JC Master Legal News Issue 903

Key Takeaways for This Issue

China Securities Depository and Clearing Corporation and the Shenzhen Stock Exchange jointly issued the “Detailed Rules for the Implementation of the H‑Share Full Circulation Business.”

To advance the high‑level opening-up of the capital market, promote the sound development of H‑share companies, and provide secure and efficient support for the full rollout of the H‑share “full circulation” reform, with the approval of the China Securities Regulatory Commission, China Securities Depository & Clearing Corporation and the Shenzhen Stock Exchange jointly issued the “Detailed Rules for the Implementation of H‑Share ‘Full Circulation’ Business” (hereinafter referred to as the “Implementation Rules”) on December 31, which took effect immediately.

To promote high-quality trade development, China will adjust import tariffs on certain goods effective January 1, 2020.

To implement the spirit of the 19th National Congress of the Communist Party of China, the Second, Third, and Fourth Plenary Sessions of the 19th CPC Central Committee, and the Central Economic Work Conference, and to promote high-quality trade development, with the approval of the State Council, the Customs Tariff Commission of the State Council recently issued a notice adjusting import tariffs on certain goods, effective January 1, 2020.

Announcement of the State Taxation Administration on Matters Relating to the Final Settlement and Clearance of Individual Income Tax on Comprehensive Income for the Year 2019

To effectively safeguard the legitimate rights and interests of taxpayers, further implement the special additional deductions policy, and establish a sound and orderly system for the annual individual income tax settlement of comprehensive income, in accordance with the Individual Income Tax Law and its Implementing Regulations (hereinafter referred to as the “Tax Law”) as well as the Tax Collection and Administration Law and its Detailed Rules, the following matters concerning the 2019 annual individual income tax settlement of comprehensive income (hereinafter referred to as the “Annual Settlement”) are hereby announced.

The Measures for the Administration of Food Production Licensing have been promulgated and will take effect on March 1.

On January 3, the State Administration for Market Regulation published the Measures for the Administration of Food Production Licensing (hereinafter referred to as the “Measures”) on its official website, which will take effect on March 1, 2020.

The central bank has cut the reserve requirement ratio by 0.5 percentage points across the board, releasing over RMB 800 billion in liquidity.

To support the development of the real economy and reduce the actual cost of social financing, the People’s Bank of China announced on the 1st that it has decided to lower the reserve requirement ratio for financial institutions by 0.5 percentage points effective January 6, 2020 (excluding finance companies, financial leasing companies, and auto finance companies).

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission is soliciting public comments on the “Guidance on Investment in Stocks Listed on the National Equities Exchange and Quotation System for Small and Medium-sized Enterprises (Draft for Comments).”

The statistical methodology for futures market data has been uniformly adjusted to single-sided calculation.

The China Securities Regulatory Commission, in coordination with public security authorities, has uncovered a major market manipulation case.

The Shanghai Stock Exchange’s next-generation market surveillance system has officially been launched and is now in operation.

China Securities Depository and Clearing Corporation and the Shenzhen Stock Exchange jointly issued the “Detailed Rules for the Implementation of the H‑Share Full Circulation Business.”

Corporate & Commercial

To promote high-quality trade development, China will adjust import tariffs on certain goods effective January 1, 2020.

The year-on-year increase in average residential prices across 100 cities has remained at a low level for several consecutive months.

Chongqing: Big Data and Intelligent Technologies Become Hotspots in the Job Market

Manufacturing continues to expand, and signs of economic stabilization are emerging.

Chengdu has established a “Direct Channel” system for intellectual property protection targeting key enterprises.

Taxation

Announcement of the State Taxation Administration on Issues Related to the Administration of Value-Added Tax, Including the Abolition of the Time Limit for Authentication and Conofficeation of VAT Credit Certificates

Announcement of the State Taxation Administration on Matters Relating to the Final Settlement and Clearance of Individual Income Tax on Comprehensive Income for the Year 2019

Announcement of the State Taxation Administration on Revising the “Payment Declaration Form for the Employment Guarantee Fund for Persons with Disabilities”

Announcement of the State Taxation Administration on Revising Certain Individual Income Tax Return Forms

Announcement of the State Taxation Administration on Further Improving the Regulatory System for Tax-related Professional Services

Litigation & Arbitration

The Measures for the Administration of Food Production Licensing have been promulgated and will take effect on March 1.

Supreme People’s Court: A grace period of one to three months may be granted to persons subject to enforcement who have lost trust.

The Ministry of Culture and Tourism has issued the Measures for the Administration of National-Level Tourist Resorts.

The China Banking and Insurance Regulatory Commission has issued an amendment to the “Measures for the Implementation of Administrative Licensing Matters for Foreign-Invested Banks of the China Banking and Insurance Regulatory Commission.”

Interpretation of the New Forest Law: Clarifying Forest Ownership and Strengthening Property Rights Protection

Other

The central bank has cut the reserve requirement ratio by 0.5 percentage points across the board, releasing over RMB 800 billion in liquidity.

Finance & Capital Markets

The China Securities Regulatory Commission is soliciting public comments on the “Guidance on Investment in Stocks Listed on the National Equities Exchange and Quotation System for Small and Medium-sized Enterprises (Draft for Comments).”

To implement the important directives of the Central Economic Work Conference on steadily advancing the reform of the New Third Board, to standardize the investment practices of public mutual funds in stocks listed on the New Third Board (hereinafter referred to as “listed stocks”), and to enable the public fund industry to better serve the development of small and medium-sized enterprises and private businesses, the China Securities Regulatory Commission has drafted the “Guidance on Publicly Offered Mutual Fund Investment in Stocks Listed on the National Equities Exchange and Quotation System for Small and Medium‑Sized Enterprises (Draft for Comments)” (hereinafter referred to as the “Guidance”) and is now soliciting public comments.

The Guidelines comprise 15 provisions and primarily cover the following areas: First, they clarify the participation requirements for fund managers, stipulating that fund managers must possess appropriate investment research capabilities and maintain an adequate team of investment analysts. Second, they standardize the scope of fund investments, permitting equity funds, hybrid funds, and bond funds to invest in stocks listed on the Select Tier of the New Third Board. Third, they strengthen liquidity risk management by requiring fund managers to invest in Select‑Tier stocks with good liquidity and to prudently determine their investment allocation ratios. Fourth, they regulate the valuation of public funds, mandating that fund managers and custodians apply fair valuation methods to listed stocks; where significant uncertainty exists regarding a stock’s value and substantial redemption requests are anticipated, a side‑car mechanism may be activated. Fifth, they enhance information disclosure and risk‑warning requirements, obliging funds to disclose their holdings of listed stocks in periodic reports and to highlight specific risks in relevant legal documents. Sixth, they reinforce investor suitability management, requiring fund managers, in collaboration with sales agencies, to conduct thorough risk assessments of fund products, evaluate investors’ risk tolerance, and provide appropriate investor education.

The statistical methodology for futures market data has been uniformly adjusted to single-sided calculation.

　To align futures market data‑statistics standards with international practices, further enhance the uniformity of market rules, facilitate statistical analysis and benchmarking by market participants, and enable both domestic and overseas investors to engage more easily, all commodity futures exchanges have, effective January 1, 2020, standardized the methodology for collecting, publishing, and reporting futures market price information to a one‑sided calculation basis.

The China Securities Regulatory Commission, in coordination with public security authorities, has uncovered a major market manipulation case.

In the preliminary stage, the China Securities Regulatory Commission’s monitoring identified abnormal trading activity—both in price and volume—for several small-cap stocks, including Dibei Electric, over multiple consecutive days. In accordance with its inspection procedures, the Commission promptly activated its enforcement‑cooperation mechanism and deployed resources to work with public security authorities in conducting an in-depth investigation of relevant leads, achieving significant progress.

Upon investigation, it was found that Luo Shandong, the actual controller of Hunan Dongneng Group, colluded with off‑exchange margin‑financing intermediaries, including Gong Shiwei, to raise funds and manipulate the share prices of eight stocks, including Dibei Electric, thereby reaping illicit profits exceeding RMB 400 million. During the investigation, with the coordinated enforcement efforts of our commission, public security authorities apprehended all 43 key members of the criminal group in a single operation and dismantled 12 illegal trading hubs. Following prosecution initiated by the Jinhua People’s Procuratorate in Zhejiang Province, the Jinhua Intermediate People’s Court recently delivered its first‑instance verdict.

This case is a major, landmark market-manipulation matter that our Commission has jointly investigated with public security authorities in recent years. Going forward, we will further refine the coordination mechanism between administrative and criminal enforcement, working together to crack down rigorously on all types of securities and futures-related illegal and criminal activities, thereby safeguarding the stable functioning of the market.

The Shanghai Stock Exchange’s next-generation market surveillance system has officially been launched and is now in operation.

Recently, the Shanghai Stock Exchange’s next-generation market surveillance system has officially gone live. This marks an important step in the Exchange’s efforts to implement the CSRC’s plan to comprehensively deepen capital market reform, promote the deep integration of technology and business, and accelerate the enhancement of its technological regulatory capabilities.

In recent years, the securities market has continued to expand, with an ever‑richer array of new products and trading mechanisms, a increasingly complex investor base, and abnormal trading activities and violations that have grown more concealed and varied—placing heightened demands on the functionality and performance of surveillance systems. At the same time, the rapid evolution of regulatory technology has introduced entirely new design paradigms for enhancing the automation, intelligence, and high performance of such systems. In response, the Shanghai Stock Exchange conducted extensive industry‑wide research and in‑depth consultations, drawing on cutting‑edge design principles from both domestic and international surveillance systems, and, following thorough deliberation, launched the development of a next‑generation surveillance system.

The new surveillance system is designed on the basis of the SSE’s big‑data platform, building upon trading and position‑holding data as well as account‑opening records, while expanding to incorporate trading‑terminal data, historical regulatory data, online public sentiment, corporate announcements, and other information, thereby fully leveraging the synergistic analytical capabilities of regulatory big data. Moreover, thanks to the platform’s robust scalability, it can meet the ever‑growing demands for data processing. Functionally, the system delivers ten categories of regulatory dashboards that are flexibly configurable and readily extensible, providing comprehensive coverage of real‑time monitoring, self‑regulatory oversight, lead analysis, operational surveillance, and cross‑data verification across both the Main Board and the STAR Market. Technologically, it employs cutting‑edge big‑data processing and intelligent analytics techniques—such as machine learning, knowledge graphs, and text mining—further enhancing the system’s data visualization, operational automation, and model‑intelligence capabilities.

At present, the system has completed functional development and testing and is operating in parallel, having been successfully launched at the end of 2019. Moving forward, the SSE will continue to enhance system performance and further improve the responsiveness of its early‑warning engine. The launch of the new surveillance system marks a significant step forward in the SSE’s technology‑driven regulatory efforts, with technology‑enabled trading oversight yielding tangible results. This will substantially strengthen frontline regulatory effectiveness, safeguard market fairness, and support the stable and sound development of the capital market.

China Securities Depository and Clearing Corporation and the Shenzhen Stock Exchange jointly issued the “Detailed Rules for the Implementation of the H‑Share Full Circulation Business.”

To advance the high‑level opening-up of the capital market, promote the sound development of H‑share companies, and provide secure and efficient support for the full rollout of the H‑share “full circulation” reform, with the approval of the China Securities Regulatory Commission, China Securities Depository & Clearing Corporation and the Shenzhen Stock Exchange jointly issued the “Detailed Rules for the Implementation of H‑Share ‘Full Circulation’ Business” (hereinafter referred to as the “Implementation Rules”) on December 31, which took effect immediately.

The Implementation Rules, formulated within the framework of higher-level regulations such as the “Guidance on Applications for Full Circulation of Unlisted Domestic Shares of H‑Share Companies,” constitute the foundational rules governing the registration, custody, and trading‑settlement operations related to H‑share full circulation. They comprise nine chapters and 51 articles, covering general provisions, cross‑border re‑registration, custody and maintenance of holding details, trade order submission and instruction transmission, clearing and settlement, nominee services, risk management, oversight of clearing participants and settlement banks, and supplementary provisions. With respect to registration and custody, once shares have completed cross‑border re‑registration, they are recorded in the Hong Kong Securities Clearing Company’s account system under the name of China Securities Depository & Clearing Corporation (Hong Kong) overseas, while domestically, they are held and their detailed records maintained through Shenzhen‑listed A‑share accounts. In terms of trading and settlement, investors submit share‑related orders through domestic securities offices, with the ultimate realization of share circulation taking place on the Stock Exchange of Hong Kong.

It should be noted that, for technical reasons, the functions enabling domestic shareholders of the relevant H‑share companies to increase their holdings of the company’s shares—including rights issues and public offerings within the prescribed quota—remain unavailable at this time. These features will be rolled out in due course, once the necessary technical systems and other conditions are in place.

Building on the experience gained from the pilot program, the steady rollout of the H‑share “full circulation” reform will help align the interests of all types of shareholders in H‑share companies and enhance corporate governance, enabling domestic enterprises to better leverage both domestic and international markets and resources for growth, while also fostering the development of Hong Kong’s capital market. Going forward, the Shenzhen Stock Exchange, in accordance with the unified arrangements of the China Securities Regulatory Commission, will work together with China Securities Depository & Clearing Corporation to provide guidance to relevant stakeholders, implement the provisions set out in the Detailed Rules, effectively safeguard shareholders’ legitimate rights and interests, and ensure the smooth launch and stable operation of the comprehensive H‑share “full circulation” reform.

Commercial & Corporate

To promote high-quality trade development, China will adjust import tariffs on certain goods effective January 1, 2020.

To implement the spirit of the 19th National Congress of the Communist Party of China, the Second, Third, and Fourth Plenary Sessions of the 19th CPC Central Committee, and the Central Economic Work Conference, and to promote high-quality trade development, with the approval of the State Council, the Customs Tariff Commission of the State Council recently issued a notice adjusting import tariffs on certain goods, effective January 1, 2020.

To actively expand imports, unlock import potential, and optimize the import structure, starting January 1, 2020, China will apply provisional import tariff rates lower than the most‑favoured‑nation rates to more than 850 items. In particular, to better meet the needs of the people, imports of everyday consumer goods that are relatively scarce domestically or have distinctive foreign characteristics will be moderately increased by introducing new or reducing existing provisional import tariff rates on frozen pork, frozen avocados, non‑frozen orange juice, and other products. To lower medication costs and promote the production of new drugs, zero tariffs will be imposed on alkaloid‑based pharmaceuticals used to treat asthma and on raw materials for manufacturing next‑generation diabetes treatments. To broaden imports of advanced technologies, equipment, and components and support the development of high‑tech industries, new or reduced provisional import tariff rates will be applied to semiconductor testing, sorting, and tape‑reeling machines, high‑pressure turbine clearance‑control valves, torque converters for automatic transmissions and aluminum valve cores, ferro‑niobium, multi‑component integrated circuit memory devices, large‑diameter film‑making raw materials, photoresist dispersions, culture media, and other items. Finally, to encourage the import of resource‑based products in domestic demand, new or reduced provisional import tariff rates will be introduced for certain wood and paper products.

To promote the coordinated development of trade and the environment, in accordance with the State Council’s directive to comprehensively ban the import of solid waste that poses significant environmental risks and has drawn strong public concern, and in alignment with the schedule for revising the Catalogue of Imported Waste Management, effective January 1, 2020, the provisional import tariff rates on tungsten scrap and niobium scrap will be abolished, and the most‑favoured‑nation tariff rates will be reinstated.

To promote high-quality development of the Belt and Road Initiative, build a global network of high-standard free trade areas, and implement an open strategy based on mutual benefit and win-win cooperation, China will, in accordance with the free trade agreements or preferential trade arrangements it has concluded with relevant countries and regions, continue to apply agreed‑upon tariff rates in 2020 to certain products originating in 23 countries and regions. Among these, further tariff reductions will be applied under China’s free trade agreements with New Zealand, Peru, Costa Rica, Switzerland, Iceland, Singapore, Australia, South Korea, Georgia, Chile, and Pakistan, as well as under the Asia-Pacific Trade Agreement. In 2020, preferential tariff rates will also remain in effect for the least developed countries that have established diplomatic relations with China and completed the exchange of notes, with the list of eligible countries subject to adjustment in line with the United Nations’ list of least developed countries and China’s transitional arrangements.

Effective July 1, 2020, China will implement the fifth round of tariff reductions on the most-favored-nation rates for 176 information technology products, and, in parallel, adjust the provisional import tax rates applicable to certain of these IT products.

The Office of the Customs Tariff Commission of the State Council stated that the aforementioned adjustments will help reduce import costs, facilitate the orderly and free flow of both domestic and international factors of production, and advance the establishment of a new, higher‑level open economic system. They will also enhance the level of opening-up, continuously expand new avenues for trade development, and accelerate the building of high‑standard free trade areas. Moreover, these measures will enable China to share the fruits of development with other countries and regions, ushering in a new phase of international trade characterized by openness and cooperation, inclusiveness and shared benefits, and mutual win‑win outcomes.

The year-on-year increase in average residential prices across 100 cities has remained at a low level for several consecutive months.

On January 1, the China Index Academy released its December 2019 report on the average residential price index for 100 cities, showing that the average residential price in these cities rose 0.42% month-on-month. Overall, the growth rate of average residential prices across the 100 cities has remained at a low level for several consecutive months. According to the China Real Estate Index System’s 100-City Price Index, which tracks a full-sample survey of new residential properties in 100 cities nationwide, the average residential price in December 2019 was RMB 15,168 per square meter, up 0.42% from the previous month. Year-on-year, the average residential price in these 100 cities increased by 3.34% compared with December 2018, with the year-on-year growth rate expanding by 0.17 percentage points.

Looking at the number of cities recording price changes, among 100 cities, 69 saw month-on-month increases, 25 experienced declines, and 6 remained unchanged compared with November. Compared with November, the number of cities where residential prices rose month over month increased by 14 in December, with 9 of them posting gains of 1% or more; meanwhile, the number of cities with month-on-month price drops decreased by 15, including 8 that recorded declines of 0.5% or more—consistent with the figure for November.

In addition, in December 2019, the average price of newly built residential properties in ten major cities, including Beijing and Shanghai, stood at RMB 27,350 per square meter, up 0.42% month-on-month. Meanwhile, the average price of secondhand residential properties in the central districts of these same ten cities was RMB 38,549 per square meter, down 0.22% month-on-month. At the end of 2019, real estate policy remained broadly stable, with continued adherence to the guiding principles of “housing is for living, not for speculation” and “not using real estate as a short-term tool to stimulate the economy.” Local governments continued to pursue the goals of stabilizing land prices, housing prices, and market expectations, while maintaining appropriate room and flexibility for policy adjustments in line with the principle of “tailoring policies to local conditions.” “In 2019, month-on-month growth in new-home prices across 100 cities remained subdued, with a marked increase in the number of cities recording month-on-month declines. Cumulative price increases continued to narrow,” noted an analyst at the China Index Academy. Specifically, first-tier cities saw a slight uptick in cumulative gains, driven by improvements in supply and demand and a low base effect, whereas second-, third-, and fourth-tier cities continued to experience a deceleration in cumulative price increases—particularly in those cities that had previously seen rapid price hikes and lacked strong demographic support, where downward adjustment pressures became more pronounced.

In addition, in the existing-home market, the increased supply of new homes in hot-spot cities has widened buyers’ bargaining power, putting significant downward pressure on prices in some cities. As a result, the average price of secondhand homes in the top ten cities has undergone cumulative adjustments, with the decline widening in recent months. “The recent stability in the real estate market is largely attributable to the steadfastness of housing‑market regulation in 2019 and the positive outcomes achieved through city‑specific policies,” said an analyst at the China Index Academy. “On the one hand, real estate‑related financial policies remained consistent throughout the year, providing a solid foundation for targeted, fine‑tuned adjustments in certain cities and ensuring that reasonable housing demand was met. On the other hand, compared with 2018, as market conditions diverged across regions, the implementation of city‑specific measures deepened further in 2019, helping to maintain overall market stability.”

Chongqing: Big Data and Intelligent Technologies Become Hotspots in the Job Market

On January 3, Liu Yibo, a 2020 undergraduate graduate from the School of Advanced Manufacturing at Chongqing University of Posts and Telecommunications, recently received job offers from several well-known companies. Ultimately, he chose to sign with an automotive office in Chongqing, where he will work in the field of machine vision. He believes that in recent years, Chongqing’s automotive industry has been actively transitioning toward intelligent and connected technologies, providing him with ample opportunities to leverage his expertise and showcase his talents. On campus, one can see students carrying resumes in small groups, with recruitment notices for various companies posted everywhere, signaling the arrival of “employment season.” Even during this year’s “most challenging job market,” when both the number of recruiting offices and available positions have declined somewhat, graduates specializing in big data and intelligent technologies—like Liu Yibo—remain highly sought after in the job market.

Taking Chongqing University of Posts and Telecommunications as an example, in 2019 about 50% of its graduates found employment in the big data and intelligent industries. Graduates from majors such as big data, artificial intelligence, communication engineering, the Internet of Things, and optoelectronics were in high demand, with relatively competitive salaries. Shi Zhuping, deputy secretary of the Party Committee of the university’s School of Computer Science, noted that the average starting salary for the class of 2019 was just over 8,600 yuan, and he expects this figure to rise further in 2020.

“In the past, Chongqing’s traditional manufacturing sector dominated and enjoyed relatively strong profitability, with a large share of college graduates entering automotive and other conventional industrial enterprises. As the ‘new economy’—including big data and intelligent technologies—has boomed, it has become highly attractive to talent, and the proportion of graduates flowing into these fields has risen rapidly,” said Yu Yue, director of the Chongqing Employment Guidance Service Center for College and Secondary Vocational School Graduates.

A city’s industrial development is closely linked to the structure of the talent it requires. Behind the “hot” majors lies a clear reflection of Chongqing’s industrial transformation in recent years. Today, Chongqing is harnessing big data and intelligent technologies to generate new momentum for growth, building a complete smart‑industry value chain around “chips, displays, devices, core technologies, and networks.” High‑tech industries and strategic emerging manufacturing have become the primary drivers of industrial economic expansion. At the same time, a large number of traditional industrial enterprises are vigorously advancing intelligent upgrades, which has significantly boosted demand for talent in big data, artificial intelligence, and related fields. However, amid this robust market demand, shortcomings in the supply of skilled professionals in Chongqing’s big data and intelligent‑technology sectors are becoming increasingly apparent. Not long ago, a report released by the Chongqing Municipal Commission of Economy and Information Technology projected that, over the next three years, the smart manufacturing industry cluster alone will require an additional 39,740 workers.

According to reports, relevant authorities in Chongqing have recently established a Big Data Industry Talent Alliance to promote collaborative talent development between universities and enterprises, ensure precise alignment with industry needs, and help address the talent bottleneck.

Manufacturing continues to expand, and signs of economic stabilization are emerging.

The Caixin China Manufacturing Purchasing Managers’ Index (PMI) for December 2019, released on January 2, stood at 51.5, remaining above the 50‑point threshold that separates expansion from contraction. Both the new orders index and the production index have stayed in expansionary territory for six consecutive months. The day before, the National Bureau of Statistics reported an official manufacturing PMI of 50.2%, indicating that the sector continues to expand, with market demand growing and production expanding at an accelerating pace. Industry observers note that leading indicators suggest that manufacturing is maintaining its expansionary trend, both across the broader economy and among small and medium-sized enterprises, underscoring a more pronounced economic recovery.

In December, the official manufacturing PMI stood at 50.2%, remaining above the 50‑point threshold for two consecutive months, signaling steady and moderate improvement in manufacturing activity. According to Zhao Qinghe, a senior statistician at the National Bureau of Statistics’ Service Industry Survey Center, production continued to accelerate while demand remained on an expansionary trajectory, with both supply and demand showing robust momentum. The production index reached 53.2%, up 0.6 percentage points from the previous month. Among the 21 industries surveyed, 15 reported production indices in expansion territory. The new orders index registered 51.2%, staying above the threshold for two months in a row. To meet production needs, offices’ purchasing intentions strengthened, with the purchasing volume index at 51.3%, up 0.3 percentage points month-on-month.

In addition, the import and export situation has improved, with a marked increase in overseas orders and a continued recovery in raw material imports. The new export orders index stood at 50.3%, up 1.5 percentage points from the previous month, marking the first move into expansionary territory since June 2018; the import index was 49.9%, up 0.1 percentage point from the prior month, rising for two consecutive months. Supply-and-demand conditions have also improved, as both the purchasing price index for major raw materials and the ex‑factory price index have rebounded.

Zhao Qinghe also noted that the ongoing transformation and upgrading of industries are gaining momentum, with emerging sectors showing strong growth. The PMIs for high‑tech manufacturing, equipment manufacturing, and the consumer goods sector stood at 52.8%, 51.3%, and 51.4%, respectively—2.6, 1.1, and 1.2 percentage points above the overall manufacturing level. These indices have remained in expansion territory for three consecutive months, with business conditions continuing to improve. The Caixin PMI, which focuses primarily on small and medium‑sized enterprises, likewise points to positive developments. Zhong Zhengsheng, Chairman and Chief Economist at Caixin Insight Group’s Monita Research, observed that the new orders index has stayed in expansionary territory for six months running. Offices generally attribute this trend to an increase in customer numbers, improving demand, and the launch of new products. With a rise in incoming orders, production continues to expand at a brisk pace. Business confidence has also shown signs of improvement, as the December output expectations index posted a modest rebound. Innovation in new products, capital investment, and plans for corporate expansion are underpinning industry-wide growth prospects.

“Both production and demand indicators have shown strong performance, marginally reinforcing the current trend of stabilization and recovery in the short-term economic cycle,” said Huang Wentao, Chief Macro and Fixed Income Analyst at CITIC Securities. Li Chao, Chief Macro Researcher at Huatai Securities, also noted that the PMI has strengthened consecutively in November and December, signaling economic stabilization. With counter-cyclical policies gaining further traction, a rebound in the economy is expected in the first quarter of 2020.

Chengdu has established a “Direct Channel” system for intellectual property protection targeting key enterprises.

On December 31, 2019, Sichuan Baili Pharmaceutical Co., Ltd. submitted an application to join the Key Enterprise Intellectual Property Protection Registry, becoming the first company in Wenjiang District, Chengdu, to apply for inclusion in this registry.

“Intellectual property is one of a company’s core competitive advantages. In the past, we constantly struggled with IP protection and enforcement, and our internal IP protection system was far from完善,” said Kang Jian, head of Sichuan Baili Pharmaceutical. “Now, by promptly applying to join the Key Enterprise Intellectual Property Protection Registry, we can not only rely on the market regulation authorities to better address the challenges we face in safeguarding and enforcing our IP rights, but also help us refine our overall IP management framework.” According to the Chengdu Municipal Administration for Market Regulation, the agency recently issued the “Work Plan for Establishing an Express‑Track System for Intellectual Property Protection of Key Enterprises,” which has been implemented since December 2019 to ensure swift response and efficient handling of IP-related cases involving priority enterprises. Under this plan, Chengdu will establish a registry of key enterprises for IP protection. High‑tech companies, enterprises recognized at or above the municipal level as IP demonstration, advantage‑building, or pilot entities, growing IP‑holding offices with a total of 50 or more IP rights, and companies that have obtained well‑known trademark status—all meeting any one of these four criteria—may apply to be included in the registry.

According to a responsible official from the Chengdu Municipal Market Supervision Administration, the city will intensify legal awareness‑raising and rights‑protection guidance on intellectual property for enterprises registered in its database, and establish a rapid response mechanism. For administrative cases involving intellectual property infringement against key enterprises under Chengdu’s jurisdiction, the principle of immediate acceptance and investigation will be applied, ensuring that cases are concluded in the shortest possible time, with strict penalties imposed on malicious or repeated infringements.

According to available information, from January to November 2019, Chengdu handled a total of 1,046 patent infringement cases, concluding 1,045 of them, and investigated 24 cases of counterfeit patents. The city also received 338 trademark counterfeiting and infringement cases, referred four of them to the judicial authorities, and shut down four illegal operation sites.

Taxation TAXATATION

Announcement of the State Taxation Administration on Issues Related to the Administration of Value-Added Tax, Including the Abolition of the Time Limit for Authentication and Conofficeation of VAT Credit Certificates

The following announcement is hereby issued regarding VAT administration issues, including the abolition of the deadline for verifying and conofficeing VAT credit certificates:

I. For value-added tax (VAT) general taxpayers, the time limits for authentication and conofficeation, audit and comparison, and declaration for input VAT credit have been lifted for special VAT invoices issued on or after January 1, 2017, special customs import VAT payment receipts, unified invoices for motor vehicle sales, and electronic standard VAT invoices for tolls on toll roads. When filing their VAT returns, taxpayers shall use the provincial (including autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan) comprehensive VAT invoice service platform to conoffice the intended use of the aforementioned tax‑deduction vouchers.

General VAT taxpayers who hold special VAT invoices, customs import VAT payment receipts, or unified invoices for motor vehicle sales issued on or before December 31, 2016, and whose deadlines for authentication, verification, and declaration for input tax credit have expired, may nevertheless continue to claim input tax credits in accordance with the “Announcement of the State Taxation Administration on Issues Concerning the Credit of Overdue VAT Credit Certificates” (No. 50 of 2011, as amended by State Taxation Administration Announcements No. 36 of 2017 and No. 31 of 2018) and the “Announcement of the State Taxation Administration on Issues Related to the Failure to Declare and Credit VAT Credit Certificates on Time” (No. 78 of 2011, as amended by State Taxation Administration Announcement No. 31 of 2018), provided they meet the prescribed conditions.

II. Where a taxpayer is eligible for the immediate VAT refund policy and such eligibility is contingent upon the taxpayer’s tax credit rating, the applicable rating shall be determined as of the tax period to which the refund request pertains. If the taxpayer’s tax credit rating changes during the tax period in question, the rating in effect at the time of the change shall prevail.

Where a taxpayer is eligible for the value-added tax credit refund policy and such eligibility is subject to specific tax credit rating requirements, the applicable tax credit rating shall be determined as of the date the taxpayer submits the “Tax Refund (Credit) Application Form” to the competent tax authority in connection with the application for the VAT credit refund.

III. In accordance with the provisions of the “Announcement of the Ministry of Finance, the State Taxation Administration, and the General Administration of Customs on Policies Related to the Deepening of VAT Reform” (No. 39 of 2019) and the “Announcement of the Ministry of Finance and the State Taxation Administration on Clarifying the Policy for Refund of End-of-Period Input VAT Credit for Certain Advanced Manufacturing Industries” (No. 84 of 2019), when calculating the proportion of input tax constituting the incremental input VAT credit eligible for refund, the input VAT amounts that a taxpayer has transferred out in compliance with regulations during the period from April 2019 up to the tax period immediately preceding the application for refund shall not be deducted from the VAT amounts indicated on the previously credited special VAT invoices, unified invoices for motor vehicle sales, special customs import VAT payment receipts, or tax payment certificates.

IV. Where entities and individuals within the territory of the People’s Republic of China (hereinafter referred to as “within the territory”) act as subcontractors and provide construction services for engineering projects located outside China, the subcontracting proceeds they receive from the domestic general contractor shall be deemed to constitute “income deemed to be derived from abroad” as stipulated in Article 6 of the State Administration of Taxation Announcement No. 29 of 2016, as amended by State Administration of Taxation Announcement No. 31 of 2018, entitled “Announcement on the Issuance of the Administrative Measures for VAT Exemption of Cross-Border Taxable Activities under the Reform of Business Tax to VAT (Trial Implementation).”

V. Animal disease prevention, diagnosis, treatment, and spay/neuter services provided by animal healthcare institutions fall under the “breeding and disease prevention and control of poultry, livestock, and aquatic animals” as specified in Item 10 of Article 1 of the Regulations on Transitional Policies for the Pilot Program to Replace Business Tax with Value-Added Tax (Attachment 3 to Cai Shui [2016] No. 36).

Animal healthcare institutions that sell animal food and supplies and provide services such as animal grooming, beauty treatments, and pet-sitting shall pay value-added tax in accordance with the applicable current regulations.

An animal medical treatment institution refers to an entity that, in accordance with the Measures for the Administration of Animal Medical Treatment Institutions (promulgated by Ministry of Agriculture Order No. 19 and amended by Ministry of Agriculture Orders No. 3 of 2016 and No. 8 of 2017), has obtained an animal medical treatment license and conducts animal medical treatment activities within the scope prescribed therein.

VI. Article 2 of the “Administrative Measures for Small-Scale Taxpayers in the Freight Transport Industry Applying for Agency Issuance of Special Value-Added Tax Invoices” (issued as Announcement No. 55 of 2017, amended by State Taxation Administration Announcement No. 31 of 2018) is hereby revised as follows:

Article 2: This Measures shall apply to value-added tax taxpayers (hereinafter referred to as “taxpayers”) who simultaneously meet the following conditions:

(1) Providing road or inland waterway freight transportation services within the territory of the People’s Republic of China (hereinafter referred to as “within the territory”) and having completed tax registration, including temporary tax registration.

(2) Those providing road freight transportation services (except for operators using ordinary freight vehicles of 4.5 tonnes or less to engage in general road freight transport) shall obtain the “People’s Republic of China Road Transport Business License” and the “People’s Republic of China Road Transport Certificate”; those providing inland waterway freight transportation services shall obtain the “Domestic Inland Waterway Transport Business License” and the “Vessel Commercial Transport Certificate.”

(3) They shall be administered by the competent tax authority at the place of tax registration in accordance with the regulations applicable to small-scale VAT taxpayers.

VII. Fiscal subsidy income received by a taxpayer that is directly linked to the revenue or quantity of goods, labor services, services, intangible assets, or real estate sold shall be subject to value-added tax in accordance with the relevant regulations. Fiscal subsidy income received by a taxpayer under other circumstances does not constitute taxable income for VAT purposes and is exempt from VAT.

Prior to the implementation of this announcement, central government subsidies received by taxpayers shall continue to be governed in accordance with the State Administration of Taxation’s Announcement on VAT Issues Relating to Central Government Subsidies (No. 3, 2013). For amounts for which VAT has already been declared and paid, taxpayers may, pursuant to the existing regulations on red‑letter invoice management, issue a red‑letter VAT invoice to deduct the central government subsidy from their sales revenue.

VIII. Article 1 of this Announcement shall take effect as of March 1, 2020, while Articles 2 through 7 shall take effect as of January 1, 2020. Matters that have already occurred but remain unresolved shall be handled in accordance with this Announcement; matters that have already been processed shall not be subject to further adjustment. Article 5 of the “Announcement of the State Taxation Administration on Issues Concerning Value-Added Tax on Central Government Subsidies” (No. 3, 2013) and the “Announcement of the State Taxation Administration on Issues Related to the Deduction of Input VAT on Domestic Passenger Transport Services and Other VAT Administration Matters” (No. 31, 2019) are hereby repealed as of January 1, 2020. In addition, Article 2 of the “Notice of the State Taxation Administration on the Deduction of Input VAT for General VAT Taxpayers Holding Special VAT Invoices Issued by the Anti-Counterfeiting Tax Control System” (Guo Shui Fa [2003] No. 17), the “Notice of the State Taxation Administration on Adjusting the Time Limit for Deducting VAT Credit Certificates” (Guo Shui Han [2009] No. 617), the “Notice of the State Taxation Administration on Issues Related to the Authentication and Verification of VAT Credit Certificates During Earthquake Relief Efforts for General VAT Taxpayers” (Guo Shui Han [2010] No. 173), Article 10 of the “Announcement of the State Taxation Administration on Further Clarifying Certain Administration Issues Related to the Transition from Business Tax to VAT” (No. 11, 2017, as amended by Announcement No. 31, 2018), and Article 4 of the “Announcement of the State Taxation Administration on Matters Relating to the Administration of VAT Invoices and Other Issues” (No. 33, 2019) are hereby repealed as of March 1, 2020. The “Administrative Measures for Small-Scale Taxpayers in the Freight Transportation Industry Applying for Agency Issuance of Special VAT Invoices” (issued as No. 55, 2017, as amended by Announcement No. 31, 2018) shall be revised accordingly in light of this Announcement and reissued.

This is hereby announced.

Announcement of the State Taxation Administration on Matters Relating to the Final Settlement and Clearance of Individual Income Tax on Comprehensive Income for the Year 2019

To effectively safeguard the legitimate rights and interests of taxpayers, further implement the special additional deductions policy, and establish a rational and orderly system for the annual individual income tax settlement and finalization of comprehensive income, in accordance with the Individual Income Tax Law and its Implementing Regulations (hereinafter referred to as the “Tax Law”) as well as the Tax Collection and Administration Law and its Detailed Rules, the following matters concerning the 2019 annual individual income tax settlement and finalization of comprehensive income (hereinafter referred to as the “Annual Settlement”) are hereby announced:

I. Contents of the 2019 Annual Tax Settlement

In accordance with tax laws, upon the conclusion of 2019, resident individuals (hereinafter referred to as “taxpayers”) are required to aggregate the income derived from four types of income—wages and salaries, labor compensation, manuscript fees, and royalties—earned between January 1 and December 31, 2019 (hereinafter referred to as “comprehensive income”). After deducting the standard deduction of RMB 60,000, as well as special deductions, special additional deductions, other legally prescribed deductions, and eligible donations to public welfare and charitable causes (hereinafter referred to as “donations”), the applicable comprehensive income tax rate shall be applied, and the quick‑calculation deduction shall be subtracted (the tax rate schedule is attached). The final tax liability for the year is then determined; by subtracting the amount of tax already withheld and paid during 2019, the taxpayer arrives at the amount of tax to be refunded or additionally payable. This amount must be reported to the tax authorities, and the corresponding refund or additional payment shall be processed. The specific calculation formula is as follows:

The 2019 annual tax settlement refund or additional tax payable is calculated as follows: [（Total comprehensive income − RMB 60,000 − Special deductions such as the “three insurances and one housing fund” − Special additional deductions such as children’s education − Other legally determined deductions − Donations）× Applicable tax rate − Quick deduction amount] − Tax already withheld and paid in 2019.

In accordance with tax laws, the 2019 annual tax reconciliation shall only compute and settle the refundable or additional tax liability arising from the year’s comprehensive income; it does not cover prior or subsequent years, nor does it include classified income such as property rental income, or income items—such as a one-time annual bonus—that taxpayers have elected, pursuant to regulations, not to include in their comprehensive income for tax calculation purposes.

II. Taxpayers Who Are Not Required to File an Annual Tax Settlement

With the approval of the State Council and in accordance with the relevant provisions of the “Announcement of the Ministry of Finance and the State Taxation Administration on Certain Policy Issues Related to the Annual Individual Income Tax Settlement for Comprehensive Income” (No. 94, 2019), taxpayers who have duly paid individual income tax in advance for the 2019 tax year and meet any one of the following conditions are exempt from filing an annual tax reconciliation:

(1) Taxpayers who are required to pay additional tax upon annual individual income tax settlement but whose total annual comprehensive income does not exceed RMB 120,000;

(2) Where the amount of additional tax payable in the taxpayer’s annual tax reconciliation does not exceed RMB 400;

(3) Where the taxpayer’s prepaid tax amount is equal to the annual tax liability, or where the taxpayer does not apply for a refund through the annual tax reconciliation.

III. Taxpayers Required to File an Annual Tax Settlement

In accordance with tax laws, taxpayers are required to file an annual tax reconciliation if they fall under any of the following circumstances:

(1) Taxpayers who, in 2019, paid more in advance than their annual tax liability and have applied for a tax refund. This includes cases where the taxpayer’s total comprehensive income for 2019 did not exceed RMB 60,000 but personal income tax had already been withheld; where the withholding rates applicable to labor compensation, manuscript fees, and royalty income during the year were higher than the annual tax rate applicable to comprehensive income; or where, at the time of advance tax payments, deductions for expenses, special deductions, special additional deductions, other legally prescribed deductions, or charitable donations were either not declared or insufficiently claimed, or where tax preferences for comprehensive income were either not claimed or not fully utilized.

(2) Individuals whose total annual comprehensive income for 2019 exceeds RMB 120,000 and whose additional tax liability exceeds RMB 400. This includes cases where income is derived from two or more sources of comprehensive income, resulting in a higher applicable tax rate after aggregation, thereby causing the amount of tax already withheld to be less than the annual tax liability.

IV. Tax-Deductible Expenses Eligible for Deduction

The following pre-tax deductions that were either not declared or under‑declared may be claimed or supplemented by taxpayers during the annual tax reconciliation period:

(1) Qualified major medical expenses incurred by the taxpayer, their spouse, and their minor children during the 2019 tax year;

(2) Taxpayers who, during the 2019 tax year, failed to declare or did not fully claim the special additional deductions for children’s education, continuing education, housing loan interest, housing rent, and eldercare, as well as the standard deduction, special deductions, and other deductions prescribed by law;

(3) Qualified charitable donations made by the taxpayer during the 2019 tax year.

V. Processing Time

The period for taxpayers to file their 2019 individual income tax final settlement is from March 1 to June 30, 2020. Taxpayers who do not have a domicile in China and depart the country before March 1, 2020, may complete their annual tax settlement prior to departure.

VI. Processing Method

Taxpayers may independently choose one of the following processing methods:

(1) File the annual tax reconciliation yourself.

(2) The withholding agent may handle the annual tax settlement on behalf of the taxpayer by virtue of wages and salaries or continuously received labor compensation income. If a taxpayer requests the withholding agent to act on their behalf, the withholding agent shall either handle the procedure itself or provide training and guidance to enable the taxpayer to file the annual tax return and claim refunds or make additional payments through the online tax service platform (including the mobile Individual Income Tax APP). Where the withholding agent undertakes the processing on the taxpayer’s behalf, the taxpayer must, by April 30, 2020, conoffice this arrangement in writing with the withholding agent, supplementarily submit information regarding comprehensive income earned outside the taxpayer’s current employer in 2019, relevant deductions, and any applicable tax preferences, and assume responsibility for the authenticity, accuracy, and completeness of the information provided.

(3) Where a tax‑related professional service agency or other entity or individual (hereinafter referred to as the “trustee”) is entrusted to handle the matter, the trustee shall enter into an authorization letter with the taxpayer.

After the withholding agent or the entrusted entity completes the annual tax reconciliation for the taxpayer, it shall promptly notify the taxpayer of the outcome. If the taxpayer discovers errors in the submitted information, they may request the withholding agent or the entrusted entity to file a corrected return, or they may file the corrected return themselves.

VII. Application Channels

To facilitate taxpayers, the tax authorities provide efficient and convenient online tax‑filing channels. Taxpayers are encouraged to prioritize filing their annual individual income tax settlement through the online tax bureau, including the mobile Individual Income Tax APP; the tax authorities will, in accordance with regulations, offer a pre‑filled return service. For those who find it inconvenient to file via these methods, they may also submit their returns by mail or visit a tax service hall.

For those who choose to file by mail, taxpayers must send their tax return to the tax authority designated in the public notice issued by the tax bureau of the province, autonomous region, municipality directly under the central government, or separately listed city where the taxpayer’s employer is located (or, if no employer exists, where the taxpayer’s household registration or habitual residence is situated).

VIII. Retention of Application Information and Documentation

When filing their annual tax reconciliation, taxpayers must, in addition to submitting the annual reconciliation return to the tax authorities, also complete and submit any relevant supplementary information as required if they need to amend their personal basic details or add new deductions or tax benefits. Taxpayers are responsible for carefully reviewing the information they provide to ensure it is true, accurate, and complete.

Taxpayers and withholding agents acting on their behalf for annual tax reconciliation are required to retain the annual tax reconciliation return, together with all relevant documentation pertaining to the taxpayer’s comprehensive income, deductions, taxes paid, or tax incentives, for a period of five years from the date the annual reconciliation period ends.

IX. Tax Authorities Accepting Annual Individual Income Tax Settlement Returns

In accordance with the principle of convenience and proximity, taxpayers who file their 2019 individual income tax settlement themselves or through an authorized representative shall submit their return to the tax authority having jurisdiction over the location of their employer. If a taxpayer is employed by two or more employers, they may choose to file with the tax authority having jurisdiction over the location of any one of those employers. If a taxpayer has no employer, they shall file with the tax authority having jurisdiction over their registered domicile or their habitual residence.

If a withholding agent handles the annual tax settlement for a taxpayer during the annual settlement period, the return shall be filed with the tax authority having jurisdiction over the withholding agent.

X. Tax Refunds and Additional Tax Payments in the Annual Settlement

When applying for an annual individual income tax settlement refund, taxpayers shall provide a qualified bank account opened within China. After review in accordance with applicable regulations, the tax authorities shall process the refund through the local treasury in accordance with relevant treasury management provisions, at the location of the tax authority that accepted the annual settlement return as specified in Article 9 of this announcement (i.e., the place of final tax settlement). If a taxpayer fails to provide a valid bank account or submits inaccurate information, the tax authorities shall notify the taxpayer to make corrections; upon making the required corrections, the refund shall be processed in accordance with the law.

To facilitate tax refunds, taxpayers whose 2019 comprehensive income did not exceed RMB 60,000 and who have already paid individual income tax in advance may use the convenient online refund service provided by the tax authorities through the Online Tax Service Platform (including the Individual Income Tax Mobile App). From March 1 to May 31, 2020, such taxpayers can file their annual tax reconciliation and claim a refund using a simplified return form.

Taxpayers who are required to pay additional tax as part of their annual tax reconciliation may make payments via online banking, POS terminals at tax service halls, bank counters, or non-bank payment institutions.

XI. Annual Tax Settlement Services

Tax authorities have introduced a series of measures to optimize taxpayer services, strengthening policy clarification and operational guidance for the annual tax settlement. They have developed tailored tax‑filing guides that explain policy interpretations, technical terms, and procedural steps in plain language, while providing timely reminders through multiple channels and formats. Additionally, they offer tax‑related advisory services via the Individual Income Tax mobile app, the official website, and the 12366 taxpayer service hotline, helping taxpayers resolve complex issues encountered during the annual tax settlement and proactively addressing their concerns.

To guide taxpayers through the annual tax settlement in a reasonable and orderly manner and to prevent congestion, the competent tax authorities will issue notifications in batches and phases, reminding taxpayers to complete the process within designated time periods. Taxpayers who wish to file earlier or later may make an appointment with the tax authorities or submit their return through the online tax service platform (including the mobile Individual Income Tax APP) during the legally prescribed annual tax‑settlement period. For taxpayers who face particular difficulties in completing the annual tax settlement on their own due to age, mobility issues, or other reasons, they may apply for personalized assistance, which the tax authorities will provide.

This is hereby announced.

Announcement of the State Taxation Administration on Revising the “Payment Declaration Form for the Employment Guarantee Fund for Persons with Disabilities”

In accordance with the “Notice on Issuing the Comprehensive Plan for Improving the System of Employment Security Funds for Persons with Disabilities and Further Promoting Their Employment” (NDRC Price Regulation [2019] No. 2015), jointly issued by the National Development and Reform Commission, the Ministry of Finance, the Ministry of Civil Affairs, the Ministry of Human Resources and Social Security, the State Taxation Administration, and the China Disabled Persons’ Federation, the State Taxation Administration has revised the form and instructions for the “Payment Declaration Form for the Employment Security Fund for Persons with Disabilities.”

Effective January 1, 2020, this Announcement shall apply to payers who, in accordance with the relevant regulations, file and remit the Employment Security Fund for Persons with Disabilities. Upon the entry into force of the declaration forms issued under this Announcement, the SB06 “Employment Security Fund for Persons with Disabilities Payment Declaration Form,” as set forth in the Annex to the State Taxation Administration’s Announcement No. 98 of 2015 (as amended by State Taxation Administration Announcement No. 31 of 2018), shall be concurrently repealed.

Announcement of the State Taxation Administration on Revising Certain Individual Income Tax Return Forms

To ensure the smooth implementation of the annual individual income tax settlement for comprehensive income, in accordance with the Individual Income Tax Law, its Implementing Regulations, and other relevant tax laws and regulations, we hereby issue the partially revised individual income tax return forms and their instructions for completion, and announce the following matters:

I. To facilitate taxpayers’ understanding, the provincial (autonomous region, municipal) tax authorities may, based on local conditions, supplement or amend the prompts and explanatory notes on the tax return forms.

II. This Announcement shall take effect as of January 1, 2020. In particular, when taxpayers file their 2019 individual income tax final settlement and clearance and report tax-exempt income, they are temporarily not required to submit the “Report Form for Individual Income Tax Exemptions and Reductions.” Annexes 4 and 5 to the “Announcement of the State Taxation Administration on the Issuance of Individual Income Tax Return Forms” (No. 21 of 2013), the “Announcement of the State Taxation Administration on the Issuance of Individual Income Tax Return Forms Related to Business and Production Income and Tax Exemptions and Reductions” (No. 28 of 2015), and the “Announcement of the State Taxation Administration on the Revision of Individual Income Tax Return Forms” (No. 7 of 2019), including the “Individual Income Tax Return for Business Income (Form A),” are hereby repealed simultaneously.

Announcement of the State Taxation Administration on Further Improving the Regulatory System for Tax-related Professional Services

In order to thoroughly implement the State Council’s requirements for the “delegation, regulation, and service” reform and to optimize the tax-related business environment, the following matters concerning the further improvement of the regulatory system for tax‑related professional services are hereby announced:

I. Streamlining the Collection of Information on Tax-related Professional Services

(1) Reduce the number of information‑collection items for tax‑related professional services. Tax‑related professional service providers are no longer required to submit information on “agreement amount,” “summary of the service agreement,” “amount of taxes involved for the client,” and “summary of the engagement report.”

(2) Extension of the deadline for collecting information on special‑purpose engagement reports. The deadline for tax offices, accounting offices, and law offices to submit information on special‑purpose engagement reports is extended from within one month after the completion of the engagement to no later than March 31 of the following year.

(3) Relax the requirements for submitting information on personnel engaged in tax-related services. Tax‑related professional service institutions may, based on their specific business characteristics, determine the specific scope of personnel within their organization who are required to submit “basic information on personnel engaged in tax‑related services.”

(4) Optimize the reporting criteria for business classification. If tax‑related professional service providers are unable to distinguish among the three categories of tax‑related services—“general tax consultation,” “professional tax advisory,” and “tax planning”—they may report such services under “general tax consultation.” Furthermore, where a provider actually renders tax‑return filing services but does not sign the tax return itself, such services may also be reported under “general tax consultation.”

(5) Addition of an option for submitting tax‑related professional service information by head offices and branch institutions. Where a tax‑related professional service institution establishes branches (including sub‑offices and subsidiaries) across different regions that do not have legal person status, it may either designate the head office to aggregate and submit the branch institutions’ tax‑related professional service information to the competent tax authority at the branch’s location, or allow each branch institution to independently submit such information to the competent tax authority at its own location.

II. Improving the Credit Review Mechanism for Tax-related Professional Services

(1) Tax-related professional service institutions and tax service personnel who dispute their credit scores, credit ratings, or adverse practice records may, within 12 months of the generation of such records or the determination of the relevant outcomes, apply to the tax authorities for a review.

Tax authorities shall, in accordance with the principles of inclusiveness and prudence, complete the review within 30 working days, render a review decision, and provide an inquiry service.

(2) Tax-related professional service institutions and tax service personnel who object to the tax authorities’ intention to include them on the List of Discredited Tax Service Providers shall, within ten working days from the date of receipt of the “Notice of Tax Matters,” submit their grounds for rebuttal and apply to the tax authorities for a review.

Tax authorities shall, in accordance with the principles of inclusiveness and prudence, complete the review within ten working days, issue a review conclusion, and provide an inquiry service.

(3) Tax authorities shall provide convenient channels, such as the electronic tax bureau, for tax-related professional service agencies and tax service personnel to apply for review.

III. Standardizing Tax-Related Professional Service Interviews

If a tax‑related professional service agency or its personnel engaged in tax‑related services falls under any of the circumstances listed in Article 14 of the Measures for the Supervision of Tax‑Related Professional Services (Trial) (issued by State Taxation Administration Announcement No. 13 of 2017, as amended by Announcement No. 43 of 2019), and the tax authority deems it necessary to conduct an interview, it shall, in advance, serve the party concerned with a Notice of Tax‑Related Matters, specifying the time, place, and purpose of the interview. Upon arrival at the designated venue, the interview shall be conducted in the presence of no fewer than two tax officials. The interviewing officials shall keep detailed records of the proceedings and may, where appropriate, make audio‑visual recordings.

IV. Relevant Requirements

Tax‑related professional service institutions and personnel engaged in tax services shall strictly comply with tax laws and regulations as well as the provisions of the Measures for the Supervision of Tax‑Related Professional Services (Trial), and shall not exploit tax reforms to impose arbitrary fees under spurious pretexts, nor use the tax‑related information at their disposal to seek improper economic gains, nor solicit business in tax service halls in a manner that disrupts the orderly conduct of tax‑filing procedures, nor solicit business in the name of tax authorities in ways that infringe upon the legitimate rights and interests of taxpayers.

Tax authorities shall strictly enforce their regulatory responsibilities for tax-related professional services and promptly investigate and address complaints and reports concerning such services. Where violations that disrupt the orderly implementation of tax reforms, including individual income tax final settlement, are verified, appropriate measures shall be taken, such as downgrading credit ratings or recording them in credit files, and suspending the acceptance of tax-related matters handled on behalf of the offending party, to ensure rigorous enforcement.

V. Effective Date

Items (1) through (4) of Article 1 and Article 4 of this Announcement shall take effect as of January 1, 2020. Accordingly, the following provisions are amended: Paragraph 3 of Article 9 of the Measures for the Supervision of Tax‑Related Professional Services (Trial) (issued by State Taxation Administration Announcement No. 13 of 2017); Paragraph 2 of Article 2 and the instructions for completing Annex 2, “Data Collection Form for Elements of Tax‑Related Professional Service Agreements,” as well as the instructions for completing Annex 3, “Annual Overview of Tax‑Related Professional Services,” and Annex 4, “Data Collection Form for Elements of Specialized Business Reports,” of the State Taxation Administration Announcement No. 49 of 2017; and the explanations regarding the scoring and deduction criteria and rules for indicators 070301 and 070302 in the Appendix, “Credit Score Indicator System and Scoring Rules for Tax‑Related Professional Service Institutions,” of the Measures for the Credit Evaluation of Tax‑Related Professional Services (Trial) (issued by State Taxation Administration Announcement No. 48 of 2017). Items (5) of Article 1, Article 2, and Article 3 of this Announcement shall take effect as of April 1, 2020. At the same time, Paragraphs 1 and 2 of Article 15 of the Measures for the Credit Evaluation of Tax‑Related Professional Services (Trial) (issued by State Taxation Administration Announcement No. 48 of 2017) are hereby repealed.

This is hereby announced.

Litigation & Arbitration

The Measures for the Administration of Food Production Licensing have been promulgated and will take effect on March 1.

On January 3, the State Administration for Market Regulation published the Measures for the Administration of Food Production Licensing (hereinafter referred to as the “Measures”) on its official website, which will take effect on March 1, 2020.

The Measures stipulate that applications for a food production license shall be submitted under the following food categories: grain processing products, edible oils, fats and their products, seasonings, meat products, dairy products, beverages, convenience foods, biscuits, canned foods, frozen drinks, quick-frozen foods, potato and puffed foods, candy products, tea and related products, alcoholic beverages, vegetable products, fruit products, fried snacks and nut products, egg products, cocoa and roasted coffee products, sugar, aquatic products, starch and starch products, pastries, soybean products, bee products, health foods, foods for special medical purposes, infant formula, special dietary foods, and other foods. The State Administration for Market Regulation may adjust these food categories as necessary to meet the requirements of regulatory oversight.

The Measures stipulate that an application for a food production license shall include premises suitable for the types and quantities of foods to be produced, covering food raw‑material handling, processing, packaging, and storage; such premises must be kept clean and maintained at the prescribed distance from toxic or hazardous areas and other sources of contamination. In addition, the applicant must possess production equipment or facilities commensurate with the types and quantities of foods produced, along with appropriate equipment or facilities for disinfection, changing, washing, lighting, ventilation, corrosion prevention, dust control, fly control, rodent control, pest control, laundry, wastewater treatment, and the storage of waste and refuse. For health food production processes involving pre‑treatment steps such as raw‑material extraction and purification, the applicant must also have corresponding pre‑processing equipment or facilities tailored to the specific products and volumes being manufactured. Furthermore, the applicant must employ full‑time or part‑time food safety professionals and management personnel, and establish regulations and procedures to ensure food safety. A rational layout of equipment and process flow is required to prevent cross‑contamination between foods awaiting processing and ready‑to‑eat foods, as well as between raw materials and finished products, and to avoid contact between food and toxic or unclean substances. Other conditions prescribed by laws and regulations must also be met.

In addition, applications for production licenses for special foods such as health foods, foods for special medical purposes, and infant formula shall also submit documentation of a production quality management system appropriate to the food being produced, as well as relevant registration and filing documents.

The Measures stipulate that any entity engaging in the production of food additives shall obtain a food additive production license in accordance with the law. An application for such a license must be accompanied by premises, production equipment or facilities, food safety management personnel, specialized technical staff, and management systems that are commensurate with the specific type of food additive being produced.

The Measures also stipulate that, except where an administrative licensing decision may be made on the spot, local market supervision and administration departments at or above the county level shall, within 10 working days from the date of acceptance of the application, make a decision on whether to grant the administrative license. If an extension of the time limit is required due to special circumstances, it may be extended by an additional five working days upon approval by the head of the administrative agency, and the reasons for the extension shall be communicated to the applicant.

Local market supervision and administration departments at or above the county level shall, based on the review of application materials and on-site inspections, issue a decision granting a production license to applicants who meet the requirements, and shall, within five working days from the date of such decision, issue the food production license to the applicant. For applications that do not meet the requirements, they shall promptly issue a written decision denying the license, stating the reasons therefor, and shall inform the applicant of their statutory right to apply for administrative reconsideration or to bring an administrative lawsuit.

The Measures also set forth clear provisions regarding license administration, as well as matters such as amendments, renewals, and cancellations.

Supreme People’s Court: A grace period of one to three months may be granted to persons subject to enforcement who have lost trust.

On January 2, the Supreme People’s Court held a press conference to release the “Opinions of the Supreme People’s Court on Further Strengthening the Principle of Good‑Faith and Civilized Enforcement in Enforcement Work” (hereinafter referred to as the “Good‑Faith and Civilized Enforcement Opinions”) and the “Opinions of the Supreme People’s Court, the Ministry of Justice, and the All China Lawyers Association on Deepening the Participation of Lawyers in the Enforcement Work of the People’s Courts” (hereinafter referred to as the “Opinions on Lawyers’ Participation in Enforcement”).

In response to the issues of excessive and arbitrary asset seizures that have arisen in some courts in practice, the “Opinions on Benevolent and Civilized Enforcement” explicitly stipulate that effective measures must be taken to resolutely rectify such practices, while ensuring smooth channels for the public to report problems. Relevant leads shall be subject to a “dual investigation per case,” and any non‑compliant conduct shall be dealt with strictly in accordance with the law. For large‑scale real estate, if its value clearly exceeds the amount of the creditor’s claim, only the portion corresponding to that excess should be seized; if the property is held under a single title certificate and cannot be divided for seizure, the people’s court shall, when necessary, actively coordinate with the relevant departments to arrange for partitioned registration and partitioned seizure.

Building on the existing provisions of judicial interpretations, the “Opinions on Good‑Faith and Civilized Enforcement” has added a circumstance permitting direct sale. If the proceeds from such a direct sale are sufficient to satisfy the debt being enforced and do not prejudice the interests of third parties, the court may authorize a direct sale without resorting to auction, even if the enforcing creditor objects. Furthermore, if the judgment debtor contends that the court’s appraisal value is too low and that an auction would harm their interests, and requests to sell the property themselves at a price no lower than the appraised value, the people’s court, upon review, may grant such permission provided it finds no evidence of collusion between the judgment debtor and others to deliberately undervalue the asset during the appraisal process and then sell it at that artificially low price.

The “Opinions on Civilized Enforcement in Good Faith” stipulate that, taking into account the specific circumstances of each case, people’s courts may grant a grace period of one to three months to persons subject to enforcement measures who have been decided upon for such measures. If, during this grace period, they voluntarily perform the obligations set forth in the legally effective documents, no further enforcement measures shall be imposed. Furthermore, where an individual subject to consumption restrictions needs to travel urgently out of town due to their own or a close relative’s serious illness, or in the event of a close relative’s death, the people’s court, in consideration of humanitarian concerns, shall temporarily lift the restriction on their use of air travel and high-speed rail.

The “Opinions on Lawyers’ Participation in Enforcement” sets out in detail how to fully leverage the vital role of lawyers in enforcement proceedings, calling for their active involvement in resolving disputes and conflicts; in property preservation, enforcement investigations, asset control, and asset disposal; in preventing and combating attempts to evade enforcement; in participating in distribution and in transitioning enforcement proceedings into bankruptcy proceedings; in concluding the current enforcement phase and providing enforcement remedies; and in promoting public awareness of the rule of law in enforcement.

The “Opinions on Lawyers’ Participation in Enforcement” stipulate that safeguards for lawyers’ involvement in enforcement proceedings must be effectively strengthened. People’s courts shall ensure parties’ right to legally retain lawyers to represent them in enforcement cases; fully implement the requirements of judicial transparency, maintain open channels for routine communication and the expression of views, and foster a new, constructive, and mutually beneficial relationship that enables lawyers to play their role; and develop “micro‑courts” and “smart courts,” establishing a convenient and efficient litigation service system that provides parties and their counsel with one‑stop access to enforcement information and more streamlined channels for contacting judges.

The Ministry of Culture and Tourism has issued the Measures for the Administration of National-Level Tourist Resorts.

Recently, the Ministry of Culture and Tourism issued the Measures for the Administration of National-Level Tourist Resorts (hereinafter referred to as the “Measures”). The formulation and promulgation of these Measures represent an important step in implementing the spirit of the Fourth Plenary Session of the 19th CPC Central Committee and in improving the institutional framework governing tourist resorts. They also constitute an essential requirement for fostering high-quality development of tourist resorts and advancing the transformation and upgrading of the tourism industry.

The Measures uphold the principle of “promoting both development and quality,” and, by standardizing the designation and management of national-level tourist resorts, seek to encourage these resorts to continually diversify their vacation and leisure offerings, enhance service and management standards, sustainably elevate their level of development and brand influence, and better meet the growing public demand for vacation, leisure, and tourism.

The Measures stipulate that the designation and management of national-level tourist resorts shall adhere to the principles of openness, fairness, and impartiality, and follow the guidelines of voluntary application, standardized assessment, dynamic oversight, and demonstration‑driven leadership. With respect to eligibility criteria, in addition to meeting the requirements of the national standard “Classification of Tourist Resorts” (GB/T 26358) and its related detailed rules, applicants must also demonstrate, from the perspective of tourists, a well‑established public tourism information service system, high overall visitor satisfaction, and significant national recognition and brand influence. As for the assessment process, no preparatory phase is provided; instead, compliance with the relevant standards and detailed rules serves as the basis for evaluation, conducted through the following sequence: document review, preliminary assessment, on-site inspection, deliberation, public announcement, and official promulgation. Notably, on-site inspections are carried out in the form of unannounced visits.

The Measures emphasize establishing a dynamic management mechanism characterized by both entry and exit, employing a combination of targeted reviews and random inspections, open audits and undercover visits, or commissioning third-party organizations to conduct social surveys and solicit feedback from tourists. In principle, a comprehensive review is conducted once every three years. For cases involving an incomplete public tourism information service system, the occurrence of tourism safety incidents resulting in liability, violations of core socialist values, or fraudulent practices during the application process, the relevant entities shall be subject to public criticism or have their rating revoked. Entities receiving public criticism must promptly and earnestly implement corrective measures, with a rectification period not exceeding one year in principle. Entities whose ratings are revoked may not apply for designation as a national-level tourist resort for a period of three years from the date of revocation.

The Measures stipulate that, through a variety of channels and mechanisms, national-level tourist resorts will receive support in areas such as the development of tourism infrastructure, public tourism services, brand building, and image promotion. Local authorities are encouraged to provide assistance and services in land use, financial support, talent recruitment, and marketing and promotion, thereby fostering a favorable environment for their development.

At present, China’s tourism industry is transitioning from a single‑focus sightseeing model to a diversified approach that equally emphasizes sightseeing, vacationing, and leisure. Promoting the development of tourist resorts is of great significance for optimizing the structure of tourism products and facilitating the transformation and upgrading of the sector. Since the establishment of the Ministry of Culture and Tourism, great efforts have been made to position the advancement of tourist resort development as a key priority for expanding new supply in the tourism market. On China Tourism Day this year, May 19, four national‑level tourist resorts were announced, marking the emergence of a new development paradigm nationwide: led by 30 national‑level resorts and supported by 453 provincial‑level resorts.

Going forward, the Ministry of Culture and Tourism will, in accordance with the Measures, carry out the designation of a new batch of national-level tourist resorts and issue standardized national-level resort logos and signage, thereby promoting quality improvement, capacity expansion, and upgrading of these resorts to better meet the evolving tourism consumption needs of the public.

The China Banking and Insurance Regulatory Commission has issued an amendment to the “Measures for the Implementation of Administrative Licensing Matters for Foreign-Invested Banks of the China Banking and Insurance Regulatory Commission.”

To thoroughly implement the decisions and arrangements of the 19th National Congress of the Communist Party of China on “promoting a new pattern of comprehensive opening-up,” and to further advance the opening-up of the banking sector, streamline administration and delegate power, and strengthen prudential regulation, the China Banking and Insurance Regulatory Commission recently revised and issued the Measures for the Implementation of Administrative Licensing Matters for Foreign‑Capital Banks of the China Banking and Insurance Regulatory Commission (hereinafter referred to as the “Measures”).

From November 8 to December 8, 2019, the China Banking and Insurance Regulatory Commission publicly solicited comments on the Measures (Draft for Comments), carefully reviewed feedback from all sectors of society, and fully incorporated scientifically sound and reasonable suggestions.

The main revisions to the Measures include: First, further advancing the lawful implementation of measures to open up the banking sector to foreign participation. The Measures are aligned with the Regulations on the Administration of Foreign‑Capital Banks, allowing foreign banks to establish both branches and wholly foreign‑owned corporate banks in China; abolishing the requirement that foreign banks meet a minimum total‑asset threshold to set up commercial operations in China; and broadening the scope of eligible Chinese majority shareholders for Sino‑foreign joint‑venture banks. Second, continuing to streamline administration, delegate power, integrate regulation with oversight, and optimize the business environment. The Measures further devolve or adjust authority over the approval of qualifications for certain directors and senior executives of foreign‑capital banks, as well as the approval process for branch openings; eliminate the approval requirement for the appointment of heads of management‑type sub‑branches; shorten the review periods for matters subject to two‑tier approval; and simplify certain application‑document requirements for foreign‑capital banks issuing bonds overseas. Third, strengthening prudential supervision. In line with the principle of national treatment, the Measures introduce corresponding requirements for equity management and anti‑money‑laundering and counter‑terrorist‑financing reviews in relevant licensing chapters, thereby reinforcing prudential oversight and revising the definition of “changes in shareholders.” Fourth, clarifying that “where the State Council has made separate provisions for administrative licensing matters in specific areas such as free trade pilot zones, those provisions shall prevail,” thus reserving policy space for the implementation of additional measures to streamline administration and delegate power in those areas.

The revised Measures will further advance a higher level of opening-up and encourage foreign‑owned banks to contribute to the high‑quality development of the economy and society. The China Banking and Insurance Regulatory Commission will continue to give equal weight to opening-up and prudent regulation, effectively guarding against financial risks while fostering the sound and steady development of the banking sector.

Interpretation of the New Forest Law: Clarifying Forest Ownership and Strengthening Property Rights Protection

On the 28th, the 15th Meeting of the Standing Committee of the 13th National People’s Congress adopted the newly revised Forest Law. The law will come into effect on July 1, 2020.

What impacts will the new Forest Law have on China’s forestry development and the building of an ecological civilization? How can we safeguard the legitimate rights and interests of forest‑management entities and motivate them to actively protect and develop forest resources? At a press conference held on the 28th by the General Office of the Standing Committee of the National People’s Congress, Wang Xiang, Deputy Director of the Economic Law Division of the Legislative Affairs Commission of the NPC Standing Committee; Wang Guanfang, Deputy Director of the Legislative Affairs Division of the Agriculture and Rural Affairs Committee of the NPC; and Li Shuxin, Second‑Level Inspector of the Office of the National Forestry and Grassland Administration, offered in‑depth interpretations.

At present, China’s forestry sector has shifted from a focus on timber production to an emphasis on ecological conservation, and from primarily supplying material goods to providing high‑quality ecological services that meet the diverse needs of society—ranging from economic and social development to ecological and cultural well‑being. “The guiding principle behind this revision of the Forest Law is crystal clear: to provide legal safeguards for ecological civilization and to ensure that forests can fulfill the people’s aspirations for a better life, encompassing material, cultural, and ecological dimensions,” said Wang Guanfang.

The new Forest Law specifically includes a provision designating Tree‑Planting Day, clearly setting March 12 as the annual Tree‑Planting Day. According to Wang Xiang, on February 23, 1979, the Standing Committee of the National People’s Congress adopted a resolution establishing March 12 as Tree‑Planting Day, aiming to mobilize people of all ethnic groups across the country to plant trees and carry out afforestation, thereby accelerating the greening of the motherland. Over the past four decades, China’s forest area, forest coverage, and forest stock volume have each roughly doubled, and the country now ranks first worldwide in its contribution to the global increase in vegetation.

“Incorporating provisions on Arbor Day into law is intended to further strengthen the public’s awareness of forest conservation and to foster a positive atmosphere in which all sectors of society and people across the country actively participate in tree planting and afforestation, thereby building a beautiful homeland,” he said. He added that this revision of the Forest Law has reinforced the responsibilities of governments at all levels and their relevant departments, as well as related enterprises and institutions and urban and rural residents, in carrying out afforestation and greening. It clarifies that governments at all levels, when organizing such efforts, must engage in scientific planning tailored to local conditions, optimize the composition of tree and forest species, encourage the use of native tree species and superior forest tree varieties, promote mixed‑species forests, and enhance the quality of afforestation and greening activities.

The new Forest Law also fully embodies the principle of “ecological priority and conservation first.” In the chapter on “Forest Protection,” it strengthens safeguards for natural forests, public-benefit forests, precious tree species, ancient and famous trees, and forest land, while refining systems for the scientific prevention and suppression of forest fires and for the control of forest pests and diseases. In response to the increasingly serious problem in practice of certain enterprises and institutions uprooting and transplanting trees, thereby damaging forest resources, the new Forest Law explicitly stipulates that such activities shall be governed as logging.

Other

The central bank has cut the reserve requirement ratio by 0.5 percentage points across the board, releasing over RMB 800 billion in liquidity.

To support the development of the real economy and reduce the actual cost of social financing, the People’s Bank of China announced on the 1st that it has decided to lower the reserve requirement ratio for financial institutions by 0.5 percentage points effective January 6, 2020 (excluding finance companies, financial leasing companies, and auto finance companies).

An official from the People’s Bank of China stated that this RRR cut is a comprehensive one, reflecting counter-cyclical adjustments and releasing over RMB 800 billion in long-term funds. It will effectively bolster financial institutions’ stable funding base for supporting the real economy, reduce their financing costs, and provide direct support to the real sector. Industry insiders noted that the RRR cut ensures reasonably ample liquidity, helping align growth in money supply, credit, and total social financing with economic development. It also creates a favorable monetary and financial environment for high-quality development and supply-side structural reform, while leveraging market-oriented reforms to smooth the transmission of monetary policy, thereby invigorating market entities, further enhancing the decisive role of the market in resource allocation, and supporting the development of the real economy.

The reduction in the reserve requirement ratio can increase the funding sources of financial institutions. According to a responsible official at the People’s Bank of China, under this comprehensive RRR cut, small and medium-sized banks—including city commercial banks operating solely within provincial administrative regions, rural commercial banks serving county‑level areas, rural cooperative banks, rural credit cooperatives, and village‑and‑town banks—will receive over RMB 120 billion in long-term funds, which will help strengthen their ability to serve small and micro enterprises and private businesses by staying rooted in their local markets and returning to their core functions. At the same time, this RRR cut is expected to reduce banks’ funding costs by approximately RMB 15 billion annually; through bank transmission, it will lower the real cost of social financing, particularly the financing costs faced by small and micro enterprises and private offices.

An official from the People’s Bank of China emphasized that this RRR cut is offset by the pre‑Spring Festival cash injection, ensuring that overall liquidity in the banking system remains broadly stable and remains flexible and appropriately accommodative. This measure is not an indiscriminate flood of liquidity; rather, it reflects a prudent and calibrated approach to counter‑cyclical policy adjustments, underscoring that the prudent monetary policy stance has not changed. The People’s Bank of China stated that it will continue to implement a prudent monetary policy, maintaining flexibility and appropriateness, avoiding excessive liquidity easing, balancing domestic and external factors, and ensuring reasonably ample liquidity. It will align the growth of money supply, credit, and total social financing with economic development, stimulate the vitality of market entities, and foster a favorable monetary and financial environment for high‑quality development and supply‑side structural reform.

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