General Trade

An Expert's View about Major Exports in China

Last updated: 22 Feb 2011

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 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.
2.2.1 Quota and Licensing Control

As part of its WTO commitments, China has removed import quota licensing control over refined oil products, natural rubber, vehicle tires, motor vehicles under certain tariff codes and key parts thereof from 1 January 2004. In 2008, only one category of commodities is subject to import quotas and licensing control. 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 management of agricultural products. Certain bulk agricultural produce such as wheat, grain and cotton which used to be under absolute quota management are now subject to tariff-rate quota management. In fact, direct administrative measures such as quota and licensing control have been slashed since China's WTO accession.

In December 2001, China promulgated a series of new administrative measures for import and export in keeping with its WTO commitments. 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 Quotas for Export Commodities, Measures for the Administration of Automatic Import Licensing Control, Implementing Rules for the Administration of Import Quotas for Mechanical and Electronic Products, and the New Foreign Trade Law amended in April 2004. These rules have formed a new administrative framework for the quota management and licensing control of imports and exports.

(a) Import Quotas and Licensing

According to the New Foreign Trade Law amended in April 2004, import goods and technologies are divided into four categories, namely prohibited imports, restricted imports, free imports, and goods under tariff-rate quota management. Among these, import goods under quantitative restrictions are subject to quota management and licensing control while restricted technology imports are under licensing control. In principle, free imports are not subject to any restrictions. However, due to the need to monitor import goods, the foreign trade 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 classified as free imports, registration and contract filing formalities 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 of the foreign trade department under the State Council or the foreign trade 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 of the foreign trade department or their appointed agents.

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 licensing, are not required to obtain an Automatic Import Licence. Commodities imported for processing trade subject to licensing control are exempt from import licence, with the exception of classied chemicals, poisonous chemicals and ozone depleting substances.

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Posted: 18 February 2011, last updated 22 February 2011

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