Date
26 March 2017
Chinese tourists may now have less reason to buy cosmetics in South Korea. Photo: Bloomberg
Chinese tourists may now have less reason to buy cosmetics in South Korea. Photo: Bloomberg

China chops import duties on some consumer goods

China slashed import duties on goods ranging from shoes to cosmetics, The Wall Street Journal reported.

It is the government’s latest effort to boost domestic spending in the face of slowing economic growth.

High taxes on imported goods often drive Chinese consumers to shop abroad. Chinese duties can make some luxury goods about 20 percent more expensive than they are overseas, consultants say.

Hong Kong, traditionally a tax-free shopping destination for mainland Chinese consumers, may suffer further declines in retail sales.

The Ministry of Finance said Monday it would cut duties by half, on average, on imports including suits, fur garments and shoes from June 1.

A tariff on cosmetics will fall to 2 percent from 5 percent, while a duty on diapers will drop to 2 percent from 7.5 percent, the ministry said.

The tax cuts come as China’s government looks for ways to boost spending within its borders.

Retail sales growth has been sliding, and the economy grew 7 percent year over year in the first quarter, its worst performance in six years.

The new policies should boost Chinese stores that have lost customers to French and South Korean cosmetics counters, Erwan Rambourg, head of consumer and retail research at HSBC, said in a report on China’s tax overhaul.

“It is understandable that instead of losing business to Galeries Lafayette in Paris, Harrods in London, or shopping malls in Hong Kong, China’s administration may want to tap into the power of domestic consumption,” Rambourg said.

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RC/FL

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