Page 186 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China

with the tax rate down from 220 percent to the current 25 Industry analysts expect the remarkable tariff cut to
percent (Li, Carmakers Welcome). meet domestic demand for imported high-end cars, as
rising income has led to a burgeoning market for luxury
Import Tariffs Cut on Vehicles cars. Over 670,000 luxury cars were sold in China during
the January to April 2018 period, up 22.3 percent year-
A couple of other regulation changes occurred in on-year, data from the China Passenger Car Association
2018 that directly affect the automobile industry. All showed (Xinhua, China’s Auto Tariff ).
substandard vehicle carriers are now banned from the
road, according to the Vehicle Carrier Management Work Vehicle Emission
Plan issued by five government departments, including
the Ministry of Transport, Ministry of Public Security and In June 2018, The Ministry of Ecology and Environment
Ministry of Industry and Information Technology. All expanded supervision over the quality of diesel products
substandard vehicle carriers needed to be upgraded or and diesel engines and increased the use of rail
eliminated by June 30, 2018 (Xinhua, Substandard). The transportation in freight services to cut back air pollution.
Chinese Ministry of Finance also announced cut import An analysis of air pollutants in 15 major Chinese cities
tariffs on vehicles and auto parts. For cars, the 25-percent showed that local mobile emitters, a category that
tariff levied on 135 items and 20-percent duty on four includes vehicles, contributed about 13.5 percent to
items will both be cut to 15 percent. Import tariffs on 79 41 percent of fine particulate matter, according to the
auto parts will all be reduced to 6 percent from the current ministry (Xinhua, Blue Sky).
level of 8 to 25 percent (Xinhua, cars and auto parts).
New Energy Vehicles
China’s decision to slash its automobile import tariffs
has been welcomed by consumers and carmakers as The number of electric vehicles on roads worldwide
another milestone in the country’s four decades of rose to a record high of 3.1 million in 2017, but more
reform and opening-up. By the end of May 2018, at least research, policies and incentives are needed to drive
22 auto companies announced price cuts following further uptake, the International Energy Agency (IEA) said.
reduced tariffs, the Economic Observer reported. Auto The number of electric cars, including battery-electric,
companies, including Volvo, Audi, Lexus and Mitsubishi, plug-in hybrid electric and fuel cell electric passenger
have announced plans to reduce vehicle prices ranging light-duty vehicles, increased by 57 percent compared
from 7,200 yuan (US$1,127) to 392,800 yuan depending with 2016, the IEA said in a report. China accounted for
on different brands and models. The move marked the 40 percent of the global total. By 2030, the IEA estimates
biggest price cut in China’s auto industry in 10 years, there will be 125 million electric vehicles on the road,
according to the paper (Xinhua, Auto Firms). based on existing and announced policies. That could
rise to 220 million if policies become more ambitious to
The latest voluntary tariff cut will directly benefit the meet global climate goals and other sustainability targets
economic growth and employment of car exporters, (Reuters, Number of Electric).
said Liu Shangxi, head of the Chinese Academy of Fiscal
Sciences. “Many positive effects will be felt in the global Data from the China Association of Automobile
economy.” Most of China’s car imports last year were from Manufacturers (CAAM) showed sales and production
the US, Germany, Japan and the UK.The auto tariffs cuts are of new energy vehicles (NEV) maintained fast growth
important measures that comply with trade liberalization, in China amid government efforts to encourage their
as the world witnesses a broad reduction in automobile use and ease pressure on the environment. NEV sales
tariffs driven by economic globalization and global trade, went up 125.6 percent year on year to 102,000 units by
according to Li Xuhong, a researcher with the Beijing May 2018, while production rose 85.6 percent to 96,000
National Accounting Institute. The Ministry of Finance units, according to the CAAM. In recent years, China has
said the tariff cut will enrich domestic market supply and intensified efforts to encourage the use of NEVs to ease
meet the diverse needs of the people to provide more pressure on the environment by offering tax exemptions
plentiful and affordable consumer experiences. In 2017, and discounts for car purchases. China has remained the
China imported 1.22 million vehicles, most of which were world’s largest NEV market for three consecutive years,
high-end SUVs, to account for some 4.2 percent of total with some 777,000 cars sold in 2017. The government
sales, while domestic brands saw growing market share. expects annual NEV output to hit 2 million in 2020, and

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