China to Reduce Import Duties on Some Energy, Materials

Reuters

China, the world's second-biggest importer, will cut import duties on some energy and raw materials products as well as consumer goods, to boost purchases, the Chinese cabinet said in a statement on Friday.

The decision underlines Beijing's intent to buy more from its trade partners to boost domestic consumption and comes after China posted its largest monthly trade deficit in at least a decade in February.

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It is the first time China's cabinet has devoted a regular meeting to the issue of boosting imports, which is usually under the purview of China's Ministry of Commerce.

"As we maintain stable growth in exports, we should focus more on imports and appropriately expand the size of imports,"   the State Council said in a meeting chaired by Premier Wen Jiabao.

China, the world's largest exporter, will have to rely less on exports to drive its economy in coming years, when growth in major U.S. and European markets slows.

Importing more will lift living standards and soothe China's disputes with its trade partners.

Vice Premier Li Keqiang said earlier this month China will import $10 trillion worth of goods and services in the five years ending 2015.

To boost imports, China's cabinet said it will cut import duties for "some energy products, raw materials, consumer goods closely related to people's daily lives, and key items that China does not produce".

China's import duties for energy products are generally low. For instance, China charges an import duty of 1 percent for mainstream gasoline products and has a zero import tax policy for diesel.

Beijing will also encourage importers to buy more from countries that have free trade deals with China, such as the Association of Southeast Asian Nations, Pakistan and New Zealand.

Chinese policy banks are also told to provide more credit to domestic importers of hi-tech products and resources.

China's large but shrinking trade surplus with the United States and Europe have drawn criticism in past years, including accusations that it deliberately holds down the yuan  to boost exports. Beijing has always denied these allegations.

To restructure China's economy into one driven more by consumers, Beijing is adopting a "buy more but not sell less" tactic, which helped narrow its trade surplus by 14.5 percent in 2011 to $155 billion.

In February, China posted a $31.5 billion trade deficit as it sucked in commodity imports that pushed total purchases up 39.6 percent compared to a year ago, more than double the pace of export growth.