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While china will slash tariffs on a number of products this year due to commitments made during its bid to enter the World Trade Organization, lower taxes aren't expected to mean large-scale price cuts for most goods, analysts warn.
The country will cut average tariffs on imported goods from 12 percent to 11 percent this year and raise quotas on some products.
Tariffs will be cut on more than 3,000 products this year, with taxes on agricultural goods dropping to 16.8 percent from last year's 18.1 percent, and tariffs on industrial products dropping to 10.3 percent from 11.4 percent.
Many car buyers are hoping the prices of imported vehicles will drop again this year, following a 10 percent average price cut last year resulting from a 30-percent reduction in tariffs.
China imported 120,000 cars last year, a 60-percent increase over 2001. But industry insiders don't expect a similar price cut this year as tariffs will only drop a little bit, from 50.7 percent to 43 percent.
In the near future, buyers may take a wait-and-see stance, expecting prices on imported cars to be cut further, said Shi Zhonghua, an analyst with China Securities.
But the prices won't drop dramatically due to soaring domestic demand, he said. Some traders may offer discounts to trim inventories, but the market is expected to remain stable.
With tariffs being lowered on some manufactured goods and spare parts, some worry that foreign companies will sell finished products directly to the Chinese market, instead of setting factories on the mainland and hiring local workers.
"But as major multinational companies have built their production facilities here, it is not very likely they will import much, since that would hurt their domestic ventures," said a customs official who declined to be identified.
The phase-out of quotas on cameras, meanwhile, will have even smaller impact on the domestic market, as major foreign camera makers have already started production in the country, taking advantage of low labor costs in China.
Kodak, Fuji, Sony, Olympus and Nikon all manufacture digital cameras on the mainland.
Fuji currently sells 10 percent of the digital cameras produced at its plant in Suzhou in the domestic market, exporting the rest due to limited domestic demand, said Xu Fuli of Fuji Investment (China) Co. Ltd.
Some company officials worry that consumers are holding off on purchases as they wait for tariff cuts to lower retail prices.
"Many of my friends have called me, asking whether computers will be cheaper this year," said Chen Yue, a Shanghai marketing executive with Legend Computer, China's largest computer maker.
"I'm shocked by this atmosphere, as ordinary customers are holding off their purchases and waiting for cheaper products, which will not appear at all. To whom can I sell?"
(Shanghai Daily January 3, 2003)
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