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China’s zero-tariff policy to benefit Lesotho

Lesotho's widely read newspaper, published every Thursday and distributed throughout the country and in some parts of South Africa.

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Tokelo Khausela

LESOTHO is set to benefit from China’s zero-tariff treatment to 98 percent of taxable items from 10 least-developed countries.

The move is meant to promote an open global economy.

Starting from 1 December 2022, China will waive all tariffs on 98 percent of the related imports from Afghanistan, Benin, Burkina Faso, Guinea-Bissau, Malawi, Sao Tome and Principe, Tanzania, Uganda, Zambia and Lesotho according to the Customs Tariff Commission of the State Council.

The step is conducive to opening up with “win-win outcomes”, building an open global economy, and helping least-developed countries to accelerate their development, the commission said.

This policy measure will gradually expand to all the least-developed countries that have established diplomatic ties with China, it added.

In an interview with the Lesotho Times this week, the Economic and Commercial Office in the Chinese Embassy in Maseru said the step would boost Lesotho’s exports to the Asian country.

“This step is conducive to opening up with win-win outcomes, further boosting Lesotho’s export to China, developing a high-level China-Lesotho bilateral economic cooperation, and making contribution to Lesotho’s sustainable development,” the office said this week.

“Since 2015, 97 percent of all products originating from Lesotho have enjoyed zero-tariff policy from China. According to the latest policy, hundreds of new products are added to the tariff exemption list, such as recycled leather, virgin peanut oil and its isolate, methanol, margarine, packaged natural water, etc. By now, the main products imported by China from Lesotho have all enjoyed zero-tariff treatment, including wool, mohair, electric motors, electrical equipment and components thereof, precious stones and cotton.”

At the opening ceremony of the Eighth Ministerial Conference of the Forum on China-Africa Cooperation in 2021, Chinese President Xi Jinping announced that China would further increase the scope of products enjoying zero-tariff treatment for the least developed countries having diplomatic relations with China, in a bid to reach 300 billion US dollars in total imports from Africa in the next three years.

For the commitment to materialise, the office said, Chinese Ambassador to Lesotho, Lei Kezhong, had met with Lesotho government officials and actively promoted the implementation of this preferential treatment as soon as possible.

“The two sides have already completed the exchange of letters in September this year.

“Based on data released by China’s customs agency, the value of trade between Africa and China rose by 35 percent from 2020 to $254 billion last year. China and Africa have made encouraging progress in discussing practical measures to tackle the pandemic, boost bilateral trade and restore economic development,” the office said.

Global Entrepreneurship Network (GEN) Lesotho managing director, John Matlosa, said there were two ways in which the move could be perceived. Firstly, some may perceive it as a renewed scramble for Africa but secondly, and perhaps more poignantly, this was a golden opportunity for Lesotho.

“My suggestion to our MSMEs could be leave the politics of trade barriers and economic protectionism to your government and seize the opportunity to enter a market with a population of 1, 4 billion people. Compared to the population of Lesotho, China has a hit rate that is 543 times more.

“So, our entrepreneurs must overcome the grasshopper mentally and start learning from our neighbours who not only sell precious metals and commodities to China but expert $138 million in food products, $41, 4 million in wines and spirits, $1, 9 million in cotton and other items such as essential oils. As a nation we need to ask ourselves what we have in our hands.

“We have wool, medical marijuana, water and herbs. These are unique items on which we have a natural abundance of and unique environmental conditions for their production.”

Mr Matlosa however, warned that it would not be a walk in the park for local entrepreneurs. Those with experience must assist new players while locals must also angle to start partnerships with Chinese businesspeople, he said.

Ultimately, the new trade policy will not benefit Basotho without a significant mindset shift, Mr Matlosa said.