Cross-border E-commerce: A booming sector in China’s economy

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01:24

One of the side forums at this year's Boao Forum for Asia is cross-border e-commerce. As more and more Chinese people shop online, cross-border e-commerce has grown rapidly in China in recent years.

Cross-border e-commerce refers to any online international sale of a product or service whether between a business (retailer or brand) and a consumer (B2C), between two businesses (B2B), or between two private persons or consumers (C2C) through an online marketplace platform such as Taobao, eBay or even Airbnb.

In 2018, China's retail imports of cross-border e-commerce reached 78.6 billion yuan, about 11.7 billion U.S. dollars, and a 39.8 percent rise year on year.

The most popular items online are digital home appliances, cosmetics, clothing, healthcare products and food. The spending power of Chinese consumers will be further unleashed thanks to a new policy.

VCG Photo

Effective January 1, the annual quota on cross-border e-commerce purchases for individual buyers will rise to 26,000 yuan (about 3,741 U.S. dollars) from 20,000. And the tax-free limits on single transactions will increase to 5,000 yuan from 2,000.

The expanded quota will win back consumers who are fond of shopping overseas and unleash more spending power.

Last November, Chinese Premier Li Keqiang said at a State Council meeting that the country needs to promote new forms of industry including cross-border e-commerce and adopt a new approach of prudent, accommodative and effective regulation. He says boosting cross-border e-commerce will contribute to high-level opening-up as well as promote steady growth of foreign trade, drive consumption and create jobs.

With rising incomes, urbanization and increasing outbound travel, it is estimated that China's cross-border e-commerce transactions will hit 23.3 trillion yuan by 2022.

China is definitely e-commerce industry's leader in the world.

However, experts say it's a warning sign that globalization is in reverse, and that rising protectionism could jeopardize the industry's development.

As China continues to reform and open up, cross-border e-commerce could be at the forefront of breaking down barriers and bringing on more win-win development.