Tariffs on cars to be slashed on GATT re-entry

CHINA'S tariffs on imported cars will be lowered to between 15 and 20 per cent in three to five years once it rejoins the General Agreement on Tariffs and Trade (GATT).

Liu Dexing, deputy commissioner of the Corporate Management Department of China Automotive Trade Corp (CNATC), said at a seminar yesterday that it was a general trend to lower the tariffs on imported cars whether China was able to re-enter GATT this year or not.

He quoted informed sources as saying the tariffs on imported cars were expected to be lowered to between 15 and 20 per cent by 1998-2000.

Early this year, the Chinese Government announced an average tariff reduction on imported cars to 110 per cent.

From July 1, it abolished the non-tariff licence of imported cars by foreign enterprises. These measures were taken as a run-up to its readmission to GATT.

The production of China's car industry was estimated to reach 1.35 million to 1.4 million units this year, although the sales were expected to touch about 1.02 million to 1.03 million units, said Mr Liu.

The import volume during 1994 is expected to decrease from 320,000 last year to 200,000, with more than 100,000 being sedans.

Car sales in China took a beating this year, due to the austerity measures imposed by the government.

Nevertheless, car buyers expect a further reduction on tariffs once the announcement of China's readmission to GATT is made. Consequently, buyers might decide to wait and watch.

Although the car industry has been facing tough times, Mr Liu expects sales would show a pick-up in the second half of the year.

He estimated the growth rate for the whole year would reach 13 per cent, with 12 per cent next year.

Shen Rong, manager of CNATC, told the seminar the demand for passenger cars would be about 1.3 million to 1.6 million units in 2000, of which family cars would account for between 400,000 and 600,000 units.

By 2005, the demand for passenger cars would be between 2.2 million and 2.7 million units, of which family cars would account for between 1.2 million and 1.6 million and by 2010, the demand would range between 3.5 million and 4.4 million, according to Mr Shen.

The demand for family cars is expected to reach a peak between 2000 and 2010