Why China wants the U.S. to stay away from century-old trade rules that affect imports under $800

“Foreign trade is bleak overall, but it actually has little impact on cross-border e-commerce,” Wang said, adding that the main destination for these parcels is the United States. It pointed out.

Recent Chinese government data shows how important the small goods trade has become in offsetting declines in the country’s traditional export routes, with the value of such goods reaching a quarter of a trillion dollars a year. Over.

At the center of the growth and controversy lie longstanding American trade provisions known as “trade agreements.” minimal rule.

This will allow businesses to ship packages worth less than $800 within the United States without paying import duties, taxes, fees or going through onerous vetting procedures. In 2016, the amount was increased from US$200 to ease the burden on American customs officials.

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But in the years that followed, resentment against the world’s second-largest economy became more pronounced, with U.S. critics arguing that the rules gave Chinese e-commerce platforms and sellers an unfair advantage and drove U.S. retailers closer to home. He claimed to have been locked out.

That puts China’s burgeoning e-shopping industry, and by extension the country’s countless manufacturing plants, at risk of huge economic losses, especially as momentum builds in the United States to overhaul century-old trade rules. There is.

Two bipartisan bills introduced in the U.S. Congress would lower thresholds or eliminate provisions to ensure that shipments from certain countries, such as China, would not benefit.

“Oh my god! minimal Potential changes to the rules will be an important issue to watch in 2024, said Sheng Lu of the University of Delaware.

Meanwhile, far from Washington, Beijing-based e-commerce veteran Annie Yuan is having her busiest day yet.

The company is just one of many logistics companies that have contracts with major U.S. e-shopping platforms, including fast-growing Chinese-backed companies Temu and Shein.

“The purchasing power of U.S. consumers is tremendous,” said Yuan, who has worked in cross-border e-commerce for 10 years.

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With many of Temu’s items valued at less than $10, last-mile door-to-door delivery within the U.S. accounted for the majority of the total amount spent by shoppers.

Thanks to the “Factory of the World’s” large-scale manufacturing capacity and efficient supply chain operating platform, production and transportation costs within China and from the mainland to the United States can be minimized, Yuan said. Stated.

In 2023, U.S. Customs and Border Protection processed approximately 1 billion entries minimal According to the agency, shipments this year increased by 46% compared to the previous year.

No matter how you look at it, these shipments are becoming increasingly essential to China’s economy, with exports accounting for nearly 20% of them.

To compound the challenge, Western countries are “de-risking” their supply chains from China, and multinational companies are implementing strategies to no longer rely solely on China for production.

Exports to the United States in 2023 recorded the largest decline in about 30 years. However, China’s e-commerce exports are growing rapidly.

In renminbi terms, the country’s overall exports last year increased by only 0.6% compared to the previous year.

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However, according to preliminary estimates from China’s customs, small e-commerce parcels surged by 19.6% to reach 1.83 trillion yuan (US$258 billion), accounting for more than 7% of total exports.

In Guangdong province, which accounts for one-third of China’s industry sales, the total value of imports and exports through e-commerce was 57 times higher than in 2015, according to data from the Guangdong government.

Expanding exports through e-commerce was discussed at the central government’s annual conference in December. Many local governments have pledged to step up development, including building more warehouses for small parcel exports.

Of the total number of e-commerce packages shipped overseas in 2022, more than one-third were destined for the United States, and one-third were classified as “clothing, shoes, and bags,” according to a Chinese customs report. It became clear.

In the United States, complaints such as the following soon arose one after another. minimal This regulation allowed entry into forced labor products.

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“Trade loopholes allow Chinese companies to import goods into the United States without oversight, allowing them to bring cheap counterfeit goods and drugs into our communities that hurt the profits of American manufacturers,” Baldwin said. I forgive you,” he said.

The Wisconsin Democratic Party said the bipartisan bill would “close this loophole” and “help ensure Americans do not support products made with forced labor.”

That same month, the Congressional Select Committee on the Communist Party of China released a report finding that Tem and Shein were likely responsible for more than 30 percent of the shipments imported into the United States under the law. minimal Regulations.

“This result is shocking,” said committee chairman Mike Gallagher (R-Wis.). “Tem does little to protect its supply chain from slave labor.”

“Tem and Shayne are building an empire around the world. minimal Loopholes in our import rules allow us to avoid import taxes and oversight on the millions of products we sell to Americans. ”

Tem told the Post that the company’s growth does not depend on influence. minimal We attribute our rapid expansion and market acceptance to our supply chain efficiency and operational capabilities.

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“We welcome and support policy adjustments by legislators that align with the interests of consumers,” Tem said. “We believe that as long as these policies are fair, they will not impact competitive business outcomes.”

A Shein spokesperson said the company is working closely with industry peers and policymakers to support reform. minimal.

“We believe this exemption requires complete reform, which is critical to holding all retailers accountable for responsible business practices,” she said.

Despite bipartisan support for the bill, analysts expect final passage to be difficult given the election-year political climate and a divided Congress that already faces a busy agenda. ing.

Mr Lu thought it was “very uncertain” whether any changes would occur.

“Not everyone agrees on how to reform.” minimal [rule],” he said. “In addition, US e-commerce businesses and influential logistics companies are benefiting from this. minimal The rules may oppose attempts to cancel benefits currently enjoyed. ”

And U.S. policymakers may lack sufficient data to support potential rule changes and assess their impact. minimal The cargo was exempted from customs inspection, Lu added.

Andy Tsai of Santa Clara University believed that even if such an outcome were widely desired, it would be difficult to predict whether the law would pass in an election year.

“As for our U.S. customers, if you ask them directly, they’ll say, ‘Yes, we’re against forced labor, and yes, we want to be tough on China,'” Tsai said.

“But they also want something cheaper, especially since inflation has been a big issue in the U.S. for the past two years.”

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“Politicians need to understand the difference between what American customers want and what they actually want when deciding whether it will help them get re-elected,” he added.

Exclude minimal The move could double costs for U.S. small businesses and consumers and require U.S. Customs to hire 22,000 additional employees, according to the advocacy group National Trade Council.

Aside from the looming legislation, companies like Renminbi are already facing hurdles arising from new export strategies.

Since December, Yuan has been warning customers about possible delays in the clearing and delivery of their packages.

U.S. Customs has begun stricter inspections of: minimal Last Saturday’s luggage. Now, when an aircraft arrives at a port, cargo is not allowed to move until customs officials arrive on the scene to verify the information and make the necessary holds.

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“The new customs procedures have just started, so we are still observing their impact,” Yuan said. “All I can say is that it definitely has an impact on logistics efficiency.”

“It’s very opaque to us at this point, and to be honest, this is beyond our control,” Yuan said, adding that the issue “is largely a matter of lobbying by the biggest stakeholders.” “It’s something that should be done,” he said.

“If lobbying doesn’t work, [de minimis rule changes] It will definitely affect the entire industry chain. ”