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A. Import Tariffs and Custom Regulations
B. Trade Barriers
C. Import Documentation
D. U.S. Export Controls
E. Chinese Export Controls
F. Inspection Standards
G. Labeling and Marking Requirements
H. Special Import Provisions
I. Prohibited and Restricted Imports
J. Customs Contact Information

The signing of the U.S.-China Bilateral Market Access Agreement on China's Accession to the WTO on November 15, 1999 represents a major victory in the United States' ongoing effort to open China's market to U.S. goods and services. By encouraging structural reform and the rule of law, the Agreement will also support China's own domestic reform process.

A. Import Tariffs and Custom Regulations

The most comprehensive guide to Chinese Customs regulations is The Practical Handbook on Import & Export Tax of the Customs of the PRC, compiled by the General Customs Administration. This guide contains the tariff schedule and national customs rules and regulations.
It may be obtained for 220 RMB plus shipping and handling from:
Xing Sheng Zhong Hai Fa Xing Zhong Xing Company.
#6 JianNei DaJie
Dong Cheng Qu, Beijing 100730.
Phone: (8610) 6519-5923 Fax: (8610) 6519-5616.

Tariff Rates:
The Customs General Administration (CGA) assesses and collects tariffs. Import tariff rates are divided into two categories: the general tariff and the minimum (most-favored-nation) tariff. Imports from the United States are assessed at the minimum tariff rate, since the U.S. has concluded an agreement with China containing reciprocal preferential tariff clauses. The five Special Economic Zones, open cities, and foreign trade zones may offer preferential duty reduction or exemption. Companies doing business in these areas should consult the relevant regulations.
On top of normal tariff duties, both foreign and domestic enterprises pay either value-added tax (VAT) or business tax. A VAT of 17% applies to enterprises engaged in import-export, production, distribution or retailing activities. China offers a comprehensive program of tax incentives and concessions. In an attempt to stimulate exports, the State Tax Administration increased VAT rebates several times in 1999, up to 17% (a full rebate) for certain kinds of processed exports. Exporters complain that it takes months to obtain the rebates and amounts are often miscalculated.
Import taxes are also imposed for certain goods, notably in the textile and raw material sectors. China Customs announced on January 3, 2000, that it was cutting import taxes on a number of products by as much as 2%, effective January 1, 2000.

Customs Valuation:
According to Chinese Customs regulations, the dutiable value of an imported good is its CIF price, which includes the normal transaction price of the good, plus the cost of packing, freight, insurance, and seller's commission. In August 1998, the Customs Administration launched an ambitious program to standardize enforcement of customs regulations throughout China as part of a larger campaign to combat smuggling. The program has successfully reduced some of the flexibility of local customs officials to "negotiate" duties.
Tariff rates significantly lower than the published MFN rate may be applied in the case of goods that the government has identified as necessary to the development of a key industry. For example, under the terms of a new foreign investment policy announced on September 8, 1999, foreign-invested firms who produce certain types of high-tech goods or who are export-oriented will no longer have to pay duty on imported equipment not manufactured in China for the enterprise's own use.

B. Trade Barriers

The Bilateral Agreement on China's WTO Accession is only the latest of fourteen trade agreements negotiated between the United States and China since 1979. These agreements cover everything from civil aviation and satellite exports to agriculture and intellectual property rights protection. Each of these agreements has played a role in China's gradual process of trade liberalization, and created new opportunities for U.S. exporters.
The Chinese government has recognized for a number of years that economic reform and market opening are cornerstones of sustainable economic growth. Nonetheless, these reforms have been difficult and often painful for certain constituencies, particularly in the aging industrial sector and heavily protected agricultural sector. Thus, while China today has a vastly more open and competitive economy than 15 years ago, there are still many significant barriers in place.

Some of the current trade barriers that U.S. firms face are:

High tariffs:
At present high tariffs constitute an effective import barrier. In early 2000, for example, some motor vehicles face tariffs of over 100%. U.S. industry points out that tariff rates for sectors in which China is trying to build international competitiveness remain especially high. Under the bilateral WTO agreement, once China accedes to the WTO its industrial tariffs will fall from an overall average of about 17% at present to an average of 9.4 % four years after accession. The motor vehicle tariffs will fall to 25% eight years after accession. Tariffs for U.S. priority agriculture products will fall from an average 31.5% to 14.4% three years after accession.

Import Quotas:
WTO rules bar quotas and other quantitative restrictions. China has been gradually eliminating them and will continue this process after accession over a several year phase-in period. At present, however, quotas limit over 40 categories of commodities, including watches, automobiles, grains, edible oils, and certain textile products. Quota allocation largely remains non-transparent to outsiders. Officials at local and central levels evaluate the need for quantitative restrictions on particular products. Once demand has been determined, the central government allocates quota to provinces and special economic zones who distribute it to end-users.
In 1996, China introduced tariff rate quotas (TRQ) on imports of wheat, corn, rice, soybeans, and vegetable oils. The regulations governing TRQ administration have not been made public. Out-of- quota rates are currently as high as 121.6%. In bilateral WTO negotiations, the United States sought and won commitments to increase quota levels and transparency in administration.

Import Licensing:
Since the early 1990s, China has eliminated many import license requirements, a process that is likely to continue as preparations are made for China's WTO accession. However, many products subject to import quotas also require import licenses, including some wool, grains, oilseeds and oilseed products, cotton, iron and steel products, commercial aircraft, passenger vehicles, fertilizer, hauling trucks, and rubber products. MOFTEC administers the licensing system, but as of late 1999 had given primary authority for approval and import of some agricultural items to the State Administration for Entry-exit Inspection and Quarantine (SAIQ). Import licenses are not easy to come by. The applicant must prove that the import is "necessary" and that there is sufficient foreign exchange available to pay for the transaction.

Administrative Controls:
Certain designated commodities must go through an automatic registration process and secure a "Certificate of Registration for the Import of Special Commodities" prior to importation. The certificate is valid for six months.

It is increasingly easy to find information about economic and trade regulations in the print and electronic media. The 1992 U.S.-China bilateral market access MOU commits China to publish all relevant laws, rules, regulations, administrative guidance and policies governing foreign trade that are not currently published. In conjunction with this commitment, China designated the MOFTEC Gazette (Wengao) as the official register for publication of all laws and regulations relating to international trade. Most government ministries have taken to publishing digests of their regulations, both in hardcopy and on their websites. The state council ( and MOFTEC ( websites are good first sources of information on Chinese Foreign Trade Law. Economic newspapers now routinely carry the text of government policies and regulations. In addition, a number of commercial entities now offer databases and translations of many regulations.
However, despite this progress access is still a problem. Chinese officials routinely implement policies based on "guidance" or "opinions" not available to foreign firms and they have not always been willing to consult with Chinese and foreign industry representatives before new regulations are implemented. It can be extremely difficult to obtain copies of draft regulations, even when they have a direct effect on foreign investment.

Legal Framework:
Laws and regulations in China tend to be far more general than in most OECD countries. This vagueness allows Chinese courts to apply them flexibly but also results in inconsistency. Companies have difficulty determining precisely whether or not their activities contravene a particular regulation. Agencies at all levels of government have rulemaking authority, resulting in regulations that are frequently contradictory. Finally, while there seems to be no shortage of rules and regulations, there are few procedures in place to appeal regulatory decisions.

Trading Rights:
The Chinese government has moved to dismantle the near monopoly on import-export rights previously enjoyed by a tiny number of state-owned firms. Liberalization of the trading system was given a major push in early 1999 when MOFTEC announced new guidelines allowing a wide variety of Chinese firms to register to conduct foreign trade. The guidelines allow, for the first time, both manufacturing and "non-production" firms with annual export volumes valued in excess of $10 million to register for trading privileges. Some goods such as grains, cotton, vegetable oils, petroleum and related products are imported principally through state trading enterprises. Firms with trading rights must undergo an annual qualifications test and certification process.
Wholly owned foreign enterprises and individuals are still not permitted to directly engage in import-export activities. China has committed to eliminate restrictions on trading rights as part of its WTO accession bid. MOFTEC is working on guidelines to allow foreign companies, subject to certain restrictions, to directly engage in trade but has not revealed when the new regulations are scheduled to go into effect.

Local Agents:
The ability of foreign firms to distribute directly their products in China is subject to strict limitations. In general, foreign firms are only allowed to distribute products that they manufacture in China and must go through local agents to distribute imported goods. China has agreed to gradually eliminate distribution restrictions as part of its bid to join the WTO.

Import Substitution Policies:
China committed to eliminate all import substitution policies and regulations as one of the conditions of the 1992 market access MOU, but instances have continued to occur. Recent examples—in the fields of generic medicines, telecom equipment, pharmaceutical pricing, power generation, and the automotive industry--have been the result of informal directives that have not been publicly announced.

Anti-Competitive Practices:
Anti-competitive practices in China exist in the form of monopolistic or monopsonistic practices designed to protect the state-owned sector. In some cases, industrial conglomerates operating as monopolies or near monopolies (such as China Telecom) have been authorized to fix prices, allocate contracts, and in other ways restrict competition among domestic and foreign suppliers. China's first law on unfair competition went into effect at the beginning of December 1993. It forbids the use of money and materials or other means as bribes to sell goods but allows discounts or commissions openly offered and properly recorded.

Anti-Dumping Regulations:
China is beginning to use safeguard and antidumping measures to control surges in imports of certain products. The Chinese government issued a final determination in China's first-ever antidumping case against the United States on June 3, 1999. It determined that U.S. companies had dumped newsprint on the domestic market. As a result, China began to levy a 78% tariff on imports of newsprint from the United States. The tariff will be reviewed after five years. Companies may request a review at any time in the intervening period. The domestic newsprint industry in China is largely made up of aging state-owned firms that cannot compete effectively against the modern production methods of foreign producers. Foreign companies involved in the investigation complained that pricing methodologies used in making the determination were flawed and that the outcome was a predetermined conclusion.
China initiated an antidumping investigation against U.S., Japanese and German manufacturers of acrylic acid products on December 10, 1999. A preliminary determination in that case is expected in July 2000.

Services barriers:
China's service sector has been one of the most heavily regulated parts of the national economy -- and one of the most protected. The service liberalizations included in the bilateral WTO agreement will improve dramatically foreign access to this sector. The Chinese economy itself will benefit from the increased scope of services, professionalism and technologies that foreign investment in services will bring. There will be substantial efficiency gains to the domestic economy as well from increased foreign participation in financial, insurance, telecommunications, distribution and professional services, after sales service and repair businesses.
At present, however, foreign services providers are largely restricted to operations under the terms of selective "experimental" licenses. The strict operational limits on entry, and restrictions on the geographic scope of activities, severely limit the growth and profitability of these operations.
Since China's services sector remains underdeveloped and current foreign participation in the market is minimal, it is difficult to estimate how much such barriers to market access represent in lost U.S. exports of services. In some service sectors, such as insurance, even the most conservative estimates predict that total premiums will reach $15 - 30 billion in the next few years. If China were completely to lift barriers to market access in this sector, U.S. insurance providers could be expected to capture a portion of the Chinese market that could easily exceed $1-2 billion. In other services sectors, such as legal services, accountancy, and consulting, and where potential revenues are likely to be more modest, the lifting of barriers to market access would still result in significant increases in U.S. exports of services.

C. Import Documentation

Normally, the Chinese importer (agent, distributor or joint-venture partner) handles documentation requirements. Necessary documents include the bill of landing, invoice, shipping list, sales contract, an import quota certificate for general commodities (where applicable), import license (where applicable), inspection certificate issued by the State Administration for Entry & Exit Quarantine and Inspection Bureau (SAIQ) or its local bureau (where applicable), insurance policy, and customs declaration form.

D. U.S. Export Controls

The Tiananmen Sanctions of 1990 are still in effect and sharply curtail U.S. exporter opportunities to sell crime control equipment to China's police agencies and defense electronics equipment to the Chinese military.
The United States Government's Enhanced Proliferation Control Initiative (EPCI), requires the U.S. Department of Commerce and exporters to closely scrutinize end-users of U.S. exports of all kinds. This regulation requires a Validated License application if the exporter has "reason to know" that the end-users might be involved in missile, nuclear or chemical weapons proliferation.
A law passed by Congress in late 1997 requires that the U.S. Government do post shipment verifications (PSV) on all High Performance Computers(HPC) shipped to one of 50 countries including China. An HPC is as of March 10, 2000 defined as any computer over 6,500 MTOPS(million theoretical operations per second) of performance. There is a USDOC requirement that a MOFTEC issued end-user certificate (EUC) must be obtained by the exporter before the computer is shipped to China. Ordinarily the computer importer or reseller in China applies for this document and passes it to the exporter. The MTOP level for HPC's will change from 6500 MTOPS to 12,500 MTOPS on August 14, 2000 unless objection is raised by Congress. For the most up-to-date information on this regulation change check the BXA HPC web-page at

U.S. Export Applications:
A USDOC dual-use export license application that does not present to the USDOC reviewers serious Chinese end-user concerns is usually approved by the USDOC in about one week. In the past year less than ten USDOC export license applications required a Pre-License Check (PLC). In the case of a PLC requirement, the Department of Commerce requests MOFTEC's permission for an FCS officer from the Embassy to visit the site of an end-user to determine the bona-fides of the end-user for the actual end-use of the product. This must be done before Commerce will act further on the export license application. The time required to complete the entire process of a PLC may be two to three months. If in the end no Pre-license visit is permitted by the Chinese Government, an export license very likely will not be issued.

For more information on U.S. export controls, exporters should view the BXA website at or contact:
BXA Exporter Services Division
Washington, D.C. Tel: 202-482-4811 Fax: 202-482-3322
Newport Beach, CA Tel: 714-660-0144 Fax: 714-660-9347
Santa Clara, CA Tel: 408-748-7450 Fax: 408-748-7470
Fax: 408-748-7470
U.S. Embassy-Beijing, Commercial Section
Mark Bayuk BXA Officer Tel: 8610-6532-6924
Fax: 8610-6532-3297
In mid 1999, satellite and related technology licensing authority was transferred from the Department of Commerce to the Department of State. For information on State Department export licensing procedures see the relevant State Dept website of the Office of Defense Trade Controls at The point of contact for State Department Licensing matters at U.S. Embassy Beijing is the Economic Section Tel: 86-10-6532-3431, Fax 86-10-6532-6422.

E. Chinese Export Controls

Prohibited Exports:
China maintains export bans and restrictive licensing procedures on certain items. Products banned from export include musk, copper, platinum, specified chemical compounds, and products whose export is banned under international treaties. Products subject to strict licensing controls include dual-use chemicals, chemical precursors, heavy water, and exports of fish, fresh vegetables and fruits to Hong Kong and Macao. Foreign-invested enterprises are restricted to exporting out of China only the products they manufacture.

The export licensing system is administered by MOFTEC and designated local offices. An export tendering system for a limited but growing number of products has also been introduced. Most licenses are valid for a single use within three months after issuance. For certain items, including 26 categories of agricultural and petroleum products, licenses are granted for six months with multiple use up to 12 times.
Other items that may not leave China include all items that are prohibited from being imported. (See next paragraph) In addition, manuscripts, printed matter, magnetic media, photographs, films or other articles, which involve state secrets; valuable cultural relics; and endangered animals and plants may not be exported.
On June 10, 1998 China promulgated Regulations on the Administration of the export of dual-use(military and civil) Nuclear Facilities and related technologies of the People's Republic of China. The export licenses required under these regulations are issued by MOFTEC.

Prohibited Imports:
The following items are prohibited from entering China:
counterfeit currencies and counterfeit negotiable securities; printed matter, magnetic media, films, or photographs which are deemed to be detrimental to the political, economic, cultural and moral interests of China; lethal poisons; illicit drugs; disease-carrying animals and plants; foods, medicines, and other articles coming from disease-stricken areas; old/used garments; and RMB. Food items containing certain food colorings and additives deemed harmful to human health by the Ministry of Health are also barred entry.

F. Inspection Standards

Import Commodity Inspection:
Chinese law provides that all goods included on a published Inspection List, or subject to inspection pursuant to other laws and regulations, or subject to the terms of the foreign trade contract, must be inspected prior to importation, sale, or use in China. In addition, safety license and other regulations also apply to importation of medicines, foodstuffs, animal and plant products, and mechanical and electronic products.
Chinese buyers or their purchase agents must register for inspection at the port of arrival. The scope of inspection undertaken by local commodity-inspection authorities entails product quality, technical specifications, quantity, weight, packaging, and safety requirements. The standard of inspection is based upon compulsory Chinese national standards, domestic trade standards or, in their absence, the standards stipulated in the purchase or sale contract.
To meet the arrival inspection requirements, it is advisable that Chinese quality certification be obtained from Chinese authorities prior to shipment of goods to China. The quality and safety certification process appears to require extensive investigation and may be time-consuming. If your products are required to have this certification, contact the State Administration for Entry & Exit Quarantine and Inspection (SAIQ) at 15 Fangcaodi Xijie, Chaoyang District, Beijing 100020 China; tel: (86-10) 6599-4328 or fax: (86-10) 6599-4306. This year SAIQ established its website at The website, in chinese only, gives a wealth of information on China's import safety certification news, regulations, procedures, policies including reference to WTO accession, and an SAIQ organization chart. This is a valuable source of information but alas at this time only available in Chinese. Hopefully WTO accession will lead to the establishment of English language website pages to make this information easily accessible to all U.S. exporters.

Scrap pre-inspection in the United States:
SAIQ has established an entity called CCIC in California for the pre-inspection of scrap paper exports to China.
China National Import & Export Commodities Inspection Corporation North America, Inc. (CCIC)

Mailing Address:
917 Sago Palm
West Covina, CA 97190

Office Address:
1509 W. Cameron AV, Suite 252
West Covina, CA 97190
Tel: 626-813-0011
Fax: 626-813-9181

The National Institute of Standards (NIST) did a workshop on Chinese standards in Beijing March 10-12, 1999. The summary of the workshop results can be viewed at the following NIST website;
A point-of-contact in the USDOC on standards is at
Tel: 202-482-4431 Fax: 202-482-0975.
The point-of-contact at USFCS-Beijing is Mark Bayuk at
Tel: 86-10-6532-6924 or Fax:86-10-6532-3297.

Security Software Certification:
Hardware and software used for data security or encryption require special security software certification before they can be sold in China. This is separate from the SAIQ quality assurance procedures. USFCS has an International Marketing Insight (IMI) on this matter published in June 1999 under the title "Security Software Certification."

The office that does this certification is the:
China National Information Security Testing Evaluation and Certification Center (CNISTEC).
No. 36 Xinjiang Gongmen
Hai Dian District, Beijing 100091
Tel: 86-10-6879-6484 Fax: 86-10-6288-0411

Quarantine Inspection:
A 1992 quarantine law provides the legal basis for the quarantine inspection of animals, plants and their products, as well as the containers and packaging materials used for transporting these items. The law also establishes the Chinese Animal and Plant Quarantine Administration (CAPQ), since replaced by the State Administration for Entry and Exit Quarantine and Inspection Bureau (SAIQ), which is under the administrative control of China Customs. SAIQ has the responsibility to carry out import and export inspections.
The importer must submit an application in advance and the products must undergo the required inspections upon arrival in China. Contracts must specify the requirements for inspection under China's law, as well as indicate the necessary quarantine certificates to be issued by the appropriate agency in the exporting country. Catalogues of the Class A and B infectious or parasitic diseases of animals and the catalogues of the diseases, pests and weeds dangerous to plants are determined and announced by the SAIQ. The U.S. Department of Agriculture maintains an office of the Animal and Plant Health Inspection Service (APHIS) in Beijing. The office is able to answer questions about Chinese quarantine laws and is the equivalent of the SAIQ. Contact Dale Maki, Tel: 86-10-6505-4575, Fax: 86-10-6505-4574. The APHIS website is

G. Labeling and Marking Requirements

Under Chinese law governing safety and product-quality standards, certain imported commodities must be inspected and certified to be in compliance with compulsory national, domestic trade or contractually stipulated standards (see Section I). Once a quality certificate for a product is issued, a safety label can be affixed.
All products sold in China must be marked -- in the Chinese language -- with the relevant information. The National Health and Quarantine Administration requires imported (but not domestic) food items such as candy, wine, nuts, canned food and cheese to be affixed with a laser sticker evidencing the product's safety. Importers are charged five to seven cents per sticker, and the stickers must be affixed under State Administration.

Food Labeling Law:
On April 1, 2000, a new national Chinese regulation announced on February 15, 2000, was put into effect for the implementation of food label standards. The law supercedes both the Regulation on Management of Import-Export Food Labeling, announced on May 24, 1994, and the Regulation on Management of Labeling Inspection Attached to Import and Export Food, announced on April 21, 1994. This Chinese law requires that all packaged food products (except bulk) must have Chinese labels clearly stating the type of food, brand name, trademark, manufacturer's name and address, country of origin, ingredients, date of production and sell-by date. This law applies to imported as well as locally-packaged products. English-language versions of the new regulations and other rules about food additives, such as Food Laws, Labeling Requirements, Food Additives Regulations, Pesticides and other Contaminants, Organic "Green" Food Standards, and Copyright/Trademark, will be obtained in the Food & Agricultural Import Regulations & Standards Report (FAIRS). This report can be accessed by going to, Please contact Audrey Talley, USDA/Foreign Agricultural Service, tel: (202) 720-9408; fax: (202) 690-0677.

H. Special Import Provisions

Firms seeking the following exemptions should consult with Customs authorities for information on the procedures and to obtain copies of appropriate forms.

Representative Offices:
Resident offices must submit a written application to Customs if they intend to import any personal effects or vehicles. Approval by Customs waives any relevant import license requirements and allows the office to import the equipment in reasonable amounts for office-use only.

Foreign-Invested Enterprises (FIEs):
China permits four types of FIEs -- equity joint ventures (EJVs), cooperative (contractual) joint ventures (CJVs), wholly foreign-owned enterprises (WFOEs), and foreign-invested joint stock companies. A complicated set of rules exempts selected FIEs from some Customs duties and VAT. Companies should consult the relevant regulations.

Processing Materials and Parts:
Raw materials, components, spare parts, auxiliary materials, and packaging materials imported by FIEs for the production of goods which will be exported are exempt from customs duty and VAT. The materials and components must be processed into products and exported within one year from the date of importation. Bonded warehouses may be established within the FIE and are subject to supervision by Customs.

Goods that are allowed to be stored at a bonded warehouse, for up to one or two years, are limited to: materials and components to be used for domestic processing subject to re-exportation; goods imported under special Customs approval on terms of suspending the payment of import duties and VAT; goods in transit; spare parts for free maintenance of foreign products within the period of warranty.
At the end of the two-year period, the goods must be imported for processing and re-exported, licensed for import, or disposed of by Customs. Customs duties and VAT may be assessed depending upon the degree of processing done in China. Goods imported under normal import contracts are not allowed to be stored in bonded warehouses.
For more information on agricultural trade policy, go to to access the 1999 China Annual Trade Policy Report.

I. Prohibited and Restricted Imports

The following items are prohibited from entering China: arms, ammunition, and explosives of all kinds; counterfeit currencies and counterfeit negotiable securities; printed matter, magnetic media, films, or photographs which are deemed to be detrimental to the political, economic, cultural and moral interests of China; lethal poisons; illicit drugs; disease-carrying animals and plants; foods, medicines, and other articles coming from disease-stricken areas; old/used garments; and RMB. Food items containing certain food colorings and additives deemed harmful to human health by the Ministry of Health are also barred entry.
In addition, rules went into effect in June 1999 which further restrict or prohibit the importation of certain commodities related to the processing trade. Jointly issued by MOFTEC and the State Economic and Trade Commission, the "Catalogue of Commodities Which are Restricted or Prohibited from Importing for Use in the Processing Trade" is designed to shift the direction of china's processing trade toward handling commodities with higher technological content and greater value-added potential.
The catalogue identifies the following "prohibited commodities": used garments; used publications with licentious content; radioactive or harmful industrial waste; junk cars, used automobiles or components; seeds, seedlings, fertilizers, feed, additives, or antibiotics used in the cultivation or breeding of any export commodity. The catalogue lists seven general types of "restricted commodities": raw materials for plastics, polyester sections, raw materials for chemical fibers, cotton, cotton yarn, cotton cloth, and some steel products. U.S. firms should contact the China General Administration of Customs for guidance regarding the import of any of these types of products.

J. Customs Contact Information

General Administration of Customs
Foreign Affairs Division
6 Jianguomenwai DaJie
Tel: 86-10-6519-5263 or 6519-5246
Fax: 86-10-6519-5394
Website: http: //

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