Beijing is moving to bolster personal consumption by lowering tariffs on imports of popular daily commodities as well as the tax rate levied on luxury goods. The step is aimed at helping to prop up China’s slowing economy by encouraging consumers to spend in China, rather than abroad.
Chinese tourists to Japan are known for their voracious appetite in snapping up just about everything from designer brands to articles of daily use in large numbers. In Hong Kong, critics have started a movement to protest excessive stockpiling of baby formula by visitors from the Chinese mainland.
Premier Li Keqiang laid out the policy to cut tariffs and tax rate at a State Council meeting on April 28.
Tariffs on some imported everyday items will be lowered by the end of June to “allow consumers to have more options” and more will be added later to the list of tariff reductions. The government is also expected to cut the consumption tax rate for some luxury goods. A higher tax rate is set for such items.
According to Chinese newspapers, baby formula, cosmetics and clothes will likely be among items whose consumption tax rate will be scaled back. As far as cosmetics are concerned, the consumption tax rate is 30 percent. A popular import brand is typically sold in China at least 50 percent higher than the price in Japan.
As a result, Chinese tourists are increasingly purchasing a variety of goods in large numbers when they vacation overseas. The practice, however, has drawn criticism as it does not benefit companies operating in the Chinese market or the government’s coffers.
If retail prices of goods drop following the cut in the tax rate, it could result in Chinese tourists spending less in Japan.