The Chinese government is implementing plans to cut import tariffs on 187 consumer goods beginning on December 1. The new guidelines will reduce import duties on some products by up to two-thirds. China reported a $510 billion global trade surplus last year.
The tariffs are being reduced on a wide variety of items, including avocados, mineral water and baby carriages. The tariffs will drop from an average 17.3 percent to 7.7 percent. The tariff on electric toothbrushes will fall from 30 percent to 10 percent. Tariffs for some types of baby formula were cut to zero. A similar tariff cut was enacted in 2015 for imported clothes, shoes and other items.
The tariff reductions are part of a new effort to spur economic growth by increasing domestic consumption. The Ministry of Finance cited the need to help consumers access quality and specialty products that aren’t widely produced locally as the reason behind the change. Consumer goods made up around 30 percent of China’s total imports in 2016.
The cuts also encourage consumers to spend at home rather than on trips overseas. According to the National Bureau of Statistics, domestic consumption contributed 64.5 percent of GDP in the first three quarters of 2017. The country believes the move is a good way to reduce its reliance on trade and investment.
Other countries, notably the United States, has been pressuring China for better access to its growing market. President Donald Trump has made narrowing the U.S. trade deficit with China a priority. The trade gap with the U.S. is about $327 billion. Trump has long complained that China engages in unfair trade practices. During Trump’s visit to Beijing, the two sides signed a series of contracts worth billions of dollars as a gesture of goodwill.
The government has also announced it would lift its limit on foreign ownership of securities, fund management and futures companies. The limit will be raised from a minority stake of 49 percent to a majority stake of 51 percent. The move would also end restrictions after three years. A similar change with restrictions that would end in five years is planned for life insurance companies.