China will cut import tariffs on some consumer products by 9.6 percentage points beginning in December, as a measure to satisfy increasingly diversified domestic demand and to facilitate consumption upgrade, the Ministry of Finance said. The reduction of import tariffs will affect 187 tariff codes, including on food, health supplements, pharmaceuticals, garments and recreational products, and the average rate will decrease to 7.7% from 17.3%.

A tariff on some infant formula and milk powder products will fall from 20% to zero, not including standard infant milk formula. Duties on diapers will drop from 7.5% to zero. In 2015, the government lowered the tariffs on consumer products including certain apparel, footwear, skin care products and diapers, which dropped by more than 50% on average.

The cut is in line with the country’s policy to lower tariff barriers and its intention to boost domestic consumption of consumer goods. Ouyang Cheng, Director of the Alibaba Cross-Border E-Commerce Research Center, said the reduction of import tariffs indicated the Chinese government’s determination to support globalization and call for further opening-up, despite a rise in trade protectionism and anti-globalization around the world. The reduction will help to expand China’s imports and also
provide more choices for Chinese consumers, the China Daily reports.

But the tariff cuts are bad news for overseas shopping agents or daigou who resell items they buy abroad to consumers in China, undercutting conventional importers who are subject to full tariffs on their products. “The tax cuts will add to the advantage of e-commerce operations over the online shopping agents,” said Cao Lei, Director of Hangzhou-based China Electronic Commerce Research Center. “Imports through general trade are much safer in terms of customs clearance, quarantine and warehousing.” About 42 million Chinese bought foreign products via cross-border e-commerce platforms last year, spending about CNY1.2 trillion. That number is expected to reach 59 million shoppers this year, with a purchase value of CNY1.85 trillion. Sophie Lin, Hong Kong-based Analyst at rating agency Standard & Poor’s, said parallel trading could account for 10% to 20% of the infant milk formula bought by Chinese consumers, and the business would not disappear as long as the large price gap remained, the South China Morning Post adds.