Lower tariffs increase competition but encourage domestic spending

ON TUESDAY, THE STATE COUNCIL, or the Cabinet, announced it plans to cut the tariffs on imported consumer goods in parts of China by the end of June to fuel domestic consumption, stabilize economic growth and reduce the outflow of spending by Chinese tourists. Comments:

The State Council's move has much to do with the declining imports in the first quarter. When a nation stays at a low level of economic development, it tends not to encourage imports of daily consumption goods in order to protect its own national industries and balance its foreign currency reserves; however, as its economy grows and reaches a certain level, importing these goods will bring benefits by optimizing the allocation of resources.

Bai Ming, a researcher on global trade at the Chinese Academy of International Trade and Economic Cooperation, which is affiliated to the Ministry of Commerce, April 29