Balancing Cross-Border E-Commerce Against Capital Outflows

Late last year, the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Finance, the General Administration of Customs, the State Administration of Taxation and the State Administration for Market Supervision, jointly issued a Circular on Improving Supervision of Cross-Border E-Commerce Retail Imports, which took effect on January 1, 2019. The General Administration of Customs also issued a separate circular, effective from the same date that, collectively with the previous circular, has become known as the New Cross-Border E-Commerce Regulations, or CBE Regulations.

The New CBE Regulations reflect the government's intention to better manage the fast growing cross-border online retail sector. A key element was to clamp down on cross-border e-commerce sales through unregulated channels such as “daigou” in which an individual or a group of exporters outside China purchase goods for customers in China, and these individuals may use loopholes to circumvent import tariffs imposed on overseas goods. The new rules also strengthen protection for consumers, improve after-sales service, and promote product safety by various procedural measures and by holding all participants liable for compliance in the supply chain—including the overseas sellers.