China’s State Council announced measures to promote foreign investment projects, lower tariffs on some commodities and speed up customs clearance processes. It should be noted that while lowering of tariffs catches most headlines, there are other measures that would be welcomed by foreign companies doing business in and with China. It’s clearly a gesture for its trade and economic partners like the EU that China is speeding reform and opening up the markets further. At the same time, China is maintaining its firms stance in against Trump’s bullying in trade war.
On promoting “predictable and attractive” environment for foreign investments, China pledged to deepen the reform of “distribution management” and treat foreign and domestic capital equally. Secondly, China will encourage foreign re-investments by expanding the coverage of withholding tax exemptions. Thirdly, China pledged to protect vigorously protect intellectual property rights and further standardize government supervision and enforcement.
Starting November 1, China will lower tariffs of 1585 product lines, including machinery, paper, textiles and construction materials. The reduction should reduce tax burden on enterprises and consumers by nearly CNY 60B. And, total tariff level of China will be reduced from 9.8% in 2017 to 7.5%.
Average rate for electromechanical equipment will be lowered from 12.2% to 8.8%. Average tax rate for textiles, building materials will be cut from 11.5% to 8.4%. Average tax rate for some resource products and primary processed products such as paper products will but reduced from 6.6% to 5.4%.
Also, starting November 1, customs clearance process will be simplified. Number of regulatory documents required for verification will be nearly halved from 86 to 48. Non-compliances charges will be standardized and announced before the end of October.