The EU will soon remove GSP privileges for Chinese exporters. That means they will no longer enjoy preferential tariff treatment in most European countries. Removal is expected to accelerate the trend of labor-intensive manufacturers including apparel makers moving out of China and to cheaper destination countries like Vietnam and Bangladesh.

Only Norway, New Zealand and Australia will continue to provide preferential tariff treatment to China. Since 2014, Switzerland, Japan, Russia, Kazakhstan and Belarus have removed China from their GSP lists.

Chinese apparel makers and low-end electronic producers would be hit most by the changes. Once the epidemic situation improves in South and Southeast Asia, more production lines are expected to move out of China to neighboring Vietnam and Bangladesh.

China’s exports increased 22.7 per cent year on year in the first three quarters of this year. Since China announced its plan to transform itself from a planned to a market economy in 1978, the country has been given duty-free treatment on certain exports by 40 countries under the GSP. In 2000, it was also given PNTR status by the US. In 2001, China entered the World Trade Organization and has since then seen enormous growth in its external trade.