China declared tariff cuts Friday on consumer products including avocados, mineral water and baby carriages in a new attempt to spur economic growth driven by domestic consumption and decrease reliance on investment and trade.
Beijing faces pressure from the USA, Europe and other trading partners for improved use of its growing market. But the assortment of 187 products influenced by the most recent cuts was comparatively small and it was unclear how China’s trade balance may be affected.
Chinese leaders are in the middle of a marathon effort to nurture self-sustaining economic development based on customer spending rather than trade and investment. Foreign products often are regarded as higher quality, safer or more affordable, which has fueled a spending boom by Chinese tourists on basic products including shoes, makeup and baby formula.
The most recent changes are supposed to “improve domestic consumption choices,” said a Finance Ministry statement.
Encouraging consumers to purchase foreign products from Chinese retailers rather than while traveling abroad can also help create jobs, said economist Lu Zhengwei of Industrial Bank at Shanghai.
“We all know that consumer products aren’t products of high value and we can not depend on them to accomplish a basic turnaround for China’s trade imbalance,” said Lu. “But step by step, it may work if we keep doing things which are mutually beneficial to both sides and great into the markets.”
China reported a $510 billion global trade surplus this past year, though total trade contracted at a indication of weak domestic and foreign demand.
The American Chamber of Commerce in China has voiced concern Trump’s focus on trade in products might divert attention from problems such as increasing foreign access to finance, healthcare and other industries in China’s state-dominated economy.
Beijing promised Nov. 10 to gradually reduce tariffs on auto imports, even though it gave no information. It was unclear how which may affect imports because the majority of the vehicles sold in China by international automakers are produced in China.
The statement followed a visit by Trump to Beijing during which the two sides signed a multibillion-dollar chain of contracts at a convention aimed at blunting criticism of Beijing’s trade surpluses and market obstacles.