JC Master Legal News Issue 892

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Administration of Major Asset Restructurings of Listed Companies.”

To advance the development of a capital market that is standardized, transparent, open, dynamic, and resilient; to support Shenzhen in becoming a pioneering demonstration zone for socialism with Chinese characteristics; to optimize the regulatory framework for restructuring and listing; to improve diversified exit channels and resolution mechanisms tailored to China’s national conditions; and to enhance the quality of listed companies, the “Decision on Amending the Measures for the Administration of Major Asset Restructuring of Listed Companies” (hereinafter referred to as the “Restructuring Measures”) was officially promulgated on October 18 and shall take effect from the date of its publication.

SF Holding’s revenue continues to surge, with September sales once again surpassing RMB 10 billion to hit a new record.

On the evening of October 18, SF Holding released its September monthly business performance report. With a strong rebound, the company saw its monthly volume surge nearly 40% thanks to the combined momentum of its traditional time-sensitive services, as well as new products and businesses such as heavy‑cargo logistics and supply chain solutions. Monthly revenue once again exceeded RMB 10 billion, reaching a new record high.

Interpretation of the “Announcement of the State Taxation Administration on Matters Related to the Management of Value-Added Tax Invoices, etc.”

To further optimize the business environment, implement relevant tax policies, standardize tax administration, and safeguard the legitimate rights and interests of taxpayers, this announcement is hereby issued.

“Major Public Interest Litigation Case Involving Illegal Fishing of Yangtze River Eel Fry” Held; 59 Defendants Ordered to Pay Over 9 Million Yuan in Damages

At 10:00 a.m. on October 18, the “extra-large public-interest lawsuit involving illegal fishing of Yangtze eel larvae,” which implicates 59 individuals, was heard in Jingjiang. This marks the first case accepted and tried by the Nanjing Environmental Resources Tribunal since the Jiangsu environmental resources adjudication “9+1” mechanism was officially put into operation.

Feng Jie, former chairman of Jiuquan Iron & Steel (Group) Co., Ltd., was sentenced to 13 years in prison in the first instance.

On the morning of the 18th, the Intermediate People’s Court of Tianshui City, Gansu Province, publicly pronounced its verdict in the case involving Feng Jie, former chairman of Jiuquan Iron & Steel (Group) Co., Ltd., who was convicted of accepting bribes and having unexplained sources of massive wealth. Defendant Feng Jie was sentenced to ten years’ imprisonment and fined RMB 2 million for the crime of accepting bribes, and to six years’ imprisonment for the crime of having unexplained sources of massive wealth. Considering all offenses together, the court decided to impose a total sentence of thirteen years’ imprisonment and a fine of RMB 2 million. The illicit funds and property already seized were confiscated in accordance with the law and turned over to the state treasury.

Table of Contents

Table of Contents

Finance & Capital Markets

The Shanghai and Shenzhen Stock Exchanges have revised the Implementation Measures for the Shanghai–Shenzhen–Hong Kong Stock Connect, clarifying the eligibility criteria for the initial inclusion of shares issued by companies with different voting rights structures.

The China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Administration of Major Asset Restructurings of Listed Companies.”

SSE: Underlying shares held in custody by overseas institutions are excluded from the calculation of the domestic asset balance cap.

China Banking and Insurance Regulatory Commission: Accelerate the revision and improvement of supporting regulations for foreign-invested institutions.

Down nearly 35% year over year, the scale of stock pledges at securities offices continues to shrink.

Corporate & Commercial

111 Group strategically partners with Taikang Online to comprehensively empower the insurance industry.

SF Holding’s revenue continues to surge, with September sales once again surpassing RMB 10 billion to hit a new record.

Wanlong Optoelectronics has established an industrial investment fund, positioning itself within the telecommunications industry chain to pursue transformation.

Yongtai Energy’s Huaying Petrochemical Project Has Officially Commenced Trial Operations and Is Set to Become a New Driver of Business Growth.

Deepening Research Project Collaboration: JULONG Intelligent Technology’s Innovation Project Secures an Additional Subsidy of RMB 2.08 Million

Taxation

Premier Li Keqiang signed a State Council order promulgating the “State Council Decision on Amending the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies” and…

Decision on the Regulations of the People’s Republic of China on the Administration of Foreign‑Funded Banks

Interpretation of the “Announcement of the State Taxation Administration on Matters Related to the Management of Value-Added Tax Invoices, etc.”

Notice of the State-owned Assets Supervision and Administration Commission on Issuing the Provisional Measures for the Supervision and Management of the Implementation of Expenditures under the State Capital Operation Budget of Central Enterprises

Serving agricultural modernization and rural revitalization, and accelerating the high-quality development of agricultural insurance.

Notice on the Issuance of the 2019 Budget for Subsidies from the Central Special Lottery Public Welfare Fund to Support Pilot Projects for Reforming Home- and Community-Based Elderly Care Services

Litigation & Arbitration

Opinions of the Supreme People’s Court on Providing Judicial Services and Guarantees for the Planning and Construction of the Xiongan New Area in Hebei Province

“Major Public Interest Litigation Case Involving Illegal Fishing of Yangtze River Eel Fry” Held; 59 Defendants Ordered to Pay Over 9 Million Yuan in Damages

The first-instance trial has commenced in the bribery case involving Zhang Maocai, former Vice Chairman of the Standing Committee of the Shanxi Provincial People’s Congress.

Shanghai’s first criminal case involving groping on a rail transit system has been handed down.

The Supreme People’s Court International Maritime Judicial Base in Zhejiang has been established. The Supreme People’s Court International Maritime Judicial Base in Zhejiang has been established.

Other

Feng Jie, former chairman of Jiuquan Iron & Steel (Group) Co., Ltd., was sentenced to 13 years in prison in the first instance.

Finance & Capital Markets

The Shanghai and Shenzhen Stock Exchanges have revised the Implementation Measures for the Shanghai–Shenzhen–Hong Kong Stock Connect, clarifying the eligibility criteria for the initial inclusion of shares issued by companies with different voting rights structures.

To clarify the specific arrangements for including shares of companies with different voting‑right structures listed on The Stock Exchange of Hong Kong Limited within the scope of Stock Connect under the Shanghai–Hong Kong Stock Connect and Shenzhen–Hong Kong Stock Connect schemes, and to continuously optimize and improve the mechanisms linking the mainland and Hong Kong stock markets, the Shanghai Stock Exchange and the Shenzhen Stock Exchange have respectively revised the “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect” and the “Shenzhen Stock Exchange Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect.” These revisions set out the initial eligibility criteria for including such shares. The revised “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect (2019 Revision)” and “Shenzhen Stock Exchange Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect (2019 Revision)” have been approved by the boards of directors of both exchanges and submitted to the China Securities Regulatory Commission for approval. They are hereby promulgated and shall take effect as of October 28, 2019.

Under the new regulations, for shares of companies with a dual‑class share structure that are constituents of either the Hang Seng Composite LargeCap Index or the Hang Seng Composite MidCap Index and do not fall within the scope of “H‑shares of A+H listed companies,” the following additional conditions must also be met at the time of their initial inclusion in the Stock Connect eligible securities: (1) the shares must have been listed on the Stock Exchange of Hong Kong for at least six months and for an additional 20 trading days thereafter; (2) during the 183 trading days immediately preceding the assessment date (including the assessment day itself), the average daily market capitalization must not be less than HK$20 billion; (3) over the same 183‑day period, the aggregate turnover of the shares must not be less than HK$6 billion; (4) since listing, neither the issuer nor any holders of the dual‑class shares may have been publicly censured by the Stock Exchange, subjected to other public sanctions, or triggered the termination of the dual‑class voting rights regime due to violations of the Exchange’s rules governing corporate governance, information disclosure, or investor protection measures applicable to companies with dual‑class share structures; and (5) such other conditions as determined by the Exchange.

In addition, to align with the aforementioned rule amendments, the Shanghai Stock Exchange and the Shenzhen Stock Exchange, in coordination with China Securities Depository & Clearing Corporation Limited, have revised the “Mandatory Provisions of the Risk Disclosure Statement for Hong Kong Stock Connect Trading” issued by the Shanghai Stock Exchange and the “Mandatory Provisions of the Risk Disclosure Statement for Hong Kong Stock Connect Trading” issued by the Shenzhen Stock Exchange. These revisions introduce new risk warnings regarding the existence of dual-class share structures among certain Hong Kong Stock Connect‑listed companies and are hereby released.

The newly revised mandatory provisions of the Stock Connect Trading Risk Disclosure Statement have been in effect since October 28. For investors applying for the first time to obtain Stock Connect trading access, securities offices must fully disclose the relevant risks and require them to sign a risk disclosure statement that incorporates the revised mandatory provisions. For investors who already hold Stock Connect trading access, securities offices are required to implement effective measures to further disclose the associated risks.

The China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Administration of Major Asset Restructurings of Listed Companies.”

To advance the development of a capital market that is standardized, transparent, open, dynamic, and resilient; to support Shenzhen in becoming a pioneering demonstration zone for socialism with Chinese characteristics; to optimize the regulatory framework for restructuring and listing; to improve diversified exit channels and orderly liquidation mechanisms tailored to China’s national conditions; and to enhance the quality of listed companies, the “Decision on Amending the Measures for the Administration of Major Asset Restructuring of Listed Companies” (hereinafter referred to as the “Restructuring Measures”) was officially promulgated on October 18 and shall take effect from the date of its publication.

This revision aims to accurately grasp market dynamics, streamline the functions of restructuring and listing, and enhance the capital market’s role in serving the real economy. It also seeks to actively support Shenzhen in becoming a pioneering demonstration zone for socialism with Chinese characteristics, representing an important step in implementing the overarching plan for comprehensively deepening capital market reform. The key amendments include: first, simplifying the criteria for determining restructuring and listing by abolishing the “net profit” requirement; second, further shortening the calculation period under the “cumulative first‑time principle” to 36 months; third, permitting assets related to high‑tech industries and strategic emerging industries that align with national strategies to undergo restructuring and listing on the ChiNext Board, while prohibiting such transactions for other types of assets; fourth, requiring that major asset restructurings undertaken by ChiNext‑listed companies comply with the requirements set forth in Article 13, Paragraph 2, Items 1, 3, 4, and 5 of the Measures for Restructuring, with the operating entities corresponding to the acquired assets being either joint-stock companies or limited liability companies and meeting the additional issuance conditions stipulated in the Administrative Measures for the Initial Public Offering of Shares and Listing on the ChiNext Board; fifth, reinstating accompanying financing for restructuring and listing; and sixth, enriching the regulatory measures governing performance‑based compensation agreements and commitments in major asset restructurings, while strengthening accountability. In addition, the arrangements for aligning the regulatory rules governing mergers and acquisitions and restructurings of STAR Market companies have been clarified, and the disclosure requirements for designated media have been simplified.

The “Regulations on Restructuring” have been open for public comment since June 20, drawing widespread attention from the market. All sectors of society have expressed support for the Commission’s efforts to enhance the adaptability and inclusiveness of its regulatory framework. During the consultation period, the Commission received a total of 69 submissions, including 66 valid comments, which primarily focused on relaxing restrictions on restructuring and listing on the ChiNext Board, removing indicators such as “net assets” from the eligibility criteria, strengthening oversight of performance‑based compensation agreements and the fulfillment of related commitments in major asset restructurings, and expanding the scale of accompanying financing offerings. The Commission has, based on specific circumstances, carefully analyzed, adopted, and incorporated these suggestions, or integrated them into subsequent related reforms.

To facilitate the smooth implementation of the Measures on Restructuring, the revised “Opinions on the Application of Articles 14 and 44 of the Measures on Major Asset Restructuring of Listed Companies—Legal Application Opinion No. 12 on Securities and Futures” has been promulgated concurrently.

Following the amendment of the Measures on Restructuring, the Commission will continue to refine the “end-to-end” regulatory framework and support the injection of high-quality assets into listed companies. At the same time, it will maintain strict oversight of restructuring and listing activities, rigorously regulate the “three high” issues in mergers and acquisitions and restructuring, crack down on illegal and non-compliant practices such as speculative shell‑picking, insider trading, and market manipulation, curb disorderly phenomena like “deceptive” restructurings and blind cross‑industry restructurings, and promote the enhancement of listed company quality as well as the stable and sound development of the capital market.

Following the implementation of the Measures on Restructuring, any merger and reorganization applications that have not yet obtained an administrative approval decision from the Commission shall be subject to the new regulations. If a listed company, in accordance with the revised Measures on Restructuring as promulgated and put into effect, makes changes to relevant matters that constitute a material adjustment to the original transaction plan, it shall, pursuant to the relevant provisions of the Measures on Restructuring, re‑undertake the procedures for decision‑making, disclosure, and application.

SSE: Underlying shares held in custody by overseas institutions are excluded from the calculation of the domestic asset balance cap.

Starting today, the Shanghai–London Stock Connect GDRs and A-shares will enable cross-border mutual conversion. Market attention is focused on whether the underlying shares and corresponding cash held in the domestic market by overseas issuers engaged in the cross-border redemption of Shanghai–London Stock Connect Global Depositary Receipts will be included in the calculation of the domestic asset‑balance cap.

Recently, Huatai Securities disclosed that the redemption restriction period for its Global Depositary Receipts (hereinafter referred to as GDRs) runs from June 20, 2019 (London time) to October 17, 2019 (London time), and is now nearing expiration. Upon the expiry of this restriction period, the GDRs may be converted into A‑shares, resulting in a corresponding reduction in the number of A‑shares held by the depositary, Citibank, N.A., as the nominee holder, and their subsequent entry into trading on the domestic market. The total number of GDRs subject to the redemption restriction period is 825.15 million, corresponding to 825.15 million A‑shares, or 9.09% of the company’s total share capital. Effective today, these GDRs may be converted into A‑shares.

In accordance with the provisions of the Joint Announcement between the China Securities Regulatory Commission and the UK Financial Conduct Authority (hereinafter referred to as the “Joint Announcement”), securities offices engaging in cross-border conversion business may hold, in the counterpart market, cash and specified investment instruments not exceeding the equivalent of RMB 500 million.

On the evening of the 17th, the Shanghai Stock Exchange stated that, in accordance with the provisions of the aforementioned Joint Announcement, overseas securities offices may hold cash and certain specified investment instruments within prescribed limits in the domestic market to shorten the cross‑border conversion cycle and hedge market risks. Meanwhile, Article 23 of the “Regulatory Provisions on the Interconnectivity of Depositary Receipt Business between the Shanghai Stock Exchange and the London Stock Exchange” further stipulates that, for the purposes of cross‑border conversion and risk hedging, overseas securities offices may, in compliance with the relevant regulatory authorities’ rules, buy and sell the underlying domestic shares corresponding to depositary receipts as well as designated investment instruments; however, their aggregate asset balance in the domestic market shall not exceed the ceiling set by the China Securities Regulatory Commission. Furthermore, the underlying shares and corresponding cash held by overseas securities offices in the domestic market when conducting global depositary receipt cross‑border redemption business on behalf of clients are excluded from the calculation of the domestic asset balance cap.

China Banking and Insurance Regulatory Commission: Accelerate the revision and improvement of supporting regulations for foreign-invested institutions.

On October 15, the website of the China Banking and Insurance Regulatory Commission published a Q&A session with officials from the Ministry of Justice and the China Banking and Insurance Regulatory Commission regarding the “Decision of the State Council on Amending the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies” and the “Regulations of the People’s Republic of China on the Administration of Foreign-Invested Banks.”

According to the briefing, this round of revisions adheres to three key principles: first, balancing expanded openness with autonomous and flexible implementation—aligning opening-up measures with domestic reform and development goals and national strategic priorities to achieve mutual benefit and win-win outcomes; second, giving equal weight to expanding openness and safeguarding financial security—ensuring financial stability through effective safeguards while steadily rolling out opening-up initiatives; and third, advancing openness in tandem with orderly progress—integrating external opening-up with China’s specific realities and pursuing a path of banking and insurance sector liberalization that is well-suited to China’s national conditions.

Specifically, the revised Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies has relaxed market access restrictions for foreign insurers. For foreign insurance companies seeking to establish operations in China, the requirements that they have been engaged in insurance business for at least 30 years and have maintained a representative office in China for at least two years have been eliminated, thereby encouraging more insurance institutions with distinctive business models and specialized expertise to enter the Chinese market. At the same time, the regulations permit foreign insurance groups to invest in and establish foreign‑invested insurance companies within China, allow overseas financial institutions to acquire equity stakes in such companies, and empower the State Council’s insurance regulatory authority to formulate detailed administrative measures. These changes further diversify the types of shareholders eligible to hold interests in foreign‑invested insurance companies, invigorate market dynamics, and promote high‑quality development of the insurance sector.

With regard to easing market access for foreign‑capital banks, the revised Regulations of the People’s Republic of China on the Administration of Foreign‑Capital Banks (hereinafter referred to as the “Foreign‑Capital Bank Regulations”) have taken two key steps: First, it has relaxed restrictions on the Chinese shareholders of Sino‑foreign joint‑venture banks by abolishing the requirement that the sole or principal Chinese shareholder must be a financial institution, thereby further expanding the scope for foreign banks to independently select their Chinese partners. Second, it has eased the conditions for foreign banks to establish commercial entities in China by removing the $10 billion total‑asset threshold for foreign financial institutions seeking to set up corporate banks and the $20 billion threshold for establishing branches, thus providing greater flexibility for smaller foreign banks that possess distinctive business models and specialized expertise to establish operations in China. At the same time, the revised Regulations have relaxed limitations on foreign banks simultaneously establishing both corporate banks and branches within China, allowing them to set up wholly foreign‑owned banks and branches, or to establish Sino‑foreign joint‑venture banks alongside branches, thereby better addressing the practical needs of foreign banks as they seek to expand their business activities in China.

With regard to easing restrictions on the business activities of foreign‑capital banks, the revised Regulations on Foreign‑Capital Banks further relaxes such restrictions, primarily in three key areas: First, it expands the scope of business for foreign‑capital banks by adding “agency issuance and redemption of government bonds” and “agency collection and payment services,” thereby enhancing their service capabilities in China. Second, it lowers the threshold for foreign bank branches to accept RMB deposits, reducing the minimum amount per deposit that a foreign bank branch may accept from Chinese residents from no less than RMB 1 million to no less than RMB 500,000. Third, it abolishes the approval requirement for foreign‑capital banks to commence RMB‑denominated operations, further improving the business environment for foreign banks operating in China. This allows well‑prepared institutions that meet the necessary conditions to offer full‑range domestic and foreign‑currency services from day one, thereby better serving the real economy while also diversifying their sources of income.

In addition, to enhance the autonomy and flexibility of foreign bank branches in deploying their assets while ensuring safety, the new regulations have revised the previous requirement that “30% of a foreign bank branch’s working capital must be held in interest‑bearing assets designated by the banking regulatory authority under the State Council” to read: “Foreign bank branches shall, in accordance with the provisions of the banking regulatory authority under the State Council, hold a specified proportion of interest‑bearing assets.” At the same time, an additional provision has been introduced: foreign banks whose capital adequacy ratios continuously meet the requirements of both the financial regulatory authorities of their home country or region and the banking regulatory authority under the State Council shall have their branches in China exempt from the restriction that “the ratio of the RMB‑denominated portion of the sum of working capital and reserves to their RMB‑denominated risk‑weighted assets shall not be less than 8%.”

The China Banking and Insurance Regulatory Commission stated that, in the next phase, it will accelerate the revision and improvement of relevant supporting regulations, including the Implementing Rules for the Regulations on the Administration of Foreign‑funded Banks and the Implementing Rules for the Regulations on the Administration of Foreign‑funded Insurance Companies, further optimizing the investment and operating environment in the banking and insurance sectors, stimulating the vitality of foreign capital’s participation in the development of China’s financial industry, enriching the range of financial services and products, and enhancing the quality and effectiveness of financial services in supporting the real economy.

Down nearly 35% year over year, the scale of stock pledges at securities offices continues to shrink.

Recently, the scale and risks associated with stock pledges by listed companies have continued to decline, largely thanks to securities offices’ efforts to unwind these pledged positions. According to Wind data, as of October 13, listed companies have pledged a total of 66.884 billion shares to 105 securities offices this year, a decrease of nearly 35% compared with the same period last year. At the same time, the number of securities offices that have been subject to inquiries or penalties from regulators for engaging in stock‑pledge transactions has been steadily rising. Overall, the most frequently cited issue is the significant shortcomings in securities offices’ due diligence on borrowing counterparties during the course of their business operations. Earlier, the China Securities Regulatory Commission (CSRC) had already issued regulatory requirements addressing five key risk areas in securities offices’ stock‑pledge activities, and it plans to further strengthen oversight and on-site inspections of on‑exchange stock‑pledge transactions going forward.

Overall scale declined year over year.

According to Wind data, as of October 13, the overall scale of securities offices’ stock‑pledge business this year has declined significantly compared with the same period last year, with both the total number of pledged shares and the aggregate market value of pledged stocks posting sharp drops. So far this year, listed companies have pledged a total of 66.884 billion shares to 105 securities offices, whereas during the same period last year, 107 securities offices provided stock‑pledge services to listed companies, with the total number of pledged shares reaching 102.409 billion. Year-to-date, the total number of shares pledged through securities offices has fallen by 34.69% year over year.

From the perspective of the total market capitalization of pledged securities, since the beginning of the year, the aggregate market value of shares pledged by listed companies has reached RMB 637.814 billion, a 20.93% decline compared with RMB 806.508 billion in the same period last year.

As of October 13, compared with the same period last year, a total of 72 securities offices have reported a year-on-year decline in the number of stock pledges handled this year, accounting for 68.57%. Among them, Western Securities, Huaxin Securities, Jiuzhou Securities, Great Wall Securities, Hongxin Securities, First Capital, East Money Securities, Hualong Securities, Shenwan Hongyuan (06806) Western, Zhejiang Commercial Securities, and Aijian Securities have all seen their pledged share volumes fall by more than 90% year over year.

Looking at individual brokerage offices, leading players such as CITIC Securities, Galaxy Jinhui Asset Management (a subsidiary of China Galaxy Securities), Zhongshan Securities, Guotai Junan, and Haitong Securities enjoy greater recognition among listed companies. So far this year, these five offices have handled 6.501 billion shares, 5.043 billion shares, 4.300 billion shares, 3.924 billion shares, and 3.896 billion shares, respectively, ranking them among the top in the industry.

Many securities offices have scaled back their stock‑pledge financing this year. Since the beginning of the year, Zhongshan Securities has unwound 2.722 billion shares, accounting for over 63% of its total stock‑pledge transactions to date; as of October 13, only 1.578 billion shares remained pledged. Meanwhile, Huatai Asset Management, Everbright Securities, and China Merchants Securities have unwound 590 million, 520 million, and 375 million shares, respectively, with their overall stock‑pledge volumes all declining markedly from the start of the year. To date, 16 securities offices have unwound more than 100 million shares each, while 29 offices have yet to unwind any pledged shares.

Hu Guopeng, chief strategy analyst at Founder Securities, believes that the sharp decline in the net increase of stock‑pledge financing projects this year is largely attributable to securities offices’ efforts to unwind their existing stock‑pledge positions. He stated: “Last year, pledging to securities offices resulted in substantial impairment losses, forcing these offices to undertake a comprehensive overhaul of their stock‑pledge business. At present, the focus is on digesting existing exposures, while also shifting toward more secure and prudent pledge‑related activities.”

As of October 11, 2019, the total number of shares pledged across the market stood at 599.771 billion, accounting for 9% of the market’s total outstanding shares, with a total pledged market value of RMB 4.65 trillion. Compared with the figures as of April 19, the total number of pledged shares decreased by 18.504 billion, the share ratio of pledged holdings fell by 0.49 percentage points, and the pledged market value declined by RMB 1.13 trillion.

Regulators are closely monitoring stock pledge business.

According to incomplete statistics, since the beginning of this year, at least 20 securities offices have come under scrutiny from regulators in connection with their stock‑pledge businesses. Several offices, including Guosheng Securities, Wanlian Securities, China Post Securities, Caifeng Securities, Yingda Securities, and Nanjing Securities, have been subject to regulatory measures imposed by local securities regulatory authorities due to issues related to stock pledging.

Taking Guosheng Securities as an example, the Jiangxi Securities Regulatory Bureau disclosed on its official website on September 23 that, upon investigation, Guosheng Securities, on August 29, 2018, executed a stock pledge transaction for client Song Rui, with YunTu Holdings as the underlying security. The pledged shares totaled 57.5 million, and the financing amount was RMB 100 million. Following this pledge, the overall pledge ratio for YunTu Holdings reached 48.56%, exceeding the risk threshold of 48%—the maximum allowable ratio of total pledged shares to A‑share capital set by the company’s Risk Management Committee. These issues indicate that Guosheng Securities failed to strictly enforce its internal policies and did not adequately implement compliance‑based operational requirements when conducting stock‑pledge business. Accordingly, the Jiangxi Securities Regulatory Bureau has decided to issue a warning letter to Guosheng Securities.

Industry insiders point out that, in the course of conducting their business, the aforementioned securities offices most frequently face criticism for significant deficiencies in their due diligence on borrowing counterparties. In addition, other issues include substantial arbitrariness in estimating pledge ratios for specific projects, inadequate internal controls, insufficiently stringent management of underlying securities, and inadequate documentation of ongoing‑period oversight responsibilities.

According to incomplete statistics, at least seven securities offices have received inquiry letters in their interim reports. In these letters, stock exchanges have focused on the implementation of securities offices’ stock‑pledge businesses, risk‑management practices, and the adequacy and reasonableness of related impairment provisions. In the first half of this year, several offices recorded asset‑impairment losses stemming from defaults in their stock‑pledge operations. Based on disclosed data, four securities offices—Orient Securities (03958), Western Securities, Guoyuan Securities, and Everbright Securities—each set aside more than RMB 200 million in impairment reserves for their stock‑pledge businesses in the first half of 2019.

Even leading securities offices have not entirely avoided the “minefield” of stock pledge financing. In its 2019 interim report, CITIC Securities disclosed a total of 21 litigation and dispute cases, primarily involving stock‑pledge repurchase transactions, margin trading and short selling, and contractual disputes.

Proactively mitigate pledge risks.

Regarding the issue of stock pledging by securities offices, a Beijing-based industry insider noted that since its launch in 2013, the stock‑pledge business expanded rapidly with banks’ active participation. Bank wealth‑management products typically treated such instruments as standardized assets, effectively substituting for bond‑type holdings. However, in 2017, newly revised regulations issued by the former China Banking Regulatory Commission classified on‑exchange stock pledges as “non‑standard assets.” This designation created substantial pressure on banks that had previously engaged heavily in this business to bring these positions back onto their balance sheets. Yet, liquidating such equities requires favorable market conditions; otherwise, it could destabilize the related operations.

Liu Feng, chief economist at Galaxy Securities, stated: “Securities offices’ stock pledge business falls within the scope of normal operations, and it is only natural for such businesses to encounter challenges. Stock‑pledge activities are closely tied to market trends; when the broader market remains sluggish, securities offices cannot remain unaffected. Conversely, once market conditions improve, the risks that have accumulated during downturns tend to dissipate.”

On August 28, the Institutional Supervision Department of the China Securities Regulatory Commission issued its first institutional supervision report to all securities offices, identifying five major risks in the securities offices’ stock‑pledge business: “unclear business positioning and blind pursuit of profits,” “weak risk awareness and inadequate risk‑control measures,” “loose review and approval processes and imprecise pledge‑ratio settings,” “incomplete due diligence, or even a lack thereof,” and “post‑loan risk management that amounts to little more than a formality.”

In response to the aforementioned risk factors, the China Securities Regulatory Commission has put forward three key regulatory requirements: First, place utmost importance on risk management and pursue business development in a rational manner. All securities offices must clearly recognize and rationally assess stock‑pledge risks, prioritize risk prevention, and reassess their business positioning, refraining from blindly expanding business scale or neglecting risk‑control requirements. Second, ensure thorough understanding and implementation. Senior management, business units, and compliance and risk‑control departments of all securities offices are required to study the new self‑regulatory rules on stock pledging in depth, fully grasp their implications, and enforce them rigorously. Third, implement rectification measures with strict adherence. Each securities office must, in strict accordance with the new self‑regulatory rules, identify and address weaknesses in its business management and operations, and promptly adopt corrective actions.

Industry insiders advise that, when “de‑mining” individual stocks, securities offices must further strengthen their risk‑control and investment‑research capabilities; otherwise, even in a robust market, they may overlook stock‑specific risks, creating hidden vulnerabilities.

Commercial & Corporate

111 Group strategically partners with Taikang Online to comprehensively empower the insurance industry.

On October 18, 111 Group, a leading domestic internet-based healthcare company, entered into a strategic partnership with Taikang Online, a wholly owned subsidiary of the Fortune Global 500‑listed Taikang Insurance Group. The two parties will engage in comprehensive, in-depth collaboration across multiple service areas, including online medical and pharmaceutical procurement, healthcare cost management, health insurance, and pharmacy benefit management (PBM).

Dr. Yu Gang believes that the integrated development of internet-based healthcare and insurance is becoming an inevitable trend, as the two sectors share inherent synergies and common ground. The “Internet Healthcare + Insurance” model offers end-to-end traceability, which not only enhances transparency in service delivery but also enables data‑driven transactions, thereby providing significant support for cost containment in the healthcare system. At the same time, by prioritizing preventive health management, it helps curb overtreatment, restrain the rapid escalation of medical expenses, and ultimately create mutual benefits for all parties involved.

This marks another major strategic move by 111 Group in the “Internet-based pharmaceuticals + insurance” space, following its strategic partnerships with China Life Insurance and MSH.

In response, Dr. Yu Gang, Co‑founder and Executive Chairman of 111 Group, stated that insurance is a key player in the payment ecosystem, providing crucial supplementary coverage within the healthcare system. By deepening the integrated development of “Internet‑based pharmaceuticals + insurance” and comprehensively establishing a closed-loop internet‑based pharmaceutical and health‑care service model encompassing diagnosis, treatment, and payment, it not only addresses the disconnect among consumers, decision‑makers, and payers in the healthcare sector but also helps resolve the challenge of controlling medical‑insurance expenditures.

Although the PBM model is already highly mature in the United States, it is still in its early stages of development in China. Following this collaboration, 111 Group will leverage big data to analyze long-term, continuous medication use, providing Taikang Online’s customers with consultation services, electronic prescriptions, and medication delivery. Together with Taikang Online, they will explore the PBM model to address issues such as inflated drug prices and the inefficient allocation of medical resources.

In addition, 111 Group will become the exclusive internet healthcare partner designated by Taikang Online. Leveraging its technological expertise, professional service capabilities, and its internet-based pharmaceutical platform and online hospital, 111 Group will help Taikang Online build an ecosystem of internet‑based drug sales and digital healthcare services, addressing challenges such as out-of‑area medical care and difficulties in accessing medications in remote areas. At the same time, 111 Group will assist Taikang Online in achieving prudent cost control through measures including establishing a dedicated drug inventory, implementing prescription‑review mechanisms, and capping average unit prices. The two parties will also proactively design and deliver high‑value health products and services, jointly researching and developing innovative health insurance solutions and coverage for individuals with pre‑existing conditions.

Taikang Online was founded in November 2015 and is one of China’s four leading internet insurance companies. This collaboration with 111 Group marks another step in Taikang Online’s strategy to deepen its “Insurance + Technology” and “Insurance + Services” initiatives. By leveraging 111 Group’s high-quality pharmaceutical resources and technological capabilities, Taikang Online aims to further strengthen its dual focus on internet‑based insurance finance and customer‑centric services, thereby better controlling costs, improving efficiency, and serving a broader base of customers.

As China’s first leading internet‑based pharmaceutical and healthcare company to list in the U.S., after nine years of development, 111 Group has transformed from a pharmaceutical e‑commerce player into a technology‑driven enabler of the broader internet‑based pharmaceutical and healthcare ecosystem. Today, 111 Group comprises the B2C pharmaceutical platform 1 Pharmacy, the internet hospital platform 1 Clinic, and the B2B pharmaceutical platform 1 Pharmaceutical City. By continuously leveraging technology to empower commerce, it strives to better serve the public under a T2B2C model, seamlessly integrating online and offline retail channels, building an integrated pharmaceutical and healthcare ecosystem, and empowering pharmaceutical companies, pharmacies, insurers, and healthcare providers.

SF Holding’s revenue continues to surge, with September sales once again surpassing RMB 10 billion to hit a new record.

On the evening of October 18, SF Holding released its September monthly business performance report. With a strong rebound, the company saw its monthly volume surge nearly 40% thanks to the combined momentum of its traditional time-sensitive services, as well as new products and businesses such as heavy‑cargo logistics and supply chain solutions. Monthly revenue once again exceeded RMB 10 billion, reaching a new record high.

Data show that, alongside a substantial increase in volume, SF Holding maintained steady revenue growth. In September, the combined revenue of its express delivery and supply chain businesses exceeded RMB 10 billion, reaching RMB 10.384 billion, up 27.32% year over year. Specifically, express delivery volume totaled 454 million shipments, a year-on-year rise of 37.99%, outpacing the industry average by 12.99 percentage points. Express delivery revenue stood at RMB 9.882 billion, up 22.33% year over year, in line with industry trends. The average revenue per shipment was RMB 21.77, down 11.32% year over year but still up 0.55% month over month. Meanwhile, the supply chain business generated RMB 502 million in revenue, a year-on-year surge of 543.59%.

Industry growth exceeds expectations; SF Express’s market share rises.

Recently, the State Post Bureau released data showing that from January to September, China’s express delivery companies handled a cumulative total of 43.91 billion parcels, up 26.4% year on year; their total revenue reached RMB 527.1 billion, an increase of 24.1% compared with the same period last year. In September alone, these companies processed 5.6 billion parcels, up 25% year on year, with revenue totaling RMB 64.92 billion, up 22.2% year on year.

Anxin Securities analysts believe that, amid a slowing macroeconomic environment, the express delivery sector continues to outperform market expectations. Leading courier companies, benefiting from cost and service advantages, are seeing further increases in industry concentration. From January to September, the CR8 index for major express brands stood at 81.8, up 0.1 percentage points quarter-on-quarter and 0.4 percentage points year-on-year.

Based on SF Express’s monthly volume, the company’s market share reached 8.11% in September, up roughly 0.54 percentage points from August, signaling a steady recovery. The sector’s stronger-than-expected growth has created favorable tailwinds for leading players; with its service quality consistently far ahead of competitors, SF Express has adopted meticulous cost‑control measures amid intense industry competition, enabling it to capture an even larger share of the industry’s upside.

Incremental market reduces hidden costs.

Against the backdrop of homogenization in the express delivery sector, cost control has become a core competitive factor for courier companies. In May this year, SF Express launched its Special‑Rate Dedicated Delivery service, and with the rapid expansion of new businesses such as heavy‑cargo shipping, the company’s volume growth has moved beyond single-digit rates, exhibiting an accelerating trend.

Huachuang Securities believes that, following the launch of its special‑offer, dedicated‑allocation products, business volume has been steadily increasing. These offerings are not merely temporary initiatives but rather a sustained growth driver that the company plans to prioritize going forward. The cost‑effectiveness of e‑commerce parcels is relative; the ratio of average order value to logistics and delivery costs directly influences customers’ choice of shipping options. As express‑delivery prices decline, more price‑sensitive products will fall within SF Express’s service scope, while SF’s strong brand and robust operational management can help clients reduce hidden logistics expenses.

Since the promotional products are designed solely as “fill‑in” items, their impact on costs is minimal. Market observers also note that, given the substantial differences in cost structures between business‑to‑business and e‑commerce shipments, a decline in unit price does not necessarily translate into a lower overall gross margin. Furthermore, by leveraging route optimization, improving load factors, and enhancing pickup‑and‑delivery efficiency, SF Express has managed to boost operational efficiency and contain costs. As a result, despite a surge in parcel volume in September, the company still posted a month‑over‑month increase in average revenue per shipment, prompting positive market feedback.

Balancing offense and defense, with a long-term strategic vision.

Recently, SF Express launched an international cargo route from Nanning to Ho Chi Minh City, marking the seventh international route the airline has opened in 2019. With nearly 60 dedicated freighters under its umbrella, SF’s aviation network strategy now reflects a scale and scope that surpasses those of typical express delivery companies.

Industry experts note that, as SF Airlines’ hub continues to expand, SF’s strategic aviation network will enable it to deliver fast, secure, and high‑quality express services, further differentiating its offerings.

Analysts at China Merchants Securities believe that SF Express’s integrated logistics network—comprising its “air network, ground network, and information network”—provides robust support for the company’s expansion into new business lines, raises barriers to entry in the mid-to-high‑end logistics segment, and facilitates the development of emerging areas such as cold‑chain logistics, thereby underscoring its overall competitive strength.

While deepening its presence in niche segments such as high-end business parcels, SF Express has adopted a differentiated competitive strategy. Beyond its traditional express delivery business, it has established an initial foothold across multiple B2B segments—including heavy‑cargo logistics, cold‑chain transportation, intra‑city delivery, and supply chain services—thereby enhancing its overall offensive and defensive capabilities.

Entering the supply chain business has broadened SF Express’s strategic horizons. In today’s era of upgrading and transforming express logistics, by expanding into the manufacturing sector and leveraging its supply chain capabilities, the company can reduce costs, boost efficiency, and build a more stable, revenue‑generating core business. As these new ventures move past their incubation phase and technological innovations are fully deployed, business growth is expected to accelerate significantly.

Wanlong Optoelectronics has established an industrial investment fund, positioning itself within the telecommunications industry chain to pursue transformation.

To accelerate 5G deployment and ensure the steady advancement of China’s network infrastructure, led by China Broadcasting Network, which obtained a 5G license in 2019, preliminary financial reports released by several telecommunications equipment companies indicate that, benefiting from this favorable policy, many related offices posted year-on-year growth in operating revenue during the first half of the year.

Recently, Wanlong Optoelectronics released its third-quarter earnings forecast, projecting net profit for January–September 2019 to range between RMB 19 million and RMB 21 million, compared with RMB 13.5427 million in the same period last year, representing a year-on-year increase of 40.3% to 55.07%. This anticipated growth is primarily driven by the rapid expansion of its IPTV video‑related new business and the continued strong performance of 4G telecom value‑added services in the small- and medium-sized enterprise segment, which have resulted in robust overall business development at its controlling subsidiary, Zhejiang Xinwang Zhuoxin Technology Co., Ltd., thereby boosting the company’s consolidated results.

Establish an industry fund to accelerate the development of the next-generation information technology sector.

In the first three quarters of this year, Wanlong Optoelectronics boosted its overall performance through mergers and acquisitions and strategic positioning within the telecommunications industry chain. According to its latest announcement, the company is preparing to establish a fund to further enhance its competitive edge and profitability.

On October 17, Wanlong Optoelectronics announced that its wholly owned subsidiary has participated in the establishment of an industrial investment fund, further accelerating the company’s strategic deployment in next-generation information technology and smart manufacturing-related industries. By joining this industrial fund and collaborating with professional investment institutions, Wanlong Optoelectronics leverages their expertise, capabilities, and resources to identify, incubate, and nurture high-quality projects aligned with the company’s core business strategy—particularly in next-generation information technology and smart manufacturing. This approach will help the company stay abreast of technological trends, refine its industrial footprint, expand new business opportunities, and foster a virtuous synergy between its operational and capital‑driven activities, thereby enhancing its overall competitiveness and profitability.

While accelerating its own transformation, Wanlong Optoelectronics has gradually moved beyond the traditional constraints of the broadcasting and television industry. Seizing the opportunities presented by the rapid growth of both broadcasting/TV and 5G technologies, the company is expanding its existing product portfolio into areas such as telecommunications equipment.

Actively transforming and deploying across the communications industry value chain through multiple approaches.

In the first half of this year, Wanlong Optoelectronics successfully acquired Chenxiao Technology. Chenxiao Technology’s products are characterized by high technological barriers and lengthy R&D cycles; once they gain market access, they enjoy long‑term viability and significant non‑substitutability. Following the acquisition, the complementary strengths of the two companies will substantially enhance their competitive edge in the market.

At present, the Chinese telecom market is experiencing strong momentum in 5G deployment; however, relatively few telecommunications equipment companies have successfully launched 5G services and generated revenue. Meanwhile, competitive operational strategies adopted by network operators are driving a decline in demand within the traditional broadcasting and telecommunications equipment sector. Faced with both broader market pressures and the need to achieve stable, rapid growth, Wanlong Optoelectronics is actively pursuing transformation.

Wanlong Optoelectronics stated that, going forward, the company will focus on three key strategic pillars—smart manufacturing, 5G, and the Internet of Things—adopting a multi‑faceted approach to stay aligned with current technological trends. By successfully establishing an industry‑focused investment fund, the company aims to bolster both its competitive edge and profitability in tandem.

Yongtai Energy’s Huaying Petrochemical Project Has Officially Commenced Trial Operations and Is Set to Become a New Driver of Business Growth.

On the evening of October 17, Yongtai Energy announced that the fuel oil blending and distribution center, along with its associated terminal project, owned by its wholly‑owned subsidiary Huaying Petrochemical Co., Ltd. (hereinafter referred to as “Huaying Petrochemical”), has begun operations. On the same day, the first 50,000‑ton class tanker, fully loaded with 42,000 tonnes of fuel oil, successfully berthed at Berth No. 1 of the 300,000‑ton class terminal at Huaying Petrochemical’s fuel oil blending center, marking the official launch of trial operations for the Huaying Petrochemical project.

According to reports, the Guangdong Huizhou Daya Bay Fuel Oil Blending and Distribution Center and its associated terminal project, operated by Hua Ying Petrochemical, comprises one 300,000‑ton class oil terminal and three 20,000‑ton class terminals. Upon full commissioning, the facility will boast an annual terminal throughput capacity of 21.5 million tonnes, a dynamic oil storage capacity of 10 million tonnes per year, and a fuel oil blending and processing capacity of 10 million tonnes per year. The project also features a total oil storage capacity of 1.15 million cubic meters, including 590,000 cubic meters of bonded storage facilities.

The company stated that the project enjoys a distinct locational advantage and is highly rare, and upon commissioning will fill the gap in large-scale fuel oil blending production in the Pearl River Delta region, while also becoming a new driver of the company’s business growth. “The project still requires a certain period before it can commence formal operations, and its operational profitability remains subject to uncertainty,” the company added, noting that it will promptly disclose relevant information as the project progresses.

Deepening Research Project Collaboration: JULONG Intelligent Technology’s Innovation Project Secures an Additional Subsidy of RMB 2.08 Million

On October 17, Julun Intelligent (002031) announced that it had received the second installment of a 2018 Guangdong Province Science and Technology Innovation Strategic Special Fund subsidy, totaling RMB 2.08 million.

Notably, the science and technology innovation subsidy awarded to Julun Intelligent stems from its participation in the “High-Performance Plasma Arc/Laser Additive–Subtractive Hybrid Manufacturing Equipment” project. This project is a collaborative effort involving Julun Intelligent, the Air Force Engineering University of the People’s Liberation Army, China General Nuclear Research Institute Co., Ltd., the Guangdong Provincial Institute of Materials and Processing, Wuhan University, and several other universities, research institutions, and enterprises. According to reports, the project was designated last year as a key‑area R&D program under the 2018 Guangdong Province Science and Technology Innovation Strategic Special Fund. In the second tranche of funding for this project, totaling RMB 10.4 million, Julun Intelligent is allocated RMB 2.08 million.

According to the company, the project will leverage Greatoo Intelligent’s mature five-axis CNC machine tools and six-axis robotic platforms, along with South China University of Technology’s technological strengths in laser selective melting and plasma additive–subtractive manufacturing, to develop two integrated additive–subtractive systems. The former will be used for the precision fabrication of complex components, while the latter will support the production of large-scale structures and on-site repair, thereby achieving an effective synergy between 3D printing and conventional machining.

Public records indicate that Julun Intelligent is currently one of China’s largest, most technologically advanced, and the first publicly listed company specializing in the development and manufacture of tire molds. The company primarily designs, develops, and produces radial tire molds, hydraulic tire curing presses, precision machine tools, and industrial robots. Its flagship products include radial tire split molds, tire half‑molds, large‑size engineering‑vehicle tire split molds, various models of hydraulic tire curing presses, industrial robots, and precision machine tools.

Julu Intelligent boasts distinctive strengths in scientific and technological research and development. The company operates R&D entities such as a national-level key enterprise technology center and an academician workstation, and has repeatedly undertaken major projects under the National 863 Program and the National Torch Program. It has received numerous national, provincial, and municipal awards for scientific and technological innovation and holds multiple invention patents.

In fact, JuLun Intelligent’s commitment to technological innovation is reflected in its steadily increasing R&D spending. According to the company’s financial data, its R&D expenditures from 2012 to 2018 amounted to RMB 26.30 million, RMB 33.7979 million, RMB 36.0423 million, RMB 36.1709 million, RMB 39.5061 million, RMB 51.2086 million, and RMB 77.0852 million, respectively, with spending growing steadily for seven consecutive years.

Taxation TAXATATION

Announcing the Decision of the State Council on Amending the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies and the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Banks.

On October 15, Premier Li Keqiang of the State Council signed a State Council decree promulgating the “Decision of the State Council on Amending the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies and the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Banks,” which shall take effect from the date of its promulgation.

The Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies and the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Banks were promulgated in 2001 and 2006, respectively. The implementation of these two administrative regulations has played a positive role in advancing the opening-up of the insurance and banking sectors, strengthening and improving the supervision and administration of foreign-invested insurance companies and foreign-invested banks, and promoting the sound development of the insurance and banking industries.

To further expand the opening-up of the financial sector, the CPC Central Committee and the State Council have made a series of strategic decisions and arrangements, including relaxing foreign‑ownership caps in the banking, securities, and insurance industries, easing restrictions on the establishment of foreign‑invested financial institutions, and broadening the scope of business activities for such institutions in China. This revision of certain provisions in two regulations is primarily aimed at implementing the policies on market access and business scope for foreign‑invested insurance companies and banks, as approved by the CPC Central Committee and the State Council, thereby providing stronger legal safeguards for the continued expansion of opening-up in the insurance and banking sectors.

The principal amendments to the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies are as follows: the requirement that a foreign insurance company seeking to establish a foreign-invested insurance company must have been engaged in the insurance business for at least 30 years and have maintained a representative office in China for at least two years has been abolished; foreign insurance groups are now permitted to invest in and establish foreign-invested insurance companies within China, and overseas financial institutions are allowed to acquire equity stakes in such companies.

The principal amendments to the Regulations of the People’s Republic of China on the Administration of Foreign‑funded Banks are as follows: First, the requirement that the sole or controlling shareholder of a proposed wholly foreign‑owned bank, the sole or principal foreign shareholder of a proposed Sino‑foreign joint venture bank, or the foreign bank seeking to establish a branch must have total assets of no less than a specified threshold at the end of the year preceding the application has been abolished. Likewise, the condition that the sole or principal Chinese shareholder of a proposed Sino‑foreign joint venture bank must be a financial institution has been removed. Second, it is now permitted for foreign banks to establish both a wholly foreign‑owned bank and a foreign bank branch within China, or to establish both a Sino‑foreign joint venture bank and a foreign bank branch simultaneously. Third, restrictions on the business activities of foreign‑funded banks have been relaxed, allowing them to engage in agency issuance, agency redemption, underwriting of government bonds, and agency collection and payment services. In addition, the minimum amount of time‑deposit funds that a foreign bank branch may accept from Chinese residents has been lowered from no less than RMB 1 million per transaction to no less than RMB 500,000 per transaction, and the approval process for foreign banks to conduct Renminbi‑denominated business has been eliminated. Fourth, supervisory measures for foreign bank branches have been improved: the requirement that such branches hold a certain proportion of interest‑bearing assets has been eased, and for foreign bank branches in China whose capital adequacy ratios consistently meet relevant regulations, the limits on the ratio of their Renminbi‑denominated funds to their Renminbi‑denominated risk‑weighted assets have been relaxed.

Interpretation of the “Announcement of the State Taxation Administration on Matters Related to the Management of Value-Added Tax Invoices, etc.”

I. Background to the Issuance of the Announcement

To further optimize the business environment, implement relevant tax policies, standardize tax administration, and safeguard the legitimate rights and interests of taxpayers, this announcement is hereby issued.

II. In accordance with the provisions of the Announcement, what reporting materials must taxpayers eligible for the 15% additional deduction policy submit?

Recently, our bureau, in conjunction with the Ministry of Finance, issued the “Announcement on Clarifying the Value-Added Tax Additional Deduction Policy for Consumer Services” (Ministry of Finance and State Taxation Administration Announcement No. 87 of 2019, hereinafter referred to as Announcement No. 87). Effective October 1, 2019, eligible taxpayers engaged in consumer services may avail themselves of the 15% additional deduction policy. In accordance with the principle of taxpayer self‑determination, self‑declaration, and self‑enjoyment, this announcement stipulates that taxpayers in the consumer services sector who meet the requirements set forth in Announcement No. 87 shall submit a “Declaration on Applying the 15% Additional Deduction Policy” to the tax authorities upon their first application of the 15% policy this year. Other taxpayers who continue to qualify for the 10% additional deduction policy shall remain subject to the existing provisions.

It should be noted that, in accordance with Announcement No. 87, whether a taxpayer continues to qualify for the 15% additional deduction policy in subsequent years is determined based on their sales revenue from the preceding year. Taxpayers who have already submitted the “Declaration of Eligibility for the 15% Additional Deduction Policy” and have been benefiting from this policy shall have their continued eligibility for 2020 and 2021 determined respectively by their sales revenue for 2019 and 2020. If they meet the relevant requirements, they must submit the “Declaration of Eligibility for the 15% Additional Deduction Policy” again when first applying the policy in the current year.

III. If the customs payment receipt information retrieved through the conofficeation platform does not match the actual situation, or if no corresponding information is found, what methods have the tax authorities provided for taxpayers to upload their customs payment receipt details?

If the customs payment receipt information retrieved through the conofficeation platform does not match the actual situation, or if no corresponding information is found, taxpayers may upload the customs payment receipt details via the conofficeation platform, or they may apply for audit and reconciliation by submitting the electronic data of the customs payment receipt to the competent tax authority.

IV. For customs payment receipts with discrepancies identified through audit and reconciliation, are there still time limits for requesting data corrections or re‑verification?

This announcement abolishes the provision in the “Announcement of the State Administration of Taxation and the General Administration of Customs on Issues Concerning the Implementation of the ‘Comparison First, Credit Later’ Management Measures for Customs Import Value-Added Tax Special Payment Certificates” (State Administration of Taxation and General Administration of Customs Announcement No. 31 of 2013) that stipulated: “With respect to customs payment certificates whose audit‑comparison results indicate discrepancies or missing links, taxpayers shall, within 180 days from the date the audit result is generated, submit the original customs payment certificate to the competent tax authority to apply for data correction or verification; otherwise, the input VAT credit shall not be allowed.” Prior to the implementation of this announcement, taxpayers who were unable to claim a VAT credit because their applications for data correction or verification had exceeded the 180‑day time limit may reapply to the competent tax authority for such correction or verification and proceed with subsequent processing in accordance with the prescribed procedures.

V. What precautions should small-scale taxpayers take when issuing special VAT invoices on their own?

(1) All small-scale taxpayers (except for other individuals) may choose to use the VAT invoice management system to issue special VAT invoices on their own.

(2) For small-scale taxpayers who voluntarily choose to issue their own special VAT invoices, the tax authorities will no longer issue such invoices on their behalf. It should be noted that small-scale taxpayers in the freight transport sector may, on a voluntary basis, opt to issue their own special VAT invoices; those who do not opt to issue such invoices themselves shall, in accordance with the relevant provisions of the “Announcement of the State Taxation Administration on the Issuance of the Administrative Measures for Small-Scale Taxpayers in the Freight Transport Sector Applying for Agency Issuance of Special VAT Invoices” (SAT Announcement No. 55 of 2017, as amended and reissued by SAT Announcement No. 31 of 2018), apply to the tax authorities for agency issuance.

(3) For small-scale taxpayers who voluntarily choose to issue their own special VAT invoices, if they sell real estate they have acquired and require a special VAT invoice, the tax authorities will no longer issue such invoices on their behalf.

Notice on the Issuance of the Interim Measures for the Supervision and Administration of the Implementation of Expenditures under the State‑Owned Capital Operation Budget of Central Enterprises

Chapter 1 General Provisions

Article 1: In order to strengthen the supervision and management of the implementation of expenditures under the State-owned Capital Operation Budget (hereinafter referred to as the “Capital Budget”), enhance the efficiency of capital budget fund utilization, and safeguard the security of state-owned capital, this Measures is formulated in accordance with the Company Law of the People’s Republic of China, the Budget Law of the People’s Republic of China, the State Council’s Opinions on the Trial Implementation of the State-owned Capital Operation Budget (Document No. 26 [2007] of the State Council), the CPC Central Committee and the State Council’s Opinions on Comprehensively Implementing Performance-Based Budget Management (Document No. 34 [2018] of the CPC Central Committee), the Interim Measures for the Administration of the Central State-owned Capital Operation Budget (Document No. 6 [2016] of the Ministry of Finance), and other relevant laws, regulations, and provisions.

Article 2: For the purposes of these Measures, “capital budget expenditure execution” (hereinafter referred to as “capital budget execution”) means the process by which enterprises under the State-owned Assets Supervision and Administration Commission of the State Council (hereinafter referred to as “SASAC”), in their capacity as investors, comply with capital budget management requirements, ensure the standardized management and use of capital budget funds, and organize the implementation of capital‑budget‑supported projects. Based on the nature of capital budget funds, capital budget execution by central enterprises shall be subject to categorized management, encompassing capital‑expenditure budgets, expense‑type budgets, and other expenditure budgets.

Article 3: Central enterprises are the implementing and accountable entities for the execution of capital budgets. Central enterprises receiving support under the capital budget shall, in accordance with the approved capital budget requirements, prepare a capital budget implementation plan, make independent decisions in compliance with the law, and organize and carry out implementation in a standardized manner.

Article 4: In accordance with its duties as an investor and the regulations on capital budget management, the State-owned Assets Supervision and Administration Commission of the State Council shall supervise and manage the implementation of capital budgets by central enterprises, including their performance, and shall urge rectification of any issues identified.

Chapter 2: Execution of Capital Budgeting

Article 5: Central enterprises shall incorporate capital budgetary funds injected into the capital budget into their enterprise-wide budget management system for unified oversight and control, thereby enhancing the overall efficiency of fund utilization. In particular, capital budgetary funds explicitly approved for specific investment or construction projects shall be used exclusively for those supported projects.

Article 6: Central enterprises shall, in accordance with the following requirements, standardize the management and use of capital budget funds, ensure fund security, achieve performance objectives, and safeguard the rights and interests of state-owned capital:

(1) The direction, intended use or projects, and performance targets of the approved capital budget;

(2) The capital budget execution plan prepared by the enterprise;

(3) Provisions of the enterprise’s internal control system;

(4) Provisions on the adjustment of the use of capital budget funds;

(5) Other requirements for capital budgeting management.

Article 7: Upon receipt of capital budgetary funds, central enterprises shall, in accordance with the approved direction, intended use, or project specified in the capital budget approval, revise and refine the capital budget expenditure plan submitted at the time of application, and prepare a capital budget implementation plan. After review and approval by the board of directors or the relevant decision-making body, the plan shall be implemented, with a copy forwarded to the State-owned Assets Supervision and Administration Commission of the State Council.

The capital budget implementation plan prepared by an enterprise shall include key elements such as the organizational structure for capital‑budget‑supported initiatives, the implementing entities, the execution period (generally not exceeding five years), and performance targets.

Article 8: Central enterprises shall, in accordance with the capital budget implementation plan, organize and carry out the implementation of capital budget‑supported projects and conduct performance monitoring. Where significant changes occur—such as in the approved direction and intended use, the implementation period, or the implementing entity—of a capital budget‑supported project, the capital budget implementation plan shall be adjusted, with a copy forwarded to the State-owned Assets Supervision and Administration Commission of the State Council.

Article 9: Capital budgetary funds received by central enterprises shall be treated as state capital. Enterprises shall, in accordance with relevant regulations, properly maintain accounting records, complete registration of changes in state-owned property rights, and promptly safeguard the equity interests of state capital.

(1) Upon receipt of capital‑budgetary funds, a wholly state‑owned company shall promptly credit such amounts to its paid‑in capital. Where capital‑budgetary funds are received multiple times within an accounting year, they may be initially recorded as capital reserves; in principle, these amounts should be transferred to paid‑in capital before the end of the accounting year.

(2) Upon receipt of capital‑budgetary funds, companies with diversified equity may temporarily record such funds as capital reserves, clearly designating them as state capital. When equity changes occur and adjustments are made, the corresponding state‑owned capital interests shall be duly accounted for.

Article 10: When central enterprises implement capital budget‑supported projects through their subsidiaries and utilize capital budget funds by increasing the capital of the implementing subsidiary, they shall promptly secure the corresponding state‑owned equity interests. For subsidiaries undergoing equity diversification that currently have no plans to raise additional capital, such funds may be allocated as entrusted loans (with a term generally not exceeding three years), to be converted into equity investments as conditions permit.

Article 11: With respect to support funds for investment and construction projects that have been explicitly approved in the capital budget, central enterprises shall not use such funds for investments in other projects or for financial‑type investments such as entrusted wealth management. Prior to the disbursement of capital‑budget funds, if an enterprise has already raised funds and invested them in projects supported by the capital budget, it may, with the approval of the board of directors or the relevant decision‑making body, replace those internally raised funds.

Article 12: During the implementation of the capital budget, if, due to adjustments in macro policies, changes in the market environment, or revisions to the enterprise’s strategic plan, it becomes impossible to proceed with the originally approved uses of the capital budget, the central enterprise shall submit a request for adjustment of the capital budget to the State-owned Assets Supervision and Administration Commission of the State Council.

Chapter 3: Execution of Expenditure-Based Budgeting

Article 13: Central enterprises shall use capital‑budget‑allocated expenditure‑type budgetary funds in accordance with the relevant policies and procedures governing the management of special-purpose funds. Except for funds expressly authorized for group‑wide unified allocation in the capital‑budget approval or applicable regulations, such funds shall be disbursed to the implementing units in a timely manner, based on the progress of the specific projects and the approved fund‑utilization plan.

Article 14: Upon completion of the implementation of expense‑related budgetary support projects by central enterprises, where liquidation is required in accordance with applicable regulations, such enterprises shall engage an intermediary agency to conduct a financial settlement and audit of the use of the relevant budgetary funds.

Article 15: With respect to expenditure‑based budgetary funds allocated under the capital budget, if, upon completion of a specific task and after the final settlement has been conducted, the actual expenditures fall short of the budgeted amount, such funds shall be cleared and designated as surplus. Budgetary funds earmarked for a specific task that remain unspent and have not been completed may, in accordance with applicable regulations, be carried forward for use in the following fiscal year. In cases where a specific task cannot proceed due to factors such as adjustments in macroeconomic policies, the corresponding funds shall likewise be cleared and treated as surplus.

Any surplus funds shall be returned in accordance with relevant regulations, and central enterprises shall submit applications for the return of budgetary funds to the State-owned Assets Supervision and Administration Commission.

Article 16: Central enterprises shall, in accordance with the relevant requirements for specific projects, promptly report to the SASAC on the implementation of their expenditure budgets.

Chapter 4: Supervision and Management

Article 17 The State-owned Assets Supervision and Administration Commission shall exercise oversight and management over the implementation of capital budgets by central enterprises through means such as follow-up supervision, special inspections, and performance evaluations.

Article 18: In accordance with the requirements of supervising and managing the implementation of capital budgets, the State-owned Assets Supervision and Administration Commission shall establish and improve a monitoring and reporting system for the execution of capital budgets by central enterprises, and shall conduct follow-up oversight of the implementation of capital budget execution plans, the progress in carrying out capital-budget‑supported projects, and the achievement of performance targets.

Article 19: In accordance with its operational needs, the State-owned Assets Supervision and Administration Commission shall engage intermediary agencies to conduct special audits on the compliance of capital budget implementation, covering the management and utilization of budgetary funds, the realization of state‑owned capital rights and interests, as well as the progress in organizing and advancing priority projects supported by the capital budget and the settlement of special funds.

Article 20: The State-owned Assets Supervision and Administration Commission shall explore the establishment of a capital budget performance evaluation system for central enterprises, conducting performance evaluations on key enterprises, significant matters, and major funding arrangements supported by the capital budget. Where necessary, it may engage third-party institutions to carry out focused performance assessments.

Article 21: Upon receiving from central enterprises applications for adjustments to the capital budget or for the return of budgetary funds, the State-owned Assets Supervision and Administration Commission shall verify the relevant circumstances. Where it is necessary to follow the procedures for adjusting the capital budget or recovering budgetary funds, it shall submit to the competent authority for capital budgeting a proposal to adjust the capital budget or recover the budgetary funds.

Article 22: In the course of supervising and managing the implementation of capital budgets by central enterprises, the SASAC shall, depending on the severity of the issues identified, take such measures as holding talks for rectification, issuing public criticism, recovering budgetary funds, or temporarily suspending the acceptance of capital budget submissions. Where violations result in losses of state-owned assets or other adverse consequences, accountability shall be pursued in accordance with relevant regulations.

Article 23: If a central enterprise fabricates projects or project scales in order to apply for and obtain capital budget funds, the full amount of such funds, or a proportionate share thereof, shall be recovered, and the enterprise shall be barred from submitting capital budget applications for a period of three years.

Article 24: If a central enterprise violates the procedures for adjusting its capital budget, or if it uses funds earmarked for specific investment and construction projects, as well as expense‑type budgetary funds, to finance other projects or engage in financial investments, appropriate measures shall be taken depending on the circumstances, including holding talks to urge rectification, recovering the relevant capital budget funds, or temporarily suspending acceptance of that enterprise’s capital budget submissions in the following year.

Article 25: If a central enterprise fails to implement the rights and interests of state-owned capital in accordance with applicable regulations or contractual agreements, or if it enters into agreements in violation of such regulations resulting in the prolonged non‑implementation of these rights and interests, measures such as conducting admonitory talks for rectification, issuing public criticism, or recovering budgetary funds may be taken, depending on the circumstances.

Article 26: Where central enterprises fail to comply with the prescribed procedures for approving, adjusting, and reporting their capital budget implementation plans, or fail to organize and carry out capital budget execution in accordance with such plans, they shall, depending on the circumstances, be subject to admonitory talks and rectification measures, or to public criticism.

Chapter V Supplementary Provisions

Article 27: The implementation and oversight of other expenditure budgets shall be organized and carried out in accordance with the relevant special policies and requirements.

Article 28: Central enterprises shall strictly comply with the policies and regulations on capital budget management, earnestly safeguard and implement the rights and interests of state-owned capital, and proactively organize and advance the implementation of capital budgets. With respect to any issues arising in the execution of capital budgets, they shall promptly adopt effective measures for rectification, and report significant matters to the State-owned Assets Supervision and Administration Commission of the State Council without delay.

Article 29: Central enterprises and relevant personnel of the State-owned Assets Supervision and Administration Commission who, in the course of capital budget execution and supervisory management, violate applicable laws, regulations, and institutional provisions shall be subject to disciplinary action in accordance with the relevant laws and regulations.

Article 30: This Measures shall be interpreted by the State-owned Assets Supervision and Administration Commission of the State Council. It shall enter into force as of the date of its issuance.

Serving agricultural modernization and rural revitalization, and accelerating the high-quality development of agricultural insurance.

On May 29, 2019, the Eighth Meeting of the Central Commission for Comprehensively Deepening Reform reviewed and approved in principle the “Guiding Opinions on Accelerating the High-Quality Development of Agricultural Insurance” (hereinafter referred to as the “Guiding Opinions”). On October 9, 2019, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, the China Banking and Insurance Regulatory Commission, and the National Forestry and Grassland Administration jointly issued the “Guiding Opinions.” Recently, a responsible official from the Ministry of Finance provided the following Q&A regarding the key aspects of the “Guiding Opinions.”

Q: What is the main background behind the formulation and issuance of the “Guiding Opinions”?

Answer: The issues concerning agriculture, rural areas, and farmers are fundamental to the national economy and the people’s livelihood, and effectively addressing these “three rural” issues has always been the top priority of the Party’s work. The CPC Central Committee and the State Council attach great importance to agricultural insurance. General Secretary Xi Jinping has emphasized that agricultural insurance must be strengthened, and that fiscal support should be provided to help farmers participate in insurance. Premier Li Keqiang convened an executive meeting of the State Council to specifically deliberate on matters related to agricultural insurance and to promote pilot programs for large‑scale disaster insurance in agriculture. The report to the 19th National Congress of the CPC explicitly stated that we must uphold the principle of giving priority to the development of agriculture and rural areas, build a modern agricultural industrial system, production system, and management system, and improve the systems for supporting and protecting agriculture.

As a traditionally large agricultural country, to develop modern agriculture we must address the risks posed by natural disasters and market price volatility—challenges that cannot be overcome without robust national-level support. From the perspective of international rules, China’s current agricultural insurance premium subsidies generally fall under the WTO’s “Green Box” measures, leaving considerable room for further expansion. Domestically, developing agricultural insurance can help shift government disaster relief from “administrative decision‑making” and “government management” toward “market‑based contracts” and “insurance claims,” providing an additional effective mechanism to safeguard grain production and protect farmers’ interests. At present, thanks to coordinated efforts across all sectors, China has become the world’s second-largest agricultural insurance market, achieving in little more than a decade what took the United States nearly a century to accomplish—a remarkable record that speaks for itself. At the same time, we are keenly aware that, compared with the requirements of the CPC Central Committee and the State Council, with farmers’ needs for risk protection, and with advanced international standards, China’s agricultural insurance still has substantial room for growth. The level of coverage remains largely confined to direct material costs such as seeds and fertilizers; coverage of production costs is only just beginning, and overall protection—especially when measured against the income‑protection schemes in developed countries—remains relatively low. Moreover, the supply of insurance products and the services provided by insurers still lag considerably behind the demands of agricultural modernization and rural revitalization. We must squarely acknowledge these shortcomings, confront the existing gaps, and accelerate the high‑quality development of agricultural insurance.

To this end, in accordance with the requirements of the CPC Central Committee and the State Council, the Ministry of Finance, together with 12 other departments and agencies—including the National Development and Reform Commission, the Ministry of Civil Affairs, the Ministry of Justice, the Ministry of Natural Resources, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, the Ministry of Emergency Management, the State Taxation Administration, the China Meteorological Administration, the China Banking and Insurance Regulatory Commission, and the National Forestry and Grassland Administration—has, on the basis of in-depth deliberations and field research, formulated a draft of the “Guiding Opinions” aimed at improving the support and protection system for modern agriculture and strengthening agricultural insurance as a crucial pillar for mitigating risks in agricultural production and operations. With the objectives of serving the development of modern agriculture, promoting rural revitalization, enhancing rural social governance, and safeguarding farmers’ incomes, the draft has been submitted to and approved at the eighth meeting of the Central Commission for Comprehensively Deepening Reform.

Q: What is the significance of issuing the “Guiding Opinions” for advancing the reform and development of agricultural insurance?

Answer: The “Guiding Opinions” clearly define, from a top-level design perspective, the guiding principles, basic tenets, key objectives, and supporting measures for accelerating the high-quality development of agricultural insurance. As an important initiative to advance the reform and development of China’s agricultural insurance in the new historical era, it serves as the fundamental guideline for agricultural insurance work in the period ahead. First, it explicitly establishes the policy-oriented nature of agricultural insurance for the first time. Previously, there had been some debate across society regarding whether financially subsidized insurance products should be classified as policy-driven business. The “Guiding Opinions” now unequivocally state that “agricultural insurance, as an important tool for dispersing risks in agricultural production and operation, plays a vital role in promoting modern agricultural development, revitalizing rural industries, improving rural social governance, and safeguarding farmers’ incomes,” thereby endowing agricultural insurance with clear policy objectives and requiring it to assume specific policy functions. At the same time, the document explicitly calls for piloting reforms of policy-based agricultural insurance. Second, it expands both the scope and substance of agricultural insurance. Building on the current coverage of crop cultivation, animal husbandry, and forestry, the “Guiding Opinions” propose further broadening the range of services provided by agricultural insurance, exploring the introduction of comprehensive bundled policies that incorporate agricultural production facilities and equipment, as well as short-term accident insurance for farmers, into the scope of coverage, thus meeting farmers’ diversified risk‑management needs. In addition, the document encourages the exploration of “Agricultural Insurance Plus” models, strengthening the coordinated use of agricultural insurance payouts and government disaster relief funds, and fostering linkages between agricultural insurance and financial instruments such as credit, guarantees, and futures (rights). Third, it places particular emphasis on the requirements of quality improvement, efficiency enhancement, and transformation and upgrading. Adhering to a problem‑oriented and goal‑oriented approach, the “Guiding Opinions” put forward a series of innovative measures to accelerate the high‑quality development of agricultural insurance. Under the framework set forth in these guidelines, China’s agricultural insurance now boasts clearer development goals, more unified top‑level design, stronger fiscal support, more clearly defined local responsibilities, improved infrastructure, and stricter management standards. Moreover, the “Guiding Opinions” lay out specific arrangements for enhancing the service capacity of agricultural insurance, optimizing its operational mechanisms, strengthening infrastructure, and ensuring effective organization and implementation. With the issuance of these “Guiding Opinions” as a landmark, China’s agricultural insurance has entered a new phase of high‑quality development.

Q: What are the main objectives set forth in the “Guiding Opinions” for accelerating the high-quality development of agricultural insurance?

A: In recent years, the Ministry of Finance has steadily increased its support for agricultural insurance. In 2018, the central government allocated RMB 19.9 billion in premium subsidies for agricultural insurance, providing risk coverage totaling RMB 3.46 trillion to 195 million farmer households—effectively leveraging subsidy funds by a factor of 174. At present, China has established 400,000 grassroots agricultural insurance service outlets, with nearly 500,000 frontline staff, achieving near‑universal coverage of all county‑level administrative areas, more than 95% of townships, and 50% of administrative villages. Agricultural insurance penetration (premiums as a share of primary sector value added) stands at approximately 0.88%, while density (premiums per agricultural worker) is around RMB 286 per person, positioning agricultural insurance as a leading component of financial services supporting agriculture, rural areas, and farmers. Building on this foundation, the “Guiding Opinions” further specify that by 2022, agricultural insurance coverage for the three major staple crops—rice, wheat, and corn—will exceed 70%; income insurance will become a key product within China’s agricultural insurance system; insurance penetration will reach 1%, and density will rise to RMB 500 per person. By 2030, agricultural insurance will continue to improve quality and efficiency, undergo transformation and upgrading, and achieve overall development broadly aligned with international best practices, fostering a win‑win scenario characterized by efficient subsidy delivery, robust industry protection, tangible benefits for farmers, and sustainable institutional viability.

To achieve the aforementioned objectives, China’s agricultural insurance premium income must reach RMB 84 billion in 2022, representing an average annual growth rate of over 10%. This target is broadly consistent with the development trends of China’s agricultural insurance sector and poses a meaningful challenge; with sustained effort, it is expected to be attained as scheduled.

Q: What innovations does the “Guiding Opinions” introduce in strengthening top-level design?

A: An important principle guiding the development of agricultural insurance is coordinated advancement; however, a lead agency has never been clearly designated in practice. This has made it difficult for central and local authorities to pool their efforts, thereby undermining the effectiveness of agricultural insurance initiatives. To strengthen top-level design and enhance coordination, and given that 80% of China’s agricultural insurance premium income is supported by fiscal subsidies at various levels, the Guiding Opinions explicitly stipulate that the Ministry of Finance, together with the Central Rural Work Office, the Ministry of Agriculture and Rural Affairs, the China Banking and Insurance Regulatory Commission, and the National Forestry and Grassland Administration, shall establish an Agricultural Insurance Working Group to provide unified planning and coordinated implementation. The document also sets out clear responsibilities for each relevant department. In addition, all provinces, autonomous regions, and municipalities are required to follow the central government’s approach by establishing agricultural insurance working groups led by their finance departments, so as to advance local agricultural insurance efforts in a coordinated manner. These measures will help better integrate resources from all stakeholders, further clarify and reinforce fiscal responsibilities, balance supply and demand in agricultural insurance, and foster synergy through vertical alignment, ensuring that the provisions of the Guiding Opinions are effectively implemented.

Q: What measures does the “Guiding Opinions” take to effectively enhance farmers’ sense of gain?

Answer: Farmers’ sense of gain is a key indicator of the quality of agricultural insurance development; whether the sector has achieved high-quality growth hinges largely on how strongly farmers feel that their needs are being met. At present, the growing demand for risk protection among farming households—particularly large-scale operators—remains difficult to satisfy effectively. Dynamic adjustments to premium payments and no-claim discounts have yet to be fully implemented, and issues such as insufficient or delayed claim payouts continue to arise. To genuinely enhance the quality of agricultural insurance and ensure the effective implementation of measures designed to benefit farmers, the “Guiding Opinions” place the enhancement of farmers’ sense of gain at the heart of the policy framework, offering a series of solutions and concrete steps, and articulating highly practical approaches and strategies. The guiding principle of the “Guiding Opinions” is to “better meet the growing demand for risk protection in the ‘agriculture, rural areas, and farmers’ sector”; its fundamental principles explicitly prohibit practices that could harm farmers’ interests; and its safeguard measures include both overarching requirements—such as “enhancing the capacity of agricultural insurance services”—and specific arrangements like “five public disclosures and two door-to-door services.” In short, boosting farmers’ sense of gain is the starting point, the core objective, and the primary focus for all relevant departments in advancing agricultural insurance going forward, as well as the critical factor for assessing the effectiveness of efforts across the board.

Q: What considerations does the “Guiding Opinions” give to improving the infrastructure for agricultural insurance?

A: At present, agricultural insurance in China remains in its early stages of development. Infrastructure construction falls short of the requirements for high-quality growth, and the level of digitalization still lags behind the demands for quality improvement and efficiency gains. For instance, data sharing and integration related to agriculture are limited; risk zoning and premium‑rate adjustment mechanisms are not yet fully robust; and issues such as moral hazard and adverse selection remain difficult to address at their root. In response, the “Guiding Opinions” place greater emphasis on infrastructure development, calling for the use of information technology to elevate the overall level of agricultural insurance. These requirements are reflected in at least the following four areas: First, refine the mechanisms for drafting agricultural insurance clauses and setting premium rates, develop a nationwide map of agricultural production risks, and implement differentiated pricing based on regional risk profiles. Second, strengthen information sharing among agricultural insurers to enable real-time monitoring of insured farmers and agricultural business entities, thereby preventing fraud and the misappropriation of government subsidies at the source. Third, optimize the spatial distribution of insurance institutions, enhance their standardized management, and establish a tendering and dynamic performance‑evaluation system that prioritizes service capacity. Fourth, improve risk‑prevention mechanisms to effectively identify, mitigate, and resolve various types of risks. It should be noted that relevant authorities are currently exploring the establishment of a Chinese Agricultural Reinsurance Company, which is envisioned as a key instrument and institutional platform for bolstering the infrastructure of agricultural insurance.

Q: What specific measures has the Ministry of Finance recently put in place to implement the “Guiding Opinions”?

Answer: Effectively implementing the “Guiding Opinions” is a key task for the fiscal authorities, both in the current period and over the coming years. With a strong sense of responsibility to the Party and the people, the fiscal departments will step up to their duties, take proactive measures, and drive China’s agricultural insurance sector to a higher level of development, thereby providing robust support for the steady growth of farmers’ incomes. First, we will ensure overall coordination, take the lead, and assume full responsibility. In accordance with the arrangements set out in the “Guiding Opinions,” we will work closely with the Central Rural Work Office, the Ministry of Agriculture and Rural Affairs, the China Banking and Insurance Regulatory Commission, the National Forestry and Grassland Administration, and other relevant departments to promptly establish an Agricultural Insurance Working Group, which will undertake unified planning and coordinated promotion of agricultural insurance initiatives. At the same time, we will set an example from the top down, guiding and urging local governments to follow the central model by swiftly establishing their own local agricultural insurance working groups, reinforcing local fiscal responsibilities, and ensuring that pro‑farmer policies supported by the Party and the government are effectively implemented and deliver tangible results. Second, we will strategically plan and refine institutional frameworks. In line with the requirements of the CPC Central Committee and the State Council, we will diligently carry out all tasks related to the establishment of the China Agricultural Reinsurance Company and further enhance the digitalization of agricultural insurance. We will introduce nationwide, standardized regulations on the tendering and procurement of agricultural insurance services, standardize the management of insurance institutions, and encourage them to improve their service quality. Moreover, we will continue to refine the performance‑evaluation system for agricultural insurance, strengthen the application of evaluation outcomes, and deepen reforms to orient premium subsidies toward performance‑based incentives. Third, we will forge ahead and increase financial support. The central government will focus on optimizing existing resources, expanding new coverage, and improving efficiency. In line with the principles of “expanding coverage, diversifying products, and raising standards,” we will allocate funds promptly and in full to ensure that current agricultural insurance policies achieve the goal of “insuring all who wish to be insured.” On this basis, we will broaden the scope of pilot programs for major‑disaster agricultural insurance, gradually achieving full coverage of major grain‑producing counties, and explore expanding the central government’s reward‑for‑subsidy policy for local specialty agricultural insurance, thereby supporting the development of regionally distinctive insurance products. In doing so, we will fully leverage the critical role of agricultural insurance in boosting farmers’ incomes and contributing to poverty alleviation, ensuring that farmers can count on stable harvests regardless of drought or flood and enjoy surplus year after year.

Notice on the Issuance of the 2019 Budget for Subsidies from the Central Special Lottery Public Welfare Fund to Support Pilot Projects for Reforming Home- and Community-Based Elderly Care Services

To the Finance Departments (Bureaus) of the relevant provinces, autonomous regions, and municipalities directly under the central government:

Upon review, the fourth batch of pilot subsidy funds for home- and community-based elderly care service reform is hereby allocated to your province (autonomous region, or directly administered municipality) (Project Code: Z175080060004; detailed amounts are set out in Attachment 1). The relevant matters are hereby notified as follows:

I. The central government subsidy funds hereby allocated shall be managed and utilized by the pilot areas in your province (autonomous region, or municipality directly under the central government) in accordance with the relevant requirements set forth in the “Notice of the Ministry of Civil Affairs and the Ministry of Finance on Central Government Support for Pilot Programs to Reform Home- and Community-Based Elderly Care Services” (Minhan [2016] No. 200), and shall be comprehensively earmarked to support expenditures related to the development of the home- and community-based elderly care service sector.

II. Please allocate the aforementioned funds to Item 2296002, “Expenditures from Lottery Public Welfare Funds for Social Welfare,” under the 2019 Government Revenue and Expenditure Classification System.

III. The finance departments of your province (autonomous region, or municipality directly under the central government) shall work closely with the civil affairs departments to ensure that central government subsidies are disbursed to the pilot areas in a timely and full amount. At the same time, they shall provide guidance to the pilot areas to strengthen the management of fund utilization, strive to enhance the effectiveness of fund use, and accelerate the implementation of the pilot program.

IV. To further strengthen the management of performance targets for public funds and effectively enhance the efficiency of fiscal resource utilization, please, in accordance with the relevant requirements of the Interim Measures for the Management of Performance Targets for Central-to-Local Special Transfer Payments (Cai Yu [2015] No. 163), and taking into account the tasks and funding levels of the reform pilot program, scientifically and reasonably set your province’s (autonomous region’s or municipality directly under the central government’s) performance targets. Complete the “Regional Performance Target Form for Central-to-Local Special Transfer Payments” (Attachment 2), and submit it to our Ministry and the Ministry of Civil Affairs for record within 60 days of receiving the transfer funds, with a copy sent to the local supervisory bureau of the Ministry of Finance, to serve as the basis for performance monitoring and evaluation. During budget execution, please conduct performance monitoring in alignment with your province’s (autonomous region’s or municipality directly under the central government’s) regional performance targets, ensuring that the annual performance objectives are achieved on schedule. At the same time, in line with central practices, promptly cascade your province’s (autonomous region’s or municipality directly under the central government’s) performance targets to lower-level entities, and strengthen budgetary performance management within the province (autonomous region or municipality). For specific projects implemented at the provincial level, please complete the corresponding performance targets and indicators and file them with the provincial finance and civil affairs departments.

Attachment: 1. Budget Allocation Table for the 2019 Central Special Lottery Public Welfare Fund Subsidies Supporting Pilot Projects on Home- and Community-Based Elderly Care Service Reform.

LITIGATION & ARBITRATION

Opinions of the Supreme People’s Court on Providing Judicial Services and Guarantees for the Planning and Construction of the Xiongan New Area in Hebei Province

In order to thoroughly implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 19th National Congress of the Communist Party of China, and to earnestly carry out the major decisions and arrangements of the CPC Central Committee with Comrade Xi Jinping at its core regarding the establishment of the Xiongan New Area in Hebei Province and the deepening of coordinated development among Beijing, Tianjin, and Hebei, and to fully leverage the functions and roles of the people’s courts in serving and safeguarding the comprehensive deepening of reform and the further opening-up of the Xiongan New Area in Hebei, the following opinions are hereby formulated.

I. Earnestly elevate political awareness and strengthen the sense of responsibility and mission to provide judicial services and safeguards for the planning and construction of the Xiongan New Area.

1. We must deeply recognize the profound significance of the planning and construction of the Xiongan New Area, and clearly understand that serving and safeguarding its development is both a glorious mission and a sacred duty of the people’s courts in the new era. The establishment of the Xiongan New Area represents a major, historic strategic decision made by the Party Central Committee with Comrade Xi Jinping at its core; it is a long-term plan of national importance and a matter of paramount national concern, bearing significant and far-reaching implications for advancing coordinated development in the Beijing–Tianjin–Hebei region and building a world-class urban agglomeration centered on the capital. People’s courts at all levels must thoroughly study and implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, strengthen the “Four Consciousnesses,” officely uphold the “Four Confidences,” and ensure the “Two Upholds.” They should conscientiously apply the new development philosophy, enhance their sense of responsibility and initiative, adjudicate relevant cases in accordance with the law, impartially and efficiently, deepen judicial system reform, and comprehensively advance the development of smart courts, thereby providing robust judicial services and safeguards to ensure that the Xiongan New Area becomes a high‑level socialist modern city and a national model for high‑quality development in the new era.

2. Accurately grasp the development objectives of the Xiongan New Area’s planning and construction, and identify the key entry points and priorities for providing judicial services and safeguards. At present, the Xiongan New Area has transitioned from a phase primarily focused on plan formulation to one of substantive construction. People’s courts at all levels must deeply understand this practical reality and deliver more scientific, precise, and robust judicial services and safeguards to comprehensively advance the planning and construction of the Xiongan New Area. It is essential to officely adhere to the requirement of actively yet prudently and orderly relieving Beijing of non-capital functions, strengthen communication and coordination with Party and government organs, uphold rule-of-law thinking, adopt a problem‑oriented approach, and focus on judicial issues in key areas and critical links—such as innovative development, urban construction, and public services. By intensifying research, formulating targeted judicial policies, and innovating working mechanisms, we can fully meet the judicial needs of Xiongan New Area’s innovative development and comprehensively enhance our capacity and level of judicial service and support for its planning and construction.

II. Fully leverage functional roles to provide robust judicial services and safeguards for the planning and construction of the Xiongan New Area.

3. Strengthen criminal adjudication to provide a secure and stable social environment for the development of the Xiong’an New Area. Strictly punish, in accordance with the law, all types of criminal offenses that undermine the planning and construction of the Xiong’an New Area, including crimes that obstruct the relocation of non-capital functions from Beijing and the implementation of key infrastructure projects, thereby actively supporting the optimization and rational allocation of industries in the New Area. Rigorously prosecute, as prescribed by law, mass‑involved economic crimes such as illegal absorption of public deposits, fundraising fraud, and financial fraud, so as to safeguard market and social order. Intensify penalties for offenses that endanger workplace safety, promote the effective implementation of the workplace safety accountability system, and ensure the safety of people’s lives and property. Enhance the adjudication of environmental and resource‑related criminal cases, including pollution, illegal logging, and unauthorized mining, thereby strengthening judicial protection of the environment and natural resources. Severely punish, in accordance with the law, crimes involving the embezzlement, misappropriation, or fraudulent acquisition of state or collective assets during land expropriation, demolition, and enterprise restructuring. Officely crack down on organized crime and evil forces, with a particular focus on combating gang‑related and other malicious offenses in areas such as land acquisition and demolition, and construction projects; rigorously prosecute related official misconduct; resolutely dismantle the protective umbrellas of criminal organizations; and effectively uphold social stability and public tranquility in the Xiong’an New Area.

4. Strengthen civil and commercial adjudication to serve and safeguard high-quality economic development. Properly handle cases involving contract disputes, property rights disputes, corporate disputes, security‑related disputes, bankruptcy proceedings, and labor disputes arising from the relocation of non‑capital functions, thereby actively supporting the coordinated development of the Beijing–Tianjin–Hebei region. Enhance judicial protection of property rights, strictly regulate the disposition of assets involved in litigation, and exercise restraint in the application of coercive measures in accordance with the law, thus providing robust judicial support and safeguards for fostering a development environment characterized by effective property‑rights incentives, free flow of production factors, fair and orderly competition, and survival of the fittest among enterprises. In accordance with the law, appropriately adjudicate cases involving hidden barriers in the credit, investment, and public‑procurement sectors, ensuring equal protection of the legitimate rights and interests of private enterprises and creating a sound rule‑of‑law environment conducive to the growth of small, medium, and micro‑enterprises in the Xiong’an New Area. With a focus on effectively achieving the goal of relocating populations as part of Beijing’s efforts to relieve itself of non‑capital functions, strengthen the adjudication of cases in areas vital to people’s livelihoods—such as education, healthcare, culture, social security, and employment and entrepreneurship—thereby actively serving to safeguard and improve living standards. Intensify the adjudication of real‑estate‑related cases to support the establishment of a new housing supply system, and proactively employ judicial measures to assist relevant authorities in rigorously controlling surrounding housing prices and preventing speculative activities in land and real estate, while providing judicial backing for the refinement of diversified land‑use and supply models, including land transfer, leasing, combined lease‑and‑transfer arrangements, mixed‑use zoning, and equity contributions based on appraised value.

5. Strengthen administrative adjudication to support and oversee the lawful administration of administrative organs. Provide legal services and safeguards for the innovative management models adopted by administrative authorities in the Xiong’an New Area, deepen the “delegation, regulation, and service” reform, and ensure that these authorities perform their duties in accordance with the law. Enhance the adjudication of administrative cases in areas such as land development and utilization, urban planning and design, infrastructure construction, and urban governance, thereby reinforcing the role of judicial review in supporting and safeguarding the planned and efficient use of territorial space resources. Properly handle administrative cases related to expropriation, relocation, and resettlement, and improve and refine mechanisms for land expropriation that feature standardized procedures, fair compensation, and diversified forms of protection. With respect to administrative litigation arising from the delegation by administrative organs to the Xiong’an New Area of approval and administrative licensing powers in areas such as engineering construction, market access, and social governance, strengthen judicial supervision and guidance to effectively promote innovation in administrative management systems and mechanisms. Establish a green channel for non-litigious enforcement cases, promptly review non-litigious enforcement applications in accordance with the law, and ensure the timely advancement of major construction projects.

6. Strengthen intellectual property adjudication to support innovation-driven development. Enhance guidance on the adjudication of IP cases at the Xiong’an New Area courts, and support the establishment of a fair and efficient judicial protection mechanism for intellectual property in the Xiong’an New Area. Provide direction to advance the integrated handling of civil, administrative, and criminal IP cases, thereby promoting the specialization, modernization, and scientific management of the Xiong’an New Area’s IP adjudication system. Support the construction of an IP protection center in the Xiong’an New Area, expand its spillover and driving effects on surrounding regions in the field of IP protection, and continuously elevate the level of judicial protection for intellectual property in the area. Furthermore, foster talent in IP adjudication within the Xiong’an New Area by establishing mechanisms for commissioned training and exchange programs between the Xiong’an courts and their counterparts elsewhere, with a focus on cultivating a corps of IP judges who are strategically minded, legally proficient, technically knowledgeable, and internationally oriented, thus better serving the innovation-driven development of the Xiong’an New Area.

7. Strengthen financial adjudication to effectively prevent and resolve major financial risks. In accordance with the law, properly hear financial cases involving financing for the construction of the Xiong’an New Area, the issuance of local government bonds, and private lending, and appropriately adjudicate disputes arising in the course of enterprises in the Xiong’an New Area engaging in IPOs, mergers and acquisitions, equity transfers, bond issuances, and asset securitization. Intensify judicial research on cases involving innovative financial activities such as financial asset trading platforms and equity crowdfunding. Support the Xiong’an New Area Administrative Committee, arbitration institutions, and commercial and industry mediation organizations in pursuing innovative development; strengthen efforts to address conflicts and disputes at their source; improve the coordination between litigation and mediation; and prioritize preventing and resolving major financial risks at the root. Enhance the professionalization of financial adjudication by establishing specialized financial courts.

8. Strengthen agricultural-related adjudication to advance the implementation of the rural revitalization strategy in the Xiong’an New Area. Actively implement policies on land‑management system reform and the newly amended Land Management Law, promote land‑system reform in the Xiong’an New Area, enhance the flexibility of land administration, and support the effective execution of reform measures. In accordance with the law, properly adjudicate disputes arising from reforms of the rural collective property rights system, including cases involving farmers’ transfer of land contract rights, eligibility rights to residential land, and the use of equity in collective assets to invest in enterprises or economic organizations. Intensify efforts to punish crimes and illegal acts that infringe upon farmers’ legitimate interests, thereby safeguarding the lawful rights and interests of farmers whose land has been expropriated. Leverage the role of people’s courts in social governance within the Xiong’an New Area to help refine a grassroots governance system that integrates self‑governance, rule of law, and moral governance.

9. Strengthen environmental and resource adjudication to advance the development of model green cities. Promote innovation in the judicial systems and mechanisms for environmental and resource protection, establishing a centralized jurisdiction system for environmental and resource cases in the Xiongan New Area and its surrounding regions, as well as in the Baiyangdian Basin. Lawfully and appropriately adjudicate disputes over natural resource ownership, providing judicial support and safeguards to foster a sound property rights system for natural resources with clearly defined rights and responsibilities, and to implement unified registration and conofficeation of natural resource rights. Enhance market‑based mechanisms for judicial protection of the ecological environment; conduct in-depth research into the legal nature and trading rules governing energy‑use rights, water‑use rights, pollutant‑discharge rights, and carbon‑emission‑trading rights, thereby offering judicial backing for building a market‑oriented green‑technology innovation system and for establishing resource‑and‑environment pricing mechanisms, diversified ecological compensation schemes, and an ecological relocation compensation framework tailored to the functional positioning and developmental realities of the Xiongan New Area.

10. Strengthen adjudication in foreign-related commercial cases and establish a new high ground for open development. Improve the legal framework governing foreign trade, support the mobilization of both domestic and international capital to participate in the construction of the Xiong’an New Area, and fully safeguard the legitimate rights and interests of investors. Enhance judicial review of cases related to the development of new forms and models of trade, pilot initiatives for innovative development of trade in services, and the establishment of comprehensive cross-border e‑commerce pilot zones. Refine the adjudication of internet‑finance cases to support the building of a globally oriented digital trade platform. Strengthen the handling of foreign‑related financial cases, encourage the establishment of wholly foreign‑owned or Sino‑foreign joint‑venture financial institutions in the Xiong’an New Area, and develop a legal framework aligned with internationally accepted investment and trade norms, thereby fostering a fair‑competition regime. Support the establishment in the Xiong’an New Area of internationally recognized arbitration, certification, and appraisal authorities, and explore the creation of diversified mechanisms for resolving commercial disputes.

11. Strengthen enforcement efforts and promote the establishment of a collaborative, coordinated enforcement mechanism. Foster a comprehensive governance framework for addressing difficulties in enforcement, characterized by Party committee leadership, coordination by the Political and Legal Affairs Commission, oversight by the People’s Congress, support from the government, court administration, interdepartmental collaboration, and public participation. Develop a departmental coordination and linkage mechanism for enforcement work in the Xiong’an New Area. Intensify enforcement measures in cases involving key projects and priority initiatives, giving priority to case filing and execution to ensure that winning parties can promptly realize their rights and interests. Support the improvement of the Xiong’an New Area’s social credit system and business integrity system, explore the establishment of integrity accounts covering all institutions and individuals, implement credit-risk‑based regulatory approaches, and put in place a robust, wide‑ranging mechanism for joint incentives for those who uphold trust and joint sanctions for those who breach it. Enable automated comparison, monitoring, and enforcement against lists of persons subject to enforcement, thereby advancing a credit‑supervision, warning, and sanctioning system that ensures that once someone is listed as untrustworthy, they face restrictions everywhere.

III. Uphold reform and innovation, and establish and improve judicial systems and mechanisms that are aligned with the coordinated development of the Beijing–Tianjin–Hebei region.

12. Deepen the comprehensive and coordinated reform of the judicial system and strengthen the development of the Xiong’an Courts. The Supreme People’s Court will enhance its guidance on the judicial system reform of the Xiong’an New Area, adhering to the principle of integrating top-level design with local experimentation. It will actively explore and pilot new mechanisms and measures in the judicial field, as well as forward-looking judicial innovation projects, giving priority to their implementation in the Xiong’an New Area. The Court will support the New Area courts in, in light of the planning and construction needs of Xiong’an, proactively pursuing judicial reforms that are aligned with administrative system reform. Furthermore, it will encourage the New Area courts, in accordance with the principles of optimization, coordination, and efficiency, to coordinate and advance internal institutional reforms and the organizational development of adjudication and enforcement, adjust and optimize the allocation and structure of specialized political‑legal staffing, and establish a judge selection mechanism that combines routine procedures with flexible, ad hoc arrangements. The Court will also explore a merit‑based recruitment system tailored to the developmental needs of the two‑tier court system in Xiong’an, while providing appropriate policy preferences for judge selection, rank conofficeation, and promotion within the New Area courts. Finally, the Supreme People’s Court will support the Xiong’an New Area courts in fully establishing a one‑stop, diversified dispute‑resolution mechanism and a one‑stop litigation service center, thereby building a modern litigation service system that is intensive and efficient, diversified in dispute resolution, convenient and people‑oriented, smart and precise, open and interactive, and integrative and shared. This effort will drive innovation in dispute‑resolution and litigation‑service paradigms and transform relevant mechanisms, effectively enhancing the people’s courts’ capacity to resolve conflicts and disputes and better serve the public.

13. Comprehensively deepen the development of smart courts and elevate the level of information technology in judicial services and support. Support the Xiong’an New Area Court in proactively adapting to the region’s planning, construction, and the public’s judicial needs by taking the lead in advancing smart court initiatives, strategically deploying intelligent infrastructure ahead of schedule, and accelerating improvements in information‑infrastructure capacity, court‑dedicated network performance, and cybersecurity defenses. Promote the deep integration of technological innovations—such as big data, artificial intelligence, and 5G—into judicial work, modernize the adjudication system and judicial capabilities, and ensure that judicial service‑delivery capacities align with the requirements for building Xiong’an into a digital, smart city. Furthermore, assist the Xiong’an New Area Court in fully leveraging the region’s first‑mover advantage in IT applications to expand the scope, increase the adoption rate, and enhance the quality of electronic litigation, while strengthening the development and application of execution‑related information systems. Establish and refine mechanisms for the real-time generation and in-depth utilization of electronic case files, and comprehensively advance the intelligent application of judicial processes. Elevate the level of digitalization across areas such as litigation‑service information retrieval, handling of public complaints and petitions, expedited case filing, and online mediation, thereby enhancing the public’s sense of gain and satisfaction.

14. Advance the development of a mechanism for the uniform application of the law and establish a sound system for standardizing judicial rulings. Improve case‑communication mechanisms, strengthen research, summarization, and refinement of common and cutting‑edge legal issues as well as adjudicatory rules for typified cases within the Beijing–Tianjin–Hebei region, and promptly circulate to courts at all levels in the region those issues that are universally applicable and have reached consensus. Explore the establishment of trial guidelines for typified cases covering various areas of practice, including criminal and civil matters; institute a long‑term mechanism for professional seminars and exchanges; and actively conduct specialized professional workshops and research projects to promote the uniform application of the law.

15. Deepen regional judicial exchanges and cooperation, and strengthen all‑round coordination and collaboration among the courts of Beijing, Tianjin, and Hebei. Improve the joint conference mechanism of the three‑province‑and‑two‑municipalities courts, enhance overall planning, coordination, and oversight, and reinforce analysis and support for major judicial matters, judicial needs, judicial policies, and complex legal issues arising in the development of the New Area. Promote the joint construction of platforms, information sharing, resource pooling, and business synergy across the stages of case filing, adjudication, and enforcement, enabling cross‑regional remote handling of litigation matters and coordinated processing across different administrative levels, thereby effectively addressing challenges such as the difficulties of litigating in a jurisdiction other than one’s own. The courts of Beijing, Tianjin, and Hebei shall, in accordance with their respective responsibilities, pool their efforts, introduce judicial policies and measures that are aligned with and supportive of the development of the Xiong’an New Area, and better fulfill the functions and roles of the people’s courts in serving and safeguarding the planning and construction of the Xiong’an New Area.

16. Strengthen support for the construction and development of the Xiongan New Area Court. Enhance guidance on judicial work and provide adequate material resources, while establishing and improving cooperative mechanisms between the Xiongan New Area Court and courts in the Beijing–Tianjin–Hebei region, the Yangtze River Delta, the Pearl River Delta, and other areas, covering talent cultivation, intellectual support, and information technology development. Encourage courts in the Beijing–Tianjin–Hebei region to dispatch subject-matter experts to the Xiongan New Area Court for temporary postings and practical training, fostering mutual exchange and integration of human resources to better enable the court to fulfill its duties. Support the Xiongan New Area Court in developing a more open system for talent cultivation, recruitment, and exchange; actively explore reforms to its talent‑training and reserve‑building mechanisms; and focus on cultivating high‑level judicial professionals with an international outlook, a thorough understanding of international rules, and proficiency in foreign languages. Furthermore, support the Xiongan New Area Court in strengthening international judicial exchanges and cooperation, striving to build it into a first‑rate court that aligns with the New Area’s international positioning and enjoys global influence.

People’s courts at all levels must earnestly align their thinking and actions with the CPC Central Committee’s major decisions and deployments on establishing the Xiongan New Area and deepening coordinated development in the Beijing–Tianjin–Hebei region. They should conscientiously implement the requirements set forth in this opinion, clearly define objectives and tasks, and ensure rigorous execution. With the overarching goal of “striving to ensure that the people feel fairness and justice in every judicial case,” they must uphold the principles of serving the overall interests, administering justice for the people, and upholding impartiality; faithfully perform the duties entrusted by the Constitution and laws; and work to foster a stable, fair, transparent, and predictable business environment underpinned by the rule of law, thereby providing stronger judicial services and safeguards for the planning and construction of the Xiongan New Area.

“Major Public Interest Litigation Case Involving Illegal Fishing of Yangtze River Eel Fry” Held; 59 Defendants Ordered to Pay Over 9 Million Yuan in Damages

At 10:00 a.m. on October 18, the “extra-large public-interest lawsuit involving illegal fishing of Yangtze eel larvae,” which implicates 59 individuals, was heard in Jingjiang. This marks the first case accepted and tried by the Nanjing Environmental Resources Tribunal since the Jiangsu environmental‑resource adjudication “9+1” mechanism was officially put into operation. It is also the nation’s first case to target the entire illicit supply chain—from fishing and purchasing to the sale of eel larvae—since the state adjusted the Yangtze River Basin’s fishing ban period in January 2016.

According to reports, as early as the beginning of this year, three government departments, including the Ministry of Agriculture and Rural Affairs, announced that by the end of this year, fishing households in the Yangtze River aquatic biodiversity conservation areas would have completed their withdrawal from fishing, with a comprehensive fishing ban implemented on a pilot basis. By the end of 2020, fishing households in all waters of the Yangtze mainstream and its major tributaries—except within the conservation areas—were required to cease fishing, with a temporary 10-year fishing ban in place.

Jingjiang, located along the lower reaches of the Yangtze River, boasts a riverfront stretching over 50 kilometers. Due to bottlenecks in artificial breeding and cultivation techniques, eel fry—often dubbed “soft gold”—have become highly sought-after commodities in the illegal trade. In 2018, based on leads provided by the local fisheries administration, Jingjiang’s public security authorities apprehended 53 suspects involved in the illegal fishing, acquisition, and sale of eel fry—the “soft gold of the water.”

In the first half of 2018, Ding and 33 other individuals violated regulations on the protection of aquatic resources by using prohibited fishing gear—such as “extinction nets” with mesh sizes smaller than 3 millimeters—either individually or in groups, to illegally harvest eel fry in the mainstream waters of the Yangtze River. Eel fry are juvenile aquatic animals of significant economic value that are subject to a fishing ban. From January to April 2018, Wang and 18 others, fully aware that the eel fry had been illegally caught by others, nevertheless engaged in covert, coordinated purchasing at uniform prices and subsequently sold the fry on the open market. Following trial, the court convicted Ding and the other 34 defendants of the crime of illegal fishing of aquatic products, sentencing them to detention or fines only; it also convicted Wang and the other 19 defendants of the crime of concealing or covering up proceeds of crime, imposing prison terms or detention, together with fines, in the first instance. The defendants collectively paid fines totaling RMB 242,000 and returned illicit gains amounting to RMB 304,727.

Following the imposition of individual criminal sentences and the finality of the criminal judgments, on July 15, 2019, the Taizhou Municipal People’s Procuratorate filed a public-interest civil lawsuit with the Nanjing Intermediate People’s Court, alleging that Wang and 58 other defendants had engaged in the illegal capture, sale, and acquisition of Yangtze eel fry, thereby damaging the ecological resources of the Yangtze River and harming the public interest. The procuratorate sought joint and several liability for damages from all defendants, with the total claimed amount exceeding RMB 9 million.

It is reported that, prior to the formal trial, the collegial panel invited renowned provincial experts in aquaculture and fisheries to provide explanations on the scientific issues at stake, thereby deepening the panel’s understanding of the specialized technical matters involved. At the pre-trial conference convened by the panel on October 16, the parties presented and cross-examined evidence pertaining to the case and articulated their arguments on certain issues raised therein.

During the trial, the multimedia evidence‑presentation system vividly illustrated illegal fishing activities, particularly the damage inflicted on fishery resources and the Yangtze River’s ecological environment by prohibited gear, thereby enhancing the effectiveness of the live‑streamed proceedings. The parties engaged in thorough courtroom debate over key issues, including how to quantify losses to ecological resources, whether the purchaser bears tort liability and, if so, whether such liability is joint and several with the fisher, and whether illegally obtained proceeds already returned pursuant to the criminal judgment may be offset against the civil damages award. The procuratorial organ also requested that a fisheries‑resource expert—whose assessment had been commissioned—appear as a witness, offering professional insights into the ecological harm caused by the illegal capture of eel fry and related matters, and responding on the spot to technical questions raised by the defendant and the court.

During the final statement phase, the defendant’s counsel publicly offered an apology in court. Given the complexity of the case and the significant disputes at issue, the collegial panel will render its judgment at a later date.

The first-instance trial has commenced in the bribery case involving Zhang Maocai, former Vice Chairman of the Standing Committee of the Shanxi Provincial People’s Congress.

On October 17, 2019, the Intermediate People’s Court of Zibo City, Shandong Province, held a public first-instance trial in the case of Zhang Maocai, former deputy director of the Standing Committee of the Shanxi Provincial People’s Congress, charged with accepting bribes. Prosecutors from the Zibo Municipal People’s Procuratorate appeared in court to support the public prosecution, and the defendant, Zhang Maocai, together with his defense counsel, attended the proceedings.

The People’s Procuratorate of Zibo City, Shandong Province, brought charges alleging that, from 2002 to 2018, the defendant Zhang Maocai, by taking advantage of his positions as Mayor of Linfen City in Shanxi Province, Secretary of the Linfen Municipal Party Committee, Secretary of the Yuncheng Municipal Party Committee, Secretary of the Jincheng Municipal Party Committee, Vice Chairman of the Shanxi Provincial Committee of the Chinese People’s Political Consultative Conference, and Deputy Director of the Standing Committee of the Shanxi Provincial People’s Congress, or by leveraging the convenient conditions arising from his official authority and status, facilitated, through the official acts of other state functionaries, assistance to others in matters such as business operations, project contracting, promotion, and job transfers. In return, he directly or through his relatives illegally accepted property from others, totaling over RMB 72.44 million.

During the trial, the prosecution presented relevant evidence, and the defendant, Zhang Maocai, together with his defense counsel, cross-examined it. Under the court’s guidance, both sides fully articulated their arguments, after which Zhang Maocai made a final statement and pleaded guilty, expressing remorse in open court.

Shanghai’s first criminal case involving groping on a rail transit system has been handed down.

Between approximately 6:23 p.m. and 6:29 p.m. on July 1, 2019, the defendant, Wang, a male born in 1985, was seated in a carriage of Line 8 of the city’s rail transit system, sitting closely to the left of a female passenger who was a minor. He placed his left hand on his own right arm and repeatedly touched the woman’s chest and other body parts. During this time, the woman shifted her seat to avoid him, but the defendant continued to remain in close proximity and persistently engaged in the touching behavior.

At approximately 6:31 p.m., the defendant, Wang, used the same method to touch another woman’s breast. The woman noticed and confronted him, and Wang was apprehended on the spot by public security authorities as he attempted to flee.

On the morning of October 15, the People’s Court of Jing’an District, Shanghai, held a trial for the defendant, Wang, on charges of forcible indecency. Due to the involvement of personal privacy, the proceedings were conducted in closed session in accordance with the law. The court delivered its verdict publicly at the hearing, sentencing the defendant, Wang, to six months’ imprisonment for the crime of forcible indecency. This case marks Shanghai’s first instance of criminal prosecution for forcible indecency committed on public transportation.

The People’s Court of Jing’an District, Shanghai, holds that:

The defendant, Wang Moumou, took advantage of the objective conditions in subway carriages—namely, their relative crowding, the difficulty of being noticed, and the challenges of evading such behavior—as well as the psychological characteristics of the female victims, who were too embarrassed to resist in public, to forcibly commit indecent acts, including groping the breasts, against two women. One of the victims was a minor. Such conduct constitutes the crime of forcible indecency and shall be punished in accordance with the law.

The defendant’s conduct not only infringes upon the victim’s personal rights but also, to a certain extent, disrupts the normal order of rail transit, thereby posing a significant social hazard. In light of the specific circumstances of the offense, the public prosecution authority has characterized “publicly and forcibly committing indecent assault in a public place” as an element constituting the crime, rather than re‑evaluating it as an aggravating circumstance; this approach is consistent with the fundamental principle of criminal law that punishment must be proportionate to the offense and should be upheld.

After surrendering, the defendant, Wang Moumou, truthfully confessed to the facts of the crime and pleaded guilty and accepted the punishment; accordingly, a lighter sentence may be imposed in accordance with the law.

Accordingly, in accordance with Article 237, Paragraph 1, and Article 67, Paragraph 3, of the Criminal Law of the People’s Republic of China, the defendant Wang [name withheld] is hereby sentenced as set forth above.

The Supreme People’s Court International Maritime Judicial Base in Zhejiang has been established. The Supreme People’s Court International Maritime Judicial Base in Zhejiang has been established.

On October 16, the unveiling ceremony for the Zhejiang Base of the Supreme People’s Court for International Maritime Justice was held at the Ningbo Maritime Court. This is one of three international maritime justice bases established by the Supreme People’s Court within China.

It is understood that, in recent years, the Ningbo Maritime Court has adhered to a strategy of excellence in maritime adjudication, consistently ranking at the forefront of China’s maritime courts in serving the marine economy, optimizing trial and enforcement procedures, and enhancing public‑oriented services. For six consecutive years, it has topped the nation in both case filings and closures; for three consecutive years, it has secured first place in the national assessment of judicial transparency among maritime courts; and it is the only maritime court nationwide designated by the Supreme People’s Court as a pilot court for hearing criminal cases. The court has successfully tried the country’s first foreign‑related maritime criminal case, established the nation’s first Maritime Administrative Dispute Resolution Center, and pioneered a high‑level “three‑in‑one” model of maritime litigation, thereby laying a solid foundation for the development of an international maritime judicial center.

Following the unveiling ceremony that day, the Ningbo Maritime Court also convened a kickoff symposium on the research project “Reform of Maritime Adjudication in the Context of Building an International Maritime Judicial Center.” This project was designated by the Supreme People’s Court as a major judicial research initiative for 2019, entrusted to the Zhejiang Base for International Maritime Justice. Strengthening the development of the Zhejiang Base for International Maritime Justice has been included among the Zhejiang Provincial Party Committee’s reform initiatives in the fields of democracy and the rule of law for 2019.

Judges from the Supreme People’s Court, the Zhejiang Provincial Higher People’s Court, and the Ningbo Maritime Court, together with legal scholars from six leading universities—including Tsinghua University, Renmin University of China, Zhejiang University, and Dalian Maritime University—gathered to exchange views on the research plan and delivered keynote addresses on topics such as the revision of maritime law, maritime administrative litigation, and maritime criminal adjudication.

Other

Feng Jie, former chairman of Jiuquan Iron & Steel (Group) Co., Ltd., was sentenced to 13 years in prison in the first instance.

On the morning of the 18th, the Intermediate People’s Court of Tianshui City, Gansu Province, publicly pronounced its verdict in the case involving Feng Jie, former chairman of Jiuquan Iron & Steel (Group) Co., Ltd., who was convicted of accepting bribes and having unexplained sources of massive wealth. Defendant Feng Jie was sentenced to ten years’ imprisonment and fined RMB 2 million for the crime of accepting bribes, and to six years’ imprisonment for the crime of having unexplained sources of massive wealth. Considering all offenses together, the court decided to impose a total sentence of thirteen years’ imprisonment and a fine of RMB 2 million. The illicit funds and property already seized were confiscated in accordance with the law and turned over to the state treasury.

The court, after trial, found that from 2000 to 2015, the defendant Feng Jie, taking advantage of his positions as Deputy General Manager of Jiuquan Iron & Steel (Group) Co., Ltd., Chief Commander of Construction Projects at Shanxi Hongyang Iron & Steel Co., Ltd., Chairman of Baiyin Nonferrous Metals (Group) Co., Ltd., Director of the Gansu Provincial Environmental Protection Department, and Chairman of Jiuquan Iron & Steel (Group) Co., Ltd., provided assistance to others in matters such as project development, contract awarding, product procurement and sales, raw material supply, and approval of environmental protection projects, and accepted property from others totaling over RMB 31.7 million. Furthermore, the defendant Feng Jie’s personal assets and expenditures significantly exceeded his lawful income, and he was unable to account for the origin of property valued at over RMB 31.89 million.

The Intermediate People’s Court of Tianshui City held that the defendant, Feng Jie, as a state functionary, took advantage of his official position to illegally accept property from others in exchange for securing benefits for them, thereby constituting the crime of bribery, with the amount involved being particularly huge. Furthermore, the defendant Feng Jie and his family’s assets clearly exceed their lawful income by an exceptionally large margin, and he has been unable to account for the source of this discrepancy, thus also constituting the crime of unexplained sources of massive wealth. In view of Feng Jie’s voluntary surrender and meritorious conduct, as well as his full restitution of all illicit proceeds, he may be given a lighter sentence in accordance with the law. Accordingly, the court rendered the aforementioned judgment.

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