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China’s Tariffs and Other Trade-related tariff rate System

China’s Tariffs and Other Trade-related tariff rate System





Since China joined WTO in 2001, China's tariffs gradually have moved towards internationalization and standardization. They have no big difference in the types and priority order of tariff rate application, etc. from other countries, but there are still a lot of features in the tariffs, internal taxes and their application.





Tariffs and internal taxes


Tariffs consist of import tariff and export tariff; internal taxes include consumption tax and value-added tax.


Export Tariff and Import Tariff


The export tariff is a tariff levied on exported commodities, and import tariff is a tariff levied on imported commodities, with the import tariff as main part.


Ad Valorem Duty and Specific Duty


The tax based on the price of import and export commodities is called ad valorem duty; the tax based on quantity of the import and export commodities is called the specific duty.





There are many export duties.

Internal taxes are divided into consumption tax and value-added tax.

Value-added tax is comparatively high.

Specific duty is a lot much.

General tariff is comparatively high.

There is no tariff rebate system, but there is the post-management system.



Priority Order of Tariff Rate Application


Export Tariff Applicable Order


First, special export tariff rate

Second, temporary export tariff rate

Third, export tariff rate


Tariff rate is applied in the sequential order as above-mentioned, and the levels of export tariff rate do not affect such priority order of tariff rate application.


Import Tariff Applicable Order


The priority order of tariff is applied on the basis of the following principles, and the final applicable tariff rate is set in accordance with such priority order.


Anti-dumping duty, anti-subsidy duty, safeguard tariff and retaliatory tariff have the first priority of tariff application, but have low possibility of application in practice.


If there are WTO MFN rates and import temporary MFN rate at the same time, regardless of the level of tariff rates or tariff amount, import temporary MFN rates have a priority.


If there are WTO MFN tariff rate, FTA tariff rate, and GSP preferential tariff rate at the same time, the lowest tariff rate shall be applied preferentially.


If there are FTA rates at the same time, the lowest tariff rate shall be applied preferentially.


For the commodities or countries which cannot apply the tariff rates mentioned above, general tariff shall be applied.



Export Tariff


China, for resource protection and other reasons, levies export tariffs on more than 300 kinds of commodities, and export tariffs consist of special export tariff rate, temporary export tariff rate and general export tariff rate by item.


Applicable priorities are as described above.



Import Tariff


MFN (Most Favored Nation) Rates


MFN rates refer to a tariff rate applied under the WTO Agreement, or a tariff rate applied under the MFN agreement between China and other countries (MFN). Since 2001 which China joined the WTO, the MFN rate which is lower than general tariff has been applied when China imports commodities from more than 150 member countries.


Conventional Tariff


China has signed a free trade agreement (FTA) with other countries, or in the middle of the negotiation to sign agreements.


According to agreement signed between China and other countries, the commodities under the agreement are applicable to the conventional tariffrate, and in the meanwhile, a certificate of origin shall be provided for the application of low tariff rate, etc.


China's conventional tariff rates mainly cover Asia and the Pacific Agreement on Trade (Korea, China, India, Sri Lanka, Bangladesh, Laos), and China-ASEAN FTA(Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam). In addition, there are also agreements between China and Chile, Pakistan, New Zealand, Singapore, Hong Kong, Macao, etc.


Preferential Tariff


Preferential tariff is enacted based on the Generalized System of Preference (GSP), that is, when developed countries import commodities from developing countries, the tariff shall be reduced or exempted to promote foreign exchange earnings and the industrialization of developing countries, as well as to accelerate the economic growth of developing countries. China is the preference-giving country as well as the beneficiary country.


A certificate of origin shall be provided for the application of the preferential tariff treatment.


The countries to which China gives preference include Bangladesh, Laos, Cambodia, Afghanistan, and other 31 countries in Africa, and the countries that give preference to China include EU, Australia, Japan, Russia, etc. China issues "FORM A" certificate from the State Commodity Inspection Bureau.


The countries that China gives preference to are:

List of African countries: Federal Democratic Republic of Ethiopia, the Republic of Angola, Benin Republic, the Republic of Burundi, Republic of Equatorial Guinea, Republic of Togo, the State of Eritrea, Republic of Cape Verde, Democratic Republic of Congo, Republic of Djibouti, Republic of Guinea, Republic of Guinea-Bissau, Union of the Comoros, the Kingdom of Lesotho, Republic of Liberia, Republic of Rwanda, Republic of Madagascar, the Republic of Mali, Republic of Malawi, Islamic Republic of Mauritania, the Republic of Mozambique, the Republic of Niger, Republic of Sierra Leone, the Republic of Senegal, Republic of Sudan, the Federal Republic of Somalia, the United Republic of Tanzania, the Republic of Uganda, the Republic of Zambia, the Republic of Chad, Central African Republic


ASEAN: Burma, Cambodia, Laos


Asia-Pacific countries: The People's Republic of Bangladesh, the Lao People's Democratic Republic


Afghanistan and other 6 countries: Islamic Republic of Afghanistan, the Democratic Republic of Timor-Leste, Republic of Maldives, the Independent State of Samoa, the Republic of Vanuatu, the Republic of Yemen


At present, there are 36 countries which give GSP to China

They are 25 countries of EU (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, United Kingdom, Czech Republic, Cyprus, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia and Slovenia), Switzerland, Norway, Japan, New Zealand, Australia, Canada, Russia, Belarus, Ukraine, Kazakhstan and Turkey.


General Tariffs


General tariffs are supplementary tariff rates applied to those commodities and countries to whose MFN rate, conventional tariff rate, and preferential tariff, etc. aren't applied.


General tariff rates are much higher than those of other countries, but nearly all trading countries are applicable to one of the MFN rate, conventional tariff, and the preferential tariff, so it is difficult to find examples of the actual use of general tariffs.



Internal Taxes


Consumption Tax


Consumption tax of China is a tax levied on luxuries, high-grade consumer goods, and special consumer goods which affect health or ecological environment, and unlike other countries, all taxable items are merged into consumption tax only.


China levies consumption tax on more than 200 kinds of goods, and goods levied in the form of specific duty are more common.


Ad Valorem Tax is calculated as dutiable value of customs duty(CIF price) plus tariff and then multiplied by consumption tax rate; specific duty is calculated by multiplying the quantity of consumer goods by unit tax amount per quantity.



Value-added Tax


VAT is a sort of internal taxes levied on the value added in the process of production and circulation of goods. Its concept and taxation principles are similar with those of other countries.


China is levying value-added tax on almost all import goods, basically 17% and exceptionally 13%.


VAT is calculated by multiplying the sum of dutiable value of tariff, tariff amount and consumption tax amount by VAT rate.



TCS Program and the Calculation of Tax Amount


The system includes all the matters concerning the type of tariffs and tariff rate by item, its applicable priorities, and applicable nations, calculation of a variety of taxable items, etc. and shows the final result by combining all these contents.


Other detailed contents are manifested in simulation calculation results.

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