Cross‐border E‐commerce and China's Exports during the COVID‐19 Pandemic

• Published date: 01 May 2024
• Author: Yi Che,Meng Yuan,Yan Zhang,Lin Zhao
• Date: 01 May 2024
• DOI: http://doi.org/10.1111/cwe.12537

©2024 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 215–242, Vol. 32, No. 3, 2024 215

Cross-border E-commerce and China’s

Exports during the COVID-19 Pandemic

Yi Che, Meng Yuan, Yan Zhang, Lin Zhao*

Abstract

China’s exports experienced a rapid recovery after the outbreak of the 2019 COVID-19

pandemic. A primary engine was cross-border e-commerce (CBEC) trade, which bucked

the downward export trend during the pandemic. By exploring the variation in the number

of CBEC comprehensive pilot zones across provinces, we identified the causal impact of

CBEC on exports using monthly province–product–destination data for 2019 and 2020. We

found strong and robust evidence that CBEC contributed to exports during the pandemic

by promoting the expansion of incumbent exports (intensive margin) rather than through

the expansion of product categories and exporting partners (extensive margin). Specifically,

higher pandemic risk suppressed the role of CBEC at the intensive margin while enhancing

it at the extensive margin. Exports to developed countries benefited more from CBEC, both

intensively and extensively. Compared with final products, a larger number of intermediate

products were exported through CBEC after the outbreak of the pandemic.

Keywords: China’s exports, COVID-19 pandemic, cross-border e-commerce, extensive

margin of trade, intensive margin of trade

JEL codes: F13, F14, F23

I. Introduction

COVID-19 pandemic broke out in China at the end of December 2019. Through a

series of lockdown measures and medical precautions, the spread of COVID-19 on the

Chinese mainland was significantly curbed by the end of February 2020, with only a

few new cases confirmed. In contrast, the COVID-19 hit countries outside China from

*Yi Che, Professor, School of Business, East China University of Science and Technology, China. Email:

tccheyi@ecust.edu.cn; Meng Yuan, Lecturer, School of Business, Xiangtan University, China. Email:

xdym901@126.com; Yan Zhang, Professor, School of Economics, Shanghai University of Finance and

Economics, China. Email: zhang_yan@mail.shufe.edu.cn; Lin Zhao (corresponding author), Assistant Professor,

School of Economics, Shanghai University of Finance and Economics, China. Email: zhao.lin@mail.shufe.edu.cn.

Yi Che gratefully acknowledges financial support from the National Natural Science Foundation of China

(No. 72073095) and East China University of Science and Technology’s Exploratory Research Fund Project.

Yan Zhang gratefully acknowledges support from the Fundamental Research Funds for the Central Universities

(No. 2023110139) and the Shanghai Planning Office of Philosophy and Social Science (No. 2023BJB010).

Yi Che et al. / 215–242, Vol. 32, No. 3, 2024

©2024 Institute of World Economics and Politics, Chinese Academy of Social Sciences

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March 2020, causing a severe and persistent pandemic. It hindered trade-motivated

travel, disrupted global supply chains, raised trade barriers, and caused a shortage of

traded goods in the foreign markets.

Although the growth rate of China’s exports declined sharply to –13.4 percent in the

first quarter of 2020, it gradually recovered, starting in the second quarter. Overall, total

exports increased by 3.6 percent in 2020. A notable contribution to this growth came from

cross-border e-commerce (CBEC) exports, which increased by 40.1 percent. Cross-border

e-commerce makes it easier and more cost-effective to reach consumers and producers

abroad, and enjoys various preferential policies. These comparative advantages of CBEC

over offline trade (Table 1) are expected to alleviate trade barriers and difficulties caused

by the global pandemic, thus contributing to exports. For instance, Alibaba’s international

station, a typical cross-border platform for business-to-business (B2B) e-commerce, saw a

101 percent increase in transaction volume and a doubling of orders in 2020.1 This paper

aims to investigate the role of CBEC in mitigating external pandemic risks.

Table 1. Comparative advantages of cross-border e-commerce exports during the pandemic

Tax/tarif‌f preferences Trade facilitation Access to unmet demand

Saving trade cost:

1. Exemption from

consumption tax for CBEC

retail exports

2. Exemption from value-

added tax for CBEC retail

exports

Saving trade cost and time:

1. Year-round and 24-hour customs clearance

2. Accelerated approval of the quarantine

license

3. Bulk customs declaration for B2B exports

4. Online operations for inspection and

quarantine

Facilitating market access

intervention, and providing faster

response to unmet demands:

1. Access to more markets through

online transactions

2. Providing more products

through online transactions

3. Overseas warehouse

Notes: The comparative advantages of CBEC were summarized by the authors from several sources. Tax/tariff

preferences were obtained from Announcement No. 103 of the Ministry of Finance and State Taxation

Administration in 2018 and Announcement No. 36 of the State Administration of Taxation in 2019. These

announcements specified specific preferential tax policies. In addition to tax preferences, trade facilitation

has always been emphasized by the State Council’s approval documents for each batch of CBEC pilot

zones, and it has worked. Taking the Hangzhou CBEC pilot zone as an example, the declaration time for

firms’ exports was shortened from four hours to an average of one minute. Furthermore, the rapid migration

of economic activity to online trade, stressed by Qiang et al. (2021), also created significant advantages for

CBEC trade during the pandemic. B2B, business-to-business; CBEC, cross-border e-commerce.

In this study, we used monthly province–product–destination data for 2019 and

2020 in China to investigate the short-term effects of the CBEC on exports. Our analysis

took advantage of the COVID-19 pandemic shock that began in March 2020, and the

varying development of CBEC trade across provinces. This allowed us to compare the

changes in exports among provinces with different numbers of CBEC comprehensive

1For more details, please refer to: https://supplier.alibaba.com/us/news/PXS0SX05.htm?spm=a27am.1286543

4.0.0.71435ec5fAX664 (in Chinese) [online; cited January 2024].