"The tariff cut suggests that China strictly abides by its commitments to the World Trade Organization (WTO)," the ministry said.

Next year, 129 new items will be subject to import tariffs, bringing the total number subject to the tax to 7,445, according to the ministry.

China will cut the average import tariff on industrial products to 10.3 percent from the present 11.4 percent, it said.

It will also cut the average import tariff on farm products to 16.8 percent from the present 18.1 per cent.

The tariff on textiles will fall to 15.2 percent; on electronics to 9.9 percent; on transportation equipment to 15.9 percent; and on machinery products to 8.6 percent.

The ministry said China will continue to impose quota management on 10 farm products and three chemical fertilizer products such as wheat and soybean oil.

China has promised to cut the average tariff level to 10 percent by 2005.

Economists said the tariff cut is "necessary," because China is yet to integrate into the international market.

"The cut in the import tariffs will further expand China's foreign trade, especially imports," said Li Jingwen, a senior economist with the Chinese Academy of Social Sciences.

The tariff cut will not have much effect on China's fiscal revenue or the country's sound economic development, he said.

Zhang Peisen, a senior researcher with the Taxation Research Institute under the State Administration of Taxation, said China's fiscal system is strong enough to deal with any further tariff cuts in the coming years.

During the first 11 months of this year, China's total tax revenue reached 1,551.8 billion yuan (US$186.9 billion), an increase of 13.6 percent or 186 billion yuan (US$22.4 billion) compared with the same period last year.

"China's WTO accession will further stimulate the national economy, which will give more resources to the taxation administration," Zhang said.

During the first nine months of this year, China's gross domestic product (GDP) grew by 7.9 percent year-on-year.

Earlier this month, the State Economic and Trade Commission said that China's economy is likely to grow by 8 percent this year.

"The growth in GDP stemming from the WTO entry will naturally lead to more tax revenue," Zhang said.

And because an increasing number of foreign companies will invest in China in the coming years, the country will collect more company and individual income taxes, he said.

(Xinhua News Agency December 23, 2002)