News / 05-02-2018

In 2017, the Chinese authorities announced a number of key reforms to customs procedures that on their face, look to facilitate the movement of goods across Chinese borders. One of the major announcements was the national roll out of a “standard” Single Window system. This article looks at the changes this brings to the old system and the implications for traders.

From fragmentation to consolidation

In China, some degree of Single Window (“SW”) has been in place since 2012. At first, the General Administration of Customs of China (“GACC”) collaborated with the General Administration of Quality Supervision Inspection and Quarantine on launching pilots on “single declaration, single inspection and single release”, which form the basis for the “single window” model. Such pilots were implemented across eight provinces (municipalities) including Guangdong, Tianjin, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Shanghai and Fujian, representing a total of 17 customs territories.1

The pilot system was subsequently succeeded by a “one-stop approval and single-window clearance mechanism”, which was promoted in 2014, by Premier Li Keqian. Again, this new clearance mechanism was only available in certain provinces and cities.

Currently, each province has its own, local version of the SW system, with different functionalities and different levels of sophistication, meaning that no, universal system was available. However, on 27 November 2017, the GACC announced that the “Standard Version” of the SW platform (the “Platform”) was now in place. This Standard Version covers all 31 provinces and regions within China, in an effort to centralise data and information. The “standard version” of the Platform is reported to cover all trade ports with a total of 35,000 registered users with more than 100,000 daily declarations and offers 9 functions.2 The Platform is running concurrently with the local SW systems.

From delays to efficiency?

Prior to the implementation of the Single Window platform, import and export businesses were required to submit trade documents to a number of different authorities: Customs, the GACC, Inspection and Quarantine; the China MSA; immigration inspection, and other departments. Declaration processes were often complicated, time consuming and duplicative. For instance, the importation of goods carried in a container used to involve 9 steps, 24 processes, and the submission of 15 types of documents.3 Customs clearance alone often exceeded 3 days.4

The implementation of the new Platform is expected to significantly reduce the time for customs clearance. Instead of having to manually submit the same information and declarations repeatedly to the different government agencies, the new Platform allows enterprises to submit their declaration and information only once onto the online Platform, which will then be automatically passed on to the different government agencies.

Prior to SW, preparation of declaration papers typically took approximately 30 minutes.  Together with a more user friendly interface, the preparation time is expected to reduce from 30 minutes to 5 minutes. At its optimal, customs clearance is expected to take only 2 hours, as compared to the 3 days previously required5. That has a significant impact on delivery times and costs. It is estimated that the total costs for customs clearance can be reduced by 50% by using the new Platform.

Multiple inspections of cargo by different law enforcement agencies used to be required, in order to satisfy the regulatory requirements of the different departments. Joint inspection is expected to be the new norm. With the Platform, containers are only expected to be opened once for inspection. In theory, upon receipt of the online declaration, should any of the departments deem the goods to be suspicious, the other agencies will be notified and will attend the port for a joint inspection.6

Am I eligible to open an account on the Platform?

The Standard Version of the Platform (and all the local platforms) is currently available only in the Chinese language. Through the website, one can apply for an account as a corporate or an individual user. The registration process appears to be rather straight forward. All that is required are the Uniform Social Credit Code, Organisation Code, name of Corporate; name of the person in charge, and his Identification Document number. It appears that so long as these information are available, one can register for an account. There does not seem to be any restriction in place for the registration of an account.

Supplementary reforms

To the central government, cooperation between departments is not always easy, as they have different protocols as well as standards. Despite these inherent challenges, internal reforms have been carried out in the different departments, to allow the smooth running of the Platform. For instance, the Ministry of Public Security has issued a memo directing all border inspection agencies to cooperate; the Ministry of Communications has updated its Vessel Safety Supervision Management system, in order to make information more easily available on the Platform; the General Administration of Quality Supervision has updated its Electronic Certificate of Inspection and Quarantine system; and both the Ministry of Agriculture and State Forestry Administration proposed that by the end of 2018, all release notices for pesticides and license for import and export of wildlife can be applied for and obtained through the Platform.7

According to a director of the National Office of Port Administration, the next step is for the Platform to include functionalities that cover the Free Trade Zones, the Pilot Free Trade Zones, Special Customs Supervision Areas (保税区、出口加工区、保税物流园区、跨境工业园区（ 包括珠海跨境工业园区 ,霍尔果斯边境合作区）、保税港区、综合保税区,) and the Cross-Border E-Commerce Comprehensive Pilot Zones.  Application of the Platform is expected to be even more widespread by then, further easing the speed of trade.  

What about Hong Kong?

At the moment, Hong Kong has no SW in place. The Economic Development Bureau has been well aware of this, and had set up a new Project Management Office (“PMO”) dedicated to the development of one several years back. A Public consultation exercise was concluded in July 2016. One of the major views was that electronic submission of business-to-government (B2G) documents to SW would streamline the business process and would bring about savings in manpower and operating costs, owing to the SW’s capabilities to facilitate data re-use and data-sharing.

Further to the consultation paper, in April 2017, the way forward for a Hong Kong SW System was discussed in the Legislative Council. It was proposed that phase 1 of the SW system should be rolled-out in Q2/2018, covering 14 trade documents, allowing applications to be made through the SW on a voluntary basis. Phase 2 is expected to roll out by 2022. By then, submission of all 40 trade documents (including the 14 documents under Phase 1) would be mandated to be done through the SW by way of legislation. The final phase is expected to roll out in 2024, where the submission of all Import and Export Declaration and the revised pre-shipment documentation proposal are mandated to be done through the SW.

A lost opportunity?

Not quite lost, but definitely late. It is reported that the GACC expects all functionalities of the Chinese SW system to be implemented nation-wide by 2020, and anticipates that the Chinese SW system could connect and share data with the HK SW by then, in order to facilitate the surge in import and export trade arising out of the Belt and Road initiative.8

As mentioned above, the Hong Kong system would not be fully implemented until 2024 at its earliest. Commentators fear that Hong Kong is too far behind schedule and would miss much of the cross-border e-commerce development opportunities.  This is especially so where standardisation and integration of SW in Hong Kong and other cities of the Greater Bay Area is considered as one of the major directions in facilitating trade flow and logistics operations efficiency in the region.

 

1  http://hkmb.hktdc.com/en/1X09X8FX/hktdc-research/China-Customs-announced-a-single-window-clearance-mechanism

2  Ibid.  The 9 functions are: (i) Declaration of goods; (ii) Cargo Manifest Declaration; (iii) Declaration of the arrival of the means of transport; (iii) Application for Licensing Documents; (iv) Application for Certificate of origin; (v) Administration of qualifications of enterprises; (vi) Status Tracking; (vii) Export tax rebate; and (viii) Payment of tax.

3  http://www.gov.cn/xinwen/2017-...

4  http://news.takungpao.com/pape...

5  http://news.takungpao.com/pape...

6  http://finance.jrj.com.cn/2017...

7  http://finance.jrj.com.cn/2017...

8  “Logistics and Trade Facilitation in Guangdong-Hong Kong- Macau Bay Area: Stakeholders Concerns, Comments from Central Government, and Policy Recommendations” - https://prisc.hsmc.edu.hk/publ...