China imposes export tarriffs, lowers import duties to combat trade imbalance
The Ministry of Finance announced Monday that the country will impose extra export tariffs, while cutting import duties as of June 1 to narrow its widening trade surplus. The ministry said a total 142 low-end and resource products will be hit with additional export tariffs.
According to Xinhua, China will impose five to 10 percent export tariffs on more than 80 steel products, including steel wires, sheets and plates, said the ministry. It will also raise the export tariffs from 10 percent to 15 percent on primary commodities, including steel billets, steel ingots and pig iron. The report went on to say:
To encourage import, China will lower import tariffs on 209 products on a temporary basis, including resources products and key component parts, according to the ministry.
Import tariffs on coal and fuel oil will not exceed three percent, while tariffs on imported component parts for televisions, refridgerators, and machineries will be levied at between two and six percent.
To boost consumption, China will also lower import duties on construction materials, electronic appliances, kitchen ware, and infant food to between 6 and 17 percent.
China’s trade surplus in April was more than double that of March at US$16.88 billion according to the General Administration of Customs.
The regulations come as Wu Yi arrives in Washington, DC for talks with U.S. treasury Secretary Henry M. Paulson Jr. at the second “strategic economic dialogue.” China has also announced plans for a US$30 billion shopping spree in the United States. But as The New York Times reports, this may not be enough to silence critics in the U.S. Congress, already angry over a trade deficit that soared to US$232 billion in 2006. Steven R. Weisman writes:
“Some people will look at this and say there is not enough progress,” Treasury Secretary Henry M. Paulson Jr. acknowledged in an interview Monday, referring to the dialogue he started last year. “The key question is, Do we have more progress than we would have had otherwise?”
Later in the report Weisman examines the recent expansion of the band in which the yuan is allowed to fluctuate daily foreign exchange trading.
The United States says that by keeping the value of the yuan low, China is trying to make the cost of its exports low and the cost of its imports high. Congress is threatening to retaliate with higher duties on Chinese goods if China does not change its currency practices.
Senator Charles E. Schumer, the New York Democrat who is a strong critic of China and its currency practices, said purchases of goods ahead of Ms. Wu’s arrival would not help either. “Instead of changing what they buy, they ought to change the rules by which they play,” he said.