China to cut import duty on cars

By Dave Leggett | 22 May 2018

China is to cut its import duty on passenger cars to 15% from 25%, effective from 1 July.

China currently charges an import tariff on finished vehicles of 25%. Import tariffs have encouraged OEMs to set up JVs in China and localise parts sourcing as much as possible, but many have complained that they have little control of their Chinese JV operations and warned of intellectual property abuses and pressures to transfer technology.

Rising trade tensions between the US and China have subsided in recent days, with moves to raise new tariffs by both countries 'put on hold' while they work on a new trade aagreement.

Bloomberg reported that the import duty on car parts will also be reduced to 6%, citing China's Finance Ministry. The report noted the shift is significant because imported cars made up only about 4% of the country's 29m vehicle sales in 2017.

The latest round of tariff easing is part of a number of policy announcements in recent months - including the end of a cap on foreign equity stakes in JVs - aimed at demonstrating China's commitment to opening up its economy.

China will phase out the equity cap on automotive joint ventures by 2022, with the cap on manufacturers of new energy vehicles and special-use vehicles to be removed later this year, according to Beijing's National Development and Reform Commission (NDRC).

China's existing tariffs reflect its historical status as an emerging economy under WTO rules. However, critics say it has seen rapid economic growth and now has a huge trade surplus - helped by a favourable currency - that now demand changes to its trade terms with the rest of the world.  

See also: US and China call off trade war

Beijing says will lower tariffs on car imports this year