China will reduce the cost of logistics and improve efficiency to spur the real economy, according to a guideline approved at a State Council executive meeting presided over by Premier Li Keqiang on July 5.

One focus of the guideline is improving the use of roads through better traffic administration and law enforcement, enabling smoother services with less red tape. Tax policy is to be overhauled, and toll charges are to be set at reasonable levels to reduce cost burdens.

"The logistics sector is a groundwork of strategic importance for the market economy," Li said. "Lower logistics costs and higher efficiency should be highly prioritized this year."

The cost burden of the logistics industry was equivalent to 14.9 percent of GDP in 2016, down by 1.1 percentage points from the previous year, and was the fourth consecutive annual downtrend, according to the National Development and Reform Commission.

However, the ratio is higher than in developed economies and even some developing ones. China ranks 27th in the 2016 Logistics Performance Index, a benchmark created by the World Bank covering 160 countries and regions.

"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 help the sector travel light and perform better. That will be of great help to the real economy," Li said.

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

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

China aims to establish an integrated nationwide cargo-clearance system and plans to cut cargo clearance times by one-third by the end of this year, the guideline said. The application of information technology and logistics standards, including vehicles and loads, 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, equipment development and management upgrades.

The government will 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," Li said.

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(China Daily European Weekly 07/07/2017 page14)