Chapter 6

China’s e-commerce
development and
policy relevance
Yue Jiang, Lei Zhang and Yunhang Jin*
Abstract

The dollar value of e-commerce

transactions in China has increased
enormously over the past 20 years,
supported by improved infrastructure,
the rapid growth of mobile telephony
and increased financing. The market
also is characterized by increasing
diversity, for example, the growth of
e-medical services, the expansion of
cross-border e-commerce and the
development of online-offline
transactions. China’s national
government has played an important
role in the development of e-commerce
through policies elaborated in five-year
plans, while regional governments also
have participated in planning and
adjusting the e-commerce policy
framework in light of local conditions.

* The contents of this chapter are the sole

responsibility of the authors and are not
meant to represent the position or opinions
of the WTO or its members.
142 CHAPTER 6

China’s e-commerce US$ 144.81 billion (CNY 999.2 billion)

development: past and in 2017, with a year-on-year growth
current situations rate of 71.5 per cent.

China’s e-commerce market emerged China’s e-commerce development has

20 years ago. China’s e-commerce experienced four phases (Yin, 2018):
transactions increased from only US$
1.16 trillion (CNY 8 trillion) in 2012 to 1. Germination
 stage (1997–1999)
US$ 4.58 trillion (CNY 31.63 trillion) in During this period, few people were
2018 (Figure 1). In 2018 (the last year informed about the market or
for which data are available on the participated in online shopping, and
composition of e-commerce), online shopping platforms were in
e-commerce transactions of goods and their infancy. The main impact of
services equalled US$ 4.44 trillion e-commerce was to assist small and
(CNY 30.61 trillion) with a year-on-year medium-sized enterprises (SMEs) to
growth rate of 14.5 per cent.1 participate in international business-
to-business (B2B) transactions. The
In 2018, the transaction scale of demand for customer-to-customer
China’s online retail sales reached (C2C) transactions had not yet
US$ 1.3 trillion (CNY 9 trillion), arisen. Major e-commerce
accounting for 28.5 per cent of the companies during this period were
market.2 Sales of e-commerce services Alibaba, 8848 and EachNet.
have increased rapidly since their
development in 2013. According to 2.C
 onstruction stage (2000–2007)
Yang (2016), the online-to-offline The internet bust led to a reshuffling
(O2O) transaction volume of local of e-commerce firms, as over
living services was expected to reach one-third of internet websites

Figure 1: China’s e-commerce transactions have increased rapidly

Source: Research report on market prospects and investment opportunities of China’s e-commerce
industry in 2019–2024, China Business Industry Research Institute, 2019, available at:
https://www.askci.com/news/chanye/20190722/1129101150117.shtml.
CHAPTER 6 143

disappeared. Nevertheless, the end of 2016, Alibaba launched

increased acceptance of online a new retail concept, leading
shopping led to the rapid e-commerce enterprises to enter the
development of C2C transactions. offline market. At present, Alibaba
However, there were important has emerged into a relatively mature
defects in logistical support for operational mode. In addition to
e-commerce, and sales of continuous increases in the variety
counterfeit goods were a major issue. of goods and services offered and
improvements in logistics and
3. Evolution
 stage (2009–2015) after-sales services, e-commerce
China’s e-commerce market was enterprises are also actively
fully developed, and competition expanding their cross-border
among e-commerce enterprises online shopping, developing rural
was fierce. 3G was officially e-commerce, and providing
commercialized in 2009 (Shen and maternal and child medical care, home
Chen, 2018). The number of user decoration, local living services
clicks for online shopping reached and other services to consumers.
100 million. The business-to- SMEs have joined the platform,
consumer (B2C) and market segment
platform Tmall went competition is intense.
online. Purchases of “The market also
clothing, shoes and is characterized Key segments of the
handbags, as well as e-commerce market,
of household goods
by increasing in particular B2C
and services, diversity, transactions in rural
increased. The for example, areas and cross-border
number of internet the growth transactions, are
users and firms of e-medical expected to continue
providing express to grow. The collection
logistics services
services, the and analysis of user
showed explosive expansion of data, particularly
growth, while the use cross-border through use of artificial
of mobile phones to e-commerce and intelligence techniques
undertake e-commerce the development to mine “big data” to
transactions rose glean insights into
of online-offline
sharply. consumer behaviour,
transactions.” is an important and
4. Mature stage (2016 growing market.
until the present)
China’s e-commerce platform The rapid growth of e-commerce is
pattern has evolved into a new stage inseparable from the development of
with the emergence of new business internet software and hardware, as
models. After several years of well as other infrastructure. In 2018,
high-speed growth, the mobile revenue from fixed data and internet
shopping market growth rate started services reached US$ 34.5 billion,
to slow down in 2016 and the with a period average of US$ 32.6
e-commerce Monthly Active Users billion (Figure 2). Revenue from mobile
(MAU) increment also decreased. At data and internet services reached
144 CHAPTER 6

Figure 2: Revenues from fixed data and internet businesses in China have
increased sharply
34.5
35 32.8
30.5
30 28.4
27 27.6

25
billion, CNY

20

15

10

0
2013 2014 2015 2016 2017 2018

Development of fixed data and Internet business revenue

Source: Ministry of Industry and Information Technology of the People’s Republic of China (billion CNY),
http://www.miit.gov.cn/n1146312/n1146904/n1648355/c6633265/content.html.

US$ 100.95 billion, and accounted had been registered in China.3

for 46.6 per cent of total telecom However, the increase in the share
revenue (Shen, 2016). of the population using a mobile
phone is expected to slow.
The use of mobile phones has risen
sharply. As of September 2019, about Firms involved in e-commerce have
1.6 billion mobile phone subscriptions absorbed considerable equity

Figure 3: Financing of e-commerce firms

Source: “E-commerce industry private equity investment and financing statistics: China mobile internet
industry private equity investment and financing pattern analysis”, China Business Industry Research
Institute, 2019, available at: https://www.askci.com/news/chanye/20190722/1129101150117.shtml.
CHAPTER 6 145

Figure 4: Forms of equity investment

services, including information
in e-commerce firms, 2018
transmission, software and information
technology services (3 per cent) and
leasing and business services (2.1
per cent). The gross merchandise
volume (GMV) of China’s e-commerce
in 2018 totalled CNY 152,424.5 billion,
again dominated by manufacturing
(36.7 per cent) and wholesale and
retail trade (22 per cent), followed
by information transmission, software
and information technology services
(7.3 per cent), transportation, storage
34% Angel round investment and postal services (3.4 per cent),
27% A round of financing and leasing and business services
10% B round of financing (2.8 per cent).5
8% Pre-A
8% Others
5% Seed investment 2. Spatial distribution
4% C round of financing The level of e-commerce development
4% Strategy investment varies greatly across provinces in
China. In 2018, e-commerce
Source: “E-commerce industry private equity
investment and financing statistics: China mobile enterprises were mainly located in the
internet industry private equity investment and eastern coastal areas, including the
financing pattern analysis”, China Business
Industry Research Institute, 2019. provinces of Beijing, Fujian,
Guangdong, Jiangsu, Shandong and
Zhejiang. The total number of
enterprises engaged in e-commerce
transactions was more than 5,000 per
investment and other forms of province, and Guangdong, Shandong
financing. Total private equity and Zhejiang reached more than
investment and financing peaked at 10,000 each in 2018. From the coast
US$ 767 billion in 2015, but had fallen to the inland, the development of
to US$ 373 billion by 2018 (Figure 3). e-commerce in the provinces of Anhui,
The largest share of financing came Chongqing, Guizhou, Hebei,
from angel investors, followed by the Heilongjiang, Henan, Hubei, Hunan,
A round of financing and the B round Jiangxi, Liaoning, Shanghai, Shanxi,
of financing (Figure 4). Sichuan and Yunnan is only moderate,
with the number of enterprises engaged
Characteristics of in e-commerce transactions ranging
Chinese e-commerce from 1,000 to 5,000 per province. The
development of e-commerce in the vast
1. Industry distribution central and western regions and parts
Of the CNY 85,597.78 billion in of the northeast provinces is limited,
e-commerce purchases4 in 2018, the with the number of enterprises
bulk represented manufacturing (44.2 engaged in e-commerce transactions
per cent) and wholesale and retail below 1,000 per province. On the
trade (39.1 per cent). The rest of the whole, the level of e-commerce
market consisted of information development declines as one moves
146 CHAPTER 6

Figure 5: An index of the development of e-commerce across provinces is closely

related to the number of firms, 2017

Source: 2017–2018 China E-commerce Development Index Report.

from east to west, which is closely to the e-commerce development

related to the level of economic index, but ninth according to the
development and degree of number of firms engaged in
marketization in each region. e-commerce. In 2017, the e-commerce
development indexes of nine provinces
The number of firms is not a very were above the average, and the
precise indicator of the potential of indexes of two more provinces were
the e-commerce market. An index very close to the average (Figure 5).6
has been constructed to measure the
level of e-commerce development in 3. Platform distribution
each province, taking into account the New e-commerce platforms in
scale, growth potential, market China have emerged in recent years.
penetration and supporting Alibaba, JD.com and NetEase Koala
environment. According to this are the major traditional e-commerce
e-commerce development platforms, while WeChat, Pinduoduo
index, Guangdong, Zhejiang, Beijing, and Xiaohongshu are promoting the
Shanghai and Jiangsu have had the use of social e-commerce, which has
highest level of e-commerce intensified competition for the
development for some time. While traditional platforms. Alibaba has
each province’s ranking in the accounted for more than 90 per cent
e-commerce development index is of traditional e-commerce transactions
closely associated with the number since 2014. The total turnover of
of enterprises engaged in e-commerce Tmall products (owned by the Alibaba
transactions, the ordering of provinces Group) reached CNY 2.13 trillion in
according to these two indicators of 2018, accounting for the largest
e-commerce development is not market share of China’s e-commerce
identical. For example, in 2017, industry. Social e-commerce remains
Shanghai was ranked fourth according smaller, but its growth has been quite
CHAPTER 6 147

rapid. WeChat transactions have information processing, application

increased seven times from 2014 systems, technical consulting and
to 2019, and Pinduoduo has doubled other outsourcing services).8
its sales since 2017. Xiaohongshu
released e-commerce services on First, the 11th five-year plan clearly
its platform for the first time in 2015, emphasizes the construction of
and its average annual turnover public e-commerce service projects
has increased by 100 per cent and promotes the formation and
since then.7 development of e-commerce service
formats with third-party platform
The central government’s services (Mao, 2007). The plan urges
plan for the development government departments to make full
of e-commerce use of specialized third-party
e-commerce service platforms to
The Chinese government formulates outsource information processing, data
a plan every five years to promote hosting, application systems and other
the development of e-commerce. information technology applications.
Since 2006, there have been These efforts should help to establish
three five-year plans stable and large-scale
addressing e-commerce demand for such
development, each “The dollar value services. Second,
emphasizing different the 11th five-year
issues.
of e-commerce plan emphasizes
transactions the importance of
1. The characteristics in China has popularizing e-commerce
and changes of the increased applications to attract
three five-year plans enormously greater involvement by
The 11th five-year plan SMEs and consumers
over the past 20
in 2007 put forward (Qiongni, 2014). The
the strategic task years, supported plan urges SMEs to use
of developing the by improved third-party e-commerce
e-commerce service infrastructure, service platforms,
industry for the first the rapid growth comprehensively
time. The plan defines implement outsourcing
of mobile
e-commerce services of various production
to include web-based telephony and and business activities,
transaction services increased and strengthen their
(web-based procurement, financing.” management and
sales and related profitability. At the
authentication, payment, same time, the plan
credit investigation and encourages the development of
other services), business outsourcing new services for different levels of
services (web-based product design, consumers, focusing on the development
manufacturing, management and of mobile e-commerce including new
other outsourcing services) and technologies, new applications and
information technology system new models, and further enhancing the
outsourcing services (mainly web- market penetration of e-commerce
based equipment rental, data hosting, applications (Wang, 2007).
148 CHAPTER 6

The 12th five-year plan emphasizes the use of e-commerce platforms

various efforts to boost the role of to expand marketing channels by
e-commerce in economic and social means of market-based operations
development. Key areas include such as equity investment, risk
research to accelerate the compensation and interest rate
transformation of the e-commerce discounts. The regions should
market, efforts to popularize and encourage e-commerce platforms
deepen e-commerce applications, to cooperate with manufacturing
creation of a strong institutional enterprises to optimize the product
and social environment to support supply chain and supporting services
e-commerce security and improving and to build a new generation of
the efficiency of resource allocation e-commerce platforms closely
(Meng, 2017). The plan calls for connected with manufacturing
pragmatic steps to support the enterprises. Efforts also are required
healthy and orderly development to promote innovations in O2O
of e-commerce, a focus on innovation e-commerce applications and to
and effectiveness, facilitate the
and development of combination of online
technical standards. “Key segments of and offline trading,
the e-commerce with an emphasis on
The 13th five-year plan innovations in business
market, in
pointed out the models and
importance of integrating particular B2C technology innovation.
traditional industries into transactions in Finally, the regions
e-commerce. According rural areas and should also create
to the 13th five-year cross-border O2O e-commerce
plan, e-commerce models and cultivate
transactions,
development should new formats for the
be led by “coordination are expected provision of
and innovation” that to continue e-commerce services.
promote the integration to grow.”
of e-commerce into The 13th five-year
traditional economic plan provides for
fields; steadily promote improvements in the legal framework
the integrated development for e-commerce, based on the three
of e-commerce in agriculture, principles of simultaneous development
manufacturing, logistics, related and standardization, parallel
services and other sectors; and competition and coordination.
comprehensively drive the Compared with the previous
transformation and upgrading of exhortation of “standardizing in the
traditional industries. Policies should development and promoting the
strengthen the integrated development development by standardizing”, the
of e-commerce in manufacturing, new development principle not only
agriculture and industry. Efforts should guarantees and maintains stakeholders’
be made to support innovative rights, but also requires them to fulfil
enterprises (to demonstrate the value corresponding obligations and
of innovations to other firms) and to responsibilities. New ideas are
assist manufacturing enterprises in required to promote development
CHAPTER 6 149

Table 1: Evolution of the five-year plans

11th five-year plan 12th five-year plan 13th five-year plan

E-commerce
Popularize Deepen
applications

E-commerce
Standardize Open
regulation

E-commerce
Construction Upgrade
platform

Traditional industries Integration

and standardization and to create period of e-commerce development,

a more open e-commerce business the 11th five-year plan emphasized
environment. The government also the construction of public e-commerce
will continue to standardize service projects and the importance
development through innovative of popularizing e-commerce
approaches to establish an open, applications. With the gradual
fair and honest e-commerce market. popularization of e-commerce
Efforts to ensure competition and applications, the 12th five-year plan
coordination will be designed to emphasized deepening e-commerce
protect fair competition and minimize applications in order to improve the
administrative interference in the efficiency of resource allocation.
market. At the same time, the The 13th five-year plan highlighted
government will promote the strengthening the integration of
complementary and coordinated e-commerce and traditional industries
development of e-commerce and and improving the legal framework
traditional industries, online and for e-commerce.
offline, as well as e-commerce
activities in urban and rural areas. The changes in the plans concentrate
The government gives equal emphasis on four aspects over time (see Table 1).
to openness and security, and The 11th five-year plan proposed
encourages enterprises to actively to construct the e-commerce
participate in international market platform, while the 12th five-year
competition, so as to develop plan proposed its upgrade. The
international e-commerce featuring emphasis in the plans changed from
convenient logistics, mutual popularizing e-commerce applications
recognition of standards, to deepening them over time.
complementarity of production E-commerce regulation in the
capacity and market sharing. plans changed from emphasizing
standardized principles to emphasizing
In general, three five-year plans open norms. Additionally, because
have specific emphasis in regard e-commerce development has now
to e-commerce based on different entered the mature stage, the 13th
development periods. Because five-year plan proposed the integration
2007 witnessed the construction of traditional industries and e-commerce.
150 CHAPTER 6

2. The value of the plans system for the e-commerce market

The plans facilitate the upgrade of based on a unified social credit
e-commerce platforms. The plans system. E-commerce enterprises take
regard e-commerce platforms as a the five-year plans as guides, establish
core to improve the efficiency of a traceability mechanism that includes
allocation of social resources, and they online product transactions and offline
advocate for enterprises to take full service, and gradually develop
advantage of the “internet +”. To standardized operations, professional
illustrate, firms need to make full use of management, standardized logistics
the internet, cloud computing, big data, and scientific supervision.
mobile internet and other technologies,
with the aim of constantly improving The plans are conducive to creating
platform functions to make them more a benign and open e-commerce
user friendly. E-commerce platforms environment. The plans propose to
should promote the integration of optimize the governance environment
multiple resources in the industrial of e-commerce, emphasizing the need
chain, including producers, traders, to strengthen the construction of
users, financial e-commerce information
institutions, logistics infrastructure, and to
agencies and technical implement effective
service agencies; “Fast logistics is supervision based on
eliminate information the foundation internet technology
barriers; optimize for the rapid regulations and law.
resource allocation; development The development of
and realize operation e-commerce needs
of China’s
coordination and to reinforce industry
optimization on the e-commerce.” guidance and create a
whole. By upgrading healthy and open
e-commerce platforms, environment. The
firms could use the advantages of development of e-commerce also
internet connectivity and resource needs to abide by the basic principles
integration to create more value. of equal emphasis on competition and
coordination, adhere to the promotion
The plans help to build a standardized of fair market competition and open
service system. Standardization of development, prevent and suppress
product information and delivery monopolistic and vicious competition,
processes is the basis for the efficient and establish an open, fair and honest
operation of e-commerce. However, market order through supervision.
China is relatively lagging in
standardization of product information The plans contribute to deepening
and delivery process, lacking a the integration of traditional industries
standard process for warehouse and e-commerce. Due to incomplete
management, logistics distribution, market competition and asymmetric
financing management and contract information, enterprises are faced with
management. Plans encourage four major difficulties in production and
enterprises to actively participate in operation decisions – what to produce,
the construction of e-commerce how much to produce, for whom and
regulations and establish a real-name how to produce. The plans proposed
CHAPTER 6 151

that e-commerce firms may effectively non-governmental organizations

solve the difficulties of what to within the region to promote the
produce, how much to produce and for popularization, dissemination
whom by integrating online and offline and penetration of e-commerce
transaction resources and creating an awareness, knowledge and skills
integrated ecosystem of production (Deng, 2013).
and distribution, including
procurement, sales and logistics, etc. 3. The government can take steps to
In order to solve the problem of how support production and processing
to produce, e-commerce enterprises supply chains, find and cultivate
need to further promote the integration modern online businesses and assist
of big data into the traditional industrial with operation and marketing links. A
chain, including manufacturing, key principle is to encourage trials
operation management and sales and innovation, which allows for
services. Through the sharing of mistakes and failures.
knowledge and information,
e-commerce enterprises may break 4. The government should provide
down the boundaries between sectors policy and legal guarantees for
and realize intensive production and the development of e-commerce
the coordination of production, service, and help solve data security and
procurement and sales. The deep related problems.
integration of the e-commerce and
traditional industries facilitates the Local governments also play an active
cultivation of modern online businesses role in boosting the development of
and the upgrade of production. e-commerce. Zhejiang province, for
example, is a leader in the field of
The role of government in the e-commerce in China, and it vigorously
development of e-commerce promotes the e-commerce applications
of industrial enterprises and
Government has the opportunity to encourages SMEs to rely on third-
play a leading role in the development party e-commerce platforms to carry
of e-commerce in four areas. out online sales. Zhejiang also
encourages qualified enterprises to
1. T
 he government promoted the develop online brands and supports
development of the basic the rapid establishment of online retail
e-commerce infrastructure based on and distribution systems for industrial
the development characteristics and products that suit the characteristics
realities of local enterprises. of Zhejiang industry.

2. The government helped facilitate Lessons from China’s

the popularization of e-commerce. experience of rapid
The primary task of government e-commerce development
is to carry out a wide range of
e-commerce training and 1. Fast logistics
popularization activities. In addition, Fast logistics is the foundation for
government can guide the the rapid development of China’s
spontaneous formation of business e-commerce. There are many logistics
associations and other companies in China’s e-commerce
152 CHAPTER 6

market, such as Shunfeng, Yuantong entry of their information technology

and Yunda. China’s goods delivery products in international markets
systems consist of a “backbone and promote the development
transportation network” with high- of e-commerce.
speed rail, highways and civil aviation;
a “general mainline network” with Endnotes
high-grade highways, ordinary speed
railways and inland waterways; and a 1
Research report on the development and
“service network” with rural roads market prospects of China’s e-commerce
and branch railways.9 Developing industry in 2019, China Business Industry
countries should strengthen transport Research Institute, available at https://wk.
infrastructure and promote competition askci.com/details/410b8e0556bd422
among various courier companies to 3b5085696e00028d0/
improve the speed and quality of their
logistics services. 2
China E-commerce Development Report
2018–2019, 2019 Global Electronic
2. Convenient platform Commerce Conference, Xiamen, 8
The availability of a user-friendly September 2019.
internet platform is a major feature of
the rapid development of China’s 3
See https://www.statista.com/
e-commerce. Consumers can easily statistics/278204/china-mobile-users-by-
search for various products and month/
compare their function and price
through the platform. Various means 4
E-commerce purchases here refer to the
of payment are available, including total goods and services purchased by
through online commercial banks, enterprises through online orders.
Alipay and WeChat. Upgrading
e-commerce shopping platforms is 5
Data from National Research Network
essential to facilitating consumers’ Database, available at: data.drcnet.com.cn
online purchases. (accessed 13 January 2020).

3. Regulating market 6
Ibid.
The rapid development of China’s
e-commerce also benefited from 7
“WPP China Social E-commerce White
regulating e-commerce, based on Paper”, 2019.
international agreements. China
continues to fulfil the Agreement 8
Liu, Guiqing, 2007, Highlights of the
on Information Technology proposed 11th five-year plan for the development
at the WTO Ministerial Conference of e-commerce Shanghai Business
in Singapore in 1996. In addition, (08): 28-29.
China has participated in the
negotiation of the Information 9
“Backbone transportation network”,
Product Agreement, and China may “general mainline network” and “service
participate in the negotiation of the network” refer to three types of logistics
e-commerce agreement. Accordingly, in China based on transport infrastructure
developing countries should actively developments and geographical features.
join the WTO’s agreement on “Backbone transportation network”
e-commerce, which will facilitate the is the most common one, followed
CHAPTER 6 153

by “general mainline network” and platform under network environment,

“service network”. Zhejiang Gongshang University.

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e-commerce in China and countermeasures”,
Deng, Q. (2013), Research on government Western Leather 38(14): 71.
functions in e-commerce ecosystem,
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and countermeasures of e-commerce
Hui, Y. (2018), Research on national development in China”, Science and
happiness effect of international trade, East Technology Economic Guide 26(22): 5-7.
China Normal University.
Wang, H. (2007), “Prospect of the
Mao, B. (2007), “China’s e-commerce development trend of e-commerce based on
development focus? Interpretation of ‘the the ‘eleventh five-year plan’ of e-commerce
eleventh five-year plan for the development of development”, E-commerce 9: 11-13.
e-commerce’”, Internet World 9: 8.
Yang, Y. (2016), Dynamic research on the
Meng, F. (2017), “China’s e-commerce impact of e-commerce development on
development in the 13th five-year plan from China’s export to “One Belt and One Road”
the 12th five-year plan”, Informatization countries, Jiangxi University of Finance and
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Qiongni, Z. (2014), Model, mechanism and

policy of regional collaborative innovation
154 CHAPTER 6: COMMENTS

Comments

QING YE*

E-commerce transactions, including the e-commerce. This chapter discusses

cross-border ones, have been growing China’s e-commerce growth in general;
rapidly and have transformative effects China’s cross-border e-commerce
on the global economy. As Chapter 6 development could also be included and
indicates, China’s e-commerce further illustrated. In fact, cross-border
transactions have seen a tremendous e-commerce in China began to grow
growth in the past 20 years. In fact, significantly in 2011 and has become an
China has become one of the largest important part of Chinese foreign trade.
e-commerce markets in the world. Cross-border e-commerce transactions,
The global value of e-commerce particularly in business-to-consumer
reached US$ 29 trillion in 2017, which (B2C) terms, encompass e-transactions,
corresponds to 13 per cent growth e-payments and logistics. There are a
over the previous year, according to mass of cross-border e-commerce
estimates by the United Nations market players in China, including
Conference on Trade and Development e-platforms, e-payment operators,
(UNCTAD, 2019b). China’s total e-vendors, warehousing operators
e-commerce sales value was estimated and express shippers, which jointly
at US$ 1.9 trillion in 2017, making it the operationalize massive online
third largest e-commerce market after transactions and offline deliveries on
Japan and the United States. However, a day-to-day basis. According to
according to UNCTAD’s Digital Chinese Customs’ statistics,1 the value
Economy Report 2019, China’s total of China’s cross-border e-commerce
e-commerce sales value in 2017 trade in goods was around CNY 134.7
represented only 16 per cent of its gross billion in 2018, with an annual growth
domestic product (GDP) (UNCTAD, rate of 20 to 30 per cent for the period
2019a). This share was nearly three from 2013 to 2018. It is noteworthy that
times less than in the United States exports took the majority share of
and four times less than in Japan. It China’s total cross-border e-commerce
indicates China’s e-commerce transactions in goods at the level of
market still has tremendous potential 83.1 per cent in 2015; however, imports
to grow, particularly in business-to- surpassed exports in less than three
business (B2B) e-commerce and years and reached 58 per cent of the
cross-border e-commerce. total share in 2018.

Statistics typically include both domestic Cross-border e-commerce impacts

and international transactions, so it is economies in different ways. For
important to single out cross-border example, it: (i) enables diversified

* The contents of this commentary are the sole responsibility of the author and are not meant
to represent the position or opinions of the WTO or its members.
CHAPTER 6: COMMENTS 155

products from all over the world to be • encouraging enterprises to engage in

supplied to consumers; (ii) encourages international trade through
small and medium-sized enterprises e-commerce;
(SMEs) to participate in international
trade; (iii) improves economic • strengthening major e-platforms;
competitiveness; (iv) spurs innovation
(e.g. many Chinese e-platforms are • enhancing customs and quarantine
utilizing “big data” to analyse and procedures;
monitor cross-border e-commerce
transactions); and (v) creates jobs – • improving cross-border payment
there are over 2 million people working services;
in the field of e-commerce in China
(WCO, 2017). • providing financial support to
e-commerce companies; and
Chapter 6 divides China’s e-commerce
development into four phases – • promoting the functions of trade
germination, growth, accelerate and associations.
mature – that follow the same logic as
that of other scholars.2 Other initiatives
Differences mainly occur include encouraging
when defining the later “E-commerce e-commerce cooperation
stages; if marked by transactions, with countries along the
milestones in government Belt and Road,
policies, later stages
including the increasing the efforts to
could also be classified cross-border support Pilot Free Trade
as “The Standardization ones, have Zones to deepen reform
Stage” and “The been growing and opening up and
Globalization Stage” rapidly and have facilitating cross border
(Yue, 2017), which is e-commerce. At the
compatible with Chapter
transformative local level, municipal
6’s government policy effects on the governments in some
discussion. The global economy.” cities are encouraged
Standardization Stage to explore ways in which
covers the period from they can integrate
2008 to 2014, when key policies to different administrative resources and
promote e-commerce development in provide comprehensive services in order
China were formulated and regulatory to promote cross-border e-commerce.
policies for China’s e-commerce had For example, Zhejiang Province has
launched by its end. The Globalization established a cross-border e-commerce
Stage has developed with the significant work mechanism, with Hangzhou and
growth of China’s cross-border Ningbo as the main pilots, for a
e-commerce. In June 2015, the Chinese management system and set of rules on
government rolled out its strategy to global cross-border e-commerce,
foster cross-border e-commerce in a especially a “single window” for
document titled “Guiding Opinions to logistical and legal matters.
Promote Healthy and Rapid Development
of Cross-Border E-commerce”,3 which Critical lessons learned from China’s
encompassed the following measures: experience of rapid e-commerce
156 CHAPTER 6: COMMENTS

development can be summarized as Improving access to reliable and

follows: (i) creating well-designed affordable ICT infrastructure is essential
national strategies and roadmaps for for e-commerce to thrive. Strengthening
boosting the development of e-commerce; logistics and transport infrastructure is
(ii) refraining from measures that may stifle imperative for both domestic and
the development of e-commerce, such cross-border e-commerce facilitation.
as streamlining the administrative Poor logistics remain a barrier to
procedures for taxing related e-commerce in many developing
businesses and enhancing services; countries, and investment in
(iii) providing a more conducive infrastructure is often much needed.
business environment based on trust, The solution may partly lie in providing
fostering entrepreneurship and direct government funding in
innovation, and providing access infrastructure investment or adopting
to financing for digital start-ups; and private-public partnerships for the
(iv) strengthening the protection of deployment of networks, as China did
intellectual property in the cross-border in its e-commerce development growth
e-commerce industry and cracking down phase. Taking the best practice from
on counterfeiting and infringement. the globalization phase of China’s
e-commerce development, policymakers
Most of the debate on digitalization could explore and harness relevant
and development has concentrated opportunities to embrace cross-border
on the extent to which countries have e-commerce and create conditions,
affordable access to various procedures and resources that enable
technologies and whether the cross-border e-commerce to thrive.
technologies benefit each country.
The digital divide remains a real On a global scale, international
concern to many developing countries, cooperation plays an important role.
particularly least-developed countries In certain markets, regulatory
(LDCs), and many face challenges of requirements regarding cross-border
drawing benefits from vibrant digital e-commerce fail to keep up with the
trade owing to the lack of adequate dynamics and trends of e-commerce
digital capacities. Further studies on in terms of their efficiency and
the policy implications of China’s effectiveness, posing substantial
e-commerce development can help demands for international cooperation
developing countries to engage in and on trade facilitation, customs revenue
benefit from the expansion of collection, cybersecurity, etc. Existing
e-commerce. In practice, the following trade facilitation solutions, such the
key policy areas need to be addressed WTO Trade Facilitation Agreement
when formulating national e-commerce (TFA), include provisions that aim to
strategies: information and modernize border clearance
communications technology (ICT) procedures and streamline processes.
infrastructure, trade logistics, legal Such efforts become even more
and regulatory frameworks, online important in the evolving development
payment solutions, digital skills, public of cross-border e-commerce.
e-procurement and stakeholder Implementation of the TFA will improve
participation in policy formulation customs procedures and formalities so
and implementation (OECD and that shipping time can be reduced,
WTO, 2017, Chapter 7). which is critical for small parcels sent
CHAPTER 6: COMMENTS 157

from SMEs on the cross-border References

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1
See http://english.mofcom.gov.cn/article/
newsrelease/press/201902/ World Customs Organization (WCO) (2017),
20190202837696.shtml “Cross-border e-commerce in China,” WCO
News 84. https://mag.wcoomd.org/
2
Mao and Zhao (2015) present in six phases: magazine/wco-news-84/cross-border-e-
germination, growth, accelerate, mature, commerce-in-china/
outbreak and transformation. From the
perspective of industry economic theory Yue, H. (2017), “National Report on
cycle, Wang (2017) identified China’s E-Commerce Development in China”,
e-commerce evolution in four periods: Inclusive and Sustainable Industrial
germination, growth, eruption and Development Working Paper Series WP 17,
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3
See https://www.chinalawupdate.cn/
wp-content/uploads/sites/206
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