The Ministry of Finance announced on Tuesday the largest-ever tariff cuts on imported automobiles and vehicle components in more than a decade. The reduced tariffs, which come into effect on July 1, demonstrates China's commitment to further open up its market and maintain the world's multilateral trade system.

In a keynote speech to the opening of the Boao Forum for Asia in April, President Xi Jinping announced four major initiatives to expand opening-up, including "a substantial reduction in automobile import tariffs".

And China also announced a timeline to remove long-standing caps on foreign ownership of automotive ventures last month.

Aside from showing its resolve to continue reform and opening-up and maintain the global multilateral trade system, the tariff reduction is also expected to catalyze the supply-side structural reform in China's auto sector and promote the sector's structural adjustments. But given that flows of imported vehicles to the domestic market can be expected, it means more competition pressures for Chinese auto manufacturers.

But only by actively participating in the international competition can China's automobile enterprises promote independent innovation, enhance their brand influence and offer higher-quality products and satisfactory after-sales services to expand their survival space.

The big tariff cuts on imported automobiles will also please Chinese consumers who will now have greater choice for their budgets. Statistics from China's auto industry association show that more than 1.2 million imported vehicles were sold in the Chinese market in 2017, and the number is expected to increase to 1.5 to 2 million annually after the tariff cuts.

As part of China's efforts to promote the transformation of foreign trade to improve the quality of its own products through competition, the positive effects of the cuts in automobile tariffs will become increasingly apparent.