MOSCOW (MRC) -- China said it would slash tariffs on USD75 billion of US imports in half as part of its efforts to implement a recently signed trade agreement with Washington, reported The Wall Street Journal.
Beginning Feb. 14, China will cut tariffs on some US goods to 5% from 10%, while levies on some other items will be reduced to 2.5% from 5%, China’s Ministry of Finance said in a statement Thursday. The tariffs were imposed in September and December during a brutal trade fight between the world’s two largest economies.
The tariff cuts come amid growing doubts about Beijing’s ability to follow through on the phase-one trade deal, in which China has pledged to boost its purchases of American merchandise and services by USD200 billion over two years.
A coronavirus outbreak that began in China in late January and has spread to more than a dozen countries has caused a near-standstill in economic activity in the country. Chinese authorities have placed many parts of the country on lockdown in an effort to contain the epidemic.
Even before the outbreak, many economists and analysts cast doubt on Beijing’s ability to meet the agreement’s purchasing targets, which cover products ranging from soybeans and poultry, oil and gas to manufactured goods. Now, with the health crisis threatening an already weakening economy, Beijing could find it more difficult to follow through on all of its pledges.
Even so, the decision to reduce tariffs indicates that the Chinese leadership remains intent on implementing the deal that has helped halt the nearly two-year trade war between the two nations.
In a statement accompanying Thursday’s announcement, the Finance Ministry said the decision was intended to "alleviate economic and trade frictions and expand economic and trade cooperation" between the two countries. "We hope to work with the United States towards the ultimate elimination of all increased tariffs," it added.
As a condition of Beijing signing the initial trade deal, inked on Jan. 15, the US agreed to cut tariffs on USD120 billion of Chinese goods by half, to 7.5%, within about 30 days, and to forgo other planned tariffs.
The biggest section of the phase-one deal covers Chinese pledges to increase US imports. Beijing agreed to buy an additional USD200 billion in goods, split across 2020 and 2021, with USD77 billion in additional trade the first year and USD123 billion the second year.
Over the two years, China agreed to boost its purchasing of US goods above 2017 levels, including an increase of about USD78 billion in manufacturing, USD32 billion in agriculture, USD52 billion in energy and USD38 billion in services. In 2017, the US exported USD186 billion of goods and services.
To fulfill the targets, US exports to China would need to climb to USD263 billion in 2020 and USD309 billion in 2021, an increase without precedent in the history of US trade.
Chinese officials have indicated that it would cut tariffs in a bid to fulfill these pledges.
As MRC informed earlier, in H2 2019, tariffs sharply reduced exports of two grades of US polyethylene (PE) amid the ongoing US-China trade dispute. As new US startups brought more high density and linear low density polyethylene production (HDPE and LLDPE) on line, flows into China, the largest global demand center, retreated since China imposed 25% tariffs on those grades in August last year. Those tariffs, like the rest China imposed on the US products, were in response to tariffs the US first imposed on Chinese products.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers.
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