JC Master Legal News Issue 891

Key Takeaways for This Issue

The STAR Market has been included in the MSCI index system.

 On October 10, MSCI, the world’s largest index provider, announced that, starting in November 2019, eligible securities listed on the STAR Market will be included in the MSCI Global Investable Market Index (GIMI).

The STAR Market welcomes its first A+H‑listed biopharmaceutical company, as Haohai Bioscience launches its offline roadshow and IPO.

As the review process for new listings on the STAR Market gathers momentum, Haohai Bioscience, which successfully passed the review on July 15 this year, launched its first offline roadshow on October 11, marking the arrival of the STAR Market’s first A‑plus‑H‑listed biopharmaceutical company.

The State Council has issued the “Plan for Advancing the Reform of the Division of Central and Local Revenues Following the Implementation of Larger-Scale Tax and Fee Reductions.”

Recently, the State Council issued the “Plan for Advancing the Reform of Adjusting the Division of Revenues Between the Central and Local Governments Following the Implementation of Larger-Scale Tax and Fee Reductions.”

Wenzhou has concluded the nation’s first “personal bankruptcy” case.

On October 9, the Wenzhou Intermediate People’s Court, in collaboration with the Pingyang County People’s Court, announced details of the nation’s first case involving the centralized clearance of personal debts that incorporates both the substantive functions and a corresponding procedural framework of personal bankruptcy.

The General Office of the State Council has issued the “Opinions on Further Ensuring the Supply and Stabilizing Prices of Shortage Drugs.”

Recently, the General Office of the State Council issued the “Opinions on Further Ensuring the Supply and Stabilizing Prices of Shortage Drugs.”

The Opinions note that the CPC Central Committee and the State Council attach great importance to ensuring the supply of shortage drugs. In recent years, China has steadily strengthened its efforts to safeguard the supply of such medications, achieving positive results; however, challenges remain, including insufficient timeliness and responsiveness in drug‑supply and price monitoring, as well as the need to further refine policies related to drug procurement, utilization, stockpiling, and price regulation.

Table of Contents

Table of Contents

Finance & Capital Markets

The STAR Market has been included in the MSCI index system.

The Shanghai Stock Exchange has revised and refined its rules governing disciplinary sanctions, review procedures, and hearings.

The CSRC has clearly specified the timeline for lifting foreign ownership caps on securities offices and other institutions.

The number of companies approved on the STAR Market has increased to 65, while the release of the 50‑stock index has been delayed.

Sino Cell is seeking to list on the STAR Market, with several core products currently in Phase III clinical trials.

Corporate & Commercial

The STAR Market welcomes its first A+H‑listed biopharmaceutical company, as Haohai Bioscience launches its offline roadshow and IPO.

Wuxi Flyover Collapse Draws Attention; Three Listed Companies Caught in the Crossfire

CITIC Special Steel’s restructuring and listing heralds the arrival of a steel industry giant on the A-share market.

Chuanheng Co., Ltd. Announces Its 2019 Equity Incentive Plan; First-Half Net Profit Up 91.27% Year on Year

Strategically positioning itself in the new energy sector, Longpan Technology plans to inject RMB 80 million to acquire a 10% stake in Mingtian Technology.

Taxation

The State Council has issued the “Plan for Advancing the Reform of the Division of Central and Local Revenues Following the Implementation of Larger-Scale Tax and Fee Reductions.”

The State Council Executive Meeting reviewed and approved the Draft Regulations on Optimizing the Business Environment.

Announcement of the Ministry of Finance and the State Taxation Administration on Clarifying the Value-Added Tax Additional Deduction Policy for the Consumer Services Sector

Notice from the General Office of the State Taxation Administration on Upholding the Principle of Revenue Collection and Ensuring the Further Effective Implementation of Tax and Fee Reduction Policies

Supplementary Notice from the General Office of the Ministry of Human Resources and Social Security on Issues Related to the Transfer and Continuation of Basic Pension Insurance Relationships for Employees

Litigation & Arbitration

Wenzhou has concluded the nation’s first “personal bankruptcy” case.

Notice of the Shandong Provincial Higher People’s Court on Issuing the Guidelines on the Element-Based Trial Method (Trial Implementation)

Liaoning Removes Barriers to High-Quality Development of Enforcement Work

BNP Paribas, having independently chosen the Hainan court, has achieved a successful resolution of a contract dispute involving a claim amount of RMB 275 million.

The Jiangsu High People’s Court has introduced an integrated-media litigation service smart terminal, seamlessly blending news dissemination with judicial services.

Other

The General Office of the State Council has issued the “Opinions on Further Ensuring the Supply and Stabilizing Prices of Shortage Drugs.”

Finance & Capital Markets

The STAR Market has been included in the MSCI index system.

On October 10, MSCI, the world’s largest index provider, announced that, starting in November 2019, eligible securities listed on the STAR Market will be included in the MSCI Global Investable Market Index (GIMI).

“The inclusion of the STAR Market in the MSCI index system underscores the rising international standing of China’s capital market. At the same time, A-shares remain a valuation sweet spot in the global market, making them highly attractive to international investors,” said Xu Yang, Chairman of Shanghai Maikorong Information Consulting Co., Ltd., on October 10. He added that this development will enhance the STAR Market’s appeal to foreign capital—much of which is long-term oriented—and help shift the market’s investment sentiment toward value‑driven strategies. Moreover, it will boost liquidity on the STAR Market and strengthen its ability to attract high‑quality companies.

Yang Delong, chief economist at Qianhai Open Source Fund, stated that starting in November, eligible STAR Market companies will be eligible for inclusion in the MSCI index system, which represents a significant positive development for these companies. This news is expected to boost sentiment in the STAR Market.

What advantages of the STAR Market have earned recognition from international indices? According to Xu Yang, first, its admission and delisting mechanisms are aligned with international standards, and given that the STAR Market is dedicated to technological innovation, it is more readily embraced by global investors. Second, as a testing ground for capital market reform in China, the STAR Market provides substantial support to listed companies, fostering their rapid growth. Moreover, the A-share market remains an undervalued investment destination, which is another key reason why it has gained favor among international indices.

MSCI stated that, specifically, securities listed on the STAR Market will be included in the MSCI China Index and its related derivative indices, provided they meet the requisite eligibility criteria set forth in the MSCI Investable Markets Methodology, including eligibility under the Shanghai–Shenzhen–Hong Kong Stock Connect programs. Furthermore, these STAR Market‑listed securities will also qualify for inclusion in the MSCI China All Shares Index, the MSCI China A‑Share Onshore Indexes, and their respective derivative indices.

Regarding eligibility for the Shanghai–Shenzhen–Hong Kong Stock Connect, as early as July 26, the three exchanges—Shanghai, Shenzhen, and Hong Kong—announced that they had reached a consensus on the inclusion of A+H shares listed on the STAR Market within the scope of Stock Connect eligible securities. Under the current rules governing Stock Connect, A+H shares are already part of the eligible universe, which in principle encompasses both A‑shares listed on the SSE’s STAR Market and their corresponding H‑shares. However, an official from the Shanghai Stock Exchange noted that, given the STAR Market’s status as a wholly new board, it differs from the main board in areas such as trading procedures, regulatory oversight, and investor suitability management. Consequently, participating in STAR Market trading via the Shanghai Stock Connect requires conducting appropriate business and technical assessments and completing related preparatory work. As a result, no specific timetable has yet been set for when stocks listed on the STAR Market will be added to the Stock Connect eligible universe.

Notably, MSCI stated that the inclusion of the STAR Market is not tied to its three‑step roadmap for incorporating A‑shares. Under the original schedule, as part of its semiannual index review in November 2019, MSCI was set to raise the inclusion factor for all large‑cap Chinese A‑shares in its indices from 15% to 20%, while also adding mid‑cap Chinese A‑shares—including eligible ChiNext stocks—at a 20% inclusion factor.

The Shanghai Stock Exchange has revised and refined its rules governing disciplinary sanctions, review procedures, and hearings.

Recently, the Shanghai Stock Exchange revised three sets of business rules—the Measures for Review by the Shanghai Stock Exchange (hereinafter referred to as the “Review Measures”), the Measures for the Implementation of Disciplinary Actions and Regulatory Measures of the Shanghai Stock Exchange (hereinafter referred to as the “Disciplinary Measures”), and the Detailed Rules for Hearings on Self-Regulatory Management of the Shanghai Stock Exchange (hereinafter referred to as the “Hearing Rules”). These revisions were officially promulgated and came into effect on October 11, 2019.

This round of coordinated revisions to three foundational systems carries three key implications: First, it aligns with the regulatory requirements under the establishment of the STAR Market and the pilot registration-based system, providing a solid institutional framework for the implementation of relevant self-regulatory measures. Second, it broadens the scope of internal redress mechanisms, affording regulated entities ample opportunity to present their defenses and ensuring effective protection of both their procedural and substantive rights. Third, drawing on practical experience, it refines the pertinent procedural rules, further enhancing the operational efficiency and procedural fairness of the relevant systems.

The principal revisions to the three sets of business rules include: first, refining the self-regulatory measures and procedures related to the STAR Market and the pilot registration-based system. In alignment with the STAR Market’s issuance and listing review rules, disciplinary sanctions have been introduced for issuers, intermediary institutions, and relevant personnel whose documents are temporarily not accepted, and such cases are now subject to hearing and review; additionally, domestic information disclosure representatives and depositary receipt holders have been brought within the scope of regulatory oversight.

Second, the scope of application for review and hearing procedures has been expanded. In addition to disciplinary sanctions related to the STAR Market, decisions to impose mandatory delisting for material violations, decisions rejecting applications for voluntary delisting, and disciplinary decisions imposing punitive liquidated damages are now also subject to review and hearing, thereby ensuring full protection of the legitimate rights and interests of regulated entities.

Third, we have refined the procedural arrangements governing disciplinary sanctions, review proceedings, and hearings. In light of the actual practices of self-regulatory oversight, we have adjusted and improved such procedural elements as the number of panel members for disciplinary sanctions and reviews, the meeting agenda, and the time limits for handling cases. We have also clarified that significant regulatory measures may be submitted by the SSE’s regulatory departments to the Disciplinary Committee for review, thereby enhancing the Committee’s authority and credibility. Furthermore, we have introduced electronic service of documents related to self-regulatory oversight to improve delivery efficiency, and we have refined the specific procedural rules governing the acceptance of hearing applications and the submission of rebuttal statements.

Following the promulgation and implementation of the “Review Measures,” the “Disciplinary Sanctions Measures,” and the “Hearing Rules,” the Shanghai Stock Exchange will rigorously enforce these provisions in its self-regulatory oversight activities.

The CSRC has clearly specified the timeline for lifting foreign ownership caps on securities offices and other institutions.

On October 11, the China Securities Regulatory Commission (CSRC) held a press conference, during which spokesperson Gao Li announced that the CSRC has lifted foreign‑ownership caps on futures companies. At the same time, the date for removing foreign‑ownership limits on securities offices and fund management companies was specified.

Gao Li stated that, in order to implement the decisions and arrangements of the CPC Central Committee and the State Council on further opening up the financial sector, and to systematically attract high-quality overseas financial institutions to invest in domestic futures companies—thereby enhancing the ability of China’s futures industry to serve the real economy and bolster its international competitiveness—the CSRC, with the approval of the State Council, officially issued the Measures for the Administration of Foreign-Invested Futures Companies in August 2018. Under these measures, eligible foreign investors are permitted to hold up to 51% of the equity in domestic futures companies, with no further restrictions imposed after three years.

In response, Bian Yongzu, Deputy Director of the Industry Department at the Chongyang Institute for Financial Studies of Renmin University of China, stated that this regulation will make China’s financial market more attractive to foreign financial institutions. With the acquisition of controlling stakes, foreign investors not only gain greater influence over corporate management decisions and profit distribution but also enhance the efficiency of their decision-making. Moreover, for domestic financial institutions, the accelerated entry of foreign capital has heightened the urgency to refine their management practices and strengthen their R&D capabilities, prompting them to focus more on bolstering their core competencies while also creating greater opportunities to learn from advanced international experience.

Gao Li stated that in July this year, the Office of the Financial Stability and Development Committee of the State Council announced that, in line with the principle of “acting sooner rather than later,” the deadline for lifting foreign‑ownership caps on futures companies—originally scheduled for 2021—would be brought forward to 2020.

“Following the release of the policy, the China Securities Regulatory Commission has promptly undertaken the necessary measures to ensure its effective implementation, refined relevant supporting arrangements, enhanced regulatory capabilities in an open environment, and effectively mitigated risks. Upon deliberation, starting from January 1, 2020, the foreign‑ownership cap on futures companies has been lifted. Relevant entities may, in accordance with the Regulations on the Administration of Futures Trading, the Measures for the Supervision and Administration of Futures Companies, the Measures for the Administration of Foreign‑Invested Futures Companies, and other applicable provisions, submit applications for administrative approval to the CSRC. Eligible overseas investors will be permitted to hold up to 100% equity in futures companies, and the CSRC will review and approve such applications in compliance with laws and regulations,” said Gao Li.

Meanwhile, Gao Li stated that on July 20, 2019, the Office of the Financial Stability and Development Committee of the State Council publicly released the “Measures for Further Opening Up the Financial Sector,” advancing the original deadline for lifting foreign‑ownership caps in securities offices, fund management companies, and futures companies—from 2021 to 2020. Following comprehensive deliberations, the China Securities Regulatory Commission further clarified the following arrangements: effective April 1, 2020, foreign‑ownership caps on fund management companies will be lifted nationwide; and effective December 1, 2020, foreign‑ownership caps on securities offices will be lifted nationwide.

In Bian Yongzu’s view, the participation of more financial institutions and the greater diversity of financial products have both broadened and deepened China’s capital market, enhancing its international appeal. This has not only bolstered China’s soft power but also strengthened its voice in the global financial arena.

The number of companies approved on the STAR Market has increased to 65, while the release of the 50‑stock index has been delayed.

 On October 11, the Listing Committee of the STAR Market of the Shanghai Stock Exchange held its 30th review meeting for 2019, approving the initial public offerings of Shenzhen Qingyi Optoelectronics Co., Ltd. and Hangzhou Danghong Technology Co., Ltd. To date, the STAR Market Listing Committee has reviewed the IPO applications of 67 companies, with 65 passing the review and two being rejected and having their reviews terminated.

As of now, the STAR Market has accepted issuance applications from a total of 162 companies. The progress is as follows: “Accepted” — 10; “Inquiry Issued” — 73; “Approved” — 5; “Submitted for Registration” — 17; “Registration Outcome” — 43; “Suspension” — 2; “Termination” — 12.

In addition, the Shanghai Stock Exchange announced on October 11 that, in order to further optimize the index compilation and release process, it has decided, after deliberation, to postpone the release of the SSE STAR 50 Index; the new release date will be announced separately.

The Shanghai Stock Exchange stated that since its launch, the STAR Market has maintained stable and orderly trading. To date, 162 companies have filed for listing on the STAR Market, of which 42 have completed the registration process, and a total of 33 companies have been listed. In terms of market size, the number of listed companies remains relatively small, and their overall scale is modest. During this period, most professional institutions, including fund management offices, emphasized that, as a core constituent index of the SSE, the STAR Market Index should prioritize both representativeness and investability. Based on extensive consultations with market participants, the Shanghai Stock Exchange and China Securities Index Co., Ltd. have decided, following in-depth research and analysis, to temporarily postpone the launch of a dedicated STAR Market Index.

In July this year, the Shanghai Stock Exchange and China Securities Index Co., Ltd. jointly announced that they would officially launch the SSE STAR 50 Index on the 11th trading day following the date when the number of stocks and depositary receipts listed on the STAR Market reaches 30.

Companies listed on the STAR Market are predominantly high‑tech and strategic emerging enterprises with strong growth potential, largely concentrated in sectors such as next‑generation information technology, biopharmaceuticals, and high‑end equipment. They exhibit robust science‑and‑technology innovation attributes, with R&D spending and the proportion of R&D personnel exceeding those of other domestic market segments. These companies are generally in a phase of rapid expansion, aligning with national strategies and the direction of economic structural adjustment. Launching an index when conditions are ripe will help foster a positive demonstration effect, highlighting a group of leading offices that wield significant influence.

Industry insiders believe that, judging from the current enthusiasm among companies seeking to list on the STAR Market and the pace of review and registration, the number of STAR‑Market‑listed offices is set to expand significantly over the next two months. At present, more than 30 companies are steadily advancing through the approval and listing process, with the vast majority expected to complete their listings within 2019. Moreover, as some companies have entered the final countdown to the regulatory deadline for the total review‑and‑response period, the STAR Market Listing Committee is likely to continue holding meetings at a rapid pace, thereby bolstering the pipeline of new issuers poised to join the STAR Market.

Sino Cell is seeking to list on the STAR Market, with several core products currently in Phase III clinical trials.

Beijing SinoCell Biotechnology Group Co., Ltd. (referred to as “SinoCell”) recently had its application for listing on the STAR Market accepted. SinoCell is a leading, innovative biopharmaceutical R&D company that focuses on the development and commercialization of biologic products across multiple therapeutic and preventive areas, including malignant tumors, autoimmune diseases, infectious diseases, and genetic disorders. The company has chosen to meet the fifth set of listing criteria for the STAR Market. It plans to raise RMB 1.982 billion, which will be allocated to clinical research projects for seven core products and to replenish working capital.

A wide range of product lines

Shenzhou Cell was formerly known as Shenzhou Cell Co., Ltd., which was established with investment from Xinuo Biotechnology and registered on April 23, 2007, with an initial registered capital of US$1.3 million.

From the perspective of the shareholding structure, as of the date of signing the prospectus, Xie Liangzhi directly held 4.33% of the company’s shares and indirectly controlled an additional 74.69%, for a total controlling interest of 79.02%, making him the company’s actual controller.

After more than a decade of accumulating and innovating in biopharmaceutical technologies, Sino Cell has established a highly efficient, high-throughput technology platform that covers the entire R&D and manufacturing value chain for biologics, and has independently developed a diversified and distinctive pipeline of biologic products, including monoclonal antibodies, recombinant proteins, and vaccines. The company is committed to providing high‑quality, cost‑effective treatment options to patients both in China and internationally, thereby meeting the growing and substantial demand in domestic and global biologics markets.

Compared with traditional small-molecule drugs, the large‑molecule biologics developed in the biopharmaceutical industry—where our company operates—exhibit high specificity and selective targeting, resulting in improved tolerability, reduced adverse effects, and superior therapeutic efficacy. Moreover, innovative biologics demonstrate a higher rate of clinical success.

After 17 years of dedicated effort, the company and its subsidiaries have independently established a comprehensive upstream technology platform for innovative biopharmaceutical discovery, spanning from target protein screening to candidate drug development. These platforms can be categorized into five core technological systems: an innovative neutralizing antibody candidate discovery system; an advanced biopharmaceutical manufacturing process system; a biopharmaceutical quality control system; a biopharmaceutical developability assessment system; and a large-scale production and management system. The company possesses mainstream biopharmaceutical manufacturing platforms capable of meeting the industrialization needs of diverse biologic products. It has also developed highly efficient expression systems and production process platforms based on CHO and insect cells, enabling the scalable production of proteins with varying molecular weights, glycosylated variants, monoclonal antibodies, antibody fragments, virus-like particle vaccines, and other biologics.

The company possesses strong capabilities in the discovery and development of innovative drugs. As of July 31, its product pipeline comprises 21 innovative drugs and 2 biosimilars, with 8 candidates having received approval to enter clinical trials, 6 having completed drug‑likeness assessments and advancing to preclinical studies, and 9 having completed candidate‑drug development and moved into the drug‑likeness evaluation stage. Additionally, several drug candidates targeting various targets are currently in the lead‑identification and validation phases. All products are independently developed by the company and are covered by commercialization rights worldwide.

The industry has significant growth potential.

The biopharmaceutical market, in which Sino Cell operates, is growing rapidly. Biologics encompass monoclonal antibodies, recombinant therapeutic proteins, vaccines, blood products, cell and gene therapies, as well as other biological treatments such as tissue‑based and oncolytic virus therapies.

According to Frost & Sullivan’s forecast, the global biopharmaceutical market is expected to grow from USD 261.8 billion in 2018 to USD 402.1 billion in 2023, with a compound annual growth rate of nearly 9.0%. Meanwhile, driven by economic growth and the rising prevalence of chronic diseases, China’s domestic biopharmaceutical market is projected to expand from RMB 262.2 billion in 2018 to RMB 641.2 billion in 2023, at a compound annual growth rate of approximately 19.6%.

In 2017, the global monoclonal antibody market accounted for 43.2% of the biologics market, whereas in China, monoclonal antibodies represented only 5.4% of the biologics market. This underscores the substantial growth potential of China’s monoclonal antibody sector. Meanwhile, the blood products market, which ranks second in China’s biologics landscape, has largely been supplanted by recombinant therapeutic proteins in the global biologics market.

Shenzhou Cell’s principal products are all biologics, including coagulation factor VIII and a range of monoclonal antibody therapeutics. All are developed with a focus on low immunogenicity, high stability, strong target specificity, prolonged efficacy, and superior bioavailability—aligning with current industry trends and future development trajectories.

At this stage, the company’s core products include SCT800/recombinant coagulation factor VIII and SCT200/EGFR monoclonal antibody, which are currently being evaluated in 7 Phase III clinical trials, 5 Phase II clinical trials, and 4 Phase I clinical trials, respectively.

From the perspective of the competitive landscape for the company’s key products, taking coagulation factor VIII as an example, the prospectus indicates that the company has completed a Phase III clinical trial of recombinant coagulation factor VIII (SCT800, indicated for the treatment of hemophilia A) for on-demand therapy in adults and adolescents, and is currently engaged in data cleaning and preparatory work for the clinical study report. Meanwhile, the company is conducting a Phase III clinical trial of SCT800 for prophylactic treatment in children, adults, and adolescents.

According to Frost & Sullivan’s forecast, by 2030 China’s hemophilia therapeutics market is expected to shift from a blood-derived factor VIII–centric structure to one dominated by recombinant factor VIII, with the market share of recombinant factor VIII products increasing from 58% in 2018 to 80% by 2030.

According to the prospectus, the recombinant coagulation factor VIII product SCT800 currently under development by Sino Cell boasts high production capacity and excellent stability. Furthermore, in the completed Phase III clinical trial evaluating on-demand treatment, it demonstrated safety and clinical efficacy comparable to those of similar products. The company expects to submit a New Drug Application for SCT800 in China within the next six months; if approved, it could become the first recombinant coagulation factor VIII product developed by a Chinese biotech office to receive marketing authorization, with significant market potential.

Adopt the fifth set of standards

Shenzhou Cell has adopted the fifth set of listing criteria for the STAR Market: the company’s projected market capitalization must be no less than RMB 4 billion, its principal business or products must have been approved by the relevant state authorities, and it must operate in a market with substantial growth potential; the company has already achieved preliminary milestones. For pharmaceutical companies, at least one core product must have received approval to proceed to Phase II clinical trials. Other enterprises that align with the STAR Market’s positioning must possess distinct technological advantages and meet the corresponding requirements.

The prospectus indicates that since its inception, Sino Cell has secured funding from numerous specialized investment institutions, several of which focus on the pharmaceutical sector. Based on the company’s post‑recent financing valuation of over RMB 11 billion, and taking into account the valuations of comparable companies in both domestic and international markets, the company estimates its market capitalization to be no less than RMB 4 billion. Its core business has been approved by the relevant state authorities, enjoys substantial market potential, and has already achieved preliminary milestones. As of the date this prospectus was signed, the company had six core products authorized to proceed to Phase II and Phase III clinical trials, thereby meeting the fifth set of listing criteria for the STAR Market.

During the reporting period, as the company’s products were still in the R&D phase and had not yet been commercialized, its biologics R&D operations did not generate any revenue. Meanwhile, R&D expenditures continued to rise, resulting in a lack of profitability. According to the prospectus, the company’s operating revenues for 2016–2018 and January–March 2019 were RMB 98.13 million, RMB 5.99 million, RMB 2.95 million, and RMB 0.86 million, respectively; net profits attributable to owners of the parent company were negative RMB 12.14 million, RMB 141 million, RMB 453 million, and RMB 108 million, respectively. As of March 31, 2019, the company’s accumulated undistributed losses totaled RMB 745 million. As of the date of signing the prospectus, the company remained unprofitable and had accumulated uncompensated losses, primarily due to its ongoing product development stage and substantial R&D expenses. The company’s R&D expenses for 2016–2018 and January–March 2019 amounted to RMB 120 million, RMB 189 million, RMB 435 million, and RMB 104 million, respectively.

Commercial & Corporate

The STAR Market welcomes its first A+H‑listed biopharmaceutical company, as Haohai Bioscience launches its offline roadshow and IPO.

As the review process for new listings on the STAR Market gathers momentum, Haohai Bioscience, which successfully passed the review on July 15 this year, launched its first offline roadshow on October 11, marking the arrival of the STAR Market’s first A‑plus‑H‑listed biopharmaceutical company.

Regarding its future development strategy following its listing on the STAR Market, an insider at Haohai Bioscience stated: “Going forward, the company will continue to invest heavily to strengthen its leading position in the medical hyaluronic acid and medical chitosan sectors and develop a new series of animal‑derived hemostatic agents. At the same time, we will focus on advancing a domestically produced full range of intraocular lenses to drive import substitution for high‑end products, while expanding into additional ophthalmic therapeutic areas such as glaucoma and retinal diseases, thereby ensuring the sustainable growth of both the company and its new product portfolio.”

According to Haohai Bioscience’s prospectus, the company plans to issue no more than 17.8 million shares in this public offering, raising RMB 1.484 billion. The proceeds will be primarily allocated to the Shanghai Haohai Bioscience International Pharmaceutical R&D and Industrialization Project, aimed at further strengthening the development of new products and expanding production capacity for its existing product lines, including medical sodium hyaluronate, medical chitosan, and topical recombinant human epidermal growth factor.

At the beginning of this year, the aforementioned fundraising and investment project was included in Shanghai’s 2019 Government Work Report, and a groundbreaking ceremony was held in mid-March at the national-level Shanghai Songjiang Economic Development Zone.

In addition, the company’s initial strategic allocation amounted to 2.492 million shares, representing 14% of the total offering size. The strategic allocation was subscribed by senior executives and core employees of UBS AG, the sponsor’s affiliate, and a dedicated asset management plan was established for this strategic placement.

According to the issuance schedule, Haohai Bioscience will conduct offline roadshows for eligible institutional investors in Shanghai, Beijing, and Shenzhen from October 11 (T-6 days) to October 15 (T-4 days), and will set the offering price on October 17.

On October 21, Haohai Bioscience determined whether to activate the clawback mechanism and finalized the allocation of shares for both the online and offline offerings, as well as the numbering of online subscription applications.

Publicly available information indicates that Haohai Bioscience is a technology-driven enterprise that leverages biomedical materials and genetic engineering technologies to research, develop, manufacture, and market medical devices and pharmaceuticals. The company has consistently focused on four rapidly growing segments within the medical biomaterials market, encompassing ophthalmology, medical aesthetics, orthopedics, and surgery.

Leveraging integrated, efficient management that combines technological innovation with marketing, Haohai Bioscience has grown into a leading domestic player in the medical biomaterials sector and was listed on the Main Board of the Hong Kong Stock Exchange on April 30, 2015.

In terms of performance, from 2016 to 2018, Haohai Bioscience reported operating revenues of RMB 861 million, RMB 1.354 billion, and RMB 1.558 billion, respectively, with a compound annual growth rate of 34.5%; gross profit margins were 83.50%, 78.75%, and 78.51%, respectively. During the same period, net profits attributable to owners of the parent company were RMB 305 million, RMB 372 million, and RMB 415 million, corresponding to net profit margins of 35.4%, 27.5%, and 26.6%, respectively.

Currently, the company has established a leading market position across four business segments: ophthalmology, orthopedics, medical aesthetics, and surgery. In the first half of 2019, Haohai Bioscience’s revenues from these four segments were RMB 345 million, RMB 154 million, RMB 170 million, and RMB 96 million, respectively. Notably, the ophthalmology segment accounted for 44.1% of total revenue, making it the company’s primary source of income.

Hao Hai Bio‑Science’s key ophthalmic products include intraocular lenses, optometric materials, and ophthalmic viscoelastic agents. In the first half of 2019, revenue from this segment reached RMB 289 million and RMB 50 million, respectively. Based on intraocular lens sales volumes and the total number of cataract surgeries performed nationwide, Hao Hai Bio‑Science’s market share in China’s intraocular lens market was approximately 30% in 2018.

In the orthopedics segment, Haohai Biotech offers sodium hyaluronate injectable solutions in three specifications—2 mL, 2.5 mL, and 3 mL—with the 3-mL formulation being the company’s exclusive product. Following its inclusion in the National Reimbursement Drug List in 2009, the sodium hyaluronate injectable solution was once again listed in the 2017 edition of the national formulary. To date, the company has maintained the top position in China’s orthopedic intra-articular viscoelastic supplement market for five consecutive years, capturing a 39.7% market share in 2018. Additionally, it has held the leading position in the domestic surgical anti-adhesion agent market for 12 consecutive years, with a 48.9% market share in 2018.

In the medical aesthetics sector, which has gained particular popularity in recent years, Haishengke’s two hyaluronic acid products, “Haiwei” and “Jiaolan,” have established differentiated positioning and complementary development in terms of product characteristics and functionality, thereby meeting diverse clinical needs. Meanwhile, the company has made significant progress on several R&D projects in the medical aesthetics field: a particulate-free linear cross-linked sodium hyaluronate gel has been submitted for production approval, while an organically cross-linked sodium hyaluronate gel and an enhanced water‑light injection formulation have both entered the registration‑testing phase.

While maintaining strong performance across its four major business segments, Haohai Bioscience has continued to ramp up its R&D investment. According to the company’s periodic reports, in the first half of 2019, R&D spending reached RMB 51.32 million, a year-on-year increase of 31.3%. As of the first half of the year, Haohai Bioscience employed 231 research personnel worldwide, accounting for 17.34% of its total workforce, and has established an integrated, collaborative R&D network spanning China, the United States, and the United Kingdom, thereby laying the groundwork for an internationally and domestically aligned R&D strategy.

Wuxi Flyover Collapse Draws Attention; Three Listed Companies Caught in the Crossfire

A viaduct in Wuxi, Jiangsu Province, suddenly collapsed, trapping three cars and resulting in three deaths and two injuries. Following the incident, an expert panel from the Ministry of Transport rushed to the scene to oversee the accident investigation, and the city of Wuxi has also established its own investigative team. Preliminary analysis indicates that the bridge’s collapse was caused by overloaded transport vehicles. On October 11, Liu, the person in charge of Wuxi Chenggong Transportation Company—the office implicated in the Wuxi viaduct accident—was taken into custody.

Notably, following the incident, several media outlets reported that the bridge’s design office was “Su Jiaoke.” In a morning announcement on the 11th, Su Jiaoke (300284) stated that the design of the bridge involved in the accident was unrelated to the company. Documents obtained by a Securities Times reporter indicate that the elevated bridge in question was designed by China State Construction Engineering Corporation (002883); as of press time, the company had yet to issue any response. Meanwhile, China State Construction Group (603018), whose abbreviated name is similar, found itself inadvertently caught in the fallout and promptly released an urgent clarification statement to disassociate itself from the matter.

As of the close on the 11th, Sujiaoke’s stock price turned positive, closing at RMB 8.83 per share, while Zhongshe Group’s stock edged down to RMB 11.70 per share. Meanwhile, Zhongshe Shares, which had remained silent, saw its share price fall 4.70% throughout the day, closing at RMB 19.08 per share.

Rizhao Iron and Steel denies bearing the transportation costs.

How did a perfectly sound elevated bridge suddenly collapse? In an early-morning briefing on the 11th, Wuxi authorities stated that at the time of the incident, five vehicles were on the collapsed section of the bridge—three passenger cars and two trucks. Preliminary analysis indicates that the bridge’s collapse was caused by overloaded transport vehicles.

Local residents noted that the cargo falling from the truck consisted of hot-rolled steel coils, commonly referred to as “steel coils” in the industry. Each coil weighs 28.54 tons. According to eyewitnesses at the scene, there were six such coils on the vehicle. Based on these figures, the total weight of the steel coils is estimated to be approximately 171 tons.

According to China’s industry standard for urban bridge construction, the “Code for Design of Urban Bridges,” the maximum allowable vehicle weight for first-class highways is 55 tonnes. It is understood that the truck involved also had a design load capacity of 55 tonnes. In other words, the vehicle in question was more than twice over the permitted limit.

According to insiders, there is a steel‑processing market near the accident site, and overloading on nearby roads occurs from time to time; accordingly, authorities suspect that the vehicle involved was transporting steel coils to this facility. Product information labels affixed to the steel coils indicate that the shipment was manufactured by Rizhao Iron & Steel Holding Group Co., Ltd. (hereinafter referred to as “Rizhao Iron & Steel”), with a production date of September 30; however, the labels do not specify any customer details.

According to information from Tianyancha, Rizhao Iron & Steel is wholly owned—100%—by Du Shuanghua, both directly and indirectly through Jinghua Rigang Holding Group Co., Ltd. (hereinafter referred to as Jinghua Rigang). On October 11, a staff member from Rizhao Iron & Steel’s Public Affairs Department stated that the company’s location near the port means all its steel products are shipped by sea. “Whether destined for domestic or international markets, transportation is almost exclusively by maritime routes, which also constitutes one of the company’s key cost advantages,” the spokesperson added. The official further emphasized that the company does not handle downstream logistics or transportation services. Additionally, the staff explained that there are no industry-specific regulations governing the transport of hot-rolled coil; such shipments are subject to standard rules based on vehicle load capacities, road weight limits, and speed restrictions.

It is worth noting that, aside from Hebei and Jiangsu, Shandong ranks third nationwide among steel-producing provinces; however, most of its steel enterprises are relatively small. Among them, the private‑sector Rizhao Steel and the state‑owned Shandong Iron & Steel (600022) are the two dominant players in the province’s steel industry.

According to reports, this batch of goods was shipped by Rizhao Iron & Steel from Rizhao Port to Suzhou Port via sea, with the local buyer arranging their own trucks for short‑haul transfer; Rizhao Iron & Steel bears no responsibility. The vehicle involved loaded the cargo at Changhong Terminal in Jiangyin, Wuxi, and traveled southward for nearly 40 kilometers to reach the site of the incident.

Three listed companies are implicated.

In July 2007, the Wuxi Municipal Audit Bureau published the “Announcement of the Wuxi Municipal Audit Bureau on the Audit Results of the Final Accounts for the Expansion Project of the Wuxi Section of National Highway 312.” The announcement stated that the Wuxi section of National Highway 312 has a total length of 48.44 kilometers and was designed throughout to first-class highway standards. Construction of the expansion project commenced in September 2003, was completed and opened to traffic in June 2005, and underwent handover and acceptance inspection in November 2005.

Notably, the announcement discloses that the overall design office for the Wuxi section of National Highway 312’s expansion project is Jiangsu Provincial Academy of Transportation Sciences Co., Ltd., among others; the principal supervision agencies include Jiangsu Kexing Engineering Construction Supervision Co., Ltd. and other supervisory entities; and the main construction contractors comprise Wuxi Transportation Engineering Corporation, ASEAN Construction Engineering Co., Ltd., China Railway Fourteenth Bureau Group Co., Ltd., and other relevant entities. The project’s construction quality has been rated as “Excellent” by the Wuxi Municipal Transportation Engineering Quality Supervision Station.

In a clarification announcement issued at 8:00 a.m. on the 11th, Suzhou Jiaoke emphasized that the “Wuxi section of National Highway 312,” for which the company served as the general designer, was not the segment where the accident occurred, adding, “The design of the bridge involved in the accident is unrelated to our company.” After withstanding the opening‑session market test, Suzhou Jiaoke’s stock ultimately turned positive, closing at RMB 8.83 per share.

According to the “Construction Drawing Design,” the entity responsible for preparing this section of the project is the Wuxi Municipal Transportation Planning, Survey and Design Institute. Tianyancha shows that the company was renamed Jiangsu Zhongshe Group Co., Ltd. in March 2015—now listed as Zhongshe Shares (002883). Meanwhile, Zhongshe Group (603018), whose abbreviation is similar, found itself inadvertently caught in the crossfire and promptly issued a clarifying announcement before the market opened to disassociate itself from the matter. As of the close on the 11th, Zhongshe Group’s share price edged down slightly to RMB 11.70 per share, while Zhongshe Shares, which remained silent, saw its stock fall 4.70% throughout the day, closing at RMB 19.08 per share.

CITIC Special Steel’s restructuring and listing heralds the arrival of a steel industry giant on the A-share market.

At 9:25 a.m. on October 11, CITIC Special Steel (000708) successfully rang the opening bell on the Shenzhen Stock Exchange, marking the debut of the world’s leading special steel company on the A-share market—a further significant milestone in the company’s history.

At the listing ceremony, Yu Yaping, Chairman of CITIC Special Steel Group, stated: “CITIC Special Steel will deepen its focus on its core business, consolidate its strengths, and expand synergies. At the same time, we will accelerate our efforts in technological innovation, enhancing competitiveness, pursuing high-quality development, and advancing our internationalization strategy, with the aim of building the world’s most competitive special steel enterprise group.”

CITIC Special Steel has completed its restructuring and listing, with a special steel production capacity of 13 million tons.

As the ultimate controlling shareholders of both the target companies, Daye Special Steel and Xingcheng Special Steel, are CITIC Group, this restructuring will enable CITIC Tai Fu Special Steel Group—the special steel business segment of CITIC Group—to achieve an overall public listing.

As a subsidiary of China CITIC Limited, CITIC Special Steel has grown into the world’s largest specialized special‑steel manufacturing group, with an annual production capacity exceeding 13 million tonnes and offering the most comprehensive range of grades and specifications. It is a leader in China’s special‑steel industry, a market pioneer, and a key standard‑setter, while also pioneering the transformation into the new materials sector as a leading high‑end manufacturing enterprise.

The Group operates four major product‑manufacturing bases—Xingcheng Special Steel, Qingdao Special Steel, Daye Special Steel, and Jingjiang Special Steel—along with two raw‑material production hubs—Tongling Special Materials and Yangzhou Special Materials—and two industrial‑chain extension platforms—Taifu Suspension and Zhejiang Steel Pipe—thus achieving a comprehensive strategic layout for coastal and riverine industrial‑chain development.

As a vice‑presidential member of the China Iron and Steel Association and the president‑unit of the China Special Steel Enterprises Association, CITIC Special Steel has undertaken key national research projects covering bearing steel, automotive gear steel, high‑strength spring steel, tool and die steel, 690 MPa‑grade high‑strength bridge steel, 2000 MPa‑grade high‑strength bridge cable steel, and wear‑resistant steel. Drawing on years of accumulated expertise, CITIC Special Steel has achieved numerous industry‑leading, and even world‑first, breakthroughs.

Special steels are critical materials required for the manufacturing of major equipment and the construction of key national projects, representing high‑tech products within the steel industry. According to the “Guidance on the Development of the New Materials Industry” issued in 2016 by four ministries, advanced steel materials—namely special steels—have been classified as advanced basic materials and have been identified as one of the primary development directions for the future new materials sector. Furthermore, the “Classification of Strategic Emerging Industries (2018)” published by the National Bureau of Statistics has, for the first time, included 39 categories of advanced steel materials in the catalog of the new materials industry.

CITIC Special Steel’s bearing steel boasts the highest purity level globally, supplying world‑renowned bearing manufacturers such as Sweden’s SKF, Germany’s Schaeffler, and Japan’s NSK, and maintaining the top global position in both production and sales for ten consecutive years. Its automotive steel is supplied to leading global automakers including Germany’s Porsche, BMW, and Mercedes‑Benz, as well as Japan’s Toyota and Honda. For energy‑saving, environmentally friendly, and clean‑energy applications, it has pioneered the world’s first ultra‑large‑diameter, 1‑meter‑class alloy steel continuous‑casting round billets for wind power. It has also developed R6‑grade marine mooring chain steel, filling a critical gap in the global market, and spring steel with a fatigue life exceeding 13 million cycles—both world‑first achievements. Furthermore, its continuous‑casting slabs have reached a maximum thickness of 610 mm, setting a new world record, while its 2000 MPa‑grade bridge cable steel represents the highest strength class ever attained worldwide.

CITIC Special Steel’s products fully meet the market demands of key national priority sectors, including energy, transportation, construction machinery, and aerospace, providing essential specialty steel solutions for national economic development, major infrastructure projects, and critical areas such as defense and military industries.

According to data from WIND, among the targets of this restructuring, Daye Special Steel’s R&D expenditure accounted for 4.48% of its operating revenue in 2018, outpacing other companies in the special steel sector and matching the average R&D intensity of the new materials sector on the A-share market (3.93%). In 2018, Xingcheng Special Steel recorded R&D expenses totaling RMB 2.035 billion, a year-on-year increase of 78.56%, placing it among the leaders in the special steel industry. As of the date the restructuring draft was signed, Xingcheng Special Steel and its subsidiaries held a total of 637 domestic patents, including 115 invention patents, as well as one overseas patent.

The leading special steel company is targeting emerging industries, positioning itself in the mid-to-high-end new materials sector.

As the leading player in the special steel industry, CITIC Special Steel’s full‑scale listing will not only reshape the landscape of the special steel sector but also likely introduce a brand‑new materials‑related stock to the A‑share market.

Relevant research indicates that high-end new materials face significant technological barriers, and downstream demand often far exceeds existing production capacity, leading to persistent supply shortages. Consequently, leading companies in these high‑tech material sectors, which benefit from substantial technological moats, exhibit inherent counter‑cyclical resilience.

Research institutions have noted that, amid the national drive to upgrade the science and technology‑driven industrial sector, companies that prioritize R&D investment are likely to see their valuations rise. As an upstream supplier to numerous high‑end manufacturing industries, special steel offices—characterized by relatively high R&D spending as a share of revenue—should logically command higher valuations. From both a fundamental and valuation perspective, leading special‑steel companies already possess long‑term investment appeal.

From the perspective of product mix, in 2016 China’s high‑alloy steels accounted for only 3% of total special steel output, while mid‑range alloy steels made up 55% and low‑end special steels 24%. Meanwhile, the report “A Comparative Study of the Current Status and Process Technologies in the Special Steel Industry at Home and Abroad” indicates that Japan’s high‑end high‑alloy steels represent 25% of its total production. In contrast, China still has considerable room for growth in the high‑end special steel segment.

Meanwhile, CITIC Special Steel positions its products in the mid-to-high end segment and maintains a stable base of long-term strategic customers. This deep-rooted customer network has been cultivated over at least five years, or even longer, with high technological barriers to entry. With the successful completion of this restructuring, the listed company’s special steel production capacity will reach 13 million tons, making it the largest and most diversified specialized steel producer globally. Its broader product portfolio reduces its vulnerability to downturns in any single industry, thereby further enhancing its ability to withstand cyclical market fluctuations.

The restructuring proposal indicates that, as of the end of 2018, the target company, Xingcheng Special Steel, ranked first globally in the production and sales of high‑grade bearing steel, with a domestic market share exceeding 80%; it also held the top position in China for both production and sales of steel used in automotive components, with a domestic market share of over 65% in high‑end automotive steel; its domestic market share for high‑end marine mooring chain steel surpassed 90%; its domestic market share for mining chain steel exceeded 80%; and its domestic market share for high‑end continuous casting round billets was above 70%.

Faced with the gap in high-end demand within the special steel industry, CITIC Special Steel stated that it will continue to prioritize market needs, target strategic emerging industries and downstream development trends, and vigorously develop cutting-edge product lines such as energy‑grade steels, ultra‑clean bearing steels, steels for critical automotive components, next‑generation marine mooring chains, high‑grade wire rods, and premium tool and die steels.

Chuanheng Co., Ltd. Announces Its 2019 Equity Incentive Plan; First-Half Net Profit Up 91.27% Year on Year

 On October 11, Chuanheng Co., Ltd. announced that, in order to further establish and improve the company’s long-term incentive mechanism, attract and retain top talent, and fully motivate its directors, senior management, mid-level managers, and key technical (and business) personnel, thereby effectively aligning the interests of shareholders, the company, and the core team, and encouraging all stakeholders to focus on the company’s long-term development, it has formulated its “2019 Restricted Stock Incentive Plan (Draft)” (hereinafter referred to as the “Draft” or the “Incentive Plan”).

The draft indicates that the grant price for both the initial award of restricted shares under this incentive plan and any reserved awards will be RMB 6.30 per share, meaning that, upon satisfying the vesting conditions, eligible participants may purchase the company’s newly issued restricted shares at this price.

According to the announcement, the total number of eligible participants under the first grant of this incentive plan is 183, including the company’s directors, senior management, mid-level managers, and key technical (and business) personnel who were employed by the company (including its subsidiaries and affiliated entities, the same applies hereinafter) at the time the plan was announced. Among them, mid-level managers and key technical (and business) personnel account for 173 individuals.

The equity under this incentive plan will be sourced from the Company’s targeted issuance of A‑share common stock to eligible participants. The total number of restricted shares proposed to be granted is 9.48 million, representing approximately 2.37% of the Company’s total share capital of 400 million shares as of the date of the draft announcement of this incentive plan. Of these, 8.68 million shares will be granted in the initial tranche, accounting for 2.17% of the Company’s total share capital at the time of the draft announcement, while 800,000 shares are reserved, representing 0.20% of the total share capital as of that date.

Meanwhile, for the restricted shares granted under this equity incentive plan, the performance‑based vesting period covers the two fiscal years 2019 and 2020, with one assessment conducted at the end of each year. For the first vesting period, the performance target is a minimum 20% year‑on‑year growth in operating revenue in 2019, based on 2018 levels. For the second vesting period, the target is a minimum 30% year‑on‑year growth in operating revenue in 2020, also measured against 2018 levels. As for the restricted shares reserved for future grants, the performance target for the second vesting period is a minimum 40% year‑on‑year growth in operating revenue in 2021, again relative to 2018 levels.

The semi-annual report shows that in the first half of the year, Chuanheng Co., Ltd. recorded operating revenue of RMB 796 million, up 40.39% year over year, and net profit attributable to shareholders of the listed company of RMB 56.6965 million, an increase of 91.27% year over year. The company stated that the rise in operating revenue was primarily driven by higher sales volumes and prices of calcium dihydrogen phosphate and monoammonium phosphate, as well as increased turnover in product trading and phosphate rock trading; the growth in profit was mainly attributable to both higher sales volumes and price increases for its key products.

Strategically positioning itself in the new energy sector, Longpan Technology plans to inject RMB 80 million to acquire a 10% stake in Mingtian Technology.

 On the evening of October 10, Longpan Technology (603906) announced that Anhui Mingtian New Energy Technology Co., Ltd. (“Mingtian Technology”), in order to foster sustained, long-term business growth and in line with the company’s automotive industry market trends and strategic plans, intends to inject an additional RMB 80 million into Mingtian Technology. Upon completion of this capital increase, Mingtian Technology’s registered capital will rise from RMB 100 million to RMB 111 million, and the company will hold a 10% equity stake in Mingtian Technology.

Longpan Technology’s core business comprises a product portfolio of environmentally friendly, high‑performance automotive chemicals, including lubricants, engine coolants, diesel exhaust fluid, and vehicle care products. Its offerings are widely used in automotive OEM manufacturing, the aftermarket, construction machinery, and other sectors. Meanwhile, the target of this capital increase, Mingtian Technology, operates in areas such as the research, development, production, and sales of new‑energy vehicles; the R&D, production, and sales of new‑energy vehicle components; the R&D, production, and sales of testing equipment for key new‑energy vehicle components; as well as the R&D, production, and sales of fuel cells and fuel‑cell engines.

Regarding the purpose and implications of this capital increase, Longpan Technology stated that the cash injection into Mingtian Technology will be entirely allocated to the day-to-day operations and business expansion of Mingtian Technology and its subsidiaries, enabling the company to more effectively develop its products and expand into new markets. This investment aligns with the evolving trends in the automotive industry and the company’s strategic objectives, representing a strategic realignment toward the new‑energy sector and helping to strengthen Longpan Technology’s competitive position in the automotive fine‑chemicals market.

Taxation TAXATATION

The State Council has issued the “Plan for Advancing the Reform of the Division of Central and Local Revenues Following the Implementation of Larger-Scale Tax and Fee Reductions.”

Recently, the State Council issued the “Plan for Advancing the Reform of Adjusting the Division of Central and Local Revenues Following the Implementation of Larger-Scale Tax and Fee Reductions” (hereinafter referred to as the “Plan”).

The Plan states that, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, we will maintain overall stability in the existing fiscal framework, establish a more balanced and rational burden-sharing mechanism, steadily advance reforms to improve the local tax system, and forge a fiscal relationship between the central and local governments characterized by clear delineation of powers and responsibilities, coordinated financial resources, and regional balance. These measures will create favorable conditions for implementing tax and fee reduction policies and ensure that businesses and the general public experience tangible benefits.

The Plan sets forth policy measures in three key areas: First, maintain the stability of the 50/50 VAT revenue-sharing ratio. This will help stabilize social expectations, guide localities to develop their comparative advantages in line with local conditions, and encourage them to cultivate and expand tax bases, thereby strengthening their fiscal self-sufficiency and fostering an environment characterized by proactive initiative, competitive development, and pragmatic enterprise‑driven growth. Second, adjust and refine the mechanism for sharing VAT credit refunds. A long-term mechanism for refunding VAT credits will be established, with the central–local 50/50 sharing ratio remaining unchanged. To alleviate the burden of credit refunds in certain regions, the local share of VAT credit refunds—previously borne entirely by the place of business (50%)—will be shifted to a phased approach: initially, the locality will cover 15%, while the remaining 35% will be advanced by the locality and subsequently shared evenly among all localities based on their respective shares of last year’s VAT revenues; any excess advanced by a locality will be offset through monthly transfers from the central government to the provincial treasury of the locality concerned. Third, shift the collection point for consumption tax to later stages of the supply chain and steadily devolve authority to local governments. In accordance with the requirements of reforming and improving the local tax system, and subject to manageable administration and oversight, selected consumption‑tax items currently levied at the production (or import) stage will be gradually moved to the wholesale or retail stage, thereby broadening local revenue sources and encouraging localities to enhance the consumer environment.

The Plan emphasizes that implementing a larger‑scale package of tax and fee reductions is a key measure to address current downward economic pressures, while reforming the allocation of revenue between the central and local governments serves as an important safeguard for the effective implementation of these policies. All regions and departments are urged to strengthen organizational leadership, strictly enforce financial and economic discipline, advance supporting reforms, and ensure thorough implementation.

The State Council Executive Meeting reviewed and approved the Draft Regulations on Optimizing the Business Environment.

On October 8, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, which reviewed and approved the Draft Regulations on Optimizing the Business Environment, providing institutional safeguards through government legislation to support investment and business development by all types of market entities; the meeting also discussed and adopted the Draft Amendment to the Archives Law of the People’s Republic of China.

The meeting noted that, in accordance with the arrangements of the CPC Central Committee and the State Council, enacting a dedicated administrative regulation to advance the development of a market‑oriented, law‑based, and internationally competitive business environment is an important measure for deepening reform and opening up, fostering fair competition, boosting market vitality and endogenous economic momentum, and promoting high‑quality development. The meeting adopted the Draft Regulations on Optimizing the Business Environment, which, centered on the needs of market entities and focused on transforming government functions, elevates proven practices from recent “delegation, regulation, and service” reforms into statutory provisions. It also benchmarks against international best practices, establishing fundamental institutional norms that treat all types of market entities—domestic and foreign‑invested—equally. First, further streamline administration and delegate power. Continue to relax market access, implement a nationally unified negative list system for market entry, promote the separation of licenses and business permits, and reduce procedures for company establishment and dissolution. Local authorities shall publicly disclose processing time limits for matters such as business registration, tax filing, bank account opening, and grid connection; if these deadlines are exceeded, the responsible agencies must provide clear explanations. Implement one‑stop acceptance and parallel processing for real estate registration, transactions, and tax payment. Further simplify administrative licensing and approval procedures, and introduce a notification‑and‑commitment system for those permits and certifications that must be retained. Strictly control the creation of new administrative licenses; any proposed new license must undergo rigorous legal and regulatory review, justification, and approval. Second, standardize and innovate regulatory enforcement. Except for special industries and key areas directly related to public safety or the health and lives of the public, adopt a “double random inspection, one public disclosure” regulatory approach. Promote “Internet plus regulation.” Adopt a tolerant yet prudent regulatory framework for emerging industries. Third, strengthen protection of market entities. Safeguard, in accordance with the law, the operational autonomy of market entities and the personal and property security of business operators; strictly prohibit the use of administrative coercive measures—such as seizure or detention—of the property of market entities or individual operators in violation of statutory authority or procedures. Ensure that all types of market entities have equal access to production factors and equal entitlement to state support policies. Establish and improve mechanisms for punitive damages for intellectual property infringement and for rights‑protection assistance. Fourth, enhance government transparency and openness. Advance non‑discriminatory acceptance and standardized processing of government services. Public utilities and enterprises providing water, electricity, gas, and heating shall publicly disclose service standards, tariff schedules, and other relevant information. When drafting laws, regulations, and administrative normative documents closely related to the production and business activities of market entities, solicit opinions from market entities and industry associations and chambers of commerce as required. Without a statutory or regulatory basis, no administrative normative document may diminish the legitimate rights and interests of market entities or impose additional obligations upon them. Fifth, enforce strict accountability. Hold the government and its staff accountable for illegal or non‑compliant conduct, dereliction of duty, or arbitrary actions; penalize public utilities for unauthorized fee‑charging; and sanction industry associations, chambers of commerce, and intermediary service providers for unlawful evaluation, certification, or compelling market entities to engage their services—all in accordance with the law.

The meeting adopted the Draft Amendment to the Archives Law of the People’s Republic of China. The draft, aimed at improving the institutional framework for archives management, stipulates the archival management responsibilities of government agencies, social organizations, enterprises, public institutions, and other entities; introduces provisions on the development of information technology in archives management; clarifies the legal validity of electronic archives; and expands access to and utilization of archives while shortening their retention periods. The meeting decided that, following further revisions, the draft will be submitted to the Standing Committee of the National People’s Congress for deliberation.

Announcement of the Ministry of Finance and the State Taxation Administration on Clarifying the Value-Added Tax Additional Deduction Policy for the Consumer Services Sector

The following announcement is hereby made regarding the value-added tax additional deduction policy for the consumer services sector:

I. From October 1, 2019, to December 31, 2021, taxpayers in the consumer services sector are permitted to add an additional 15% to their current period’s deductible input tax credit, thereby reducing their payable tax liability (hereinafter referred to as the “15% Additional Deduction Policy”).

II. For the purposes of this announcement, “taxpayers in the consumer services sector” refers to taxpayers whose sales revenue from the provision of consumer services accounts for more than 50% of their total sales revenue. The specific scope of consumer services shall be determined in accordance with the “Notes on the Sale of Services, Intangible Assets, and Real Estate” (issued under Cai Shui [2016] No. 36).

Taxpayers established on or before September 30, 2019, whose sales revenue for the period from October 2018 to September 2019 (or, if the operating period is less than 12 months, based on the actual operating period) meets the aforementioned eligibility criteria, shall be subject to the policy of an additional 15% tax credit starting October 1, 2019.

Taxpayers established after October 1, 2019, whose sales revenue within three months from the date of establishment meets the aforementioned conditions, shall be eligible for the 15% additional deduction policy starting from the date they are registered as general taxpayers.

Once a taxpayer has opted to apply the 15% additional deduction policy, no further adjustments will be made within the same year. Whether the policy applies in subsequent years will be determined based on the taxpayer’s sales revenue for the preceding year.

III. Taxpayers in the consumer services sector shall calculate their current-period additional deduction amount at 15% of their current-period deductible input tax. Input tax that, under the existing regulations, is not eligible for deduction from output tax shall not be subject to the additional deduction; if input tax for which an additional deduction has already been calculated at 15% is subsequently transferred out in accordance with the relevant provisions, the corresponding additional deduction amount shall be reduced in the period in which such transfer-out occurs. The calculation formula is as follows:

Current-period accrual of the additional deduction amount = Current-period deductible input VAT × 15%

Current-period deductible additional deduction amount = Balance of the additional deduction at the end of the previous period + Additional deduction accrued in the current period − Additional deduction adjusted downward in the current period.

Other relevant matters concerning the application of the additional deduction and credit policy by taxpayers shall be governed by the “Announcement on Policies Related to the Deepening of the Value-Added Tax Reform” (Ministry of Finance, State Taxation Administration, General Administration of Customs Announcement No. 39 of 2019) and other applicable provisions.

Notice from the General Office of the State Taxation Administration on Upholding the Principle of Revenue Collection and Ensuring the Further Effective Implementation of Tax and Fee Reduction Policies

To the tax bureaus of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan, as well as to the Commissioner’s Offices of the State Taxation Administration stationed in various localities:

Since the beginning of this year, the effects of the larger‑scale tax and fee reductions and exemptions implemented under the directives of the CPC Central Committee and the State Council have continued to unfold, effectively boosting market vitality and promoting high‑quality economic and social development. To ensure that these policies and measures are further put into practice and yield tangible results, and to enhance the sense of gain among enterprises and the general public, the following requirements are hereby issued regarding adherence to the principle of revenue collection and strict compliance with discipline in revenue‑related work:

I. Strictly levy taxes and fees in accordance with laws and regulations.

Tax authorities at all levels must officely uphold the principle that implementing tax and fee reductions is both a political imperative and a hard‑won task. They should strengthen their awareness of law-based administration, rigorously collect taxes and fees in strict accordance with laws and regulations, enforce discipline in revenue collection, and steadfastly adhere to the bottom line of lawful tax administration. They must consistently uphold the “Three Musts and Three Resolutions”: ensure that all eligible tax reductions are fully implemented, all applicable fee reductions are fully realized, and all due taxes and fees are collected in full and in compliance with the law; resolutely crack down on fraudulent invoicing and tax evasion; categorically refrain from levying excessive or unauthorized charges; and diligently carry out the work of refunding outstanding input VAT credits.

II. It is strictly prohibited to impose taxes or fees in advance in any form.

Tax authorities at all levels must strictly standardize revenue‑generation and tax administration practices, prohibit in any form the premature levying of taxes or fees, and fully implement all policies on tax and fee reductions and exemptions. They shall not unlawfully collect taxes in advance from enterprises, arbitrarily change the method of tax collection within the year, levy taxes before the statutory filing period, or adopt measures such as large‑scale, concentrated debt‑collection campaigns or industry‑wide, extensive inspections that run counter to the overarching trend of tax and fee cuts. Any units or individuals found to have violated discipline in revenue‑generation work or illegally increased tax revenues shall be held strictly accountable.

III. Strive to Foster a Favorable Environment for Revenue Generation

Tax authorities at all levels should proactively report their work to local Party committees and governments and actively seek their understanding and support. When encountering instances of improper interference by relevant parties in revenue‑generation efforts, tax authorities at all levels must promptly report such cases to their superior tax authorities. The latter shall vigorously engage in communication and coordination to jointly foster a favorable environment for revenue collection.

IV. Coordinate with local governments to make appropriate budget adjustments

Tax authorities at all levels should strengthen analytical forecasting, promptly and accurately assess the actual trends in local tax base development, and objectively reflect the status of revenue collection. In coordination with fiscal departments, they should work with local governments to make prudent, procedure‑compliant adjustments to the initial budget, ensuring that tax revenue targets are aligned with the current economic conditions and the broader context of tax and fee reductions.

Strictly levying taxes and fees in accordance with the law is a fundamental requirement of law-based administration for tax authorities, and it serves as an important safeguard for optimizing the tax‑related business environment and enhancing taxpayers’ sense of gain from tax and fee reductions. Tax authorities at all levels must, from the standpoint of strengthening the “Four Consciousnesses,” officely upholding the “Four Confidences,” and resolutely practicing the “Two Upholds,” deeply appreciate both the practical and strategic significance of implementing tax and fee reduction policies, rigorously enforce discipline in revenue collection, and spare no effort to ensure that these policies and measures are further put into practice and yield tangible results.

Supplementary Notice from the General Office of the Ministry of Human Resources and Social Security on Issues Related to the Transfer and Continuation of Basic Pension Insurance Relationships for Employees

To the Human Resources and Social Security Departments (Bureaus) of all provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps:

To strengthen the development of professional conduct within the human resources and social security system, enhance service quality, and better safeguard the pension insurance rights and fund security of mobile workers, the following supplementary notice is hereby issued regarding further improvements to the transfer and continuation of basic employee pension insurance relationships:

I. When insured persons transfer and continue their basic old-age insurance relationship across provinces, with respect to one-time contributions to the old-age insurance premium that were made more than three years (inclusive) prior to the implementation of the “Notice of the Ministry of Human Resources and Social Security on Several Issues Concerning the Transfer and Continuation of Basic Old-Age Insurance Relationships for Urban Enterprise Employees” (Ministry of Human Resources and Social Security Regulation No. 5 [2016], hereinafter referred to as “Regulation No. 5”), the social insurance administering agency of the place of departure (hereinafter referred to as the “place of departure”) shall provide the social insurance administering agency of the place of arrival (hereinafter referred to as the “place of arrival”) with a written undertaking (the format of which is attached).

II. When insured persons transfer and continue their basic old-age insurance relationship across provinces, for any lump-sum old-age insurance contributions made more than three years (inclusive) after the implementation of Ministry Regulation No. 5, the place of departure shall, in accordance with the relevant provisions of Ministry Regulation No. 5, provide the place of arrival with the pertinent legal documents. Such legal documents must have been prepared by the people’s courts, audit authorities, administrative departments conducting labor inspections, or labor and personnel dispute arbitration committees, among others, in the course of performing their respective statutory duties and must have arisen prior to the payment of the lump-sum contribution; they may not be issued retroactively. The place of departure and the place of arrival shall, in accordance with their respective responsibilities, review the compliance and completeness of the relevant materials and verify the insured person’s contribution and transfer information.

III. With respect to periods of insurance contributions and funds that cannot be transferred due to locally enacted policies allowing one-time payment of pension insurance premiums or due to the inability to provide the requisite documentation, the transferring jurisdiction shall, within ten working days of receiving the liaison letter from the receiving jurisdiction, notify the insured in writing and cooperate with the place where the one-time premium payment was made (hereinafter referred to as the “place of retroactive payment”) to appropriately resolve any ensuing issues. As for all other periods of pension insurance contributions and funds that meet the national regulations on transfer and continuation, full transfer shall be ensured.

IV. During the period in which the insured person maintains an employment relationship with the employer, if the employer has obtained approval to defer payment of social insurance contributions, resulting in a one-time payment of pension insurance premiums, then upon the insured person’s interprovincial transfer and continuation of their pension insurance relationship, the place of departure shall provide the place of arrival with relevant documents, including the deferral agreement and proof of arrears payment. Upon verification and conofficeation by the place of arrival, the necessary procedures shall be processed.

V. In accordance with the Social Insurance Law and other relevant provisions, the social insurance premium collection agency shall accept complaints and reports from insured persons, investigate and handle, in accordance with the law, cases where employers fail to pay pension insurance premiums in full and on time, and order such arrears to be made up. Where the one-time payment of pension insurance premiums spans three years or more (inclusive), upon the insured person’s inter‑provincial transfer and continuation of their basic pension insurance relationship, the place of departure shall provide the relevant documents issued by the social insurance premium collection agency at the time of the order to make up the arrears; upon verification and conofficeation by the place of arrival, the transfer shall be processed.

VI. In accordance with the provisions of the “Notice issued by the General Office of the CPC Central Committee and the General Office of the State Council on the Issuance of the ‘Opinions on Resolving Social Insurance Issues for Certain Demobilized Soldiers,’” when demobilized soldiers make retroactive payments of pension insurance premiums, the place of transfer shall be responsible for providing the relevant documentation—such as the certification of retroactive payment issued by the veterans affairs department at the time of such payment—when transferring and continuing their basic pension insurance relationship across provinces. Upon verification and conofficeation by the receiving locality, the transfer shall be processed, and appropriate personnel identification for the demobilized soldier shall be maintained.

VII. Where an insured person has received duplicate basic old-age insurance benefits (including both enterprise employee basic old-age insurance benefits and those for staff of government agencies and public institutions, the same hereinafter), the social insurance administration agency shall, in consultation with the individual, determine which one of the basic old-age insurance relationships will be retained and continue to receive benefits; all other such relationships shall be terminated, with any remaining balance in the individual account paid out in a lump sum to the individual, and the duplicated benefits shall be refunded. If the individual refuses to return the duplicated benefits, the amount shall be offset against the balance of the terminated individual old-age insurance account. If the balance of the individual old-age insurance account is insufficient to cover the duplicated benefits, the shortfall shall be deducted monthly from the continuing basic pension at a prescribed rate until the full amount of the duplicated benefits has been repaid. For cases where duplicate benefits were already being received prior to the implementation of the “Notice of the General Office of the State Council on Forwarding the Interim Measures for the Transfer and Continuation of Basic Old-Age Insurance Relationships for Urban Enterprise Employees” issued by the Ministry of Human Resources and Social Security and the Ministry of Finance (Guobanfa [2009] No. 66), the relevant provisions set forth in the “Notice of the Ministry of Human Resources and Social Security on Implementing the Interim Measures for the Transfer and Continuation of Basic Old-Age Insurance Relationships for Urban Enterprise Employees” forwarded by the General Office of the State Council (Renshubufa [2009] No. 187) shall continue to apply.

If an insured person receives both employee basic old-age insurance benefits and urban–rural resident basic old-age insurance benefits concurrently, the social insurance administration agency shall terminate and dissolve the individual’s urban–rural resident basic old-age insurance relationship, and refund to the individual the balance in their personal account, excluding any government subsidies. Any basic old-age pension received concurrently under the urban–rural resident basic old-age insurance scheme shall be repaid; if the individual fails to repay it, the social insurance administration agency shall offset the amount against the balance in the individual’s urban–rural resident basic old-age insurance personal account or against the employee basic old-age insurance benefits that the individual continues to receive.

VIII. Social insurance agencies at all levels shall uniformly use the National Social Insurance Relationship Transfer System to handle the transfer and continuation of pension insurance relationships, transmit relevant forms and documents, and reduce the need for unnecessary supporting documentation. They should enhance their online service capabilities, making full use of the internet, the 12333 hotline, mobile apps, and other channels to provide insured persons with fast and convenient services, striving to achieve the goal of “at most one visit.”

Human resources and social security departments at all levels shall strive to achieve interconnectedness and data sharing for pension insurance matters that span different administrative levels and business functions. Where information can be shared, participating units or insured persons shall not be required to submit the same information repeatedly. When transferring and continuing basic pension insurance relationships across provinces, written commitments and relevant legal documents that would otherwise need to be provided to the receiving locality for one-time payment of pension contributions shall not be requested from the insured individual; such documentation shall, in principle, be provided by the originating locality. If the originating locality differs from the place where the retroactive contribution is made, the social insurance administration agency at the place of retroactive contribution shall obtain the necessary materials through the originating locality.

9. Social insurance administration agencies at all levels shall refine their operational regulations, standardize processing procedures, and strengthen internal controls to ensure the lawful and compliant transfer and continuation of pension insurance relationships for insured persons. Provincial-level social insurance administration agencies shall rigorously review instances of lump-sum pension premium payments in transfer and continuation transactions and conduct quarterly data‑driven cross‑checks using big data. If any suspected anomalies or irregularities are identified, they shall be verified and addressed, with a verification report submitted to the Ministry’s Social Insurance Center; if no anomalies are found, a zero‑report shall be filed. In cases where suspected fraudulent transfer or continuation activities are detected, such cases shall be reported to the Ministry’s Social Insurance Center for verification within 10 working days. The Ministry’s Social Insurance Center shall conduct quarterly spot checks on pension insurance transfer and continuation operations.

X. It is necessary to strengthen oversight of interprovincial transfer and continuation of basic old-age insurance relationships, rigorously investigate and prosecute fraud, dereliction of duty, and other misconduct, and effectively mitigate risks to the pension fund. Localities that unlawfully introduce policies allowing one-time payment of old-age insurance premiums shall be held accountable in accordance with relevant national regulations. Staff members of social insurance administration agencies who engage in improper practices, submit false written commitments, or participate in the forgery of relevant legal documents and other materials shall be ordered by the human resources and social security administrative department to make corrections; the directly responsible supervisors and other persons bearing responsibility shall be disciplined in accordance with laws and regulations. If it is discovered that an insured entity or individual has obtained old-age insurance enrollment and premium payments, or transferred and continued their basic old-age insurance relationship, through the falsification of relevant documents and materials, the human resources and social security administrative department shall order the withdrawal of the corresponding period’s old-age insurance relationship; where such actions constitute fraudulently obtaining old-age insurance benefits, they shall be handled in accordance with the Social Insurance Law and other applicable provisions.

LITIGATION & ARBITRATION

Wenzhou has concluded the nation’s first “personal bankruptcy” case.

On October 9, the Wenzhou Intermediate People’s Court, in collaboration with the Pingyang County People’s Court, announced details of the nation’s first case involving the centralized clearance of personal debts that incorporates both the substantive functions and a corresponding procedural framework of personal bankruptcy.

In this case, the debtor, Cai, is a shareholder of a bankrupt enterprise in Wenzhou. A final and enforceable court judgment has held him jointly and severally liable for more than RMB 2.14 million in debts owed by that bankrupt company. Upon investigation, it was found that Cai holds only a 1% equity interest—representing an actual capital contribution of RMB 5,800—in a machinery company in Ruian City where he is employed; he also owns a scrapped motorcycle and some small savings. In addition, Cai earns approximately RMB 4,000 per month from that company, while his spouse, Hu, earns about RMB 4,000 per month. Cai has long suffered from hypertension and kidney disease, incurring substantial medical expenses, and his child is currently enrolled at a university. As a result, the family has been living well below its means for an extended period and genuinely lacks the financial capacity to repay the substantial debt.

On August 12 this year, after the Pingyang People’s Court ruled to file and accept the case of centralized debt clearance for Cai, it appointed Wenzhou Chengda Certified Public Accountants as the administrator. Following the administrator’s public announcement soliciting claims and convening the first creditors’ meeting, the Pingyang People’s Court presided over the inaugural creditors’ meeting on September 24. Cai solemnly pledged, by reading aloud a “Commitment Letter on the Absence of Dishonest Conduct,” that, apart from the assets already identified by the administrator, he possessed no other property; should any dishonest behavior be discovered, he would bear the corresponding legal consequences, and if losses were incurred to creditors, he would assume liability for compensation in accordance with the law. Ultimately, Cai proposed a repayment plan stipulating a 1.5% repayment rate—amounting to just over RMB 32,000—to be paid in a single lump sum within 18 months. At the same time, Cai undertook that, upon full performance of this plan, for a period of six years thereafter, if his household annual income exceeded RMB 120,000, 50% of the amount exceeding that threshold would be allocated to settling any outstanding debts owed to all creditors.

On September 27, the Pingyang Court issued a behavioral restriction order against Cai and terminated enforcement proceedings against him in the case at issue. As a result, the case was successfully concluded.

Notice of the Shandong Provincial Higher People’s Court on Issuing the Guidelines on the Element-Based Trial Method (Trial Implementation)

To further advance judicial reform and innovation and to enhance the quality and efficiency of adjudication in civil and commercial dispute cases, this Guideline is formulated in accordance with the “Several Opinions of the Supreme People’s Court on Further Promoting Case Classification Based on Complexity and Streamlining Judicial Resource Allocation” (Fa Fa [2016] No. 21), and in light of the actual conditions of judicial work in the courts of our province.

Article 1 [Definition of Element-Based Adjudication] Element-based adjudication refers to the process of distilling the fundamental factual elements of a given case, summarizing whether each element is disputed, and conducting trial proceedings centered on those disputed elements. This approach streamlines the preparation of judicial documents, thereby simplifying the adjudication process, enhancing judicial efficiency, and enabling specialized adjudication of similar cases and expedited handling of straightforward cases.

Article 2 [Scope of Application] The following nine categories of first-instance ordinary civil and commercial cases, where the facts are clear, the rights and obligations are well-defined, and the parties’ disputes are minor, shall be adjudicated using the element‑based trial procedure: (1) Disputes over financial loan contracts; (2) Disputes over private loan contracts; (3) Disputes over sales contracts; (4) Disputes over liability for motor vehicle traffic accidents; (5) Disputes involving infringement of trademark rights; (6) Labor disputes; (7) Divorce disputes; (8) Disputes over property service contracts; and (9) Credit card disputes.

Other civil and commercial cases that are suitable for adjudication under the element-based trial procedure may also be heard in accordance with such procedure, as the circumstances warrant.

Article 3 [Completion of the Elements Table] The basic factual elements of the parties’ claims and defenses shall be listed, and the “Trial Elements Table” shall be integrated into the online case filing system. When filing a case online, the plaintiff shall complete the “Trial Elements Table” in accordance with the system’s automated prompts; for on-site filings, the plaintiff shall be guided by the case‑filing court clerk or judicial assistant in completing the “Trial Elements Table.”

People’s courts may not refuse to accept a case on the ground that the parties have failed to complete the “Trial Elements Form.”

Article 4 [Trial Procedure] Cases tried under the element-based trial procedure shall be subject to the summary procedure and shall be concluded within one month from the date of case filing, with a maximum period of three months.

Article 5 [Pre‑trial Service of Process] Within three days from the date of case filing, the people’s court shall serve on the defendant and any third parties copies of the complaint and a copy of the “Trial Elements Form” completed by the plaintiff, and shall notify them to submit their responses to the contents of the “Trial Elements Form,” stating whether they admit or deny each allegation. With respect to any denials, they shall set forth the facts and evidence upon which such denials are based.

The defendant and any third party shall complete the “Trial Elements Form” and submit it to the People’s Court within five days from the date of receipt of a copy of the complaint. Failure to submit within the prescribed time shall not affect the adjudication of the case.

Article 6 [Methods of Service] In cases tried under the element‑based adjudication procedure, service may be effected by convenient and flexible means such as telephone, text message, WeChat, or email, with appropriate records kept.

If the parties have agreed on the address for service and the method of service, service shall be effected in accordance with such agreement.

Article 7 [Period for Producing Evidence and Period for Filing a Defense] In cases tried under the element‑based adjudication procedure, a fixed period for producing evidence and a period for filing a defense shall, in principle, no longer be set. Upon soliciting the parties’ views, the court may proceed to hear the case immediately or designate a hearing date, which shall be recorded in the minutes. If the parties insist on such periods, the people’s court shall set the period for producing evidence at no more than fifteen days and the period for filing a defense at no more than five days.

Article 8 [Pre‑trial Conference] The judge, or a judicial assistant authorized by the judge, shall preside over the pre‑trial conference to carry out procedural matters such as verifying the identities of the parties, explaining their litigation rights and obligations, and organizing the exchange of evidence. The court shall also review the “Trial Elements Forms” submitted by the plaintiff, the defendant, and any third parties, summarize the undisputed and disputed facts, identify the key points of contention, and conduct pre‑trial mediation.

If an agreement is reached through pre-trial mediation, a mediation statement shall be prepared and approved and signed by the presiding judge; if no agreement is reached, the case shall be submitted to the presiding judge for direct scheduling of a court hearing. Should the parties request a separate setting of the hearing date, such date shall be promptly fixed and recorded in the minutes, without further service of a summons. The hearing date shall generally be scheduled within three days following the pre-trial conference.

Article 9 [Trial Format] Court hearings may be conducted via internet video conferencing or other similar means.

At the hearing, the order of proceedings shall be determined in accordance with the relevant factual elements and in conjunction with the claims asserted. The facts of the case as established at the pre-trial conference shall not be re‑examined.

Factual elements on which both parties are in agreement shall be conofficeed and recorded in the court transcript, without further presentation of evidence or cross-examination. As for factual elements that are disputed by both parties, they shall be subject to focused examination, with the parties guided to present evidence, engage in cross-examination, and participate in argumentation, all without being constrained by the formal procedures of court investigation or courtroom debate.

Article 10 [Form of Judgment] In cases tried under the element-based adjudication method, a judgment may be delivered in open court.

Article 11 [Document Preparation] The “Trial Elements Table” shall be integrated into the end-to-end online case-handling system, enabling the automatic generation of element-based judicial documents to assist judges in drafting such documents.

Element‑based judicial documents no longer separate the parties’ arguments and defenses, the assessment of evidence, the findings of fact, and the court’s reasoning; instead, they analyze and argue around specific disputed elements and render a judgment in accordance with the relevant laws. Undisputed factual elements are merely listed without further analysis or reasoning.

Article 12 [Immediate Performance] For cases where performance is rendered immediately in court, with the consent of all parties, no separate legal document shall be issued after the relevant circumstances have been recorded in the court transcript.

Article 13 This Guideline shall be implemented on a trial basis from the date of its promulgation.

Liaoning Removes Barriers to High-Quality Development of Enforcement Work

Recently, the Higher People’s Court of Liaoning Province conducted a video conference to coordinate enforcement work across all courts in the province, urging them to resolutely guard against major risks in the enforcement field, closely monitor key indicators for improving the quality and efficiency of enforcement, focus on addressing seven specific issues, and make every effort to ensure the effective implementation of all enforcement tasks.

During the meeting, the Liaoning High People’s Court issued a briefing and commentary on the efforts of local courts to address difficulties in enforcement. Two grassroots courts ranked high in enforcement performance presented their experiences, while the presidents of three lower-ranked grassroots courts delivered self-critical remarks; the chief justices of the respective intermediate people’s courts offered comments or made public statements. The Liaoning High People’s Court emphasized that, to sustain high‑level development in enforcement work, it is imperative to tackle seven key issues: waning morale and determination; inadequate implementation of the “top leader takes charge of specifics, and specifics are followed up”; low satisfaction among applicants; frequent suspension of cases at the first sign of interference; insufficient use of enforcement measures; inadequate enforcement力度 in cases involving special categories of parties; and slow progress in establishing and operationalizing the enforcement command center as a fully functional entity.

Zhang Xuequn, President of the Liaoning High People’s Court, has called for treating the rigorous management and oversight of judicial enforcement personnel as a long-term priority, ensuring that this work is earnestly, thoroughly, and effectively implemented. He emphasized placing integrity in enforcement at the forefront, integrating it with the thematic education campaign on “Staying True to Our Original Aspiration and Keeping Our Mission Officely in Mind,” strengthening integrity‑oriented education for all enforcement officers, continuously improving enforcement systems, and persistently upholding proper conduct and strict discipline. Efforts must focus on standardizing enforcement practices, intensifying specialized training for enforcement personnel, transitioning all enforcement cases to online processing, and reinforcing oversight and inspection of passive, selective, or improper enforcement. The mechanisms for supervising and restraining the exercise of enforcement powers should be refined, the separation of adjudication and enforcement further advanced, and the “one case, one account” management of funds and assets in enforcement cases strengthened. The system for handling reports and complaints should continue to be improved. Finally, the stability of the enforcement workforce must be ensured by bolstering incentive mechanisms, establishing a fault‑tolerance and error‑correction framework for enforcement work, and enhancing safeguards to protect enforcement officers in the lawful performance of their duties, thereby fostering a stronger sense of professional honor, pride, and belonging.

BNP Paribas, having independently chosen the Hainan court, has achieved a successful resolution of a contract dispute involving a claim amount of RMB 275 million.

On October 8, the Haikou Maritime Court successfully mediated a dispute over a ship mortgage loan contract between BNP Paribas and Guanghui Bao Oil Tanker Co., Ltd., with the subject matter of the case totaling RMB 275 million.

In this case, the plaintiff, BNP Paribas, had the option to choose the competent court. Relying on its recognition of and confidence in Hainan’s rule-of-law business environment and the Haikou Maritime Court, it voluntarily opted to file suit with the Haikou Maritime Court. The Haikou Maritime Court adhered to the principle of equal protection, effectively resolved disputes, and safeguarded the legitimate rights and interests of both parties in accordance with the law.

On January 4, 2019, BNP Paribas filed a pre-litigation maritime preservation application with the Haikou Maritime Court, seeking to seize the vessel “Guanghui Bao Shi” owned by Guanghui Bao Petroleum Tanker Co., Ltd. on the grounds that the company had failed to repay its loan on time. Subsequently, the bank initiated litigation and, during the proceedings, submitted an application for the auction of the vessel. The seized vessel, “Guanghui Bao Shi,” has a deadweight tonnage exceeding 300,000 tons and an estimated value of over US$60 million, making it the largest‑tonnage and highest‑valued ship ever seized by the Haikou Maritime Court since its establishment. At present, the vessel has been listed on Taobao’s judicial auction platform, with a starting price of RMB 390 million, representing the highest‑valued ship ever auctioned on the Taobao judicial auction platform to date. As of October 10, more than 32,000 users had viewed the listing, and over 370 had set up alerts.

On May 9, the Haikou Maritime Court held a public hearing in this case. During the proceedings, the defendant, Guanghui Bao Petroleum Tanker Co., Ltd., acknowledged its outstanding loan debt but stated that it was unable to repay it promptly due to operational difficulties. Furthermore, the parties remained deeply divided over issues such as the calculation of interest on the loan at issue, the allocation of costs—including preservation fees and attorney’s fees—and the applicable law.

Following court proceedings and multiple rounds of post‑trial mediation and negotiation, the parties, under the auspices of the Haikou Maritime Court, voluntarily reached a settlement agreement. They agreed on matters including the amount of the debt in dispute, the method of repayment, the scope of the ship’s mortgage security, and the allocation of subsequent costs, and jointly signed the mediation agreement in court. Upon the parties’ application, the Haikou Maritime Court issued a civil mediation statement, which was served to both parties on October 8 for their acknowledgment. The dispute has thus been resolved amicably.

The successful resolution of this case has earned the full approval of both parties, bolstering the image of China’s maritime courts as impartial, efficient, and authoritative institutions under the rule of law. It has also significantly enhanced the international credibility of China’s maritime justice system, serving as a vivid illustration of how the Haikou Maritime Court, in delivering high‑standard, high‑quality services to support major national strategies such as building a strong maritime nation and developing free trade zones and ports, is striving to foster a business environment that is law‑based, internationally oriented, and highly convenient.

The Jiangsu High People’s Court has introduced an integrated-media litigation service smart terminal, seamlessly blending news dissemination with judicial services.

“Simply tap the ‘Labor Dispute’ button, and the machine will prompt you for detailed information about your case. Based on the specifics, it will provide you with a legal opinion letter and a risk assessment report. If you have further questions, you can click the adjacent ‘Smart Q&A’ button to receive an online response from the AI assistant,” explained a staff member at the Litigation Service Hall of the Jiangsu Provincial Higher People’s Court, deftly guiding the party through the machine’s interface. Recently, the Jiangsu High People’s Court has introduced the “People’s Court News and Publicity + Litigation Services Integrated Communication Platform,” offering the public a new channel to gain comprehensive access to judicial information and enjoy efficient, convenient litigation services.

According to the introduction, this platform is an integrated communication hub that brings together the People’s Courts’ news and publicity efforts with litigation services. It seamlessly combines print media, periodicals, a new-media ecosystem, websites, and audiovisual content, consolidating text, images, video, H5 pages, and other multi‑media formats, while also offering essential litigation‑service functions. By presenting judicial‑publicity materials in a comprehensive, multi‑perspective manner within the new‑media landscape, it enables the public to gain a thorough understanding of key legal‑media developments in the information age.

The platform also fulfills certain functions related to judicial transparency and litigation services. Through its terminals, the public can watch live court proceedings, access enforcement data, obtain various document templates, and receive legal advice. In addition, the platform’s terminals support risk assessments for 12 common types of cases, including divorce disputes, labor disputes, and lease‑contract disputes, and can automatically generate corresponding evaluation reports.

It is understood that the platform will gradually extend to all three‑level courts across Jiangsu Province. By linking the Supreme People’s Court News and Media Group with local platforms, it will establish a nationwide broadcasting network that both respects regional differences and ensures unified command, thereby further advancing the integrated development of media within Jiangsu’s courts and comprehensively deepening the construction of Jiangsu’s smart courts.

Other

The General Office of the State Council has issued the “Opinions on Further Ensuring the Supply and Stabilizing Prices of Shortage Drugs.”

Recently, the General Office of the State Council issued the “Opinions on Further Ensuring the Supply and Stabilizing Prices of Shortage Drugs” (hereinafter referred to as the “Opinions”).

The Opinions note that the CPC Central Committee and the State Council attach great importance to ensuring the supply of shortage drugs. In recent years, China has steadily strengthened its efforts to safeguard the supply of such medications, achieving positive results; however, challenges remain, including insufficient timeliness and responsiveness in drug‑supply and price monitoring, as well as the need to further refine policies related to drug procurement, utilization, stockpiling, and price regulation.

To further ensure the stable supply and pricing of shortage drugs and better meet the public’s basic medication needs, the Opinions set forth the following policy measures.

In terms of ensuring supply, first, we will strengthen coordinated monitoring. We will establish a national multi-source information‑collection platform for shortage drugs and put in place a collaborative monitoring mechanism to achieve interconnected and shared information on active pharmaceutical ingredients and finished dosage forms across registration, production, procurement, pricing, and other stages, thereby enhancing the sensitivity and timeliness of our response. Second, we will improve the management of the shortage‑drug list. A systematic approach will be adopted, with the formulation of national and provincial key monitoring lists for clinically essential but easily scarce drugs, as well as a comprehensive shortage‑drug list, both of which will be dynamically updated. Third, we will implement a reporting requirement for the cessation of production of shortage drugs. Holders of drug marketing authorizations who discontinue manufacturing shortage drugs must report this to the drug regulatory authorities in accordance with applicable regulations. The medical insurance authorities will promptly inform the lead agency of the corresponding inter‑agency coordination mechanism about the impact of such production halts on market supply, while the health authorities will promptly assess the risk of shortages arising from these production stoppages. Fourth, we will enforce policies allowing direct online listing and self‑registration procurement. For items on the shortage‑drug list, enterprises may independently set prices and directly list their products on provincial centralized drug procurement platforms, with medical institutions making independent purchases. For drugs included in both the shortage‑drug list and the key monitoring list, medical institutions may conduct offline searches for manufacturers and then register their purchases independently on the provincial centralized drug procurement platform. Fifth, we will establish and refine a regular reserve mechanism for shortage drugs. We will optimize the structure of central and local pharmaceutical reserves, fully leverage the role of provincial reserves, select a group of clinically essential drugs with uncertain usage patterns and prone to shortages for inclusion in the reserve, and clearly define procedures for mobilizing reserved shortage drugs.

In terms of price stability, first, we will strengthen monitoring and early warning for abnormal drug pricing. We will regularly track changes in procurement prices and promptly investigate and issue warnings when prices experience unusual fluctuations. Second, we will reinforce routine oversight of drug prices. This includes refining the mechanisms for investigating drug price costs and establishing a credit‑based evaluation system for pricing and tendering processes. For drugs exhibiting abnormally large or frequent price increases, or significant inter‑regional price disparities, we will employ a combination of measures—such as cost investigations and suspension of online listing—to impose appropriate constraints. Third, we will intensify law enforcement against illegal activities. We will establish a coordinated inter‑agency working mechanism, conduct joint crackdowns across multiple departments, and promptly disclose the outcomes to the public. Where criminal offenses are involved, we will pursue criminal liability in accordance with the law, hold the responsible parties accountable, and thereby deter misconduct effectively.

The Opinions emphasize the need to ensure timely reporting, strengthen oversight and accountability, and promptly hold talks with and urge rectification in areas where implementation is inadequate, so as to guarantee the effectiveness of relevant measures. Furthermore, efforts should be stepped up to enhance public communication and guidance, regularly disclose updates on efforts to ensure the supply and stabilize prices of shortage drugs, and proactively address public concerns.

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