China - New Customs Law

January 2001

The new Customs Law of the People’s Republic of China ("PRC"), enacted on 8 July, 1999, took effect on 1 January 2001.

The old Customs Law of PRC came into force on 1 July, 1987. Since then, the economic situation of China has undergone great change, especially in international trade and transportation. The PRC government found that the old Customs law was ineffective in combating smuggling and the evasion of customs duties. Further, the Customs authority was not efficient enough to promote international trade between China and other countries. Also, the division of duties and powers between Customs and other authorities was unclear. Therefore, it was necessary to amend the old Customs Law in order to address these issues.

The main amendments made by the new Law are:

1.To establish a general bureau for detection and investigation in order to co-ordinate efforts against smuggling (the General Customs Bureau). This Bureau which will exercise almost the same power as the police; 
2.To clarify the liability of the person or unit which is responsible for customs clearance to make reasonable checks on the authenticity of the information provided to it by the shipper/consignee; 
3.To improve the administration of the import of raw materials and other cargo/goods. Companies providing customs clearance services for the import and export of goods should be licensed by the Customs; 
4.To strengthen Customs’ powers to enforce the payment of customs duties. If duties remain unpaid for three months, Customs has the power to: (1) sell the cargo involved; (2) freeze the debtors’ bank accounts; (3) attach other assets owned by the debtor; 
5.To streamline the system for provision of security to Customs in return for the release of the cargo before the formalities for customs clearance have been completed; 
6.To improve the executive methods available to Customs. Customs has authority to arrest cargoes or vessels suspected of involvement in smuggling; 
7.The new Law also defines the meaning of an act of smuggling. That is: To violate the PRC law, to escape the supervision of customs, evade customs duties or to infringe prohibitions or restrictions on the import and export of cargo. 

There is no significant change per se to the administration of vessels entering, leaving or passing through mainland Chinese waters. However, the strengthening of the Customs’ powers in relation to the administration of cargo may lead to an increase in the detention of vessels carrying suspect cargo.

With thanks to Chen Zhen Sheng and Claire Morgan of Sinclair Roche & Temperley, Shanghai Office, for preparing this article.