China's Premier Li Keqiang lets fly at officials over delays in implementing tariff cuts for consumer goods
Li tells bureaucrats trial run of policy for consumer goods must start by end of June
Premier Li Keqiang has again shown impatience over bureaucratic delays, ordering officials to speed up trials on cutting tariffs for consumer products.
In what was at least the third time this month that Li had called for reforms to be implemented more quickly, a statement on the government website yesterday highlighted his growing frustration at bureaucracy delaying social and economic reforms.
When Li asked at Tuesday's State Council meeting how soon trial reductions of import tariffs could be launched, officials said they could not happen until August, because they needed to be discussed among various departments.
"That is too slow," Li was quoted as saying.
The State Council said tariffs would be cut for high-demand imported products in an attempt to boost domestic consumption after China's economic growth slowed to 7 per cent in the first quarter of this year.
Li has lashed out on at least two previous occasions this month at bureaucrats who delay important tasks such as risk assessments for development projects.
"It is a common problem that lies in China's administrative system," Mizuho Securities' economist Shen Jianguang said. "Many officials tend to say they need more time to study an issue - especially when it might hurt their interests."
By cutting tariffs, the government hopes to spur domestic consumption by channelling part of the huge spending by mainlanders overseas back to the country. But this might hurt revenues collected by departments such as the Ministry of Finance and the Customs Bureau.
The State Council decision triggered a fall in stock prices of Hong Kong retailers yesterday. Cosmetics chains SaSa and Bonjour dropped by 4.3 per cent and 6.7 per cent.
Fashion chain I.T closed 3.7 per cent lower, while Lifestyle International, which runs the Sogo department store, dipped 1.9 per cent. Jewellery retailers Chow Tai Fook and Luk Fook dropped 2.1 per cent and 3.4 per cent respectively.
"This is definitely another blow to mid-market retailers in Hong Kong" after the tightening of multiple-entry visas for mainland travellers, said CLSA senior investment analyst Mariana Kou.
Kou said it was difficult to estimate the impact of the policy proposals, but expected companies such as SaSa, Bonjour, Mannings, Watson's and other pharmacies to be the first hit.
A SaSa spokesman, however, noted that the mainland lifted consumption taxes for skincare and hair care products in 2006, and that taxable cosmetics represented a minor portion of their sales in Hong Kong and the mainland.
