China's imports of automobiles have plunged this year, in spite of the cancellation of quota controls over auto imports and the reduction of import tariffs since the beginning of this year.

As one of its World Trade Organization (WTO) membership commitments, China has abolished its 20-year-long practice of quota controls over imports of motor vehicles.

The Ministry of Commerce has decided to conduct automatic license management over imports of auto products. This means that the examination and approval system for imports of motor vehicles has changed to automatic registration.

Starting from Jan. 1, the tariff rate on imports of motor vehicles was cut to 30 percent, which is the fourth tariff cut since China’s accession to the WTO.

Before the latest cut, the tariff rate for imports of motor vehicles with a displacement of less than three liters was 34.2 percent and that for imports of vehicles with displacement of more than three liters was 37.6 percent.

According to customs statistics, the country imported 36,434 motor vehicles and chassis valued at US$1,149 million in January-April, down 43.8 percent and 42.8 percent respectively year on year.

The import plunge can be attributed to multiple causes. Previously approved by the State Council, the National Development and Reform Commission published the Automotive Industry Development Policy, abolishing the bond policy on vehicle imports that had been carried out for many years.

Starting from 2005, all bonded zones in importing ports are not allowed to store vehicles targeted at the domestic market.

The cancellation of the bond policy means imported motor vehicles must pay duties upon arrival.

According to related stipulations of the policy, those who apply for import of motor vehicles for the purpose of sales should submit certificates on auto brand sales.

Starting from 2005, only enterprises that have received authorization from foreign automakers are qualified to import and sell foreign vehicles.

This policy has not been well received by small motor vehicle distributors.

Meanwhile, the policy of requiring the payment of duties upon arrival of imported motor vehicles, though not yet actually implemented, will greatly raise capital costs for motor vehicle importers and in turn increase the operating costs of automobile distributors.

(Shenzhen Daily June 21, 2005)