Just days before a planned face to face meeting between the trade representatives of the United States and China, Beijing announced its decision to exempt 16 types of US products imported into the country from tariffs.

The Chinese Ministry of Finance said in a statement on its website that the list of goods that would be exempt from the import tariffs include the animal feed ingredients whey and fish meal and fish meal as well as some critical anti-cancer drugs and lubricants.

Even as concerns were rising that the prolonged trade war with the US was hitting the already slowing economy of China, Beijing had announced in May that it would be implementing a tariff waiver program.

According to some analysts, this move by China is a gesture of friendship but should not be viewed as a signal that a trade agreement is likely soon.

“The exemption could be seen as a gesture of sincerity toward the U.S. ahead of negotiations in October but is probably more a means of supporting the economy,” ING’s Greater China economist Iris Pang wrote in a note.

“There are still many uncertainties in the coming trade talks. An exemption list of just 16 items will not change China’s stance,” she said.

The list of exemptions of just 16 products from the USD imported in China is does not compare with the more than 5,000 types of US products that are under the Chinese trade war related tariff regimen. Additionally, major products such as American soybeans and pork still face hefty trade war related tariffs from China because Beijing has already managed to increase imports of the products from alternative sources in Brazil and other countries.

However, China had said that consideration for exemption from its import tariffs for those US products would be made that are not easily substitutable. The US is the largest supplier of whey in China. Whey is an important ingredient for piglet feed and Beijing has found it difficult to find consistent and large supplies of the product from other sources except the US.

According to analysts, the strategy of China to continue with the tariffs on soybeans and other crucial import products for the US such as American made cars is aimed at one of the critical political support base for US president Donald Trump in the US which primarily include the numerous factories and farms spread the Midwest and South. This becomes doubly important because of a slowdown of the largest economy of the world and intention of Trump to run for  a second term as president.

Since the trade war started between the two largest economies of the country more than a year ago, both the countries have imposed tariffs on each other’s hoods worth billions of dollars and the trade war has roiled world financial markets and contributed to a slowdown of the entire global economy with concerns rising about a global recession once again.

(Adapted from Reuters.com)

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