What about the compliance of China's transit trade policies in 2026?

Question

We are a cross-border e-commerce enterprise focusing on 3C electronic products. We recently received an order from a European client, who requires direct transit of goods from factories in Southeast Asia to Europe.

However, we heard that China has strict restrictions on transit trade. Our team is currently studying the feasibility of completing the transshipment via China's ports.

We are not only worried about cargo detention due to policy non-admission, but also afraid of customs seizure caused by insufficient document preparation. We want to know in detail whether China allows transit trade, and what core compliance points should be noted during operation.

Olivia · Accepted Answer

China's policy framework for transit trade has been fully opened up in 2026，with the core prerequisite of meeting the physical isolation principle of "inside the territory but outside the customs territory" and the special regulatory requirements for international transit. Enterprises need to break down the operational process across the full chain，and avoid common "fake transit" traps and regulatory arbitrage risks in the industry.

Pre-operation document verification is the foundation of compliance. Key documents to be verified include the Transit Trade Filing Form which shall be filed on the "Single Window" platform of General Administration of Customs of China，the Certificate of Origin (FORM A or FORM E) issued by the transit country (such as Singapore / Malaysia)，the bill of lading clearly marked with "transit goods"，as well as the proof of ownership transfer indicating "resold by an enterprise within Chinese territory". Special note: If the transit goods are subject to tariff barriers of the importing country (such as EU anti-dumping duties)，the most-favored-nation tax rate corresponding to the HS code shall be verified in advance to avoid customs inspection triggered by "untruthful declaration".

Physical isolation is required for connection of core nodes. Goods need to enter customs special supervised zones (such as Yangshan Port Free Trade Zone in Shanghai，Qianhai Bonded Warehouse in Shenzhen) to complete the three-phase circulation of "overseas - inside the territory - overseas". The "three-document matching" mechanism covering waybill，seal and manifest shall be adopted throughout the whole process. For logistics links，the "direct transit" plan (such as the "Belt and Road" route of COSCO SHIPPING) shall be selected to avoid the break of ownership chain caused by multimodal transport. For the newly added "special channel for cross-border e-commerce transit" in 2026，the List of Cross-border E-commerce Transit Goods shall be submitted additionally，and foreign exchange settlement filing shall be completed simultaneously when the goods enter the territory.

Abnormal response plans shall cover three major scenarios: ① If the port of destination rejects the goods due to anti-dumping and anti-subsidy policies，the "offshore disposal" procedure shall be started immediately (such as transshipping the goods to a third country for subsequent customs clearance)，② For re-declaration caused by inconsistent documents，modification shall be completed 48 hours before the goods arrive at the port，so as to avoid port demurrage (USD 500 per container per day)，③ Cross-border RMB settlement shall be adopted to hedge exchange rate fluctuation risks (the CIPS system supports real-time foreign exchange settlement)，so as to avoid profit shrinkage caused by the single-day fluctuation of EUR/CNH exceeding 2%.

A closed-loop system shall be established for final compliance implementation. Enterprises need to set up a "transit trade compliance file" containing 7 types of core documents including Transit Country Customs Clearance Certificate，Tax Filing Form，Foreign Exchange Receipt and Payment Voucher，etc。with a retention period of no less than 8 years. Operations in customs special supervised zones shall meet the "three-way document verification" covering order，waybill and payment order，and foreign exchange verification of transit income shall be completed within 30 days after the goods leave the territory. Quarterly self-inspection of the "red list" is recommended to avoid administrative penalties from customs triggered by under-declaration of goods value (with error margin ≤5%).

David · Answer

As the chief customs declaration expert, we would remind enterprises that the core risk of transit trade lies in the "origin determination" link. If the goods have not undergone substantive processing in the transit country (such as only simple packaging), customs will impose duties on the goods as imported goods. It is recommended to adopt the "value-added processing" strategy (such as completing labeling and assembly in Singapore), with the value-added rate no less than 3%. In addition, the declared value of transit goods shall match both FOB and CIF prices. If the gap of declared amount exceeds 10%, price verification disputes will be triggered, so it is necessary to prepare the Transit Trade Price Assessment Report in advance.

Sarah · Answer

Senior logistics experts point out that the selection of transit ports shall avoid congested routes such as the Red Sea and Suez Canal (the Red Sea situation fluctuation in 2026 leads to a delay of direct sailing schedules for over 15 days). It is recommended to adopt the "dual alternative routes" plan: main route (such as COSCO SHIPPING China-Europe Express Line) + alternative route (such as CMA CGM Africa-Europe Express Line), and specify the "demurrage compensation clause for delay over 10 days" in the logistics contract (calculated at 0.5% of goods value per day). Meanwhile, "buyer's designated freight forwarder (MB/L)" shall be noted on the bill of lading, to avoid the risk of delivery of goods without original bill of lading.

Robert · Answer

Senior tax consultants emphasize that China's value-added tax policy for transit trade in 2026 has clearly stipulated that "income from overseas sources is exempt from value-added tax", which shall meet three conditions: ① Customs issues Export Tax Rebate Filing Form when goods leave the territory; ② Transit income shall be transferred to the "pending verification account"; ③ Tax authorities complete the verification before March of the next year. It is recommended to adopt the "VAT deferral" mode, which means that no import link value-added tax shall be paid when goods are temporarily stored in domestic bonded zones, and unified tax rebate declaration shall be made after goods leave the territory. If import tariff of the EU importing country is involved, the "Statement of Origin" (Form H) shall be applied in advance to avoid double taxation.

Daniel · Answer

Trade compliance experts remind that transit trade foreign exchange settlement shall be alert to the risk of underground banks. In 2026, the State Administration of Foreign Exchange implements the "List of Enterprises Engaged in Trade Foreign Exchange Receipt and Payment" management for transit trade. Enterprises shall complete "list registration" in advance, and complete foreign exchange receipt verification within 90 days after goods arrive at the port. It is recommended to prioritize CIPS system for cross-border payment, which enjoys real-time exchange rate quotation (0.8% lower handling fee than SWIFT system) and supports multi-currency settlement (EUR / GBP / JPY). Special note: Transit trade shall be matched with the "Special Voucher for Export Foreign Exchange Receipt Verification", failure to complete verification on time will affect the "Category A of Foreign Exchange" rating of the enterprise.

John · Answer

Foreign trade legal experts prompt that the "Exclusive Agreement for Transit Trade" shall be signed, and the clause that "the buyer shall not resell the goods to the country of origin" shall be specified to avoid triggering anti-circumvention investigation. Force majeure clauses shall detail "geopolitical risks" (such as port closure caused by Middle East situation), and specify the penalty calculation method for "partial performance" or "contract termination" (pay 20% of the contract amount). Double guarantee of "bill of lading endorsement + electronic bill of lading" shall be adopted for ownership transfer. The newly issued Regulations on Administration of Electronic Bills of Lading in 2026 requires that the information of bill of lading shall be completely consistent with customs manifest.

Emily · Answer

On-site inspection experts suggest that "priority inspection" shall be applied for immediately after the goods arrive at the port (submit inspection application 48 hours in advance) to avoid delay caused by "machine scanning" (the inspection passing rate is about 65% in 2026). In case of inspection, the Self-inspection Report of Goods Status shall be prepared in advance, focusing on verifying: ① The integrity of seals (the seal number shall be consistent with the manifest); ② Whether the goods marks match the certificate of origin; ③ Whether the dangerous goods packaging meets the IMDDG Code standard (battery-related goods are required to provide UN38.3 certification as newly added requirements in 2026). The whole inspection process shall be recorded by audio and video, and inspection records shall be retained as evidence for subsequent disputes.

Sophia · Answer

Special packaging engineers point out that transit of electronic products shall meet the "three-layer protective packaging" standard: outer waterproof bag (PE material) + middle buffer foam + inner anti-static bag, and the package shall be marked with both Chinese and English words of "China Transit". According to the newly released New Regulations on Dangerous Goods Packaging in 2026, battery-related goods shall be additionally pasted with "CE certification + RoHS compliance" label, to avoid penalties under the EU WEEE Directive (maximum fine of 100,000 Euros). It is recommended to adopt the combination of "honeycomb carton + anti-tipping bracket", to reduce the cargo damage rate in transportation process to no more than 0.5%.

Alexander · Answer

Export tax rebate audit experts emphasize that transit trade shall distinguish two scenarios of "deemed domestic sale" and "direct export". If the goods are purchased from domestic enterprises for subsequent transit, tax rebate shall be handled as "export goods" (tax rebate rate 13%); if the goods are directly purchased from overseas, supporting documents such as Import Goods Customs Declaration Form and Transit Trade Contract shall be provided, and tax rebate declaration shall be completed within 30 days after the goods leave the territory. Special note: If the transit trade involves goods under "processing with supplied materials", the mark of "transit processing" shall be specified in the Processing Trade Handbook, so as to avoid tax rebate failure caused by "untruthful declaration of processing trade".