The fiscal health of the central government is certainly of vital importance in itself and to the economy. But by no means should it be an excuse to prevent or put off reforms crucial to the country's balanced and sustainable development.
Further cutting import tariffs, including those on luxury goods, is not only about the country's membership of the World Trade Organization, it is also about China's growth strategy of increasing imports to balance trade and easing pressure on yuan appreciation resulting from its large trade surplus.
Though there is much media fanfare predicting that China will soon surpass Japan as the world's largest luxury consumer market, with an estimated value of $14.6 billion, Chinese policymakers should bear in mind that what really lies behind the demand for lower import tariffs is a trillion-dollar domestic market boasting the world's largest group of middle-income consumers.
Even a back-of-an-envelop calculation will show that the benefits from a reduction in import tariffs will far outweigh the costs.
If China is to inevitably wean its economy off long-term dependence on investment and exports for growth, the two ministries must bridge their differences as fast as possible and lift the unnecessarily heavy taxes on imports, be they luxury products or not, so as to boost consumer-led growth in this country.
Further cutting import tariffs, including those on luxury goods, is not only about the country's membership of the World Trade Organization, it is also about China's growth strategy of increasing imports to balance trade and easing pressure on yuan appreciation resulting from its large trade surplus.
Though there is much media fanfare predicting that China will soon surpass Japan as the world's largest luxury consumer market, with an estimated value of $14.6 billion, Chinese policymakers should bear in mind that what really lies behind the demand for lower import tariffs is a trillion-dollar domestic market boasting the world's largest group of middle-income consumers.
Even a back-of-an-envelop calculation will show that the benefits from a reduction in import tariffs will far outweigh the costs.
If China is to inevitably wean its economy off long-term dependence on investment and exports for growth, the two ministries must bridge their differences as fast as possible and lift the unnecessarily heavy taxes on imports, be they luxury products or not, so as to boost consumer-led growth in this country.
