China’s RCEP tariff concessions still guard growth sectors

China’s RCEP tariff concessions still guard growth sectors

Beijing’s plans for new megadeal shed light on industrial priorities

TOKYO — China’s plans for phasing out tariffs under the Regional Comprehensive Economic Partnership have shed light on Beijing’s strategic thinking on nurturing industries, with electric-vehicle technologies positioned as a top priority that will enjoy long-term tariff protection.

Under the new massive trade deal signed on Sunday, China is set to scrap tariffs immediately on a large portion of items that are currently subject to a roughly 2% to 6% tariff, mostly in areas where China already is a competitive player.

But it secured a longer grace period on many items that are protected under steep tariffs, or that are expected to face intense global competition in coming years.

By mixing immediate tariff repeals with long phase-out periods, Beijing managed to create an industry road map that will shield growth sectors, such as eco-friendly vehicles, from foreign competitors for the long term. 

For example, China will not scrap its tariffs on certain electrodes and materials for electric car batteries until the 16th year of the agreement. China considers electric vehicles a priority area, and has quickly bolstered output of battery components. A Chinese company is now the world’s top producer of insulators.