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Trade war

China cuts more tariffs to shield economy from trade war

Lowered duties to offer $8.7bn in relief, as Beijing burnishes free trade credentials

China has reduced tariffs on imports three times since December 2017.

BEIJING -- The Chinese government decided on Wednesday to implement another round of tariff cuts from November, in a bid to alleviate the impact of the trade war on domestic companies, and to align itself with Europe and Japan in opposition to the increasingly protectionist policies of the U.S.

The lower tariffs on imports, first announced earlier this month by Chinese Premier Li Keqiang during the World Economic Forum hosted by China, will apply to 1,585 products and decrease duties to 7.5% on average from 9.8% last year.

Duties on construction machinery will be lowered to 8.8% from 12.8%, duties on textiles and building materials to 8.4% from 11.5%, and those on paper products to 5.4% from 6.6%.

This represents China's third significant tariff cut in the past year. In July, tariffs were reduced on 1,449 products. In December 2017, China lowered tariffs on everyday goods and other products. The tariff cuts implemented this year are expected to provide 60 billion yuan ($8.72 billion) in tax relief to companies and consumers.

With this latest move, China appears to be differentiating itself from the U.S. administration under President Donald Trump, who is raising tariffs in an effort to shield U.S. interests. Since July, Beijing and Washington have imposed tariffs on each other's goods in a tit-for-tat spat that has impacted $250 billion worth of Chinese exports, as well as $110 billion worth of U.S. goods.

China's tariffs are on average higher than those set by the U.S., a fact that Trump has called out as unfair. By cutting the duties, China attempts to ease such criticism.

In addition, Beijing seems to be positioning closer to Japan and the European Union by painting itself as a follower of free trade. By taking that tack, China hopes to avoid a scenario in which the two trading partners join America's pressure campaign. Japan in particular benefits from lower tariffs on disposable diapers, rice cookers and soy sauce.

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