The cross-border e-commerce industry in China has experienced rapid global growth since 2022, supported by favorable tax policies and subsidies. According to data from Chinese Customs, cross-border e-commerce imports and exports amounted to 577.6 billion yuan ($81.27 billion) in the first quarter of this year, a growth of 9.6 percent. Cross-border e-commerce is entering an “accelerated growth” phase, making global buying and selling smoother. Since 2014, cross-border e-commerce has been included in the Chinese premier’s Government Work Report for 11 consecutive years, recognized as a new driving force for boosting foreign trade growth. The state media reports that the regime has established 165 cross-border e-commerce comprehensive pilot zones, where e-commerce retail export goods enjoy governmental subsidies such as tax rebates.
However, analysts warn that this surge brings significant concerns, including tariff evasion, product dumping, and the protection of private data. Economist Davy J. Wong told The Epoch Times that while most countries offer some level of export incentives and subsidies, the international norm is that these benefits should not harm the interests of the receiving countries. Mr. Wong believes China’s practices violate the principles and spirit of fair international competition and typically lead to sanctions from the affected countries.
According to the Shanghai Taxation Office, Beijing started the export tax rebates policy as early as 1985 to enhance its competitiveness in foreign markets by eliminating double taxation on exported goods. Through multiple tax reforms, Beijing revised the tax rebate policy to allow a zero-tax rate for all export products with limited exceptions starting from March 20, 2020. Mr. Wong further claimed that Chinese cross-border e-commerce companies exploit loopholes such as the U.S. de minimis rule, which exempts imports valued under $800 from duties and taxes. He alleges that they break down shipments into smaller parcels priced as low as $3.99 or $4.99, and these companies flood the U.S. market with low-cost goods.
This practice not only bypasses tariffs but also undermines the local markets for small goods and light industrial products in the West, causing devastating impacts without contributing to local tax revenues.” In 2018 and 2019, during the U.S.-China trade war when tariffs on Chinese goods were increased, they used these methods and various subsidies to penetrate the U.S. market and circumvent tariff barriers,” Mr. Wong added.
Economist Li Hengqing said that after the collapse of China’s real estate market, property values have plummeted, causing a rapid decline in ordinary people’s wealth. In this situation, Beijing needs to find alternative strategies. One significant opportunity is to capture international markets and export excess domestic production capacity to various parts of the world. Frank Tian Xie, a business professor at the University of South Carolina Aiken, believes, “The issue of excess capacity for small commodities is not that severe, and its impact is relatively minor. However, the problem becomes more significant when it comes to large-scale industries like steel or aluminum.
Regarding data protection concerns, Mr. Wong alleged that Chinese cross-border e-commerce platforms have always quietly collected user data. It is an indisputable fact that a large amount of Chinese big data is obtained, misused, and sold in a manner that disregards any limits, regulations, or legal awareness, infringing on user privacy.” In 2017, the Chinese Intelligence Law stipulated that “any organization and citizen shall support, assist, and cooperate with national intelligence work according to the law.” On April 26, 2023, China’s latest revision of the Counter-Espionage Law expanded the powers of national security personnel to “review and retrieve data, summon individuals, and inquire about property information” for those suspected of espionage.
As a result, Mr. Wong believes that Chinese e-commerce platforms will be even more unscrupulous toward Westerners. These platforms will definitely compromise the data security of a large number of European and American users by leaking, misusing, and selling specific personal information and banking information, severely threatening the safety of European and American residents and, of course, affecting national security as well.