In an effort to create greater opportunities for foreign investment and facilitate cross-border trade, the Chinese Ministry of Finance (MOF) ordered an adjustment of import and export tariffs on selected goods in 2022.
The Customs Tariff Commission ("CTC") of the State Council issued the Circular on the 2022 Tariff Adjustment Plan (the "Circular"), which implemented provisional tariff rates lower than the most-favored-nation (MFN) tariff rates on 954 commodities and increased import and export tariffs on some products.
While these new directives reflect China’s agenda and national priorities for the coming years, they also leave the door open for international companies to reinforce their business ties with China and with local Chinese customers.
The changes will help adapt to the supply-demand changes in the domestic market, guide resource allocation, support innovation, and industrial transformation, and promote low carbon development.
To promote the high-quality opening of markets, China will apply agreed tax rates on selected goods originating in 29 countries and regions for 2022 in accordance with China’s free trade agreements (FTA), including the Regional Comprehensive Economic Partnership (RCEP) and the China-Cambodia FTA, both of which came into effect on January 1st, 2022.
In addition, to keep consistency with the revised Harmonized System for Commodity Names and Codes and relevant WTO rules – China will make technical conversions of certain tariff items. After the adjustment, China will have in total 8,930 tariff items.
Starting from January 1st, 2022, these over 900 commodities that were previously subject to higher MFN (most-favored-nation) tariff rates, are now subject to lower rates, and belong to a wide range of sectors such as medical products, automotive, manufacturing components, raw materials, environmental restoration, sports equipment, and others benefitting from lower tax bands and subsequently more ability to price competitively.
Simultaneously, to balance the new reduced tariff rates, China canceled the provisional import tariff rate and re-impose higher import and export duty rates on other products such as meat, batteries, phosphorus, etc., which are currently deemed as lower priority for China’s trade criteria.
Exporters from the 29 countries who have bilateral trade agreements with China (e.g., Australia, New Zealand, Pakistan, Peru, Switzerland, Costa Rica, Singapore, Vietnam, and Japan, among others) and the Asia-Pacific Trade Agreement’s (APTA) members enjoy a further reduction of the conventional duty rates on imported and exported taxable items.
IT remains of high importance for the Chinese government, as this July additional 62 IT products will enjoy a further cut in the MFN duty rates. This is the seventh time China has applied such an act, with the last one taking place in July 2021 for 176 IT products.
Some of the commodities affected by the tariff change include:
>> Anti-cancer drugs and medical products: To reduce the financial burden on patients, impose zero tariffs on radium chloride injections, a new anti-cancer drug, and reduce import tariffs on some medical products, including intracranial thrombectomy stents and artificial joints.
>> Aquatic products and sports equipment: To boost consumption upgrading and enhance the atmosphere of the winter Olympic Games, reduce import tariffs on some high-quality aquatic products, including salmon and cod, as well as baby clothes, dishwashers, and skiing gear.
>> Oil paintings and antique artwork: To adapt to demand in cultural consumption, impose zero tariffs on oil paintings and other artwork over 100 years old.
>> High-efficiency auto parts and materials for environmental restoration: To improve the environment and promote green and low carbon development, reduce import tariffs on gasoline engine particle traps and electronic throttles for automobiles that can improve vehicle fuel efficiency, as well as peat used for soil
>> Manufacturing components and raw materials: To optimize and upgrade manufacturing industries, lower import tariffs on key components such as high-purity graphite accessories, high-voltage cables for high-speed trains, membrane electrode assemblies, and bipolar plates for fuel cells, as well as raw materials needed by the food processing, household chemicals, and leather manufacturing industries, such as cocoa beans, plant oils, and animal
>> Mineral resources: Lower import tariffs on natural resources, including pyrite and pure potassium chloride, which are in short supply domestically.
>> Certain commodities are now subject to an increase in import and export duties. The changes include re-imposing MFN tariffs on some amino acids, lead-acid battery parts, gelatin, pork, and m-cresol, and abolishing interim import tax rates on these products, as well as raising import and export duties on phosphorus and blister copper to promote the transformation, upgrading, and high-quality development of relevant industries.
The 2022 tariff adjustments reflect China’s intention to secure its industrial and supply chains. They also aim to reallocate resources to promote technology innovation, industrial upgrades, and green development, and help boost China’s participation in the restructuring of the global industrial chains and the global free trade network.
In terms of logistics, the government is taking measures to boost online and offline cross-border trade, inviting international brands to deepen their footprint in the Chinese market.
Alongside the reduced tariffs, another factor that is expected to trigger regional trade and foreign investments in China is the implementation of the Regional Comprehensive Economic Partnership (RCEP) in January 2022. These 15 partnering countries represent one-third of the world’s population, and together they formed the largest trade deal. With the partnership in place, over 90% of the goods traded between the RCEP members will be tariff-free.
Another note of importance is that the China-Europe freight trains are contributing with the stabilization of the international supply chain. These trains travel across 70 routes between China and 170 cities from 23 European countries, cutting shipping times by half compared to the sea transportation route.
The trains provide opportunities for European cities that could have remained isolated due to the global transport difficulties.
The 2022 tariff adjustments could affect companies that import and export taxable goods and services with China. Foreign investors should be aware of these changes to better tap into China’s growing consumer markets.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
Talk to an expert
Schedule a 30-mins complimentary, no-obligation call to see how Woodburn can help you. Book a call with our Head of Business Advisory - Kristina Koehler-Coluccia.
Topics we can advise on include:
Company Registration
Cloud Accounting & Financial Reporting
Cloud Payroll Services
Tax & Audit Services
Recruitment
Employer-of-Record
Visa Application
Trademark Registration
Switch to Woodburn
Partner with Woodburn (cross referral)
Our calls are automatically scheduled via Zoom - or via Teams, WeChat or WhatsApp upon direct request.
Our advisory calls are available from Monday-Friday from 8am to 5pm CEST and Wednesday until 9pm CEST.