China ends decades-long preferential tariff certificates to exporters

China's general administration of customs stopped issuing certificates of origin under the generalised system of preference (GSP) for exports from December 1 to the 32 countries, which no longer offer China GSP status.

The GSP system, used around the world, reduces levies on certain imports from developing countries and incentivises exports from less developed economies, promoting economic growth. The system also helps to bring down the cost of import goods for donor economies.

Some companies said that the impact will be limited, compared to other problems like inflation, a Chinese government-controlled media outlet reported.

"Preferential tariffs have been reduced progressively. So basically, we don't expect any impacts on our industry base in China. We have a massive inflation of raw materials, transportation costs. These are the biggest impact," said Ludovic Weber, CEO of Saint-Gobain Asia-Pacific, a company that mainly exports industrial materials like silicone sealant from China to America, Europe and Southeast Asia.

In fact, China has not received GSP privileges from those regions for many years. The EU ceased granting the certificate back in 2015, when China was elevated to an upper-middle-income country by the World Bank. Switzerland and Canada both canceled it in 2014.

China has been accorded the preferential tariff treatment by 40 nations since 1978, but currently only New Zealand, Australia and Norway still grant China GSP status.

Though the GSP cancellation might not have a material impact on the overall economy, some labour-intensive, lower-margin exporters will still be affected by the move, the report added.

However, experts believe that the move can be an opportunity for these exporters to upgrade themselves faster, as the cancellation of GSP will speed up companies' innovation if they want to remain competitive.

Fibre2Fashion News Desk (DS)