China’s Ministry of Finance is to end tariff exemptions on 192 types of equipment imported for use in Chinese-invested projects from March 1.
The list of equipment to lose tariff-free status includes general machinery, smelting and mining machinery, packing materials and electronic devices, the ministry announced on Monday.
The change will apply to Chinese-funded projects approved after March 1. Those approved before March 1 can maintain the tariff-free status on imports until January 1, 2008.
Meanwhile, the tariff-free policy on equipment used in foreign-funded projects, which includes 20 items such as cars and electronic office fittings, will be maintained.
The ministry said the move would create a fair environment for domestic equipment makers to compete with foreign rivals through innovation.
The tariff-exemption policy on equipment used in projects where domestic and foreign investment was encouraged began in 1998, but 580 types of equipment for use in Chinese-invested projects and 20 types for foreign-funded ones were excluded in order to protect domestic industries.
Chinese enterprises have been suggesting that more types of equipment be removed from the list, as the country has been able to develop more equipment with higher technological standards and the old threshold for import tariff exemption was hurting domestic producers.
The government shortened the list of tariff-free equipment imported for Chinese-invested projects for the first time in 2000, but has kept that for foreign-invested projects unchanged.
Experts say while China gave foreign investors tariff benefits to address a lack of investment after the Asian financial crisis, they were less necessary now the country had seen an improving investing environment after joining the World Trade Organization.
A unified tariff policy on equipment import for domestic and foreign investors will effectively boost the country’s own equipment manufacturing industry, experts say.