JC Master Legal News Issue 898

Key Takeaways for This Issue

Notice on Soliciting Public Comments on the “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect (Second Amendment, 2019) (Draft for Comments)”

In accordance with the joint announcement and related arrangements issued by the China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong regarding the implementation of the Southbound Investor Identification Code System under the Shanghai–Hong Kong Stock Connect, the Shanghai Stock Exchange (hereinafter referred to as “the Exchange”) intends to revise the Measures for the Implementation of the Shanghai–Hong Kong Stock Connect Business, adding relevant provisions. Public comments are now being solicited.

Chinese tech companies are taking their business models overseas.

An increasing number of mature Chinese internet companies are turning their attention overseas. Drawing on China’s rich array of use cases and its vast market, these offices have developed highly effective business models and are now taking them global.

Order No. 49 of the State Taxation Administration: Measures for the Administration of Reporting Tax Violations

The Measures for the Administration of Reporting Tax‑Related Violations have been reviewed and approved at the fourth Bureau Meeting of the State Taxation Administration for 2019 on November 21, 2019. They are hereby promulgated and shall enter into force as of January 1, 2020.

The Regulations for the Implementation of the Food Safety Law will come into effect on December 1.

There is no such thing as a minor issue when it comes to food safety. The Regulations on the Implementation of the Food Safety Law, revised after a decade, will officially take effect on December 1. Dubbed the strictest food safety regulatory framework in history, these regulations highlight several key features, including holding individuals accountable and establishing a blacklist system.

The People’s Bank of China has released a draft of the Assessment Measures for Systemically Important Banks for public comment.

To improve China’s regulatory framework for systemically important financial institutions and establish an assessment and identification mechanism for systemically important banks, the People’s Bank of China, in conjunction with the China Banking and Insurance Regulatory Commission, has drafted the “Measures for the Assessment of Systemically Important Banks (Draft for Comments)” (hereinafter referred to as the “Assessment Measures”).

Table of Contents

Table of Contents

Finance & Capital Markets

Notice on Soliciting Public Comments on the “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect (Second Amendment, 2019) (Draft for Comments)”

Notice on the Issuance of the “Review Rules for Major Asset Restructuring of Companies Listed on the STAR Market of the Shanghai Stock Exchange”

BOC International Securities’ IPO application has been approved, marking the 37th listed securities office on the A-share market.

The Financial Stability and Development Committee continues to closely monitor capital replenishment at small and medium-sized banks.

The options market has once again unveiled its “Five Golden Flowers.”

Corporate & Commercial

Chinese tech companies are taking their business models overseas.

Ultra-low-energy buildings are poised to become a new driver of economic growth.

A conference on the high-quality development of enterprises in the engineering construction sector was held in Beijing.

China accounts for nearly 40% of the global cross-border parcel delivery market.

“Violent layoffs” are unacceptable.

Taxation

Order No. 49 of the State Taxation Administration: Measures for the Administration of Reporting Tax Violations

An Interpretation of the Measures for the Administration of Reporting Tax Law Violations

Decision of the State Taxation Administration on Amending the Measures for the Administration of the Formulation of Tax Normative Documents

Interpretation of the “Decision of the State Taxation Administration on Amending the Measures for the Administration of the Formulation of Tax Normative Documents”

The Mainland and Macao have signed the Fourth Protocol to the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion.

Litigation & Arbitration

The Regulations for the Implementation of the Food Safety Law will come into effect on December 1.

Starting in December, these laws and regulations will soon affect our daily lives.

Public Consultation on the Provisional Measures for Rewarding Whistleblowers in the Field of Market Regulation

The Measures for the Safety Management of Road Transportation of Dangerous Goods came into effect in 2020.

A batch of regulations in Jiangsu has been submitted for deliberation; electric bicycles are slated to be brought under legislative regulation.

Other

The People’s Bank of China has released a draft of the Assessment Measures for Systemically Important Banks for public comment.

Finance & Capital Markets

Notice on Soliciting Public Comments on the “Shanghai Stock Exchange Measures for the Implementation of the Shanghai–Hong Kong Stock Connect (Second Amendment, 2019) (Draft for Comments)”

In accordance with the joint announcement and related arrangements issued by the China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong regarding the implementation of the Southbound Investor Identification Code System under the Shanghai–Hong Kong Stock Connect, the Shanghai Stock Exchange (hereinafter referred to as “the Exchange”) intends to revise the Measures for the Implementation of the Shanghai–Hong Kong Stock Connect Business, adding relevant provisions. Public comments are hereby solicited, with a deadline for feedback of December 6, 2019.

In accordance with the joint announcement issued by the China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong regarding the implementation of the Southbound Investor Identification Code System under the Shanghai–Shenzhen–Hong Kong Stock Connect, the Shanghai Stock Exchange intends to amend the “Measures for the Implementation of the Shanghai–Hong Kong Stock Connect Business” by adding Article 76, which reads as follows: “An investor’s participation in trading under the Hong Kong Stock Connect shall be deemed to constitute consent for this Exchange or its securities trading service company to provide the Securities and Futures Commission of Hong Kong and the Stock Exchange of Hong Kong with relevant investor information and other pertinent materials, in compliance with the provisions of applicable laws, administrative regulations, departmental rules, normative documents, and business rules of the Mainland and Hong Kong, as well as pursuant to regulatory cooperation arrangements.” The numbering of subsequent articles will be adjusted accordingly, while the content remains unchanged. This is hereby notified.

Notice on the Issuance of the “Review Rules for Major Asset Restructuring of Companies Listed on the STAR Market of the Shanghai Stock Exchange”

In order to standardize the major asset restructuring activities of companies listed on the STAR Market of the Shanghai Stock Exchange (hereinafter referred to as “the Exchange”) (hereinafter referred to as “STAR Market companies”), protect the legitimate rights and interests of STAR Market companies and investors, and enhance the quality of STAR Market companies, these Rules are formulated in accordance with the “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration System,” the “Provisional Measures for the Ongoing Supervision of STAR Market Listed Companies,” the “Administrative Measures for Major Asset Restructuring of Listed Companies” (hereinafter referred to as the “Restructuring Measures”), the “Special Provisions on Major Asset Restructuring of STAR Market Listed Companies” (hereinafter referred to as the “Special Restructuring Provisions”), and other relevant laws, administrative regulations, departmental rules, normative documents, as well as the “Shanghai Stock Exchange Rules for Listing Stocks on the STAR Market” (hereinafter referred to as the “Listing Rules”) and other business rules of the Exchange. With the approval of the China Securities Regulatory Commission, these Rules are hereby promulgated and shall take effect from the date of their publication.

When a STAR Market company undertakes a major asset restructuring, issues shares to acquire assets, or undergoes a restructuring‑based listing, these Rules shall apply; in cases not covered by these Rules, the Exchange’s other relevant business rules shall prevail. Except for restructuring‑based listings, where a STAR Market company implements a major asset restructuring that does not involve the issuance of shares, the provisions of Chapters III through VI of these Rules shall not apply; instead, the requirements for information disclosure shall be governed by the Exchange’s other applicable regulations. For the purposes of these Rules, “restructuring‑based listing” refers to the major asset restructuring transaction as defined in Article 13 of the Measures on Major Asset Restructuring. The Exchange shall review the application documents submitted by STAR Market companies for share‑issuance‑based asset acquisitions or restructuring‑based listings (hereinafter collectively referred to as “application documents”). If the Exchange approves such applications, it shall forward its review opinions, the application documents, and related review materials to the China Securities Regulatory Commission (hereinafter “CSRC”) for the registration procedure; if the review is not approved, the Exchange shall issue a decision to terminate the review. With respect to restructuring‑based listing applications by STAR Market companies that do not involve the issuance of shares, if the Exchange approves the application, it shall issue a decision approving the restructuring‑based listing; if the review is not approved, the Exchange shall issue a decision to terminate the review.

BOC International Securities’ IPO application has been approved, marking the 37th listed securities office on the A-share market.

At its 187th review meeting of 2019, held on November 28, the CSRC Issuance Review Committee approved the initial public offering application of Bank of China International Securities Co., Ltd. (hereinafter referred to as “BOCI”), marking the 37th listed securities office in the A-share market. As a securities office in which Bank of China holds an indirect stake, BOCI’s degree of reliance on Bank of China and the reasonableness of its related-party transactions with the bank have become key areas of scrutiny by the committee. Analysts note that, based on its financial performance, BOCI has experienced a slight decline over the past three years, and its revenue mix and business structure still require further optimization.

BOC International was formerly known as BOC International Securities Co., Ltd. The company was established in Shanghai on February 28, 2002, with a registered capital of RMB 1.5 billion. Following multiple rounds of capital increases, share expansions, and restructuring into a joint-stock company, as of May 24, 2019—the date the prospectus was signed—BOC International had 13 shareholders, with a total share capital of 2.5 billion shares. From an equity standpoint, Bank of China’s wholly owned subsidiary, BOC International Holdings, is currently the largest shareholder, holding 928 million shares, or 37.14% of the total. Upon successful completion of this IPO, BOC International Holdings’ shareholding will decrease to 27.85%. However, BOC International has stated that no single shareholder can unilaterally determine the company’s business policies, make decisions, or appoint or remove senior management through shareholder meetings or the board of directors; accordingly, the company has no controlling shareholder or de facto controller. As a securities office in which Bank of China holds an indirect stake, BOC International candidly disclosed in its prospectus: “Since its inception, the company has consistently used the ‘BOC’ brand, which has significantly contributed to enhancing our brand recognition and facilitating business operations.” Consequently, the relationship between BOC International and Bank of China has become a key focus of scrutiny by the Issuance Review Committee. For instance, the committee has requested that BOC International clarify whether the basis for determining the absence of a controlling shareholder and a de facto controller is sufficiently substantiated; explain why the company has not registered its own trademarks; assess whether it exhibits significant reliance on Bank of China; and evaluate whether such reliance could adversely affect the integrity of the company’s assets or its operational independence. During the reporting period, BOC International engaged in substantial related-party transactions with BOC International Holdings, Bank of China, and their affiliates across areas including investment banking, asset management, proprietary trading, private equity investments, and property leasing. In response, the Issuance Review Committee has asked BOC International to elaborate on the necessity and reasonableness of these various related-party transactions, the fairness of transaction prices, whether its core businesses are dependent on Bank of China, whether such dependencies compromise the company’s operational independence, the stability and sustainability of its cooperation with Bank of China, and the potential impact on the company’s ability to continue operating in the future.

BOC International is headquartered in Shanghai and operates 115 branches across more than 80 major cities nationwide. According to the China Securities Regulatory Commission’s 2018 classification of securities offices, BOC International was rated Class A, Level A. From 2016 to 2018, its operating revenue totaled RMB 2.83 billion, RMB 3.07 billion, and RMB 2.76 billion, respectively, while net profits were RMB 1.07 billion, RMB 1.07 billion, and RMB 0.71 billion, respectively. As of December 31, 2018, the company’s total assets amounted to RMB 38.71 billion, with net assets of RMB 11.60 billion. In terms of specific business segments, BOC International categorizes its operations into seven major areas: investment banking, securities brokerage, asset management, proprietary trading, private equity investment, futures, and other businesses, with securities brokerage, asset management, and investment banking constituting its core businesses. Between 2016 and 2018, these three segments accounted for 94.30%, 87.16%, and 86.86% of total operating revenue, respectively. BOC International notes that the CSRC currently employs risk‑control regulatory metrics centered on net capital and liquidity, and that a office’s net capital level is a key determinant of its business scale. Limited access to financing channels has significantly constrained the company’s ability to expand its operations, develop innovative products, and enhance profitability. Accordingly, the company plans to leverage the capital markets through this offering to replenish its net capital via multiple channels, thereby further strengthening its risk resilience and competitive position.

In addition, the company’s revenue mix and business portfolio require further optimization. At present, its revenue remains heavily reliant on traditional businesses such as securities brokerage, which are highly sensitive to market conditions and may lead to significant fluctuations in operating performance. Moving forward, the company will remain committed to innovation and transformation, vigorously pursue product‑driven innovation, continuously develop new sources of profit growth, expand the scale of its innovative and diversified businesses, and refine its revenue structure, thereby mitigating the impact of securities market cycles on both revenue and profitability.

The Financial Stability and Development Committee continues to closely monitor capital replenishment at small and medium-sized banks.

On the 28th, the Financial Stability and Development Committee of the State Council (referred to as the “Financial Committee”) held its tenth meeting. The meeting emphasized the need to prioritize risk mitigation in the course of reform and development, and to bolster the capital adequacy of commercial banks—particularly small and medium-sized banks—through multiple channels.

The meeting noted that, in the next phase, it is essential to adhere to established policies and guidelines, refine and optimize approaches and measures, strike a balanced relationship between maintaining growth and guarding against risks, and strengthen counter-cyclical adjustments. Particular attention should be paid to mitigating risks through reform and development, bolstering the capital base of commercial banks—especially small and medium-sized banks—through multiple channels, and improving long-term mechanisms for preventing, resolving, and managing risks. These efforts will help ensure the sound functioning of the financial system and safeguard overall economic and social stability. The meeting emphasized that, in the coming period, priority should be given to addressing pressing issues by further deepening reforms of the capital market and small and medium-sized banks, guiding the private equity fund industry toward standardized and healthy development, and refining incentive and constraint mechanisms. By unleashing vitality, fostering competition, and strengthening endogenous momentum, we can enhance the financial system’s adaptability, competitiveness, and inclusiveness, thereby promoting a virtuous cycle between finance and the economy.

At the nearly four meetings convened by the Financial Stability and Development Committee, bank capital replenishment has been a recurring topic, with the most recent three sessions placing particular emphasis on supporting small and medium-sized banks in bolstering their capital bases and deepening reform. Mingming, Chief Fixed Income Analyst at CITIC Securities Research, recommends that the next step should continue to adhere to the overarching approach of “one policy per institution, differentiated regulation,” leveraging equity raises and the introduction of strategic investors to strengthen capital adequacy, intensifying structural adjustments to enhance these banks’ resilience to risks, and guiding them back to serving the grassroots and the real economy. At the same time, in tandem with monetary policy and other measures, financial institutions should be encouraged to refine their lending practices for micro, small, and medium-sized enterprises, thereby increasing support for private and micro‑small businesses.

Capital market reform is also a key focus of this meeting. Following a period of implementation, the effective institutional arrangements pioneered on the STAR Market are expected to be gradually extended to other market segments, with recent efforts likely centered on advancing reforms to the ChiNext Board and piloting a registration-based system. “Looking ahead, two areas warrant close attention: first, the broader dissemination of lessons learned from the STAR Market’s experimental platform; and second, safeguarding the bottom line against systemic financial risks,” said Wang Bo, Director of the Research Institute at Central Plains Securities.

Authoritative sources indicate that relevant authorities will further refine the capital market’s foundational institutional framework. Specifically, they will strengthen the accountability of intermediary institutions in the issuance and underwriting process; relax daily price‑limit restrictions and enhance market‑stabilization mechanisms in trading; elevate the quality and relevance of information disclosure during ongoing supervision; and introduce innovative approaches, optimize delisting criteria, and streamline procedures in the delisting phase. At the same time, they will refine the margin‑trading and short‑selling system to promote a more balanced long‑short dynamic.

Various reform measures for the New Third Board are also being expedited to ensure their swift implementation. Chen Yongmin, Deputy General Manager of the National Equities Exchange and Quotations Company, recently stated that the company will, based on feedback gathered from all market participants, promptly refine and issue relevant rules and regulations for the New Third Board and organize the rapid rollout of these reforms. With regard to guiding the private equity fund industry toward standardized and sound development, the China Securities Regulatory Commission has emphasized that industry growth should focus on four key areas: serving the real economy, staying committed to core investment activities, strengthening risk prevention and control, and upholding integrity and fulfilling contractual obligations.

The term “risk” was repeatedly emphasized throughout this conference. Industry insiders note that, over the long term, risk prevention will help foster healthy and stable economic growth. In its China Financial Stability Report (2019), the People’s Bank of China stated that to win the tough battle of preventing and defusing major financial risks, it is essential to implement the fundamental principles of “safeguarding overall stability, coordinating across sectors, adopting tailored measures, and precisely defusing risks,” with priority given to the following tasks: first, effectively stabilizing the macro leverage ratio and managing credit risks in key areas; second, prudently resolving shadow banking risks; third, orderly addressing risks at various high‑risk financial institutions; fourth, comprehensively rectifying and standardizing the financial order; and fifth, deepening reform and opening-up in the financial sector, strengthening expectations management and public‑opinion guidance, and effectively guarding against abnormal market volatility and external shocks.

The options market has once again unveiled its “Five Golden Flowers.”

The China Securities Regulatory Commission has approved the Zhengzhou Commodity Exchange to launch options trading on PTA, methanol, and rapeseed meal; the Dalian Commodity Exchange to launch iron ore options trading; and the Shanghai Futures Exchange to launch gold options trading.

Against the backdrop of China’s comprehensive and deepening capital market reforms, the simultaneous launch of a batch of commodity options has drawn significant attention. Recently, the China Securities Regulatory Commission unveiled the “12 Measures for Deepening Reform,” which emphasized “expanding the range of futures and options products.” The recent concentrated listing of five new options contracts represents an important milestone in the capital market’s broader reform agenda. Prior to this expansion, China already had six commodity options, all introduced successively over the past two years. Following a period of development, these instruments have operated smoothly, with trading volumes and open interest steadily rising, and strong price correlation between options and their underlying futures. Meanwhile, both the trading infrastructure and investors’ understanding of options have continued to improve, while the relevant rules and operational frameworks governing options trading have grown increasingly sophisticated, creating favorable conditions for further market expansion.

China Securities Regulatory Commission spokesperson Chang Depeng stated that PTA, methanol, rapeseed meal, iron ore, and gold are key commodities. Since the launch of their respective futures contracts, market operations have remained generally stable, with broad participation from industrial clients and effective functionality. The introduction of corresponding options products will further meet the personalized and sophisticated risk-management needs of real‑economy enterprises while reducing hedging costs.

Industry analysts note that, for the Zhengzhou Commodity Exchange, PTA and methanol options will be among the first energy‑and‑chemical‑related options, while rapeseed meal options will further enhance the risk‑management toolkit for the oilseed and edible‑oil sector. This marks another solid step forward on the exchange’s path toward balanced development of both futures and options, making its approaches and channels for serving related industries more comprehensive and diversified.

As the Dalian Commodity Exchange’s first industrial‑goods option, the listing of iron ore options will help the derivatives market better serve the steel industry and advance the development of an international pricing center for iron ore. In recent years, iron ore prices have exhibited significant volatility, driving increased demand among steel companies for risk management—and this demand is trending toward greater diversification and sophistication. Iron ore options can provide the steel sector with a new suite of risk‑management tools.

The Shanghai Futures Exchange will launch gold options, a move that not only meets the objective needs of China’s gold industry but also represents an important step toward further enriching the gold derivatives product suite and enhancing the influence of China’s gold market. Gold possesses both commodity and financial attributes, serving as a key global safe-haven asset. Over the years, China has consistently ranked first worldwide in both gold production and consumption, establishing itself as a major gold market in Asia.

Jiang Guochang, General Manager of the Shandong Gold Exchange Center, stated that both futures and options play crucial roles in risk management, including hedging, though their functions differ. Relatively speaking, futures‑based hedging strategies are straightforward and practical, meeting the needs of most investors, whereas options‑based hedging approaches are more refined and specialized, catering to enterprises with more sophisticated hedging requirements. Shandong Gold will actively participate in gold options trading and, by leveraging financial derivatives such as options, futures, and forwards, proactively manage and mitigate price‑volatility risks to ensure stable business operations.

Cai Chengmiao, Executive General Manager of CITIC Securities and head of its on‑exchange market‑making business, stated that gold options will help refine the price‑discovery mechanism in the gold market, significantly enhancing the efficiency and precision of asset allocation and risk management for both corporate and institutional investors. Zhao Ting, Director of the Precious Metals Trading Division at the Financial Markets Department of Shanghai Pudong Development Bank, noted that, drawing on the successful launch of SHFE copper and natural rubber options, coupled with the exchange’s recent introduction of a market‑maker system—which has effectively boosted liquidity in gold futures contracts—gold options are poised to become a highly popular product.

Commercial & Corporate

Chinese tech companies are taking their business models overseas.

As of May this year, TikTok has topped the Apple App Store’s download rankings for five consecutive quarters, from the first quarter of 2018 through the first quarter of 2019. In countries including Japan, the United States, Thailand, Indonesia, India, Germany, France, and Russia, it has repeatedly claimed the No. 1 spot on the local overall charts. By proactively delivering short, engaging videos tailored to users’ preferences, its gradually personalized content feed has proven highly effective at capturing and retaining audiences. TikTok is a Chinese internet product that has gone global. In fact, over the past few years, an increasing number of Chinese internet companies that have matured domestically have turned their attention overseas. Drawing on China’s rich array of use cases and vast market, these offices have developed highly successful business models and are now taking them to the world stage.

At this very moment, if we take a global vantage point, we might observe remarkably similar scenes of everyday life. In Beijing, New Delhi, Seoul, and Manila, four users simultaneously launch Alipay, Paytm, Kakao Pay, and GCash on their smartphones, scan a QR code, and complete a purchase. These apps offer highly comparable functionalities; the latter three are often referred to as “local versions of Alipay,” each adapted to suit the specific cultural and regulatory context of its respective region. Overall, these mobile applications are steadily converging lifestyles around the world—and Chinese‑originated apps are accelerating this trend. Behind each of these platforms stands Ant Group, the parent company of Alipay.

Since 2013, Chizicheng has been expanding overseas, and its very first product topped the personalized app‑download charts in app stores across 89 countries and regions. Since then, the company has steadily diversified its portfolio, launching more than 40 mobile apps spanning categories such as desktop tools, security, music, news, fitness, and gaming, amassing nearly 700 million users in over 200 countries and regions. Among them, users in developed markets in Europe and North America account for more than 40%, while the remaining user base is concentrated in Southeast Asia, India, the Middle East, North Africa, and other regions. As Chinese companies increasingly enter global markets, building a worldwide R&D network has become a key pillar of internationalization. This not only enables more effective integration of technology and talent but also brings companies closer to local markets, providing crucial technological support for their global expansion.

In the United Kingdom, R&D facilities established by Chinese companies are occupying an ever‑increasing share of office space. More and more Chinese offices are setting up research and development centers in the UK, actively seeking to accelerate their integration into the global market through overseas scientific research. Located on the outskirts of Birmingham, Changan Automobile’s UK R&D center has, over nearly nine years of development, gradually evolved into an institution with capabilities spanning conceptual design, engineering development, vehicle integration, and simulation analysis. Meanwhile, Huawei has also established a research institute in London, focusing on artificial intelligence technologies—including computer vision, natural language processing, and decision‑making and reasoning. These technologies not only enhance existing products and services such as smartphones but also support the company’s long‑term technological accumulation.

Qi Zhenhong, President of the China Institute of International Studies, believes that “for Internet companies to achieve greater growth, the market is paramount. In my view, forward-thinking, well‑capitalized Internet offices that venture abroad early and strategically position themselves will reap even greater returns in the future.”

Ultra-low-energy buildings are poised to become a new driver of economic growth.

On September 1 this year, China’s “Technical Standard for Nearly Zero‑Energy Buildings” officially came into effect. This marks the first time internationally that the definitions related to nearly zero‑energy buildings have been explicitly codified through a national standard, and it is also China’s first pioneering national standard on building energy efficiency.

To promote ultra‑low‑energy buildings, local governments across China are rapidly introducing supportive policies. Provinces and municipalities such as Shandong, Henan, Beijing, and Jilin have successively rolled out policies and technical standards for the demonstration and widespread adoption of ultra‑low‑energy buildings, offering incentives in areas including financial subsidies, allowances for non‑floor‑area‑included space, upward adjustments to registered prices, and green‑finance measures. Industry experts predict that, as ultra‑low‑energy building technologies are increasingly applied to single‑family homes, residential structures, public facilities, mid‑rise buildings, and high‑rise towers, they will unlock a substantial market scale.

Stepping into the “Zai Shui Yi Fang” residential community in Qinhuangdao, Hebei Province, residents are full of praise for its passive‑house design. Resident Wang Zhen notes that the complex excels across all performance metrics: in winter, no heating is needed, and in summer, no air conditioning is required—yet indoor temperatures remain comfortably around 20 degrees Celsius year-round. Reportedly, “Zai Shui Yi Fang” is among China’s earliest completed ultra‑low‑energy green residential developments and also one of the country’s first ultra‑low‑energy green buildings.

Hebei Province leads the nation in the scale of passive ultra‑low‑energy buildings. As of September 2019, the province had cumulatively constructed 67 such buildings, with a total floor area of 3.1662 million square meters. Of these, 22 have been completed, totaling 555,200 square meters, while 45 are under construction, covering 2.611 million square meters. These buildings have enhanced indoor comfort and delivered significant energy savings and emission reductions, providing valuable lessons for the further development of passive ultra‑low‑energy architecture.

Hebei Province also ranks first nationwide in the comprehensiveness of its ultra‑low‑energy building standards and specifications. The Hebei Provincial “Energy‑Efficiency Design Standard for Passive Low‑Energy Residential Buildings,” implemented in 2015, was the country’s first passive‑house standard. Subsequently issued and put into effect—such as the Hebei Provincial Energy‑Efficiency Design Standard for Passive Ultra‑Low‑Energy Public Buildings, along with related construction and acceptance procedures, testing standards, and evaluation criteria—have all filled critical gaps in the industry and have largely established a coherent system. On January 1, 2019, the “Hebei Province Regulations on Promoting the Development of Green Buildings” (hereinafter referred to as the “Regulations”) came into force, marking the first local regulation in China to incorporate requirements for the development of passive ultra‑low‑energy buildings. The Regulations provide supportive provisions covering the planning and construction of passive ultra‑low‑energy projects, floor area ratios, and research and development of related technologies.

Hebei Province is prioritizing the development of a complete industrial chain to accelerate the emergence of new competitive advantages. Centered on passive ultra‑low‑energy buildings, it seeks to leverage the catalytic effect of passive‑house technologies on upstream and downstream industries, driving renovation and upgrading efforts to establish an integrated industrial ecosystem that spans the entire construction process and lifecycle, encompassing roughly 80 specialized subsectors. So how far are passive houses from the average consumer? “China’s passive‑house market remains small; at present, it is in the stage of technological demonstration and promotion, with no mandatory implementation yet,” said Feng Jun, president of the China Real Estate Association. He added that passive‑house certification in China is still voluntary.

Industry experts note that, in terms of construction costs, a passive house costs several hundred yuan—sometimes nearly a thousand yuan—more per square meter than a conventional home of comparable size. According to a company executive, passive housing is an integrated systems‑based project; certain raw materials, manufacturing equipment, and core components still have to be imported, which objectively drives up construction expenses. Strengthening R&D on passive‑house‑related products and technologies and achieving domestic production are therefore inevitable trends.

A conference on the high-quality development of enterprises in the engineering construction sector was held in Beijing.

On November 21, the Conference on High-Quality Development of Enterprises in the Construction Industry was held in Beijing, hosted by the China Construction Association Certification Center and co-organized by the Beijing Haide International Quality Research Institute and Beijing China Construction Association Testing Center Co., Ltd. At the conference, Liu Jinzhang noted that, as the national strategy for high-quality development continues to advance, high quality has become the cornerstone for Chinese construction offices to build their reputation and a “golden key” for expanding market access, enhancing capabilities, and strengthening brand equity. Chinese construction enterprises are now offering “Chinese solutions” and “Chinese wisdom” both at home and abroad to create better living environments, demonstrating their sense of responsibility as a major country through “Made in China” construction.

According to reports, in 1994, the China Construction Industry Association Certification Center was jointly established by the former Ministry of Construction and the China Construction Industry Association, and it is one of the four certification bodies under the administrative guidance of the Ministry of Housing and Urban–Rural Development. Over the past 25 years, the Center has grown into a specialized certification organization serving more than 5,000 enterprises, NGOs, and government agencies in the construction sector, providing comprehensive services that include forward-looking standard-setting, foundational management certification, innovative technology R&D, practical education and training, and excellence‑driven quality improvement.

In addition, the conference announced a list of “Outstanding Enterprises in Quality Management,” “Exemplary Leaders in Quality Management,” and “Advanced Individuals in Quality Management,” all of whom have dedicated themselves over the past 25 years to advancing high‑quality development in the industry. According to the organizers, these awards were selected by the China Construction Industry Association Certification Center based on its 25 years of experience serving a wide range of industry enterprises, employing rigorous procedures and multi‑dimensional criteria. The aim is for these cutting‑edge management practices to leverage the industry platform established by the Certification Center, thereby driving continuous progress across the sector.

China accounts for nearly 40% of the global cross-border parcel delivery market.

“China is a key player in the global cross-border parcel delivery market, with parcels originating from China now accounting for 38 percent of the total. Throughout the year, China Post as a whole supported cross-border e‑commerce transactions exceeding RMB 350 billion,” said Ma Junsheng, Director of the State Post Bureau, at the Universal Postal Union’s Global Conference on Cross-Border Cooperation in the E‑Commerce Era held on the 26th.

The Universal Postal Union’s Global Conference on Cross-Border Cooperation in the E‑Commerce Era was held in Xiamen from November 26 to 28, co‑hosted by the UPU and jointly organized by the State Post Bureau, China Post Group Corporation, and the Xiamen Municipal Government. Liu Aili, Chairman of China Post Group Corporation, stated that in the age of e‑commerce, the postal network under the UPU framework remains the world’s largest physical delivery network and continues to serve as the primary channel for cross‑border e‑commerce parcel delivery.

According to statistics, in 2018 postal services accounted for approximately 70% of global cross-border parcel deliveries. These cross-border parcels are predominantly composed of apparel, consumer electronics, and health and beauty products, with 72% weighing less than one kilogram—aligning closely with the postal service’s strengths in handling high-value, lightweight small items. “To date,” said Zhang Ronglin, Deputy General Manager of China Post Group Corporation, “China Post has dispatched over 10 million pieces of mail to 24 European countries via railway transport modes such as the China–Europe Railway Express and the China–Russia combined road‑rail service, with a total weight exceeding 2,000 tons.” He added that international rail freight for mail has become the backbone of China’s cross-border land transportation.

According to statistics from the General Administration of Customs, from January to October this year, the total value of retail imports and exports via the customs cross-border e‑commerce management platform reached RMB 139.62 billion, up 25.5% year on year. With its extensive network coverage, low costs, and rapid delivery, the postal and express delivery sector has become the primary logistics channel for cross‑border e‑commerce goods.

Bishar Hussein, Director General of the Universal Postal Union’s International Bureau, stated that the future development of global postal services requires regulatory authorities to harmonize their tools, enables postal operators to maintain a competitive edge in an increasingly open market, and calls for all stakeholders to deepen their integration into the international postal sector. “The postal sector must strengthen cooperation with international organizations such as customs, civil aviation, and railways—working together to establish alliances, formulate standards, and develop new business models,” he added. Ma Junsheng emphasized that the postal sector should accelerate the accumulation of air‑transport and rail‑mail resources, expand overseas delivery networks and overseas warehouses, and build an efficient, reliable supply chain; expedite the cultivation and expansion of import‑export operations to achieve a more balanced and effective cross‑border channel; develop convenient, dependable return‑and‑exchange solutions and establish localized customer‑service systems; enhance coordination with stakeholders to provide users with robust risk‑management measures; and coordinate order flows and routing to meet multi‑tiered time‑frame requirements.

“Violent layoffs” are unacceptable.

Recently, an online article about “NetEase layoffs” has gone viral. The author, a five-year veteran of NetEase Games, claims that after being diagnosed with dilated cardiomyopathy this year, the company forced him to resign through a series of coercive tactics—“pressure, manipulation, surveillance, framing, and threats.” In response, NetEase issued a formal apology, acknowledging that certain employees did engage in inappropriate behavior—such as being overly blunt and unsympathetic—but maintained that the employee’s performance was indeed subpar and, under the terms of the employment contract, the company was entitled to terminate his employment.

Whether or not this constitutes “violent layoffs” depends first on the methods employed and second on the nature of the actions. If the methods are improper, it may simply be a management issue; but if the underlying rationale is flawed, it could cross legal boundaries. At present, NetEase’s use of terms like “brutal and crude” and “unreasonable” suggests it acknowledges shortcomings in its approach, yet its insistence on citing “unsatisfactory performance” also serves a strategic purpose. After all, dismissing an employee on the grounds of illness not only projects an image of callousness, opportunism, and cold-heartedness, but may also run afoul of the Labor Contract Law. By contrast, if the issue lies with the employee’s capabilities, the company can not only terminate the contract in accordance with the law, but also emphasize its commitment to humanitarian principles. Clearly, whether the employee’s competence truly meets the required standard has become the central point of contention going forward, and labor inspection authorities should intervene promptly to render a more authoritative ruling.

However, this issue has drawn public attention, likely because it strikes a nerve in the protection of workers’ rights: anyone may face illness or other hardships, and there will come a time when one simply cannot keep up. What should be done then? According to the Labor Law, an employer is required to assign alternative work; only if, after training or a reassignment, the employee still proves unable to perform the job may the employer terminate the labor contract. Yet in real life, we repeatedly encounter cases of “disguised layoffs”: no matter how promising the initial recruitment promises, when it comes time to let someone go, employers invariably cite “irregular attendance” or “inability to perform” as pretexts. When confronted with such situations, employees should carefully review their complaints; if they believe their performance is not at issue, they should officely refuse and seek assistance from the labor arbitration authorities.

It is worth noting that, in many cases of “violent layoffs,” an unspoken practice often emerges: employers lower employees’ wages, make life difficult for their family members, or resort to persuasion and intimidation to pressure them into resigning voluntarily. The underlying logic is to rebrand the layoff as a “voluntary resignation,” thereby sidestepping the “N+1” severance payment and avoiding legal risks. In this particular case, NetEase ultimately paid the “N+1” compensation, yet made no mention whatsoever of the company’s coercion forcing the employee to leave or of the protracted struggle the employee endured. Moreover, based on employee feedback, the company not only threatened the employee with the prospect of being unable to find another job but also allegedly fabricated evidence of early departure. Such conduct is not only callous and inhumane; it may also constitute violations of laws and regulations, warranting intervention and investigation by the relevant authorities.

This “violent layoff” incident has once again laid bare the fragility of workers’ rights. Objectively speaking, in the fiercely competitive internet industry, both the culture of grueling overtime—“working day and night” and “996”—and cost‑cutting layoffs like this have long been unspoken norms. While many people strongly object to these practices, it must be acknowledged that a company is not a family, and entrepreneurship is not a public‑service endeavor; offices are entitled to employ various cost‑reduction strategies. Nevertheless, it is equally important to emphasize that, regardless of the method used, legality and compliance remain the bottom line. In this case, NetEase itself serves as a vivid illustration: if a company takes employees’ concerns seriously and adopts lawful, reasonable measures, a dignified separation is entirely possible. But if it resorts to coercion or inducement, crossing established boundaries, it risks plunging itself into controversy and damaging its reputation.

“Violent layoffs” are unacceptable. For a company to cultivate a positive image and enhance its appeal, it must not only offer competitive financial compensation but also demonstrate genuine humanistic care. All industries—including the internet—should recognize that we live in an age where everyone has a voice: if you perform well, good work will speak for itself; but if you fall short, no amount of concealment can hide poor performance. In the end, you’ll fail to save on severance costs and only end up with a tarnished reputation.

Taxation TAXATATION

Order No. 49 of the State Taxation Administration: Measures for the Administration of Reporting Tax Violations

The Measures for the Administration of Reporting Tax‑Related Violations have been reviewed and approved at the fourth Bureau Meeting of the State Taxation Administration for 2019 on November 21, 2019. They are hereby promulgated and shall enter into force as of January 1, 2020.

Administrative Measures for the Reporting of Tax Law Violations

Chapter I General Provisions

Article 1: In order to safeguard the right of organizations and individuals to report, in accordance with the law, violations of tax laws and administrative regulations by taxpayers and withholding agents, and to regulate the reporting procedure, these Measures are hereby formulated in accordance with the relevant provisions of the Law of the People’s Republic of China on the Administration of Tax Collection and its Implementing Rules.

Article 2: For the purposes of these Measures, “whistleblowing” refers to the act by organizations or individuals of providing tax authorities, through written correspondence, telephone, fax, online channels, in-person visits, or other means, with leads concerning tax-related violations committed by taxpayers or withholding agents.

Under the forms specified in the preceding paragraph, any entity or individual who reports tax-related violations shall be referred to as the whistleblower; the taxpayer or withholding agent subject to such reporting shall be referred to as the reported party.

Whistleblowers may file reports under their real names or anonymously.

Article 3. For the purposes of these Measures, “tax-related violations” refer to acts suspected of tax evasion (avoidance of tax payment), evasion of tax collection, tax fraud, the issuance of false, forged, or altered invoices, as well as other tax-related violations involving the avoidance of tax payment.

Article 4. The administration of whistleblowing shall adhere to the principles of compliance with laws and regulations, tiered and categorized management, local jurisdiction, and strict confidentiality.

Article 5: Tax inspection bureaus at or above the municipal (prefectural, autonomous prefectural, league) level shall establish tax‑violation case reporting centers. The Tax Violation Case Reporting Center of the Inspection Bureau of the State Taxation Administration is responsible for receiving reports of tax violations, as well as for supervising, guiding, and coordinating the handling of significant reported matters. The tax‑violation case reporting centers of the tax inspection bureaus of provinces, autonomous regions, municipalities directly under the central government, cities separately listed in the national plan, and municipalities (prefectures, autonomous prefectures, leagues) are responsible for receiving, accepting, processing, and managing reports of tax violations. Cross‑regional inspection bureaus at all levels and county tax bureaus shall designate departments to perform the functions of tax‑violation case reporting centers, which shall be responsible for receiving reports of tax violations and handling them in accordance with their prescribed duties.

For the purposes of these Measures, the “Reporting Center” refers to the tax‑violation case reporting center mentioned in the preceding paragraph, as well as any department designated to perform the functions of such a reporting center. The Reporting Center shall display an external identification sign.

Article 6: Tax authorities shall publicly announce the telephone (fax) number, mailing address, postal code, and online reporting channels of their whistleblower hotline, and shall establish dedicated reception facilities and whistleblower boxes.

Tax authorities also accept reports of tax-related violations through the 12366 taxpayer service hotline.

Article 7 Tax authorities shall strengthen communication and cooperation with public security, judicial, disciplinary inspection and supervision, and letters-and-visits authorities, and effectively carry out whistleblower management.

Article 8: Reporting tax-related violations is a voluntary act on the part of the whistleblower, and any expenses incurred by the whistleblower as a result of such reporting shall be borne by the whistleblower himself or herself.

Article 9: Whistleblowers shall, in the course of making a report, comply with laws and administrative regulations; they shall be responsible for the authenticity of the materials they submit, and shall not fabricate or distort facts, nor shall they make false accusations or maliciously harm others; nor shall they infringe upon the interests of the state, society, or collectives, or the legitimate rights and interests of other citizens.

Chapter 2: Receipt and Acceptance of Whistleblowing Matters

Article 10: Whistleblowers reporting tax-related violations shall provide the name (or personal name) and address (or domicile) of the reported party, as well as leads regarding the tax violation. They shall, to the extent possible, also furnish the reported party’s Unified Social Credit Code (or identification number), information on the legal representative and the actual controller, and any other relevant supporting documentation.

Whistleblowers are encouraged to submit written whistleblowing materials.

Article 11: The Reporting Center, upon receiving a named report, shall accurately record the information of the named reporter.

An individual who wishes to file a named report must submit it in their own name; a unit that wishes to file a named report must have it submitted by an authorized staff member of the unit.

When multiple individuals jointly submit a real-name report, a primary contact person shall be designated; if no such person is designated, the first signatory of the reporting materials shall serve as the primary contact. Article 12: Upon receiving telephone-based reports, the 12366 taxpayer service hotline shall forward them to the relevant departments in accordance with the following classification:

(1) Matters of whistleblowing that meet the requirements set forth in Article 3 of these Measures shall be promptly forwarded to the Reporting Center;

(2) Reports concerning the failure to issue invoices when required, the failure to file for tax registration, and other minor tax violations shall, in accordance with relevant regulations, be directly forwarded to the competent business department of the tax authority having jurisdiction over the reported party for handling.

(3) Other matters reported shall be forwarded to the competent authority or department.

Upon receiving tip-off materials that meet the requirements set forth in Article 3 of these Measures, any other unit or department of the tax authority shall promptly forward such materials to the Reporting Center.

Article 13: For complaints filed in writing under the complainant’s real name, the complainant shall submit the original and a copy of valid identification documents, such as a business license or a resident identity card.

For reports submitted in writing, online, or by fax under the reporter’s real name, the reporter shall provide photocopies of valid identification documents, such as a business license or a resident identity card.

Where a report is made by telephone and requires the reporter to provide their real name, the tax authority shall inform the reporter that reports must be submitted in accordance with the forms set forth in paragraphs 1 and 2 of this Article.

If the whistleblower does not submit the report in the forms prescribed in paragraphs 1 and 2 of this Article, it shall be deemed an anonymous report.

The Reporting Center may issue a receipt of acknowledgment upon request of an in-person, named whistleblower; for joint submissions by multiple individuals, a receipt shall be issued to the designated primary contact or the first signatory.

Article 14: Visitors making complaints or reports shall go to the complaint‑reception facilities established by the tax authorities. When multiple persons visit to raise the same complaint or report, they shall elect a representative, with the number of representatives not exceeding three.

Article 15: When receiving oral complaints from visitors, the details of the complaint shall be accurately recorded and either read to the complainant or conofficeed by reading it aloud. For complaints submitted under a real name, the complainant shall sign or affix a seal; for anonymous complaints, a record shall be kept.

When receiving telephone reports, one shall listen attentively, obtain clear information, and record it accurately.

Telephone calls and in-person complaints received may be recorded audio‑visually after the complainant has been informed.

When receiving written complaints such as letters or faxes, the integrity of the complaint materials shall be maintained, and they shall be promptly registered and processed.

Article 16: Tax authorities shall reasonably designate premises for receiving whistleblower complaints. Such premises shall be appropriately separated from office areas and equipped with necessary audio‑recording, video‑recording, and other surveillance facilities, ensuring full coverage of the reception area and their proper functioning.

Article 17: The Reporting Center shall promptly review the complaints it receives. Complaints falling under any of the following circumstances shall not be accepted:

(1) Where the subject of the report cannot be identified, or where no leads regarding tax-related violations can be provided;

(2) The matters reported have already been or, in accordance with the law, should be resolved through litigation, arbitration, administrative reconsideration, or other statutory procedures;

(3) Repeated reporting of the same matter that has already been investigated and concluded, without providing any new, valid leads.

Except as otherwise provided in the preceding paragraph, the Reporting Center shall deem a report to be accepted upon receipt of the matter being reported.

The Reporting Center may, upon request of the real-name whistleblower, provide an explanation—either orally or in writing—of the reasons for non-acceptance, as appropriate.

The Reporting Center of the Inspection Bureau of the State Taxation Administration shall conduct a preliminary review of all complaints received at its level. Complaints falling outside the scope specified in Article 3 of these Measures shall be forwarded to the competent authority or department; those within the scope set forth in Article 3 shall, in accordance with the principle of territorial jurisdiction, be referred to the relevant reporting center, which shall examine the matter and decide whether to accept it for processing. The Reporting Center of the Inspection Bureau of the State Taxation Administration shall regularly obtain from the relevant reporting centers information on the acceptance status of the cases it has forwarded, and shall follow up on any cases that have been referred but not yet accepted.

Article 18: For complaints received by a county tax bureau that has not established an inspection bureau, if such complaints meet the requirements set forth in Article 3 of these Measures, they shall be submitted to the whistleblower center of the next higher-level tax bureau’s inspection bureau for unified handling.

Inspection cases reported to interregional inspection bureaus at all levels that meet the requirements set forth in Article 3 of these Measures shall, after being filed with the tax inspection bureau at the same level, be processed accordingly.

Article 19: Where jurisdiction over a whistleblower complaint is in dispute, the parties concerned shall resolve the issue through consultation on the principle of facilitating the investigation and handling of the case; if no agreement can be reached, the matter shall be submitted to the common higher-level tax authority for coordination or decision.

Chapter III Handling of Whistleblowing Matters

Article 20: Upon receipt of a report, it shall be classified and handled in accordance with the following procedures:

(1) Where the report contains detailed information, clear leads regarding tax violations, and sufficient supporting evidence, the Inspection Bureau shall initiate a case for investigation.

(2) Where the content of the report and the leads are relatively clear but lack the necessary supporting documentation, and there is a reasonable basis to suspect tax-related violations, the Inspection Bureau shall conduct an investigation and verification. If tax-related violations are found, a case shall be filed for inspection; if no violations are found, the matter shall be closed.

(3) If the subject of the report is clearly identified but other matters reported are incomplete, unclear in content, or lack sufficient leads, the case may be temporarily filed for further investigation. Once the reporter supplements and clarifies the information, it shall then be processed.

(4) For whistleblowing matters that have already been accepted but remain under investigation, any subsequent whistleblowing submissions may be consolidated for processing.

(5) Matters of whistleblowing not covered by Article 3 of these Measures shall be forwarded to the competent unit or department.

Article 21 The Reporting Center may, either in the name of the tax authority or in its own name, supervise and assign the handling of reported matters to lower-level tax authorities.

Article 22: The Reporting Center shall, within fifteen working days from the date of acceptance of a reported matter, complete tiered and categorized handling, unless special circumstances apply.

The investigating authority shall conclude the handling of the reported materials received from the reporting center within three months from the date of receipt; if the case is complex and cannot be concluded within this period, an extension may be granted.

Article 23: The Inspection Bureau of the Tax Authority shall rigorously review the outcomes of cases under supervisory oversight. Where the facts are unclear or the handling is improper, it shall notify the competent authority to conduct supplementary investigations or reopen the investigation and handle the matter in accordance with the law.

Chapter 4: Management of Whistleblowing Matters

Article 24: The Reporting Center shall maintain strict control over complaint materials, recording, on a case-by-case basis, the main contents of accepted complaints, the progress of their handling, and the basic information of both the complainant and the respondent.

Article 25: In principle, received whistleblower materials shall not be returned. As for whistleblower materials that are not accepted, after recording the basic information of the reported matter and the reasons for non-acceptance, they may be destroyed upon approval by the head of the tax inspection bureau at the same level.

Article 26: Inspection materials placed on temporary hold for further review may be destroyed if no valuable supplementary information is received within two years from the date of acceptance.

Article 27: The whistleblower materials pertaining to supervised cases shall be managed separately, and the specific procedures for forwarding, reporting, and other matters related to such cases shall be carried out in accordance with the relevant regulations.

Article 28: The custody and organization of whistleblower materials shall be handled in accordance with the relevant provisions on archival management.

Article 29: Each year, the Reporting Center shall compile and analyze data on the number, categories, and handling status of reported cases and related matters, prepare an annual analytical report, and submit it in accordance with applicable regulations.

Chapter 5: Responding to Whistleblowers and Providing Rewards

Article 30: A whistleblower who has provided real-name information may request a response regarding the handling of the reported matter and the outcomes of the investigation and enforcement.

When a real-name whistleblower requests a response regarding the handling of their report, they shall cooperate with identity verification; when requesting a response on the outcome of the investigation and handling, they shall present the valid identification document provided at the time of reporting.

The Reporting Center may, depending on the specific circumstances, respond to named whistleblowers either orally or in writing.

Article 31: The handling status of real-name complaints shall be communicated by the whistleblower center of the tax authority that rendered the decision.

Where matters reported are subject to supervision, assignment, submission, or referral, the recipient shall be informed of the disposition; where such matters are temporarily retained for investigation, the reporter shall be advised to provide additional materials.

Article 32: The outcome of the investigation and handling of real-name complaints shall be communicated by the whistleblower center of the tax authority responsible for the investigation.

If a real-name whistleblower requests a response regarding the outcome of the investigation into the reported matter, upon conclusion of the investigation, the Reporting Center may provide the whistleblower with a brief summary of the findings related to the reported lead; however, it shall not disclose information on the handling of tax-related violations beyond the scope of the reported lead, nor shall it furnish any enforcement documents or materials pertaining to the case.

Article 33: After the 12366 Tax Service Hotline receives a report and forwards it to the Reporting Center or the relevant business department, it may, upon the reporter’s request, inform the reporter of the status of the case as communicated by the Reporting Center or the relevant business department.

Article 34: Where a reported matter is verified as true and has resulted in the recovery or reduction of losses to the state, the real-name whistleblower shall be granted an appropriate reward in accordance with the relevant provisions of the Ministry of Finance and the State Taxation Administration.

Chapter Six: Protection of Rights

Article 35: If a whistleblower does not wish to provide personal information or to have their whistleblowing activity made public, the tax authority shall respect such wishes and maintain confidentiality.

Article 36 Tax authorities shall, within the scope of their duties, protect, in accordance with law, the lawful rights and interests of both whistleblowers and those who are the subject of whistleblowing.

Article 37: Tax authority personnel who have a direct conflict of interest with the matter reported, the whistleblower, or the reported party shall recuse themselves.

If the whistleblower has legitimate grounds and evidence demonstrating that a tax authority official should recuse himself or herself, such official shall be required to recuse himself or herself upon approval by the head of the tax authority at the same level or by the head of the inspection bureau.

Article 38: Tax authority personnel must strictly comply with the following confidentiality provisions:

(1) The acceptance, registration, handling, and investigation of whistleblowing matters shall be conducted in strict compliance with relevant national laws, administrative regulations, and other applicable provisions, with rigorous confidentiality measures in place. A sound accountability system must be established, and no one may, on their own initiative, excerpt, duplicate, withhold, or destroy whistleblowing materials.

(2) It is strictly prohibited to disclose the whistleblower’s name, identity, affiliation, address, contact information, or any other related details; it is also strictly prohibited to reveal the content of the report to the reported party or to any person unrelated to the investigation and handling of the case.

(3) During investigations and fact-finding, as well as when initiating formal inspections, the original or a copy of the whistleblower’s letter shall not be disclosed, nor shall any information pertaining to the whistleblower be revealed. With respect to anonymous letters and materials submitted by whistleblowers, handwriting analysis shall not be conducted except in exceptional circumstances.

(4) Publicity and reporting, as well as the awarding of commendations to individuals who have made meritorious reports, shall be conducted in accordance with the law. Without the written consent of the whistleblower, their name, identity, affiliation, address, contact information, and other relevant details may not be disclosed.

Chapter VII Legal Liability

Article 39: If a tax authority official violates the provisions of these Measures by disclosing to the person being reported or to any individual unrelated to the investigation and handling of the case the whistleblower’s complaint materials or relevant information, administrative disciplinary action shall be imposed in accordance with the law.

Article 40: If tax authority personnel retaliate against whistleblowers, they shall, depending on the circumstances and consequences, be subject to administrative disciplinary measures in accordance with the law; if their conduct constitutes a crime, it shall be referred to the judicial authorities for handling in accordance with the law.

Article 41: If tax authority personnel fail to perform their duties, neglect their responsibilities, or engage in favoritism and corruption, thereby causing losses to the whistleblowing system, they shall be subject to criticism and education; in cases of serious misconduct, they shall be given administrative disciplinary measures in accordance with the law and reassigned from their posts; if their conduct constitutes a crime, the matter shall be referred to the judicial authorities for lawful handling.

Article 42: In cases of reported tax law violations that involve disciplinary or legal misconduct by tax authorities or tax personnel, such cases shall be referred to the relevant departments for handling in accordance with applicable regulations and laws.

Article 43: If a whistleblower violates the provisions of Article 9 of these Measures, tax authorities shall dissuade, criticize, and educate the whistleblower; if such dissuasion, criticism, and education prove ineffective, the matter may be referred to the relevant departments for handling in accordance with the law.

Chapter VIII Supplementary Provisions

Article 44: For the purposes of these Measures, “conclusion of a whistleblowing investigation” means either that the conclusive document in the whistleblowing case has taken legal effect, or that, following investigation and verification, no tax-related violations have been found.

Article 45: The tax authorities of the State Taxation Administration in each province, autonomous region, directly administered municipality, and city under separate planning may formulate specific implementation measures in accordance with these Measures.

Article 46 This Measures shall come into force on January 1, 2020. The Measures for the Administration of Reporting Tax-related Violations (promulgated by Order No. 24 of the State Taxation Administration) shall be repealed concurrently.

An Interpretation of the Measures for the Administration of Reporting Tax Law Violations

The Measures for the Administration of Reporting Tax‑Related Violations (hereinafter referred to as the “Measures”) have been reviewed and approved at a meeting of the State Taxation Administration’s Bureau. The relevant provisions of the Measures are hereby interpreted as follows:

I. Background of the Revision

To thoroughly implement the spirit of the Fourth Plenary Session of the 19th CPC Central Committee, further deepen the “delegation, regulation, and service” reform in the tax sector, and improve the tax inspection system, the State Taxation Administration has revised the original Measures in response to new circumstances and issues encountered during their implementation.

II. Key Revisions

(1) Measures to facilitate whistleblowers have been strengthened. The Measures stipulate that whistleblowers may submit reports by letter, telephone, fax, online channels, or in person, and may do so through cross‑regional inspection bureaus at all levels as well as departments within county tax bureaus that perform the functions of whistleblower centers. Furthermore, the 12366 taxpayer service hotline is explicitly designated to receive telephone‑based reports.

(II) Strengthening provisions that impose constraints on tax authorities. The Measures further clarify the workflow for handling whistleblower complaints, set time limits for processing such reports, and standardize the response process by establishing specific requirements regarding the responding entity, the content of the response, the procedural steps, and the allocation of powers and responsibilities.

(3) In response to the needs of the reform of the national and local tax administration system, specific measures have been added to ensure that the tax authorities’ whistleblower‑handling work is “well‑coordinated.” In light of the organizational changes resulting from the merger of national and local tax agencies and the ongoing inspection‑reform, the Measures stipulate that cross‑regional inspection bureaus at all levels and county tax bureaus shall designate specific departments to perform the functions of a whistleblower center; they set forth the requirements for handling whistleblower reports received by cross‑regional inspection bureaus; and they clarify the procedures for resolving disputes.

III. Effective Date of the Measures

These Measures shall come into force on January 1, 2020, and the Measures for the Administration of Reporting Tax Violations (promulgated by Order No. 24 of the State Taxation Administration) shall be repealed concurrently.

Decision of the State Taxation Administration on Amending the Measures for the Administration of the Formulation of Tax Normative Documents

The “Decision of the State Taxation Administration on Amending the Measures for the Administration of the Formulation of Tax Normative Documents” was reviewed and approved at the fourth Bureau Meeting of the State Taxation Administration for 2019 on November 21, 2019. It is hereby promulgated and shall enter into force as of January 1, 2020.

The State Taxation Administration has decided to amend the Measures for the Administration of the Formulation of Tax Normative Documents as follows:

I. The name of the regulation shall be amended to: “Administrative Measures for the Formulation of Tax Normative Documents.”

II. In the text, “taxation normative documents” shall be amended to “tax administration normative documents,” except for the reference to the “Measures for the Administration of the Formulation of Taxation Normative Documents” in Article 50.

III. Article 1 is amended to read as follows: “In order to standardize the formulation and management of tax‑related normative documents, implement the principle of tax legality, build a standardized and unified tax legal system, optimize tax enforcement practices, promote law-based administration by tax authorities, and safeguard the legitimate rights and interests of parties subject to tax administration, this Measures is hereby formulated in accordance with the Legislation Law of the People’s Republic of China, the Regulations on the Procedures for Formulating Rules and Regulations, and other relevant laws, regulations, and provisions, taking into account the actual work of tax authorities.”

IV. Article 2, paragraph 1, is amended to read as follows: “For the purposes of these Measures, ‘tax normative documents’ refer to documents formulated and promulgated by tax authorities at or above the county level in accordance with their statutory powers and prescribed procedures, which affect the rights and obligations of taxpayers, payers, withholding agents, and other parties subject to tax administration, possess general binding force within the jurisdiction, and are repeatedly applicable over a specified period.”

V. Delete the phrase “except for matters involving tax reductions or exemptions approved by the State Council” from Article 5.

VI. Article 6, paragraph 2, is amended to read: “Internal departments, branch offices, and temporary bodies of tax authorities at all levels shall not, in their own name, formulate normative tax documents.”

VII. Article 17 is amended to read as follows: “When drafting tax normative documents, the drafting department shall conduct thorough investigations and studies, summarize practical experience, and solicit the views of grassroots tax authorities. When drafting tax normative documents that are closely related to the production and business activities of parties subject to tax administration, the drafting department shall solicit the opinions of representatives of such parties and of industry associations and chambers of commerce. The drafting department may invite the policy and legal affairs department to jointly solicit opinions.”

“Soliciting opinions may be conducted in writing, through online consultations, or by convening symposiums, expert review meetings, and other formats.”

“Except where confidentiality is required by law, for tax normative documents that affect the vital interests of parties subject to tax administration or may have a significant impact on their rights and obligations, the drafting department shall solicit public comments.

“Where laws or administrative regulations expressly prescribe a time limit for soliciting public comments on normative documents, such provisions shall prevail.”

VIII. Article 26 is amended to read as follows: “Where a draft submitted for review involves significant public interests or has a substantial impact on the lawful rights and interests of parties subject to tax administration or on tax administration, the drafting department shall, upon approval by the policy and legal affairs department, submit it for collective deliberation. During the review process, if the policy and legal affairs department determines that a tax‑related normative document involves significant public interests or has a substantial impact on the lawful rights and interests of parties subject to tax administration or on tax administration, it may recommend that the drafting department submit the document for collective deliberation.”

9. Article 27 is amended to read: “When the tax authorities take the lead in jointly formulating normative documents with other agencies, and when tax authorities below the provincial level draft, on behalf of local people’s congresses and their standing committees or governments, documents that involve the rights and obligations of parties subject to tax administration, the competent business departments shall submit the draft for review or the text for joint consultation to the policy and legal affairs department for examination.”

“Where, after consultation with other agencies, the content of a document has undergone substantial changes, the drafting department shall resubmit it to the policy and legal affairs department for review.”

“Normative documents jointly formulated by other authorities in conjunction with the tax authorities shall be implemented in accordance with the provisions of paragraph 1 of this Article.”

X. Article 48 is amended by adding a new paragraph as paragraph 1: “Tax authorities at all levels shall give full play to the role of public‑sector lawyers in the formulation and administration of tax‑related normative documents.” Accordingly, the original paragraph 1 shall be renumbered as paragraph 2.

In addition, certain textual elements have been adjusted and revised accordingly.

This Decision shall enter into force on January 1, 2020. The Measures for the Administration of the Formulation of Tax Normative Documents shall be amended accordingly and re-issued in accordance with this Decision.

Interpretation of the “Decision of the State Taxation Administration on Amending the Measures for the Administration of the Formulation of Tax Normative Documents”

In order to thoroughly implement the spirit of the Fourth Plenary Session of the 19th CPC Central Committee, further improve the tax legal system, optimize tax enforcement practices, and enhance the tax authorities’ capacity to administer taxation in accordance with the law, the State Taxation Administration has revised the Measures for the Administration of the Formulation of Tax Normative Documents (promulgated by Order No. 41 of the State Taxation Administration, hereinafter referred to as the “Measures”), in accordance with the Legislation Law of the People’s Republic of China and the Regulations on the Procedures for the Formulation of Rules and Regulations. The relevant provisions are hereby interpreted as follows:

I. Refining the Legislative Purpose of the Measures

The Decision adopted at the Fourth Plenary Session of the 19th CPC Central Committee states: “We must uphold and improve the socialist rule of law with Chinese characteristics” and “accelerate the establishment of a comprehensive system of legal norms.” The issuance of normative documents by tax authorities is an important means of implementing laws and administrative regulations, directly affecting the rights and obligations of parties subject to tax administration. In order to implement the relevant requirements of the CPC Central Committee and the State Council, Article 1 of these Measures has been revised as follows: “In order to standardize the formulation and management of tax‑related normative documents, uphold the principle of tax legality, build a standardized and unified tax legal system, optimize tax enforcement practices, promote law-based administration by tax authorities, and safeguard the legitimate rights and interests of parties subject to tax administration, these Measures are hereby formulated in accordance with the Legislation Law of the People’s Republic of China, the Regulations on the Procedures for Formulating Rules and other relevant laws, regulations, and provisions, and taking into account the actual work of tax authorities.”

II. Amendment of the Names and Definitions of Tax Normative Documents

To meet the requirements of the reform of the national and local tax administration system, this document clarifies that normative documents issued by tax authorities include those pertaining to social insurance premiums and non-tax revenues, and promotes the institutionalization and standardization of the formulation of such normative documents. Accordingly, the term “taxation‑related normative document” in the Measures has been revised to “tax‑related normative document,” and a new definition has been provided for tax‑related normative documents. Article 2, Paragraph 1 of the Measures has been amended to read: “For the purposes of these Measures, ‘tax‑related normative document’ refers to a document formulated and promulgated by tax authorities at or above the county level in accordance with their statutory powers and prescribed procedures, which affects the rights and obligations of taxpayers, payers, withholding agents, and other parties subject to tax administration, possesses general binding force within the jurisdiction, and is repeatedly applicable over a specified period.”

III. Amendment to the Provisions on the Authority to Formulate Tax Normative Documents

Following the reform of the tax administration system, tax authorities at and below the county level are all branch institutions, and tax authorities no longer maintain any directly affiliated agencies. Accordingly, paragraph 2 of Article 6 of the Measures has been amended to read: “Internal departments, branch institutions, and temporary bodies of tax authorities at all levels may not, in their own name, formulate normative tax documents.”

IV. Improving the Procedural Requirements for the Formulation of Tax Normative Documents

To enhance the scientific and democratic nature of institutional development within tax authorities and to safeguard enterprises, industry associations, and chambers of commerce in their rights to information, participation, expression, and oversight during the formulation of regulations, Article 17 of these Measures has been amended to stipulate that when drafting tax‑related normative documents, opinions must be solicited from enterprises, industry associations, and chambers of commerce; public consultation must be conducted; and specific time limits for such consultations must be specified.

V. Addition of Provisions for Collective Deliberation on Important Normative Documents

To better safeguard the legitimate rights and interests of taxpayers, payers, and withholding agents, and to enhance the quality of institutional development within tax authorities, the system of collective review for important normative documents has been further refined. Article 26 of the Measures has been amended to read as follows: “Where a draft submitted for review involves significant public interests or has a substantial impact on the lawful rights and interests of parties subject to tax administration or on tax administration, the drafting department shall, upon approval by the policy and legal affairs department, submit it for collective review. During the review process, if the policy and legal affairs department determines that a tax‑related normative document involves significant public interests or has a substantial impact on the lawful rights and interests of parties subject to tax administration or on tax administration, it may recommend that the drafting department submit the document for collective review.”

VI. Standardizing the Management of Normative Documents Jointly Formulated by Tax Authorities

To strengthen the management of normative documents jointly formulated by tax authorities and other agencies, Article 27 of these Measures adds a paragraph stating: “Normative documents jointly formulated by other agencies taking the lead and the tax authorities shall be implemented in accordance with the provisions of paragraph 1 of this article.” In other words, for normative documents drafted under the joint leadership of other agencies and the tax authorities, the tax authorities are also required to conduct a legality review.

VII. Addition of Provisions on Strengthening the Use of Public‑Sector Lawyers

To better leverage the role of public‑sector lawyers and enhance the quality of normative documents, Article 48 of these Measures is supplemented with the following paragraph: “Tax authorities at all levels shall fully harness the role of public‑sector lawyers in the formulation and management of tax‑related normative documents.”

In addition, in accordance with the relevant provisions of the “Guiding Opinions of the General Office of the State Council on Fully Implementing the Legality Review Mechanism for Administrative Regulatory Documents” (Guobanfa [2018] No. 115), the Measures have revised the term “legality review” to “legality audit.”

The Mainland and Macao have signed the Fourth Protocol to the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion.

The Fourth Protocol to the Arrangement between the Mainland and the Macao Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter referred to as the “Arrangement”) was signed in Macao on the 28th, introducing new provisions on tax exemptions for government investments.

On the same day, Chief Executive of the Macao Special Administrative Region, Chui Sai On, and Director of the State Taxation Administration, Wang Jun, signed Protocol No. 4 to the Arrangement on behalf of their respective sides. Upon entry into force, income derived by the Macao SAR Government from investments in the mainland will be exempt from taxation; this exemption applies to the Guangdong–Macao Cooperation and Development Fund as well as to similar investment projects undertaken in the future. These measures will effectively reduce the tax burden on the Macao SAR Government’s mainland‑based investments, enhance returns, help diversify reserve‑management portfolios, and promote industrial development, thereby fully demonstrating the state’s support for the Macao SAR’s policy of pursuing moderate economic diversification.

The Protocol also introduces a series of amendments to the Arrangement to align with the requirements of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting (BEPS) Action Plan, particularly the provisions on minimum standards, thereby reflecting developments and changes in international tax rules and ensuring that the Arrangement is consistent with the latest model treaty of the OECD for the avoidance of double taxation.

The Mainland and the Macao Special Administrative Region signed the Arrangement in 2003, marking its 16th anniversary to date. The Arrangement ensures tax equity for residents of both sides, enhances the business environment for enterprises, and fosters the development of bilateral trade and investment. Subsequently, the Mainland and Macao signed the First, Second, and Third Protocols to the Arrangement in 2009, 2011, and 2016, respectively, to refine and improve its specific provisions.

LITIGATION & ARBITRATION

The Regulations for the Implementation of the Food Safety Law will come into effect on December 1.

Food safety is no small matter. The Regulations on the Implementation of the Food Safety Law, revised after a decade, will officially come into effect on December 1. Dubbed the strictest food‑safety regulatory framework in history, these regulations highlight several key features, including holding individuals accountable and establishing a blacklist system. The Regulations emphasize four “strictest” principles: the harshest penalties, the most rigorous accountability, the tightest oversight, and the most stringent standards. They strengthen sanctions for violations, for example by raising the cost of non‑compliance and introducing a “penalties‑to‑individuals” mechanism that allows fines of up to ten times the annual income of the legal representative and other responsible parties. A “blacklist” system has been established for serious violators in the food production and operation sectors, with credit‑based joint punitive measures enforced. In addition, mechanisms have been improved to ensure seamless coordination between administrative law enforcement on food safety and administrative detention by public security authorities. At the same time, the principle of “the most stringent standards” has been formally enshrined in legal provisions for the first time, which will help elevate the overall level of industry development.

The most stringent aspect of the Regulations lies in their first-ever reinforcement of risk-control measures for imported foods and the responsibilities and obligations of importers, thereby strengthening source‑level food safety oversight to prevent non‑compliant imported foods from entering the domestic market.

Starting in December, these laws and regulations will soon affect our daily lives.

What should you do if you encounter “problematic vaccines”? And how can we regulate the overseas purchasing of “life-saving drugs”? In December, a batch of laws and regulations in the food and drug sectors came into effect, safeguarding our health and well‑being. Meanwhile, rules governing number portability ensure users’ “freedom to switch networks,” while six laws are being temporarily adjusted for application within free trade pilot zones to advance the separation of licenses and permits. With an ever‑improving legal framework, life becomes more secure for all of us.

Vaccine-related crimes will be prosecuted with the utmost severity.

In recent years, cases involving “problematic vaccines” have occurred in many regions, deeply concerning parents nationwide. The Vaccine Administration Law, which came into effect on December 1, addresses key issues in vaccine management through a comprehensive institutional framework. The law stipulates that criminal acts related to vaccines shall be prosecuted with the utmost severity in accordance with the law; it imposes penalties higher than those applicable to ordinary pharmaceuticals for illegal production and sale of counterfeit or substandard vaccines, as well as for violations of quality‑management standards governing manufacturing, storage, and transportation. Moreover, those held accountable may face fines, administrative detention, bans from practicing the profession, and even lifetime bans on engaging in the field. The law also establishes stringent responsibilities at every stage, link, and for all parties involved in the entire vaccine‑administration chain. At the production stage, a rigorous access‑approval system is in place, with requirements even more stringent than those set forth in the Drug Administration Law for engaging in pharmaceutical manufacturing. In the distribution phase, vaccines must be stored and transported under specified temperature conditions, with regular monitoring throughout the process. At the immunization stage, medical and health personnel are required to provide vaccination services strictly in compliance with established protocols—such as conducting the “three checks and seven verifications” prior to administration and promptly treating any adverse reactions that arise afterward.

Imported legally manufactured pharmaceuticals from abroad that have not been approved for sale in China will no longer be treated as counterfeit drugs.

The film “Dying to Survive” has sparked public concern over the practice of overseas “daigou”—buying and reselling medications. In response, the law has been updated. Effective December 1, the revised Drug Administration Law redefines the scope of counterfeit and substandard drugs: medicines imported without approval will no longer be classified as “counterfeit.” For cases involving the import of small quantities of legally marketed drugs from abroad without authorization, penalties may be mitigated if the circumstances are relatively minor. However, it is important to note that, under this law, importing drugs from overseas remains subject to approval, and any conduct that disrupts the orderly administration of pharmaceuticals will still be punishable. Experts argue that separating violations in drug production and marketing from issues of counterfeit or substandard quality and addressing them separately enhances the scientific rigor of regulatory enforcement. Furthermore, in light of the emerging issue of online sales of prescription drugs in recent years, the newly amended Drug Administration Law stipulates that online drug‑selling platforms must be interconnected with medical institutions’ information systems, enabling data sharing to ensure the authenticity of prescriptions and safeguard patient medication safety; drug‑delivery services must also comply with the requirements of Good Distribution Practice.

Food safety violations will be punished at the individual level.

Food is paramount to the people. The Regulations on the Implementation of the Food Safety Law, which came into effect on December 1, strengthen the principal responsibility of food producers and operators for food safety and introduce a “penalties imposed on individuals” mechanism, fully reflecting the “four strictest” requirements in the food and drug sectors. The Regulations stipulate that if a food production or operation enterprise or other entity commits an unlawful act as defined by the Food Safety Law, in addition to the penalties prescribed under the law, if any one of the following three circumstances applies—“intentional commission of the unlawful act,” “the unlawful act is of a particularly egregious nature,” or “the unlawful act has resulted in serious consequences”—the legal representative, principal person in charge, directly responsible supervisors, and other personnel with direct responsibility shall also be subject to fines ranging from one to ten times their income derived from the entity in the preceding year. Furthermore, the Regulations require that, on the basis of routine local‑level oversight, food safety regulatory authorities may adopt random supervisory inspections conducted by higher‑level agencies or organize cross‑jurisdictional inspections. For foods that may be adulterated or falsified and cannot be tested using existing food safety standards, the State Council’s food safety regulatory authority may establish supplementary testing items and methods. At the same time, the whistleblowing reward system has been improved: reward funds are explicitly incorporated into the budgets of governments at all levels, and rewards for internal whistleblowers within violating entities have been increased.

Telecommunications service providers shall not obstruct users from porting their numbers.

The highly anticipated number‑portability service officially launched nationwide at the end of November, and the Ministry of Industry and Information Technology’s “Regulations on the Administration of Number Portability Services” will also come into effect on December 1. The regulations stipulate that telecommunications operators must provide users with convenient number‑portability services and are prohibited from engaging in any violations, including impeding service, interfering with user choice, obstructing portability, degrading communication service quality, making comparative or false advertising, and other such practices. Under the regulations, telecommunications operators must treat ported‑in subscribers as new customers on their network, strictly comply with provisions on real‑name registration for telephone users, and ensure that ported‑in users enjoy equal rights under equivalent conditions. Operators are also required to clearly inform users, through appropriate means, of the risks and potential losses associated with switching networks, and obtain the users’ explicit conofficeation. The regulations enumerate nine categories of violations that telecommunications operators may commit when providing number‑portability services, such as refusing, blocking, or delaying the provision of the service without justifiable reasons; employing technical measures—such as interception or throttling—to impair the quality of communication services for ported‑in users; or imposing special tariff plans or marketing schemes exclusively for ported‑in subscribers.

Six laws will be temporarily adjusted in their application within the free trade pilot zones.

Effective December 1, provisions of six laws, including the Foreign Trade Law, will be temporarily adjusted for application within the pilot free trade zones. This marks a new step in China’s “separation of licenses and business permits” reform in the free trade zones, and is expected to further improve the business environment. According to the Decision on Authorizing the State Council to Temporarily Adjust the Application of Relevant Legal Provisions in the Pilot Free Trade Zones, adopted at the 14th Meeting of the Standing Committee of the 13th National People’s Congress, within these zones, certain provisions of six laws—namely the Foreign Trade Law, the Road Traffic Safety Law, the Fire Protection Law, the Food Safety Law, the Customs Law, and the Seed Law—will be temporarily modified. These adjustments will be implemented on a trial basis for three years and advanced through four categories of measures: direct cancellation of approvals, conversion of approvals to filing requirements, adoption of a notification‑and‑commitment system, and optimization of approval services. The Decision specifies that, for practices proven feasible, the State Council shall submit proposals to amend the relevant laws; for those practices found unsuitable for adjustment, the original legal provisions will be reinstated upon expiration of the trial period.

Public Consultation on the Provisional Measures for Rewarding Whistleblowers in the Field of Market Regulation

To encourage the public to actively report serious violations in the field of market regulation, the State Administration for Market Regulation recently launched a public consultation on the “Interim Measures for Rewarding Reports of Serious Violations in the Field of Market Regulation (Revised Draft for Comments).” The draft clearly stipulates reward provisions for reporting such violations and raises the existing reward standards.

According to the draft for public comment, whistleblowers may receive a reward ranging from 1% to 5% of the fines and confiscated proceeds imposed for the reported violation, with a maximum reward of RMB 1 million per case. If the report concerns systemic or regional risks and involves violations that have already caused or may cause significant social harm, the reward may be increased to as much as RMB 2 million. Under the interim measures, whistleblowers may submit reports either under their real names or anonymously. Reports of serious violations in the field of market regulation may be filed with market supervision and administration authorities at all levels via written submissions, the 12315 platform, email, or other means.

What constitutes a major violation? According to the Provisional Measures, a major violation refers to any act that: (1) is suspected of constituting a crime; or (2) is subject to administrative penalties such as an order to suspend production or business operations, revocation or cancellation of a license or business permit, or imposition of a substantial fine. Where local laws or regulations provide specific definitions of major violations, those provisions shall prevail. The Provisional Measures further specify that the scope of reward for reporting covers: (1) major violations of laws and regulations in the field of market regulation concerning food, drugs, special equipment, and industrial product quality and safety; (2) major violations of laws and regulations related to competition law, intellectual property, and the crackdown on pyramid schemes; and (3) major violations posing regional or systemic risks. In addition, it includes other significant violations in the field of market regulation that have a substantial social impact and seriously endanger the personal and property safety of the public, provided that the market regulatory authorities determine such cases warrant a reward; as well as violations that are referred to judicial authorities for criminal investigation.

To qualify for a whistleblower reward, certain conditions must be met. The Provisional Measures stipulate that the report must identify a specific target and provide concrete facts of illegal conduct or leads to criminal activity, along with key evidence; the information must not have been previously known to the market regulatory authorities; and the reported matter must have been investigated and closed by the authorities, resulting in an administrative penalty, or, where applicable, referred to the judicial authorities for criminal prosecution. Compared with the existing “Measures for Rewarding Persons Who Report Illegal and Criminal Activities Involving the Production and Sale of Counterfeit and Substandard Products,” the Provisional Measures raise both the reward standards and the maximum reward amount. However, the reporter also notes that reports of ordinary violations will not be eligible for rewards.

Under the Provisional Measures, whistleblower rewards are proposed to be divided into three tiers. Specifically: Tier 1: The whistleblower provides detailed facts of the violation and direct evidence, with the reported information fully corroborating the violations; upon verification, the reported matter is found to constitute an exceptionally serious violation or to involve suspected criminal activity. Tier 2: The whistleblower furnishes facts of the violation along with direct evidence, and the reported information is fully consistent with the established facts. Tier 3: The whistleblower submits basic facts of the violation together with relevant evidence, and the reported information is substantially in line with the established facts. For Tier 1 cases, the reward shall be 5% of the amount of fines and confiscated proceeds. If this calculation yields less than RMB 5,000, a reward of RMB 5,000 shall be granted. For Tier 2 cases, the reward shall be 3% of the amount of fines and confiscated proceeds. If this calculation yields less than RMB 3,000, a reward of RMB 3,000 shall be granted. For Tier 3 cases, the reward shall be 1% of the amount of fines and confiscated proceeds. If this calculation yields less than RMB 1,000, a reward of RMB 1,000 shall be granted. In addition, for cases where no fines or confiscations are imposed, the minimum reward amounts at each tier shall be RMB 2,000, RMB 1,000, and RMB 500, respectively. Under the Provisional Measures, the maximum reward for any single case is capped at RMB 1 million. For reports involving systemic or regional risks that have already caused, or may potentially cause, significant social harm, the reward may exceed the limits set forth herein, with a ceiling of RMB 2 million.

The Measures for the Safety Management of Road Transportation of Dangerous Goods came into effect in 2020.

On the 28th, China’s Ministry of Transport announced that the Measures for the Safety Management of Road Transportation of Dangerous Goods (hereinafter referred to as the “Measures”) will come into effect on January 1, 2020. The Measures aim to effectively prevent accidents in the road transport of dangerous goods and safeguard the lives and property of the public.

At a press conference held in Beijing on the 28th, Ministry of Transport spokesperson Wu Chungkeng stated that the Measures, jointly issued by the Ministry of Transport, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Ecology and Environment, the Ministry of Emergency Management, and the State Administration for Market Regulation, integrate existing laws, regulations, and standards. The Measures draw on lessons learned from accidents, synthesize practical experience from across the country, and proactively align with international norms, with a strong focus on strengthening end-to-end safety management of road transport of dangerous goods and addressing key issues plaguing the industry.

Some specific management measures outlined in the Measures include, in strengthening safety management at the loading stage, establishing a loading inspection system to address the issue of lax oversight during the filling process by production and business entities, which has allowed non‑compliant transportation. Loaders are required to conduct “five mandatory checks”: (1) verifying that the vehicle holds valid driving and operating permits; (2) conofficeing that the driver and escort personnel possess valid qualification certificates; (3) ensuring that the transport vehicle is within its valid inspection period; (4) conofficeing that the hazardous goods being loaded match those specified on the waybill; and (5) checking that the hazardous materials being filled are listed among the permitted substances for the tank’s designated use. Any cargo failing to meet these requirements shall not be loaded or transported.

In strengthening safety management during the transportation process, in response to issues such as transport enterprises “hanging” vehicles under their name without proper oversight or substituting management with contracting, the regulations explicitly prohibit the practice of entrusting hazardous‑goods transport vehicles to operate under another entity’s license. A hazardous‑goods waybill system has been established, and transport enterprises are required to fulfill obligations related to pre‑departure inspections, safety briefings, and real-time vehicle monitoring. Regarding the harmonization of vehicle‑access policies, to address the lack of uniformity across regions in managing the passage of hazardous‑chemical transport vehicles, the regulations stipulate that public security organs may, in accordance with the law, impose restrictions on such vehicles in five specific types of areas, road sections, and time periods. Where it is determined that hazardous‑chemical transport vehicles should be restricted from using expressways, the restriction must apply between midnight and 6:00 a.m.

China is a major producer and user of hazardous materials. As of the end of 2018, the country had 12,300 road transport enterprises handling dangerous goods, operating 373,000 vehicles and employing 1.6 million workers. Nearly 3 million tons of hazardous materials are transported by road each day, with road transport accounting for 70% of the total volume of hazardous‑goods transportation.

A batch of regulations in Jiangsu has been submitted for deliberation; electric bicycles are slated to be brought under legislative regulation.

At the ongoing 12th Meeting of the Standing Committee of the 13th Jiangsu Provincial People’s Congress, a batch of regulations (drafts) were submitted for deliberation for the first time, covering multiple areas of public concern, including the management of electric bicycles and rural roads.

[Electric bicycles are slated to be brought under legislative regulation]

The draft “Jiangsu Province Regulations on the Administration of Electric Bicycles,” which underwent its first reading, stipulates that electric bicycles must comply with mandatory national standards and be subject to mandatory product certification. Furthermore, electric bicycles that have reached ten years of service, or those that have been illegally assembled, modified, or retrofitted—such as by altering the motor or battery, or by adding a canopy or cargo box—are prohibited from being used on public roads. The draft also provides a transitional period: electric bicycles that do not meet national standards but have already obtained temporary license plates may continue to be operated until December 31, 2022.

[For the first time, Jiangsu has included village roads in its rural road planning]

Also submitted for first‑reading consideration at this session is the “Draft Regulations of Jiangsu Province on Rural Roads,” which defines rural roads as encompassing county roads, township roads, and village roads, and stipulates that county roads shall meet at least Grade III standards, while township and village roads shall meet at least Grade IV standards. For the first time in our province, village roads are incorporated into the rural road planning framework; such plans are to be prepared by the people’s governments of townships and towns, submitted for approval and filing with the relevant higher‑level authorities, and developed in consultation with the village (or residential) committees, thereby clarifying the legal status of village roads—matters not addressed in the national Highway Law. At the same time, the draft regulations designate the county‑level people’s government as the principal entity responsible for rural road development, establish a funding mechanism primarily based on public fiscal allocations, and prohibit any measures that would impose additional burdens on farmers or undermine their interests in rural road construction, including the forced imposition of contributions or labor and material supplies from organizations or individuals.

Other

The People’s Bank of China has released a draft of the Assessment Measures for Systemically Important Banks for public comment.

On the 26th, the People’s Bank of China announced on its official website that, in order to improve China’s regulatory framework for systemically important financial institutions and establish an assessment and identification mechanism for systemically important banks, the central bank, together with the China Banking and Insurance Regulatory Commission, has drafted the “Measures for the Assessment of Systemically Important Banks (Draft for Public Comment)” (hereinafter referred to as the “Assessment Measures”). The assessment methodology employs quantitative indicators to calculate each participating bank’s systemic importance score and, in conjunction with other quantitative and qualitative information, makes regulatory judgments to comprehensively evaluate the systemic importance of the banks under review. Banks scoring 300 points or above will be included in the initial list of systemically important banks.

Banks designated as systemically important financial institutions will enjoy higher credit ratings than ordinary financial institutions, but they will also be subject to stricter regulatory oversight. According to reports, the central bank is leading the development of supplementary supervisory rules for systemically important banks, which aim to strengthen regulatory requirements in areas such as liquidity management, large‑exposure risk, risk data aggregation, and risk reporting by implementing additional capital requirements and reinforcing internal capital‑constraint mechanisms. The Assessment Measures draw primarily on the global methodology for assessing systemically important banks and the Basel Committee on Banking Supervision’s 2012 Framework for Domestic Systemically Important Banks, while also incorporating adjustments to the assessment indicators to reflect China’s specific circumstances.

Officials from the People’s Bank of China and the China Banking and Insurance Regulatory Commission stated that they will use quantitative assessment indicators to calculate the systemic importance scores of the 30 participating banks. Banks scoring 300 points or above will be included in the initial list of systemically important banks. Subsequently, regulatory judgments will be made by integrating additional quantitative and qualitative information to comprehensively evaluate the systemic importance of the participating banks. Once the final list of systemically important banks is approved by the Financial Stability and Development Committee of the State Council, it will be jointly announced by the People’s Bank of China and the China Banking and Insurance Regulatory Commission.

Chen Hao, a financial regulatory analyst at Industrial Securities Research, believes that once a bank is designated as systemically important, its regulatory requirements will be tightened. This includes higher capital adequacy ratios and more stringent liquidity risk management standards, among other supervisory and monitoring metrics. In addition, these banks will be required to develop comprehensive recovery and resolution plans to prevent the “too big to fail” dilemma when risks necessitate their orderly exit.

Dong Ximiao, a specially appointed researcher at the National Financial and Development Laboratory, stated that the banking sector is the backbone of China’s financial industry, and systemically important banks are the cornerstone of that sector. In the context of China’s national economic and social development, it is essential for systemically important banks to truly fulfill their role as “stabilizers” of both the economy and the financial system.

Regarding the future regulation of systemically important financial institutions, officials from the People’s Bank of China and the China Banking and Insurance Regulatory Commission stated that, going forward, the CBIRC will continue to exercise day-to-day oversight over systemically important banks in accordance with the law. Meanwhile, the People’s Bank of China, with a view to strengthening macroprudential management and preventing systemic risks, has taken the lead in formulating supplementary regulatory measures for systemically important banks, drawing on China’s banking sector development and regulatory experience.

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