Speech at “A new Silk Road for E-Commerce” session of the 10th Digital Regulation Forum
21 April, One Whitehall Place, London
By Xiaoguang Yang, Counsellor of the Chinese Mission to the EU
Ladies and Gentlemen,
I am pleased to attend this new Silk Road for E-Commerce session of the 10th Digital Regulation Forum. On behalf of the Chinese Mission to the EU, I thank the Organizers of this event to invite me to this forum. And I will focus my contribution on 3 points: the booming E-Commerce in China, Chinese Regulations on E-Commerce and Cross Border E-Commerce, and the way to build a Digital Silk Road between China and the EU.
Let me start by introducing the newly passed 13th Five Year Plan of China. It is the guiding principle for China’s development in the coming 5 years. The most important concepts for this new 5 year plan are innovative, coordinative, green, open, and shared growth. The Chinese people are good at putting concept into reality. The future 5 years are essential for China to turn herself into a more open, green and knowledge based economy. In the 13th 5 year plan, we aimed at building a “digital China” at a faster speed. We are going to perfect the new generation of high speed fiber-optical network, we’ll provide 1000 Mega bytes high speed network in urban areas, and cover more than 98% of China’s villages with fiber-optical network. On mobile networks, 4G will be popularized at town or village level. 5G will be commercially initiated. We’ll also promote the “Internet plus” project, linking it with the commercial and service pattern in the internet age, to forge a new ecological system of “internet plus.” In other words, E-commerce in China will enjoy a new round of development.
According to a report from Mckinsey, China has been the largest, and the fastest growing E-Commerce market in the world. In 2015, online retails reached 630 billion US dollars, 80% larger than that of the United States.
China had more than 5000 different types of cross-border online platforms serving over 200,000 companies of e-commerce operations in 2015. Driven by the rapid growth of e-commerce, small and medium sized e-commerce companies have become a new growth focus in China. In 2015, Alibaba rose to number one in the retail category ahead of Amazon and Walmart.
Why China’s E-Commerce develops so fast? I saw a figure, 72% of China online shoppers keep online all day. Jack Ma, founder of Alibaba, was once quoted as saying: “in other countries, e-commerce is a way to shop, in China it is a lifestyle”. In China’s Singles Day (11 November), E-Commerce platforms usually make big online promotions. Last year, Alibaba’s sale was over 14 billion US dollars on 11 November. People said Jack Ma was backed by 700 million women buyers. There are also many jokes on this online promotion day. Many people try their best to prevent their wives from excessive spending online on 11 November. Since most wives wait till 12 o’clock at night on 10 November, and continue purchasing online for the whole day, husbands are advised to think out some way to stop their wives. And finally they have one. That is, they use their wives’ online users name and online bank accounts to log on 2 hours before the promotion begins, but intentionally input with wrong passwords for three times. Then husbands can feel safe and go to bed because their wives online account will be locked for 24 hours and they are helpless in making the online purchase. Another joke goes like this. At midnight on 10 November, the husband returned home from extra work feeling so tired. Then he found a piece of paper on the desk written by his wife, saying: Dear Husband, I moved so many goods into the shopping cart for the whole afternoon. I’ve done so much labour, and so tired I am. Now I have to go to sleep. Please just finish the easiest part of the shopping then. Don’t make me disappointed. Dinner is in the Microwave oven. Love you. The husband went into the bedroom and saw his wife fell into deep sleep. So tired was his wife, he burst into tears, feeling sorry for her. Then he came silently to the computer, and click the mouse on the icon “payment for all.” He realized next month he would have to work extra hours again.
My second point is on China’s laws and regulations on E-Commerce.
Currently, China is making its first law on E-Commerce. This is regarded as one of the most important legislative task of China. The legislation process has started and runs smoothly. It is reported that the Draft law will have 130 articles, covering electronic contracts, net payments, personal data protection, consumer rights protection, etc. The purpose of this legislation is to promote the sound and smooth development of E-Commerce and information exchange, safeguard E-Commerce safety, protect all parties’ legal rights, improve the reliability of the E-Commerce market, to ensure a healthy development of the Chinese market economy.
According to some legal experts, there are 3 basic principles of this new legislation: (1) to encourage innovation, competition, and development. (2) To ensure the normal market order. (3) To protect the market and the legal rights of every party in the market.
It is also reported that this E-Commerce law draft will be presented to the National People’s Congress, which is the highest legislative body in China, by the end of next year.
But China is not short of regulations on E-Commerce. Last May, the State Council issued a guideline on E-Commerce, aiming at promoting innovation and standardizing market order. According to the guideline, China is going to build a big orderly E-commerce market by 2020. E-Commerce will be an important platform for promoting entrepreneurship, stabilizing employment, and improving service on people’s livelihood. It is aimed at creating a relaxed environment for E-Commerce in China, lowering the market access threshold, reducing tax burdens, strengthening financing support and maintaining a level playing field.
Also included in the guidelines are, strengthening E-Commerce international cooperation, and improving cross border clearance efficiency. The Chinese Government will also try its best to safeguard online security and online transaction security, to further promote online business.
So far, cross-border E-Commerce is also a hot topic in China. On April 8th this year, the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation jointly issued a directive regulating import tax of retailed commodities through cross border E-Commerce. In coordination with this new policy, the Ministry of Finance and 10 other Ministries also published 2 positive lists of imported goods through cross border E-Commerce. The General Administration of Customs also published a proclamation on the supervision of imported commodities through cross border E-Commerce. The new policy is aimed at tax regulation and protection of consumers. The positive lists can meet most demands in China, including nearly 1300 commodities like food and beverage, textiles, electric apparatus, personal care products, etc. So it will be a long term bonus for China’s cross-border E-Commerce. Although some people worried that the new policy may bring extra costs to consumers by higher tax, however, the new policy offers favorable tax rates, and it is beneficial for E-Commerce companies to lower logistic cost, shorten clearance period, thus it will not bring extra costs to the consumers.
My third point is on building a Digital Silk Road between China and the EU.
Last year, during the 17th China EU Summit, leaders from both China and the EU agreed to build 5 new platforms for cooperation between China and the EU, namely, to build synergies between the One Belt One Road initiative (OBOR) and the European Investment plan, to jointly build connectivity platform, to strengthen digital cooperation, to set up legal affairs dialogue, and to facilitate people to people exchanges. This year is regarded as the year of early harvest of the 5 new platforms.
Among the 5 new platforms, OBOR, connectivity, and digital cooperation are closely linked to building a new silk road between China and the EU. Therefore, I am quite optimistic on this initiative.
We have solid foundation for cooperation on E-Commerce between China and the EU. It is estimated that so far there are about 300 million Chinese people who are considered as middle class population. In the future 15 years, about 1 billion will join the so called middle class group. And this will generate a huge market for high quality products and high quality services. It is no doubt an opportunity for the EU since its products meet the Chinese demands.
European consumers also benefit from Chinese products that are fair in prices and good in quality. According to a German report, import from China help European families save 500 Euros each year.
Europe is an important cooperation partner for Chinese’s OBOR initiative. China is the only country outside the EU to express interest in joining the European Investment Plan, which will improve the European infrastructure and boost demand. When China and the EU work together, more grand ideas and projects will be achievable, which will invigorate the economy.
With the connectivity platform in progress, the “China-EU grand passageway” will help shorten the transportation time, and improve customs clearance efficiency. This will certainly be good news for E-Commerce between China and the EU.
The Digital Silk Road initiative is a grand idea. With supports form both China and the EU, I believe it will enjoy great potential. I welcome ideas and efforts that help turning this idea into reality.