JC Master Legal News Issue 901

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Supervision and Administration of Non‑Listed Public Companies” and the “Measures for the Information Disclosure of Non‑Listed Public Companies.”

In accordance with the arrangements set forth at the Central Economic Work Conference, and in order to steadily advance the reform of the New Third Board, improve the market’s foundational systems, and enhance its financing functions, the China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Supervision and Administration of Non‑Listed Public Companies” (hereinafter referred to as the “Public Companies Measures”) and the “Measures for the Administration of Information Disclosure by Non‑Listed Public Companies” (hereinafter referred to as the “Information Disclosure Measures”), which shall take effect from the date of their promulgation.

The 12th China Corporate Social Responsibility Summit and the 2019 China CSR Public Welfare Gala will soon be held in Beijing.

On December 13, the “China 5G Economy Symposium” was held at the China International Economic Exchange Center in Beijing. Hosted by Guojing Consulting Co., Ltd., the forum brought together approximately 100 guests from government agencies, 5G‑related enterprises, relevant universities and research institutes, as well as the media.

Interpretation of the “Announcement of the State Taxation Administration on Revising Certain Issues Related to the Annual Corporate Income Tax Return Form”

To implement the Enterprise Income Tax Law of the People’s Republic of China and related tax policies, and to further reduce the tax compliance burden on enterprises, the State Taxation Administration has issued the “Announcement of the State Taxation Administration on Revising Certain Issues Related to the Annual Corporate Income Tax Return” (hereinafter referred to as the “Announcement”). The following is an interpretation thereof.

The complete draft of the Civil Code is set to be unveiled.

The 15th Meeting of the Standing Committee of the 13th National People’s Congress will be held in Beijing from December 23 to 28, at which the complete draft of the Civil Code of the People’s Republic of China will be submitted for deliberation.

2019: “China’s Governance” Inspires the World

In 2019, China marked the 70th anniversary of its founding. The country’s twin achievements—the rapid economic development and long-term social stability—have earned widespread acclaim, reshaping the world’s perception and understanding of China. The secrets behind the success of “China’s governance” and its global significance have drawn increasing attention and reflection from the international community.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Supervision and Administration of Non‑Listed Public Companies” and the “Measures for the Information Disclosure of Non‑Listed Public Companies.”

China Securities Depository and Clearing Corporation has revised the Measures for the Administration of Settlement Reserve Funds.

Rules for the Southbound Investor Identification Code System under the Shanghai–Shenzhen–Hong Kong Stock Connect Have Been Issued and Put into Effect.

The Shanghai Stock Exchange has issued its first batch of credit protection certificates, supporting corporate bond financing through credit enhancement.

Notice on Amendments to the “Shenzhen Stock Exchange Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect”

Corporate & Commercial

The 12th China Corporate Social Responsibility Summit and the 2019 China CSR Public Welfare Gala will soon be held in Beijing.

After collecting membership fees, charging additional on-demand fees—video platforms’ pricing practices must be standardized.

In 2019, the transaction scale of China’s fresh-food market will exceed RMB 2 trillion.

Beijing has completed the renovation of 1,007 gas stations.

Revenue exceeded 310 billion yuan, with a growth rate of 10.6%—the gaming industry’s ability to attract capital remains undiminished.

Taxation

Interpretation of the “Announcement of the State Taxation Administration on Revising Certain Issues Related to the Annual Corporate Income Tax Return Form”

Interpretation of the “Announcement of the State Taxation Administration on the Entry into Force and Implementation of the Agreement between the Government of the People’s Republic of China and the Government of the Republic of Botswana for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income”

Nine Common Mistakes to Watch Out for When Filling Out Special Additional Deduction Information

Twenty Years After Macao’s Return: Taxation Ushers in a New Era

Convenient tax settlement helps realize the benefits of personal income tax reform.

Litigation & Arbitration

The complete draft of the Civil Code is set to be unveiled.

The Legislative Affairs Commission of the National People’s Congress reviewed its legislative work in 2019.

The newly revised “Regulations on Military Archives” have been promulgated.

The Regulations for the Implementation of the Foreign Investment Law will be promulgated in the near future.

Zhejiang Province Has Issued Measures for the Sealing of Juvenile Criminal Records

Other

2019: “China’s Governance” Inspires the World

Finance & Capital Markets

The China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Supervision and Administration of Non‑Listed Public Companies” and the “Measures for the Information Disclosure of Non‑Listed Public Companies.”

In accordance with the arrangements set forth at the Central Economic Work Conference, and in order to steadily advance the reform of the New Third Board, improve the market’s foundational systems, and enhance its financing functions, the China Securities Regulatory Commission has issued the “Decision on Amending the Measures for the Supervision and Administration of Non‑Listed Public Companies” (hereinafter referred to as the “Public Companies Measures”) and the “Measures for the Administration of Information Disclosure by Non‑Listed Public Companies” (hereinafter referred to as the “Information Disclosure Measures”), which shall take effect from the date of their promulgation.

This revision of the Measures for Public Companies is grounded in supporting the reform of the New Third Board, with targeted adjustments focused on implementing public offerings to unspecified qualified investors and optimizing the private placement mechanism. The key amendments include: First, the introduction of a public offering regime to unspecified qualified investors, allowing listed companies to conduct public offerings to such investors under a sponsorship and underwriting framework. Second, the streamlining of the private placement system by removing the 35‑investor cap and introducing a self‑underwritten issuance option. Third, the refinement of the review procedures for public transfers and issuances: where administrative approval is required, the National Equities Exchange and Quotations Company will first issue a self‑regulatory opinion, which the China Securities Regulatory Commission will then use as the basis for its approval. Fourth, the innovation of regulatory approaches, establishing principles of differentiated information disclosure, clarifying legal liabilities for corporate governance violations, strengthening the accountability of intermediary institutions, and urging companies to operate in compliance with applicable rules.

Building on the experience gained from regulating listed companies and drawing extensively on the reforms implemented on the STAR Market, the Measures on Information Disclosure clearly define the information‑disclosure obligations of companies listed on the National Equities Exchange and Quotations (NEEQ), thereby strengthening the foundational regulatory framework. At the same time, in light of the characteristics of companies at different tiers following the NEEQ’s reform, the measures establish a differentiated information‑disclosure system. The key provisions include: first, based on the realities of the NEEQ market and listed companies, setting out basic requirements for information disclosure to ensure its quality; second, establishing a tiered, differentiated disclosure regime that tailors disclosure formats, content, and management practices to align with the specific circumstances of SMEs at each stage of development and with investors’ information needs; and third, coordinating administrative oversight by the China Securities Regulatory Commission with self‑regulatory supervision by the NEEQ, reinforcing division of responsibilities and collaboration to create an efficient regulatory mechanism.

The Measures on Public Companies and the Measures on Information Disclosure were publicly solicited for comments from November 8 to December 8, 2019. During this period, a total of 30 submissions were received, of which 17 were deemed valid. In addition, the CSRC conducted on-site visits, surveys, symposiums, and other forms of engagement to solicit views and suggestions from local government financial authorities, listed companies, securities offices, accounting offices, law offices, investment institutions, as well as academic experts and scholars. Based on the feedback received, stakeholders generally agreed that these two regulations would strengthen the legal foundation of the New Third Board reform and help enhance the market’s capacity to serve small and medium-sized enterprises and the private sector. The CSRC carefully reviewed and analyzed all submitted opinions and recommendations, and incorporated those that were deemed reasonable.

Building on the aforementioned two regulations, the China Securities Regulatory Commission and the National Equities Exchange and Quotations Company will progressively issue supporting rules to clarify the specific institutional arrangements for the reform and regulation of the New Third Board, ensure the smooth implementation of all reform measures, achieve the intended objectives, address the shortcomings in the multi-tiered capital market’s ability to serve small and medium-sized enterprises, and better support the high-quality development of the real economy.

Following the promulgation of the Measures for Public Companies, projects under review and those that have been approved but not yet issued shall be processed in accordance with the existing procedures.

China Securities Depository and Clearing Corporation has revised the Measures for the Administration of Settlement Reserve Funds.

Following the completion of the reporting procedures to the China Securities Regulatory Commission, China Securities Depository & Clearing Corporation (CSDC) officially promulgated the Measures for the Administration of Settlement Reserve Funds (2019 Revision) on December 20, 2019, which took effect upon its publication. The principal amendment reduces the minimum settlement reserve fund collection ratio for equity‑related business from 20% to 18%, and, in light of the current practices of settlement participants in daily operations and risk management, further refines provisions concerning CSDC’s authority to adjust the minimum settlement reserve fund collection ratio and related matters.

Optimizing the settlement reserve‑fund collection system aims to strike an appropriate balance among security, efficiency, and cost in the transaction‑settlement process, ensuring safety while minimizing settlement costs and enhancing market efficiency.

Rules for the Southbound Investor Identification Code System under the Shanghai–Shenzhen–Hong Kong Stock Connect Have Been Issued and Put into Effect.

To advance high-standard opening-up of the capital market and further enhance connectivity between the mainland and Hong Kong markets, with the approval of the China Securities Regulatory Commission, the Shanghai and Shenzhen Stock Exchanges today released the revised Measures for the Implementation of the Shanghai–Hong Kong Stock Connect and the Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect. The two stock exchanges and the securities registration and clearing institutions are expediting preparatory work to launch the systems, which are scheduled to go live on January 13, 2020.

Following the implementation of the Southbound Investor Identification Code system, Southbound investors will provide identification codes and other relevant information, which will help the Hong Kong Securities and Futures Commission strengthen market oversight and ensure the smooth and orderly operation of the Shanghai–Shenzhen–Hong Kong Stock Connect. The Hong Kong Securities and Futures Commission will also continue to assist the China Securities Regulatory Commission in refining the Northbound Investor Identification Code system.

The Shanghai Stock Exchange has issued its first batch of credit protection certificates, supporting corporate bond financing through credit enhancement.

To implement the decisions and arrangements of the CPC Central Committee and the State Council on broadening financing channels for private enterprises and alleviating their financing difficulties through market-oriented measures, and building on the earlier pilot program for credit protection contracts, the Shanghai Stock Exchange, with the approval of the China Securities Regulatory Commission, has recently launched a pilot program for credit protection certificates. On December 17, 2019, the first batch of credit protection certificates was issued, comprising four transactions with a total notional principal of RMB 133 million, thereby effectively supporting bond financing totaling RMB 4.46 billion.

The initial four credit protection certificates were issued by Haitong Securities, CITIC Securities, CITIC Construction Investment, and Huatai Securities. Among the reference entities, Shenzhen Baiyeyuan Investment Co., Ltd. and the originator of the 2019 Haier Leasing Phase I Asset-Backed Special Plan are both private enterprises. The protected debt instruments encompass corporate bonds—including those issued by private offices and poverty‑alleviation bonds—as well as asset‑backed securities. By leveraging market‑based credit enhancement tools, these four issuers provided credit protection to bond issuers, offering a comprehensive financing solution that combines bond issuance with credit protection certificates. This approach has bolstered market confidence, improved issuance efficiency, and facilitated smooth bond financing for the issuers. Meanwhile, Guotai Junan, as the manager of the 2019 Ping An Leasing Auto Finance Phase III Asset‑Backed Special Plan, will soon issue credit protection certificates for this plan to support its successful launch.

The first batch of credit protection certificates, by means of credit enhancement, has effectively supported bond financing for private enterprises and small, medium, and micro-sized businesses, yielding significant social benefits. For example, the proceeds from Lankao County’s poverty‑alleviation special‑purpose corporate bonds were allocated to the resettlement housing construction project in the Mengze Garden residential community. Haitong Securities, by selling credit protection certificates with a notional principal of RMB 43 million to investors in the poverty‑alleviation special‑purpose bonds, supported a concurrent bond issuance totaling RMB 1 billion, thereby reducing corporate financing costs, providing funds for project implementation, advancing local public‑welfare infrastructure, and improving residents’ living conditions. Another example is the first tranche of Haier Leasing’s asset‑backed special‑purpose plan in 2019, which served nearly 70 small, medium, and micro‑enterprise borrowers, with individual financings not exceeding RMB 60 million. Huatai Securities, by selling credit protection certificates with a total notional principal of RMB 30 million to 19 priority‑class subscribers of the Haier Leasing ABS, provided credit enhancement support, effectively backing an issuance scale of RMB 960 million and facilitating the provision of financial leasing services to small, medium, and micro‑enterprises, thus easing their access to financing.

The prudent launch of a pilot program for credit protection certificates represents an important initiative by the Shanghai Stock Exchange, under the guidance of the China Securities Regulatory Commission, to develop credit enhancement instruments and facilitate financing for private enterprises. In November 2018, in accordance with the unified deployment of the CSRC, the SSE initiated a pilot program for credit protection contracts, which proceeded smoothly and played a positive role in supporting private‑enterprise financing. To date, 23 institutions have become core dealers in SSE credit protection contracts, with a total of 37 contracts executed, amounting to RMB 2.27 billion in notional principal, thereby effectively supporting bond financings totaling RMB 12.54 billion for 18 issuers. To further enhance the exchange‑bond market’s ability to serve the real economy, refine the risk‑pricing mechanism in the corporate bond market, and strengthen the function of credit‑risk disclosure, and building on the stable operation of the earlier credit protection contract pilot, the CSRC has approved the SSE to conduct a pilot program for credit protection certificates. Exchange‑traded credit protection certificates are tradable financial instruments issued by certificate‑issuing entities to provide credit‑risk protection to certificate holders with respect to reference entities or debt obligations. They feature the following characteristics: first, their pricing is more market‑oriented, typically structured through bookbuilding and other methods, reflecting a high degree of marketization; second, their terms are relatively standardized and can be transferred and circulated through non‑public channels; third, they offer convenient investor participation—subject to compliance with suitability requirements, investors are not required to sign a master agreement, thus broadening market coverage; and fourth, they ensure high transparency, with stringent information‑disclosure requirements throughout the certificate’s life cycle.

Going forward, under the unified leadership of the China Securities Regulatory Commission, the Shanghai Stock Exchange will further refine the technical systems supporting credit protection instruments. Through market‑oriented services and targeted training, it will support and encourage more qualified financial institutions to participate in credit protection‑instrument transactions, thereby alleviating financing constraints faced by private enterprises and small, medium, and micro‑sized businesses in a market‑driven manner and enhancing the exchange’s bond market’s ability to serve the real economy.

Notice on Amendments to the “Shenzhen Stock Exchange Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect”

In accordance with the joint announcement and related arrangements issued by the China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong regarding the implementation of the Southbound Investor Identification Code System under the Shenzhen–Shanghai–Hong Kong Stock Connect, and subject to the approval of the China Securities Regulatory Commission, this Exchange has amended the “Shenzhen Stock Exchange Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect (Revised in 2019).” The specific details are as follows:

I. A new provision is added as Article 77: “An investor’s participation in Stock Connect trading shall be deemed to constitute consent for this Exchange or its securities trading service company to, in accordance with the relevant laws, administrative regulations, departmental rules, normative documents, and business rules of the Mainland and Hong Kong, as well as applicable regulatory cooperation arrangements, provide the Securities and Futures Commission of Hong Kong and the Stock Exchange of Hong Kong with investor information and other relevant materials.”

II. The sequence of the subsequent articles shall be adjusted accordingly, with the content remaining unchanged.

This Notice shall take effect as of January 13, 2020. The “Shenzhen Stock Exchange Measures for the Implementation of the Shenzhen–Hong Kong Stock Connect (Revised in 2019)” shall be amended accordingly and reissued in accordance with this Notice.

Hereby notified.

Commercial & Corporate

The 12th China Corporate Social Responsibility Summit and the 2019 China CSR Public Welfare Gala will soon be held in Beijing.

At present, China’s economic and social development is entering a new era. The advancement of corporate social responsibility has reached a critical juncture. Chinese enterprises are placing increasing emphasis on the shared sustainable development of business, society, and the environment, with their CSR efforts now spanning economic, social, cultural, and ecological dimensions. This underscores the urgent need to rally the collective strength of all sectors of society and to drive positive social progress through concrete actions.

The summit, themed “Responsibility Unites Strength, Action Shapes the Future,” will bring together leaders from relevant organizations, renowned economists, and business executives to share their explorations and practical initiatives in the field of social responsibility, continuously innovating and expanding the frontiers of corporate social responsibility.

As the wheel of time turns to 2020, this year marks both the completion of building a moderately prosperous society in all respects and the final year of the 13th Five-Year Plan. At this critical juncture—when we are poised to secure a decisive victory in achieving the first centenary goal—what new missions will corporate social responsibility undertake? And what trends will shape our understanding and practice going forward? Faced with mounting downward economic pressures and a challenging, complex external environment, how can entrepreneurs uphold their core qualities, shoulder their responsibilities, and champion the entrepreneurial spirit, continuing to shine and contribute as they press ahead on the path to fully realizing a moderately prosperous society? At the 12th China Corporate Social Responsibility Summit, a distinguished lineup of speakers will address these questions one by one. It is also reported that the summit will unveil the “2019 Corporate Social Responsibility Rankings” and host a high-level dialogue titled “Mobilizing Corporate Strength to Win the Battle Against Poverty.”

Over more than a decade of development, corporate social responsibility in China has undergone fundamental transformations—both in theory and in practice—and the value of Chinese enterprises’ commitment to CSR has risen rapidly.

The 2019 China Corporate Social Responsibility Charity Gala and the 12th China Corporate Social Responsibility Summit were hosted by Xinhuanet. Now in its eleventh consecutive year, the event has become a high‑level platform for all sectors of society to jointly explore new concepts of social responsibility, review the latest achievements in corporate social responsibility practices, and advance the further development of CSR initiatives.

After collecting membership fees, charging additional on-demand fees—video platforms’ pricing practices must be standardized.

Recently, Wu Shengwei, an attorney at Shanghai Zhengce Law Office, published an article on Zhihu stating that, as a loyal user, he identified numerous issues while reviewing the “VIP Membership Service Agreement” of a certain video platform. He decided to safeguard his own rights and those of other members through legal means and attached a draft civil complaint.

This lawsuit is highly anticipated, as the issues at stake—raised by Wu Shengwei—directly affect the vital interests of internet users. The outcome of the case will help clarify our understanding of video‑streaming platforms’ monetization models and advance reforms in the legal, institutional, and market‑regulation spheres.

The crux of the matter isn’t whether fees should be charged or whether they’re too high; it’s how those fees can be structured in a way that’s both reasonable and lawful. People aren’t opposed to charging—after all, there’s no such thing as a free lunch. Producing original content costs money, acquiring copyrights requires investment, and video‑streaming platforms need to cover their operating expenses; otherwise, we wouldn’t be able to enjoy online services at all. That’s why most people understand and accept subscription‑based models. However, the current practice of some video‑streaming platforms—charging membership fees and then imposing additional charges—raises the question of whether this amounts to double billing. Moreover, even after paying for a membership, users are still forced to watch ads, blurring the distinction between members and non‑members. The platforms justify this by saying they offer different service tiers tailored to varying needs—but these tiered offerings are built on top of the already‑collected membership fees.

Today, most video‑streaming platforms are operating at a loss, and their eagerness to turn a profit is understandable. However, if you want to make money, you need to do so in a transparent way—making it clear to users exactly how they’re spending their money. The scope of members’ benefits must be laid out plainly, and the specific pricing models and fee structures should be simple, straightforward, and disclosed well in advance. Otherwise, it’s hardly surprising that consumers repeatedly raise concerns about sudden, unexpected charges. Meanwhile, the power to interpret these policies rests with the platform itself, creating an imbalance between rights and responsibilities that undermines efforts to establish a well‑regulated market. With the platform calling the shots, how can it possibly earn consumers’ trust?

If it hadn’t drawn public attention, and if not for lawyers who insisted on upholding the law, few people would have realized just how many hidden pitfalls some video‑streaming platforms harbor. Major streaming services all have their own legal departments, and when drafting contract terms, countless experts work to maximize their own interests. This formidable professional expertise should not be used as a pretext for charging users; rather, it ought to be a hallmark that these platforms cherish.

Compliance with market principles underpins all business activities. Charging fees is acceptable, provided it is transparent and standardized; both parties to the contract must clearly define their respective rights and obligations. Unilaterally imposing various exemption clauses, however, constitutes an irresponsible practice.

In 2019, the transaction scale of China’s fresh-food market will exceed RMB 2 trillion.

According to data from Analysys, China’s fresh‑produce market reached a transaction value of RMB 1.91 trillion in 2018 and is expected to surpass RMB 2 trillion in 2019. Consumer demand for fresh products remains strong, with purchase frequency averaging three times per week; among these, fruits and vegetables are bought an average of 4.8 times weekly.

“Wet markets have time-sensitive demand, and supermarket coverage in some areas remains insufficient. Coupled with the accelerated pace of life in first- and second-tier cities, time and convenience have become top priorities for many office workers, driving strong user demand for grocery‑shopping apps,” noted Cao Lei, director of the E‑Commerce Research Center at NetEconomy Society (an e‑commerce portal).

While winning over young urban consumers, the mobile “grocery‑shopping” app is rapidly expanding into smaller and medium‑sized cities and attracting a growing base of middle‑aged and older users. According to the 2019 Online Fresh‑Food Consumption Trends Report, in terms of order volume and the growth rate of merchants, third- and fourth-tier cities are 1.4 and 1.49 times that of first-tier cities, respectively. This indicates that an increasing number of consumers in these lower‑tier cities are turning to online platforms to purchase fresh produce. Statistics from the food‑delivery platform Ele.me show that, on its fresh‑food channel, the number of middle‑aged and older users grew by more than 500% in 2018, reflecting a significant rise in this demographic’s acceptance of online grocery shopping.

Beijing has completed the renovation of 1,007 gas stations.

According to the Beijing Municipal Emergency Management Bureau, in order to comprehensively standardize and enhance the safety conditions of gas stations across the city, the bureau has been carrying out a citywide initiative to upgrade and standardize gas stations since July 2013. Over six years, 1,007 commercially operated gas stations in Beijing have completed this upgrading and standardization process. Specifically, 989 stations were renovated, 8 were shut down and deregistered, 10 were demolished, and 8,035 issues and potential hazards were rectified. A total of RMB 1.5 billion was invested in these upgrades, with an additional RMB 239 million allocated to improving safety facilities.

According to reports, during the implementation of standardized renovation projects for gas stations, key upgrade measures have been identified, including double-walled pipelines, overflow‑prevention systems, level‑monitoring systems, emergency shut‑off devices, and double‑walled tanks or impermeable containment ponds. Meanwhile, the emergency management bureaus of each district conduct acceptance inspections of completed renovations; only after passing these inspections are incentive funds disbursed, ensuring that all rectifications are fully implemented. To effectively carry out the standardized renovation of gas stations, the Municipal Emergency Management Bureau, taking into account each station’s license‑renewal cycle and the scope of required upgrades, has carefully scheduled work timelines and organized the renovation process in an orderly manner, all while safeguarding the city’s overall fuel supply. Furthermore, to ensure that all districts fulfill their assigned tasks on schedule, the Municipal Emergency Management Bureau annually incorporates the standardized renovation of gas stations into the municipal safety production assessment criteria for district governments under the Municipal Safety Committee, as well as into the Party Committee and government oversight of district-level safety production efforts.

Going forward, the Municipal Emergency Management Bureau will continue to strengthen safety oversight of gas stations, conduct rigorous enforcement inspections on facilities and equipment at stations that have completed standard‑compliant upgrades, and carry out follow-up reviews of those that remain non‑compliant due to temporary closures. It will strictly prohibit any unauthorized operation of stations that have not undergone the required standard‑compliant renovations, thereby ensuring a stable and safe operating environment for all gas stations in the city.

Revenue exceeded 310 billion yuan, with a growth rate of 10.6%—the gaming industry’s ability to attract capital remains undiminished.

On December 18, the third-party research office Gamma Data released the “2019 China Game Industry Annual Report” (hereinafter referred to as the “Report”). According to the data, in 2019, both the domestic Chinese game market and overseas export revenues posted another acceleration in growth, with total revenue exceeding RMB 310 billion—a year-on-year increase of 10.6%.

Among them, China’s game market generated actual sales revenue of RMB 233.02 billion, with a growth rate of 8.7%, marking a slight rebound compared to the same period last year. Within the gaming industry, the most dynamic segment—the Chinese mobile gaming market—saw its actual sales revenue exceed RMB 151.37 billion, up 13.0% year over year.

In 2019, China’s mobile gaming market generated $11.19 billion in overseas revenue, up 16.7% year over year. According to research by Gamma Data, domestically developed mobile games in markets such as the United States, Japan, South Korea, the United Kingdom, and Germany have all posted year-on-year growth rates that outpace the overall growth of their respective local mobile gaming markets, giving Chinese mobile titles a distinct competitive edge in international markets. The esports industry, which is closely tied to gaming, has also experienced rapid expansion. The report indicates that China’s esports gaming market reached RMB 96.96 billion in 2019, with a growth rate of 16.2%, driven primarily by the burgeoning mobile esports sector.

Notably, in the esports sector, revenue generated from non‑game‑related activities—such as tournaments, live streaming, and clubs—accounts for only 12%, indicating that the industry is still in its early stages and holds promising prospects. In 2019, the game‑streaming market’s actual sales exceeded RMB 10 billion, with growth rates remaining robust. With livestreaming platforms like Huya and Douyu going public, companies from other sectors—including video‑sharing platforms—are also steadily expanding into game‑streaming, injecting momentum into the industry’s development.

Innovation was the defining feature of the gaming industry in 2019. The surging waves of 5G and cloud gaming fueled companies’ drive to innovate, prompting numerous offices to proactively position themselves in this space. Meanwhile, user surveys reveal that more than 90% of gamers place a high value on product innovation. Since 2018, reforms to market regulations have solidified “high‑quality” as an industry-wide consensus. In 2019, the benefits of innovation and premium‑quality offerings began to emerge, both in the domestic market and globally.

Gamma Data’s research reveals that in 2019, game development saw a marked surge in innovation, with distinctive advances emerging across gameplay mechanics, visual aesthetics, and thematic approaches. Meanwhile, established titles leaned more heavily on innovative operational and maintenance strategies. Gamma Data categorizes product innovation into four levels; analysis shows that among the top 250 titles in 2019, nearly 75% exhibited either significant, moderate, or localized innovation. Notably, significantly innovative titles accounted for just 15.3% of the total, yet contributed 62.3% of overall revenue (turnover).

In 2019, a major trend in innovation among gaming companies was the emergence of cloud gaming as a growth driver, spurred by substantial progress in 5G infrastructure deployment. Many offices are now actively positioning themselves in this space. To date, leading players such as Tencent, NetEase, and Perfect World have all achieved significant breakthroughs. Meanwhile, several major Chinese cities announced their 5G rollout schedules, with network coverage expected to be rolled out nationwide within two years. At the same time, edge‑computing service providers—such as Shengtian Network and Shunwang Technology—that can help reduce overall latency in cloud gaming are also proactively expanding into related areas.

Taxation TAXATATION

Interpretation of the “Announcement of the State Taxation Administration on Revising Certain Issues Related to the Annual Corporate Income Tax Return Form”

To implement the Enterprise Income Tax Law of the People’s Republic of China and related tax policies, and to further reduce the tax compliance burden on enterprises, the State Taxation Administration has issued the “Announcement of the State Taxation Administration on Revising Certain Issues Related to the Annual Corporate Income Tax Return” (hereinafter referred to as the “Announcement”). The following is an interpretation:

I. Background Information

Since 2019, in order to reduce the costs of entrepreneurship and innovation, bolster the growth momentum of small and micro enterprises, and promote employment expansion, the fiscal and tax authorities have successively introduced a series of corporate income tax preferential policies, including the “Corporate Income Tax Preferential Policy for Small and Low-Profit Enterprises,” the “Pre-Tax Actual Deduction for Corporate Donations Supporting Poverty Alleviation,” and the “Deduction from Taxable Income of Community-Based Household Service Revenues.” To ensure the full implementation of these measures and further ease the administrative burden on taxpayers, the State Taxation Administration has issued a public notice after soliciting opinions from all relevant parties.

II. Main Content

(1) Revision of certain forms and instructions for the Annual Corporate Income Tax Return of the People’s Republic of China (Type A, 2017 Edition)

1. To implement the relevant policies on corporate income tax, revisions have been made to the formats and instructions for seven forms, including the “Corporate Income Tax Annual Return Form” and the “Corporate Income Tax Annual Return Basic Information Form” (A000000), as well as to the instructions for three forms, such as the “People’s Republic of China Corporate Income Tax Annual Return (Type A)” (A100000).

2. To further refine the reporting standards, the instructions for completing certain data items in the “Detailed Statement of Loss Carryforwards for Enterprise Income Tax” (A106000) and the “Detailed Statement of Adjusted Overseas Income After Taxation” (A108010) have been improved.

(2) The requirements to complete and submit the “Summary Table of R&D Expenses Eligible for Additional Deduction” and the “Supplementary Ledger Summary for ‘R&D Expenditures’” are hereby abolished.

To reduce the tax compliance burden on enterprises, when filing to claim the additional deduction for R&D expenses, companies are no longer required to complete the “Summary Table of R&D Expenses Eligible for Additional Deduction” or submit the “Supplementary Ledger Summary for ‘R&D Expenditures’.” The “Supplementary Ledger Summary for ‘R&D Expenditures’” shall be retained by the enterprise for record‑keeping purposes.

III. Implementation Period

This Announcement applies to the annual corporate income tax final return and payment filing for the 2019 tax year and subsequent years. Where the rules governing the corporate income tax return forms for prior years are inconsistent with those set forth in this Announcement, no retroactive adjustments shall be made. If a taxpayer seeks to adjust tax-related matters pertaining to prior years, such adjustments shall be made in accordance with the relevant rules applicable to the respective tax years as prescribed in the corporate income tax return forms.

Interpretation of the “Announcement of the State Taxation Administration on the Entry into Force and Implementation of the Agreement between the Government of the People’s Republic of China and the Government of the Republic of Botswana for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income”

The Agreement between the Government of the People’s Republic of China and the Government of the Republic of Botswana for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter referred to as the “Agreement”) was formally signed in Gaborone on April 11, 2012. The principal provisions of the Agreement are set out below:

I. Scope of Tax Types

The Agreement applies to personal income tax and corporate income tax in China, and to income tax in Botswana, including taxation on capital gains.

II. Regarding Permanent Establishments

With respect to a permanent establishment in the construction industry, the Agreement provides that a construction site, or activities of construction, assembly, or installation, or related supervisory and management activities, if they continue for more than 12 months, shall constitute a permanent establishment.

With respect to a labor‑type permanent establishment, the Agreement provides that if an enterprise of one Contracting State furnishes services, including consulting services, in the other Contracting State through its employees or other personnel, such activities—when carried out for the same project or for related projects—constitute a permanent establishment if they exceed 183 days, whether continuously or cumulatively, within any 12‑month period.

III. Regarding Dividends

Dividends paid by a company that is a resident of one Contracting State to a resident of the other Contracting State may be taxed in the first-mentioned State in accordance with its laws. However, if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the dividends.

IV. Regarding Interest

Interest arising in one Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned State in accordance with its laws. However, if the beneficial owner of the interest is a resident of the other Contracting State, the tax so imposed shall not exceed 7.5 per cent of the gross amount of the interest. Nevertheless, interest arising in one Contracting State and paid in respect of loans, guarantees or insurance provided by the government, a political subdivision or local authority, a central bank, or a financial institution wholly owned by the government of the other Contracting State shall be exempt from tax in the first-mentioned State.

V. Regarding Royalties

Royalty payments arising in one Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned State in accordance with its laws. However, if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so imposed shall not exceed 5 per cent of the gross amount of the royalties. “Royalties” include any payments made as consideration for information relating to industrial, commercial or scientific experience, or for technical and advisory services.

VI. Other Provisions

Articles 10 (Dividends), 11 (Interest), 12 (Royalties), and 21 (Other Income) of the Agreement all contain anti-abuse provisions, stipulating that the treaty benefits set forth in these articles shall not apply where the primary or one of the primary purposes of a transaction is to obtain the benefits of the relevant provisions.

China and Botswana have completed the respective domestic legal procedures required for the entry into force of the Agreement. The Agreement entered into force on September 19, 2018: in China, it applies to income derived from tax years beginning on or after January 1, 2019; in Botswana, with respect to taxes levied on a withholding basis, it applies to amounts payable on or after October 19, 2018, and with respect to other taxes levied on the basis of annual aggregate computation or similar methods, it applies to taxable income earned on or after July 1, 2019.

Nine Common Mistakes to Watch Out for When Filling Out Special Additional Deduction Information

Reminder 1: For the same child’s education deduction, the allocation between both parents must comply with the policy‑specified standards.

Relevant Policy: For taxpayers, expenses incurred for their children’s full-time education at the degree level are eligible for a standard deduction of RMB 1,000 per child per month. Parents may choose either that one parent claim the full 100% of the standard deduction, or that both parents each claim 50% of the standard deduction. Reminder: Please coordinate with your joint deduction partner to ensure that the combined percentage of deductions claimed by both parties for the same child does not exceed 100%.

Reminder 2: For housing purchased by both spouses after marriage, only one spouse may claim the deduction for housing loan interest.

Relevant Policy: If a taxpayer or their spouse, either individually or jointly, uses a commercial bank loan or a housing provident fund personal housing loan to purchase residential property within China for themselves or their spouse, the interest expense on the first home loan may be deducted at a fixed rate of RMB 1,000 per month in the year the interest is actually incurred. With mutual agreement between the spouses, either spouse may elect to claim the deduction. For first-home loans taken out by each spouse prior to marriage, after marriage, the couple may choose one of the purchased properties: the purchaser may claim the full 100% of the standard deduction, or each spouse may claim 50% of the standard deduction for the property they personally purchased. Reminder: Taxpayers are advised to verify whether their residential property was purchased separately by both spouses before marriage. If the property was acquired after marriage, only one spouse may claim the deduction. If the property was purchased separately before marriage, taxpayers should communicate with their spouse to conoffice the appropriate deduction method.

Reminder 3: For the elderly‑support tax deduction item reported by taxpayers, the total deduction amount claimed by all joint deductors must comply with the applicable standards.

Relevant Policy: If a taxpayer is not an only child, the monthly deduction of RMB 2,000 shall be shared among the taxpayer and their siblings, with each person’s share not exceeding RMB 1,000 per month. The sharing may be equally divided among all caregivers, agreed upon by them, or designated by the person being supported. Any agreement on sharing or designation must be documented in a written allocation agreement, and a designated allocation takes precedence over an agreed-upon one. Reminder: Taxpayers are advised to communicate with any co‑deductors to ensure that the total amount reported for the elderly‑care deduction does not exceed RMB 2,000, and that each individual’s share does not exceed RMB 1,000 per month.

Reminder 4: For the same item of special additional deductions, a taxpayer may designate only one withholding agent to claim the deduction.

Relevant Policy: If a taxpayer receives wage and salary income from two or more sources and has special additional deductions processed by the withholding agent, for any given special additional deduction item, the taxpayer may claim the deduction at only one of those sources within the same tax year. Reminder: Taxpayers are advised to verify whether they have claimed the same deduction item at multiple locations; if so, they should promptly cancel any redundant deduction entries.

Reminder 5: If a taxpayer and their spouse have the same primary place of work, only one of them may claim the housing rental deduction.

Relevant Policy: Taxpayers who do not own a home in their primary place of employment may deduct housing rental expenses according to prescribed standard rates. The deduction for housing rental expenses is claimed by the lessee who has entered into the residential lease agreement. If both spouses have the same primary place of employment, only one spouse may claim the deduction for housing rental expenses. Reminder: Taxpayers are advised to communicate with their spouse and, if they share the same primary place of employment, conoffice that housing rental expenses are not being deducted by both parties simultaneously.

Reminder 6: A taxpayer and their spouse may not simultaneously claim deductions for both housing rental expenses and housing loan interest.

Relevant Policy: A taxpayer and their spouse may not simultaneously claim both the housing loan interest deduction and the housing rent special additional deduction within the same tax year. Reminder: Taxpayers are advised to communicate with their spouses to agree on which deductions each will claim and how they will be applied, ensuring that housing rent and housing loan interest expenses are not deducted concurrently.

Reminder 7: Taxpayers must ensure that the identity information provided for their children, spouse, and elderly parents is accurate.

Relevant Policy: Taxpayers are responsible for the authenticity, accuracy, and completeness of the information they submit. If any changes occur in the information related to special additional deductions, taxpayers shall promptly provide the relevant details to the withholding agent or the tax authorities. Reminder: Taxpayers are advised to verify that the identity information they have reported for their children, spouse, and elderly parents matches the information recorded on their identification documents.

Reminder 8: Taxpayers claiming the deduction for continuing professional education shall do so in the year they obtain the relevant certificate.

Relevant Policy: Expenses incurred by taxpayers for continuing education leading to professional qualifications for skilled personnel or professional and technical personnel may be deducted at a fixed amount of RMB 3,600 in the year the relevant certificate is obtained. Reminder: Taxpayers claiming deductions for continuing education related to professional qualifications for skilled personnel or professional and technical personnel must do so in the year the certificate is obtained, and should verify that the information provided—such as the certificate name, certificate number, issuing authority, and date of issuance (or approval)—is consistent with the actual certificate.

Reminder No. 9: When taxpayers report continuing education for academic degrees, such education must be undertaken within China and qualify as continuing education leading to an academic degree or diploma.

Relevant Policy: For taxpayers who undertake continuing education leading to a degree or diploma within China, a fixed deduction of RMB 400 per month is allowed during the period of such education. Reminder: Taxpayers should ensure that the type of continuing education they pursue is a nationally recognized degree‑granting program; for example, self‑study examinations, adult college entrance examinations, applications for degrees based on equivalent academic qualifications, and online universities are all eligible for the special additional deduction for continuing education expenses.

Twenty Years After Macao’s Return: Taxation Ushers in a New Era

Over the past 20 years since its return to the motherland, Macao has witnessed dramatic transformations in its economic size, fiscal revenue, gross domestic product, and per capita GDP. In the process of integrating and developing with the mainland, the tax authorities, as a crucial link between the implementation of macroeconomic policies and the day-to-day operations of businesses, have played a distinctive role. The year 2019 marked the full-scale rollout and solid grounding of large‑scale tax and fee reductions; a series of measures—including deepened VAT reform, personal income tax reform, universal tax relief for small and micro enterprises, and preferential personal income tax policies within the Guangdong–Hong Kong–Macao Greater Bay Area—were vigorously implemented, delivering substantial tax‑cut benefits to numerous Macao‑based enterprises operating on the mainland.

Zhuhai Jia’guan Plastics Products Co., Ltd., a wholly owned enterprise of Macao, primarily engages in the manufacturing and sale of plastic products such as air conditioner housings and television casings, with its output mainly supplied to leading companies like Gree Electric Appliances. According to Dai Changhai, the company’s legal representative, revenue has maintained an annual growth rate of approximately 10% over the past three years, and the company expects this year’s revenue to reach RMB 300 million. Following the deepening of VAT reform, the company’s tax burden has been significantly reduced, with an estimated annual VAT savings of about RMB 1 million. Leveraging the industrial agglomeration effect of Zhuhai’s home appliance manufacturing sector, the company plans to reinvest the tax‑cut benefits to expand production capacity and enhance its competitiveness.

The Guangdong–Macao Cooperative Traditional Chinese Medicine Science and Technology Industrial Park is the first collaborative project under the Guangdong–Macao cooperation framework. According to Zhang Haihong, the park’s chief financial officer, the reduction in the value-added tax rate in the 2019 project construction budget resulted in tax savings of approximately RMB 30 million for the enterprise, with these funds slated to be reinvested in further park development.

In 2017, the Guangdong–Macao Traditional Chinese Medicine Industrial Park underwent a major structural overhaul, and the tax authorities granted it exemptions or reductions totaling nearly RMB 200 million in land value-added tax. In 2018, property tax and urban land use tax were reduced by approximately RMB 1.47 million. Such tax‑related support has helped the park maintain an even stronger momentum of development.

Not only have enterprises and industrial parks reaped substantial benefits, but the Greater Bay Area’s implementation of a personal income tax preferential policy for high‑end talent from Hong Kong and Macao has also left such talent—whether starting businesses or seeking employment on the mainland—with a strong sense of fulfillment, further bolstering their confidence in pursuing long-term development in the region.

In Chongqing, the Yu’ao Bridge has just celebrated its 20th anniversary. On December 16, 1999, to mark the return of Macao to China, the bridge was officially groundbreaking—a joint venture between Macao’s Tianhua Group and Chongqing Haixu Industrial Development Co., Ltd.—and has since stood as a testament to the friendship between the people of Macao and Chongqing. Over the past two decades, Chongqing Huapu Bridge Co., Ltd. (hereinafter referred to as “Huapu Company”), which was established alongside the Yu’ao Bridge, has also experienced rapid growth. With guidance from the Jiangbei District Tax Bureau of Chongqing, the company has benefited from preferential policies under the Western Development Strategy, paying corporate income tax at a reduced rate of 15%. According to calculations by the company’s finance director, “Since 2016, we have cumulatively enjoyed national tax incentives totaling RMB 10.4 million. These tax reductions represent vital capital for the company’s reinvestment; in recent years, such tax breaks have eased our financial pressures and enabled us to allocate more resources toward further investment.” Throughout this process, the tax authorities have proactively implemented tailored measures—“one policy for each enterprise”—to address businesses’ concerns and challenges in tax compliance, helping them fulfill their obligations correctly and mitigate tax-related risks.

Convenient tax settlement helps realize the benefits of personal income tax reform.

Recently, the Ministry of Finance and the State Taxation Administration jointly issued an announcement on policy issues related to the annual individual income tax settlement and finalization, outlining measures to alleviate the tax burden on middle- and low-income groups. At the same time, the State Taxation Administration has publicly sought public input on the operational procedures for this process—topics of great concern to individual taxpayers—thereby reflecting a modern governance approach grounded in tax rule of law and collaborative governance.

Annual tax reconciliation and settlement is a key component of the implementation of the new Individual Income Tax Law. In this round of tax reform, the tax threshold was raised starting in October last year. Effective January 1 this year, the new law has been fully implemented, introducing six additional special deductions for individual income tax calculation. These two measures have significantly reduced the tax burden on taxpayers, particularly those in the middle- and lower-income brackets. In the first three quarters, the personal income tax reform resulted in an additional tax reduction of 442.6 billion yuan, with an average per capita reduction of 1,764 yuan. In addition, another indispensable element of the comprehensive‑and‑classified personal income tax system—annual tax reconciliation and settlement—will make its debut from March 1 to June 30, 2020.

Annual tax reconciliation and settlement involves, on the basis of taxes already paid in advance, identifying any omissions or underpayments, aggregating income and deductions, settling accounts on an annual basis, and refunding overpayments while collecting any shortfalls—this is also a standard international practice. Only through annual reconciliation can taxpayers’ actual personal income tax liability for the entire year be accurately determined. For many individuals, this process also enables the full implementation of all pre‑tax deductions and tax‑benefit policies, thereby better safeguarding their rightful entitlements. In short, only when this annual reconciliation and settlement is carried out smoothly can the new Individual Income Tax Law be said to have completed a full cycle of implementation.

As China has only recently begun to establish a personal income tax system that combines comprehensive and categorized approaches, most individual taxpayers have previously paid little attention to their own tax affairs, have little understanding of “filing,” lack experience in direct interactions with tax authorities, and feel unfamiliar with the annual tax reconciliation process. Consequently, how to carry out this year’s annual reconciliation effectively has attracted widespread public attention.

The relevant announcements and draft documents issued by the two departments this time provide comprehensive policy support for next year’s annual tax reconciliation and settlement.

Litigation & Arbitration

The complete draft of the Civil Code is set to be unveiled.

It has been learned that the 15th Meeting of the Standing Committee of the 13th National People’s Congress will be held in Beijing from December 23 to 28, at which the complete draft of the Civil Code of the People’s Republic of China will be submitted for deliberation.

According to Yue Zhongming, spokesperson for the Legislative Affairs Commission of the Standing Committee of the National People’s Congress, in light of the comments raised during the committee’s deliberations and input from various quarters, the Commission has revised and refined the draft provisions of each part of the Civil Code. It has also incorporated the General Provisions of the Civil Law of the People’s Republic of China, which were promulgated and came into effect in 2017, into the draft and renumbered the articles, thereby producing the Draft Civil Code of the People’s Republic of China, which is now submitted for consideration at the December session of the Standing Committee. Following the Standing Committee’s review, the draft Civil Code will be made public on the website of the National People’s Congress to solicit opinions from the general public. In accordance with the work plan, the Draft Civil Code of the People’s Republic of China will be approved by a decision of the Standing Committee of the National People’s Congress and submitted to the Third Session of the 13th National People’s Congress, scheduled to convene next year, for deliberation.

Regarding the revisions to the draft provisions of each section of the Civil Code, Yue Zhongming explained that: in the first section, General Provisions, the structure and content of the General Provisions of the Civil Law have been largely retained, with only minor textual amendments; the “Supplementary Provisions” have been moved to the final part of the Code. In the second section, Property Rights, the system of residential rights has been refined, and relevant provisions on pledge of movable property and retention of title have been improved. In the third section, Contracts, the provision allowing a breaching party to seek termination of the contract has been deleted, usury has been prohibited, and the rules governing factoring contracts and construction project contracts have been further clarified. In the fourth section, Personality Rights, the regulations on sexual harassment have been strengthened, and the definition of privacy has been refined. In the fifth section, Marriage and Family, the scope of close relatives has been further specified, the circumstances rendering a marriage invalid have been rationally defined, and the authority empowered to annul marriages entered into under concealment of a serious illness has been clearly established. In the sixth section, Inheritance, only some minor textual adjustments have been made. In the seventh section, Tort Liability, the provisions on online torts have been improved, and the rules governing liability for objects thrown or falling from high places have been refined. Yue Zhongming also reported on the recent public consultation process for draft laws. Specifically, the third‑reading draft of the Marriage and Family section of the Civil Code received 237,057 comments submitted online by 198,891 members of the public, along with 5,635 letters from citizens. The majority of these submissions focused on refining the scope of close relatives, revising the authority responsible for annulling voidable marriages, further improving the regime of marital joint debts, and legalizing same‑sex marriage.

In addition, Yue Zhongming outlined the key amendments proposed for the draft revisions to the Securities Law, the Basic Medical and Health Care and Health Promotion Law, the Forest Law, the Community Corrections Law, and the Law on the Prevention and Control of Environmental Pollution by Solid Waste, which are scheduled for further deliberation at the December session of the Standing Committee. He also provided information on the draft Yangtze River Protection Law, the draft amendment to the Law on the Protection of Investments by Compatriots from Taiwan, the draft Export Control Law, the draft Urban Maintenance and Construction Tax Law, and the draft Stamp Tax Law, all of which are slated for their first reading.

The Legislative Affairs Commission of the National People’s Congress reviewed its legislative work in 2019.

On the 20th, Yue Zhongming, Director of the Legislative Planning Office of the Legislative Affairs Commission of the Standing Committee of the National People’s Congress, stated that as of the closing of the 14th session of the Standing Committee on October 26, the 13th National People’s Congress and its Standing Committee had enacted four laws, amended 13 laws, and adopted five decisions on legal and major issues. He also noted that this does not represent the final tally for the year, as the December session of the Standing Committee is expected to deliberate and adopt additional laws and decisions.

Yue Zhongming stated that, looking back on the legislative work of 2019, there were many notable features and highlights.

First, legislative work continues to be characterized by greater weight, a faster pace, and higher standards. As of October 26, when the 14th Meeting of the Standing Committee concluded, the 13th National People’s Congress and its Standing Committee had enacted four laws, amended thirteen laws, and adopted five decisions on legal and major issues. Moreover, these figures do not yet represent the year’s final tally; the December session of the Standing Committee is expected to deliberate and adopt additional laws and decisions.

Specifically, first is the Foreign Investment Law. The enactment of this law represents a major legislative achievement in implementing the CPC Central Committee’s strategy of further opening up to the outside world, providing crucial legal safeguards for fostering a favorable environment for foreign investment in China. The Standing Committee of the National People’s Congress and the State Council have accelerated the legislative process, and relevant parties have reached consensus on key institutional designs and normative provisions within a relatively short period. In January this year, the NPC Standing Committee convened an additional session to deliberate on the draft Foreign Investment Law, paving the way for its smooth submission to the Second Session of the National People’s Congress in March for deliberation and adoption. On December 12, the State Council Executive Meeting reviewed and approved the Regulations for the Implementation of the Foreign Investment Law, ensuring the effective implementation of the law, which will come into force on January 1 next year.

Another example is the enactment of the Vaccine Administration Law. The Standing Committee of the National People’s Congress fully exercised its leading role in legislative work, strengthened communication and coordination with relevant departments, and, starting from drafting in October 2018 and culminating in the third reading and adoption by the Standing Committee in June 2019, successfully completed this important task in just over half a year.

Second, we have earnestly implemented the important systems prescribed by the Constitution and promoted its effective enforcement. The Standing Committee of the National People’s Congress deliberated and adopted a decision to grant a special amnesty to certain prisoners on the occasion of the 70th anniversary of the founding of the People’s Republic of China, thereby putting into practice the criminal policy of combining leniency with strictness and fully harnessing the inspiring effect of the amnesty by granting it to nine categories of inmates. In September, an extraordinary session of the Standing Committee was convened to deliberate and adopt a decision on conferring state medals and honorary titles, solemnly commending a group of meritorious role models who have made outstanding contributions to the building and development of the People’s Republic of China.

Third, legislation in key areas has been comprehensively advanced. In order to deepen reform across the board, expand opening-up, and promote high-quality economic development, the Foreign Investment Law and the Resource Tax Law have been enacted; the Land Management Law and the Urban Real Estate Management Law have been amended; eight laws, including the Construction Law, have been revised as a package; a draft amendment to the Securities Law is under deliberation; drafts of amendments to the Law on the Protection of Investments by Compatriots from Taiwan, the Law on Urban Maintenance and Construction Tax, and the Law on Deed Tax are soon to be considered; and a decision authorizing the State Council to temporarily adjust the application of relevant legal provisions within the free trade pilot zones has been adopted.

With a focus on safeguarding and improving people’s livelihoods, a draft Civil Code has been prepared for deliberation, building on the review of the individual parts of the draft. A Vaccine Administration Law has been enacted, the Drug Administration Law has been amended, and drafts of the Basic Medical and Health Care and Health Promotion Law, the revised Law on the Protection of Minors, and the revised Law on the Prevention of Juvenile Delinquency are under consideration. In pursuit of advancing ecological progress, drafts revising the Forest Law and the Law on the Prevention and Control of Environmental Pollution by Solid Waste are being reviewed, and the draft Yangtze River Protection Law is soon to be submitted for deliberation.

With a focus on strengthening and innovating social governance, the draft Community Corrections Law and the draft amendment to the Archives Law were deliberated. In order to improve the organizational structure of state institutions, the Judges Law and the Prosecutors Law were revised, the draft Public Officials’ Administrative Disciplinary Measures Law was reviewed, and a decision was adopted on the National Supervisory Commission’s authority to formulate supervisory regulations. With regard to legal safeguards for national security, the Cryptography Law was enacted, the draft Biosecurity Law was reviewed, and the draft Export Control Law is slated for imminent review.

Fourth, new measures have been introduced to strengthen exchanges with local people’s congresses. Building on the annual symposium on local legislative work, the Standing Committee of the National People’s Congress convened, for the first time this year, a conference on legislative exchanges among provincial-level people’s congresses.

Fifth, we have strengthened the institutionalization and mechanization of legislative publicity, ensuring timely public communication and the release of information on legislative work. We have held press conferences by the spokesperson of the Legislative Affairs Commission to inform the public about the Standing Committee of the National People’s Congress’s deliberations on draft laws and the process of soliciting public comments on these drafts. In addition, we have addressed pressing legal issues of public concern by providing responses from both a legislative and a parliamentary perspective.

The newly revised “Regulations on Military Archives” have been promulgated.

Xi Jinping, Chairman of the Central Military Commission, recently signed an order promulgating the newly revised Regulations on Military Archives, which will take effect on January 1, 2020.

The newly revised Regulations adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implement Xi Jinping’s Thought on Strengthening the Military, and are oriented toward the effective fulfillment of the armed forces’ missions and tasks in the new era. Focusing on supporting combat readiness and warfighting, they deeply grasp the distinctive features and underlying principles of archival work in the military in the new era, and systematically standardize key issues such as the fundamental tasks, division of responsibilities, management requirements, operational procedures, institutional safeguards, and oversight and inspection mechanisms.

The newly revised Regulations, comprising eight chapters and 66 articles—General Provisions, Responsibilities, Archival Creation and Management, Archival Services and Utilization, Development and Assurance of Archival Work, Archival Work in Wartime, Supervision, Inspection, and Rewards and Punishments, and Supplementary Provisions—serve as the fundamental framework for military archival work in the new era. The Regulations clearly delineate the responsibilities of archival authorities at all levels, specialized archival departments, record‑creating units, archives (offices), and military personnel; they institute a responsibility‑based system for archival work, establishing a structure in which relevant departments provide professional guidance, archives (offices) handle day-to-day management, and every member of the military bears accountability. The Regulations standardize wartime archival mechanisms, streamline procedures for accessing archival materials, and enhance the contribution of archival work to building the armed forces’ combat capabilities. They also specify measures for the filing of electronic documents and the legal validity of electronic archives, regulate the sharing of archival information and the use of online services, and, drawing on experience in military archiving, introduce provisions for oversight and supervision, establish an assessment and evaluation mechanism for archival work, and refine reward and punishment measures to ensure effective implementation at the operational level.

The Regulations for the Implementation of the Foreign Investment Law will be promulgated in the near future.

At a regular press conference held on the 19th, Ministry of Commerce spokesperson Gao Feng stated that the text of the Regulations for the Implementation of the Foreign Investment Law will be released in the near future.

Gao Feng stated that the Regulations for the Implementation of the Foreign Investment Law will rigorously uphold the legislative principles and objectives of the Foreign Investment Law, address concerns raised by foreign investors, and, at the level of administrative regulations, flesh out and clarify relevant provisions, thereby ensuring strong operability. Overall, the Regulations are characterized by three key features: strengthening the principle of national treatment for both domestic and foreign investment, enhancing investment protection, and reinforcing legal accountability.

Zhejiang Province Has Issued Measures for the Sealing of Juvenile Criminal Records

Recently, the People’s Procuratorate of Zhejiang Province, in collaboration with 12 departments including the Publicity Department of the Zhejiang Provincial Party Committee and the Zhejiang Provincial Committee of the Communist Youth League, jointly issued the “Implementation Measures for the Sealing of Juvenile Criminal Records in Zhejiang Province” (hereinafter referred to as the “Implementation Measures”).

The Implementing Measures explicitly stipulate that, for minors who were under the age of eighteen at the time of the offense and who have been sentenced to a term of imprisonment of five years or less, or who have been exempted from criminal punishment—including juvenile suspects in cases where the procuratorial organs have lawfully decided not to prosecute, as well as minors subject to administrative penalties for public order or measures such as compulsory education and rehabilitation imposed by public security organs—the people’s courts, people’s procuratorates, public security organs, and judicial administrative organs shall seal and archive their criminal records and records of unlawful conduct.

According to the Implementation Measures, sealed criminal records encompass legal documents such as case initiation records, investigation records, procuratorial documents, trial judgments, and penalty enforcement documents, as well as electronic information and other case-related materials.

The approach is not aimed at punishment; the purpose of sealing records is to facilitate rehabilitation.

According to a responsible official from the Zhejiang Provincial People’s Procuratorate, the system of sealing juvenile criminal records was introduced as a new mechanism following the 2012 amendment to the Criminal Procedure Law. In 2014, Zhejiang issued the “Provisional Measures for the Implementation of Sealing Juvenile Criminal Records in Zhejiang Province.” However, in practice, the provisions governing the sealing and access to such records were overly general and lacked enforceability; moreover, they failed to clearly address issues such as retroactive sealing of pre‑2012 juvenile criminal records, the sealing of electronic records, and mechanisms for oversight and accountability, resulting in the improper disclosure of certain juvenile criminal information. To address these shortcomings, Zhejiang has now promulgated formal “Implementation Measures” that further refine the scope of record sealing, the procedures for accessing criminal records, and the mechanisms for supervision and accountability.

The sealing effect is only so-so; employment restrictions should be appropriately relaxed.

Hu Donglin, Deputy Procurator-General of the Zhejiang Provincial People’s Procuratorate, previously stated in a media interview: “Sealing records is intended to facilitate rehabilitation; otherwise, the ‘juvenile offender’ label could easily become a heavy burden that impedes young offenders from returning to the right path. In recent years, both nationwide and within the province, several serious juvenile crimes have occurred, generating highly negative social repercussions and sparking widespread calls for harsh punishment online. However, overall, most offenses committed by minors are characterized by randomness and minor severity. Moreover, these young people lack life experience, and their values, outlook on life, and worldview remain unformed, which contributes to relatively high success rates in guidance, education, and correction. By implementing tiered intervention measures to help low‑severity offenders shed this ‘label,’ we can prevent them from losing hope and once again becoming estranged from society.” According to relevant materials, Article 19 of the United Nations Rules for the Protection of Juveniles Deprived of Their Liberty stipulates that “upon release, the juvenile’s records shall be sealed and destroyed at an appropriate time.” Similarly, Article 21 of the United Nations Standard Minimum Rules for the Administration of Juvenile Justice provides that “records of juvenile offences shall not be cited in subsequent adult proceedings.”

With regard to the sealing of juvenile criminal records, the Implementation Measures have been refined in multiple respects.

According to a responsible official from the Zhejiang Provincial People’s Procuratorate, the scope of application has been explicitly extended to include criminal records of juvenile offenders who met the relevant criteria prior to 2012. Additionally, the regulations have been supplemented to stipulate that, during the applicable period, criminal records of juveniles subject to non-prosecution decisions by the procuratorial organs, administrative penalties for public order by the public security organs, or placement in corrective education facilities must also be sealed, thereby maximizing the protection of minors’ rights and interests. It is further clarified that sealed criminal records shall encompass electronic information; this is achieved by establishing dedicated sealing modules within relevant electronic information systems or applying special markings, with the implementation of specialized management and access‑control mechanisms, under which electronic data may not be accessed or used without proper authorization. In line with the criminal principle of “interpreting the lighter by reference to the heavier,” and guided by the principle of prioritizing the educational, rehabilitative, and salvific interests of minors, the scope of sealing has been appropriately broadened to include cases in which the public security organs have imposed administrative penalties for public order or ordered placement in corrective education facilities. Moreover, for cases where criminal records are required to be sealed, the court is mandated to issue a standardized “Notice of Sealing of Juvenile Criminal Records,” which, together with the final judgment, shall be served simultaneously on the procuratorial organs, the public security organs, and the judicial administration authorities. The same procedure shall apply mutatis mutandis to cases in which the procuratorial organs decide not to prosecute.

Clearly define and refine types of crimes, and establish an assessment and tracking mechanism.

Regarding the sealing of juvenile criminal records, some netizens have expressed concerns, arguing that it might reduce the deterrent effect for certain minors who harbor criminal intentions. An official from the Zhejiang Provincial People’s Procuratorate noted that the sealing of criminal records is subject to strict limitations and applies only to minors suspected of minor offenses. Under the Criminal Procedure Law, only criminal records pertaining to individuals under 18 at the time of the offense and sentenced to a term of imprisonment of five years or less are eligible for sealing. For cases involving serious crimes, arrest and prosecution must be carried out in accordance with the law, and records of sentences exceeding five years are not sealed. Sealing criminal records does not erase them; rather, it serves to strictly restrict access to such records. According to legal provisions, judicial authorities may access sealed criminal records when necessary for case handling, or relevant entities may do so pursuant to state regulations, provided they follow rigorous approval procedures.

Tong Lihua, director of Beijing Zhicheng Law Office and director of the Beijing Youth Legal Aid and Research Center, argues that most objections to sealing juvenile criminal records stem primarily from sympathy for the victims. In fact, once a minor has been convicted and sentenced, they have already borne the corresponding legal responsibility for their offenses, which can, to a certain extent, provide psychological comfort to the victims.

“It would be worthwhile to establish a database on juvenile delinquency, systematically classify the types of offenses committed by minors, and maintain and update the database in a structured manner,” said Tong Lihua. “It is essential to ensure the database is promptly updated and seamlessly integrated, with real-time monitoring to achieve near‑universal coverage. Moreover, the scope of access to the database should be carefully defined. Building on this database, we must strike a balance between safeguarding the employment rights of those involved and appropriately delineating the extent of any employment restrictions.”

Other

2019: “China’s Governance” Inspires the World

In 2019, China marked the 70th anniversary of its founding. The country’s twin achievements—the rapid economic development and long-term social stability—have earned widespread acclaim, reshaping the world’s perception and understanding of China. The secrets behind the success of “China’s governance” and its global significance have drawn increasing attention and reflection from the international community.

China’s influence on the world has never been as comprehensive, profound, or far-reaching as it is today. In 2019, amid a complex and volatile international landscape and a persistently sluggish global economy, China forged ahead with determination and initiative, steering the course amid turmoil and surmounting challenges. The strengths of “China’s governance” were brought into sharp relief, injecting greater positive momentum into global peace, stability, and prosperity and inspiring the world.

China’s “Aspiration” Leads the Trend of the Times

The clash between unilateralism and multilateralism has been a defining feature of the evolving international landscape throughout 2019. It is important to recognize that peace, development, cooperation, and win-win outcomes remain the prevailing trends of our times, and multilateralism is an inevitable choice for humanity. Upholding multilateralism and promoting common development serve the fundamental interests of peoples around the world. In 2019, through such international cooperation platforms as the Shanghai Cooperation Organization, the BRICS mechanism, the Boao Forum for Asia, and the Asian Infrastructure Investment Bank, China consistently adhered to a multilateralist vision that prioritizes win-win cooperation, is grounded in rules and order, upholds fairness and justice, and is guided by effective action. China put forward a series of initiatives to safeguard multilateralism and sent a clear signal of support for this approach. “A timely rain after a long drought”—this was how Espinosa, President of the 73rd session of the United Nations General Assembly, described the Chinese leadership’s steadfast commitment to multilateralism. She noted that China has “sustained the health and vitality of the multilateral system,” a contribution that the United Nations highly commends.

Robert Kuhn, Chairman of the U.S.-based Robert K. Kuhn Foundation, believes that China’s steadfast support for multilateralism is vital to the stability, security, and healthy development of the entire world.

China’s “Quality” Boosts the Global Economy

As the world’s second-largest economy, China has contributed more than 30 percent to global economic growth for many consecutive years. In 2019, by further expanding its opening-up and vigorously promoting high-quality development, China once again bolstered global confidence with an impressive economic performance. At events such as the Second Belt and Road Forum for International Cooperation, Chinese leaders announced a series of bold new measures to deepen China’s opening-up, reafofficeing the country’s unwavering commitment to advancing higher‑level openness. The successful hosting of the Second China International Import Expo was widely seen as a major milestone in China’s continued expansion of openness. Amid headwinds confronting economic globalization, China has demonstrated through concrete actions that its door of openness will only open wider. This is a strategic choice rooted in China’s own development needs, and a pragmatic step taken in line with the overarching trend of economic globalization—sending a clear message to the world that China not only seeks to develop itself but also to benefit the entire globe. “China remains the world’s largest source of growth opportunities,” said Kevin Sneader, a Global Managing Partner at McKinsey. He noted that the country’s vast market size, highly efficient supply chains, and ample capital are key factors driving international investors’ confidence in China’s economy.

China’s “system” enriches global governance.

The world today is undergoing a transformation of a magnitude unseen in a century, and the global governance system is facing numerous challenges. In the view of British scholar Martin Jacques, China is rethinking its relationship with the world in an entirely new way, and it has the potential to offer the international community fresh experiences and insights in the realm of global governance. How does the “China model” give rise to “China’s governance”? In light of the People’s Republic of China’s 70 years of development, an increasing number of international observers are pondering the deeper forces behind these achievements. “China has opened up a new possibility,” Martin Jacques says. “It is to abandon the law of the jungle, reject hegemony and power politics, transcend zero-sum games, and forge a new path of civilizational development based on win-win cooperation.”

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