International Trade Policies
China has done much to liberalize foreign trade since the early
1990s. The government has cut tariffs sharply and eliminated
many state-trading monopolies, import licensing requirements,
and export subsidies. However, value-added taxes raise the effective
cost of imports and introduction or selective enforcement of
regulations disrupts imports from time to time.
Summary of China's agricultural
trade policies |
Measure |
Description |
Tariffs |
China cut most tariffs in the years preceding its accession
to the World Trade Organization (WTO) in December 2001. The
average agricultural tariff was cut from 31 percent in 2000
to 17 percent in 2004. |
Tariff-rate quotas (TRQs) |
As part of its WTO commitments, China established import
quotas for key commodities (see table below). Imports up
to the quota amount are subject to low tariffs, while over-quota
imports are subject to much higher tariffs. |
State-trading |
For most commodities, China has reduced or eliminated
import and export monopolies by state-owned trading companies.
However, state-trading is still important for grains, sugar,
and fertilizers. A share of each tariff rate quota is reserved
for use by China's state-trading companies. |
Value-added tax |
Imported commodities are assessed the value-added tax
(VAT) of 13 percent for agricultural commodities or 17 percent
for processed foods or industrial products. The VAT is assessed
on the value of the imported shipment when it arrives in
China, including transportation costs and tariffs, thus raising
the cost of imports. At times, policymakers exempt certain
strategic imports from the VAT. China encourages exports
by giving rebates of VAT payments on exported products, but
the VAT rebate for grain exports was canceled in December
2007. |
Nontariff barriers |
As a WTO member, China committed to apply science-based
sanitary and phytosanitary standards that apply equally to
domestic and imported agricultural commodities. However,
China's imports are at times disrupted by regulations with
unclear details about implementation, testing, and certification
requirements, and selective enforcement of regulations. It
is not clear whether stringent standards applied to imports
must also be met by domestic products. |
Export subsidies |
As a WTO member, China agreed to eliminate export subsidies. |
Export taxes |
In 2008, China introduced taxes on exports of wheat, rice,
corn, other grains, soybeans, seeds, flour and other milled
grain products. Tax rates range from 5 percent to 25 percent. |
| Export quotas |
Exports of corn and selected strategic commodities are limited
by annual export quotas set by the national government. Quotas
are not typically made public and the system for determining
and awarding the quotas is not transparent. |
China tariff rate quotas for agricultural commodities
After joining the WTO in December 2001, China phased in tariff
rate quotas (TRQs) for certain key commodities during the years
2001-04. The TRQ levels for 2004 remain in force for subsequent
years. TRQs for vegetable oils expired after 2005. For most commodities,
a share of the TRQ is reserved for state-owned trading companies.
The remaining quota is distributed by government authorities
to other end-user applicants who must meet certain criteria that
include history of imports and minimum production capacity.
China tariff-rate
quotas (TRQs) |
Commodity |
Quota |
State-trading
share of quota |
In-quota tariff |
Over-quota
tariff* |
|
1,000 metric tons |
Percent |
Percent |
Percent |
Wheat |
9,636 |
90 |
1 |
68 |
Corn |
7,200 |
60 |
1 |
50 |
Rice, short/medium grain |
2,660 |
50 |
1 |
50 |
Rice, long grain |
2,660 |
50 |
1 |
|
Cotton |
894 |
33 |
1 |
47 |
Sugar |
1,945 |
70 |
15 |
50 |
Wool |
287 |
NA |
1 |
38 |
Wool tops |
80 |
NA |
3 |
38 |
NA=not applicable. *Most Favored
Nation tariff.
Source: ERS analysis. |
More on China Agricultural Policy:
China's Market Stabilization
Measures
China's Policies Affecting Factors of
Production and Inputs
China's International Trade Policies
China's History of Agricultural Policy
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