At a glance: Nine government agencies led by the Ministry of Commerce (MOFCOM) released a blueprint for modernizing China’s logistics system over the next five years. It seeks to decrease the cost and increase the efficiency of domestic business activities and international trade. Notable tasks outlined in the policy include:
- Integrate new technologies such as 5G, Big Data, the Internet of Things and AI into logistics networks
- Build a green logistics system by using reduced and recyclable packaging and equipment, transporting goods with clean NEVs, etc.
- Accelerate the development of cold chain logistics and extend the coverage of urban and rural cold chain facility networks
- Support enterprises to invest in international logistics infrastructure, such as overseas warehouses, and cultivate internationally competitive shipping companies which are “autonomous and controllable”
MERICS comment: Logistics is an integral part of Beijing’s ambitions to turn China into a manufacturing superpower. Upgrades to the logistics sector will increase the efficiency of production, improve access to Chinese consumers and enable local firms to capture more of the postproduction services.
The policy also bolsters one of the key pull factors for foreign companies operating in China: world class distribution networks. The combination of excellent infrastructure, complete industrial clusters, as well as the large and growing domestic market all contribute to China’s substantial appeal as a production base for foreign firms. As of February 2021, European companies registered their strongest commitment on record to remaining in or even expanding operations in China. Only nine percent indicated plans to shift some current or planned investments to other markets and only one percent planned to fully divest.
The Special Action Plan presents several specific benefits for foreign enterprises operating in China. Expanding the cold chain logistics networks will further increase the market for medical and food products. The move towards high tech logistic services, in the form of automatic guided vehicles and high-end warehouses, could create new opportunities for foreign firms to provide the software and equipment necessary for this transformation. They can also gain an advantage in promoting their green distribution and product disposal practices as officials strive to develop more environmentally friendly logistic networks.
Policy name: Special Action Plan for the High-quality Development of Trade Logistics (2021-2025) (商务部等9部门关于印发《商贸物流高质量发展专项行动计划（2021-2025年）》的通知) (Link)
Issuing bodies: MOFCOM, NDRC, MOF and others
Date: August 9, 2021