China Prepares Legislation to Regulate E-commerce Industry

Though little is known about the specific contents of the draft legislation, it is expected to improve efficiency in customs clearance for cross-border online shopping and set up dispute settlement mechanisms.

China’s top legislators are considering new legislation to regulate the country’s booming e-commerce industry.

A draft of the new legislation was submitted for a first read through to legislators attending the bimonthly session of the National People’s Congress Standing Committee in Beijing on Monday.

Though little is known about the specific contents of the draft legislation at this time, it is expected that it will, at least in part, improve efficiency in customs clearance for cross-border online shopping, and set up dispute settlement mechanisms with countries and regions involved in cross-border transactions with China.

Financial and economic affairs committee’s deputy director Lyu Zushan made a presentation to the NPC’s Standing Committee, according to Chinese state media. Lyu said e-commerce trade amounted to more than 20 trillion yuan, or about $2.87 trillion at current exchange, in 2015, with online retail sales totaling 3.88 trillion yuan, or approximately $559 billion.

“Promoting e-commerce is conducive to China’s opening-up strategic layout and the optimization and upgrading of its foreign trade,” Lyu was quoted as saying in a press report. “It is also conducive to building the Belt and Road Initiative and to implementation of the FTA [free-trade area] strategy.”

China’s Ministry of Commerce has predicted the volume of cross-border e-commerce in 2016 will reach 6.5 trillion yuan, or $936 million, and will soon account for 20 percent of China’s foreign trade.

The accounting surrounding e-commerce in China has come under scrutiny lately. Earlier this month, the China Consumers Association, a state-backed advocacy group, claimed that up to 17 percent of promotions on major e-commerce platforms over the Singles Day sales period in November were misleading.

Meanwhile, the China’s State Administration for Industry and Commerce met with major e-commerce players in China to warn against unfair sales and marketing practices ahead of Singles Day. Separately, the U.S. Securities and Exchange Commission is investigating Alibaba over accounting practices, investments and how it reports operating data.

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