JC Master Legal News Issue 899

Key Takeaways for This Issue

The Shanghai Stock Exchange has, in accordance with applicable laws and regulations, made a decision to delist the shares of *ST Huaye.

On December 4, 2019, the Shanghai Stock Exchange, in strict accordance with the relevant provisions of the Rules for Listing Stocks and based on the review opinions of the Listing Committee, made the decision to delist the shares of Beijing Huaye Capital Holdings Co., Ltd. (hereinafter referred to as *ST Huaye or the Company).

More than 160 cities have rolled out intensive talent policies, while many localities have made minor adjustments to their home‑purchase regulations.

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.

The State Taxation Administration has introduced 16 measures to support the integrated development of the Yangtze River Delta region.

To thoroughly implement the spirit of the Fourth Plenary Session of the 19th CPC Central Committee and earnestly carry out the decisions and arrangements of the CPC Central Committee and the State Council on promoting integrated development in the Yangtze River Delta region, the State Taxation Administration recently issued the “Notice on Measures to Support and Serve the Integrated Development of the Yangtze River Delta,” introducing 16 tax‑related facilitation measures to bolster the high‑quality, integrated development of the Yangtze River Delta.

The China Banking and Insurance Regulatory Commission has revised and promulgated the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies.

To implement the decisions and arrangements of the CPC Central Committee and the State Council on further opening up the insurance sector, and to enforce the newly amended Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies (hereinafter referred to as the “Regulations on the Administration of Foreign-Invested Insurance Companies”), the China Banking and Insurance Regulatory Commission recently revised and issued the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies.

The commemorative stone marking the 20th anniversary of Macao’s return to the motherland was unveiled in Zhuhai.

The commemorative stone marking the 20th anniversary of Macao’s return to the motherland was unveiled on the 7th at the Macao Return Memorial Park in Zhuhai. The unveiling ceremony was co-hosted by the Zhuhai Youth Federation and the Macao Youth Federation, with approximately 100 youth representatives from both Zhuhai and Macao in attendance.

Table of Contents

Table of Contents

Finance & Capital Markets

The Shanghai Stock Exchange has, in accordance with applicable laws and regulations, made a decision to delist the shares of *ST Huaye.

The promotional event for the Astana International Exchange, “China’s gateway to Central Asian capital markets,” was successfully held at the Shanghai Stock Exchange.

Promoting the Enhancement of Listed Company Quality and Building a Blueprint for Sustainable Development — The Second MSCI A‑Share Listed Companies ESG Training Was Successfully Held at the Shenzhen Stock Exchange.

The Shenzhen Stock Exchange has officially released the business rules and guidelines related to stock options.

The STAR Market has seen its first-ever IPO trade below its issue price on the first day, signaling the end of the era when new shares were guaranteed to rise.

Corporate & Commercial

More than 160 cities have rolled out intensive talent policies, while many localities have made minor adjustments to their home‑purchase regulations.

China’s plan to restore hog production: Return to normal levels by 2021.

Guidelines on the transformation of P2P platforms into micro‑loan businesses have been released! P2P platforms that meet these criteria now have a new path forward.

Nanjing has released 1,800 tons of municipally‑reserved frozen pork at prices below the market average.

Promoting and applying low-carbon technologies: The 14th Five-Year Plan will strengthen efforts to address climate change.

Taxation

The State Taxation Administration has introduced 16 measures to support the integrated development of the Yangtze River Delta region.

Notice of the Ministry of Finance, the State Taxation Administration, and the People’s Bank of China on Adjusting and Improving the Local Sharing Mechanism for Value-Added Tax Credit Refunds and Related Budgetary Management Matters

Announcement by the Ministry of Finance, the State Taxation Administration, and the China Securities Regulatory Commission on the Continued Implementation of Individual Income Tax Policies Related to the Shanghai–Hong Kong and Shenzhen–Hong Kong Stock Market Trading Connectivity Mechanisms

The Consumption Tax Law is now open for public consultation—its basic institutional framework will remain stable.

The tax authorities continuously innovate their services to enhance taxpayers’ sense of gain.

Litigation & Arbitration

The China Banking and Insurance Regulatory Commission has revised and promulgated the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies.

A responsible official from the relevant department of the China Banking and Insurance Regulatory Commission answered questions regarding the revision of the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies.

Draft Amendment to the Vocational Education Law Seeks Public Input: Clarifies the Framework of the Modern Vocational Education System

Explanation Regarding the “Administrative Measures for Agricultural Plastic Film (Trial) (Draft for Public Comment)”

Further refine the draft implementing regulations of the Foreign Investment Law and expedite their promulgation.

Other

The commemorative stone marking the 20th anniversary of Macao’s return to the motherland was unveiled in Zhuhai.

Finance & Capital Markets

The Shanghai Stock Exchange has, in accordance with applicable laws and regulations, made a decision to delist the shares of *ST Huaye.

On December 4, 2019, the Shanghai Stock Exchange, in strict accordance with the relevant provisions of the Rules for Listing Stocks and based on the review opinions of the Listing Committee, made the decision to delist the shares of Beijing Huaye Capital Holdings Co., Ltd. (hereinafter referred to as *ST Huaye or the Company). The delisting of *ST Huaye’s shares, resulting from the stock price remaining persistently below par value, accurately reflects the company’s fundamental conditions, is the outcome of rational investment by investors, and represents the market’s choice. The Shanghai Stock Exchange will continue to rigorously enforce the delisting regime, resolutely delisting companies that meet the mandatory delisting criteria, and effectively promote an overall improvement in the quality of listed companies.

The facts regarding the delisting of the company’s shares are clear, and in accordance with the regulations, its listing should be terminated.

From October 16, 2019, to November 12, 2019, the closing price of *ST Huaye shares remained below the par value per share for 20 consecutive trading days, triggering the delisting conditions set forth in Article 14.3.1, Paragraph 5 of the Shanghai Stock Exchange’s Rules for Listing Stocks, and thus warranting delisting. Pursuant to Article 14.3.8 of the same rules, the company’s shares were suspended from trading effective November 13.

Thereafter, the SSE strictly complied with the relevant provisions of the Stock Listing Rules and, in accordance with the regulations, made the decision to delist *ST Huaye shares. On November 12, the SSE notified the company of its right to present a defense and to request a hearing; on November 18, the company submitted a request for a hearing, which the SSE accepted on November 19 and issued a notice of the hearing. On November 27, the SSE Listing Committee convened a hearing, thoroughly hearing the company’s on-site statements and defenses. On the same day, the Listing Committee held a meeting to deliberate on the delisting of the company’s shares, concluding that the shares had met the face‑value delisting criteria set forth in the Stock Listing Rules, that the company’s request for an exemption from delisting lacked statutory basis, and issuing its review opinion recommending the delisting of *ST Huaye shares. On December 4, based on the Listing Committee’s review opinion, the SSE made the decision to terminate the listing of *ST Huaye shares. The delisting of *ST Huaye shares is supported by clear facts, explicit rules, and compliant procedures.

The delisting of the company’s shares is a true reflection of its fundamental financial condition, and the risks associated with delisting have already been fully disclosed.

*ST Huaye’s share price has remained below par value, a true reflection of the company’s underlying fundamentals. Consequently, its delisting was the result of investors’ choices. The company’s internal controls have failed, and its accounts‑receivable‑based debt‑investment business has given rise to significant risks, involving numerous creditor‑rights and guarantee‑related lawsuits; certain assets and bank accounts have been seized and frozen. In 2018, the company reported a loss of RMB 6.438 billion, and in the first three quarters of 2019, it incurred a loss of RMB 5.049 billion, with shareholders’ equity standing at negative RMB 4.820 billion at year‑end. Furthermore, several subsidiaries improperly provided large‑scale guarantees to related parties, totaling RMB 1.713 billion, thereby creating substantial uncertainty regarding the company’s ability to continue as a going concern. In 2018, the company received an adverse opinion on its internal control audit and an disclaimer of opinion on its financial statement audit. In response to violations—including imprudent engagement in debt‑investment activities and unauthorized guarantees—the Shanghai Stock Exchange publicly censured the company, its actual controller, and relevant persons accountable in July 2019. Additionally, the China Securities Regulatory Commission initiated an investigation in July 2019 into alleged violations of information disclosure regulations. During the delisting process, under regulatory guidance, *ST Huaye fully disclosed the risk that its listing could be terminated due to its share price falling below par value. On October 16, 2019, the stock price dipped below par value; on October 17, the company issued a preliminary announcement alerting investors to the risk of delisting. By October 29, the stock had closed below par value for ten consecutive trading days, prompting the company to issue its first risk‑warning notice on October 30. Thereafter, the company released daily risk‑warning announcements. Throughout the period when the stock price remained persistently below par value, the company published a total of eleven such notices, thoroughly informing the market of the imminent risk of delisting.

The Shanghai Stock Exchange will continue to rigorously enforce the delisting regime and promote the institutionalization of delisting procedures.

The delisting regime serves as a market‑based screening mechanism. A company’s withdrawal from the Shanghai Stock Exchange’s Main Board does not mean it has lost its legal person status; rather, it simply indicates that the company is no longer suitable for continued listing on that board. Following delisting, its shares may, in accordance with applicable laws and regulations, be listed and traded on the National Equities Exchange and Quotations System for Small and Medium‑sized Enterprises. Should the company continue to improve its operations and actively restore its ability to generate earnings, it may, upon meeting the requisite conditions, apply to relist.

In recent years, under the guidance of the China Securities Regulatory Commission, the Shanghai Stock Exchange has continuously deepened reforms to its delisting system, assumed primary responsibility for delisting operations, and, in accordance with laws and regulations, initiated delistings for numerous companies that met delisting criteria. The Exchange has established a normalized delisting framework and practical procedures, and its delisting efforts have garnered broad understanding and support from all market participants. This year, *ST Dakong and *ST Huaye on the Shanghai market were delisted after triggering the par‑value‑below‑face‑value threshold, further demonstrating the institutionalization and market‑oriented nature of the delisting mechanism. Moving forward, the Shanghai Stock Exchange will remain focused on enhancing the quality of listed companies, rigorously enforce the delisting regime, maintain stringent oversight at the exit stage, and strive to foster a market environment characterized by survival of the fittest, thereby encouraging listed offices to concentrate on their core businesses, improve operational performance, and safeguard the sound development of the securities market.

The promotional event for the Astana International Exchange, “China’s gateway to Central Asian capital markets,” was successfully held at the Shanghai Stock Exchange.

　Recently, more than 50 representatives from domestic securities offices, fund management companies, and relevant Kazakh institutions gathered at the Shanghai Stock Exchange to attend a promotional event titled “The Astana International Exchange: A Gateway for Chinese Investors into the Central Asian Capital Markets,” co-hosted by the SSE and the Astana International Exchange (AIX) of Kazakhstan. Liu Ti, Deputy General Manager of the SSE, Kairat Kelimbetov, Chairman of the Astana International Financial Centre (AIFC), and Timothy Bennett, CEO of the AIX, among others, attended the event and delivered remarks. On the same day, the AIX’s 18th Board Meeting was successfully held at the SSE.

At the promotional event, Liu Ti, Deputy General Manager of the Shanghai Stock Exchange, stated that the Joint Statement between the People’s Republic of China and the Republic of Kazakhstan, issued in September 2019, noted, “Both sides support the development and operation of the Astana International Financial Centre and encourage financial institutions from both countries to deepen cooperation with it.” The Shanghai Stock Exchange will encourage and support Chinese-funded financial institutions in “going global,” enabling them to participate in capital market investment and financing activities in Kazakhstan through various channels. Furthermore, leveraging the AIX as a platform, the Exchange will explore entry into the Central Asian market and pragmatically develop capital market‑based investment and financing mechanisms to support the Belt and Road Initiative.

AIFC Chairman Kairat Kelimbetov stated that economic and trade exchanges between China and Kazakhstan are becoming increasingly frequent, with a growing number of Chinese enterprises and financial institutions either considering or already engaging in the Kazakh market. Looking ahead, Kazakhstan’s investment climate will continue to improve, and its investment‑friendly environment will be further enhanced, welcoming more Chinese‑invested companies to participate in the Kazakh market.

Kazakhstan was the place where General Secretary Xi Jinping first proposed the initiative to build the Silk Road Economic Belt. Against the backdrop of deepening China’s opening-up and China–Kazakhstan cooperation, the Shanghai Stock Exchange signed a cooperation agreement with the Astana International Financial Centre (AIFC) Authority, becoming a strategic partner of both the AIFC and the AIX, and investing in a stake in the AIX. In July 2018, the AIX officially commenced operations. As of November 22, 2019, the AIX listed a total of 38 products, including 11 equity‑based instruments. Moreover, several Chinese securities offices have already become official members of the AIX. Looking ahead, under the leadership of the China Securities Regulatory Commission, the Shanghai Stock Exchange will leverage its unique strengths to actively support the development of the AIX and contribute to the advancement of the Belt and Road Initiative.

Promoting the Enhancement of Listed Company Quality and Building a Blueprint for Sustainable Development — The Second MSCI A‑Share Listed Companies ESG Training Was Successfully Held at the Shenzhen Stock Exchange.

On December 5, the second MSCI ESG Training for A‑share Listed Companies was successfully held at the Shenzhen Stock Exchange. Experts from MSCI, the Principles for Responsible Investment, and other relevant fields delivered presentations and engaged in discussions on topics including global ESG investment trends, ESG data disclosure, climate‑change regulations and disclosure trends, and China’s sustainable development. More than 330 representatives from 270 listed companies attended the training.

ESG is one of the key concepts and evaluation frameworks in international investing, integrating three core dimensions: environmental sustainability, social responsibility, and corporate governance. As awareness of ESG principles and sustainable development continues to grow, an increasing number of investors are incorporating ESG criteria into their investment decisions. Experts at the conference noted that ESG‑based investing is expanding rapidly, with ESG rating systems becoming increasingly sophisticated. By focusing on corporate governance and assessing industry‑specific key factors and risks, these frameworks help identify sector‑specific risk profiles and provide a more comprehensive assessment of potential impacts on company returns. Chinese enterprises are steadily elevating their attention to ESG; however, further improvements are needed in areas such as target setting, disclosure practices, and governance structures.

The Shenzhen Stock Exchange has long been a proactive advocate for corporate social responsibility and sustainable development. Among the first in China, it has placed a strong emphasis on corporate governance, established a research center, and promoted the adoption of ESG standards by listed companies. It has also prioritized providing robust financing channels for green industries, strengthened cross‑border cooperation in green finance, and contributed to the global advancement of green finance, thereby becoming a key platform for driving the growth of the green economy. In September 2006, the SZSE took the lead in formulating and issuing the “Guidelines on Corporate Social Responsibility for Listed Companies,” guiding listed offices to disclose relevant CSR information. Awareness of social responsibility among Shenzhen‑listed companies has steadily risen; taking the 2018 annual reports as an example, 89% of companies disclosed information on their CSR activities or published standalone CSR reports, with the number of companies issuing independent reports increasing by 41 compared with the previous year. In 2016, the SZSE launched a pilot program for green corporate bonds and innovatively introduced green ABS and green PPP products. In 2017, it unveiled the “CFC–CSI Green Bond Index,” simultaneously publishing market data in both China and Europe, thus fostering connectivity and interoperability between green financial products and services in China’s capital markets. At the same time, the SZSE has actively engaged in ESG practices, striving to build a transparent exchange; since 2002, it has consistently supported the Alashan Ecological Restoration Project and initiated the establishment of the Alashan Ecological Foundation. Leveraging its platform strengths, the exchange has mobilized human and material resources to contribute to poverty alleviation efforts.

At present, China has entered a critical phase of economic structural transformation, with robust financial demand for the development of green industries and the green upgrading and transformation of traditional sectors. In line with the requirements set forth by the China Securities Regulatory Commission, the Shenzhen Stock Exchange will focus on establishing an institutional framework centered on information disclosure, leveraging its strengths in market mechanisms, technology, services, and geographic location to promote high-quality growth among listed companies, strengthen their environmental and social responsibilities, and encourage private capital to actively support the green economy. This will help advance China’s sustainable economic development while continuously enhancing the internationalization of its infrastructure and cross-border services, thereby providing a conducive environment for global investors to participate in the Chinese market.

The Shenzhen Stock Exchange has officially released the business rules and guidelines related to stock options.

On December 7, the Shenzhen Stock Exchange officially released ten rules, including the “Shenzhen Stock Exchange Pilot Trading Rules for Stock Options,” along with four guidelines, such as the “Shenzhen Stock Exchange Guidelines for Brokerage Services of Securities Offices in the Stock Options Pilot Program.” These measures take effect immediately. This marks the establishment of a comprehensive, well‑structured, and clearly tiered stock options regulatory framework at the Shenzhen Stock Exchange, laying a solid institutional foundation for the smooth launch and rollout of options trading on the Shenzhen market and helping to enhance risk‑management capabilities and safeguard the sound development of the market.

The Shenzhen Stock Exchange’s stock options business rules and guidelines serve as the institutional framework governing the operation of stock options, covering contract management, trading and exercise, risk control, trading supervision, investor suitability management, market maker oversight, and other matters. They provide clear provisions on portfolio strategies, combined exercises, two-sided quoting by market makers, and streamlined account opening for investors, while setting out general principles for block trades and securities margin trading, thereby leaving room for future business innovation. The formulation of these rules and guidelines has drawn extensively on existing market experience. Recently, the Shenzhen Stock Exchange has completed adjustments to the ETF trading and settlement model, further enhancing convenience for investors.

A relevant official from the Shenzhen Stock Exchange stated that, following the release of the stock options business rules and guidelines, the exchange will formally initiate procedures for opening trading permissions for options‑trading institutions, establishing settlement participant accounts, and registering investor accounts, while also publishing the list of market makers. The official expressed the hope that options‑trading institutions will continue to make thorough preparations, organize investor account openings in a standardized and orderly manner, participate in the full‑network testing, and actively carry out investor education and training initiatives.

Going forward, the Shenzhen Stock Exchange will, in accordance with the unified deployment of the China Securities Regulatory Commission and in close collaboration with all market participants, meticulously prepare and coordinate efforts to ensure thorough business and technical readiness, thereby facilitating the smooth launch of stock options on the Shenzhen market. This initiative aims to promote the sound development of the capital market, enhance its ability to serve the real economy, and better support the construction of the Guangdong–Hong Kong–Macao Greater Bay Area and the pilot demonstration zone for socialism with Chinese characteristics.

The STAR Market has seen its first-ever IPO trade below its issue price on the first day, signaling the end of the era when new shares were guaranteed to rise.

　According to WIND data, Jianlong Weina, a new stock listed on the STAR Market on the 4th, was issued at a price of RMB 43.28 per share, with an IPO price‑to‑earnings ratio of 53.16 times (compared with an industry P/E ratio of 16.52). The offering raised a total of RMB 626 million, with China Tianfu Securities serving as the sponsor and co‑lead underwriter, alongside Zhongyuan Securities. On its debut day, Jianlong Weina’s share price peaked at RMB 44.88 before closing at RMB 42.35, down 2.15% from the issue price—making it the first new stock since the STAR Market’s launch to fall below its IPO price on its very first trading day.

With the implementation of a market‑based pricing mechanism, stocks trading below their IPO price have become increasingly common on the STAR Market. According to data from the Shanghai Stock Exchange, as of now, 60 companies are listed on the STAR Market, with a combined market capitalization of RMB 709.488 billion and a free‑float market cap of RMB 102.098 billion. Meanwhile, Wind data show that among the 60 STAR‑Market stocks that went public this year, 10 had closed below their issue price as of the December 4 close; the largest decline was recorded by Rongbai Technology, whose latest closing price stood at RMB 22.70, down 15% from its IPO price of RMB 26.62. In addition, four other STAR‑Market issuers closed the day with share prices no more than 10% above their IPO prices. Looking at new‑stock offerings across the A‑share market this year, we also see a trend of narrowing first‑day gains and a gradual rise in the number of stocks trading below their issue price. Data indicate that, since the beginning of the year, a total of 182 new shares have been listed on the Shanghai and Shenzhen stock exchanges. To date, 15 stocks have fallen below their IPO prices—besides the aforementioned 10 STAR‑Market issues, this group includes companies such as Chongqing Rural Commercial Bank, which is listed on the main board.

Meanwhile, the average first-day gain of STAR Market IPOs has been declining month by month. According to research from SW Securities, the 16 new stocks listed in November posted an average first-day gain of 64.4%, a drop of 57.3 percentage points compared with the previous month. In terms of sector distribution, new listings in information technology and pharmaceuticals/biotechnology led the pack, while those in high-end equipment, energy conservation, and environmental protection lagged behind.

Industry insiders generally agree that, in the early stages of the STAR Market’s launch, investor enthusiasm was high and new‑stock supply remained relatively scarce, leading to broadly elevated pricing. As supply and demand balance out, the market is expected to gradually return to rationality, with speculative surges giving way to more measured trading—making price drops below the IPO offering price a natural outcome. With such price corrections, the pricing of new STAR Market listings will also progressively normalize.

The emergence of new shares trading below their IPO price—particularly on the very first day of listing—signals that the era of “new shares never lose” is drawing to a close. Dong Dengxin, director of the Institute of Finance and Securities at Wuhan University of Science and Technology, notes that as pilot programs for the registration-based system and market-oriented IPO reforms gain momentum, the notion of “new shares never lose” is likely to be consigned to history. The longstanding practice of forcing new stocks to post multiple consecutive daily limit-ups or limit-downs has largely come to an end, and the phenomenon of new shares trading below their IPO price on their debut day is set to become the norm.

Commercial & Corporate

More than 160 cities have rolled out intensive talent policies, while many localities have made minor adjustments to their home‑purchase regulations.

According to data from Centaline Property, nationwide, since 2019 more than 160 cities have introduced various talent‑related policies, a year‑on‑year increase of over 40% compared with the same period in 2018. In most cases, these talent policies are linked to housing measures. In addition to the new talent initiatives, several first‑tier cities have made minor policy adjustments regarding home‑purchase eligibility and tax incentives.

Industry insiders argue that talent needed by local governments should not simply be funneled into the real estate market; instead, such talent should be aligned more closely with industrial policies. What truly retains skilled workers is a thriving industry, not the purchase of a home. Since November, there has been an explosive surge in the issuance of talent‑attracting policies. Nationwide, more than 20 cities have rolled out various measures to draw and retain talent during the month. Nearly 10 of these cities—including Foshan, Nanjing, Shanghai, Chengdu, and Zhongshan—have provided detailed clarifications or supplementary provisions regarding eligibility for home purchases and housing subsidies. On December 4, the Foshan Municipal Housing and Urban–Rural Development Bureau released an operational guideline titled “Supplementary Notice on Further Improving Talent Housing Policies.” According to this guidance, individuals holding an A‑, B‑, C‑, or T‑card under the Youyue Foshan Card system must submit their card (original verified and a copy retained) when purchasing property in Foshan’s restricted‑purchase zones. Meanwhile, non‑local residents who work in Foshan and hold at least a bachelor’s degree or a mid‑level professional qualification are required to present their academic or professional certification (originals verified and copies retained), along with a labor contract or business license. In addition, Foshan’s new housing policy explicitly categorizes eligible talent: once the relevant criteria outlined in the guideline are met, applicants may purchase either new‑build or secondhand homes within the city’s restricted‑purchase areas.

Several first-tier cities have also joined the ranks of those implementing new talent‑related policies. On November 20, the Management Committee of the Lingang New Area of the Shanghai Free Trade Zone unveiled a series of measures to support talent development, relaxing housing purchase restrictions: individuals holding a bachelor’s degree or higher who have paid individual income tax or social insurance for at least three years are eligible to buy property in the Lingang New Area. In terms of talent eligibility, the regions that have introduced such policies generally set relatively low entry thresholds, with many expanding the scope of eligible candidates. Take Nanjing as an example: the city recently issued the “Nanjing Measures for Talent Purchasing Commodity Housing (Trial) 2020,” which essentially achieves full coverage of all types of talent. The policy not only includes domestic and overseas professionals across academic, skilled, managerial, and experience‑based categories but also extends to key enterprises in education, healthcare, government agencies, and public institutions. According to Nanjing, all market‑available commodity housing is prioritized for talent, with housing allocation proceeding in order of priority—talent first, followed by other eligible buyers.

Zhang Dawei, chief analyst at Centaline Property, argues that local governments should not simply funnel talent into the real estate market. Instead, talent policies ought to be closely aligned with industrial strategies, and housing for such individuals should prioritize affordable, government‑assured options. Guo Shiying of the Zhuge Housing Data Research Center notes that many cities have further refined their talent‑attracting measures, but these initiatives typically target specific districts or demographic groups rather than adopting a comprehensive, citywide approach. Relaxing talent‑related policies does not equate to easing home‑purchase restrictions; it merely broadens the pool of potential buyers in terms of attracting skilled professionals. With real estate market regulation remaining tight and showing no signs of loosening, such policies are unlikely to significantly impact local housing markets, so stakeholders should continue to adopt a rational, measured perspective.

China’s plan to restore hog production: Return to normal levels by 2021.

The “Three-Year Action Plan for Accelerating the Recovery and Development of Hog Production,” released on the 6th by China’s Ministry of Agriculture and Rural Affairs, states that this year efforts will be made to swiftly reverse the decline in hog inventory, ensuring a halt to the downward trend and a subsequent rebound by year-end, as well as maintaining basic stability in pork market supply during the New Year and Spring Festival periods next year and throughout the sessions of the National People’s Congress and the Chinese People’s Political Consultative Conference. The plan also aims to restore production capacity to near‑normal levels by the end of 2020 and return it to normal by 2021.

The Plan specifies that the Northeast, the Huang–Huai–Hai Plain, and the Central‑South regions are designated as pig‑and‑pig‑product exporting areas, tasked with contributing to China’s overall goal of ensuring stable production and supply while achieving steady output growth. The southeastern coastal regions are identified as major consumption areas, with a self-sufficiency rate to be maintained at around 70 percent. Megacities such as Beijing and Shanghai are required to secure control over 70 percent of their pork supply through inter‑regional cooperation and the establishment of breeding bases, thereby meeting domestic demand. Meanwhile, the Southwest and Northwest regions are classified as production‑consumption balance zones, where basic self‑sufficiency must be ensured. The Plan outlines 18 key tasks, including implementing subsidy programs for the construction of large‑scale pig farms, increasing subsidies for the purchase of agricultural machinery, securing land for livestock operations, carrying out fiscal support initiatives, and strengthening financial and insurance assistance.

The Plan places particular emphasis on continuing to launch standardized demonstration projects for pig farming, with the goal of establishing an additional 120 high‑quality, replicable and scalable standardized demonstration farms within three years. It also calls for a thorough review of no‑pig zones, ordering corrective action in all cases where “pig‑free cities” or “pig‑free counties” are imposed under the guise of environmental protection. Furthermore, it seeks to standardize the development of pig slaughter and processing enterprises, supporting the relocation of leading slaughter capacity to concentrated pig‑raising areas in Northeast China, the Huanghuaihai Plain, and parts of Central and South China, thereby aligning such capacity with regional production patterns. Finally, it will continue to rectify and close small‑scale slaughterhouses, aiming to designate 100 standardized demonstration enterprises by 2020.

Guidelines on the transformation of P2P platforms into micro‑loan businesses have been released! P2P platforms that meet these criteria now have a new path forward.

According to sources close to regulators, the Internet Finance Rectification Office and the Online Lending Rectification Office recently issued the “Guiding Opinions on the Pilot Program for Transforming Online Lending Information Intermediary Institutions into Small‑Loan Companies” (hereinafter referred to as the “Opinions”). It is clear that the current priority in the online lending sector is to focus primarily on mitigating existing risks. The Opinions explicitly stipulate that any online lending institution seeking to transform must establish a nationwide small‑loan company with a registered capital of no less than RMB 1 billion, and an initial paid‑in cash capital of no less than RMB 500 million, which must be sourced from the shareholders’ own funds; the remaining portion must be fully paid up within six months from the date of the company’s establishment.

Which online lending institutions are eligible to transform into small-loan companies?

The “Opinions” set forth the basic requirements for online lending institutions planning to undergo transformation:

First, compliance requirements: The existing business of the online lending institution must be free from any serious violations of laws or regulations. Based on compliance inspection results, the institution’s existing operations and financial management should be relatively standardized; it must have maintained full‑scale bank‑custody arrangements for all its business over the past year; and, over the past two years, neither the institution nor its actual controllers or key senior management personnel may have incurred any serious penalties for regulatory violations or any records of criminal offenses in areas such as market supervision, taxation, public security, or the courts. Furthermore, there should be no substantiated complaints alleging major violations, no instances of conducting any financial activities in breach of laws or regulations, and active cooperation with the special campaign to address risks in the online lending sector. Online lending institutions that have already exited the industry are prohibited from applying to convert into micro‑loan companies.

Second, there must be eligible shareholders and a capable management team. If the existing shareholders of an online lending institution lack the capacity to absorb the risks associated with its legacy portfolio, it is imperative to bring in new, financially robust shareholders and obtain their commitment to address these risks.

Third, the transformation plan must be feasible. The restructuring proposals put forward by online lending institutions should fully take into account the interests of lenders, involve thorough prior communication with them, and secure the support and cooperation of a majority of lenders. They must also obtain valid approval from the competent authorities—such as lender assemblies or shareholders’ meetings—and possess the capacity and appropriate mechanisms to ensure the effective implementation of the plan. Furthermore, online lending institutions are required to publicly disclose both online and offline contact information to maintain open and unimpeded channels of communication with lenders.

Fourth, the institution must possess strong financial technology capabilities that meet the requirements for online operations. For online lending institutions seeking to transition into nationwide operations, they should also have a solid internet‑based background and robust network‑technology infrastructure, enabling them to conduct the entire process of online micro‑lending digitally and to integrate with regulatory systems to satisfy remote supervisory requirements.

What preparatory steps should institutions take in the course of their transformation?

First, conduct a thorough review and classification of existing business. Online lending institutions must meticulously sort through their outstanding portfolios and, in accordance with information disclosure requirements, prepare categorized tables that include: the number and types of lenders, the total loan amounts, loan terms, outstanding receivables, and post‑transition repayment safeguards; the number and types of borrowers, the total loan amounts, loan terms, annualized interest rates, repayment methods, repayment‑guarantee measures, and results of non‑performing‑asset risk assessments; as well as detailed breakdowns of the institution’s own assets, asset quality, and risk profile. At the same time, engage intermediary agencies such as accounting offices and law offices to audit the institution’s cleanup efforts and its compliance with the relevant provisions set forth in these Guiding Opinions, and issue an audit report.

Second, a transformation implementation plan must be formulated. Online lending institutions shall develop a detailed implementation plan covering the organizational structure of the subsequent micro‑loan company, its principal sponsors, other investors, registered capital, investment terms, forms of contribution, methods for classifying and disposing of existing business, strategies for mitigating risks associated with such existing business, and an implementation roadmap for new business activities following the transformation.

Third, the transition period. In principle, online lending institutions shall complete their transformation into micro‑loan companies within one year; for those with outstanding loan balances exceeding RMB 5 billion and whose loans are predominantly with terms of one year or longer, the transition period shall not exceed two years, calculated from the date the local financial regulatory authority issues the approval for a temporary license. During this transition period, such institutions must wind down all existing online lending business and implement the required rectifications in accordance with applicable regulations. Furthermore, online lending institutions planning to transform into nationwide micro‑loan companies must also possess an internet platform that meets the eligibility criteria for operating online micro‑loan services before their temporary license may be converted into a formal license.

Fourth, determine the shareholders and their respective capital contributions. First, existing shareholders of the online lending institution shall increase their capital; second, actively attract new shareholders with strong financial resources—where the institution’s original shareholders consist solely of natural persons, it is required to bring in a financially robust corporate entity as the controlling shareholder; third, encourage the management team and key business personnel to acquire equity stakes.

Fifth, registered capital and the capital contribution deadline. For online lending institutions planning to transform into small‑loan companies operating on a single provincial level, the registered capital shall be no less than RMB 50 million, with contributions in cash. For those planning to transform into nationwide small‑loan companies, the registered capital shall be no less than RMB 1 billion, also payable in cash, with an initial paid‑in cash capital of no less than RMB 500 million, which must consist of the shareholders’ own funds; the remaining portion shall be fully paid up within six months from the date of the company’s establishment. In addition, to enhance risk management and resolution capabilities, the initial paid‑in cash capital of the small‑loan company must also meet a requirement of at least one‑tenth of the outstanding loan balance of the original online lending institution at the time of transformation.

Sixth, sign commitment letters and other legal documents related to the transition and exit.

Establish a transitional period for resolving existing business exposures.

The “Opinions” also specify the relevant supporting policies:

A transitional period is established for the resolution of existing business. Online lending institutions shall, in accordance with the principle of repayment upon maturity, wind down their existing business within one year in principle; for those with an outstanding balance exceeding RMB 5 billion and where the majority of loan terms are longer than one year, the phase-out should, in principle, be completed within two years, and no new online lending business may be initiated.

Restrictions on shareholder dividends: For the first three years, small‑loan companies may not distribute profits to shareholders; such earnings must be used to offset prior losses incurred in the institution’s existing operations. This restriction does not apply where the old and new shareholders have otherwise agreed in a separate arrangement during the transition period.

Supports access to the credit reporting system and the inclusion of defaulting borrowers in the credit reporting system.

Appropriately increase the leverage ratio. For newly established microfinance companies undergoing transformation, the outstanding balance of non-standardized financing—such as bank loans and shareholder loans—shall not exceed one times their net assets; meanwhile, the outstanding balance of standardized financing instruments—such as bond issuances and asset-backed securities—shall not exceed four times their net assets.

Strengthen industry self-regulation.

Launch pilot transformation projects by the end of November.

The “Opinions” stipulate that, by the end of November 2019, all localities shall launch pilot programs for transformation. Applications to transform into small‑loan companies operating on a single provincial‑level basis shall be organized and implemented locally; applications to transform into nationwide‑operating small‑loan companies shall, after submitting the list of institutions slated for transformation and the corresponding transformation proposals to the Online Lending Rectification Office and the Internet Finance Rectification Office for compliance‑assessment opinions, be organized and implemented locally. By the end of December 2019, all localities shall complete the preparatory work required for the transformation pilot programs, and by the end of January 2020, they shall finalize the approval process for temporary licenses for small‑loan companies. Following receipt of the official approval document for the temporary license, online lending institutions shall, in accordance with the transformation implementation plan, wind down their existing business and report weekly to the financial regulatory authorities at the county (city or district) level on the progress of such wind‑down efforts, subject to oversight and ensuring the prudent mitigation of risks.

Nanjing has released 1,800 tons of municipally‑reserved frozen pork at prices below the market average.

As the traditional season for curing and preserving meat is underway, coupled with the approaching New Year’s Day and Spring Festival, market demand for pork products has been rising. To meet consumer needs, starting on the 6th, the Nanjing Municipal Bureau of Commerce, the Municipal Development and Reform Commission, and other departments have released 1,800 tons of municipally‑reserved frozen pork in three batches, including cuts such as front leg, hind leg, ribs, and ground pork. The distribution points comprise 50 retail outlets operated by Suguo, RT-Mart, and Sushi Meat Shop, with prices set 15% below the average market price of pork during the week preceding the release.

Promoting and applying low-carbon technologies: The 14th Five-Year Plan will strengthen efforts to address climate change.

At a recent press conference held by the State Council Information Office, Vice Minister of Ecology and Environment Zhao Yingmin stated that the 14th Five-Year Plan period is a crucial phase for China to advance high-quality development and build a Beautiful China. During this time, China will strengthen its efforts to address climate change and integrate climate action into both the Outline of the 14th Five-Year Plan for National Economic and Social Development and the 14th Five-Year Plan for Ecological and Environmental Protection.

According to preliminary calculations, in 2018 China’s carbon intensity—measured as CO₂ emissions per unit of GDP—decreased by 4% compared with the previous year and by a cumulative 45.8% since 2005, equivalent to a reduction of 5.26 billion tonnes of CO₂. Meanwhile, non-fossil energy accounted for 14.3% of total energy consumption, effectively reversing the trend of rapid growth in CO₂ emissions.

Zhao Yingmin stated that the Ministry of Ecology and Environment is formulating climate‑change response strategies for the 14th Five-Year Plan period. It will continue to implement measures to curb greenhouse gas emissions, while supporting and encouraging certain localities and key sectors to launch peak‑emission initiatives tailored to their specific economic and social development contexts, setting clear peak‑emission targets, roadmaps, and implementation plans. The ministry will also maintain the reduction rate of carbon dioxide intensity per unit of GDP as a key indicator, advance the management of non‑carbon dioxide greenhouse gas emissions, and establish a robust mechanism for greenhouse‑gas accounting and management that ensures coordinated planning, multi‑agency participation, mutual collaboration, and clear assignment of responsibilities. Furthermore, it will strengthen the integrated approach to addressing climate change, pollution prevention, and ecological and environmental protection, and accelerate the deployment and commercialization of low‑carbon technologies and the development of low‑carbon industries.

Zhao Yingmin stated that during the 14th Five-Year Plan period, efforts will be made to establish a global climate governance system that is more equitable and reasonable, and based on win-win cooperation. “We plan to update the National Strategy on Adapting to Climate Change, promote climate‑change adaptation measures across sectors such as agriculture, water resources, forests, oceans, human health, and disaster prevention and mitigation, and strengthen capacity‑building for climate‑change adaptation,” he added.

Taxation TAXATATION

The State Taxation Administration has introduced 16 measures to support the integrated development of the Yangtze River Delta region.

To thoroughly implement the spirit of the Fourth Plenary Session of the 19th CPC Central Committee and earnestly carry out the decisions and arrangements of the CPC Central Committee and the State Council on promoting integrated development in the Yangtze River Delta region, the State Taxation Administration recently issued the “Notice on Measures to Support and Serve the Integrated Development of the Yangtze River Delta,” introducing 16 tax‑related facilitation measures to bolster the high‑quality, integrated development of the Yangtze River Delta.

Further facilitate cross-provincial tax administration for enterprises in the Yangtze River Delta region.

To promote economic coordination and integration within the Yangtze River Delta region, the Notice introduces three measures: facilitating cross-provincial enterprise relocation procedures, streamlining cross-provincial tax-related filing and verification processes, and simplifying cross-provincial property and land tax‑source management. The Notice stipulates that for enterprises in the Yangtze River Delta with a tax credit rating of Grade A or Grade B, if their domicile or place of business is relocated across provinces (or municipalities) within the region and such a move entails a change of the competent tax authority, the tax authorities may process the cross‑provincial (or cross‑municipal) relocation in accordance with applicable conditions. The tax authority of the place of departure shall promptly transmit the enterprise’s relevant information to the tax authority of the place of arrival, which will automatically complete the registration procedures. Meanwhile, the enterprise’s existing tax credit rating and other qualifications, as well as rights such as the outstanding input VAT credit at period end, shall be carried forward. The Notice further provides that taxpayers in the Yangtze River Delta who temporarily engage in production and business activities across provinces (or municipalities) within the region may, after completing the cross‑regional tax‑related reporting at the location of their establishment, log into the electronic tax bureau of the place of operation to file, provide feedback, and handle tax returns and payments.

Formulate lists for “no penalty for first-time violations,” “one visit maximum,” and cross‑regional one‑stop services.

The Notice, in line with the ongoing deepening of the “delegation, regulation, and service” reform, has established three lists for the Yangtze River Delta region—covering both tax enforcement and taxpayer services—to vigorously stimulate the vitality of market entities. On the tax enforcement front, a unified list of “no penalty for first-time violations” has been formulated across the region, under which taxpayers who commit minor infractions on their first occurrence, promptly rectify them, and have not caused any adverse consequences will be exempted from penalties in accordance with the law. In terms of taxpayer services, adhering to the principles of “starting with the easy before the difficult, prioritizing high-frequency matters, and taking practical considerations into account,” a “one‑visit maximum” standard list of tax‑related procedures has been developed for the Yangtze River Delta, accompanied by region‑wide, standardized operational guidelines for each listed item. Furthermore, building on the availability of online self‑service through the electronic tax bureau, a list of cross‑provincial (and cross‑municipal) offline one‑stop services has been compiled, including information reporting, tax‑related data inquiries, and the issuance of tax certificates. Dedicated service windows have been set up to facilitate inter‑regional processing, implementing a workflow of out‑of‑jurisdiction acceptance, internal document flow, local handling, and time‑bound feedback, enabling taxpayers to complete relevant transactions at the nearest taxpayer service hall.

Promote the sharing, mutual recognition, and joint utilization of tax credit information within the region.

The Notice emphasizes strengthening the sharing of tax‑related credit information among taxpayers in the Yangtze River Delta region, implementing three measures—joint use of dynamic credit scores, mutual recognition of credit rating outcomes, and coordinated risk‑alert notifications—which will help enhance tax compliance across the region and foster a fair and equitable business environment. It is understood that the State Taxation Administration has already launched pilot programs for dynamic credit monitoring in Shanghai and Ningbo, tailoring services and administrative measures to taxpayers’ credit ratings. The Notice proposes extending these practices to the Yangtze River Delta, where taxpayers’ dynamic credit‑monitoring data and evaluation results would be shared, with differentiated management and service measures applied accordingly. Taxpayers with high credit scores may receive incentives such as streamlined documentation requirements, shorter processing times, and reduced on‑site inspections, thereby effectively supporting businesses in operating with integrity and in compliance with the law.

Exploring the use of technologies such as 5G and blockchain to enable smart tax administration.

The Notice, grounded in the goal of enhancing tax‑filing convenience, introduces three measures—implementing smart tax services, standardizing taxpayer consultation, and optimizing tax services for large enterprises—to further improve the sense of gain among market entities. The Yangtze River Delta region boasts a strong IT infrastructure, a pool of skilled professionals, and a robust commitment to innovation. In advancing smart tax administration, the Notice calls on tax authorities to proactively explore the application of technologies such as 5G, blockchain, and artificial intelligence, thereby refining tax enforcement practices, delivering intelligent and personalized taxpayer services, and promoting the development of smart tax service halls that offer features like intelligent guidance, automated form completion, and digital review. To better facilitate and serve taxpayers, the Notice mandates that tax authorities across the Yangtze River Delta share local content within the 12366 knowledge base, adopt a unified approach to responding to inquiries on common tax policies, and organize regular exchanges among 12366 staff throughout the region, enabling coordinated consultation and jointly elevating the overall quality of taxpayer advisory services. Meanwhile, in support of the region’s economic and social development, the Notice also outlines four additional initiatives: establishing uniform standards for exercising discretion in tax administrative penalties; expanding the scope of tax‑benefit filing from mandatory registration to record‑keeping only; benchmarking and upgrading the tax‑related business environment; and conducting joint tax‑economic analyses—measures designed to help foster an excellent business climate in the Yangtze River Delta.

Li Wanfu, Director of the Tax Research Institute of the State Taxation Administration, stated that the tax authorities have focused on the two key pillars of “integration” and “high quality,” rolling out a comprehensive package of 16 tax‑related facilitation measures. These initiatives will help stimulate economic growth in the Yangtze River Delta region, advance its high‑quality integrated development, and further enhance its role as a model for regional development.

Notice of the Ministry of Finance, the State Taxation Administration, and the People’s Bank of China on Adjusting and Improving the Local Sharing Mechanism for Value-Added Tax Credit Refunds and Related Budgetary Management Matters

To the Finance Departments (Bureaus) of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan; to the Finance Bureau of the Xinjiang Production and Construction Corps; to the local supervisory bureaus of the Ministry of Finance; to the tax authorities of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan under the State Taxation Administration; to the Shanghai Headquarters, branches, and business administration departments of the People’s Bank of China; to the central sub-branches in provincial capitals (seat cities); and to the central sub-branches in vice-provincial-level cities:

In accordance with the relevant provisions of the State Council’s Notice on Issuing the Plan for Advancing the Reform of Adjusting the Division of Revenues between the Central and Local Governments Following the Implementation of Larger-Scale Tax and Fee Reductions (Guofa [2019] No. 21), the following matters concerning the adjustment and improvement of the local sharing mechanism for value-added tax credit refunds and related budgetary management are hereby notified:

I. On the Local Cost-Sharing Mechanism

Effective September 1, 2019, for the portion of the value-added tax (VAT) credit refund borne by local governments—50% in total—15% is allocated to the locality where the enterprise is located, while the remaining 35% is apportioned among localities based on the share of VAT revenue each receives relative to the total VAT revenue shared by all localities. This allocation ratio is calculated and determined by the Ministry of Finance according to the actual VAT revenue shares of each region in the preceding year. In practice, the 15% portion is refunded directly by the province where the enterprise is situated, whereas the 35% portion is initially advanced by the provincial finance department of the enterprise’s location. If the advance falls short of the share due, the provincial finance department will, through intergovernmental fund transfers, remit the shortfall monthly to the central government; if the advance exceeds the share due, the central government will, via similar intergovernmental transfers, reimburse the excess monthly to the provincial finance department of the enterprise’s location. Provincial finance departments in each region are required, taking into account the fiscal systems and financial capacities below the provincial level, to rationally design the mechanism for sharing VAT credit refunds at sub‑provincial levels, thereby enhancing efficiency, effectively alleviating the burden of refund payments on lower‑level finances, and ensuring that VAT credit refunds are disbursed promptly.

II. Regarding the Establishment of Budget Items

Since 2019, under the “Domestic Value-Added Tax” (item 1010101) in the Government Revenue and Expenditure Classification System, a sub‑item titled “101010136 Refund of Overpaid Value-Added Tax Credit” has been added as a revenue‑refund account jointly used by the central and local governments, reflecting value‑added tax refunds issued by the tax authorities in accordance with the policy on refunding outstanding VAT credits. Additionally, a sub‑item named “101010137 Provincial-Level Adjustment of Refunds for Outstanding VAT Credits” has been established as a revenue account shared by the central and local governments, recording adjustments—via fund transfers—to reflect cases where the provincial finance at the enterprise’s location has advanced more (or less) than its 35% share of the VAT credit refund. Furthermore, a sub‑item titled “101010138 Sub‑Provincial-Level Adjustment of Refunds for Outstanding VAT Credits” has been created as a local‑government revenue account, documenting adjustments—through fund transfers—to reflect instances where the municipal or county finance at the enterprise’s location has advanced more (or less) than its corresponding share of the VAT credit refund. Under the “Converted Value-Added Tax” (item 1010104), a sub‑item called “101010426 Refund of Converted Value-Added Tax Credit” has been introduced as a revenue‑refund account jointly used by the central and local governments, reflecting converted value‑added tax refunds disbursed by the tax authorities in line with the relevant policy. Moreover, a sub‑item named “101010427 Provincial-Level Adjustment of Refunds for Converted Value-Added Tax Credit” has been added as a revenue account shared by the central and local governments, recording adjustments—via fund transfers—to reflect situations where the provincial finance at the enterprise’s location has advanced more (or less) than its 35% share of the converted VAT credit refund. Finally, a sub‑item titled “101010428 Sub‑Provincial-Level Adjustment of Refunds for Converted Value-Added Tax Credit” has been established as a local‑government revenue account, documenting adjustments—through fund transfers—to reflect cases where the municipal or county finance at the enterprise’s location has advanced more (or less) than its corresponding share of the converted VAT credit refund. The name of the item “Domestic Refund of Converted Value-Added Tax” (item 101010429) has been revised to “Other Domestic Refunds of Converted Value-Added Tax.”

III. Procedures for Processing Refunds to the Treasury

(1) When tax authorities process VAT credit refund transactions, the budgetary item on the Tax Revenue Refund Certificate shall be recorded as “VAT Credit Refund” (item 101010136) or “Refund of VAT Credit Following Conversion to VAT” (item 101010426). The budgetary level shall be determined in accordance with the central‑provincial‑local allocation mechanism for VAT credit refunds, whereby the central government bears 50%, the provincial government 35%, and the remaining 15% is allocated according to each province’s established sub‑provincial VAT credit refund sharing arrangement.

(2) For input VAT credit refunds that occurred between September 1, 2019, and the date of promulgation of these Measures, corresponding adjustments to treasury accounts shall be made. Based on the input VAT credit refund cases processed after September 1, 2019, the tax authorities shall issue correction (treasury adjustment) notices, specifying the “VAT Input Credit Refund” account (item 101010136), the “Refund of Input Credit Subject to Re‑levied VAT” account (item 101010426), and the accounts previously used to record the refunded VAT input credits. Treasury departments at all levels shall, in accordance with the correction (treasury adjustment) notices and other relevant documents issued by the tax authorities, review and process the related transactions.

IV. Regarding Fiscal Fund Transfers

The fiscal transfer of outstanding VAT credit refunds is initiated, based on the amounts each locality is required to remit, by the provincial finance departments and the Ministry of Finance’s supervisory bureaus, respectively, and is uniformly processed on-site by the provincial treasuries in accordance with applicable regulations. Specifically: if the provincial finance department where the enterprise is located has advanced less than its share of the amount, the provincial finance department shall, through inter‑budgetary transfers, remit the shortfall to the central level on a monthly basis; if it has advanced more than its share, the Ministry of Finance’s supervisory bureau shall, via inter‑budgetary transfers, remit the excess to the provincial level on a monthly basis. The amounts that localities are required to remit are calculated by the Ministry of Finance based on the previous year’s VAT revenue‑sharing ratios across regions, the portion advanced by the provincial finance departments, and the 35% share of the outstanding VAT credit refund borne by the local governments.

(1) Allocation of funds by the provincial fiscal authorities.

Within the first 10 working days of each month, the provincial finance department where the enterprise is located, based on the amount of under‑paid allocations to be adjusted as provided by the Ministry of Finance for its region, shall issue a correction (allocation adjustment) notice to the provincial treasury, specifying the relevant budgetary item. Through the “Provincial Allocation Adjustment for VAT Credit Refund” account (item 101010137) and the “Provincial Allocation Adjustment for VAT Credit Refund Following Conversion to VAT” account (item 101010427), the under‑paid portion shall be reallocated from the provincial level to the central level.

(2) Transfer of funds by the Supervision Bureau of the Ministry of Finance.

Within five working days after the provincial fiscal authorities complete the inter‑budgetary transfer each month, the Ministry of Finance’s Supervisory Bureau, based on the amount of overpaid funds to be transferred as provided by the Ministry of Finance, issues a correction (inter‑budgetary transfer) notice to the provincial treasuries at the sub‑item level. Using the “Provincial Inter‑Budgetary Transfer for VAT Credit Refunds” (sub‑item 101010137) and the “Provincial Inter‑Budgetary Transfer for VAT Credit Refunds Following the Conversion to VAT” (sub‑item 101010427), it reallocates the excess payments from the central level to the provincial level for the relevant regions.

Each January, the provincial finance departments and the supervisory bureaus of the Ministry of Finance adjust the accounts to reflect the 35% portion of the value-added tax credit refunds incurred in December of the previous year. Such adjusted revenues are treated as income for the current year and are not included in the prior year’s revenue. After each provincial treasury submits the final daily report on central budgetary revenue to the Central General Treasury on December 31 of the preceding year, any value-added tax credit refunds arising during the adjustment period are uniformly accounted for as revenue of the current year.

V. Strengthening Oversight of Refunds for Input VAT Credits

The local supervisory bureaus of the Ministry of Finance conduct oversight and management of the implementation of the carryforward VAT refund policy through sampling inspections. Provincial finance, tax, and treasury authorities shall cooperate as required. Each quarter, the provincial tax authorities submit a province-wide list of carryforward VAT refunds, while the provincial treasury authorities provide lists or reports on fund transfers (refunds), to the respective local supervisory bureau of the Ministry of Finance. When local supervisory bureaus identify issues such as false reporting of carryforward tax amounts, failure to conduct reviews in accordance with regulations, improper fund transfer (refund) procedures, or delays in ensuring the timely availability of refunded funds, they shall promptly put forward recommendations for corrective action to the relevant departments and report to the Ministry of Finance. Annually, each local supervisory bureau is required to submit a supervisory report to the Ministry of Finance.

This Notice shall take effect as of September 1, 2019. From September 1, 2019, until the date of issuance of this Notice, the central–local sharing arrangements stipulated in the “Supplementary Notice on the Refund of End-of-Period Input VAT Credit for Imported Equipment under Certain Projects” (Cai Yu [2011] No. 486) and the “Notice on VAT Refund Issues Related to the Production of Ethylene and Aromatic Products Using Naphtha and Fuel Oil” (Cai Yu [2015] No. 3) shall be adjusted in accordance with the provisions of this Notice. Any input VAT credit amounts that local governments were previously required to bear but which had been advanced by the central government in prior years shall be recovered through the year‑end settlement between the central and local treasuries for 2019 and subsequent years. The aforementioned documents shall be repealed effective from the date of issuance of this Notice.

Announcement by the Ministry of Finance, the State Taxation Administration, and the China Securities Regulatory Commission on the Continued Implementation of Individual Income Tax Policies Related to the Shanghai–Hong Kong and Shenzhen–Hong Kong Stock Market Trading Connectivity Mechanisms

The following announcement is hereby made regarding the continued implementation of the individual income tax policies pertaining to the Shanghai–Hong Kong Stock Connect, the Shenzhen–Hong Kong Stock Connect, and the Mutual Recognition of Funds between Mainland China and Hong Kong:

With respect to the capital gains derived by mainland individual investors from the transfer of shares listed on the Hong Kong Stock Exchange through the Shanghai–Hong Kong Stock Connect and Shenzhen–Hong Kong Stock Connect, as well as from the transfer of units in Hong Kong‑listed funds purchased or sold under the Mutual Recognition of Funds scheme, personal income tax shall continue to be temporarily exempted from December 5, 2019, to December 31, 2022.

This is hereby announced.

The tax authorities continuously innovate their services to enhance taxpayers’ sense of gain.

Tax authorities across the country have consistently regarded “delegation, regulation, and service” as the strategic first move in deepening reform, introducing a series of effective and robust measures to continuously unlock the benefits of reform and inject new momentum into economic and social development. Recently, the tax advance ruling for complex tax-related matters in Nansha District, Guangzhou, was selected as an innovative case by the Guangdong Provincial Free Trade Office in 2019. To support the development of new business models within the free trade zone, Nansha’s tax authorities boldly broke new ground by becoming the first in China to launch a tax advance ruling service for complex tax issues.

“At the time, the company was undertaking a major project that involved multiple parties, and there was no clear guidance on how to handle the numerous complex tax‑related issues arising from the investment. This posed significant concerns for the company,” recalled Zhang Guangwei, chief accountant at Guangzhou Nansha Urban Construction Investment Co., Ltd., who witnessed the first advance ruling in Nansha District firsthand. In response, the Nansha tax authorities, upon the company’s application and after thorough deliberation in accordance with applicable laws and regulations, promptly issued an advance tax ruling on the complex tax matters at hand.

According to reports, the Nansha Free Trade Zone’s advance tax rulings are aligned with international best practices and tailored to China’s domestic context, providing customized tax‑related services to enterprises seeking guidance on how existing tax laws and regulations should be applied to specific, complex matters expected to arise in the future. At present, the Nansha tax authorities have issued advance tax rulings for a number of major projects.

Recently, the Administrative Service Center of Luolong District in Luoyang City, Henan Province, introduced a commitment‑based system for tax deregistration filings. By simply ticking a box on a single commitment form, businesses can complete their deregistration application in just a few minutes. According to a responsible official at the Luolong District Administrative Service Center, one commitment form now replaces fifteen separate forms. Under this new system, companies no longer need to spend time filling out numerous documents; instead, tax officials will process the deregistration based on the commitment provided by the enterprise, following established procedures, thereby maximizing convenience for businesses. After the information is entered into the system, tax personnel conduct a professional review and cross‑check. If any irregularities are detected, the commitment‑based procedure is halted and switched to the standard process, helping to prevent potential tax risks for the enterprise.

The Consumption Tax Law is now open for public consultation—its basic institutional framework will remain stable.

On December 3, the Ministry of Finance and the State Taxation Administration jointly issued a notice to solicit public comments on the “Consumption Tax Law of the People’s Republic of China (Draft for Public Consultation).” In an accompanying explanatory note released on the same day, the two departments stated that the conditions for enacting consumption tax legislation are currently mature.

In their explanatory statement, the two departments noted that, in drafting the consultation draft, they have maintained the basic institutional framework of the consumption tax and ensured policy stability; incorporated into the bill the reforms and policy adjustments already implemented; and, in line with the regulatory characteristics of the consumption tax, authorized the State Council to adjust tax rates. Mao Jie, Head of the Department of Finance and Taxation at the University of International Business and Economics, told a reporter from the Economic Daily: “After 26 years of reform and practice, and several rounds of tax‑system optimization, the Provisional Regulations on the Consumption Tax have reached a stage where legislative conditions are fully mature. At this critical juncture—when we are accelerating the establishment of a modern fiscal system and advancing the modernization of national governance—it is imperative to introduce consumption‑tax legislation at the appropriate time.”

According to the draft for public comment, the consumption tax categories include tobacco, alcohol, high‑end cosmetics, precious jewelry and jade, fireworks and firecrackers, refined petroleum products, motorcycles, passenger cars, golf balls and related equipment, luxury watches, yachts, disposable wooden chopsticks, solid wood flooring, batteries, and paints. The consumption tax is levied either on a ad valorem basis, on a specific‑quantity basis, or through a combined ad valorem and specific‑quantity approach to calculate the tax payable. In October this year, the State Council issued the “Plan for Advancing the Reform of Adjusting the Division of Central–Local Revenues Following the Implementation of Larger‑Scale Tax and Fee Reductions,” which proposes shifting the consumption tax collection point downstream and gradually transferring jurisdiction over it to local governments. Industry experts believe that this measure will help bolster local tax revenues, further strengthen the local tax system, and encourage government entities to prioritize support for the consumer market, thereby improving the business environment.

To reflect the direction of this reform, the Draft for Public Comment has revised the definition of “taxpayer.” Previously, the Provisional Regulations on Consumption Tax defined taxpayers in terms of multiple concepts, including production, consignment processing, importation, and sales. As the consumption tax reform progresses, wholesale and retail have been added to the list of collection stages. Recognizing that sales activities occur at the production, wholesale, and retail levels, the Draft consolidates these related concepts and adopts a unified formulation: entities and individuals that sell, commission the processing of, or import taxable consumer goods within the territory of China. Moreover, it separately addresses cases where consumer goods are used for personal purposes.

The Draft for Public Comment stipulates that, in accordance with macroeconomic regulation needs, the State Council may adjust the consumption tax rates and shall file such adjustments with the Standing Committee of the National People’s Congress for record. In this regard, the two departments stated in their explanatory notes on the “Consumption Tax Law of the People’s Republic of China (Draft for Public Comment)” that consumption tax is a regulatory tax and plays a crucial role in steering production and consumption patterns. Accordingly, the State Council must make timely adjustments to consumption tax rates in light of changes in economic development, industrial policies, sectoral trends, and household consumption levels. To this end, the Draft includes an authorization clause empowering the State Council to adjust consumption tax rates. Furthermore, under the Draft, the State Council may conduct pilot programs for consumption tax reform, modifying the tax categories, rates, and points of taxation; the pilot plans shall be filed with the Standing Committee of the National People’s Congress for record. In line with the CPC Central Committee and the State Council’s directives on improving the local tax system and reforming the division of revenues between the central and local governments, efforts to shift the taxation point for certain consumer goods have been steadily advancing. Given that these initiatives will continue even after the enactment of the Consumption Tax Law, it is necessary to legally authorize the State Council to carry out relevant pilot projects. To implement the spirit of deepening the “delegation, regulation, and service” reform and further reduce taxpayers’ administrative burdens and reporting requirements, the Draft abolishes three existing tax‑calculation periods—“one day,” “three days,” and “five days”—and introduces a new six‑month period.

Zhang Bin, a researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, stated that value-added tax and consumption tax are the two largest taxes currently levied under provisional regulations. The release of the draft Consumption Tax Law and, more recently, the draft Value-Added Tax Law signifies substantial progress in tax legislation and represents a crucial step toward fulfilling the task of fully implementing the principle of tax legality.

LITIGATION & ARBITRATION

The China Banking and Insurance Regulatory Commission has revised and promulgated the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies.

To implement the decisions and arrangements of the CPC Central Committee and the State Council on further opening up the insurance sector, and to enforce the newly amended Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies (hereinafter referred to as the “Regulations on the Administration of Foreign-Invested Insurance Companies”), the China Banking and Insurance Regulatory Commission recently revised and promulgated the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies (hereinafter referred to as the “Implementing Rules”).

The revised Implementing Rules further implement the latest measures to open up the insurance sector by relaxing the foreign‑ownership cap for foreign‑owned life insurers, raising it to 51% and leaving room in the regulatory framework to fully lift such restrictions at an appropriate time in 2020. Pursuant to the Decision of the State Council on Amending the Regulations of the People’s Republic of China on the Administration of Foreign‑Invested Insurance Companies and the Regulations of the People’s Republic of China on the Administration of Foreign‑Invested Banks, the Implementing Rules have eased the准入 requirements for foreign‑invested insurance companies, no longer imposing conditions such as a “30‑year operating history” or provisions related to “representative offices.” To standardize equity management of foreign‑invested insurance companies, the amended Implementing Rules mandate that each foreign‑invested insurer must have at least one normally operating insurance company as a major shareholder, thereby clarifying the responsibilities and obligations of major shareholders and ensuring the sustained, sound operation of these entities. In terms of harmonizing domestic and foreign‑invested regulatory regimes, the Implementing Rules have removed provisions pertaining to the administration of branches of foreign‑invested insurance companies. Accordingly, with respect to the establishment and management of branch offices, foreign‑invested insurers are subject to the same regulations—such as the Measures for Market Access to Branches of Insurance Companies—as their Chinese counterparts. Moreover, the eligibility criteria for Chinese applicants seeking to establish joint‑venture insurance companies are now uniformly governed by the Measures on Equity Management of Insurance Companies, thus ensuring consistency and coherence across relevant regulatory frameworks.

Going forward, the China Banking and Insurance Regulatory Commission will, in accordance with the revised Regulations on the Administration of Foreign-Invested Insurance Companies and their Implementing Rules, strengthen regulatory oversight of foreign‑invested insurance companies, continue to optimize the investment and operating environment of the insurance sector, further invigorate market dynamism, diversify financial services and product offerings, and enhance the quality and effectiveness of the insurance industry’s support for the real economy.

A responsible official from the relevant department of the China Banking and Insurance Regulatory Commission answered questions regarding the revision of the Implementing Rules for the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies.

1. What is the background behind this revision of the Implementing Rules?

The CPC Central Committee and the State Council attach great importance to opening up the financial sector. On April 10, 2018, in his keynote address at the opening ceremony of the Boao Forum for Asia, President Xi Jinping emphasized the need to “accelerate the process of opening up the insurance industry.” Subsequently, with the approval of the CPC Central Committee and the State Council, the China Banking and Insurance Regulatory Commission (CBIRC) successively introduced a series of new measures to further open the insurance sector to foreign investment. To implement the decisions and arrangements of the CPC Central Committee and the State Council and to carry out the major financial opening-up initiatives already announced, the Decision of the State Council on Amending the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies and the Regulations of the People’s Republic of China on the Administration of Foreign-Invested Banks was officially promulgated on October 15, 2019. The revised Regulations of the People’s Republic of China on the Administration of Foreign-Invested Insurance Companies have relaxed the准入 requirements for foreign‑invested insurance companies; accordingly, the accompanying Implementing Rules must also be amended to provide stronger legal safeguards for the further opening up of the insurance sector.

2. What key measures to further open up to the outside world are being implemented through this revision of the Implementing Rules?

The implementation primarily focuses on two key measures to further open up the sector. First, it enacts the policy of relaxing foreign‑ownership caps in life insurance companies. Article 3 of the Implementing Rules has been amended to state: “Foreign insurance companies may establish joint‑venture life insurance companies in China with Chinese companies or enterprises, provided that the foreign equity share does not exceed 51% of the company’s total share capital,” and an additional provision has been added: “Where the China Banking and Insurance Regulatory Commission has otherwise prescribed requirements, such provisions shall prevail,” thereby creating regulatory flexibility for the eventual, timely, and comprehensive removal of foreign‑ownership restrictions in 2020. Second, it implements measures to ease market access for foreign‑invested insurance companies, including the elimination, nationwide, of the requirement that foreign insurers maintain a representative office for two years prior to establishment, as well as the abolition of the 30‑year operational‑history threshold. In accordance with the State Council’s Decision on Amending the Regulations of the People’s Republic of China on the Administration of Foreign‑Invested Insurance Companies and the Regulations of the People’s Republic of China on the Administration of Foreign‑Invested Banks, the Implementing Rules no longer contain provisions relating to matters such as the 30‑year operational‑history requirement or representative offices.

3. To further standardize the management of equity in foreign-invested insurance companies, what revisions have been made to the Implementing Rules?

The Implementing Rules require that a foreign‑invested insurance company have at least one normally operating insurance company as its principal shareholder. A principal shareholder is defined as the shareholder with the largest shareholding, as well as any other shareholders whose interests, pursuant to laws, administrative regulations, and the provisions of the China Banking and Insurance Regulatory Commission, exert a significant influence on the company’s management and operations. The Rules further stipulate that principal shareholders must commit not to transfer their equity holdings within five years from the date of acquisition. If a principal shareholder of a foreign‑invested insurance company intends to reduce its equity stake or withdraw from the Chinese market, it shall fulfill its shareholder obligations and ensure that the insurer’s solvency remains in compliance with regulatory requirements. These institutional arrangements will help further refine the regulatory framework for equity governance of foreign‑invested insurance companies, enhance their corporate governance structures, and safeguard their sustained and sound operations.

4. How does the revised “Detailed Rules for Implementation” further harmonize the regulatory framework for both domestic and foreign‑invested insurance companies, and in what key areas is this reflected?

First, with respect to the management of branch offices, the Implementing Rules have deleted certain existing provisions pertaining to the administration of branches of foreign‑invested insurance companies. The establishment and management of such branches are now governed, like those of domestically‑capitalized insurers, by the Measures for the Market Access Administration of Insurance Company Branches and other relevant regulations, thereby ensuring that cooperation and competition take place under a unified regulatory framework. Second, regarding the qualification requirements for Chinese applicants, the conditions and administrative procedures applicable to Chinese applicants seeking to establish joint‑venture insurance companies are now uniformly governed by the Measures for the Administration of Equity in Insurance Companies, thus ensuring consistency and coherence across the relevant regulatory provisions.

5. Following the issuance of the Implementing Rules, what work arrangements has the CBIRC put in place?

Going forward, we will, in accordance with the revised Implementing Rules, advance the relevant approval procedures in compliance with the law. While expanding openness and attracting foreign investment, we will continue to refine and improve our regulatory approaches, ensuring that our risk‑based oversight capabilities are commensurate with the level of openness.

We welcome more qualified foreign-invested insurance companies to enter the Chinese market, leverage their advanced expertise in conjunction with China’s specific conditions, and foster mutual growth through competition with domestic insurers, thereby better meeting the multi‑tiered and diversified financial needs of the real economy and the general public.

Draft Amendment to the Vocational Education Law Seeks Public Input: Clarifies the Framework of the Modern Vocational Education System

According to the Ministry of Education’s website, the ministry today launched a public consultation on the “Draft Amendment to the Vocational Education Law of the People’s Republic of China (Exposure Draft).” Building on the existing law, the draft revises and adjusts 41 articles and adds 15 new ones. It clarifies the framework of a modern vocational education system, establishes seamless pathways for vocational school education—extending upward to vocational colleges at the associate and bachelor’s degree levels—and integrates vocational education into compulsory education, strengthening career‑oriented early‑education initiatives. At the same time, it promotes integrated training across secondary and higher vocational education and allows for flexible academic systems.

The Draft for Soliciting Opinions proactively pursues institutional innovation, officely anchoring itself in the positioning of vocational education as a distinct type of education and systematically designing its legal framework. It focuses on addressing the pressing and challenging issues in the field of vocational education, thereby enhancing the relevance and specificity of its provisions. Moreover, it closely aligns with the realities of vocational education reform and development, promptly translating practical achievements into legal norms. Building upon the existing law, a total of 41 articles have been revised or adjusted, and 15 new articles have been added.

The specific amendments in the Draft for Public Comment primarily cover the following aspects:

Uphold the Party’s overall leadership. In accordance with the requirements set forth in the CPC Central Committee’s Opinions on Strengthening the Party’s Political Development, it is stipulated that vocational education must “uphold the CPC’s overall leadership and adhere to the socialist orientation in running schools.” The Party’s leadership is institutionalized through specific rules and regulations, and provisions regarding the governance structure of vocational schools have been added, clearly defining the leadership system of public vocational schools—including secondary vocational schools—as a principal‑responsibility system under the leadership of the CPC grassroots organizations.

Clarify the essence, positioning, and guiding principles of vocational education. Drawing on international definitions of vocational education, define its core content. Emphasize that vocational education is a distinct form of education, equal in status to general education, and stipulate that, following compulsory education, the state shall pursue differentiated development of vocational and general education at various stages. Establish the implementation principles of vocational education—“integration of industry and education, collaboration between schools and enterprises, integration of work and study, and unity of knowledge and practice.”

Improve the mechanisms for organizing vocational education. In line with the requirement to shift vocational education from a model primarily led by the government to one characterized by unified government oversight and diversified participation by society, promote diversified provision of educational services; stipulate that the state will give priority support to the development of high‑level vocational colleges; strengthen the rights and responsibilities of industry authorities, industry associations, and enterprises in establishing or co‑establishing vocational schools; and innovate delivery models by supporting the establishment of shareholding‑based and mixed‑ownership vocational schools.

Improve the management system for vocational education. Address the salient issues of overlapping administration and fragmented policymaking by stipulating that vocational education shall be managed under the leadership of the State Council, with a tiered structure in which local authorities take the lead, coordinated by the government, guided by industry sectors, and involving broad social participation. Establish a coordination mechanism by instituting an inter‑ministerial joint conference on vocational education under the State Council; strengthen provincial‑level overall planning; and enhance the support framework by setting up a National Vocational Education Guidance and Advisory Committee.

Clarify the framework of the modern vocational education system and define its core principles. Promote seamless articulation between school-based education, vocational training, and other forms of learning outcomes, and establish “1+X” and “X+1” systems. Smooth the pathways for vocational education at all levels, extending upward to include junior college‑ and bachelor’s‑degree‑level vocational institutions, while integrating vocational orientation into compulsory education to strengthen early career exploration. At the same time, advance integrated programs that link secondary and higher vocational education, allowing for flexible academic systems.

Enhance institutional support for industry–education integration. Make the promotion of industry–education collaboration and school–enterprise partnerships a fundamental guiding principle, with a focus on addressing the imbalance in which vocational schools are overly enthusiastic while industry and enterprises remain insufficiently engaged. Strengthen enterprises’ rights to operate educational institutions; establish a system for industry–education‑integrated enterprises, specifying eligibility criteria and preferential policies, and defining the forms of school–enterprise cooperation; advance apprenticeship‑based training; and encourage industry and enterprise participation across the entire process—ranging from vocational school admissions and program design to curriculum development and quality assessment.

Establish a vocational education teacher‑education system. Focus on addressing the bottleneck of insufficient professional expertise among vocational educators by strengthening government accountability, stipulating that the state shall set up vocational education teacher‑training centers, and enhancing specialized teacher‑training and professional development. Clarify that vocational teachers must possess practical work experience and a corresponding level of technical proficiency, and refine the mechanisms for reassigning technical and skilled personnel to teaching positions as well as the system for recognizing master craftsmen in technical and vocational fields.

Improve the quality‑assessment mechanism for vocational education. New provisions on quality assessment have been introduced, establishing a framework that includes government evaluation, industry assessment, and institutional self‑evaluation, while specifying the organizational structure and content requirements of these assessments. A certification system for vocational skill levels has also been established. The regulations stipulate that quality assessments in vocational education must involve industry stakeholders, enterprises, and independent third‑party professional organizations, and that relevant information shall be made publicly available in a timely manner.

Expand the institutional autonomy of vocational schools. Encourage vocational schools to operate independently in response to market and employment needs, and implement their management autonomy. In line with the principles of aligning program offerings with industry demands, curriculum content with occupational standards, and teaching processes with production workflows, strengthen schools’ pedagogical autonomy, broaden their authority over salary and compensation structures, and grant them greater discretion in admissions.

Improve the mechanism for funding vocational education. Further clarify the responsibilities of governments at all levels in allocating funds for vocational education, specify the requirement that the government coordinate and allocate resources to support vocational education, and strengthen the institutional framework for corporate investment and diversified funding mechanisms for vocational schools.

Foster a social environment that promotes the development of vocational education. The law stipulates that the state shall adopt measures to enhance the social status and remuneration of workers and skilled personnel, reward organizations and individuals that have achieved outstanding results in vocational education, and designate the second week of May each year as Vocational Education Week. At the same time, it underscores the equal status of students in vocational schools.

Strengthen legal accountability. In line with the requirements of legislative standardization, a separate chapter on legal liability has been added, stipulating the responsibilities of the government and clearly defining the obligations of enterprises, schools, and internship units, thereby underscoring the mandatory nature of the law.

In addition, the Ministry of Education provided specific clarifications on several issues.

On the legal status of technical schools, particularly technician colleges: At present, technical schools are incorporated into the administration of secondary vocational schools. In this revision, in accordance with the Implementation Plan, it has been added that qualified technician colleges, upon approval, may be designated as institutions of higher vocational education.

With regard to the retention of primary vocational education, in order to maintain the uniformity of compulsory education, primary vocational education has been abolished. (In practice, there are only 15 vocational junior high schools nationwide, and they have already been counted as part of compulsory education institutions, thus qualifying as a special category within compulsory education.) Accordingly, the provisions concerning primary vocational education in the original law have been deleted.

On the adoption of the concept of “vocational colleges.” To implement the positioning of vocational education as a distinct type, the term “vocational college” is used to replace the term “higher vocational school.” Vocational colleges correspond to regular institutions of higher education and encompass both associate‑degree and bachelor’s‑degree levels.

With regard to the levels of vocational education, it is divided into three tiers—primary, intermediate, and advanced—laying the legal foundation for future efforts to align the vocational education system with the national qualifications framework.

Explanation Regarding the “Administrative Measures for Agricultural Plastic Film (Trial) (Draft for Public Comment)”

The Necessity of Formulation

The CPC Central Committee and the State Council attach great importance to soil pollution prevention and control, and have set forth clear requirements for establishing and improving the management system for agricultural plastic mulch. The “Opinions of the CPC Central Committee and the State Council on Comprehensively Strengthening Ecological and Environmental Protection and Resolutely Winning the Battle Against Pollution,” issued in June 2018, laid out plans and arrangements for winning the tough battle against pollution in agriculture and rural areas, emphasizing the need to refine the system for the collection and treatment of used plastic mulch. Article 30 of the Soil Pollution Prevention and Control Law of the People’s Republic of China, which came into effect on January 1, 2019, explicitly stipulates that producers, sellers, and users of agricultural inputs shall promptly collect and recycle agricultural plastic mulch; specific measures are to be formulated by the agricultural and rural affairs department under the State Council in coordination with the State Council’s departments responsible for ecological environment and other relevant sectors. The Action Plan for Soil Pollution Prevention and Control, promulgated by the State Council, calls for accelerating the legislative process and issuing departmental regulations on the recycling and utilization of discarded agricultural plastic mulch.

Agricultural mulch film is an essential agricultural input. In China, its extensive use across a wide range of applications has played a crucial role in boosting crop yields, enhancing product quality, and diversifying the supply structure of agricultural products. However, due to overreliance on use at the expense of recycling and the lack of clear responsibility for collection, residual plastic pollution from agricultural mulch film has become increasingly severe in some regions, emerging as a major environmental constraint on the sustainable development of agriculture. First, residue levels are substantial. According to data from 210 nationally monitored sites under the Ministry of Agriculture and Rural Affairs, average residue concentrations in key mulch‑using areas of Northwest China exceed 36 kg per hectare, with peak levels reaching as high as 138 kg per hectare; in North China, residue levels also surpass 20 kg per hectare. Second, the scope of contamination is broad. The range of crops covered by mulch has expanded from cash crops to field crops such as cotton, corn, and wheat, resulting in varying degrees of mulch‑film residue in soils across these cultivated areas. Third, usage practices are often inappropriate: to increase yields, farmers have indiscriminately expanded the area under mulch without adequately addressing the challenges of residue removal and environmental pollution. Moreover, large quantities of previously used thin‑walled, low‑quality mulch films remain in the fields, proving difficult to collect and further complicating remediation efforts. Therefore, to prevent and control agricultural mulch‑film pollution and to protect and improve the agricultural ecological environment, there is an urgent need to establish and refine a comprehensive system for the supervision and management of agricultural mulch film.

In accordance with the decisions and arrangements of the CPC Central Committee and the State Council, as well as the requirements of the Law of the People’s Republic of China on the Prevention and Control of Soil Pollution, the Ministry of Agriculture and Rural Affairs has taken the lead in drafting the Measures for the Administration of Agricultural Plastic Film (Trial) (Draft for Comments). During the drafting process, the Ministry established a working group, conducted thorough research into the actual practices of agricultural plastic film use and recycling in China, and examined relevant local legislation. The group carried out multiple field investigations at the grassroots level, convened expert review meetings, and extensively sought input from relevant departments under the State Council, local agricultural and rural affairs authorities, as well as manufacturers and industry associations of agricultural plastic films. After repeated revisions and refinements, the Measures for the Administration of Agricultural Plastic Film (Trial) (Draft for Comments) was finalized.

II. Main Content

The draft for public comment is divided into five chapters—General Provisions, Production, Sales and Use, Recycling and Reuse, Supervision and Inspection, and Supplementary Provisions—comprising a total of 25 articles. It primarily sets forth the following provisions:

(1) Establish a full-chain regulatory system

The management of agricultural mulch films is broad in scope; only by implementing end-to-end oversight and regulation across the entire chain—covering production, sales, use, collection, and recycling—can we achieve the goals of improving the agricultural ecological environment and advancing green agricultural development. To this end, a multi‑departmental management system with clearly defined roles and coordinated efforts must be established. Accordingly, the draft for public comment adopts a holistic, full‑process regulatory approach, stipulating: first, that people’s governments at all local levels shall, in accordance with the law, assume responsibility for preventing and controlling pollution caused by agricultural mulch films within their administrative jurisdictions, and shall organize, coordinate, and supervise relevant departments to fulfill their statutory duties in overseeing and managing such pollution; second, it specifies the respective responsibilities of the departments of agriculture and rural affairs, industry and information technology, market supervision, and ecological environment in the supervision and administration of agricultural mulch films. (Articles 4 and 5)

(II) Standardize production, sales, and usage practices

To facilitate product traceability and market supervision, and to standardize the conduct of producers, sellers, and users throughout the production, sales, and use stages, the draft for public comment stipulates the following: First, producers shall comply with relevant standards for agricultural mulch films, affix enterprise identification marks on their products, clearly differentiate between fully biodegradable and non‑fully biodegradable agricultural mulch films in the content of the certificate of conformity, and maintain records of outgoing sales. Second, sellers of such films shall, in accordance with the law, inspect the packaging, labels, and certificates of quality inspection of agricultural mulch film products; they shall not procure or sell agricultural mulch films that fail to meet national mandatory standards, nor shall they sell non‑agricultural mulch films to users of agricultural mulch films, and they must keep sales ledgers. Third, users shall apply agricultural mulch films within the period specified on the product label; agricultural production enterprises, farmer professional cooperatives, and other users shall, in accordance with the law, maintain records of their use of agricultural mulch films. In addition, the draft sets forth requirements regarding the content and retention periods for production, sales, and usage records. (Articles 7, 8, 9, 10, 11, and 12)

(3) Implementing Recycling Responsibilities

In accordance with Article 30 of the Soil Pollution Prevention and Control Law of the People’s Republic of China, producers, sellers, and users are all responsible for the collection of agricultural plastic film. To ensure that each party fulfills its respective obligations, the draft for public comment stipulates: Users of agricultural plastic film shall, prior to the expiration of its intended service life, collect non‑fully biodegradable agricultural plastic film waste from fields and deliver it to designated collection points or collectors; they may not dispose of such waste arbitrarily, bury it, or incinerate it. Meanwhile, producers, sellers, collection points, enterprises engaged in the recycling and reuse of used agricultural plastic film, and other relevant organizations shall collaborate, adopt diverse approaches, and establish a sound system for the collection and utilization of agricultural plastic film, thereby promoting the recovery, treatment, and reuse of discarded agricultural plastic film. (Articles 14, 15, and 16)

(4) Encourage the reuse of used agricultural plastic film.

To encourage technological innovation, enhance the utilization of agricultural film, and promote green development, the draft for public comment stipulates: First, research and development and the promotion of technologies and machinery for the recovery of agricultural film shall be encouraged, and the reuse of used agricultural film shall be carried out. Second, enterprises engaged in the reuse of used agricultural film shall be supported in enjoying preferential policies—covering land use, electricity, water, credit, and taxation—in accordance with relevant regulations, and social service organizations and enterprises involved in the reuse of used agricultural film shall receive assistance. Local governments are to establish incentive policies for the collection and recycling of agricultural film. (Articles 18 and 19)

Further refine the draft implementing regulations of the Foreign Investment Law and expedite their promulgation.

The Foreign Investment Law will come into effect on January 1 next year. Regarding the current progress in formulating supporting measures, Ministry of Commerce spokesperson Gao Feng stated at a press conference held on the 5th that the Ministry attaches great importance to the implementation of the Foreign Investment Law, and that the public consultation on the implementing regulations for the law has now concluded.

Gao Feng stated that the Ministry of Commerce will continue to work closely with the judiciary to draft the implementing regulations for the Foreign Investment Law, carefully review the views and suggestions put forward by all sectors of society, further refine the draft regulations, and expedite their promulgation to ensure that they come into force on January 1 next year, in tandem with the Foreign Investment Law. Gao Feng also noted that the Ministry is actively advancing the formulation of related supporting rules and regulations. For example, the Ministry, in collaboration with the State Administration for Market Regulation, has drafted the “Measures on Information Reporting for Foreign-Invested Enterprises” and has already completed the public consultation process. “Going forward,” Gao Feng said, “we will, based on the feedback received, further revise and improve the draft and issue it as soon as possible, ensuring its simultaneous implementation with the Foreign Investment Law.”

Other

The commemorative stone marking the 20th anniversary of Macao’s return to the motherland was unveiled in Zhuhai.

The commemorative stone marking the 20th anniversary of Macao’s return to the motherland was unveiled on the 7th at the Macao Return Memorial Park in Zhuhai. The unveiling ceremony was co-hosted by the Zhuhai Youth Federation and the Macao Youth Federation, with approximately 100 youth representatives from both cities in attendance. The memorial stone, jointly crafted by the two federations, bears inscriptions such as “Zhuhai and Macao Draw a Circle of Unity; Youth Together Build the Chinese Dream,” serving as a symbol of enduring friendship between the two regions and a testament to their continued pursuit of shared aspirations in the new era. In addition, the two youth federations jointly issued a commemorative cover for the unveiling ceremony, and participating youth representatives from Zhuhai and Macao filled it with their hopes and blessings before depositing a “letter to their future selves 20 years hence” into the envelope.

This event marks the first in a series of activities organized by Zhuhai and Macao youth to celebrate the 20th anniversary of Macao’s return to the motherland. Moving forward, the Zhuhai Youth Federation will collaborate with relevant organizations to host a cultural gala commemorating the 20th anniversary, the finals of the “Bay Area Youth Speak” competition, and the official release of a themed flash‑mob video highlighting this milestone. According to a spokesperson from the Zhuhai Youth Federation, the aim is to foster ongoing exchanges, mutual understanding, and deeper connections among young people from Zhuhai and Macao through a series of meaningful, engaging, and vibrant initiatives—while contributing to Macao’s balanced economic diversification and advancing the development of the Macao–Zhuhai hub within the Guangdong–Hong Kong–Macao Greater Bay Area.

“The development of the Guangdong–Hong Kong–Macao Greater Bay Area and China–Macao cooperation represent the greatest opportunity and fortune for the current generation of young people in both regions. We look forward to the youth federations of the two places forging an even closer partnership, working together to draw the most beautiful concentric circles of unity, and guiding young people on both sides to jointly realize the Chinese Dream. On the occasion of the 20th anniversary of Macao’s return to the motherland, the Macao Youth Federation will take this as a new starting point, leading more young Macanese to deepen their understanding of the motherland and integrate into the development of the Guangdong–Hong Kong–Macao Greater Bay Area,” said Mo Zhiwei, Vice Chairman of the All-China Youth Federation and President of the Macao Youth Federation.

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