China cuts import tax on cars

The Chinese government have announced it is reducing levies on imported cars from July 1 to 15 per cent from the current 25 per cent, in place for more than a decade. Autofile reported last month that China was weighing proposals to reduce the car import levy to 10 per cent or 15 per cent.

The import duty on car parts will also be reduced to 6 per cent, the Chinese finance ministry said.

The latest round of tariff easing is part of a flurry of policy announcements in recent months aimed at demonstrating China’s commitment to opening the economy. This is partly in response to the accusations of protectionism levelled by the Trump administration.

Beijing has also pledged to slash foreign ownership limits in the car sector as well as in banking, and last November reduced import tariffs on almost 200 categories of consumer products.

For luxury electric vehicle maker Tesla, a tariff cut would provide a boon until the company manages to set up local production. Since last year, the California-based firm has been working with Shanghai’s government to explore assembling cars in China.

Last month’s announcement by Beijing that it would allow foreign electric vehicle makers to fully own car factories as early as this year removed the primary hurdle in the way of Tesla founder and CEO Elon Musk to establish its own electric car production factory without a local partner. 

Lexus may follow suit as it has also been reluctant to establish production in China with a partner.