China adjusts duty-free policy to boost consumption

A dragon-themed T-shirt is pictured at Haikou Riyue Plaza Duty-Free Shop in Haikou, south China's Hainan Province, Jan. 27, 2024. (Photo: Xinhua)

Chinese authorities issued a notice on a duty-free policy adjustment on Tuesday, under which a dozen downtown duty-free shops in first- and second-tier cities such as Beijing, Shanghai, and Guangzhou, south China's Guangdong Province will be able to sell goods to outbound travelers, including Chinese nationals, who will depart from the Chinese mainland by air or an international cruise within 60 days.

The new measures are part of moves to boost the healthy and orderly development of China's downtown duty-free shops. Observers said that the new policy will effectively boost domestic consumption in the second half, fueling the country's consumption upgrade while injecting new impetus into the recovery of the world's second-largest economy.

The new policy will take effect on October 1, 2024. It will be applicable to six downtown duty-free shops in Beijing, Shanghai, Qingdao, and Xiamen in East China's Shandong and Fujian provinces, Dalian, Northeast China's Liaoning Province, as well as Sanya, South China's Hainan Province.

The existing 13 imported goods duty-free shops in cities such as Beijing, Shanghai, and Harbin, Northeast China's Heilongjiang Province, will be transformed into downtown duty-free shops within three months from October 1. After passing customs inspection, they will be allowed to begin operations.

In addition, a new downtown duty-free shop will be set up in each of eight cities, including Guangzhou and Shenzhen in South China's Guangdong Province, Chengdu, Southwest China's Sichuan Province, and North China's Tianjin Municipality.

The downtown duty-free shops will mainly sell portable consumer goods, and the notice also encourages the sales of "China-made trendy products" at those stores. The sales will adopt a model where purchases are made at the store and items are picked up at the departure ports.

"It carries great significance in shoring up and expanding the domestic consumption market. It will also draw more international tourists to spend as 'China travel' becomes a global fever," Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Tuesday.

According to industry insiders, the new policy will encourage Chinese consumers to spend on commodities that are of high quality and high added value, which aligns with the country's ongoing consumption upgrade. Sales of cigarettes and alcohol now account for the bulk of China's duty-free consumption.

China's duty-free market has grown steadily in recent years.

Last year, offshore duty-free sales in Hainan, a renowned tourist site, surged 25.4 percent year-on-year to 43.76 billion yuan ($6.2 billion), which translated to an average of 6,478 yuan per visitor, according to local customs.