China on Wednesday announced a plan for certain US imports and companies to file for exemptions from Chinese tariffs, in a goodwill gesture that will help ease the impact of the trade war on US companies and inject fresh optimism into a new round of trade negotiations planned for October.
The US products exempted from Chinese tariffs include 16 types of products highly related to livelihood such as lubricating oil, medical linear accelerators and anticancer drugs. The State Council, China's cabinet, will continue to work on the exemption list and will publish it "at a proper time."
Certain imports including lubricating oil, fish meal, parva, medical linear accelerators, anticancer drugs and medicago will be exempted from retaliatory tariffs imposed on US imports from September 17, 2019 until September 16, 2020. Companies involved in the exports of products already subject to tariffs can apply for refunds from Chinese customs within six months, starting from Wednesday.
For imports such as whey and release agents, companies will no longer be subject to retaliatory tariffs imposed on US imports from September 17, 2019 until September 16, 2020. But they will not receive refunds on paid tariffs.
"The exemption represents our goodwill as a new round of trade talks will soon begin, which is another chance Beijing gives to Washington to end the trade war," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday.
The US side should cherish this sincerity and goodwill, and sit down to talk about common goals after being locked in an impasse, Bai said.
Chinese Commerce Ministry said last week that Beijing and Washington will strive to achieve "substantial progress" in the upcoming 13th round of trade consultations in early October in Washington.
The yearlong trade war between the world's two largest economies has been escalating recently, particularly after the US implemented tariffs on over $125 billion worth of Chinese imports on September 1, covering products such as footwear, foods and other daily necessities.
In turn, the Chinese government imposed additional tariffs on some $75 billion of US products to China, including a 5 per cent tariff on US crude oil.
The US' latest manufacturing index and job market numbers showed that the economy is near recession, while the Chinese economy has also been facing downward pressure. It is necessary for both sides to show goodwill in taking further trade talks seriously, a Beijing-based veteran economic observer surnamed Li told the Global Times.
"The exempted products are highly related to the livelihood of the Chinese people. This latest move also aims to ease the pressure on some Chinese companies that rely on imports from the US for their production output," Song Guoyou, director of Fudan University's center for economic diplomacy, told the Global Times on Wednesday.
"China had already begun the process of accepting applications for tariff exemptions several months ago, and it takes some time to finish reviews. The government has finished approving the first batch of imports now," Mei Xinyu, an expert close to the Ministry of Commerce, told the Global Times.
Mei said that the move aims to reduce the impact of the trade war on the Chinese economy. The timing of the announcement, which comes several weeks ahead of the National Day that will celebrate the 70th anniversary of the founding of the People's Republic of China, signals that Beijing also wants to inject positivity into the national atmosphere.
"China and the US may reach certain agreements before a scheduled meeting in early October. As part of the deal, the exemptions on certain US products could be in exchange for US exemptions on Chinese products," Mei said.
However, US agriculture products, such as soybean, corn and pork, are not on the exemption list ahead of new trade talks.
"If we exempt corn or pork it means the trade war is near the end," Gao Lingyun, an expert from the Chinese Academy of Social Sciences, China's think tank, told the Global Times on Wednesday.
It's unlikely that China will exempt US agriculture products, as they remain major leverage for Beijing in upcoming trade negotiations, analysts said.