Region/Countries: Asia, China Industry: Multiple Sectors Date: December 2017

Why this is important to Wisconsin businesses: Although China's trading partners remain concerned about excess steel capacity, the reduced tariffs and duties generally indicate a trend of openness and cooperation.

As announced by the Ministry of Finance, China will adjust tariffs on a number of import and export items starting Jan. 1, 2018.

To incentivize imports, tariffs will be lowered on advanced machinery, key machine components and raw energy materials, dobby or jacquard looms, cathode materials for power batteries, raw materials for advanced medicine, and coconut fiber. Export taxes on steel and chlorite will be eliminated, while those on commodities including apatite, coal tar and wood chips will be reduced.

Due to the government plans for stricter management of certain materials, the provisional import tax rate on nickel ingots will be increased, and provisional duties on certain solid waste imports, such as waste steel and ores, will be replaced by tariffs applicable to most favored nations.

To encourage the development of the Belt and Road Initiative and free trade areas, China will also apply conventional tariffs on products from 26 countries and regions in line with trade pacts. This will result in lower tariffs with trade partners including ASEAN nations, South Korea and Australia, among others, as well as continued tariff concession with members of the Asia-Pacific Trade Agreement. The move is likely to stir concerns among foreign competitors in the U.S. and Europe that China, the world’s top steel producer, may be looking to sell its excess product abroad.

China, the world’s second-largest economy, exported 64.5 million tons of steel products in the first 10 months of the year, down 30 percent from a year before. That included 1.74 million tons of steel wire, down 9.5 percent from a year before. It has cut some 100 million tons of legal capacity and another 120 million tons of illegal capacity since January 2016, and rejects U.S. claims that it needs to do more. At a ministerial-level G20 meeting in Berlin last month, China and the U.S. remained at odds over how to tackle excess steel capacity.

The China Metallurgical Industry Planning and Research Institute (MPI) expects steel demand to rise in all downstream sectors and reach 726 million tons in 2018.

Since December 2017, China has already made a significant reduction on tariffs on a number of consumer goods, including certain foods, health products, clothes and infant formula, with certain types of baby milk powder and diapers completely free of tariffs.

A series of new measures taken by China have also demonstrated determination to open up its market to the world and enhance mutually beneficial cooperation.