From 22 days to 22 Seconds: Modernising China’s Customs Administration

China customes

It was not so long ago that anything entering or leaving China would have been subject to a long customs clearance process. To the average person this process might have seemed insignificant, but for the millions of young entrepreneurs looking to make the most out of economic reforms this used to represent one of their biggest obstacles when competing in global markets. 

Now, following a 22 year partnership with the United Nations Development Programme, China’s Customs Administration has transformed its technologies, retrained its 50,000-strong workforce and reduced its clearance time from 22 days to just 22 seconds. In less than a generation it has completely realigned its work with and been admitted to the World Trade Organisation (WTO).

Highlights

  • Following a 22 year partnership with UNDP, China’s Customs Administration has transformed its technologies, retrained its 50,000-strong workforce and reduced its clearance time from 22 days to just 22 seconds.
  • While customs revenue doubled from 1.88 trillion RMB in 2001 to 4.46 trillion RMB in 2010, staff levels rose by just 6.1 per cent during the same period.

Had this not changed, it is hard to see how China could have attracted or coped with the kind of growth in imports and exports that have seen it become a hub for global trade. Yet, while entry to the WTO brought with it a heightened capacity to engage with the world in 2001, the task of catching up and integrating with more advanced economies was just getting started.

In recognition of the need to ensure that China would be able to fully develop its international trade potential against a backdrop of rapid globalisation, a joint project between UNDP and the China International Centre for Economic and Technical Exchanges was launched in 1990.

Initially, the project aimed to modernise the General Administration of Customs through a series of targeted needs assessments that would identify areas that required improvement. From 1996 to 2000 efforts were made to translate these research findings into reforms across the entire customs system. Laws and regulations were updated to better reflect the needs of a country moving into the 21st century and provide increased transparency in Customs processes. High-tech automated systems were introduced to bring greater speed and efficiency to the day to day operation of the administration. Attention was then given to improving customs officers’ understanding of customs enforcement techniques and standards from around the world.

By 1997, forty-six percent of China’s export earnings came from small and medium sized enterprises, attesting to the much-simpler and more accessible customs processes through which smaller businesses were able to flourish. Preparations to integrate within the regulatory framework of the WTO quickly followed in 2001.

Customs officers were trained on WTO rules, and automated systems were further updated to allow officials to remain abreast of developments in new technologies and achieve parity with other member states. From 2006-10 the Customs Administration kept pace with the latest WTO standards. It also enacted further revisions to the legal and regulatory governance of customs transactions in China, as well as continuing to provide ongoing training for customs officers.

The results from this partnership between CICETE and UNDP have been excellent. China boasts a world-class customs agency capable of supporting an extraordinary international trade volume that has raised its global profile. A further testament to the ability for this project to increase efficiency can be seen in the fact that while customs revenue doubled from 1.88 trillion RMB in 2001 to 4.46 trillion RMB in 2010, staff levels rose by just 6.1 per cent during the same period.

As globalisation and improvements in technology continue to drive international trade, so the need for ongoing co-operation between UNDP and CICETE continues. China’s competitiveness in international trade markets relies on its continued efforts to remain up-to-date with modern practices. With this in mind, 2011 heralded the inception of the project’s fifth phase, which will continue until 2015. Attention has now turned to ensuring that the benefits gained by the programme of modernisation are felt more widely across China, including in the West and old industrial powerhouse of the North-East, as sustainable rejuvenation is sought in these areas.

Another more recent focus of the partnership has been on building trade partnerships to ensure supply security, particularly with African nations through South-South Cooperation. Close interaction has seen preferential tariffs for African countries, enabling them to grow their export profiles to the extent that trade volume between China and Africa exceeded 166 billion USD in 2011, up from two billion USD in 1999 and equating to an astounding 830 percent increase.

China’s modernised customs agency has allowed the country to become Africa’s largest trading partner, providing valuable revenue streams into the world’s poorest continent to fund continued and sustainable development. Moreover, China is now able to pass on its expertise as it seeks to boost African infrastructure to facilitate continued trade. In aid of this in 2011 the Customs Administration conducted a study tour to visit its counterparts in Kenya, Namibia and the Seychelles to share China’s knowledge on modernisation from its own experiences and to build relations between respective agencies. Crucially, through its partnership with UNDP, the Administration has become a globally important training ground for modern customs practices.