(1) Environmental policies

In recent years China has intensified the regulation of 

pollutant emission from ships. To promote green shipping, 

higher energy efficiency, and emission reduction, China 

has issued a series of implementation schemes and rules 

relating to pollution prevention and remediation, ECAs, 

and supply of LSFO. On October 23, 2019, China’s 

Maritime Safety Administration issued the Implementation 

Plan of 2020 Global Sulfur Cap for Marine Fuels which 

provides that: (1) From January 1, 2020, internationalroute ships entering waters of the PRC must use fuel 

oil with a sulfur content not exceeding 0.50% m/m; (2) 

From January 1, 2020, international-route ships entering 

China’s inland ECAs must use fuel oil with a sulfur content 

not exceeding 0.10% m/m; (3) From March 1, 2020, 

international-route ships entering Chinese waters may not 

carry fuel oils with a sulfur content exceeding 0.50% m/m 

if they are for self-use. These requirements are waived for 

ships that use any apparatus, equipment, or alternative 

fuel that allows the ships to achieve the same or better (air 

pollutant) emission targets than otherwise required.

(2) Export and import policies

In China, fuel oil is usually imported by state-trading 

enterprises, but a certain quantity may be imported by 

nonstate trading enterprises. In the past few years, this 

import quota has been 16.20 million metric tons. The five 

major state-owned importers –CNPC, Sinopec, CNOOC, 

Zhuhai Zhenrong Corporation, and Sinochem – are not 

subject to any import cap.

Starting from February 1, 2020, China will refund (or 

exempt) the 13% VAT on fuel oil bunkered at Chinese 

coastal ports by international-route ships. According to 

this policy, the customs will issue an export declaration 

form for fuel oil (with the HS Code “27101922”) that enters 

a storage facility under export supervision for fueling 

international voyage ships. The taxpayer can then submit 

this form and other required materials to the tax authority 

to receive the tax rebate or exemption. Starting from May 

1, 2020, China will include #5-#7 LSFO (sulfur content 

not exceeding 0.5% m/m and HS Code of 2710192210) 

into the catalog of goods subject to export license 

administration, so that an export quota will be imposed on 

these products. 

(3) Policies for pilot free-trade zones

The Hangzhou Customs has introduced a series of 

regulatory innovations since 2017, including cross-

region direct supply, bunkering at moorings outside port 

areas, one-to-many bunkering, many-to-one bunkering, 

post-bunkering declaration, and shared public depot, 

etc. Furthermore, pilot free-trade zones in Zhejiang, 

Shandong, and Hebei have been approved to carry 

out blending operations for bonded oils of different tax 

numbers. In 2017, the authority to approve the sale of 

bonded fuel oil to international-route ships was delegated 

to the Zhejiang Free-Trade Zone. At the close of 2019, 

nine (9) companies have received such approval, which, 

combined with the five (5) national suppliers, brought 

the total number of qualified bonded fuel suppliers in 

Zhoushan to fourteen (14).

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