Next week, tariffs on hundreds of goods will be reduced by China as part of its efforts to shore up trade to provide a boost to its slowing economy and to cushion the impact of a devastating swine fever epidemic.
Import duties on frozen pork, semiconductor parts and more than 800 other products which include consumer goods and high-tech products would be lowered by Beijing, the Chinese government announced on Monday. The decision will be implemented from January 1.
So far this year, the Chinese economy has been hit by many events. In addition to the impact on its economy of the long and acrimonious trade war with the United States, the Chinese economy was also affected by a slowdown in domestic demand and rising levels of debt.
Analysts said that the decision of China to reduce import tariffs on pork from 12 per cent to 8 per cent was prompted by the skyrocketing price of pork which is a staple of the Chinese diet. The price of pork has more than doubled over the last month compared to the same time a year earlier because of an African swine fever epidemic that destroyed many pig farms of the country.
The consumer inflation in China rose at the fastest pace in almost eight years earlier this month because of a sudden increase in pork prices.
There was need for reducing the pork prices to “better meet people’s daily needs”, the Chinese government on Monday.
China is currently trying to stall a sharp slowdown in its economy through a slew of measures in addition to tariffs. A day before the tariff reduction announcement, Beijing has also announced 28 new measures to lend more support to the ailing private sector of the country. The measures included expanding the tax cuts and easing access to bank loans. China’s economic growth crucially depends on the performance of its private sector but the private companies of the country have to endure more hardship in gaining access to funding compared to the state owned companies.
Monday’s announcement was described as an “encouraging olive branch” as Beijing gets ready to sign the phase one trade deal with the United States, by Stephen Innes, chief Asia market strategy as AxiTrader. He said that this could be an attempt by China to show Washington that it would be ready to open up its market and economy further.
“It suggests that harmonious discussions continue” as the two sides wrap up “phase one” and head into “phase two” of trade negotiations, Innes added.
Alex Capri, senior fellow and lecturer at the National University of Singapore said that this move by China is also suggestive of its intention of that encouraging trade with other countries.
Capri said Beijing likely wants to increase ties in the semiconductor sector with countries like South Korea and Japan.
(Adapted from CNN.com)