At the end of 2020, the 10 ASEAN countries and 15 countries including China, Japan, South Korea, Australia, and New Zealand formally signed the Regional Comprehensive Economic Partnership Agreement (RCEP). Bo Peng, an associate researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, said that the signing of RCEP is, for China, a landmark event second only to WTO (World Trade Organization) in the field of foreign trade and economic cooperation. The signing of RCEP means that about one-third of the world’s economy will form an integrated market, and the tripartite pattern of global trade has begun. The ten ASEAN countries will join hands with China, Japan, South Korea, Australia and New Zealand to promote the region. Tariff and non-tariff barriers were reduced, and free trade agreements were signed to establish a unified market.
Chinese auto parts industry will benefit from “tariff reduction and exemption.”
China is a major importer and exporter of auto parts. The parts industry will benefit from “tariff reduction and exemption.”
The Regional Comprehensive Economic Partnership Agreement has further liberalized trade in goods. Tariff reductions among member states are mainly based on the commitment to immediately reduce tariffs to zero tariffs and to zero tariffs within ten years. It is expected that the follow-up free trade zone is expected to quickly achieve a major stage Sexual construction results.
Since the first decline in China’s domestic auto market in 2018, China’s autos have entered the era of the inventory market. Some people in the industry said that the “Regional Comprehensive Economic Partnership Agreement” will bring a potentially huge zero-tariff market, which is equivalent to supplementing an incremental market. After China joined the World Trade Organization in 2002, China opened up its auto market, giving global auto companies opportunities and also providing opportunities for the Chinese economy.
Joining the “Regional Comprehensive Economic Partnership Agreement” provides market opportunities for Chinese auto companies to go global, and also provides opportunities for member states, especially ASEAN, for economic development. The signing of the “Regional Comprehensive Economic Partnership Agreement” has an inspiring effect on China’s long-term economic development. From the perspective of effect, the commitment of tariff reduction among members of the Regional Comprehensive Economic Partnership Agreement to “immediately reduce tariffs to zero tariffs within ten years” will positively promote the development of the automotive industry. And Chinese auto parts appearing in the high import and high export goods list at the same time will benefit from tariff reduction and exemption on the cost side and income side at the same time.
Countries’ attitudes towards import and export tariffs on auto parts
Japan embodies the self-confidence of auto parts brands, is open to auto parts of various countries and exempts most products from tariffs.
South Korea is relatively conservative and has obvious local protection policies for complete vehicles, but most of its parts have lowered tariff rates.
Southeast Asia has fewer tariff preferences for vehicle imports, and basically no preferences for passenger cars. In terms of commercial vehicles, there are certain tax preferences for light trucks and off-highway trucks, and there are no tax preferences for medium and heavy trucks.
ASEAN countries have only small tax incentives for auto parts, which reflects the cautious protection of their own industrial chains.
The two major motorcycle sales countries in Indonesia and Vietnam have gradually reduced tariffs on Chinese two-wheelers, which will benefit the export of domestic enterprises in the long term and promote the upgrade of motorcycle products in Southeast Asia and the increase in the penetration rate of electrification.
In general, countries have different attitudes towards auto parts imports: ASEAN only slightly reduces tariffs on auto parts imports, Japan is completely open to auto parts imports, and China and South Korea give preferential tariffs to some auto parts imports, but High tax rates are still maintained for a small number of parts and components.
Chinese import and export tariffs
Starting from January 1, 2021, China has further adjusted some tariffs, including most-favoured-nation tariffs, regular tariffs and temporary tariffs for certain imported products. China has promulgated a series of regulations to reduce import and export taxes and tariffs in order to increase the degree of openness and domestic consumption. These changes may affect companies that import and export taxable goods and services with China.
Three types of taxes for companies exporting products to China-Value Added Tax (VAT), Consumption Tax (CT) and Customs Duty.
According to the announcement of the State Administration of Taxation on the deepening of reforms, starting from April 1, 2019, the import value-added tax on imported goods in China has been reduced from the previous 10% or 16% to 9% or 13%.
Certain commodities that are mainly classified as agricultural and public utilities can enjoy a 9% tax, while other commodities that require a value-added tax, such as manufactured products, can enjoy a 13% tax.
Taxable services provided by entities or individuals in other countries in China shall be subject to a 6% value-added tax as before.
