Starting from Wednesday, China's exports to the 27 EU member states as well as the United Kingdom, Canada, Turkey, Ukraine, and Liechtenstein will no longer enjoy preferential tariff treatment under the Generalized System of Preferences (GSP), and China Customs will stop issuing GSP certificates of origin For shipping to 32 countries.

Although a few countries still retain preferential tariff treatment for China, overall, the era of China enjoying the GSP in global trade is over. This change may deprive some Chinese exporters of certain tariff preferences, but it will not obscure the international community's recognition of China's strong economic development and trade competitiveness.

Under the Generalized System of Preferences, developed countries can grant tariff preferences to certain export products from developing countries to help developing countries expand exports and accelerate economic growth. Since 1978, some EU member states and 40 countries including the United Kingdom, Russia, Canada, and Japan have provided China with GSP trade preferences, which has greatly promoted China's foreign trade and industrial development.

However, the GSP is not a permanent trade arrangement. When the economic development of some developing countries reaches a level where such assistance is no longer needed, developed countries can cancel preferential treatment.

With the rapid development of China's economy and the continuous improvement of people's living standards, China's per capita GDP is expected to reach US$12,000 in 2021, approaching the threshold of a high-income country set by the World Bank and no longer a high-income country. Belongs to the categories of low-income and lower-middle-income countries. It is completely legitimate to remove China from the GSP list of developed countries, and the impact of this change on China does not need to be overstated.

Nonetheless, it is worth noting that GSP treatment should not be confused with MFN treatment under the WTO framework. In recent years, some U.S. politicians have instigated the cancellation of China's permanent most-favored-nation status, claiming that China is not a "developing country."

Without the GSP, it is undeniable that some low-end, labor-intensive manufacturers may face some losses, but the overall impact will be limited. First, Chinese-made products are becoming increasingly competitive in the global market, and simple tariff policies are unlikely to weaken this competitiveness. If the outcome of the U.S.-China trade war is anything different, it is that tariffs will not hinder Chinese exporters from pursuing greater market opportunities. Despite the U.S. imposing tariffs on more than $300 billion worth of Chinese goods, China's exports to the U.S. have continued to grow rapidly in the past few months.

In addition, as China's trade development enters a new stage, China has signed a number of trade agreements with its major trading partners in surrounding areas to reduce tariffs, reduce non-tariff barriers, and strengthen cooperation. For example, with the Regional Comprehensive Economic Partnership (RCEP) entering into force next year, China is expected to usher in a new era of further deepening opening up and promoting regional trade cooperation.

From the perspective of restructuring the supply chain, canceling the GSP treatment is an inevitable process for China's industrial development to no longer be driven by low-profit manufacturing. While low-end labor-intensive industries will be hit hard by this change, these industries, such as clothing, have already moved production lines to neighboring countries to reduce costs.

Facts have proven that this kind of industrial transfer will not bring much pressure on the Chinese economy, but will instead become an extension of the China-centered industrial chain. It is the integration into the value chain of Chinese manufacturing that drives the economies of neighboring developing countries and is conducive to regional development.