China Considers Backtracking on Disruptive CBEC Reforms

Take home

• China is considering implementing a one year grace period for CBEC commodities. That means they would still be imported according to previous relaxed regulatory requirements during the transition timeframe rather than subject to stringent requirements for general import. The transition period is being considered to allow enterprises to make better preparations and the government to form a more reasonable and effective regulatory scheme.

It’s been one month since the issuance and implementation of the new CBEC tax policy and positive lists for cross-border e-commerce in China. Guidance issued with the two batches of CBEC positive lists, clearly state that articles imported through CBEC bonded zones should have a clearance sheet. To obtain the “market-entry ticket”, companies need to follow import procedures for traditionally imported goods by submitting a series of documents. Products like imported non-special use cosmetics and special use cosmetics should have pre-market approvals. Some types of overseas manufacturers should be approved as well. The new regulations have threaten to be a huge dampener on the wild fire growth CBEC has seen over the last several years.

The past month has been hard for many CBEC companies who are struggling to adjust product categories and clear stock according to the positive list. CBEC traders mainly dealing with health foods, cosmetics, etc. now need pre-market approval to trade these products and if they do not have large stock will shortly be severely limited in their permitted product portfolio. Since AQSIQ’s final rules for CBEC are still not issued, various local ports are enforcing requirements at different scales. (See CL news on 25 Apr 2016)

In the last few days, the General Office of the State Council together with other related departments conducted an investigation on the implementation status and ramifications of new policies. They are fully aware of companies’ difficulties and the current lack of a unified supervisory regime. At a symposium held on 5 May organized by these departments, regulators conveyed the following messages:

• The issuance of intensified polices is not to restrict the development of CBEC but to create a fair market;
• There would be some transitional measures such as suspending the requirements of obtaining the clearance sheet and pre-market approvals of some product categories in a “grace period” lasting for one year; but the new tax system and positive lists should continue to be enforced.
• In the long run, CBEC commodities should comply with Chinese national regulations.