China's Central Government Redirects Exports to Domestic Market
The country aims to boost domestic sales of overstocked products amid falling international demand.
The chief administrative authority of China issued official guidance on Monday, supporting the transfer of exported products initially destined for export to be sold domestically.
As the demand from major overseas markets is curbed by the coronavirus pandemic, State Council said in a statement today that products for overseas shipment are allowed to be sold domestically from now until the end of 2020.
These products, which are produced according to the standards of the export destination country, should meet China's domestic standards the government department requires. The delay or cancellation of overseas orders due to the pandemic means these products can't be shipped.
The central government asked several ministry-level administrative agencies to support domestic sales. Under the guidance, the Ministry of Finance, People's Bank of China, and the China Banking and Insurance Regulatory Commission should offer financial and insurance support. The General Administration of Customs of China, tax department and other regulators should simplify the collection process.
The government department said it will support the transfer of domestic sales from multiple channels through e-commerce platforms and local offline sales.
"We encourage foreign trade enterprises to turn to e-commerce platforms and implement promotion activities for foreign trade products through various online shopping festivals," the government department said in the statement.
China's exports fell by 4.9% in May year-over-year, following growth in April, totaling 1.46 trillion yuan ($209 billion). To compare, imports plummeted 12.7% from the same month last year, falling in at 1.01 trillion yuan ($144 billion).
"With regard to short-term China's foreign trade performance, we are also closely monitoring and researching and judging," Feng Gao, the spokesperson of the Ministry of Commerce, said at a regular press conference on June 4.
"Currently, there are still many uncertain and unstable factors," Gao added.
In contrast to weakened demand overseas, Chinese online retailers reported recorded record sales of 33% year-over-year sales growth on Thursday's China's midyear "6.18" shopping festival.
The overall online sales for the 18-day shopping event totaled $136 billion. Alibaba Group (NYSE: BABA; HKEX: 09988) and JD.com Inc. (Nasdaq: JD) were responsible for $98 billion and $38 billion, respectively.