From Free Trade Beneficiary to Leader: China Extends Zero Tariffs to the World’s Poorest Nations
By the Basilinna Team
November 26, 2024
Your Talking Points
China announced zero-tariff treatment for all products from the world’s least-developed countries (LDCs) that have diplomatic relations with China.
LDCs contribute less than 1% to global trade, so this policy is more about politics than economics, showcasing Beijing’s support for the Global South and its commitment to open markets amid a continued global turn toward protectionism, particularly as Trump prepares to reenter the White House. This move could further bolster China’s influence in both trade and geopolitics.
As the top destination for LDC exports, China’s expanded trade concessions are likely to deepen its strategic and economic ties with these nations and are part of a decade-long trade liberalization initiative putting China alongside global leaders in free trade like Australia, New Zealand, Norway, and Switzerland.
What Happened
At the G20 meetings in Brazil, Chinese President Xi Jinping emphasized that China stands with the least-developed countries (LDCs) and announced it would grant zero-tariff treatment to 100% of tariff lines for all LDCs with diplomatic ties to China, effective December 1, 2024. China is trying to position itself as a leader of free trade globally, in contrast to the United States and the incoming Trump administration’s proposal to significantly raise tariffs on most imports to the U.S., including up to 60% on all Chinese goods.
Digging Deeper
1. Longstanding Policy, Not a New Initiative
China's unilateral preferential tariff policies for LDCs are not new. As early as 2010, the Chinese government began offering preferential tariff treatment to LDCs exporting to China. Over the past decade, this program has expanded to cover 43 LDCs with diplomatic ties to China, allowing at least 95% of their exports to enter duty-free (see Figure 1). The latest commitment—granting 100% tariff exemptions for all exports from eligible LDCs—puts China on par with nations like Australia, New Zealand, Norway, and Switzerland in providing full duty-free access to LDCs.
Figure 1. China’s Milestone in Supporting LDCs
Source: Global Trade Alert; Basilinna
2. Minimal Global Trade Impact
Although China's 100% tariff exemption for LDC exports is a significant gesture, its global trade impact will be minimal. LDCs have consistently accounted for less than 1% of global exports and only 1.39% of global imports (Figure 2). Their small role in the international trade ecosystem means this policy, while symbolically important, does little to shift the broader dynamics of global trade. LDCs themselves will likely be the largest beneficiaries of the economic ripple effects.
Figure 2. LDCs hold a minimal share in global trade.
Source: World Trade Organization
3. Political Over Economic Significance
For China, the political significance of this move far outweighs its economic impact. All 43 LDCs with diplomatic ties to China already enjoy at least 95% duty-free access for their exports to China, with 80% benefiting from duty-free treatment on 98% of their goods. Raising this to 100% offers only a marginal economic advantage but serves as a powerful symbolic gesture of Beijing’s commitment to market openness and enhanced China-LDC trade cooperation. Notably, many of these LDCs are African nations actively involved in China’s Belt and Road Initiative.
4. Steering LDCs Closer to China in U.S.-China Competition
China is already the largest destination for LDC exports, accounting for 25% of their total exports, compared to the U.S., which receives just 10% (Figure 3). Beijing’s expanded trade concessions are likely to further solidify China’s position as a key trading partner for LDCs. In contrast, President-elect Trump’s threats to impose a minimum 10% tariff on all imports could hinder LDC exports to the U.S., potentially driving these nations to align more closely with China in geopolitical and economic terms, as well as at multilateral forums.
Figure 3. China is the largest destination for LDC exports.
Source: World Trade Organization
Published by Basilinna Institute. All rights reserved.
