Move to help boost domestic consumption, top official says

Import taxes on a large number of consumer and luxury goods will be lowered this year, a former deputy commerce minister told China Daily in an exclusive interview.

"Consumer and luxury goods will help promote domestic consumption and China needs to reduce import duties," Wei Jianguo said on Tuesday.

Wei is a former deputy minister of commerce and also a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

"There will be at least two rounds of reductions this year on a large range of goods," he told China Daily on the sidelines of the annual session of CPPCC.

In his annual government work report on Monday, Premier Wen Jiabao gave priority to boosting domestic consumption while he cut the economic growth forecast for this year to 7.5 percent.

"Expanding domestic consumption, especially consumer demand, is the key to China maintaining stable and rapid economic growth, and is this year's priority," Wen said in the report.

But for many economists and companies, lowering import tariffs on common consumer goods, including food, cosmetics and luxury products ranging from watches to bags, is of major importance.

Ministries must get ready for the move, said Liu Kegu, member of the National Committee of the CPPCC and also a former official on fiscal and tax reform at the Ministry of Finance.

China is expected to become the third-largest consumer market for luxury goods by 2015. High import tax has driven many domestic consumers to shop in other regions and countries.

According to the World Luxury Association, outbound expenditure by Chinese consumers on luxury goods during the Spring Festival hit a record high of $7.2 billion, up 28.7 percent from a year earlier.

"Why not take some measures to get this huge consumption flow back to China?" Liu said.

The Ministry of Finance announced last year it would lower import tariffs on more than 600 goods, including consumer goods.

"It is good, but far from enough. A wider range of goods needs to be included and a larger percentage of tariffs need to be cut," Wei said.

"Authorities, including the Ministry of Finance and the General Administration of Customs, should be more active on the issue."

The Ministry of Commerce has been active over the last year in promoting imports of middle and high-range consumer goods.

Officials from the ministry said a reduction in import taxes on consumer goods, including luxury items, will come, however, consensus has been difficult to reach.

"They should all push for it," Wei said.

"This is good for China and consumers and will also help the nation fend off trade friction with its trade partners."

Statistics from the Ministry of Commerce showed five categories - watches, suitcases, garments, liquor and electronics - are priced 45 percent higher in the mainland than in Hong Kong, 51 percent higher than the United States and 72 percent higher than France.

But, in response to a proposal from the CPPCC National Committee representative made last year, the Ministry of Finance said in a statement on Monday that import tariffs, on average, on the five categories, are low among emerging markets.

dingqingfen@chinadaily.com.cn

(China Daily 03/07/2012 page1)