BOFIT Viikkokatsaus / BOFIT Weekly Review 2017/48

China's finance ministry announced last week that import duties on 187 consumer goods will be reduced starting from today (Dec 1). Import duties drop on average from 17 % to under 8 %. The wide-ranging list of consumer products includes seafood, cheeses, nuts, mineral water, alcoholic beverages, pharmaceuticals, perfumes, cosmetics, hygiene products, clothing, home appliances, household devices and baby diapers. Many products on the list are considered luxury items.

The WTO reports that the average import duty on non-agricultural products in China was 9 % in 2015, a level that is relatively low compared to other emerging economies (duties range from 6 to 60 %), but is clearly higher that in developed economies (2–4 %).

Even if the duty cuts are substantial, many observers expect their impact to be minor. The last round of duty reduction in 2015 had relatively marginal effects. Instead, the main goal of the measure seems to be levelling the playing field for online retailers and brick-and-mortar outlets. Online purchases from foreign sellers are duty-free in China if they are worth less than 2,000 yuan (250 euros). During the year, a buyer can make duty-free purchases of foreign goods up to 20,000 yuan (2,500 euros). In addition, online retailers can offer much lower value-added tax and consumption tax rates than brick-and-mortar shops.

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