JC Master Legal News Issue 885

Key Takeaways for This Issue

The first IPO registration on the STAR Market has failed: the CSRC has rejected Heng’an Jiaxin’s registration application.

On August 31, the website of the China Securities Regulatory Commission published the “Decision on Not Approving the Registration of the Initial Public Offering of Shares by Heng’an Jiaxin (Beijing) Technology Co., Ltd.” This marks the first-ever case of a STAR Market‑listed company whose registration was rejected by the CSRC.

A first in A-shares: Weiming Pharmaceutical invests in its own bonds.

On August 28, Weiming Pharmaceutical issued an announcement titled “Announcement on Bond Purchases and External Investments.” With the approval of the Board of Directors, the company plans to allocate up to RMB 100 million of its idle proprietary funds for bond investments, acquiring no more than 1 million (inclusive) units of the “17 Weiming Bond” through block trades on the Shenzhen Stock Exchange’s Comprehensive Agreement Trading Platform.

Interpretation of the “Announcement of the State Taxation Administration on Matters Relating to the Collection and Administration of the Cultivated Land Occupation Tax”

To implement the Law of the People’s Republic of China on the Cultivated Land Occupation Tax and the Measures for the Implementation of the Law of the People’s Republic of China on the Cultivated Land Occupation Tax, and in accordance with the CPC Central Committee and the State Council’s directives on deepening the “delegation, regulation, and service” reform and optimizing the tax‑related business environment, the State Taxation Administration has drafted the Announcement on Matters Relating to the Collection and Administration of the Cultivated Land Occupation Tax (hereinafter referred to as the “Announcement”) to clarify certain collection and administration issues, facilitate operations at the grassroots tax authorities and among taxpayers, and ensure the smooth implementation of the Law on the Cultivated Land Occupation Tax.

The nation’s first case of unfair competition involving the improper use of time‑sharing rental durations for VIP accounts on a video‑streaming website has been adjudicated.

The nation’s first novel case of online unfair competition involving the time‑based rental of VIP account usage durations on a video‑streaming website has concluded at the Haidian District People’s Court in Beijing.

Using the law to combat violence is the only viable option.

Late on the night of August 30, 2019, a Hong Kong police officer stationed at the Kwai Chung Police Station’s armory was slashed and injured by three masked assailants clad in black after his shift ended. The attackers delivered multiple savage blows, leaving deep, bone‑exposing wounds—a brutality that is utterly appalling. Without law and order, there can be no Hong Kong. Upholding the rule of law to curb violence is what the people demand and is also the key to restoring peace and stability to Hong Kong.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission is soliciting public comments on regulations governing senior executives in the futures industry.

The China Securities Regulatory Commission has announced the on-site inspection results for 24 companies that have applied for an initial public offering.

The Shanghai and Shenzhen Stock Exchanges have issued implementation measures for private-placement convertible bonds, expanding the pool of eligible issuers.

The new regulations have stirred up the market, with sci-tech innovation companies racing to restructure.

The first IPO registration on the STAR Market has failed: the CSRC has rejected Heng’an Jiaxin’s registration application.

Corporate & Commercial

The three ancillary regulations to the Anti-Monopoly Law officially came into effect on September 1.

Guonong Technology Made False Statements; the Investor Protection Center Supports Investors in Filing Claims Litigation.

Gu’ao Technology Announces Restructuring Plan: Intends to Acquire Xiangsheng Information for Synergistic Development Across Multiple Sectors

Storm Group: The company’s solvency is clearly inadequate; it plans to lay off employees to cut costs.

A first in A-shares: Weiming Pharmaceutical invests in its own bonds.

Taxation

Interpretation of the “Announcement of the State Taxation Administration on Matters Relating to the Collection and Administration of the Cultivated Land Occupation Tax”

The National Development and Reform Commission and the State Taxation Administration have jointly issued a notice to strengthen the development of taxpayer credit in the personal income tax field.

The State Taxation Administration has issued a new version of the Taxpayer Service Standards.

State Taxation Administration: Services Further Upgraded to Resolve Public Concerns

The State Taxation Administration has unveiled a second batch of ten new measures to make tax and fee payment more convenient.

Litigation & Arbitration

The nation’s first case of unfair competition involving the improper use of time‑sharing rental durations for VIP accounts on a video‑streaming website has been adjudicated.

The loan was classified as a “scheme‑based loan,” and the lawyer’s lawsuit filed under false pretenses was dismissed.

The perpetrator in the “Didi Hitch driver murder case” in Yueqing, Zhejiang, Zhong Yuan, has been executed.

A man was sentenced for selling fake questions from the legal professional qualification examination.

The Shenzhen Intellectual Property Court heard the “Moutai” case in a seven‑judge panel.

Other

Using the law to combat violence is the only viable option.

Finance & Capital Markets

The China Securities Regulatory Commission is soliciting public comments on regulations governing senior executives in the futures industry.

On August 30, the China Securities Regulatory Commission (CSRC) held a press conference. Spokesperson Chang Depeng stated that, in order to strengthen the filing and oversight of appointments for directors, supervisors, and senior management personnel of futures companies, the CSRC has revised the Measures for the Administration of Qualifications for Directors, Supervisors, and Senior Management Personnel of Futures Companies (hereinafter referred to as the “Measures”).

Chang Depeng stated that the key revisions to these Measures include: first, clarifying the requirements for the filing and registration of directors, supervisors, and senior management personnel of futures companies, streamlining the filing process, and simplifying the supporting documentation, thereby reflecting the shift in the CSRC’s administrative regulatory approach since the “delegation, regulation, and service” reform. Second, in light of regulatory practice and market developments, the eligibility criteria for relevant positions have been adjusted; senior management personnel of futures companies are now permitted to hold concurrent posts at multiple wholly‑owned or controlling subsidiaries, and the cap limiting the proportion of overseas nationals serving in managerial roles to no more than 30% has been removed. Third, ongoing and post‑event supervision has been strengthened to standardize the appointment and performance of duties by directors, supervisors, and senior management, thereby effectively enhancing the effectiveness of regulatory oversight.

“We welcome valuable feedback from all sectors of society on the draft for public comment. The CSRC will, based on the results of this public consultation, further revise the Measures and, after completing the requisite procedures, issue and implement them,” said Chang Depeng.

The China Securities Regulatory Commission has announced the on-site inspection results for 24 companies that have applied for an initial public offering.

 On August 30, the China Securities Regulatory Commission (CSRC) held a press conference. Spokesperson Chang Depeng stated that since 2019, the CSRC has completed on-site inspections of 24 companies applying for initial public offerings on the Main Board, the SME Board, and the ChiNext Board.

“To promptly transmit market pressure and urge market participants to fulfill their duties, in July this year, the CSRC preliminarily announced the regulatory measures it had initiated—based on the severity of the issues—for six companies applying for an initial public offering, eight sponsoring institutions, four accounting offices, and four law offices,” said Chang Depeng.

Chang Depeng pointed out that, following a review of the issues identified at enterprises after completing on-site inspections, the CSRC has adopted a tiered approach based on the nature and materiality of the problems: First, one enterprise has been referred to the inspection department, as it is suspected of maintaining substantial off‑book revenues and expenses without proper accounting records, and of transferring funds through off‑book bank accounts used for receivables and payables to its de facto controller, relatives, senior management, and core employees. Second, a warning letter has been issued to another enterprise, which is suspected of deliberately manipulating the timing of revenue recognition, paying procurement rebates in cash outside the books, instructing certain individual suppliers to conduct transactions with the company under fictitious identities, and having its de facto controller misappropriate company funds. Third, numerous internal control and accounting deficiencies were found at other enterprises, including cross‑period revenue recognition, use of personal bank cards for collection and payment, unclear accounting standards for construction‑in‑progress, under‑provisioning of depreciation on fixed assets, incomplete logistics and transportation records, inadequate controls over product issuance procedures, and imprecise allocation of product costs. In addition, banking institutions are further suspected of inaccuracies in loan risk classification and financial asset accounting classification, imprudent impairment provisions, insufficient disclosure of risks associated with receivables‑type investments, lax internal control procedures in issuing conofficeation letters, and the absence of certain business policies. Furthermore, administrative regulatory measures will be initiated against three sponsoring institutions, five accounting offices, and three law offices found to have professional practice quality issues.

Chang Depeng emphasized that the information disclosure regime is a foundational pillar for the sound development of capital markets, serving as a critical safeguard for investors in making value assessments and investment decisions, and also a key lever for enhancing corporate governance standards. Conducting on-site inspections of companies applying for an initial public offering not only effectively implements the securities issuance system centered on information disclosure and improves the quality of such disclosures, but also exerts a strong deterrent effect on related illegal and non-compliant practices.

Chang Depeng stated that, in recent days, the China Securities Regulatory Commission has launched on-site inspections of the first batch of 44 companies under review for their initial public offerings in 2019. Based on the inspection findings, these cases will be categorized and handled in accordance with laws and regulations; to date, nine companies have applied to withdraw their filing materials. The CSRC will continue to adopt a combination of problem‑oriented oversight and random sampling, and plans to schedule a second round of on-site inspections in 2019, maintaining a stringent enforcement stance against violations of information disclosure requirements. By steadily enhancing the authenticity, accuracy, and completeness of information disclosed by companies seeking an IPO, the Commission aims to safeguard the entry threshold, improve the quality of listed companies at the source, and ensure that intermediary institutions fulfill their role as “gatekeepers” of the capital market. In doing so, it seeks to advance the regulatory objectives of serving the real economy and protecting the legitimate rights and interests of investors, striving to build a capital market that is standardized, transparent, open, dynamic, and resilient.

The Shanghai and Shenzhen Stock Exchanges have issued implementation measures for private-placement convertible bonds, expanding the pool of eligible issuers.

To implement the policy requirements set forth in the CPC Central Committee and the State Council’s “Several Opinions on Financial Services for Private Enterprises,” and to further leverage the exchange‑bond market’s positive role in serving the real economy, in accordance with the unified deployment of the China Securities Regulatory Commission, the Shanghai Stock Exchange and the Shenzhen Stock Exchange, together with the National Equities Exchange and Quotations Co., Ltd. and China Securities Depository & Clearing Corporation Limited, have jointly formulated and issued the “Measures for the Implementation of Non‑Public Issuance of Convertible Corporate Bonds by Non‑Listed Companies” (hereinafter referred to as the “Measures”), expanding the scope of issuers eligible for non‑public issuance of convertible corporate bonds (hereinafter referred to as “convertible bonds”) from innovative and entrepreneurial enterprises to all non‑listed companies.

The main contents of the Implementation Measures comprise four key aspects: First, the scope of eligible issuers and applicable entities has been expanded. Convertible bonds may be issued by joint-stock companies whose shares are not listed on a stock exchange; limited liability companies may implement these provisions by analogy. Second, the issuance method is clearly defined: convertible bonds shall be issued through a non‑public offering, and prior to issuance as well as after conversion into shares, the number of shareholders in a joint‑stock company must not exceed 200, while that of a limited liability company must not exceed 50. Third, the responsibilities and division of labor among relevant institutions are specified. For issuers that are companies listed on the National Equities Exchange and Quotations System, the stock exchange shall seek the opinion of the NEEQ when verifying compliance with listing requirements. Furthermore, investors applying for share conversion must also meet the NEEQ’s regulations on investor suitability management. Fourth, the share‑conversion process is clearly outlined. The Measures set out distinct procedures for share conversion, tailored respectively to companies listed on the NEEQ and those that are not listed. Fifth, information‑disclosure requirements are clarified. Taking into account the unique characteristics of convertible bonds, the Measures specify differentiated disclosure obligations and ongoing reporting duties for all parties throughout the bond’s issuance and throughout its term. Sixth, arrangements for aligning with the pilot program for innovative and entrepreneurial convertible bonds are explicitly defined.

The Shanghai and Shenzhen Stock Exchanges stated that the launch of non‑public issuance of convertible corporate bonds is an important measure to support the real economy and alleviate the difficulties and high costs of financing faced by private enterprises and small and medium‑sized enterprises. It will help broaden corporate financing channels and reduce financing costs. Moving forward, under the leadership of the China Securities Regulatory Commission, the exchanges will continue to implement the requirements for deepening reform of the investment and financing system, systematically consolidate their experience and strengths in serving private enterprises, explore new models for bond‑market‑based support, and leverage the bond market’s role in actively serving the real economy, thereby better supporting supply‑side structural reform.

The new regulations have stirred up the market, with sci-tech innovation companies racing to restructure.

The “Special Provisions on Major Asset Restructuring of Companies Listed on the STAR Market” and the “Review Rules for Major Asset Restructuring of Companies Listed on the STAR Market (Draft for Comments)” have both been released. Against the backdrop of policy support and regulatory clarity for M&A and restructuring activities among STAR Market‑listed companies, what are the prevailing trends and preferences of these offices in this area?

By examining publicly available data on both listed and IPO‑pending companies on the STAR Market, we find that many of these science‑and‑technology enterprises have chosen technological innovation as their strategic focus, underpinned by a clear industrial rationale and a well‑defined business ecosystem. This, in turn, offers valuable insights into the M&A and restructuring dynamics these offices are likely to pursue in the future.

Incremental reform has provided a tremendous impetus.

Sun Jinju, an analyst at New Era Securities, pointed out that the regulations on major asset restructurings on the STAR Market were revised and refined based on the existing Measures for the Administration of Major Asset Restructurings of A‑share Listed Companies, with adjustments tailored to the unique characteristics of the STAR Market. These regulations embody four key features: deregulation, high standards, stringent disclosure requirements, and expedited review processes.

Great Wall Securities notes that the development of the STAR Market is progressing steadily, with investor enthusiasm and attention remaining at high levels. The implementation of new rules on M&A and restructuring for the STAR Market will not only help refine the market’s regulatory framework but also enable STAR‑listed companies to scale up and enhance their competitiveness, potentially further invigorating the market.

“This is a testament to the pace of innovation-driven development. For our company, having just completed our listing on the STAR Market, we honestly hadn’t yet considered M&A and restructuring at this stage. However, the swift implementation of relevant policies has demonstrated the powerful momentum generated by incremental reforms. Going forward, we will leverage the funds raised and ensure the successful execution of our investment projects, while actively seeking suitable opportunities for external expansion,” said the board secretary of a STAR Market‑listed company.

However, some executives at STAR Market‑listed companies have observed that, while the policy supports M&A and restructuring activities among STAR Market offices, it also imposes stringent regulatory requirements on their external expansion. “The guidelines for M&A and restructuring on the STAR Market stipulate that such transactions must align with the market’s strategic positioning; the target industry should either be in the same sector as the STAR Market company or lie upstream or downstream, and the deal must generate synergies with the company’s core business. From this perspective, the policy does not compromise on standards when it comes to M&A and restructuring involving STAR Market offices. Moreover, the policy sets a series of very strict criteria for the assets being acquired or restructured. In my view, the policy is encouraging M&A and restructuring that adhere to high standards, stringent requirements, and sound, well‑regulated practices,” said the head of a STAR Market‑listed company based in Shanghai.

The expansion strategy is closely aligned with industry logic.

With the policy now in place, can STAR Market–listed companies meet the stringent requirements in subsequent mergers and acquisitions and restructuring? By analyzing publicly available data on a sample of STAR Market‑listed offices and those seeking to list, we find that, having chosen technological innovation as their strategic focus, many such companies exhibit clear traces of industry logic and business ecosystems in their M&A activities and external investments. Consequently, the industrial trajectories underlying these transactions are relatively well defined.

Individual stocks such as Western Superconducting and Jiayuan Technology, which are already listed on the STAR Market, transitioned from the New Third Board. According to available data, during its time on the New Third Board, Jiayuan Technology raised RMB 47.25 million in March 2016, RMB 58.50 million in November 2016, and RMB 118 million in September 2017. Meanwhile, Western Superconducting raised a cumulative total of over RMB 1 billion while listed on the New Third Board. During their tenure on the platform, these companies also engaged in acquisitions and external investments. Western Superconducting issued shares on the New Third Board to raise capital for areas such as high‑temperature alloys, and in terms of external investments, it has invested in advanced materials—including high‑temperature alloy bars for aircraft engines and aerospace engines. Similarly, Jiayuan Technology’s external investments included acquiring a partial stake in Meixian Jinxiang Copper Foil Co., Ltd.; the company stated that this acquisition would help optimize resource allocation, streamline management, and serve the overall interests of both the company and its shareholders.

A review of the public filings of companies seeking to list on the STAR Market likewise reveals the industry‑driven logic and strategic trajectories underlying their outward expansion. According to a sponsor at CITIC Securities, offices that filed for STAR Market listing in the early stages—particularly those that have completed registration and gone public—generally exhibit a well‑defined industrial development rationale. “By choosing technological innovation as their growth path and proactively pursuing a STAR Market listing from the outset, these companies demonstrate clear strategic planning. Their prior external investments, acquisitions, and restructuring activities have largely aligned with this industrial logic, and post‑listing they are likely to pursue further extension‑oriented expansion and experimentation around their core businesses.”

The first IPO registration on the STAR Market has failed: the CSRC has rejected Heng’an Jiaxin’s registration application.

On August 31, the website of the China Securities Regulatory Commission published the “Decision on Not Approving the Registration of the Initial Public Offering of Shares by Heng’an Jiaxin (Beijing) Technology Co., Ltd.” This marks the first-ever case of a STAR Market‑listed company whose registration was rejected by the CSRC.

The China Securities Regulatory Commission stated that if Hengan Jiaxin (Beijing) Technology Co., Ltd. submits another application for a public offering of shares and listing, it may file the relevant application documents six months after the date of this decision. Furthermore, should the company disagree with this decision, it may, within 60 days of receipt, apply to the CSRC for an administrative review, or, within six months of receipt, bring an administrative lawsuit before a people’s court with jurisdiction.

Regarding the reasons why Hengan Jiaxin failed to obtain registration, the China Securities Regulatory Commission noted that, during its review of Hengan Jiaxin’s application for an initial public offering and listing on the STAR Market, it identified two issues.

First, on December 28 and December 29, 2018, the issuer entered into four significant contracts and signed the corresponding acceptance reports in the same year, with a total value of RMB 158.5976 million. As of the end of 2018, none of these contracts had been paid, nor had invoices been issued; nevertheless, the company recognized revenue from these four contracts in 2018. In 2019, citing prudence, and following approval by both the Board of Directors and the Shareholders’ Meeting, the issuer adjusted the timing of revenue recognition for these four contracts, resulting in a corresponding reduction of RMB 136.8284 million in 2018 main business revenue and a reduction of RMB 78.2717 million in net profit. Consequently, the net profit attributable to owners of the parent company, excluding non-recurring items, decreased from RMB 87.3299 million before the adjustment to RMB 9.0582 million after the adjustment, representing a reduction of 89.63% of the pre‑adjustment figure. The issuer’s rationale for classifying this accounting error correction as a special accounting treatment is insufficient and does not comply with the requirements of enterprise accounting standards. Furthermore, the issuer exhibits weak foundational accounting practices and deficiencies in internal controls.

Second, in 2016, the issuer’s actual controller, Jin Hong, transferred 5.672 million shares to 16 employees, including Liu Changyong, at a nominal price of RMB 1 per share. In the filing materials submitted to the STAR Market Listing Review Center of the Shanghai Stock Exchange, as well as in the responses to the first and second rounds of inquiries, the issuer characterized these equity transfers as the termination of share‑holding entrustment arrangements and thus concluded that they did not constitute share‑based payments. However, in the third round of responses, the issuer, the sponsor, and the reporting accountant determined that, given the passage of time, the evidence supporting the existence of such share‑holding entrustment was insufficient. Accordingly, out of prudence, they adjusted the accounting treatment to recognize a one‑time share‑based payment expense of RMB 59.7052 million on the grant date. The issuer failed to disclose this prior‑period accounting error correction in accordance with the requirements of the prospectus.

The China Securities Regulatory Commission (CSRC) has determined that the aforementioned circumstances pertaining to Hengan Jiaxin are inconsistent with the relevant provisions set forth in Chapter II of the Measures for the Registration Administration of Initial Public Offerings on the STAR Market (CSRC Order No. 153). In accordance with the Decision of the Standing Committee of the National People’s Congress on Authorizing the State Council to Adjust the Application of Relevant Provisions of the Securities Law of the People’s Republic of China in the Course of Implementing the Reform of the Stock Issuance Registration System, the Decision of the Standing Committee of the National People’s Congress on Extending the Period of Authorization Granted to the State Council to Adjust the Application of Relevant Provisions of the Securities Law of the People’s Republic of China in the Course of Implementing the Reform of the Stock Issuance Registration System, the Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration System, and the Measures for the Registration Administration of Initial Public Offerings on the STAR Market (CSRC Order No. 153), the CSRC hereby makes a decision, in accordance with the law, not to register Hengan Jiaxin’s application for the registration of its initial public offering.

Commercial & Corporate

The three ancillary regulations to the Anti-Monopoly Law officially came into effect on September 1.

On August 30, the State Administration for Market Regulation held a special press conference to introduce the relevant details of three implementing regulations under the Anti-Monopoly Law, namely the Provisional Regulations on Prohibiting Monopoly Agreements, the Provisional Regulations on Prohibiting Abuse of a Dominant Market Position, and the Provisional Regulations on Stopping the Abuse of Administrative Power to Exclude or Restrict Competition.

According to reports, on June 26 this year, the State Administration for Market Regulation promulgated three implementing regulations under the Anti-Monopoly Law: the Provisional Regulations on Prohibiting Monopoly Agreements, the Provisional Regulations on Prohibiting Abuse of a Dominant Market Position, and the Provisional Regulations on Preventing the Abuse of Administrative Power to Exclude or Restrict Competition. These three regulations will officially come into force on September 1.

At the press conference, Wu Zhenguo, Director of the Anti-Monopoly Bureau of the State Administration for Market Regulation, outlined the key institutional frameworks of these three regulations:

First, a vertically integrated and standardized antitrust enforcement system has been established. Specifically, the enforcement mechanism has been streamlined; enforcement procedures have been refined; and oversight of enforcement activities has been strengthened.

Second, the Provisional Regulations on Prohibiting Monopoly Agreements have refined both the methods for identifying monopoly agreements and the enforcement procedures. First, they clarify the specific forms and constituent elements of monopoly agreements and elaborate on the factors that the State Council’s antitrust enforcement authority considers when determining “other monopoly agreements.” Second, they define concerted practices and specify the criteria for identifying such practices. Third, they detail the application requirements, determination criteria, and the legal effects of exemption decisions for operators seeking lawful exemptions. Fourth, they further refine the leniency program: for the first three operators who voluntarily report and provide crucial evidence, fines may be reduced by varying degrees in accordance with the order in which their applications are submitted, thereby enhancing the practicality and operability of the leniency regime.

Third, the Interim Provisions on Prohibiting the Abuse of a Dominant Market Position clarify the identification and handling of unlawful conduct. First, it elaborates on the factors to be considered in determining market dominance, with particular emphasis on specifying the criteria for assessing dominance in the internet and intellectual property sectors. Second, it explicitly lists six specific forms of abuse of a dominant market position, including selling goods at unfairly high prices or purchasing goods at unfairly low prices, and sets out the possible “legitimate justifications” for such conduct by operators. Third, it further details the measures for addressing abuses of a dominant market position, including the issuance of penalty decisions and the determination of factors to be considered in imposing fines, while stipulating that if an operator can demonstrate that its conduct was due to passive compliance with an administrative order, it may be subject to a lighter or reduced penalty in accordance with the law.

Fourth, the Interim Provisions on Prohibiting the Abuse of Administrative Power to Exclude or Restrict Competition clearly define the types of conduct and the corresponding enforcement measures. First, it elaborates on the specific manifestations of such abusive practices as restricting trade. Second, it refines the procedures for addressing abuses of administrative power that exclude or restrict competition, providing four distinct approaches depending on the circumstances: declining to initiate a case; submitting recommendations for action to the relevant higher-level authorities; terminating the investigation upon the party’s voluntary cessation of the unlawful conduct; and concluding the investigation when no violation is found.

Guonong Technology Made False Statements; the Investor Protection Center Supports Investors in Filing Claims Litigation.

Recently, the China Securities Regulatory Commission’s Small and Medium Investor Service Center (hereinafter referred to as the Investor Service Center) supported investors in filing a civil lawsuit against Shenzhen China Agricultural University Technology Co., Ltd. (hereinafter referred to as Guonong Technology) for false statements, and the case has been formally accepted by the Shenzhen Intermediate People’s Court (hereinafter referred to as the Shenzhen Intermediate Court). Han Donghui, a public-interest lawyer at the Investor Service Center, along with his team of attorneys, is representing the investors in the litigation.

In this case, the Investor Protection Center has decided to adopt a case‑by‑case demonstration approach to showcase, lead, and encourage more aggrieved small and medium investors to safeguard their rights. The litigation plan tentatively sets the date of the false statement as the third trading day following the signing of the agreement—November 21, 2013—and the disclosure date as April 11, 2017, when Guonong Technology first voluntarily disclosed the terms of the agreement. Accordingly, support‑type lawsuits have been filed against the then‑general manager Li Linlin, the then‑chairman Jiang Yuming, the then‑board secretary Yang Bin, and Guonong Technology itself.

According to reports, Guonong Technology issued an announcement in June 2017 stating that the China Securities Regulatory Commission had initiated an investigation into the company on suspicion of violations of information disclosure laws and regulations. In August 2018, Guonong Technology released announcements disclosing the “Notice of Preliminary Administrative Penalty” and the “Administrative Penalty Decision.”

According to the Administrative Penalty Decision, on November 18, 2013, Shandong Beida Gaoke Huatai Pharmaceutical Co., Ltd., a subsidiary of Guonong Technology Holdings (hereinafter referred to as Shandong Huatai), entered into an ATP Patent Licensing Agreement with an individual, Hu Xiaoquan, and notarized the agreement. Under this agreement, from January 1, 2014, until the expiration of the patent term, Hu Xiaoquan licensed his ATP patent to Shandong Huatai for a fee. Regardless of whether Shandong Huatai manufactures products covered by the patent, it was required to pay an annual licensing fee of RMB 14 million, totaling RMB 154 million. The total value of the agreement represented 79.83% of Guonong Technology’s audited total assets and 198.83% of its audited net assets in 2012; in 2013, it accounted for 63.64% of the audited total assets and 202.63% of the audited net assets.

However, the aforementioned signing of the “ATP Patent Licensing Agreement” constitutes a material event that, pursuant to Article 67, Paragraph 2, Item (3) of the Securities Law and Articles 30 and 33, Paragraph 1, of the Measures for the Administration of Information Disclosure by Listed Companies, is required to be disclosed. Nevertheless, Guonong Technology failed to make timely disclosure, only providing supplementary disclosure on April 11, 2017. For failing to disclose this material event in a timely manner, the listed company and the relevant persons held accountable were issued warnings and fines by the China Securities Regulatory Commission.

The Investor Service Center believes that, given the substantial proportion of the “ATP Patent Licensing Agreement” to the company’s total assets, the listed company’s failure to disclose the agreement’s terms in a timely manner has had a significant impact on its financial condition and substantially influenced investors’ investment decisions. Furthermore, post‑preliminary research revealed that, from the proposed disclosure date through the benchmark date, the company’s stock price declined by 32.72%, thereby causing substantial harm to investors’ rights and interests.

In response, the Investor Protection Center appointed public-interest lawyer Han Donghui as the litigation-support counsel in this case, representing investors Guan and Xu in filing claims for compensation against Li Linlin, Jiang Yuming, Yang Bin, and Guonong Technology. On June 6, 2019, the counsel submitted the case‑filing documents to the Shenzhen Intermediate People’s Court and received a “Notice of Prior Mediation”; on August 13, 2019, the court issued a “Notice of Acceptance of the Case.”

Gu’ao Technology Announces Restructuring Plan: Intends to Acquire Xiangsheng Information for Synergistic Development Across Multiple Sectors

On the evening of August 29, Gu’ao Technology disclosed a preliminary proposal for issuing shares, convertible corporate bonds, and paying cash to acquire assets while raising accompanying funds, along with related-party transactions. Under the plan, the company intends to acquire 100% of the equity interest in Xiangsheng Information held collectively by 45 counterparties, including Yang Zijin, at a transaction price not exceeding RMB 416 million. Specifically, the listed company plans to pay RMB 228.6 million in shares, RMB 21 million in convertible corporate bonds, and RMB 166.4 million in cash.

Following this transaction, Xiangsheng Information will become a subsidiary of Gu’ao Technology, and its management team and business operations will remain largely unchanged.

Injecting fresh vitality, with resources highly allocated.

Public records indicate that the target company, Jiangsu Xiangsheng Information Technology Co., Ltd., is a high-tech enterprise primarily engaged in the research, development, and production of a range of software and hardware products for information security. Its core business encompasses the R&D, manufacturing, sales, and service of information security hardware and software, offering electronic signature products based on PKI, document and data security applications, and related system solutions. The company entered the electronic signature industry in 2009, focusing on serving electronic procurement and bidding systems, and was among the first providers to participate in the development of such systems. Its primary customers are government‑sector entities involved in electronic procurement and bidding.

Regarding the impact of this restructuring on the listed company, Gu’ao Technology stated that, on the one hand, it will integrate the target company’s information security technologies to enhance the information security of its own smart self-service devices and other products; on the other hand, leveraging the target company’s industry strengths in e‑government areas such as electronic bidding, it will help expand its non‑bank customer base. Meanwhile, the target company will also fully capitalize on Gu’ao Technology’s established customer network and channel resources within the banking sector, while drawing on its own competitive advantages to broaden its business in the financial services industry, thereby achieving synergistic development.

Gu’ao Technology stated that, as a high-tech enterprise that early on positioned itself in the electronic certification industry, Xiangsheng Information centers on its suite of electronic signature products and builds upon the electronic tendering and bidding sector, generating revenue by providing customers with a range of document and data security solutions tailored to their needs.

According to reports, the electronic certification industry is an inevitable outcome of the internet era. Over the past decade and more, it has grown rapidly in China, evolving from scratch. Based on publicly available data from the China Electronic Certification Service Industry Alliance, as of 2017, the overall size of China’s electronic certification market stood at RMB 23.7 billion, with the market for electronic signature products and services accounting for approximately RMB 900 million—up 69.81% year over year. Electronic signature products and services remain in the early stages of industry development, yet they are expanding at a notably fast pace.

In fact, Xiangsheng Information has maintained rapid growth over the past three years. From 2016 to 2018, the target company reported operating revenues of RMB 33.7953 million, RMB 44.1177 million, and RMB 69.2032 million, respectively, with net profits attributable to owners of the parent company totaling RMB 7.6126 million, RMB 12.7588 million, and RMB 18.0953 million, respectively.

Synergistic development across multiple sectors has effectively enhanced corporate competitiveness.

Gu’ao Technology stated that, under the pressure of internet finance, traditional financial equipment manufacturers are facing significant challenges, making corporate transformation an urgent priority.

According to the financial report, Gu’ao Technology’s performance under pressure improved significantly in 2019. As disclosed in its 2019 interim report, the company recorded operating revenue of RMB 93.94 million in the first half of the year, up 81.25% year over year, while net profit attributable to the parent company stood at a loss of RMB 4.18 million, with the loss narrowing by 78.55% compared with the same period last year. Gu’ao Technology stated that it is currently at a critical juncture in its transformation and development, with its performance having transitioned from a downward trend to a phase of gradual recovery and growth. This restructuring is expected to generate multi‑faceted synergies, playing a pivotal role in helping the company navigate the transformation period.

According to the Plan, Gu’ao Technology will achieve synergies with the target company across multiple dimensions, including technology and customer resources. Furthermore, this transaction will enable Gu’ao Technology to expand into the information security business, thereby diversifying the company’s revenue mix, strengthening its core competitiveness, and effectively enhancing its sustainable profitability and shareholder returns.

Notably, in this major asset restructuring, Gu’ao Technology plans to issue convertible corporate bonds to no more than five qualified specific investors, using such bonds to pay a consideration of RMB 21 million. This approach aligns with the pilot announcement issued by the China Securities Regulatory Commission in November 2018, providing a more flexible mechanism for balancing interests in transactions and diversifying financing channels for mergers and acquisitions and restructuring.

Industry insiders note that asset restructuring is a direct mechanism for optimizing resource allocation among enterprises, helping listed companies achieve industry consolidation and technological upgrading, enhance their market competitiveness, and deliver sustained, stable returns to investors.

Storm Group: The company’s solvency is clearly inadequate; it plans to lay off employees to cut costs.

On the evening of August 29, Storm Group released its 2019 interim report. The report showed that in the first half of the year, the company recorded operating revenue of RMB 83.5929 million, a year-on-year decline of 89.44%; net profit attributable to shareholders of the listed company was a loss of RMB 264 million, compared with a loss of RMB 106 million in the same period last year.

The announcement indicates that, as of June 30, 2019, Storm Group’s consolidated financial statements reported current assets of RMB 486 million and current liabilities of RMB 2.083 billion. Its subsidiary, Storm Smart, recorded a net loss attributable to owners of the parent company of RMB 87.4291 million for the first half of 2019. As of June 30, 2019, its current assets stood at RMB 356 million, while its current liabilities totaled RMB 1.664 billion, which may give rise to uncertainties regarding the company’s ability to continue as a going concern.

“The company’s solvency is clearly inadequate,” the Storm Group stated, adding that it faces a shortage of working capital and is unable to meet its debt obligations on time, with numerous legal proceedings already initiated due to defaults. If the company fails to reach a settlement with its creditors, there is a risk that creditors may enforce collection against the company’s assets through legal channels.

Restructuring or workforce reductions are currently key measures for Storm Group to navigate its crisis. According to the company, it will proactively engage with customers and suppliers, pursue debt restructuring to recover some funds and reduce liabilities, thereby supporting business development; streamline redundant operations, downsize its workforce, significantly cut operating costs, boost labor productivity, and lower expenses; and explore innovative financing channels, strengthen communication with financial institutions, optimize its financing framework, and mitigate debt‑related risks.

Delisting risk has emerged as another pressing crisis for Storm Group. According to the announcement, the company faces the risk that its audited net assets attributable to shareholders of the listed company will be negative as of the end of 2019. Under relevant regulations, if the company’s audited 2019 financial statements show a negative net asset balance at year-end, the Shenzhen Stock Exchange may suspend trading of the company’s shares.

Regarding its internet video business, the announcement indicates that as of June 30, 2019, Storm Group had approximately 66,000 VIP subscribers, with about 47,000 on the PC platform and roughly 19,000 on mobile. The parent company’s advertiser base comprised 62 clients, generating average advertising revenue of RMB 498,000 per client.

According to Storm Group, Feng Xin has not stepped down as the company’s legal representative and remains its controlling shareholder and de facto controller.

In addition, Storm Intelligence’s business remains in normal operation. To optimize its structure and control costs, the company has restructured administrative and offline sales departments, while core functions such as technology and product operations remain unaffected.

A first in A-shares: Weiming Pharmaceutical invests in its own bonds.

On August 28, Weiming Pharmaceutical issued an announcement titled “Announcement on Bond Purchase and External Investment.” With the approval of the Board of Directors, the company plans to deploy up to RMB 100 million of its idle proprietary funds for bond investments, acquiring no more than 1 million (inclusive) units of the “17 Weiming Bond” through block trades on the Shenzhen Stock Exchange’s Comprehensive Agreement Platform. The purchase price is RMB 80 per unit.

Following the release of this announcement, it has drawn attention from the capital markets. Notably, the practice of a listed company purchasing its own bonds in the secondary market remains the first of its kind in the A-share market.

In response, Weiming Pharmaceutical stated that this transaction generated over ten million yuan in gains for the listed company, reducing its debt-to‑asset ratio and lowering interest expenses—both of which serve shareholders’ interests. For the remaining bondholders, the listed company’s ability to honor its obligations has been strengthened, creating a win‑win situation.

The listed company can directly earn over ten million yuan.

According to available data, the “17 Weiming Bond” was listed on the Shenzhen Stock Exchange on December 28, 2017. It has a term of five years, running from September 25, 2017, to September 25, 2022, with a coupon rate of 6.7%. On September 25, 2018, the bond made its first interest payment: for each bond unit with a face value of RMB 1,000, the interest distributed amounted to RMB 67 (inclusive of tax). After tax, individual investors and mutual fund investors received RMB 53.6 per unit, while non-resident enterprises—including QFII and RQFII—received RMB 60.3 per unit.

On June 22, 2019, United Credit Rating Co., Ltd. issued the bond credit rating report for “17 Weiming Bond,” assigning it a credit rating of AA.

According to an announcement issued by Weiming Pharmaceutical, the funds used to invest in the aforementioned bonds are the company’s own idle capital. By engaging in prudent bond investments, the company can enhance its capital utilization efficiency, generate a certain level of investment income, and thereby further improve its overall profitability, delivering greater returns to the company and its shareholders.

Analysts note that if Weiming Pharmaceutical were to purchase RMB 100 million worth of bonds at RMB 80 per bond, the listed company could realize a direct profit of over RMB 10 million and reduce its interest expenses.

This transaction does not involve the early redemption of bonds.

Since the beginning of this year, debt defaults by listed companies have drawn widespread attention. In response, a researcher at a public‑fund office has cautioned investors to carefully assess market risks. In the case of Weiming Pharmaceutical, does its recent investment in its own bonds constitute an early redemption?

Some market observers explain that, among a wide array of investment options, bonds—being a relatively stable asset class—often attract investor preference. In this transaction involving Weiming Pharmaceutical, there is no early redemption involved; based on the cash balance disclosed in the recently released semi‑annual report, the company’s ability to meet its obligations is fully adequate. Therefore, this move is not driven by liquidity concerns but rather represents a compliant investment by qualified investors, which indirectly underscores the company’s confidence in its future prospects, highlights its strong cash flow and stable operations, and helps bolster investor sentiment in the secondary market.

According to the 2019 interim report released by Weiming Pharmaceutical, the company recorded revenue of approximately RMB 300 million in the first half of the year, up 1.98% year over year, and net profit attributable to shareholders of the listed company of about RMB 25.6553 million, a year-on-year increase of 358.62%. As of the end of the reporting period, the company’s asset‑liability ratio stood at 29.07%. According to data from Tonghuashun, the company’s asset‑liability ratio was 34.02% at the end of 2018.

Taxation TAXATATION

Interpretation of the “Announcement of the State Taxation Administration on Matters Relating to the Collection and Administration of the Cultivated Land Occupation Tax”

I. Background to the Issuance of the Announcement
To implement the Law of the People’s Republic of China on Cultivated Land Occupation Tax (hereinafter referred to as the “Cultivated Land Occupation Tax Law”) and the Measures for the Implementation of the Law of the People’s Republic of China on Cultivated Land Occupation Tax (hereinafter referred to as the “Implementation Measures”), and in accordance with the CPC Central Committee and the State Council’s directives on deepening the “delegation, regulation, and service” reform and optimizing the tax‑related business environment, the State Taxation Administration has drafted the Announcement on Matters Relating to the Collection and Administration of the Cultivated Land Occupation Tax (hereinafter referred to as the “Announcement”). The purpose is to clarify certain collection and administration issues under the Cultivated Land Occupation Tax Law, facilitate operations at the grassroots tax authorities and among taxpayers, and ensure the smooth implementation of the law.
II. Guiding Principles for the Formulation of the Announcement
Taking taxpayers’ ease of understanding and the practicality of grassroots implementation as both the starting point and the ultimate goal, and requiring a precise grasp of relevant policies, this approach seeks to standardize tax collection and administration, streamline tax‑filing procedures, and strengthen data‑driven tax management. By refining and clarifying collection and administration measures, simplifying tax‑filing documentation, and enhancing taxpayer services, it provides taxpayers and frontline tax officials with clearer policy guidance and more robust operational instructions in the areas of farmland occupation tax filing and collection, as well as exemption, reduction, and refund management.
III. Main Contents of the Announcement
The announcement comprises twelve articles, covering the tax calculation formula for the farmland occupation tax, specific details of tax exemptions and reductions, procedures for handling tax refunds and additional tax payments related to such exemptions and reductions, submission of tax return forms and supporting documentation, follow-up management of tax exemptions and reductions, as well as normative documents slated for repeal.
(1) Clarify the tax calculation formula to facilitate taxpayers’ tax reporting.
(2) Refine the specific details of tax reductions and exemptions to facilitate taxpayers’ understanding and streamline implementation at the grassroots level. In accordance with the provisions of the Law on Cultivated Land Occupation Tax and its Implementing Measures, the scope of tax reductions and exemptions has been further clarified. Taxpayers may now compare their land‑occupation projects and intended uses to file applications for such reductions or exemptions, thereby enhancing the accuracy of their filings and minimizing misjudgments.
(3) Optimize tax return forms to shorten tax-processing time. By streamlining the data items required on the return, a single form now replaces the multiple forms previously needed, thereby reducing taxpayers’ time and effort.
(4) Simplify tax‑filing documentation and streamline tax‑processing procedures. Streamline the required documentation, clarify the procedures for tax reductions, exemptions, and refunds, and adopt a handling approach whereby taxpayers “self‑determine eligibility, file a return to claim benefits, and retain relevant documents for record‑keeping.”
IV. Effective Date

The Notice shall take effect as of September 1, 2019.

The National Development and Reform Commission and the State Taxation Administration have jointly issued a notice to strengthen the development of taxpayer credit in the personal income tax field.

To implement the Individual Income Tax Law of the People’s Republic of China and its implementing regulations, and to carry out the Guiding Opinions of the General Office of the State Council on Accelerating the Development of a Social Credit System and Establishing a New Regulatory Mechanism Based on Credit, the National Development and Reform Commission and the State Taxation Administration recently jointly issued the “Notice on Strengthening the Building of Taxpayer Credit in the Individual Income Tax Field,” thereby reinforcing coordinated governance of taxpayer credit in individual income tax matters and promoting law-based, honest tax compliance by taxpayers.

The Notice requires that all regions and departments, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council on building a social credit system, take fostering a sense of integrity and practicing the core socialist values as their fundamental principles, and strengthen the development of personal income tax taxpayer credit. It calls for adhering to the principle of law-based advancement to establish and improve the personal income tax taxpayer credit mechanism; upholding the principle of inter‑departmental coordination to fully leverage the roles of relevant competent authorities and forge a concerted effort in building taxpayer credit; and observing the principle of rights protection to safeguard taxpayers’ legitimate rights and interests.

The Notice states that, in establishing a personal income tax taxpayer credit management mechanism, a system of credit‑based commitments for personal income tax returns shall be fully implemented. Taxpayers are required to commit to the truthfulness, accuracy, and completeness of the information they report, and the fulfillment of these commitments will be incorporated into their personal credit records. A sound system for maintaining personal income tax taxpayer credit records shall be put in place, with the natural person taxpayer identification number serving as the unique identifier. The tax authorities will focus on collecting and evaluating taxpayers’ personal credit information—based on their individual income tax return filing records, records of reporting special additional deductions, and records of breaches of credit commitments and violations of laws and regulations—in accordance with applicable laws and regulations. In addition, a mechanism for identifying instances of untrustworthy conduct by natural persons will be established; where the circumstances are serious and meet the criteria for major tax‑related violations involving loss of trust, the tax authorities will designate such individuals as subjects of severe untrustworthiness, publicly disclose this information in accordance with the law, and share it with the National Credit Information Sharing Platform.

The Notice requires the refinement of mechanisms for joint incentives for trustworthiness and joint punitive measures for untrustworthiness. For taxpayers with consistently excellent personal income tax credit records, relevant departments shall provide greater service conveniences and, in accordance with the law, implement incentive measures such as green channels and acceptance of applications with missing documents. Administrative authorities are encouraged to take such records into account as a reference factor when awarding honorary certificates, commendations, and recognitions. As for individuals who have seriously lost trust in the context of personal income tax, the tax authorities will forward their information to the relevant departments to impose joint punitive measures in compliance with laws and regulations.

The Notice emphasizes strengthening information security and safeguarding rights and interests, protecting natural persons’ tax credit information in accordance with the law, intensifying oversight of credit information systems and the databases of credit service agencies, and establishing access permissions for personnel managing natural persons’ tax credit information based on the principle of least privilege to protect taxpayers’ personal privacy. Where a taxpayer disputes their individual income tax credit record, they may submit an objection to the tax authorities, who shall provide timely feedback. Natural persons are encouraged to proactively rectify any breaches of trust and mitigate adverse effects within the prescribed time limit, thereby undertaking credit restoration.

The Notice requires all regions and departments to make full use of newspapers, radio, television, the internet, and other channels to provide clear explanations of the personal income tax reform policies, intensify publicity on lawful and honest tax compliance, enhance public awareness of integrity, and foster a positive social ethos that values and practices honesty.

The State Taxation Administration has issued a new version of the Taxpayer Service Standards.

Recently, the State Taxation Administration issued the “National Tax Service Standards” (Version 3.0) (hereinafter referred to as the new version of the tax service standards), introducing concrete measures to address issues identified during the thematic education campaign on “Staying True to Our Original Aspiration and Keeping Our Mission Officely in Mind.” Focusing on taxpayers’ and payers’ emerging needs and expectations, the new version of the standards has been refined and adjusted—while preserving its original structure—based on the principle of “maximizing convenience for taxpayers and maximizing compliance among tax officials.” It also encourages local authorities to innovate tax‑administration methods, further enhancing the quality and efficiency of tax services.

“Streamlining administration” scores another victory: a substantial reduction in required documentation and in‑person procedures.

In line with the requirements for streamlining administration and delegating power, the new version of the Tax Service Standards has abolished two approval procedures: “approval for the agency sale of stamp tax stamps” and “approval for non-resident enterprises to elect to have their enterprise income tax paid on a consolidated basis by their principal establishment.” To effectively address the difficulties taxpayers face in both establishing new businesses and completing deregistration, the new standards have reclassified tax registration as an information‑reporting requirement and introduced “package‑style” services for newly established enterprises. Similarly, tax deregistration has been transformed into a tax‑clearance filing process, with the implementation of “exemption‑from‑application,” “immediate‑processing,” and “commitment‑based” options, thereby making substantial efforts to streamline the procedures for both new business establishment and deregistration.

Among these initiatives, the “package” service for newly established enterprises has been widely welcomed by taxpayers since its pilot launch in several regions. In Jiangsu Province, the tax authorities have introduced a “comprehensive package” for new businesses, transforming multiple forms, separate procedures, and repeated visits into a single‑click application through the electronic tax bureau, one‑stop document issuance at the tax service hall, and a “maximum of one visit” experience for new taxpayers. “With just a few clicks online, I was able to collect both the tax control device and invoices in one go,” said Wang Ying, a tax officer at Wuxi Suyuantang Health Technology Co., Ltd., expressing her satisfaction with the new‑business package service.

Compared with the previous Tax Service Standards, the new version significantly streamlines the tax-related documentation required from taxpayers: 70 types of certificates issued by external agencies are no longer required, and 148 administrative matters now allow taxpayers to complete their tasks with “at most one visit.” “While simplifying administration and making services more convenient for taxpayers, we have also adopted innovative approaches to transform our service delivery, returning authority and responsibilities to taxpayers. We have clearly stipulated that taxpayers may independently file tax returns and make tax payments, and freely choose which tax incentives to avail themselves of, thereby granting them greater autonomy in decision‑making,” said Sun Yushan, Director-General of the Taxpayer Services Department of the State Taxation Administration.

It is understood that, in order to formulate the new version of the tax service standards in a scientific and rational manner, the State Taxation Administration has thoroughly summarized tax service practices from across the country and incorporated replicable, scalable innovations into the standards—such as the Shenzhen tax authorities’ “mobile processing of pre‑conditions for lifting abnormal account status” and “expansion of online tax payment methods,” as well as the Chongqing tax authorities’ “one‑form integration” and “element‑based declaration”—to guide localities in benchmarking and elevating their taxpayer services.

A more convenient experience: Measures squarely address the pain points and bottlenecks in tax administration.

The public’s perception of the convenience of tax administration is the most immediate and tangible. During the thematic education campaign, the State Taxation Administration has focused on addressing the pain points, bottlenecks, and difficulties reported across regions, ensuring thorough rectification, optimization, and continuous improvement—efforts that have been fully reflected in the new version of the taxpayer service standards, thereby fostering a tax‑friendly business environment that is both comfortable and convenient.

In terms of integrating tax-related matters, the original 98 shared tax‑administration services previously handled by both the national and local tax authorities have been streamlined from “two separate steps” or “joint processing” to “one‑stop service.” Furthermore, 34 related procedures—such as supplementary tax (fee) declarations and real estate transaction filings—are now processed in a sequential, “linked‑process” manner. At the same time, tax‑filing procedures have been simplified, with detailed operational guidelines provided, thereby enhancing overall processing efficiency.

In standardizing business processes, operations are divided into four stages—acceptance, processing, feedback, and archiving—with clearly defined procedures for each stage. Strict adherence is ensured to requirements such as “front‑office acceptance, internal workflow, time‑limited completion, and back‑office issuance,” while strengthening coordination between front‑ and back‑office functions, eliminating inconsistencies in processing workflows, and effectively standardizing taxpayer services.

In expanding tax service channels, we will strengthen the development of the electronic tax bureau, increase the share of online and self-service tax processing, and clearly designate procedures that can be handled through the electronic tax bureau, mobile apps, or self-service terminals, thereby providing taxpayers with diversified tax service options.

According to Li Wanfu, Director of the Tax Science Research Institute of the State Taxation Administration, the newly released tax service standards include a list of tax preferential measures, stipulating that, except for cases requiring statutory approval or filing, taxpayers shall “make their own determinations and file claims” to enjoy such benefits, thereby ensuring the effective and meticulous implementation of tax reduction and fee-cutting policies.

For example, with respect to VAT refunds, the processing time for refunding input VAT credit balances has been shortened from 20 working days to 10, the time for crediting or exempting VAT refunds has been reduced from 20 to 15 working days, and the time for export VAT refunds has been cut from 20 to 10 working days, thereby comprehensively accelerating the overall timeframe for VAT refunds.

“Previously, it took 20 working days to receive a tax refund; now, the funds arrive in the company’s account in about one week,” said Liu Aihua, head of Fujian Sanming Foreign Trade Development Co., Ltd. From January to July this year, the company received export tax refunds totaling RMB 32.61 million, providing crucial financial support for expanding its overseas markets.

“Management” focuses on strengthening internal capabilities: with an emphasis on improving ex‑ante, in‑process, and ex‑post oversight.

During the development of the new tax service standards, the State Taxation Administration has adhered to a balanced approach that integrates deregulation, regulation, and service. It has both reduced the administrative burden on taxpayers and strengthened post‑event oversight, implementing multiple measures to refine mid‑process and post‑event management systems and fostering a fair and equitable market environment for businesses.

— Strengthening real-name verification. Fully implementing real-name tax processing, we have established clear real-name verification requirements for high-risk transactions such as invoice acquisition, proxy invoice issuance, and tax deregistration. For other matters, we encourage real-name verification by streamlining the documentation required, thereby effectively verifying the identity of taxpayers and “flagging” suspected illegal activities such as fraudulent invoice acquisition or issuance. This approach both mitigates the risk of tax evasion and safeguards the legitimate rights and interests of law-abiding taxpayers.

— Strengthening administrative coordination. Management measures are being communicated to taxpayers regarding their tax‑filing obligations; for example, procedures for invoice management of newly registered taxpayers and the implementation of a guidance period for small‑scale trading and wholesale enterprises have been standardized, with clear stipulations on the quantity of invoices to be issued and the maximum invoicing limit. In addition, to enhance front‑office risk mitigation, requirements for taxpayers to correct errors and make amends have been reinforced: low‑risk matters are appropriately flagged, while medium‑ and high‑risk issues are promptly addressed and prevented.

— Strengthening credit-based regulation. Adhering to the principles of rewarding good faith and sanctioning breaches of trust, we will provide preferential treatment to A‑ and B‑rated taxpayers in areas such as invoice issuance, export tax rebates, access to tax incentives, refund of input VAT credits, and tax deregistration. Conversely, C‑ and D‑rated taxpayers will face restrictions on invoice supply, processing of tax refunds or credits, and export tax rebates, thereby fostering taxpayer integrity and self-discipline.

“Integrity is paramount; one must never chase short-term gains,” said the head of Zhejiang Longyou Lingxi Bamboo and Wood Products Factory. The company’s tax credit rating was downgraded to Level C for failing to file and pay taxes on time, which restricted its access to several preferential bank loans. Subsequently, the company paid the outstanding taxes, late fees, and penalties. Following an assessment, the tax authorities restored its tax credit, enabling the company to promptly secure a bank loan for technological upgrades.

An official from the State Taxation Administration stated that the tax authorities will officely uphold a taxpayer‑centered approach. Building on the outcomes of the first phase of thematic education, they will carefully plan and implement the second phase across the entire system, addressing issues through self‑criticism and rectification, and striving to make life easier and reduce burdens for taxpayers and payers. This effort will ensure that the Party Central Committee and the State Council’s decisions and arrangements on tax and fee reductions are effectively put into practice and take root within the tax system.

State Taxation Administration: Services Further Upgraded to Resolve Public Concerns

In accordance with the central government’s arrangements, as among the first batch of units to carry out the thematic education campaign on “Staying True to Our Original Aspiration and Keeping Our Mission Officely in Mind,” the State Taxation Administration and provincial tax authorities have implemented the overarching requirements of “upholding our original aspiration, shouldering our mission, identifying gaps, and ensuring effective implementation.” They have integrated study and education, investigative research, problem identification, and corrective action throughout the entire process. Addressing the persistent pain points, bottlenecks, and difficulties encountered by taxpayers and payers in tax filing and payment, they have launched a series of coordinated policy and service measures and introduced a range of practical, targeted corrective initiatives, striving to achieve the goal of “solving problems and delivering tangible benefits to the people.”

The Party Committee of the State Taxation Administration has resolutely implemented the major decisions and arrangements of the CPC Central Committee and the State Council, meticulously planned, and earnestly carried out all tax‑related reform and development initiatives. For instance, in implementing policies and measures to cut taxes and fees, it has established and refined an efficient, unified command-and‑implementation mechanism characterized by “comprehensive coordination and end‑to‑end oversight,” ensuring that these policies and measures are effectively put into practice. In the first half of the year, cumulative new tax and fee reductions totaled RMB 1.1709 trillion, thereby significantly easing the burden on enterprises and invigorating market entities.

“Tax service is the aspect of tax administration that the public experiences most directly and concretely. We have focused on issues raised across regions—such as difficulties in accessing tax services—and, from the outset, launched reforms, implemented targeted measures, and ensured thorough, comprehensive, and in-depth follow-up to address these concerns,” said Sun Yushan, Director-General of the Taxpayer Services Department of the State Taxation Administration.

According to reports, during the thematic education campaign, the State Taxation Administration has designated taxpayer services as a key area for identifying and addressing shortcomings. It has urged tax authorities at the provincial level to systematically review their weak points and deficiencies, compile and submit province‑wide summaries to form a special list of issues specific to the campaign. This list details the concrete manifestations of each problem, analyzes the underlying causes, assigns clear responsibilities to designated individuals, emphasizes a problem‑oriented approach, outlines targeted corrective measures, and implements time‑bound rectification through a “check‑off and close‑out” mechanism.

For example, at the outset of the thematic education campaign, some enterprises reported difficulties in tax administration. In response, the State Taxation Administration promptly formulated and rolled out ten new measures to facilitate tax filing and payment in July, including implementing a “list‑based” approach for tax incentives, paperless processing of export tax refunds, accepting applications with incomplete documentation under a “deficiency‑tolerance” policy, and offering more convenient self‑service tax‑filing options. The gradual rectification of these issues has led to an overall improvement in service quality; by addressing longstanding pain points and bottlenecks in tax administration, businesses have experienced greater convenience and satisfaction.

Recently, the State Taxation Administration issued another work plan for targeted rectification under the thematic education campaign, incorporating six identified issues—including tax service—as key areas for special remediation. The plan emphasizes immediate action and prompt correction, genuine and substantive improvements, and tangible results, while highlighting the selection and promotion of exemplary models, with the aim of introducing additional taxpayer-friendly measures that are both replicable and scalable.

Meanwhile, in line with the State Taxation Administration’s directives, tax authorities across the country have focused on the issues that taxpayers and payers care about most and urgently need addressed. Through a process of learning, research, self-assessment, and corrective action, they have rolled out a series of practical, tangible measures to better serve the public. For example, the Guangdong Provincial Tax Service Bureau has tackled inconsistencies in work standards and insufficient coordination among regions, levels, and departments by further advancing standardization, regularization, and integrated service delivery, thereby making it easier for businesses to handle tax matters. In Hunan Province, addressing shortcomings in taxpayer services, the tax authority started by tackling the problems that taxpayers and payers find most daunting, vexing, pressing, or painful, specifying 65 concrete measures and introducing 12 initiatives under the “delegation, regulation, and service” reform; as a result, 159 types of administrative procedures can now be completed entirely online.

It is understood that, during the thematic education campaign, many taxpayers put forward “bright ideas” aimed at simplifying tax administration. After careful review and evaluation, the tax authorities incorporated these suggestions into their rectification action plans, implementing targeted improvements to refine and enhance services, thereby turning these “bright ideas” into concrete, effective measures.

“When businesses have tax-related needs, the tax authorities respond promptly, and the series of suggestions we put forward have all been turned into reality.” Liu Haiyang, the financial director of Anhui Jiren Pharmaceutical Co., Ltd., is particularly impressed by the local tax authority’s newly launched “Internet Plus Self-Service Tax Processing” model and the mobile‑based “One WeChat Account, One App” electronic tax bureau, both designed to meet the company’s specific needs.

A responsible official from the State Taxation Administration stated that, going forward, the tax system will continue to fully implement all requirements of the thematic education campaign, closely address pressing public concerns, and vigorously advance follow-up improvements—including service innovation—so as to effectively resolve the anxieties and frustrations that enterprises face in handling tax filing and payment. The tangible results of this thematic education will be gauged by the sustained increase in taxpayer and payer satisfaction.

The State Taxation Administration has unveiled a second batch of ten new measures to make tax and fee payment more convenient.

Recently, the State Taxation Administration issued the “Notice on Implementing the Second Batch of New Measures to Facilitate Tax Filing and Payment,” introducing an additional ten specific measures across five key areas—streamlining tax filing and payment, optimizing tax service delivery, simplifying invoice usage, strengthening credit‑based governance, and enhancing advisory and guidance services—thereby further easing burdens and improving convenience for taxpayers, payers, and frontline tax officials.

Sun Yushan, Director-General of the Taxpayer Services Department of the State Taxation Administration, stated that, in accordance with the CPC Central Committee’s directives, the tax authorities have earnestly carried out the thematic education campaign on “Staying True to Our Original Aspiration and Keeping Our Mission Officely in Mind.” The first batch of ten new measures to facilitate tax filing and payment, launched in July this year, received an enthusiastic response and widespread acclaim from taxpayers, payers, and frontline tax officials. With the introduction of a second set of ten new measures, the authorities are further reducing the documentation required, shortening processing times, streamlining procedures, and lowering costs, thereby enhancing tax administration efficiency and demonstrating greater determination and effort to address the key pain points, bottlenecks, and difficulties faced by taxpayers and payers.

— In terms of convenient invoice usage, three measures have been introduced, including “fully implementing the self‑issuance of special VAT invoices by small-scale taxpayers” and “rolling out an electronic invoice public service platform,” which effectively reduce taxpayers’ time and costs associated with invoice management.

The Notice states that the State Taxation Administration will further expand the scope of self‑issuance of special VAT invoices by small-scale taxpayers. When small-scale taxpayers engage in VAT‑taxable activities and need to issue special VAT invoices, they may voluntarily use the VAT invoice management system to issue such invoices themselves.

The Notice clarifies that the State Taxation Administration will establish a nationwide, unified public service platform for electronic invoices, providing taxpayers with basic public services such as issuing electronic invoices. Professor Xu Zhengzhong of the Party School of the CPC Central Committee (National Academy of Governance) noted that the General Office of the State Council recently issued the “Division of Key Tasks for the National Teleconference on Deepening the ‘Delegation, Regulation, and Service’ Reform and Optimizing the Business Environment,” one of whose priority tasks is to build this unified national public service platform for electronic invoices. The tax authorities’ prompt response demonstrates their determination and efficiency in addressing issues and serving the public.

— In terms of facilitating tax filing and payment, two measures have been introduced: “promoting end-to-end online processing for general tax refunds and credits” and “providing tax return filing prompts and reminders,” further shortening the time required for tax refunds and credits and enhancing tax compliance.

The Notice requires tax authorities in all provinces to provide taxpayers with online services for handling general tax refunds and credits through the electronic tax bureau. Taxpayers may submit applications online, and the tax authorities will conduct end-to-end online review and complete the subsequent refund procedures. Additionally, a reminder function has been added to the “My Messages” section of the electronic tax bureau to alert taxpayers who have not yet filed their returns as the filing deadline approaches, helping them fulfill their tax obligations promptly and mitigating the risk of penalties.

— In terms of optimizing tax services, two measures have been introduced: “strongly promoting one-stop processing for real estate transaction matters” and “online handling of cross‑regional tax‑related matters,” further streamlining tax‑filing procedures and enhancing efficiency.

The Notice requires tax authorities in each province, in coordination with departments such as natural resources and housing and urban–rural development, to establish integrated service windows at government service halls—among other measures—to collect all documentation for real estate transactions in a single step, thereby achieving “one-window acceptance and parallel processing.” At the same time, through the electronic tax bureau, taxpayers can file online for cross‑regional tax‑related reporting, verification, and feedback, as well as submit preliminary VAT returns. Currently, taxpayers in some regions have already begun to benefit from this convenient service. Fan Qin, a finance professional at Panzhihua Xinxin Photovoltaic Power Co., Ltd., expressed satisfaction with the Sichuan Provincial Tax Service Bureau’s “Cross‑Regional Tax‑Related Reporting and Verification Management” module on its electronic tax platform. “I can complete all tax‑related procedures for cross‑regional operations without leaving my office, saving more than 3,000 yuan each month in travel, accommodation, and transportation expenses,” she said.

— Enhancing credit‑building efforts. The State Taxation Administration has introduced measures to improve the credit‑repair management mechanism, clearly defining the conditions for tax‑credit repair, standardizing repair criteria, streamlining repair procedures, and ensuring smooth access to repair channels. These steps actively encourage taxpayers to proactively rectify breaches of trust, mitigate adverse consequences, and restore their tax‑credit standing, thereby further leveraging the positive incentives of credit‑based management and safeguarding taxpayers’ legitimate rights and interests.

— Strengthening advisory and guidance services. Two measures have been introduced—“Vigorously promote intelligent consultation” and “Enhance the precision of tax policy publicity and outreach”—to elevate the level of intelligence in advisory services and provide taxpayers and payers with the policy guidance they need.

The Notice emphasizes that the State Taxation Administration will accelerate the launch of an intelligent consultation system, promote its web‑based, app‑based, and mini‑program versions, and provide “7×24-hour” intelligent advisory services. Tax authorities at the provincial level are required to actively explore the development of voice‑enabled intelligent consultation to offer taxpayers convenient advisory support.

At the smart‑consultation area of the tax service hall of the Hongkou District Tax Bureau in Shanghai, company finance manager Wang Ying asked the screen, “What are the eligibility criteria for the carryforward VAT refund?” No sooner had she finished speaking than the screen displayed the detailed requirements for applying for the refund. “I didn’t expect that simply engaging in a human‑machine dialogue would clarify everything—truly very convenient,” Wang said.

A responsible official from the State Taxation Administration stated that, as thematic education continues to deepen, the tax authorities will remain guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, uphold the people-centered development philosophy, and take taxpayers’ and payers’ satisfaction as a key benchmark for assessing the effectiveness of this educational campaign. They will ensure the thorough and unwavering implementation of the CPC Central Committee and the State Council’s major decisions and arrangements on tax and fee reductions within the tax system.

Litigation & Arbitration

The nation’s first case of unfair competition involving the improper use of time‑sharing rental durations for VIP accounts on a video‑streaming website has been adjudicated.

Believing that Hangzhou Longhun Network Technology Co., Ltd. and Hangzhou Longjing Technology Co., Ltd., through their “Ma Shang Wan” app, were engaging in the time‑shared rental of iQIYI VIP accounts and imposing restrictions on certain functions of the iQIYI app within the disputed application—thereby infringing upon its legitimate rights and interests—Beijing iQIYI Technology Co., Ltd. brought suit against the two companies, seeking to have the adverse effects eliminated and to recover a total of RMB 3 million in economic losses and reasonable expenses. Recently, the Haidian District People’s Court of Beijing concluded the case, ruling in favor of all of iQIYI’s claims. Reportedly, this case represents the first-ever nationwide dispute involving novel online unfair competition arising from the time‑shared rental of video‑website VIP account usage durations.

The plaintiff, iQIYI, alleges that it operates the video‑streaming website iQIYI.com and the iQIYI mobile app, and that its paid VIP membership model is a key business strategy for expanding its user base and sustaining its video‑content operations. Furthermore, iQIYI explicitly stipulates that VIP members are granted only limited rights to use their iQIYI VIP accounts and may not transfer, lend, lease, sell, or share such accounts with others. The two defendants, through cloud‑streaming technology in the app at issue, unlawfully rented out iQIYI VIP accounts on a time‑shared basis, thereby violating the iQIYI VIP Account User Agreement and undermining iQIYI’s paid‑membership system. In addition, the defendants employed technical measures to restrict certain functions of the iQIYI app within the app in question, resulting in a diminished user experience for the public. These two conductings constitute acts of unfair competition.

The two defendants do not accept all of iQIYI’s claims and contend that no competitive relationship exists between them; they further assert that they lawfully obtained the right to use iQIYI’s VIP accounts, such that the time‑shared rental of these accounts constitutes legitimate use. They also maintain that the app at issue employs a novel business model based on cloud‑streaming technology and should therefore not be deemed invalid.

After trial, the court held that the principal issues in this case are whether a competitive relationship exists between the parties and how to characterize the challenged conduct. With respect to the competitive relationship, as Internet technologies advance and resources become increasingly integrated, competition for market resources has expanded to encompass non‑competitors. As long as an operator’s conduct affects the business interests of other operators, it falls within the scope of the Anti-Unfair Competition Law. In this case, the two defendants’ practice of renting out time‑shared access to iQIYI VIP account credentials through the app at issue clearly impairs iQIYI’s business interests, including its user traffic; therefore, even if the defendants concurrently engage in other lines of business, this does not alter the fact that a competitive relationship exists between them and iQIYI. Regarding the propriety of the challenged conduct, with respect to the practice of time‑sharing the rental of VIP membership accounts, given that such behavior is not typical of ordinary individual users, it inevitably increases iQIYI’s operational costs and risks. By providing iQIYI VIP video content through the rental of VIP accounts, the defendants have engaged in opportunistic free riding on iQIYI’s key business assets. Furthermore, the defendants derived profits from this conduct and, after receiving infringement notices from iQIYI, further obscured their actions through modifications and other measures, demonstrating clear subjective malice. On these grounds, the court found the challenged conduct to be unfair. The court also noted that the inherent unfairness of the challenged conduct remains unchanged regardless of whether the defendants lawfully obtained the iQIYI VIP accounts in question. On the contrary, having acquired these accounts legally, the defendants should have been aware of the usage restrictions imposed by iQIYI on its VIP accounts, thereby rendering their subjective malice all the more evident. With respect to the restriction of certain functions of the iQIYI app within the app at issue, based on the principles of cloud‑streaming technology and the app’s functional settings, the court determined that the restriction was imposed by the defendants on the iQIYI app interface within the cloud‑based product. Such restriction is likely to mislead potential users and impair their experience with the iQIYI app, thus constituting an improper practice. Accordingly, the court concluded that the aforementioned challenged conduct undermines iQIYI’s normal business operations under its “paid VIP membership” model, infringes upon iQIYI’s legitimate rights and interests, and violates Article 12, Paragraph 2, Item 4 of the Anti‑Unfair Competition Law, thereby constituting unfair competition. The court accordingly ruled in favor of all of iQIYI’s claims.

The loan was classified as a “scheme‑based loan,” and the lawyer’s lawsuit filed under false pretenses was dismissed.

The court, after trial, found that on June 18, 2017, the defendant, Wang Mouchun, was brought by Bi Mou to Hangzhou Zhongyan Industrial Co., Ltd. to obtain a loan of RMB 500,000 in order to repay a debt owed to Hangzhou Changheng Industrial Co., Ltd. Yang Mou and other shareholders of Hangzhou Zhongyan Industrial Co., Ltd. instructed the defendant, Wang Mouchun, to sign a loan agreement for RMB 1.2 million. On the same day, the defendant, Wang Mouchun, executed a Personal Loan Contract borrowing RMB 1.2 million from Rao Mou and Shen Mou. The following day, Tong Mou, a shareholder of Hangzhou Zhongyan Industrial Co., Ltd., transferred RMB 200,000 to the defendant, Wang Mouchun’s account. Subsequently, the defendant, Wang Mouchun, remitted this sum of RMB 200,000 to Bi Mou’s account. On June 23 of the same year, the plaintiff, Shen Mou, transferred RMB 300,000 to the defendant, Wang Mouchun’s account. Thereafter, the defendant, Wang Mouchun, transferred this amount of RMB 300,000 to Bi Mou’s account. On June 26 of the same year, the plaintiff, Shen Mou, transferred RMB 900,000 to the defendant, Wang Mouchun’s account. Subsequently, accompanied by staff members of Hangzhou Zhongyan Industrial Co., Ltd., the defendant, Wang Mouchun, withdrew the full RMB 900,000 in cash and returned it to Tong Mou and others.

It was further ascertained that Yang, Tong, Rao, Bi, and others—shareholders of Hangzhou Zhongyan Company—have been convicted of fraud by the People’s Court of Xiacheng District, Hangzhou, Zhejiang Province, and sentenced to imprisonment for their alleged involvement in the “loan‑sharking” scheme targeting the defendant Wang Muchun.

After trial, the court held that the plaintiff, Rao, had been found by a final and effective judgment of the People’s Court to have committed the crime of “routine loan” fraud by entering into a Personal Loan Contract with the defendant, Wang Muchun. The Personal Loan Contract entered into between Plaintiff Rao and Defendant Wang Muchun was intended to conceal the fraudulent purpose underlying the criminal act; accordingly, such contract is null and void ab initio. The RMB 500,000 actually disbursed by Plaintiff Rao to Defendant Wang Muchun constituted the principal amount of a loan provided to the victim—namely, Defendant Wang Muchun—in furtherance of the “routine loan” fraud scheme. Pursuant to the Opinions of the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice on Several Issues Concerning the Handling of Criminal Cases Involving “Routine Loans,” this sum of RMB 500,000 shall be confiscated in accordance with the law. Plaintiff Shen denied having initiated the present litigation, and neither Plaintiff Rao nor Plaintiff Shen appeared in court. Accordingly, the court rendered a judgment dismissing the claims of Plaintiffs Rao and Shen.

The perpetrator in the “Didi Hitch driver murder case” in Yueqing, Zhejiang, Zhong Yuan, has been executed.

The case involving defendant Zhong Yuan, charged with intentional homicide, robbery, and rape, was tried in the first instance by the Intermediate People’s Court of Wenzhou, Zhejiang Province, and in the second instance by the Higher People’s Court of Zhejiang Province. Recently, the Supreme People’s Court legally approved the death sentence. Upon receipt of the Supreme People’s Court’s criminal ruling, the Intermediate People’s Court of Wenzhou served it on Zhong Yuan and, in accordance with the execution order issued by the President of the Supreme People’s Court, carried out the death sentence on Zhong Yuan on the afternoon of August 30, 2019. Prosecutorial authorities dispatched personnel to oversee the execution on site. Prior to the execution, the Intermediate People’s Court of Wenzhou, in compliance with the law, arranged for Zhong Yuan to meet with his close relatives.

The Supreme People’s Court, after review and verification, conofficeed the following: While operating a Didi Hitch service in Yueqing City, Zhejiang Province, the defendant Zhong Yuan, driving a sedan with license plate number Sichuan A31J0Z, developed the intent to rob a female passenger of her money due to gambling debts. He prepared tools for the crime, including a sharp knife, a balaclava, and adhesive tape. On August 23, 2018, at approximately 10:00 a.m., after receiving a ride‑hailing order via the Didi app from a female passenger, Lin, to Wengyang Subdistrict in Yueqing City, Zhong Yuan lured Lin into canceling the order under the pretext of settling the fare through WeChat. At around 1:10 p.m. that day, he drove to the agreed meeting point, picked up Lin, and attempted to rob her en route; however, Lin noticed his unusual behavior and got off the vehicle prematurely, thwarting the plan. The following day, at approximately 9:00 a.m., Zhong Yuan received another order from a female passenger, Zhao (the victim, who was 19 years old at the time of her death), to Yongjia County, Zhejiang Province. He again tricked Zhao into canceling the order, but she refused. At about 1:28 p.m. that day, Zhong Yuan picked up Zhao. Around 2:15 p.m., while driving near Shangjiang’ao Village in Danxi Town, Yueqing City, he stopped, produced the sharp knife, threatened Zhao, slashed her left hand, bound her limbs with adhesive tape, and transferred RMB 9,000 from Zhao’s Alipay account to his own bank account. Continuing on, Zhong Yuan drove to a section of road near Shijiaolong Village in Danxi Town, where he forcibly raped Zhao in the rear seat of the car. Fearing that his crime would be exposed, he strangled Zhao with his hands and repeatedly stabbed her in the neck with the knife, causing a rupture of the right external carotid artery, massive hemorrhage, and her death. Zhong Yuan then discarded Zhao’s body at the base of a roadside cliff and fled, abandoning his vehicle.

The Supreme People’s Court, upon review, held that the defendant Zhong Yuan used violence to rob others of their property, constituting the crime of robbery; forcibly raped a woman, constituting the crime of rape; and intentionally deprived another person of life in order to eliminate evidence, thereby also constituting the crime of intentional homicide. Accordingly, he should be punished cumulatively in accordance with the law. Taking advantage of his position as a Didi Hitch driver, Zhong Yuan committed robbery, raped a female passenger, and then murdered her to silence her—his crimes are of an extremely heinous nature, with particularly grave circumstances and consequences, posing a severe threat to society, and thus warranting strict punishment under the law. The findings of fact in the first-instance judgment and the second-instance ruling are clear, the evidence is solid and sufficient, the convictions are accurate, and the sentencing is appropriate. The trial procedures were lawful. Accordingly, the Supreme People’s Court approves the Zhejiang Provincial Higher People’s Court’s decision upholding the first-instance criminal ruling sentencing the defendant Zhong Yuan to death.

A man was sentenced for selling fake questions from the legal professional qualification examination.

On August 30, the People’s Court of Yuexiu District, Guangzhou, Guangdong Province, publicly pronounced judgment in a case of illegal use of information networks. The defendant, Liang, was convicted of the crime of illegally using information networks and sentenced to eight months’ imprisonment, suspended for one year, with a fine of RMB 5,000, and the tools used in the offense and the illicit proceeds were confiscated.

The court, after trial, found that between 2017 and September 2018, the defendant, Liang, rented overseas servers, established a certain website, and posted on it false information regarding registration for the legal professional qualification examination, as well as materials such as exam questions and answers. Subsequently, Liang created QQ groups and promoted the aforementioned website to group members, using the website’s deceptive information to gain the trust of prospective examinees and defraud them into paying examination registration fees and purchasing exam questions and answers.

On September 27, 2018, Liang was apprehended by public security officers and brought to justice. At the scene, investigators seized one computer, one portable hard drive, and one mobile phone—tools used in the commission of the crime. Following his arrest, Liang voluntarily returned RMB 1,500 to the public security authorities, which he had fraudulently obtained from victims as examination registration fees.

After trial, the court held that the defendant, Liang, established websites and communication groups for the purpose of committing fraud and disseminated information to facilitate such fraudulent activities, constituting a serious offense. His conduct constitutes the crime of illegally using an information network. Following his apprehension, the defendant Liang truthfully confessed to his crimes, which, in accordance with the law, warrants a lighter sentence. Taking into account the facts, nature, circumstances of the offense, the degree of harm caused to society, and the defendant’s attitude toward admitting guilt, the court rendered the aforementioned judgment.

The Shenzhen Intellectual Property Court heard the “Moutai” case in a seven‑judge panel.

Recently, the trademark infringement dispute between Kweichow Moutai Co., Ltd. (hereinafter referred to as Kweichow Moutai) and Zhongqian Liquor Industry Co., Ltd. of Maotai Town, Renhuai City, Guizhou Province (hereinafter referred to as Zhongqian Liquor Industry), together with Shenzhen Longhua District Yueqian Tea and Liquor Trading Office (hereinafter referred to as Yueqian Trading Office), was heard at the Shenzhen Intellectual Property Court. This case marked the first time that a seven-member collegial panel was employed, with jurors specifically authorized to participate in fact-finding during the trial proceedings.

This case involves the well-known brand and trademark “Moutai,” which has a significant social impact and draws considerable public attention. The plaintiff, Kweichow Moutai, is a prominent enterprise in China’s baijiu industry; its product, Kweichow Moutai liquor, and its “Kweichow Moutai” trademark—both in textual and graphic forms—are highly recognized both domestically and internationally. The defendant, Zhongqian Liquor Industry, primarily engages in the production and sale of baijiu and is registered in Maotai Town, Guizhou Province. The “Kweichow Maotai Town Business‑Use Liquor” it produces and markets has been alleged to infringe upon the plaintiff’s rights, with Yueqian Trading Co., Ltd. serving as Zhongqian Liquor Industry’s authorized distributor in Shenzhen.

The plaintiff, Kweichow Moutai, contends that the “Kweichow Moutai Town Business‑Use Liquor” manufactured and sold by Zhongqian Distillery and the “Kweichow Moutai Town Business‑Use Liquor” marketed by Yueqian Trading Company infringe upon four of its well‑known trademarks—namely, the combined graphic‑text trademark “Kweichow Moutai Liquor,” the word marks “MAOTAIZHEN” and “Kweichow Moutai,” as well as the circular‑pattern trademark. The packaging, presentation, and trademark markings used on these products are highly similar to those of the plaintiff’s product, “Kweichow Moutai Liquor,” deliberately deceiving and misleading consumers and causing confusion. Accordingly, the plaintiff seeks to hold the defendants legally liable for their infringing conduct and to recover damages.

Determining the facts of an infringement is the most challenging issue in adjudicating intellectual property cases. China’s Law on People’s Assessors, revised in April 2018, introduced a seven-member collegial panel, which precisely addresses this need in handling complex IP disputes. The Shenzhen Intellectual Property Court’s pioneering use of such a seven‑member panel—comprising three judges and four assessors—represents another significant step in reforming the adjudication mechanism for IP cases. In this case, the four people’s assessors were randomly selected from a pool of 434, hailing from diverse sectors including the liquor industry, education, healthcare, and technology. Their participation has helped ensure that the court’s rulings better reflect societal norms and public perceptions. Moreover, entrusting the ascertainment of factual findings to people’s assessors enhances the authority of the judiciary and strengthens the court’s public image.

In the first instance, the Shenzhen Intellectual Property Court found trademark infringement to be established and, on the spot, ordered the defendant, Zhongqian Distillery, to immediately cease production and sale of the infringing products, and Guangdong–Guizhou Trading Company to immediately cease selling such products. The court further awarded Guizhou Moutai RMB 1 million in compensation for economic losses and reasonable expenses incurred in protecting its rights.

Other

Using the law to combat violence is the only viable option.

Late on the night of August 30, 2019, a Hong Kong police officer stationed at the Kwai Chung Police Station’s armory was slashed and injured by three masked assailants clad in black after his shift ended. The attackers delivered multiple savage blows, with some wounds reaching the bone, their brutality utterly appalling.

Who is it that repeatedly claims to be acting for the sake of Hong Kong? Who is it that twists right and wrong by alleging police brutality? Some radical, violent elements, who once cried “foul” when others were accused, have now thrown off all pretense and openly attacked the police. Such thugs must be brought to justice without the slightest leniency.

Employing the rule of law to “stop violence and quell chaos” has long been a position officely stated by the HKSAR Government. All acts of violence and illegal conduct must be rigorously pursued and held fully accountable, regardless of political views, background, or affiliations. Whether they are street rioters or Legislative Council members, anyone who crosses the legal red line will face zero tolerance and no leniency. The successive arrests of Joshua Wong, Eddie Chu, Agnes Chow, and Albert Cheng clearly demonstrate that the law is ever‑present and justice has never been absent. Illegality is illegality, and violence is violence—there is simply no such thing as “illegality for the sake of righteousness.”

Radical violent elements will not simply back down; at this critical juncture, the most important thing is to stand officely and unequivocally in support of the police. Police officers are on the front line of curbing violence and constitute a vital bulwark for stabilizing Hong Kong’s situation. By resolutely and confidently backing the Hong Kong police as they enforce the law with utmost seriousness, we must become the unwavering support behind these “backbones.”

Without the rule of law, there is no Hong Kong. Bringing violence to justice in accordance with the law is what the people demand and, above all, the key to restoring peace and stability to Hong Kong.

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