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China Aiming for More Import

Release Date

22 April 2012

China Aiming for More Import

By Sara Cheng

On the 1st of January this year, the Chinese government reduced the import tariff of over 730 products (mostly raw materials and resources for production, consumer goods and advanced machinery and equipment) to an average of 4.4%. The new tariff is 50% lower than the previous average preferential import tariff under the Most Favored Nations Treatment, which shows the commitment of Chinese government to boost import.

We believe China will continue to encourage import in the medium to long term for the following four reasons:
  • First, China has been on trade surplus for over 20 years and was pressed to appreciate China yuan in recent years. With over 3,000 billion US dollars in its vault, China has more US dollars than the combined US dollar reserve of G7, and is the biggest overseas US dollar holder. Quantitative Easing Monetary Policy is a knife hanging over China. China needs outlets to cash out foreign currency reserves. Import and investment overseas are China’s major channels.
  • Second, China is determined to import the most advanced technology and services to catch up with technologically advanced countries. To fulfill its strategy, China will eventually transform from a labour intensive manufacturing base to a more advanced exporter of its own branded products, technology and services.
  • Third, as the world factory, China needs on-going mining and agricultural resources, machinery, equipment and advanced technology to meet the production demand for export.
  • Last but not least, China needs to import consumer goods and raw materials for domestic consumption. China’s fast economic growth in the past decade was mostly fueled by export and government investment in infrastructure construction, which resulted in an unbalanced and unsustainable GDP contribution structure. To achieve a more balanced economic structure and be less dependent on global markets and government investment, the Chinese government has been urging domestic consumption since global financial crisis. This has led to the development of a clear national strategy and issuing of a series of policies to build a safety net. China is determined to increase the purchasing power for low and low to medium income households, create a fairer wealth distribution mechanism and boost import of consumer goods. With this backdrop, consumer goods import in China has grown at an average annual rate of over 25% in the past 3 years and will continue this trend in the short to medium term.

Import fits China’s national strategy and is an integral part of its 12th Five Year Plan. As a result of Chinese government’s commitment to import, China’s import grew at over 30% in 2010 and served as a powerful impetus for exports of its neighboring Asian counties and further nations in Asia Pacific region. Today, China imports 13% of the world’s total imports of raw materials and over 30% of the world’s total imports of metals including two thirds of the world’s import of iron ore and China’s import contributes 10% of global imports. China’s demand for imported goods and services present great opportunities for foreign companies which can offer products/services on China’s shopping list.

If you need any assistance or require further information to export consumer goods to China, visit Australian Business Consulting & Solutions or contact our China Expert Sara Cheng directly. Email: Tel:1800 505 529.

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