China Reduces Tariff to Promote Domestic Demand

Recently, the state authorities announced that from June 1, 2015, some consumer goods import tariffs would be reduced by more than 50% on average.

To reduce some consumer goods import tariff rates, it appears to be detrimental to the economic interests, but it is actually wise to promote domestic demand, but also a social consensus obtained in practice.

China Tourism Research Institute statistics show that China's outbound tourism trends in recent years show a substantial increase, overseas spending 20,000 yuan per capita, the proportion for shopping about 58%. Chinese people overseas shopping led to the capital outflow, so that our annual inbound and outbound tourism trade deficit exceeded 100 billion US dollars, which is not conducive to boost domestic demand and expand consumption, but not conducive to economic restructuring and upgrading.

Chinese people are keen to sweep goods overseas, which is a result of many complex reasons, unsound consumer market is an important factor, lack of brand building and counterfeit products seriously affect people's consumption enthusiasm. The more immediate reason is the high import tariffs on luxury goods and the undeveloped duty-free shopping level. Studies have shown that if the consumer goods import tariffs decrease by 10 percent, funding for overseas shopping will be returning 300 billion yuan. At the same time, the reduction of tariffs can attract more foreign brands into China, and can also promote domestic enterprises to further change the mode of operation and adjust the product structure.

It can be seen China is determined to reduce the tariff. At present, the economic is under downturn pressure, boosting domestic demand and promoting consumption is the key to economic growth and structural adjustment.(www.chinainout.com)

China to Cut Import Tariffs to Boost Domestic Consumption

According to the latest news, after the study of the Customs Tariff Commission of the State Council and approved by the State Council, the pilot project for import tariffs cut on consumer goods will be carried out. From June 1, 2015, in an way of provisional tariff, China will reduce the import tariffs on skincare, suits, short boots, diapers and other products, by an average of more than 50%.

These tariff cut products are mainly textile and garment products. Among them, the import tariff on fur clothes will be reduced straight from 23% to 10%; tariffs on cashmere pullovers knitted or crocheted will be reduced from 14% to 7%; tariffs on men's wool coats, capes and similar articles, and women's wool coats, capes and similar articles will be reduced from 16% to 8%; tariffs on men's wool suits and women's wool suits will be reduced from 17.5% linear to 10%.

Meanwhile, the footwear import tariffs will also be reduced, for example, import tariffs on rubber or plastic short boots and other three footwear products will be reduced from 24% to 12%, while tariffs on the footwear of textile materials will be reduced from 22% to 12%. Moreover, the import tariffs on diapers will be reduced from 7.5% to 2%, import tariff on skincare reduced from 5% to 2%.

From the foregoing, this time the import tariffs will be reduced greatly, with an average reduction of 50% in value, even some items’ tariffs decline by more than 50%.

From the announcement of Treasury Secretary tariff policy department, this adjustment is intended to improve consumer goods import and export policies and broaden domestic consumers shopping options, pilots for import tariff cut will be carried out for those daily consumer goods that domestic consumers have great demand for. (www.chinainout.com)

Premier Li Visits to Peru to Promote Railway Construction of Tens of Billions of Dollars

A Chinese scheme to build an east-west railway across South America, cutting across parts of the Amazon rain forest, has moved a step closer after Peru agreed to study theproposal.

The scheme would link Peru's Pacific coast with Brazil's Atlantic shores.

The decision came after talks between the Chinese Prime Minister Li Keqiang, and Peruvian President Ollanta Humala.

If completed, the railway would stretch 5,300km but campaigners fear the impact onindigenous people.

Brazil, China and Peru will now begin feasibility studies into the railway.

Mr Li secured Brazil's consent earlier this week, as part of his tour of Latin America.

The railway would "consolidate Peru's geopolitical position as a natural gateway to South America", President Humala said.

For China, it would reduce the cost of shipping raw materials and farm products.

But campaigners are concerned it might destroy untouched parts of the Amazon rainforest, affecting hundreds of indigenous communities.

Mr Li sought to ease fears, saying "to create the infrastructure, it is necessary to protect the environment" in a declaration with Mr Humala, AFP reported.

It is likely to cost more than $10 billion. The route is still being examined, but would begin in the gigantic Brazilian port of Acu and ending at a Peruvian port.

The Chinese President, Xi Jinping, pledged earlier this year to invest $250 billion in Latin America over the next decade. (www.chinainout.com)

Infrastructure Investment in Latin America Needs China

To many South American leaders, Chinese Premier Li Keqiang’s visit this week couldn’t come at a better time, and from a better country. China has been busy with Latin America, surpassing the United States as South America’s leading export destination outside of the region, according to the China-Latin America Economic Bulletin.

What is more, the ink is barely dry on big loan agreements to Venezuela and Ecuador, or a major China-Latin America cooperation plan signed in January that pledges to increase trade by $500bn and investment by $250bn and to cooperate on science and technology, trade, and environmental protection.

Now it’s the turn of Brazil, Peru, Chile, and Colombia, all destinations on Li’s itinerary. The Chinese are expected start implementing the cooperation plan with new agreements on science, trade, and currency swaps.

Expectations of considerable Chinese investments seem justified by Beijing’s track record of providing more than the World Bank and Inter-American Development Bank combined in loans for Latin American governments, according to the China-Latin America Finance database. There will likely be more of the same for infrastructure projects such as the Twin Ocean Railroad from Peru to Brazil.

According to the International Monetary Fund (IMF), Latin American growth is expected to dip below one per cent this year, after a disappointing 2014 of 1.4 per cent. That stands in stark contrast to the region’s “China Boom” from 2003 to 2013 when the region grew over 3 per cent per year thanks in large part to Chinese demand for Latin America’s commodities and the subsequent uptick in prices that came along with scarcity and speculation.

Those days are gone. China’s demand has slowed as it rebalances its economy, dampening commodity prices worldwide. With growth sliding, Latin Americans are realising that their governments did not invest much of the proceeds from the China boom. Gross fixed capital formation in the region was a paltry 19.6 per cent, far short of the 25 per cent recommended by the Growth Commission and other bodies for nations needing to develop their economies. Ecuador, Colombia, and Peru were above average though still nowher near 25 per cent, while in Argentina, Brazil, and Venezuela the investment rates were anemic.

According to research by the IMF, although the China-led commodity boom was among the longest and most lucrative in the region’s history, most Latin American countries saved less of these windfalls than they have in past booms. This year’s annual report from the Economic Commission for Latin America and the Caribbean adds that Latin American governments also failed to bring in new tax revenue in proportion to the windfalls as well.

It is thus no surprise that the region did little to invest into export competitiveness in sectors other than commodities. Over 78 per cent of Latin American manufacturing exports have lost global market share to their counterparts since 2003.

The China boom also came at significant social and environmental cost that was not properly mitigated. A new study, China in Latin America: Lessons for South-South Cooperation and Sustainable Development, shows how primary commodity exploitation – such as petroleum, copper, iron ore, tin, soybeans and the like – are endemic to environmental degradation.

The recent China-boom thus put increased pressure on the region’s waterways, forests, and other areas that accentuated threats to human health, biodiversity, global climate change, and local livelihoods. According to the report Latin American exports to China – the fastest growing export destination over the past decade – were close to twice as greenhouse gas intensive and ten times as water intensive than overall economic activity in the region.

So currency swaps and trade talks, science and technology agreements, and finance for infrastructure will be very welcome. Indeed, Latin America faces an annualinfrastructure gap of 6.2 per cent of GDP and the IMF says that infrastructure investment has the highest multiplier impact on the rest of the economy.

China and Latin America would also do well to ensure that equal attention go to risks associated with their economic relationship. That means investing the proceeds of the relationship in competitiveness, as well as in social and environmental protections.

If Latin Americans don’t manage their natural resources correctly, however, their very source of comparative advantage will dwindle, translating into lost growth and elections. If China doesn’t also mitigate the negative impacts of its trade and investment in the region, it will lose its positive image in a region they are making long term bets on–and lose a lot of money as well.

Kevin P. Gallagher is a professor of global development policy at Boston University’s Pardee School of Global Studies wher he co-directs the Global Economic Governance Initiative. His forthcoming book is The China Triangle: Latin America’s China Boom and the Fate of the Washington Consensus. (www.chinainout.com)

Backhauls on Sino-european Trains and Economic and Trade Exchanges along Silk Road Increase

In April, at Alashankou railway port, the containers of 68,000 tons are shipped to China, an increase of 39.5%. It’s analyzed that it’s because that backhaul sources gradually go into the normalization of operation and promote the port container imports, besides China Railway Corporation encourages the large-scale development of containers.

On May 18 (the local time at Madrid), loaded with 60 standard containers of Spanish wine, a freight train pulled out, and is expected to arrive at Yiwu West Railway Station in 20 days, and the Spanish specialty will be sold in Zhejiang and other areas of China.

Earlier, in August 2014, "Chongqing-Xinjiang-Europe" train first carried out original automobile and arrived in Chongqing railway port, creating a precedent that Chinese inland railway port imports vehicles. 

It is reported that in 2014, China Railway Construction Corporation accelerated to build the sino-EU railway line, ran 308 Central European trains for the whole year, sent 26070 containers, increasing by 285% a year earlier, and promoted the development of economic and trade exchanges between China and EU. Railway Corporation said, in 2015 they would focus to import cars, machinery and equipment, chemicals, and agricultural products, develop backhaul sources and lower total logistics costs.

www.chinainout.com

China’s Li Keqiang Seeks Big Deals in Brazil

Chinese Premier Li Keqiang arrives in Brazil on Monday for his first official trip to Latin America bearing tens of billions of dollars worth of trade and investment deals in the latest sign of China’s rising influence in the continent.

During his three-day visit, Mr Li is expected to witness the signing of at least $50bn in Chinese investments in Brazil’s infrastructure, a senior Brazilian official said last week.

Mr Li will then continue his eight-day South American tour with visits to Colombia, Peru and Chile.

The four countries account for 57 per cent of China’s booming trade with Latin America and Beijing is increasingly interested in boosting its direct investment in the region, particularly in the roads, bridges and railways it has already built across its own country.

China’s rising influence in a region once considered America’s “backyard” is seen by some as a challenge to the two-century-old “Monroe Doctrine”, which Washington established to discourage foreign (particularly European) influence in the region.

Some policy makers in Beijing hav

e argued that China should ramp up its involvement in Latin America as a counterbalance to the continued enormous US diplomatic, military and economy presence in Asia.

In January Chinese President Xi Jinping pledged $250bn of investment in Latin America over the next decade, highlighting China’s strong economic interest in the region.

Bilateral trade between China and Brazil increased 13-fold in value terms between 2001 and 2013, according to Brazilian statistics, and China has been Brazil’s biggest trading partner since 2009.

But a pronounced slowdown in China, led by sliding construction and weakening demand for commodities, meant annual trade between China and Latin America as a whole increased by just 0.8 per cent in 2014 from a year earlier.

As a result of the slowdown at home, China’s enormous state-owned construction and infrastructure companies are looking overseas for opportunities to build the roads, ports, railways and airports that are overly ubiquitous in China. (www.chinainout.com)

A Large Group of Entrepreneurs Accompany Chinese Premier to Visit Brazil

Chinese Premier Li Keqiang will arrive in Brazil on an official visit this evening(May 20) and begin his Latin America tour. On Prime Minister Lee's visit to Brazil, a delegation of more than 120 entrepreneur will accompany the visit, in addition to the five senior officials. Brazilian President Rousseff will host Prime Minister Lee and will witness the signing of more than 40 cooperation agreements.

Brazil's Foreign Ministry issued a communique, which disclosed some of the activities arranged for Prime Minister Lee's visit, including meeting the the House and Senate Speakers, visiting Rio de Janeiro and attending several events.

One year later of the Chinese President Xi Jinping's visit to Brazil, the Premier Li Keqiang's visit is another important visit, which indicates the increasingly close political relations between the two countries, and further strengthened cooperation in finance, agriculture, energy and transport.

Since 2009, China has became Brazil's main trading partner, in 2014 the bilateral trade volume reached 77.9 billion US dollars, China maintained a trade surplus of $ 3.3 billion.

After Brazil Prime Minister Lee will also visit Colombia, Peru and Chile. (www.chinainout.com)