China exempts more US goods from tariff list
Published: Sep 11, 2019 01:36 PM Updated: Sep 12, 2019 12:00 AM

Photo: VCG

Beijing on Wednesday announced a plan for certain US imports and companies to file for exemptions from Chinese tariffs, in a perceived goodwill gesture that should help ease the impact of the trade war on US companies and inject fresh optimism into a new round of trade negotiations planned for October.

The US products exempted from Chinese tariffs include 16 types related to livelihood, such as lubricating oil, medical linear accelerators and anticancer drugs.

The exemptions will take effect on Tuesday and remain in place until September 16, 2020.

The Tariff Commission of the State Council will continue to work on the exemption list and publish it "at a proper time," the statement said.

Companies involved in the export of products already subject to tariffs can apply for refunds from China customs within six months, starting Wednesday.

For imports such as whey and release agent, companies will no longer be subject to retaliatory tariffs imposed on US imports from September 17, 2019 until September 16, 2020. But companies will not be refunded for tariffs already paid.

The Chinese side has tried hard to reduce the impact of China-US trade frictions on companies in China, and Chinese analysts immediately hailed the latest exemption list as a responsible move.

According to a tariff document published on the website of the Ministry of Finance, applicants for exemptions can be based on three reasons: companies with difficulties finding alternatives, companies on which increased tariffs have had a serious impact, and industries where more tariffs have exerted more impact.

"China is trying to reduce the negative impact on companies in the country during the trade war," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation in Beijing, told the Global Times on Wednesday.

According to the analysts, the exemption represents a goodwill gesture before a new round of trade talks as Beijing offers Washington another chance to end the trade war.

Citing viewpoints from Squawk Box, US President Donald Trump tweeted Wednesday that "China suspends tariffs on some US products. Being hit very hard, supply chains breaking up as many companies move, or look to move, to other countries. Much more expensive to China than originally thought."

 Cherishing goodwill

The US side should cherish the sincerity and goodwill of the Chinese side, sit down and talk about common goals after being locked in an impasse, Bai said.

The Chinese Commerce Ministry said last week that Beijing and Washington will strive to achieve "substantial progress" in the upcoming 13th round of trade consultations in early October in Washington.

The year-long trade war between the world's two largest economies escalated particularly after the US started to impose tariffs on over $125 billion in Chinese imports on September 1, covering products including footwear, food and other daily necessities.

In turn, the Chinese government imposed additional tariffs on some $75 billion in US imports to China, including a five percent tariff on US crude oil.

The latest US manufacturing index and job market numbers showed that the US economy was close to a recession, while the Chinese economy has also been facing downward pressure, a veteran Beijing-based economic observer surnamed Li told the Global Times.

It was necessary that both sides show goodwill and take further trade talks seriously, Li believed.

Song Guoyou, director of Fudan University's center for economic diplomacy, told the Global Times on Wednesday that the exempted products were "highly related to the livelihood of the Chinese people."

The move aims "to ease the pressure on some Chinese companies that rely on imports from the US for their production output," Song told the Global Times.

Mei Xinyu, an expert close to the Ministry of Commerce, told the Global Times on Wednesday that China had already begun accepting applications for tariff exemptions months ago and it would take time to finish the review process.

"The government has finished approving the first batch of imports," Mei said.

The timing of the announcement, weeks ahead of the October 1 National Day that celebrates the 70th anniversary of the founding of the People's Republic of China, shows that Beijing wants to inject positivity into the celebratory mood, Mei believed.

"China and the US may reach certain agreements before scheduled trade talks in early October," Mei said.

"As part of the deal, the exemptions on certain US products could be in exchange for US exemptions on Chinese products," according to Mei.

 Major leverage

US agricultural products such as soybean, corn and pork are not exempted.  

"If we exempt corn or pork, it means the trade war is near the end," Gao Lingyun, an expert from the Chinese Academy of Social Sciences in Beijing, told the Global Times on Wednesday.

It was unlikely US agricultural products would be exempted as they offer leverage for Beijing in the upcoming trade negotiations, the analysts said.

According to those Chinese experts, the Chinese delegation would negotiate in a serious, proactive manner in early October while also adhering to the country's principles and bottom line.