China's State Council recently approved setting up the sixth batch of cross-border e-commerce comprehensive pilot zones in 27 cities and regions, in an effort to stabilize foreign trade and foreign investments amid the COVID-19 pandemic.

What is a cross-border e-commerce comprehensive pilot zone? Let's take a look.

First one in Hangzhou

China established its first cross-border e-commerce comprehensive pilot zone – a special economic area aimed at boosting foreign trade and cultivating new competitive edges globally – as early as 2015 in Hangzhou, East China's Zhejiang province.

With the advent of the internet and the influence of COVID-19, cross-border e-commerce, a new business form of foreign trade with fastest development and greatest potential, has been developing rapidly to boost China's economy.

Cross-border e-commerce -- featuring online marketing, online transactions and contactless payment -- refers to selling goods or services internationally from an online platform. The process can be between a retailer or brand and a consumer (B2C), or between two businesses (B2B), or between two private persons (C2C).

Despite the unprecedented challenges brought by the COVID-19 pandemic, cross-border e-commerce, with its specific advantages, has boomed in China in the past few years.

So far, China has seen the establishment of more than 30,000 enterprises related to cross-border e-commerce, with the volume climbing every year.

The cross-border e-commerce imports and exports in the country reached 1.98 trillion yuan (about $311.3 billion) in 2021, up 15 percent year-on-year. From 2016 to 2020, China's cross-border e-commerce had grown nearly 10 times.

Expanding nationwide

As of now, there have been a total of 132 such zones, covering 30 provinces, autonomous regions and municipalities.

While the first two batches of 13 zones were located in larger cities in the eastern coastal areas, the latter batches extended to the vast central and western regions, with all the prefecture-level cities of Jiangsu, Zhejiang, and Guangdong provinces included.

Functions and advantages

According to the State Council, these cities will work to settle deep problems in cross-border e-commerce, build complete industrial chains and provide experience that can be used by the sector across the country.

In these pilot zones, central and local government provide a series of preferential policies in the field of customs clearance, tax, exchange settlement, commodity inspection, logistics, and financial service to facilitate businesses.

For instance, the pilot zone in Hangzhou took the lead in the national integration of customs clearances. Enterprises can make customs declarations in Hangzhou and export from any port they want, be it Shanghai, Ningbo, Xiamen or Tianjin.

The measure, which was later expanded across China, cuts the declaration time from an average of four hours to just one minute.

In addition, these pilot zones have extensive storage facilities at home and abroad. E-commerce enterprises are allowed to import unsold goods from overseas and store them in advance in bonded warehouses.

Once consumers place an order, customs clearance starts immediately and the products can be delivered in merely two or three days. And it is cheap as there is no international postage.

In 2021, cross-border e-commerce B2B export supervision pilot was officially copied and expanded in the national customs, with the supporting policies continuously improved, according China's Central Administration of Customs.

Cross-border e-commerce B2B export refers to the cross-border e-commerce export model in which domestic enterprises transport goods to overseas enterprises or warehouses through cross-border e-commerce platforms.

Meanwhile, China-Europe Railway Express has gradually connected with the cross-border e-commerce model, as China launched regular operation of several freight train services.

International e-commerce cooperation

It is noted that China is ramping up efforts to promote the global cooperation of e-commerce as it has established long-term bilateral e-commerce cooperation with more than 20 countries, including Vietnam, New Zealand, Brazil and Italy.

Moreover, the signing of the Regional Comprehensive Economic Partnership (RCEP) has played a positive role in promoting the upgrading of export e-commerce industry and the extension of trade radius.