Improving sector seen as key to increasing domestic consumption

China is rolling out new efforts to ensure the healthy, high-quality development of the business logistics sector, as it is of critical importance for boosting consumption, analysts and industrial insiders said.

On Aug 10, nine ministry-level departments, including the Ministry of Commerce and the National Development and Reform Commission, issued a guideline for an action plan to shore up the growth of business logistics between 2021 and 2025.

According to the document, the goal is to establish a smart, green, modern system to improve both the efficiency and quality of business logistics services.

Moreover, a new raft of policy incentives introduced under the plan are well-targeted and timely and should effectively boost the sector, experts said.

The term－business logistics－refers to logistics services closely related to wholesale, retail, accommodation, catering and import and export services. The sector is also a key driver of the expansion of domestic demand and consumption.

Last year, the aggregate cost of logistics services made up about 14.7 percent of China's GDP, down 3.3 percentage points compared to 2012.

"A modernized logistics system is a common requirement when a country's economy advances to a certain stage, and China is now at the point where it needs to upgrade its system," said Liu Baokui, a senior researcher at the Institute of Spatial Planning and Regional Economy at the NDRC.

Liu said industries, logistics and efforts to boost consumption are synergetic.

"Without improvements to the efficiency of the modern logistics system, the potential for innovation related to industrial upgrades and further consumption development will surely be hampered," he added.

Many measures outlined in the new documents are conducive to building an energetic domestic market and a new development paradigm.

According to the action plan, measures to improve business logistics will be rolled out on several fronts.

A wider, more comprehensive domestic logistics network, which will include a highly efficient dispatch system between urban and rural areas, will be established, along with an international network.

Further, the wider application of technical standards in the logistics sector will be promoted. Efforts will be made to improve the standardization of business logistics and promote the application of modern information technology to consolidate the foundation for high-quality commerce and logistics development.

The sector will also be optimized, and stronger efforts will be made to create a more comprehensive, green logistics system.

Efficiency in international logistics will be improved by easing global logistics channels and facilitating customs clearance for cross-border trade.

Moreover, efforts will be made to cultivate key enterprises in commerce and logistics and fully leverage their core competitiveness, brand influence and professional services.

Wang Jixiang, deputy director of the China Association of Warehousing and Distribution, pointed out that business logistics is crucial as it connects producers and consumers and that efficient service is key to improvement.

"Yet, for a very long time, demand for improvement was relatively low. With China's economy making rapid progress, the quality of business logistics services must be improved," Wang said.

He noted in particular that accelerated efforts made to achieve high-quality growth in the sector will create great opportunities.

"Therefore, logistics companies should adhere to the requirements in the action plan to improve their technologies and management and the efficiency of the supply chain," he said.

China has realized notable progress in the development of the sector in recent years, and this growth has contributed enormously to boosting consumption. Yet on a global scale, there is still a notable gap between the nation and developed countries in terms of modernization, said Dong Chao, head of the logistics and consumption division of the Chinese Academy of International Trade and Economic Cooperation.

To illustrate, he said business logistics facilities in rural areas remain weak and vulnerable, which hampers rural consumption. The development of facilities in western areas and urban cities in eastern China also remains uneven, he noted.

Some leading enterprises in the sector are already responding to the action plan.

JD Logistics, the logistics arm of e-commerce giant JD, said in a statement last week that the company is working to improve its overall infrastructure. Efforts were already in place to widen channels for local agricultural products to better serve the nation's rural vitalization strategy.

The company also said it is working on making better use of advanced technologies, including 5G, artificial intelligence and cloud computing, to ensure efficiency in warehousing and dispatching is also visibly improved.

Fan Feifei contributed to this story.