Context: Huang is the first official to publicly argue that China should act boldly in implementing the ‘three zeros’ in international trade, and his argument, especially given this critical moment in the US-China trade dispute, has triggered varied responses. Huang thinks the three zeros would help ambitious companies such as Huawei go global.
Huang Qifan 黄奇帆 China International Economic Exchange Centre executive vice president outlines the Three Zeros’ (zero tariffs, zero market barriers, zero subsidies) impacts on Chinese commodities.
Implementing zero tariffs in the manufacturing industry could
- reduce enterprises’ costs and increase Chinese products’ global competitive advantage
- China’s intermediate import duty currently counts for more than 60 percent of total import duty
- facilitate the development and completion of manufacturing industry chains, thereby helping Chinese enterprises
- control industrial clusters’ upper, middle and lower streams
- set up industrial standards
- have a say in managing the entire value chain
- form a group of corporate champions
- force China’s manufacturing industries to compete with international peers via
- promoting their brands
- speeding up independent innovation
China seeks to be self-sufficient in the agricultural sector, but it will continue trading agricultural products. Zero tariffs in the agricultural sector could
- help China make full use of international agricultural resources,
- Chinese land and water resources are not currently enough to support the goal of self-sufficiency
- improve the quality of domestic agricultural products supply
- meet the Chinese people’s basic consumption needs
- put China at an advantage in negotiations with European countries and the US in reducing tariffs on agricultural products, for which China has huge demand
Addressing concerns zero tariffs in the agricultural sector could threaten national food security, Huang argues that the advantages outweigh the disadvantages. Concerning agricultural products’ structure, he says, zero tariffs would
- have the least influence on rice, as Europe and the US do not produce rice and cannot dump Chinese rice
- only facilitate China’s already significant purchases of soybean feeds
- threaten domestic agricultural products such as wheat, corn and sugar, but this could be managed under FTAs via exception clauses and quota restrictions
China’s energy and mining sector demand is huge, and relies heavily on imported raw materials. Zero tariffs would have limited influence on the domestic market, but only
- reduce domestic energy and minerals costs
- relieve resources restraints
- promote balanced and coordinated world trade development
Zero tariffs in consumer goods such as medicines, cosmetics, clothes and other daily necessities could
- drive domestic consumption
- stimulate retail sales
Overall, zero tariffs increase imports and reduce international trade frictions, concludes Huang. A major importing nation must be a strong nation, he adds, as a major importing nation often
- has a large market that could affect the global one
- sets market prices in global trade
- has sufficient foreign exchange reserves, or the country’s currency is the world currency
Zero market barriers could promote an internationalised business environment, including
- pre-established national treatment for all enterprises (state-owned, private and foreign-funded)
- negative lists implementation
- respecting intellectual property rights
- complying with a fair and reasonable labour security system
- ecological environmental protection
- competitive neutrality
- expanding opening-up in the education, health and cultural sectors
- further expanding services trade and digital trade, especially in
- banking
- insurance
- securities
- delivery
- telecom
Huang also lists the benefits to China of implementing zero subsidies, which are
- saving state money
- improving industrial structure
- forcing state-owned enterprises to reform and develop innovation capacity for survival
- reducing international trade friction
- reduce grey area operations in subsidies processing