Technology Apr 08

China to expand cross-border e-commerce duty-free zones

Increase in number of trading parks seen a route to reviving foreign trade 

by Nadeem Xu
China to expand cross-border e-commerce duty-free zones
Yiwu International Trade City, the world’s largest consumer products market. 

(ATF) – China is to almost double the number of cross-border e-commerce pilot zones as it seeks to reshape an export sector ravaged by the coronavirus outbreak, a meeting of the State Council's executive decided.

Another 46 zones, in which companies are permitted to trade without paying export duties, will be established along with support processing facilities to keep foreign trade and investment stable during the epidemic. That would take the total to 105 around the country, state-run Xinhua reported.

The meeting Tuesday, chaired by Premier Li Keqiang, also decided that the historic annual Canton Fair trade show – whose 127th iteration should have been held this month – will now take place online in June.

Companies operating within China’s e-commerce free-trade zones are exempt from value-added and consumption taxes on retail exports. Corporate income tax would also be reassessed.

The meeting said that companies will be supported to jointly build and share overseas warehouses as well as marketing networks.

E-commerce is seen as an important driver of foreign trade during the health crisis, the meeting noted. Figures from the General Administration of Customs showed that the retail sales of China's cross-border e-commerce businesses reached 186.21 billion yuan ($26.25bn) in 2019. In 2018 the sector grew 50% to 134.7bn yuan – with exports surging 67% to 56bn yuan and imports growing 39.8% to 79bn yuan.

Measures were also established to boost processing trade, which accounts for a quarter of China’s foreign trade. Li led calls for the need to coordinate domestic and foreign trade and to help processors overcome economic tackle difficulties as well as stabilise foreign investment and employment.

Cross-border e-commerce has grown into a major source of foreign income. Delegates at the meeting hailed the importance of leveraging the strength of the sector at a time when traditional foreign trade is being clobbered by the coronavirus outbreak. 

Deferred tax payments for bonded materials or finished products sold domestically will be temporarily waived until the end of the year. And a pilot programme that permits processors to pay duty for their domestic sales as either imported materials or finished goods will also be extended to all the integrated bonded zones.

The category of industries in which foreign investment is encouraged will be expanded, and the list of prohibited goods in processing trade will be shortened, the meeting decided.

• A comprehensive bonded zone is to be established in Yiwu, Zhejiang Province, home of the Yiwu International Trade City, the world’s largest consumer products market. 

The zone, which covers 1.34 square kilometers, will provide a new platform for the city’s manufacturing base to export its goods overseas, according to an announcement by the provincial department of commerce on Tuesday. 

The zone will focus on modern logistics, advanced manufacturing and  strategic emerging industries as it seeks to lift the city’s production base higher up the value chain.