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China Lifts Registration of Foreign Trade Operators in Revised Foreign Trade Law

Mon, 16 Jan 2023
Categories: China Legal Trends

On 30 Dec. 2022, China’s legislature, the Standing Committee of the National People’s Congress (NPC) adopted the “Amendment to the Foreign Trade Law” (对外贸易法修正案).

Only one revision was made to the Foreign Trade Law, and that is, the deletion of the clauses of “foreign trade operators who intend to engage in the import and export of goods or technology shall ......register”.

The “Foreign Trade Law” (对外贸易法) was enacted in 1994 and amended in 2004, 2016 and 2022.

Under the 1994 Foreign Trade Law, only licensed entities to engage in foreign trade are permitted to import and export. Other entities intending to operate foreign trade can only entrust these licensed entities.

Since the 2004 Foreign Trade Law, foreign trade operators only need to complete registration before conducting import and export business. Such registration is a common procedure for Chinese enterprises that frequently conduct import and export business.

One of the benefits of registration is the registration of an English corporate name with China’s Ministry of Commerce (MOFCOM). Since a Chinese company does not have a legal English name, the name registered with the MOFCOM will become its relatively standard English name. This has become the primary channel for verifying the English names of Chinese companies.

As of the 2022 Foreign Trade Law, Chinese companies will no longer need to register. This means that any Chinese company can directly export or import commodities.

For foreign traders, on the one hand, they will be likely to encounter more Chinese trading partners, including some less skilled traders and some fraudsters; on the other hand, they will have no channel to verify the English names of Chinese companies.

Therefore, foreign traders may need to conduct additional verification and due diligence on their Chinese trading partners.

 

 

Cover Photo by Eirc Shi on Unsplash

Contributors: CJO Staff Contributors Team

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