Given the complex inspection, certification and labelling requirements in place for imports into China, why aren't similar regulations imposed on Chinese exports?

Since joining the World Trade Organization on December 11, 2001, China allows most companies to import provided the business registers with China’s Ministry of Commerce (MOFCOM). However, MOFCOM maintains a list of products that only government-run enterprises can import into the People’s Republic.

Chinese authorities classify imports as permitted, restricted and prohibited. MOFCOM considers most products as eligible imports but uses licences or quotas to restrict others, and bans the import of specific goods like toxic materials.

Product Inspections and Certification

The Chinese government demands that certain products be inspected and accompanied by formal certification. For example, agricultural imports must have acceptable pest-free certification. Certification may include Chinese inspections of and approvals for factories or processing facilities in the countries where the imports originate – and at the expense of the exporting companies.

For some imported products, China recognizes certification from a recognized agency from the exporter’s home country (e.g. by the Canadian Food Inspection Agency). In other cases, China insists that testing be conducted in the People’s Republic and the source factories or processing facilities be inspected before approving the necessary certification.

Chinese authorities confiscate imports that fail inspection or lack adequate certification.

Currency Tracking

Chinese companies may pay for imported merchandise in foreign currencies. However, these companies have filing requirements with the China’s State Administration of the Foreign Exchange to prove that all foreign currency is used solely to fund imports.

Product Labelling and Packaging

China'a labelling and packaging requirements are particularly stringent for consumer product imports. Chinese authorities will refuse entry for any import deliveries that fail to meet detailed labelling and packaging specifications.

Product Licensing

MOFCOM requires import licences for most goods. Licences for products like crude oil and digital mobile equipment are issued automatically and are used principally for tracking purposes. Other product licences control imports including dangerous products or administer rate quotas for two-stage tariffs (described below).

Tariffs

China charges an ad valorem tariff averaging 9.9% on most imports. The ad valorem rate applies to the import shipment’s transaction value including freight costs, insurance premiums, packing charges and other service charges incurred prior to delivery in China.

Importers of certain fertilizers, corn, cotton, rice, sugar, wheat, wool and wool tops enjoy two-stage tariffs. Two-stage tariffs grant a lower tariff rate up to a specified total quantity of imports. MOFCOM specifies what quantities are eligible for lower rates to Chinese companies applying during September and October each year.

Import Taxes

Most Chinese imports are subject to a value-added tax ranging from 7% to 13%. In addition, a consumption tax from 3% to 45% is imposed on imported consumer goods such as cosmetics, liquor and tobacco.

Exceptions and Special Provisions

China has 15 free-trade zones where imports receive preferential tariff and tax treatment. These special zones also grant exceptions to normal customs procedures. However, any trade between free trade zone companies and Chinese businesses outside the zones must follow the established regulations for imports into China.

Certain Chinese importers also export all goods manufactured from their imported materials. MOFCOM has the power to refund tariffs and value-added taxes to companies that export 100% of their processed merchandise.

Sources for this Article

This article presents independent calculations and insights based on Foreign Affairs and International Trade Canada’s Import Regulations – China