28 Sept 2018
General trade refers to the import or export of goods by enterprises in China with import-export rights. In China’s customs statistics, the scope of general trade covers: imports and exports using loans or aids; the import of materials and parts by FIEs for processing of goods for sale in the domestic market; the export of goods purchased by FIEs or manufactured by processing domestically-produced materials; the import of food and beverages by restaurants and hotels; the supply of domestically-produced fuel, materials, parts and components to foreign vessels or aircraft; the import of goods as payment in kind in lieu of wages in labour service cooperation projects with foreign countries; and the export of equipment and materials by enterprises in China as investment in kind for their investment abroad.
Quota and Licensing Control
After joining the WTO, China has greatly reduced its direct administrative measures for import and export such as quota and licensing control. Starting from 1 January 2004 as part of its WTO commitments, China has removed its import quota licensing control over refined oil products, natural rubber, vehicle tires, motor vehicles under certain tariff codes and key parts thereof. At the same time, as WTO members have lifted restrictions on certain Chinese exports (such as textiles), China has also cancelled the quota and licensing requirements on the export products concerned. In addition, China has introduced reforms in the import administration of agricultural products. Certain bulk agricultural produce such as wheat, grain and cotton which used to be under absolute quota administration are now subject to tariff-rate quota administration.
Following its WTO accession, China has promulgated a series of measures for import and export administration. These include Regulations of the People’s Republic of China on the Administration of the Import and Export of Goods, Measures for the Administration of Import Licensing Control, Provisions for the Administration of Export Licensing Control, Measures for the Administration of the Import of Mechanical and Electronic Products, Measures for the Administration of Designated Operators of Certain Imports, Measures for the Administration of Export Commodity Quotas, Measures for the Administration of Automatic Import Licensing, Implementing Rules for the Administration of Import Quotas for Mechanical and Electronic Products, as well as the amended Foreign Trade Law. These rules have formed a new administrative framework for the quota and licensing control of imports and exports.
(a) Import Quotas and Licensing
According to the amended Foreign Trade Law, import goods and technologies are divided into four categories, namely prohibited imports, restricted imports, free imports, and goods under tariff-rate quota administration. Among these, import goods under quantitative restrictions are subject to quota and licensing control while restricted technology imports are under licensing control. The import of goods and technologies under the free imports category is not subject to any restrictions. However, due to the need to monitor imports of goods, the commerce department under the State Council has introduced the automatic licensing system on certain free import goods and has published a catalogue on them. For the import of technologies under the free imports category, registration and record filing of the contract are required.
For the import of goods and technologies subject to quota and licensing control in general trade, it is necessary to obtain prior approval from the commerce department under the State Council or from the commerce department in conjunction with other relevant departments under the State Council. For the import of commodities subject to automatic import licensing, the consignee should apply for automatic licensing before customs declaration and obtain prior approval from the commerce department or its appointed organs.
China has also revised certain documents governing the administration of imports by FIEs in accordance with its WTO commitments. FIEs importing items subject to quota and licensing control for investment purpose or own use, or for manufacturing products for domestic sale, or for domestic sale in China directly, should apply for the required import quota, import licence or automatic import licensing. FIEs importing within their investment limit raw materials, parts and components for investment purpose or own use, or goods subject to automatic import licensing, are not required to obtain an Automatic Import Licence. Commodities subject to licensing control which are imported for processing trade are exempt from import licence, with the exception of controlled chemicals, precursor chemicals and ozone depleting substances.
(b) Export Quotas and Licensing
China imposes restrictions on the export of certain commodities. These include domestic resources that might be depleted and are in short supply or need conservation in China, and goods destined for countries or regions with limited market capacity and exports to these destinations therefore have to be restricted. Goods under export restriction are subject to quota and licensing control while technologies under export restriction are subject to licensing control. For commodities subject to export quota administration in general trade, it is necessary to apply for an export licence by presenting the export quota certificate. For the export of commodities subject to export licensing, it is necessary to apply for an export licence by presenting the export contract. However, FIEs exporting items subject to quota and licensing control must first obtain approval from MOFCOM before applying to the relevant department for an export licence. For the export of commodities whose export quotas are obtainable through open tender, utilisation with compensation or bidding without compensation, application for the licence should be made after a successful bid with the quota amount confirmed.