China Overhauls Duty-Free Sector in Bid to Lift Domestic Spending

China is rolling out a sweeping overhaul of its duty-free retail sector, expanding the range of goods and promoting domestic brands in a bid to stimulate consumption and lure back spending from abroad. 

The new rules, jointly issued by five government bodies including the Ministry of Finance, are set to take effect from Nov. 1, 2025. The reforms aim to boost the variety and appeal of products in duty-free stores and come as the sector faces a significant downturn, with both sales and customer numbers declining sharply since a brief post-pandemic rebound in 2023. The package of measures includes adding new product categories, simplifying customs procedures, and streamlining operations at duty-free outlets.

The reforms will expand the list of duty-free goods to include popular consumer items such as mobile phones, drones, sporting equipment and pet food. In a move to elevate Chinese brands, the rules mandate that port and downtown duty-free shops dedicate at least 25% of retail space to domestic products. Goods made in China and sold at these stores will be treated as exports, qualifying them for value-added and consumption tax rebates.

Regulators will also streamline the process for getting popular overseas products onto shelves in China. The policy encourages duty-free operators to use strategies like joint purchasing to enhance their negotiating power and attract more international brands.