China will usher in more foreign cars next year by lowering import tariffs and raising quotas in line with its World Trade Organisation commitments, the official Xinhua News Agency said Thursday, according to Reuters.

Citing Xinhua quoting the Foreign Trade Ministry, Reuters said China would cut vehicle import duties by 5.6% next year and boost import quotas by 15% to $US9.125 billion.

The report did not specify what type of cars the tariff cuts applied to or the new levels, Reuters said.

Reuters noted that, last January, China cut tariffs on cars with engines of three litres or less to 43.8% from 70%, and lowered tariffs on models with engines larger than three litres to 50.7% from 80%.

According to Reuters, the move sparked a brutal price war among domestic producers as they fought to hold on to their share of the rapidly growing Chinese market, where annual car sales are expected to hit one million units for the first time this year.

"Some car dealers that have already obtained import quotas or permits are waiting for duties to fall next year to import their cars," Xinhua said, according to Reuters, adding that there was room for imported car prices to fall further.
Reuters said China joined the World Trade Organisation last December and has promised to cut average car import duties to 25% by July 1, 2006 and abolish all limits on quotas by January 1, 2005.

Imported cars still account for just 7% of the Chinese domestic passenger car market, with all vehicle imports standing at $6.261 billion in the first 10 months of this year, Reuters said.

According to Reuters, Xinhua said China imported 100,160 vehicles from January to October, of which 56,000 were cars. Imported vehicles are expected to hit 120,000 vehicles in the full year, including 70,000 cars, the news agency added.

Official statistics show car sales in China rose 51.73% year on year to 908,100 units in the first 10 months of 2002, Reuters added.