What's the next step for offshore trade?

Source: China Trade News By zhang Weilun

Along with our country economic growth mode transformation and the new development pattern of "binary" construction, foreign trade to achieve high quality development must closely rely on innovation, reform, open the three power, also should give full play to the advantage of mechanism of system in our country, to get more market main body at a higher level to participate in the international division of labor, the service configuration and flow of factors of global production. Promoting the new and diversified international trade activities is not only an important starting point for China to deepen the reform in the field of foreign trade, but also an inevitable choice to effectively cope with the complex and changeable international economic situation in recent period. China Trade News reporters noted in their research that in recent years, new offshore trade has been accelerated in Shanghai, Zhejiang, Tianjin, Chongqing and other pilot free trade zones, as well as in Hainan free trade port. This can be regarded as an effective way to enable the high-quality development of foreign trade and adapt to China's current foreign trade transformation.

New forms of business bring new opportunities

As a new type of international trade, offshore trade is a comprehensive and comprehensive form of international trade that can effectively reduce the import and export operating costs of foreign trade enterprises. It is an extension and development based on the international entrepot trade model. In the international trade practice, the traditional offshore trading usually contains "goods through the port of entrepot trade in our country" and "goods through the port not pure overseas on business," the two forms, but as the digital trade and service trade spurt in recent years, the territory of China main body participation in international trade division of labor deepening, trade links and trade patterns gradually varied, Offshore trade is also harder to divide simply by route.

The Ministry of Commerce pointed out in the 14th Five-Year Plan for High-quality Development of Foreign Trade last year that it would support the development of offshore trade in accelerating the development of new forms of trade. Specific measures include supporting the development of offshore trade in Hainan Free trade Port, pilot free trade zone and other places where conditions permit, exploring the cultivation of a group of offshore trade operators with strong risk control capabilities and sound internal compliance systems, and promoting the establishment of national or regional offshore trade organizations.

Relevant scholars also pointed out in the interview that offshore trade has certain advantages in transaction matching, resource integration and capital settlement, and can effectively realize the separation of order flow, goods flow and capital flow. Under the current background of China's construction of "double cycle" pattern, the development of offshore trade can not only enrich China's current trade pattern, but also further enhance the adhesion between China and the world economic system.

For the majority of market players, participation in offshore trade can not only expand business scope, effectively create more orders, but also effectively reduce trade costs. For example, in the China (Chongqing) Pilot Free Trade Zone on June 7, chongqing Huidi Aviation Equipment Co., Ltd. completed an offshore trade of aviation lubricants worth $430,000. Compared with the previous mode, the logistics cost of the enterprise is reduced by 60%, the transportation time is shortened by 77%, and the tax is saved by 200,000 YUAN.

Against the backdrop of repeated impacts of COVID-19, increasing geopolitical risks and accelerating reconstruction of global value chains, industrial chains and supply chains, the development of offshore trade can facilitate the free entry and exit of goods and capital, improve the efficiency of China's international trade and promote economic strength.

New opportunities and new challenges remain

The pilot free trade zone (port), as the experimental field of reform and opening-up, is an important hub and platform for the development of offshore trade. From the practice of Shanghai and Hainan in recent period, vigorously promoting the development of offshore trade has become an important way to gather high-level trade headquarters, build an international trade center, and enhance regional radiation and influence in the international economic and trade pattern.

In fact, the development of China's offshore trade is still in the primary stage. This new type of trade forms also put forward higher requirements for the related tax system environment reform. Reporter noted that in the State Council issued by the innovation for the reform of promoting free trade area trade and investment facilitation measures notice in particular, "support the development of the free trade area offshore trade, conform to the tax system reform direction, not shifted tax base erosion and profit under the premise of research demonstration enterprise income tax, stamp tax policies".

The rapid development of offshore trade in free trade zone needs strong support of offshore trade tax policy. Insiders told reporters that in terms of the current tax environment, the effect of the existing supportive tax policies is relatively weak. In order to promote the development of offshore trade, it is urgent to combine the transaction mode of offshore trade and study the supporting tax policies. In order to support the development of offshore trade, attract offshore business agglomeration, promote capital flow and information flow to the headquarters, and enhance the comprehensive economic strength of the headquarters, many developed free trade ports (areas) will provide certain tax policy support for offshore trade.

In addition, offshore trade also needs to improve cross-border financial services capabilities, in particular by strengthening supervision of a range of cross-border businesses. Stable political and economic environment, preferential tax arrangement, simple transaction process and efficient supervision mode are indispensable conditions for offshore business. However, China still has much room for improvement in institutional openness, information openness and transparency. Although China has a large trade scale, its ability to coordinate international business needs to be further enhanced.

New challenges require new thinking

In the interview, the reporter learned that due to the characteristics of offshore trade, goods do not enter the country and it is difficult to verify the customs information, relevant cross-border settlement business is not only the focus of the supervision department's inspection, but also the practical difficulties in cross-border settlement. The full set of original B/L cannot be provided to the bank. Only the electronic version of telex release B/L can be provided, which cannot reflect the complete transfer record of cargo rights... These new problems require new and innovative ways to solve them.

And in the exploration of solutions, often involve the coordination of multiple regulatory departments. Under the framework of free trade, the Binhai New Area Central Branch of the State Administration of Foreign Exchange (Binhai New Area Central Branch of the People's Bank of China) and the Administrative Committee office of the China (Tianjin) Pilot Free Trade Zone held an on-site promotion meeting for offshore trade business in a company engaged in offshore trade. The meeting convened foreign exchange administration departments, territorial administrative departments, commercial banks and offshore trade implementing enterprises to explore and promote new business in the form of on-site office meetings, and effectively support real economy enterprises to develop new trade business.

"The successful implementation of offshore trade business can not only significantly reduce the logistics operation cost of international trade for headquarters companies, but also help improve the position of tianjin local companies in the industrial chain and value chain, and enhance international competitiveness and trade discourse." Said the head of the foreign trade enterprise.

Relevant experts suggest that in the face of these new problems, on the one hand, it is necessary to support qualified places to improve the supervision capacity of offshore trade by means of science and technology, solve the problem of trade authenticity verification by using big data and block chain technology, and explore the supervision path by making full use of information technology and sandbox supervision. On the other hand, we can learn from the experience of Hong Kong, Singapore and other first-class offshore financial centers to build a legal environment in line with international standards.

Responsible editor: Ge Yan