FOR some fashion-conscious Chinese, one of the highlights of a US trip is a shopping visit to suburban factory outlets.

A familiar sight at such outlets is some Chinese grabbing several shopping bags and snapping up branded cosmetics, handbags, or watches.

What keeps them in a state of excitement is the knowledge that these items are much cheaper there than back home.

According to a recent report on the Caijing magazine website, the prices for products deemed luxuries in Beijing are much higher than in New York.

For instance, a pair of ordinary Levi's jeans is priced at US$70-90 (455 to 585 yuan) in New York, while in Beijing they carry a price tag of 699-899 yuan.

One of the favorite overseas purchases is a Coach handbag, which is priced at 2,000 to 5,000 yuan in China, against 640 to 1,920 yuan in New York.

Ironically, some of the favorite luxury items are manufactured in China, branded and bought overseas, and finally brought back to China by those Chinese aspiring to be seen as successful.

These overseas luxury buys by Chinese stun the world, provoking whispers about Chinese purchasing power, but the Chinese government seems to have mixed feelings about it.

Ideally, it could have been translated into domestic consumption, which is believed to be vital to China's sustained growth.

The loss in import duty is also considerable.

There is now a general consensus that one of the many factors contributing to the relatively high prices of luxury items in China is the high import tariffs. There is less consensus on whether it is sensible to reduce import duties to make luxury items more competitive and more accessible at home.

Cutting tariffs

At a routine briefing on June 15, Yao Jian, spokesman for the Ministry of Commerce, said that "further cuts in import duties, including those on luxury goods," is an issue about which key ministries have "reached general agreement."

The cited causes for the move were trade balance and domestic consumption.

According to the World Luxury Association, China is expected to surpass Japan by 2012 as the world's largest luxury consumer market, valued at US$14.6 billion a year.

Significantly, Chinese consumers spend four times more on luxury goods abroad than at home, due largely to higher import duty and taxes at home.

According to statistics released by the Ministry of Commerce this March, domestic prices for some 20 luxury items including watches, bags and wine were about 45 percent higher than those in Hong Kong, 51 percent more expensive than in the US, and about 72 percent more than in France.

The significant differences in price are unfair for most domestic consumers, and contribute to an underestimation of Chinese imports.

Yao, the commerce ministry spokesman, explained that as a rule this huge volume of overseas purchase is not counted in the mutual trade, distorting the true picture about China's trade balance.

There are allegations, Yao said, that per capita Chinese overseas shopping stands at about US$1,000 per trip, meaning China's trade imbalance might have been exaggerated by tens of billions of US dollars.

Earlier reports suggested the commerce and finance ministries are likely to submit a proposal to the State Council about cutting tariffs on luxuries in the near future.

But Yao seemed to have overestimated the degree of agreement among fellow ministries on this issue.

On July Yao admitted that there was still not a timetable for adjusting the import duty, saying this was "subject to the attitude of the Ministry of Finance."

As a matter of fact, soon after Yao's statement in June, there appeared on the Ministry of Finance's official website an article by Liu Shangxi, a researcher at an institute affiliated with the Ministry.

Raising levies

The article suggests that instead of reducing or eliminating import duty, the duty on luxuries should go up.

Such views are by no means rare.

Early last year, there were proposals to the National People's Congress advocating higher import duties on luxury goods as a measure to address the widening wealth gap, and to curb wasteful consumption.

According to Zhang Yansheng, a researcher with the State Development and Reform Commission, in adjusting import duties, the adjustment should first of all favor ordinary working people and laborers.

Under no circumstances should high-end goods be singled out for lowered duty, he said.

Insiders also point out that import duty is just one of the many factors making luxury goods pricier at home.

There were fresh reports about new consensus, followed by fresh denials.

Last week it was reported that different ministries seem to have reached a compromise about import duty adjustment based on a redefinition of luxuries.

According to these reports, some mass-consumed items (such as cosmetics) would no longer be considered luxuries, and their duty would be reduced, while tariffs on true luxuries, such as watches and jewelry, would go up.

But the Beijing News refuted the report on Wednesday, saying the attitude of the Ministry of Finance, which is crucial, remains unchanged.

Prevailing online opinion seem to support the stance of the Ministry of Finance.

"Make luxuries cheaper? They must be kidding! The stated purpose of luxuries is to show off one's riches. If we do have the import duty reduced, they [the brand owners] would be sure to mark up their prices. Be reminded that luxury brand owners are selling vanity, not commodities," one Internet user commented.

Another netizen urged "aggressively raising the import duty for luxury goods, and aggressively lowering the tax on ordinary goods needed by the average people."

The complaint that "Not all people can afford luxury goods and the majority of consumers are unable to buy them" is ridiculous, because when luxuries are within everyone's reach, they cease to be luxuries.

As some people point out online, China's first priority now is not to make luxuries cheaper, but to make daily necessities like pork and beef less expensive. According to an investigation, pork, beef and chicken in Beijing are almost as expensive as in New York.