Will China’s move to cut tariffs prompt US rethink?
China’s central government, unfazed by the escalating trade war launched by the US, seems determined to open the country wider to other economies in the world so that they can get a slice of China’s booming market. This in turn will help sharpen the competitiveness of China’s manufacturing industry.
In the face of a tidal wave of trade protectionism, China has stepped up efforts to ward off the backward undercurrent, firmly propelling globalization by integrating the world’s second-largest economy more broadly and closely with the world.
In late September, the State Council, China’s cabinet, came out with a new policy set to take effect on November 1 that will cut import tariffs on up to 1,500 kinds of products including textiles, apparel, machinery and electrical equipment. The massive tariff reduction will cut China’s overall tariff level from 9.8 percent to 7.5 percent and is expected to save consumers and businesses 60 billion yuan ($8.7 billion) a year.
Prior to this move, China decided in July to cut import tariffs on foreign cars and SUVs to 15 percent from the previous 25 percent. The measure has been welcomed by major auto manufacturers, particularly those in Europe and Japan.
Some analysts claim the tariff cuts came in response to the US government, which has placed punitively high tariffs on $250 billion worth of Chinese goods.
Despite Washington’s intention to shut its doors on China, Beijing has taken the opposite road and opened its doors more widely to other economies. The Chinese government now has a job to do – to prove to the world that US economic punishment won’t work. If anything, it will only make China stronger.
Also, China’s central government is encouraging foreign companies to ramp up their investment in China by creating the world’s most convenient transport and logistical infrastructure, setting up more than a dozen special free trade zones throughout the country, and giving them the same taxation and credit policy treatment as China’s own businesses.
Chinese leaders are staunch believers in economic globalization and integration that is based on free and unfettered movement of talent, investment and trade on a global scale.
Only free competition can benefit all market players.
Also, by embracing free trade and competition, China’s numerous manufacturing firms can upgrade their industrial and technological level, which will allow them to gain a more solid foothold in the global marketplace.
Some US media reports have commented that China’s latest import tariff reductions are likely to discourage Chinese consumers from buying US goods.
They claim that by cutting tariff levels on non-US goods while increasing them on American imports, China is effectively steering its consumers away from American goods.
But these reports are obviously ignoring one fact: It is the administration of US President Donald Trump that launched the trade war in the first place, and China has no choice but to hit back by raising tariffs on US goods.
If the US government stops the trade war by rescinding the tariffs on Chinese goods, China will respond in kind. Then all US goods will enjoy the same lowered tariffs in China.
Beijing’s latest move could discourage the Trump administration from accelerating the trade war. It’s time for Washington to rethink its policy.
Despite Washington’s intention to shut its doors on China, Beijing has taken the opposite road and opened its doors more widely to other economies. The Chinese government now has a job to do – to prove to the world that US economic punishment won’t work.