Nov 01, 2018 (China Knowledge) - In order to adapt to the industrial upgrading and reduce the cost of enterprises, Chinese authorities have announced import tax reduction on 1,585 items. The tax reduction was mainly implemented on industrial products and daily use items, which include mechanical and electrical equipment, spare parts and raw materials. The average tax rate was reduced from 10.5% to 7.8%, with an average decrease of about 26%.
It is understood that China's industries with competitive advantages include textiles, building materials, base metal products, and steel among others. The first step is to lower the import tariff of China's comparative advantage in order to boost the supply side reform.
A total of 677 tax items, in the comparative advantage list, will be affected by tax reductions, with the average tax rate falling from 11.5% to 8.4%, with an average fall of 27%.
The reduction in textile import tax rate will promote the transformation and upgrading of the textile and clothing industry and improve quality and efficiency. Similarly, building material import tax reduction will reduce marble tiles prices, ceramic tiles, glass fiber and other commodities. The move will enhance market competitiveness, to meet consumer needs for home decoration and enterprises’ demands for production materials.
Reduction in import of tariffs on mechanical and electrical equipment will help upgrade the industrial structure. A total of 396 tax items are involved, with the average tax rate falling from 12.2% to 8.8%, with an average fall of 28%. The main purpose is to reduce the import tariffs of light industrial machinery, general machinery and instruments, which is conducive to the introduction of advanced foreign technology and equipment into traditional industries such as food processing, clothing, construction, transformation and upgrading; to reduce the import tariffs of various processing machinery and agricultural machinery; to speed up the revitalization of equipment manufacturing industry; and to promote intelligent manufacturing.
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