China is developing regulations to develop cross-border e-commerce

China yesterday published draft regulations aimed at promoting the construction of overseas warehouses and developing cross-border e-commerce activities, which have become an important element of its foreign trade, the Chinese Ministry of Commerce said.

Companies including Shein (希音), PDD Holdings Inc’s (拼多多) Temu and Alibaba Group Holding Ltd’s (阿里巴巴) AliExpress (全球速賣通), which primarily ship Chinese-made products “overseas” to markets across Europe, the world has been developing rapidly over the last few years.

This has opened up a new growth path for some companies that previously focused on domestic consumption, which remains muted by the macroeconomic slowdown, the prolonged housing crisis and income uncertainty.

Photo: Reuters

The ministry’s announcement, including draft regulations on inbound and outbound cross-border e-commerce, indicated that it will also strive to improve cross-border data management and optimize supervision over cross-border exports.

Government ministries and departments would improve financing channels and help cross-border e-commerce companies “enter the global market,” the ministry said.

The announcement also comes as an aggressive market takeover by low-cost Chinese retailers has delivered record profits to some companies but has also intensified a fierce price war, deepening deflationary fears in the world’s second-largest economy.

“If this situation continues, China may experience what we call a vicious cycle: lower value-added consumption, deflation, low profit rates leading to low wages, which further pushes consumers to reduce their consumption levels,” said Shi He- ling (史鶴凌), professor of economics at Monash University in Melbourne.