Trade Surplus to Fall on Increased Domestic Demand & Lower Import Tariffs

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Chinas trade surplus is expected to fall in 2006 after hitting new highs – estimated at US$100 billion – this year, up from just US$32 billion in 2004.

The government, under pressure from the US and others, plans to boost domestic consumption to increase imports, and it is thought that further appreciation of the Renminbi (RMB) may also be considered.

In a related move, it has been announced that China will cut import tariffs on more than 100 categories of products beginning from January 1 next year as part of a WTO-driven plan. The products include vegetable oil, raw chemical materials, automobiles and parts, and some preferential tariffs will be available to members of the Association of Southeast Asian Nations (ASEAN). In line with the aims of the recent Hong Kong WTO talks, China will also lower tariffs on products from about 30 least developing countries, such as Cambodia, Myanmar, Laos, Bangladesh and Sudan.

Average import tariffs will be 9.9 percent, down from 10.4 percent in 2004.

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