SCIO briefing on measures to stabilize foreign trade

The Joint Prevention and Control Mechanism of the State Council held a press conference in Beijing on April 10 to brief the media on the measures to stabilize foreign trade. April 12, 2020

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference held by the Joint Prevention and Control Mechanism of the State Council. Today, we have invited Mr. Ren Hongbin, assistant minister of commerce, and Mr. Li Xingqian, director of the Department of Foreign Trade of the Ministry of Commerce. They will brief you on the measures to stabilize foreign trade, with focus on new integrated pilot zones for cross-border e-commerce, support for processing trade, and an online Canton Fair. They will also answer any questions you might have.

First, I will give the floor to Mr. Ren.

Ren Hongbin:

Friends from the media, good afternoon. First of all, on behalf of the Ministry of Commerce, I would like to express our gratitude for your long-term support and concern for our work. The Central Committee of the Communist Party of China (CPC) and the State Council have attached great importance to work of stabilizing foreign trade. General Secretary Xi Jinping has given important instructions regarding this issue. He emphasized the efforts to keep the fundamentals of foreign trade and investment stable and stabilize shares of the international market. Since the beginning of 2020, the COVID-19 outbreak has presented China's foreign trade with severe, unprecedented challenges. According to customs statistics, in RMB terms, China's foreign trade volume, exports and imports decreased by 9.6%, 15.9% and 2.4%, respectively, in the first two months of this year.

Currently, the epidemic's situation in China has continued to improve, and foreign trade companies are resuming work and production in an orderly manner. Nevertheless, the COVID-19 is still spreading rapidly across the world, and it has had a massive impact on the global economy and trade. Based on our recent research on major provinces, enterprises and relevant chambers in this sector, many foreign trade companies are facing problems. For example, previously-confirmed orders were cancelled or extended, there are difficulties regarding signing new orders, and inconvenient situations are arising regarding logistics and transportation.

The State Council has issued timely measures to stabilize foreign trade. The State Council executive meeting on March 10 reviewed and adopted measures in this regard. This included improving export tax rebates, increasing export credit supplies and offering more export credit insurance services, among others. On April 7, the State Council executive meeting put forward a series of other measures, such as establishing new integrated pilot zones for cross-border e-commerce, supporting processing trade, organizing the online Canton Fair, and so on. A series of policies are expected to stabilize the basic trend of foreign trade.

Ren Hongbin:

Next, I'll introduce to you the policies and measures introduced by the State Council executive meeting on April 7 in three parts.

The first task is to establish new integrated pilot zones for cross-border e-commerce. As the fastest-growing trading method in the internet era, cross-border e-commerce is not restricted by space and time, and it can solve the mismatch of information between the supply and demand side by reducing intermediate steps. Cross-border e-commerce provides new opportunities for more countries, companies and groups, which reflects the inclusiveness of trading activities. Since 2015, the State Council has established 59 integrated pilot zones for cross-border e-commerce in four attempts. The Ministry of Commerce has been working with other government bodies and local governments to establish a policy mechanism with "six systems and two platforms" (including an information-sharing system, financial system, intelligent logistics system, e-commerce credit risk system, risk management system and statistical monitoring system; and the online "single window" platform and the offline "integrated park" platform) at its core. We have introduced 36 mature and innovation practices nationwide in 12 aspects in this field, so as to continuously promote the rapid development of cross-border e-commerce. In 2019, the trade volume of cross-border e-commerce retail reached 186.21 billion yuan, five times that of 2015, with an average annual growth rate of 49.5%. The integrated pilot zones for cross-border e-commerce are playing an increasingly important role in developing foreign trade.

The pandemic has impacted the traditional sectors of foreign trade. Thus, we need to further leverage the unique strength of cross-border e-commerce, carry out online marketing and transaction to ensure orders, market and market shares, so as to enable overall foreign trade to overcome obstacles with new business forms and models. Therefore, the Ministry of Commerce worked alongside13 departments, such as the Cyberspace Administration of China, to carry out studies and assessments and put forward policy and work suggestions. On April 7, the State Council decided to set up 46 integrated pilot zones for cross-border e-commerce. Along with the existing 59 zones, the total number reached 105 in China, covering 30 provinces, municipalities and autonomous regions. This formed a development landscape that links together inland and coastal areas as well as eastern and western regions. The integrated pilot zones will continue carrying out trials and apply policies and measures, such as cross-border e-commerce retail export taxation and retail import supervision.  

Second, the meeting also decided to support processing trade. Processing trade is an important part of China's foreign trade and open economy. Since China carried out reform and opening-up more than 40 years ago, processing trade has experienced leapfrog development, making key contributions to job creation, building a trade powerhouse and upgrading the industrial structure. In recent years, the domestic and international environment has undergone profound changes, and the scale and proportion of processing trade have dwindled: it made up 25.2% of China's foreign trade at the end of last year, compared to 53.4% at the peak in 1998. Meanwhile, processing trade has also made upgrades and transfers. Processing trade in central and western China accounted for 23.3% of the nation's total, climbing 7.8 percentage points from the year 2015. Currently, companies engaged in processing trade are facing many difficulties. We upheld the problem-oriented principle, studied the current situation, and put forward the following policies and measures to stabilize processing trade in four aspects:

First, reduce the costs of processing trade companies' domestic sales. When bonded materials or finished products in processing trade are sold domestically, the import-related taxes will be imposed as usual, but the interests of the deferred tax will be temporarily waived till the end of the year. 

Second, expand the pilot scope of domestic sales. The pilot program where processing trade companies may pay duty for their domestic sales as either imported materials or finished goods will be extended to all the integrated bonded zones, so as to reduce companies' actual taxes. 

Third, optimize the structure of processing trade. We will accelerate the revision of categories of industries that encourage foreign investment, promote the high-quality development of the manufacturing industry, and raise the capability of China's central, western and northeastern regions that are undertaking industrial transfer. 

Fourth, enlarge the scope of goods access. We will shorten the list of prohibited goods in processing trade, moving some products out of the lists of prohibited goods that accord with China's industrial development policy and are not energy-intensive, highly-polluting and resource-intensive.

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