Chinese Customs and Tariff Law

Customs Law (1987 and 2021 Revision)

The Customs Law of the People’s Republic of China (hǎiguān fǎ) was first enacted in 1987 and substantially revised in 2021, taking effect on 1 July 2021. The Law establishes the legal framework for customs supervision, tariff collection, customs declaration, and enforcement. The 2021 revision modernised the customs legal framework by introducing provisions for electronic customs clearance, risk management, post-clearance audit, and enhanced enforcement powers. The Law also strengthened provisions against smuggling and customs fraud, increasing penalties and extending the statute of limitations for customs violations from three to five years.

The Customs Law is administered by the General Administration of Customs (GAC; hǎiguān zǒngshǔ), which is responsible for customs policy, tariff administration, border protection, and trade facilitation. The GAC operates through regional customs offices at ports, airports, and border crossings throughout China.

Tariff Classification

China applies the Harmonised Commodity Description and Coding System (HS) for tariff classification, adopting the internationally standardised six-digit code structure with additional national subdivisions to eight or ten digits. The Import and Export Tariff Regulations establish the tariff schedule, updated annually by the Tariff Commission of the State Council to reflect changes in trade agreements, industrial policy, and international commitments.

The GAC Rules of Tariff Classification provide interpretative guidance for determining the correct HS code for imported and exported goods. Classification disputes may be resolved through the GAC’s classification review procedure or through administrative reconsideration and judicial review. Binding tariff classification rulings may be obtained from the GAC in advance of importation, providing certainty for traders. The GAC maintains a public database of classification rulings to promote consistency.

Customs Valuation

Customs valuation in China is governed by the WTO Customs Valuation Agreement, implemented through the Regulations on the Determination of Customs Value of Imported and Exported Goods (2013). The primary method is the transaction value method, based on the price actually paid or payable for the goods, adjusted for specified elements including commissions, royalties, and proceeds of subsequent resale. Where transaction value cannot be determined, the GAC applies sequential alternative methods: identical goods value, similar goods value, deductive value, computed value, and fallback method.

Related-party transactions are subject to particular scrutiny. Importers with transactions with related sellers must demonstrate that the relationship did not influence the price. The GAC may challenge transfer prices and substitute an independent market value. The GAC Guidelines on Related Party Transactions provide criteria for demonstrating that related-party prices are arm’s length, including reference to comparable uncontrolled prices, resale minus, and cost-plus analyses.

Rules of Origin

China’s Rules of Origin for Imported and Exported Goods (2004) establish the criteria for determining the country of origin of goods. For imports, the rules apply a wholly obtained standard for goods wholly produced in a single country and a substantial transformation standard using the 4-digit HS heading change as the primary test, with value-added percentage (30% or higher) as a supplementary test where heading change is insufficient.

For exports, the rules apply to the issuance of certificates of origin (yuánchǎn dì zhèngshū), which may be required for preferential tariff treatment under China’s free trade agreements. China has preferential rules of origin under bilateral and regional FTAs, including the Regional Comprehensive Economic Partnership (RCEP), the China-ASEAN FTA, and agreements with 28 other countries. The GAC administers both non-preferential and preferential origin certification.

Customs Declaration

All imports and exports must be declared to customs using the China International Trade Single Window (zhōngguó guójì màoyì dān yī chuāngkǒu), an electronic platform that integrates customs, inspection, quarantine, and trade control procedures. The Administrative Measures on Customs Declaration (2018) require declarants to submit accurate and complete documentation including invoices, packing lists, contracts, bills of lading, and any required licences or permits.

Declarations must be made within 14 days of the goods’ arrival for imports and before loading for exports. The GAC processes declarations through a risk-based system, with low-risk shipments cleared automatically and higher-risk shipments subject to documentary review or physical inspection. Post-clearance audit by the GAC may occur within three years of the declaration, examining the accuracy of classification, valuation, and origin declarations.

GAC Enforcement

The GAC exercises extensive enforcement powers under the Customs Law, including the power to inspect goods, examine records, detain suspect shipments, and impose administrative penalties. The Customs Administrative Penalty Regulations establish graduated penalties for violations: (1) incorrect declarations attract fines of ¥1,000 to ¥10,000; (2) false declarations affecting tariff assessment attract fines of 50% to three times the underpaid duty; (3) smuggling attracts fines of up to five times the value of the goods and potential criminal prosecution.

The GAC operates a risk management system that uses data analytics and intelligence to target high-risk shipments for inspection. The system considers factors including country of origin, commodity type, declarant history, and shipping patterns. The GAC also operates the Anti-Smuggling Bureau, which investigates and prosecutes serious customs offences with criminal penalties.

Trade Remedies

China applies trade remedy measures (anti-dumping, countervailing, and safeguards) under the Foreign Trade Law (2004) and the Regulations on Anti-Dumping, Regulations on Countervailing, and Regulations on Safeguard Measures (all 2004). The Ministry of Commerce (MOFCOM) conducts investigations and recommends measures, while the Tariff Commission imposes the duties.

China is one of the most active users of trade remedies globally, particularly anti-dumping duties on steel, chemical, and agricultural products. The GAC administers the collection of trade remedy duties at the border. MOFCOM’s investigation procedures include public notice, questionnaire responses, verification visits, and public hearings. Judicial review of trade remedy determinations is available through the SPC’s specialised international trade tribunal. China has also been a frequent respondent in WTO dispute settlement proceedings challenging its trade remedy measures.