Value of Exports and Imports by Category of Commodities

(100 million USD )

The imports and exports volume between China and the top ten trading partners totaled 437.74 billion US dollars, accounting for 85.87% of China’s import and export volume.

China's Top Ten Trade Partners in 2002

                   (1 million USD)

China's Top Ten Source of Imports in 2002

                                        (1 million USD)

Section I: Foreign Trade Laws and Regulations

To date, China has instituted a fairly perfect foreign trade legal system with the “Foreign Trade Law” as the core, involving management of foreign trade dealers and import and export commodities and technology, foreign exchange, customs control, import and export commodity inspection, animal and plant quarantine, protection of intellectual property rights, and economic and trade arbitration related to foreign interests and proceedings.

I. Foreign Trade Law
The Foreign Trade Law, which came into force on July 1, 1994, serves as the basic law on standardizing foreign trade activities in China. Its basic principles are:

- That the whole country practices a unified foreign trade system;

- Safeguarding a fair and free foreign trade order;

- Ensuring the independent operational authority of foreign trade dealers;

- Encouraging the development of foreign trade; and

- Promoting trade relations with other countries and regions on the basis of equality and mutual benefit.

II. Laws and Regulations on Managing Foreign Trade
Laws and Regulations on Managing Foreign Trade Dealers
“Regulations on the Management of Import and Export Business License”

Laws and Regulations Governing Management of Import and Export Commodities
Major laws and regulations on managing import & export commodities
Regulations on the Importing and Exporting of Cargoes, P.R.China

Important laws and regulations in connection with trade
The “Provisions of the People’s Republic of China on Environmental Management of Chemicals imported for the First Time and the Import and Export of Poisonous Chemicals” and related detailed rules for implementation； “Provisional Regulations on Environmental Protection Regarding the Import of Wastes”

Laws and Regulations on Import and Export Commodity Inspection
The “Law of the People’s Republic of China on Inspecting Import and Export Commodities” and related detailed rules for implementation; the “Procedures on the Implementation of the License System for Safety and Quality of Import Commodities” and related detailed rules for implementation; the “Procedures on Managing Labels of Import and Export Foodstuffs (for Trial Implementation)”; and the “Procedures on Exemption of Import and Export Commodities from Inspection (for Trial Implementation)”； and the “Procedures on Re-Inspection of Import and Export Commodities” promulgated in 1993.

Laws and Regulations on Animal and Plant Quarantine
The “Law of the People’s Republic of China on Quarantine of Entrance and Exit Animals and Plants” and related detailed rules for implementation.

Laws and Regulations on Hygienic Quarantine
The “Law of the People’s Republic of China on Border Hygienic Quarantine” and related detailed rules for implementation; the “Food Hygiene Law of the People’s Republic of China”; and the “Procedures of the People’s Republic of China on Managing Imported Pharmaceuticals”.

Laws and Regulations Governing Foreign Exchange Control
“Regulations of the People’s Republic of China on Foreign Exchange Control”; “Notice of the People’s Bank of China on Further Reforming the Foreign Exchange Control System”; “Provisions on Managing Settlement in, Sales of and Payment in Foreign Exchanges”; “Procedures on Managing the Settlement in Foreign Exchanges under Current Account”

Customs Laws and Regulations and Tariff Laws and Regulations
“Customs Law of the People’s Republic of China”; “Customs Regulations of the People’s Republic of China Concerning Protection of Intellectual Property Rights”; “Customs Inspection Regulations of the People’s Republic of China”; “Import and Export Duty Regulations of the People’s Republic of China”

Civil and Commercial Laws Involving Foreign Interests
“General Principles of the Civil Code of the People’s Republic of China”; “Law of the People’s Republic of China on Economic Contracts Involving Foreign Interests”

Economic and Trade Treaties Common practices in international trade
To date, the Chinese Government has signed bilateral trade agreements or treaties with the governments of 100 countries (regions), and has signed or joined nearly 100 international economic and trade treaties.

The Chinese Government has joined many international economic and trade conventions, and recognized and adopted many internationally accepted trade practices, laws and regulations or exemplary methods, such as the “General Rules of Notes to Terminology Used in International Trade,” the “Warsaw-Oxford Rules, 1932,” “Unified Rules for Bills Used in Combined Transport,” “Unified Rules for L/C with Reimbursement Clause” and “Unified Rules for Application for Collection”

On Dec. 11, 2001, China became a member of WTO officially

Section II: Foreign Trade Management
In accordance with the stipulations of the “ Foreign Trade Law of the People’s Republic of China,” China practices a unified foreign trade system, and safeguards a fair and free foreign trade order according to law. The state permits the free import and export of goods and technology (except for those subject to laws and regulations stipulating otherwise).

The Chinese government will implement step-by-step reform of the foreign trade system in accordance with “Protocol on the Accession of the People’s Republic of China ” and its Annex and “Report of the Working Party on The Accession of China”.

I. Trading Rights
Trade right refers to the right to import and export in the trade of cargoes, excluding the right to distribution in domestic markets.

Gradually, China will lower the requirement of minimal registered capital for the Chinese enterprises to obtain trade right, enable the foreign-funded enterprises to obtain complete trade right, and cancel the system of trade-right examination and approval within 3 years upon China’s entry into WTO.

II. State Trading and Designated Trading
In China, state-run trade will be enforced in the import of 8 types of staple goods essential to the national economy and the people’s livelihood, including grain, cotton, vegetable oil, sugar, crude oil, finished oil, chemical fertilizer and tobacco. State-run trade control will be enforced in the export of such commodities as tea, rice, maize, soybean, tungsten sand, ammonium paratungstate, tungsten-ware, coal, crude oil, finished oil, silk, unbleached silk, cotton, cotton yarn, cotton textile, antimony sand, oxidized antimony, antimony-ware, silver, etc.

The government permits the non-state-run trade enterprises to undertake the import and export of a restricted amount of the goods on which the state-run trade control is enforced.

Considering the need to maintain the import and export business order, the department of the State Council in charge of foreign trade and economy may enforce designated business management on a portion of the goods within a definite period of time, i.e., by authorizing a number of companies to act as agency of the import and export of a certain product.

At present, the products subject to designated business include natural rubber, timber, plywood, wool, acrylic fibers and steel. The products will be open to free business within 3 years upon China’s entry into WTO.

Those enterprises and organizations that are not included in the list of state-run trade enterprises or in the list of designated business management are forbidden to undertake the import and export of the goods on which state-run trade control or designated business management is enforced.

III. Customs Duties and Other Duties and Charges
China had adopted the Harmonized Commodity Description and Coding System ("HS") as from 1 January 1992 and joined the International Convention on the Harmonized Commodity Description and Coding System in the same year.

According to the promise made by the Chinese government in order to enter WTO, the general level of China’s tariff will decrease from 14% to 10% by 2005: that of industrial products will decrease from 13% to 9.3%, and that of farm produces from 19.9% to 15.5%. The implementation of the promise on tariff decrease in farm produces will come to an end in 2004 and that in 98% of the industrial products in 2005, but the tariff of automobile and auto parts will decrease to 25% and 10% (average level) respectively by July 1st, 2006, and the tariff decrease of some chemical products will last until 2008.

Upon accession China would participate in the Information Technology Agreement ("ITA") and would eliminate tariffs on all information technology products as set out in China's schedule. Furthermore, upon accession, China would eliminate all other duties and charges for ITA products.

IV. Non-Tariff Measures and Import and Export Licensing Procedures

China will cancel the current non-tariff measures of over 400 duty paragraphs no later than January 1st, 2005, including the measures of quota, license, etc., covering such products as automobile, electromechanical products, natural rubber, color sensitive material, etc. During the period in between, the quota of relevant products will be allowed a certain increase rate.

1. Import Licensing

Goods whose import is restricted in amount will undergo quota management; other types of goods of restricted import will undergo licensing management. Those under quota control will be publicly assigned a total import quota for the next year before July 31st of each year by the import quota control department.

Considering the need to monitor the import of goods, automatic import licensing management will be enforced on some of the free-import goods. To import the goods subject to automatic import licensing management, the importer should submit an application for automatic import license to the department of the State Council in charge of foreign trade and economy or to relevant economic management departments of the State Council before going through the procedures of customs declaration.

In order to maintain the balance of international payment, when international income and expenses suffer serious imbalance or face such threats, or in order to maintain the foreign exchange reserve at a level suitable to the implementation of economic development plan, the government may take temporary restrictive measures on the value or amount of imported goods.

In 2003, eight kinds of goods have been subjected to import licensing control, totaling 143 8-digit commodity codes. The 4 types of goods subjected to import quota licensing control include finished oil, natural rubber, auto tires, automobile and key parts. The 4 types of goods subjected to import licensing control include CD production equipment, monitored chemicals, drug-producing chemicals and ozonosphere eroding material.

China implements classified management of finished electromechanical products, i.e., import ban, restricted import and automatic import licensing.

About the finished electromechanical products of restricted import, where there is a restriction in amount, quota control will be implemented; where there is none, it is a specified finished electromechanical product that is subject to licensing control. The import of specified products mainly takes the form of worldwide bidding.

To import electromechanical products subjected to automatic licensing control, the importing unit should apply for a automatic import license before going through the customs declaration procedures.

China prohibited or restricted the importation of certain commodities, including weapons, ammunition and explosives, narcotic drugs, poisons, obscene materials and those foodstuffs, medicines, animals and plants which were inconsistent with China's technical regulations on food, medicines, animals and plants.

2. Export Licensing

China applied its export license system to certain agricultural products, resource products and chemicals. China's export licensing system was administered in accordance with the "Interim Procedures for the Export Licensing System".

Global export licensing control applies to all the listed goods that are subject to export licensing control, except where special rules dominate.

In 2003, export licensing control is implemented on 52 types of goods (338 8-digit commodity codes) (excluding textile commodities of passive quota), including export licensing, export quota bidding, compensable use of export quota, free bidding of export quota and export licensing control respectively.

Textiles of restricted export by the country are subjected to quota and export credentials managements, monitored by the customs and inspected by the entry-exit inspection and quarantine department in accordance to relevant rules and regulations.

China prohibited export of narcotic drugs, poisons, materials containing State secrets, precious and rare animals and plants.

V. Tariff Rate Quotas

Upon entry into WTO, China will implement tariff rate quota control on such farm produces as wheat, maize, rice, cotton, sugar, soybean oil, palm oil, wool, etc., chemical fertilizer, and such industrial products as wool top. The calculation of the quota of farm produces will take the period between 1995 and 1997 as base period.

While the tariff rate quota products are subjected to state-run trade management, some of the tariff quota is reserved for import by non-state-run trade enterprises.

About goods imported within tariff rate quota, tariff is to be submitted according to the tariff rate within quota; as for goods imported outside the tariff rate quota, tariff is to be submitted according to the tariff rate outside quota. The department of import quota control will announce the total tariff rate quota of the following year between September 15th and October 14th each year.

VI. Technical Barriers to Trade
The Chinese government maintains the right to inspect the imported and exported goods.

In accordance with the principles of citizen treatment, China promises that within 18 months upon its entry into WTO all the qualified evaluation organization will be able to provide evaluation service to domestic products as well as to imported products.

VII. Sanitary and Phytosanitary Measures

China applied sanitary and phytosanitary（SPS） measures only to the extent necessary to protect the life and health of human beings, animals and plants.

Within 30 days upon China’s entry into WTO, the Chinese government will inform WTO of all the laws, regulations and other measures concerning sanitary and phytosanitary（SPS） measures, including the scope of finished products and relevant international standards, guidances and suggestions.

VIII. Customs Valuation

The overwhelming majority of China's customs duties were ad valorem duties. The customs value of imported goods was assessed according to the c.i.f. price based on the transaction value, as defined in the Customs Valuation Agreement. If the transaction value of imported goods could not be determined, the customs value was determined based on other means provided for in the Customs Valuation Agreement.

IX. Rules of Origin

China's rules of origin for import and export were non-preferential rules of origin. Once the international harmonization of non-preferential rules of origin was concluded, China would fully adopt and apply the internationally harmonized non-preferential rules of origin.

From the date of accession, China would ensure that its laws, regulations and other measures relating to rules of origin would be in full conformity with the WTO Agreement on Rules of Origin and that it would implement such laws, regulations and other measures in full conformity with that Agreement.

X. Export Tax

China collects export tax on such products as eel fry, lead, zinc, tin, antimony, ferromanganese iron, chromium iron, copper, nickel, aluminum, etc., totaling 84 duty paragraphs.

Section III: Processing Trade and Border Trade

I. Processing Trade
Processing trade (including processing with purchased materials and processing with imported materials) is subject to the examination and approval of foreign trade responsible department of the provincial level or below the provincial level, but the processing of sugar, vegetable oil, wool, natural rubber and crude oil which are managed by the state for the total balance must get the approval of the provincial level foreign trade responsible department in the place where the processing trade enterprises registered.

The Chinese Customs manages the processing trade separately according to the categories of commodities: The prohibited category refer to commodities which are banned to import under the “Foreign Trade Law of the People’s Republic of China,” and commodities the Customs cannot make bonded supervision; restricted category refers to sensitive commodities that with a big gap between China and foreign countries in price and cannot be supervised; permitted category include other commodities other than the two categories mentioned above.

The Chinese Customs makes a separate management on processing enterprises, and manages the list according to existing situation.

II. Border Trade
China supports and encourages the development of border trade. Currently, it manages the border trade in the following two types.

1. Border people mutual trade. This refers to border people trade with people of neighboring countries at government approved areas or appointed fairs within 20 kms along the borderline and exchange commodities within a fixed amount and quality. At present, border people are exempted from import tax and import link value-added tax for exchanging commodities (articles for daily use only) under 3,000 renminbi in a day, and the part exceeding 3,000 yuan will be taxed by law.

2. Small amount border trade. This refers to approved small amount trade enterprises along the borderland trade with border enterprises or other trade institutions of neighboring countries at the state-appointed border ports.

Other similar border trade other than border people mutual trade will be regulated in reference to the small amount border trade.

Apart from tobacco, wine and cosmetics which will be taxed according to law, other commodities imported through small amount border trade at the appointed ports will be taxed half of the import tax and import link value-added tax. Imported materials exchanged through foreign economic and technological cooperation through border areas will be considered in the light of the above-mentioned policy.

Foreign trade departments will give certain preferential treatment to import and export commodities under quota license exchanged through small amount border trade.

Section IV: China’s Anti-Dumping Policy and Procedures

In case an imported product, by means of dumping or subsidies, has caused substantial damages or has constituted the threat of substantial damages to related industries that have been established in China, or has caused substantial barriers to the establishment of related industries in China, the relevant departments of the Chinese Government will adopt anti-dumping or anti-subsidy measure in accordance with the “Anti-Dumping and Anti-Subsidy Regulations of the People’s Republic of China.”

I. Anti-Dumping Procedures and Competent Authorities
1. The Ministry of Commerce is in charge of accepting anti-dumping applications and will decide whether to place a case on record;

2. The Ministry of Commerce is in charge of making anti-dumping investigations together with the General Administration of Customs and issues the initial ruling; and the Ministry of Commerce is also in charge of investigating the damages and issues the initial ruling, together with relevant competent industrial departments;

3. In accordance with the investigations on the dumping and damages and the ruling, the Ministry of Commerce puts forward the proposal on whether to levy and collect the anti-dumping tax;

4. In accordance with the proposal of the Ministry of Commerce, the State Council Tariff and Tax Regulations Commission decides on whether to levy and collect the anti-dumping tax, and sets the tax rate and the collection duration; and

5. The General Administration of Customs is in charge of implementing anti-dumping measures.

II. Anti-Dumping Applications and Acceptance
A domestic producer of the same products as or the similar products to imported products or a related organization both can file a written application for anti-dumping investigations to the Ministry of Commerce. The Ministry of Commerce is a competent department that accepts applications for anti-dumping investigations, and decides whether to place a case on record and notifies related parties of interests.

III. Duration of Anti-Dumping Investigation
The duration of anti-dumping investigations is 12 months from the date when the announcement on placing the case on record is made to the date when the announcement on the final ruling is made. It may be extended to 18 months under special circumstances.

IV. Forms for Anti-Dumping Investigations
While making anti-dumping investigations, relevant departments in charge of anti-dumping investigations may issue questionnaires to all parties of interests and conduct a sample survey. At the request of a party of interests, they should provide the opportunities for all parties of interests to state their views.

While accepting anti-dumping investigations, all parties of interests should earnestly state circumstances and provide related data. Otherwise, the competent department may issue a ruling according to the materials it has acquired.

V. Anti-Dumping Measures
Once the initial ruling states that dumping does exist and has caused damages to a domestic industry, the following temporary anti-dumping measures may be taken:

1. Levying and collecting the temporary anti-dumping tax in accordance with prescribed procedures; the duration of the temporary anti-dumping tax is four months from the date when the announcement on the decision concerning the temporary anti-dumping measures is made, and may be extended to nine months under special circumstances.

2. Demanding that guarantee fund in cash or other forms of guarantees be provided.

A dealer in the export of dumping products or the government of the exporting country may file an application for the price commitment to the Chinese Ministry of Commerce. The Ministry of Commerce can decide to accept the price commitment through negotiation, thus halting anti-dumping investigations. But should the price commitment fail to be executed, anti-dumping investigations may be resumed.

Should the final ruling state that dumping does exist and has caused damages to a domestic industry, the anti-dumping tax may be levied and collected. The duration of levying and collecting such a tax and the price commitment is five years.

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