How The National Two Sessions Affect Foreign Trade In China?

On March 4, the much-anticipated National Two Sessions officially started. What are the important topics related to foreign trade that need our attention this year?

1. Improve the quality of foreign trade and foreign investment while maintaining stability

 On March 5, Premier Li Keqiang proposed in the government work report to implement a high-level opening to the outside world and promote the steady improvement of foreign trade and foreign investment. Implement wider, broader, and deeper opening up to the outside world, and better participate in international economic cooperation.

Specific projects related to foreign trade include:

 – Promote the stable development of imports and exports.

Strengthen credit support for small and medium foreign trade enterprises, expand export credit insurance coverage, optimize underwriting and claim settlement conditions, and deepen the pilot program for facilitation of foreign exchange receipts and payments in trade;

Stabilize processing trade, develop new business models and models such as cross-border e-commerce, and support enterprises to explore diversified markets;

Innovation and development of service trade;

Optimize and adjust import tax policies to increase imports of high-quality products and services;

Run major exhibitions such as China International Import Expo, Canton Fair and Service Trade Fair;

Promote the smooth flow of international goods, clean up and standardize port charges, and continuously improve the level of facilitation of customs clearance;

 

 – Actively and effectively utilize foreign capital.

Further reduce the negative list of foreign investment access;

Promote the orderly opening of the service industry, add comprehensive pilots for expanding the opening up of the service industry, and formulate a negative list of cross-border service trade;

Promote the construction of a free trade port in Hainan, strengthen the reform and opening up of the pilot free trade zone, promote the integrated development of special customs supervision areas and pilot free trade zones, and give full play to the role of open platforms for various development zones;

Promote fair competition between domestic and foreign-funded enterprises, and protect the legitimate rights and interests of foreign-funded enterprises in accordance with the law;

Foreign businessmen are welcome to expand their investment in China and share China’s open large market and development opportunities;

 

– High-quality co-construction of the “Belt and Road”.

Adhere to extensive consultation, joint construction and sharing, adhere to the enterprise as the main body, follow the principles of marketization, improve the diversified investment and financing system, promote the cooperation of major projects in an orderly manner, and promote the interconnection of infrastructure;

Improve the quality and efficiency of foreign investment and cooperation;

 

– Deepen multilateral, bilateral and regional economic cooperation.

Firmly safeguard the multilateral trading system;

Promote the early implementation of the Regional Comprehensive Economic Partnership Agreement, the signing of the China-EU Investment Agreement, accelerate the negotiation process of the China-Japan-Korea Free Trade Agreement, and actively consider joining the Comprehensive and Progressive Trans-Pacific Partnership Agreement;

On the basis of mutual respect, promote the development of equal and mutually beneficial economic and trade relations between China and the United States;

China is willing to expand mutual opening up with other countries in the world to achieve mutual benefit and win-win results;

 

2. Cancel port construction fees

On March 5, the government work report officially announced the cancellation of port construction fees. This policy will further reduce the overall cost of logistics.

According to the relevant documents of the State Council and the “Administrative Measures for Collection and Use of Port Construction Fees” issued by the Ministry of Finance and the Ministry of Transport in 2011, port construction fees will be collected until December 31, 2020. The Maritime Safety Administration of the Ministry of Transport also issued a notice on December 24, 2020 to deploy related work after the implementation of the port construction fee collection policy expires.

In 2020, due to the impact of the new crown pneumonia epidemic, my country will gradually exempt import and export cargo port construction fees. According to the latest data released by the General Administration of Customs on January 27, the port construction fee will be exempted from 15 billion yuan in 2020.

 

3. Promote the same line, same standard and same quality of domestic and foreign products

 In terms of stabilizing and expanding consumption, it is proposed to encourage enterprises to innovate products and services, facilitate market access for new products, and promote the same quality of domestic and foreign products in the same line.

Domestic trade and foreign trade products will compete on the same stage. People in the domestic market can also buy more assured, secure and comfortable products; accordingly, in order to expand the domestic market share, enterprises will further innovate products and services, and continuously transform and upgrade, thus forming a virtuous circle of demand-driven supply and supply-creating demand .

On June 22, 2020, the General Office of the State Council issued the “Implementation Opinions on Supporting the Transfer of Exported Products to Domestic Sales”, which proposed 10 policy measures from three aspects:

The first is to support the entry of export products into the domestic market, including accelerating the transfer of domestic market access, promoting the development of “same line, same standard, same quality”, and strengthening intellectual property protection;

The second is to support the transfer of domestic sales through multiple channels, including the establishment of a transfer platform for domestic sales, to play an effective investment driving role, and to accurately match consumer demand;

The third is to increase support, including improving the level of facilitation of re-domestic sales, providing financing services and support, increasing insurance support, and strengthening financial support.

 

4. Tax cuts and fee reductions do not engage in “sudden brakes”

 On March 5th, Minister of Finance Liu Kun stated in the “Ministerial Channel” interview that my country’s institutional tax and fee reduction policies will continue to be implemented, and the phased tax and fee reduction policies will be withdrawn in due course. With regard to the phased tax and fee policies introduced in 2020, on the basis of research and demonstration, some of them will appropriately extend the implementation period, and some will be suspended when they expire, and no “sudden brakes” will be applied.

In 2020, in the face of severe and complex situations and financial difficulties in revenue and expenditure, my country continued to announce the implementation of 7 batches of 28 tax and fee reduction policies, and the scale of new tax and fee reductions exceeded 2.6 trillion yuan.

This year’s government work report pointed out that the system will continue to implement tax reduction policies, extend the implementation period of some phased policies such as value-added tax concessions for small-scale taxpayers, and implement new structural tax reduction measures to hedge the impact of some policy adjustments.

Increase the value-added tax threshold for small-scale taxpayers from monthly sales of 100,000 yuan to 150,000 yuan.

On the part of small and micro enterprises and individual industrial and commercial households whose annual taxable income is less than 1 million yuan, on the basis of the current preferential policies, the income tax will be halved.

All localities must implement tax reduction policies in a timely manner to ensure that market players should enjoy them all.

 

5. China has approved RCEP

On March 8, the Minister of Commerce Wang Wentao stated in the “Ministerial Channel” interview that the Chinese government has formally approved the Regional Comprehensive Economic Partnership Agreement (RCEP), and hopes that relevant countries can accelerate the RCEP approval work, eventually reaching 6 ASEAN countries. The entry into force threshold of the agreement approved by the member states and 3 non-ASEAN member states. The sooner the agreement enters into force, the more it can benefit all countries.

He said that China is currently accelerating the implementation of technical preparations. So far, the progress of various tasks such as tariff reduction and certification of origin “is still very smooth.” After these preparations are completed, China will conduct consultations and docking with relevant member states. After mutual confirmation is obtained, the agreement can be implemented as soon as the agreement comes into force.

 

6. Promote China-U.S. relations over ups and downs

On March 11, Premier Li Keqiang said in response to a question from a CNN reporter that “China-US relations should be promoted to look forward beyond the bumps and move towards overall stability”.

Li Keqiang said that in the past few years, Sino-US relations have indeed encountered serious difficulties, which have brought adverse effects on both countries and the world. As the world’s largest developing country and the world’s largest developed country, China and the United States will benefit both while fighting will hurt both.

Li Keqiang mentioned that China and the United States share extensive common interests and there are many areas where they can cooperate. Against the background of multiple shocks last year, the trade scale between China and the United States still reached 4.1 trillion yuan, an increase of 8.8%.

“We should still focus more on common ground and expand our common interests. As permanent members of the United Nations, China and the United States have important responsibilities for maintaining world peace and stability and promoting world prosperity and development. China and the United States should be promoted. The relationship has crossed the roughness and looked forward, moving in the direction of overall stability.” Li Keqiang said.