China has said it will halve additional tariffs levied against 1,717 products imported from the United States last year, following the signing of a phase one trade deal that brought a truce to a bruising trade war.
China’s finance ministry said in a statement on Thursday that tariff reductions for the $75bn worth of goods, which were implemented on September 1, will take effect from 05:01 GMT on February 14.
That is the same time the US tariff cuts on Chinese products will be implemented.
The reductions come about three weeks after the two countries signed the phase one trade deal in Washington, DC, which included China’s promise to boost purchases of US goods and services by $200bn over two years in exchange for the US rolling back some tariffs imposed against Chinese goods.
China’s finance ministry said in a statement that additional tariffs levied on some goods will be cut to 5 percent from 10 percent previously, while extra tariffs on some goods will be lowered to 2.5 percent from 5 percent previously.
Further adjustments would depend on the development of the bilateral economic and trade situation, the ministry said.
China hopes it and the US can abide by the trade deal and implement it to boost market confidence, push bilateral trade development and aid global economic growth, the ministry added.
“Any move to de-escalate is always good. Especially, when the market is overwhelmed by the news about virus, good news about tariff is refreshing,” said Tommy Xie, head of Greater China research at OCBC Bank in Singapore.
“The announcement shows China’s commitment to implement the phase one trade deal despite the disruptions from the recent virus outbreak,” said Xie.
The news was positive for financial markets and comes as Beijing seeks to shore up investor and business confidence in China as a virus outbreak casts deep uncertainty over the economic outlook.
The yuan hit its highest in two weeks, while Asian stocks and Wall Street futures also rallied after the announcement.
While the proposed tariff cuts point to clear progress in China-US trade ties, the virus outbreak has cast doubt over just how soon the phase one deal could help China’s slowing economy.
China’s Global Times on Thursday reported Beijing is considering using a disaster-related clause in the phase one deal due to the coronavirus outbreak, citing an unnamed Chinese trade expert close to the government.
The phase one deal text contains a disaster clause that allows for implementation delays in the event of “natural disaster or other unforeseeable events”.
US Agriculture Secretary Sonny Perdue on Wednesday warned the US would have to be tolerant if the fast-spreading coronavirus impaired China’s ability to increase purchases of US farm products under the signed trade deal.
Chinese foreign ministry spokeswoman Hua Chunying, when asked about the Global Times report at a daily briefing on Thursday, referred the matter to the relevant departments.
Some analysts had said following the trade deal that China may need to roll back some of the tariffs on US goods such as soybeans and crude oil in order to meet its purchasing commitments. Other analysts also noted such moves are expected to cushion faltering growth at home.
“Under the Phase 1 deal, China has to meet a tough target to increase US imports by $100bn this year, so a measure like this was necessary and expected,” said Tomo-o Kinoshita, global market strategist at Invesco Asset Management.
“But at the same time, that they did this now points to their desire to support Chinese companies as the coronavirus epidemic will obviously deal a huge blow to China’s growth,” he added.