The revised Catalogue of Non-tax-exempt Imported Commodities for Chinese-invested Projects became effective March 1, 2007. Through this act, the Ministry of Finance (MOF) ended tariff exemptions on 192 types of equipment imported for use in Chinese-invested projects.

The equipment losing tariff-free status includes general machinery, smelting and mining machinery, food machinery, packing materials, electronic devices and equipment for environment protection, all of which can be manufactured domestically or for which China will have adequate production capacity in the near future, as explained by MOF.

Chinese-invested projects approved after March 1 this year must comply with this new Catalogue, while those approved before March 1 can maintain the tariff-free status on imports until January 1, 2008.

Meanwhile, the tariff-free policy on equipment used in foreign-invested projects, which includes 20 items such as cars and electronic office fittings, will be maintained.

Chinese enterprises have been suggesting that more types of equipment be removed from the list, as the country has been able to develop more equipment with higher technological standards and the old threshold for import tariff exemption has been hurting domestic producers. MOF has said that this move is an important method to support the policy of the State Council to develop the domestic equipment and manufacturing industry, and it would create a fair environment in which domestic equipment manufacturers can compete with foreign rivals through innovation.