country brought in 35,909 tonnes of ferroniobium in 2018 and 37,818 tonnes for the first 10 months of this year.
The tariff rate for frozen avocado was cut to 7 per cent from the most-favored-nation duty of 30 per cent, the ministry said.
China’s economy is expanding at its weakest rate in nearly 30 years and could face more downward pressure next year, but the government has vowed to keep growth within a reasonable range in 2020 and keep policies forward-looking and effective.
U.S. Trade Representative Robert Lighthizer said China had agreed to buy $200 billion worth of additional U.S. goods and services over the next two years as part of the Phase 1 trade pact to be signed in early January. If the purchases are made, they would represent a huge jump in U.S. exports to China.
Beijing has said the increased purchases are in line with the growing needs of the Chinese people, as the country opens its markets further to global trade.
Tariffs for some asthma and diabetes medications will be set at zero, the ministry said, while duties on some wood and paper products will be lowered, too.
Import tariffs on multi-component semiconductors will be cut to zero.
China will also further lower most-favored-nation import tariffs on some information technology products from July 1, the ministry said.