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China plans further cuts in logistics costs

Xu Wei
Updated: Jul 5,2017 8:45 PM

China is set to reduce logistics costs and improve logistics efficiency to spur the real economy, according to a guideline approved at a State Council executive meeting chaired by Premier Li Keqiang on July 5.

One focus is placed on better road transportation through improved traffic administration and law enforcement to enable better services while cutting red tape. Tax policy is to be overhauled, and toll charges are to be set to reasonable levels to reduce costs.

“The logistics sector is the basis of strategic importance for the market economy. Lower logistics costs and higher efficiency should be highly prioritized this year,” Premier Li said.

Statistics from the National Development and Reform Commission shows that the cost of logistics in China took up about 14.9 percent of GDP in 2016, down by 1.1 percentage points from the previous year, a fourth consecutive annual decrease.

The ratio is, however, not only significantly higher than in developed economies but also some developing economies, too.

China ranks 27th among 160 countries and region in the 2016 Logistics Performance Index, a benchmark created by the World Bank.

“China’s logistics costs are still on the higher end in the world. We should promptly respond to the shared concern of businesses with well-designed measures to make the sector travel light and perform better. That will be of great help to the real economy,” he said.

According to the guideline, support will be provided in the form of urban planning and land use. A number of logistics centers at national levels will be developed. Logistics infrastructure will be reinforced, and rail freight service improved and integrated with other means of transportation.

More means of financing will also be made available to companies in the logistics sector.

The country plans to establish an integrated nationwide cargo-clearance system and to cut cargo clearance time by one-third this year, according to the guideline.

The application of information technology and logistics standards, including loading units and vehicles, will play a major part.

The logistics sector will benefit from greater integration with the manufacturing sector, while more effort will go to core technology and equipment development and management upgrading.

The government will proactively press ahead with the reform agenda to break regional protectionism and industry monopoly.

“We must take actions to drive China’s logistics costs to the lower reaches among developing countries,” the Premier said.