The average MFN tariffs applied by China on manufactures was 6.8% in 2023, according to data from the World Trade Organization (WTO).
China has shown a downward trend in this indicator, as it was 7% in 2021 and 9.5% in 2017.
Due to China’s extensive network of preferential trade agreements, trade in manufactured goods with numerous economies benefits from much lower tariffs.
China’s MFN applied tariffs
China’s manufacturing sector, in general, remains open to foreign investment. Over the past four years, various restrictions on Foreign Direct Investment (FDI) were removed in key sectors, such as vehicle and satellite production.
In March 2024, China announced the total elimination of remaining restrictions on foreign investment in the manufacturing sector. In addition, the number of sectors incentivizing FDI has grown with recent updates to the FDI Incentive Sectors Catalogue.
This increase reflects China’s interest in strengthening its production chains in strategic areas, such as semiconductors and the clean energy sector. According to the authorities, there are no requirements for foreign companies to transfer technology within the manufacturing sector.
Exports
Private investment in China’s manufacturing sector has been a key pillar of economic growth. However, its long-term sustainability faces significant challenges. These include environmental problems, slowing productivity growth, rising labor costs and overcapacity.
China’s manufacturing trade has shown resilience in the face of recent global shocks. Despite the Covid-19 pandemic, manufactured exports maintained an upward trend.
In particular, exports of components have grown thanks to increased global demand for teleworking devices. On the other hand, textile exports have declined.
Imports of manufactured goods showed significant variations. They declined slightly in 2019 and 2020, but recorded a sharp increase in 2021, followed by declines in 2022 and 2023.
Major exported products include machinery, transportation equipment, automobiles, chemicals, textiles, apparel, iron and steel. In 2023, manufactured products accounted for 95.1% of China’s total exports, down slightly from 95.4% in 2019. They also made up 57.5% of imports, down from 66.5% in 2019.