The import tariff on audio and video products and other
electronic publications has been cut, the finance ministry said on
its website yesterday.
The government reduced import tax from 17 percent to 13 percent
on recorded cassettes, compact and digital video discs and floppy
discs, effective September 15.
Analysts said the move aims to encourage imports of these
products in a bid to help reduce the country's trade surplus and
rebalance its international payments.
Last year, China imported US$30.79 million worth of these
products, an increase of almost 80 percent on the previous year.
Based on that figure, the reduced tax rate may lead to a loss of
about US$1.2 million in tax revenue, experts said.
"It is part of the country's efforts to encourage imports and
promote the balance of international payments," said Chen Jijun, a
senior analyst with Beijing-based CITIC Securities.
China had accumulated foreign exchange reserves of US$1.41
trillion by the end of August, according to government officials.
The trade surplus has become a major contributor to the expanding
reserves.
Chen said the move should help reduce the surplus, given China
mainly imports audio, video and electronic products from developed
countries - the source of most of its trade surplus.
China has cut the import tariff on key equipment and reduced
export rebates on some energy-intensive products in its all-round
macroeconomic regulations this year designed to narrow the trade
surplus.
In August, China registered a trade surplus of US$24.98 billion,
up by 32.8 percent. But the growth rate was 48.1 percentage points
lower than the January-July period.
"The regulatory measures have worked to some extent," Chen said,
adding that imports are also growing steadily.
China's imports in August were US$86.38 billion, a record high
on a monthly basis.
But he warned that if China does not change its economic
structure, it will be difficult to substantially reduce the trade
surplus.
China's low-cost labor and resources are behind the fast
increase in the country's exports. Many foreign companies have
shifted their manufacturing to China to take advantage of low local
costs, and they are driving the country's strong export industry,
he said.
He said China should raise resource prices as a fundamental
method to rebalance the economy.
(China Daily October 9, 2007)