JC Master Legal News Issue 911

Key Takeaways for This Issue

The China Securities Regulatory Commission has issued the revised Regulations on the Procedures for Formulating Securities and Futures Rules.

Recently, the China Securities Regulatory Commission issued the revised Regulations on the Procedures for Formulating Securities and Futures Rules (hereinafter referred to as the “Regulations”), which will take effect on April 13, 2020.

The Shanghai Stock Exchange has revised its Trading Rules, which will take effect on March 13, 2020.

On March 13, the SSE website issued an announcement stating that, in order to implement the relevant provisions and requirements of the new Securities Law regarding the securities trading system, and with the approval of the China Securities Regulatory Commission, the Shanghai Stock Exchange has revised the “Shanghai Stock Exchange Trading Rules” (hereinafter referred to as the “Trading Rules”), which will take effect from March 13, 2020.

The State Taxation Administration has released the latest edition of the “Guidance on Tax and Fee Preferential Policies Supporting Epidemic Prevention and Control and Economic and Social Development.”

Recently, the State Taxation Administration released a new edition of the “Guidance on Tax and Fee Preferential Policies Supporting Epidemic Prevention and Control and Economic and Social Development,” providing detailed explanations for 17 policies across four key areas—supporting prevention and treatment, ensuring supply of materials, encouraging charitable donations, and facilitating the resumption of work and production—so as to help taxpayers and payers better understand and promptly benefit from the newly introduced tax and fee preferential measures.

The State Council has reformed the land management system, granting greater autonomy to provincial-level people’s governments.

With the approval of Premier Li Keqiang, the State Council recently issued the “Decision on Authorizing and Delegating Land-Use Approval Powers.”

The General Office of the CPC Central Committee has issued the “Regulations on the Principal Responsibility of Party Committees (Party Leading Groups) for Comprehensively Strengthening Party Governance.”

Recently, the General Office of the CPC Central Committee issued the “Regulations on the Principal Responsibility of Party Committees (Party Groups) for Comprehensively Strengthening Party Governance” (hereinafter referred to as the “Regulations”) and circulated a notice requiring all regions and departments to conscientiously implement them.

Table of Contents

Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission has issued the revised Regulations on the Procedures for Formulating Securities and Futures Rules.

The China Securities Regulatory Commission has officially lifted the foreign ownership cap on securities offices.

The China Securities Regulatory Commission and the Supreme People’s Court have established an online mechanism for connecting litigation and mediation in securities and futures disputes.

The China Banking and Insurance Regulatory Commission has issued the “Notice on Further Strengthening Financial and Insurance Support for Poverty Alleviation in the Deeply Impoverished Areas of the ‘Three Regions and Three Prefectures’.”

The reform of the targeted issuance system in the New Third Board market is beginning to yield results.

Corporate & Commercial

The Shanghai Stock Exchange has revised its Trading Rules, which will take effect on March 13, 2020.

Forty-three companies have released their first-quarter earnings forecasts, with online entertainment offices posting particularly strong results.

The central bank reported that preferential loans totaling RMB 182.1 billion have been disbursed, with an effective financing cost of 1.28%.

In February, automobile production and sales posted a sharp decline.

Multiple manufacturers are vying to establish a foothold in the Wi‑Fi 6 industry chain.

Taxation

The State Taxation Administration has released the latest edition of the “Guidance on Tax and Fee Preferential Policies Supporting Epidemic Prevention and Control and Economic and Social Development.”

Tax Big Data Supports the Resumption of Work and Production in the Yangtze River Delta

Taxes, fees, energy costs, and transportation expenses have all been reduced, providing targeted support to small and micro enterprises.

The State Taxation Administration and 22 other departments have jointly issued guidelines to boost consumption expansion and quality improvement.

Ministry of Finance: This year, a pilot program will be launched to publicly disclose procurement intentions.

Litigation & Arbitration

The State Council has reformed the land management system, granting greater autonomy to provincial-level people’s governments.

The Supreme People’s Court has issued the “Key Tasks for Judicial Reform in the People’s Courts in 2020.”

Maliciously registering the “Huoshenshan” trademark: The Market Supervision Administration of Chaoyang District, Beijing, imposed the maximum penalty of RMB 100,000.

The Supreme People’s Court has accepted the appeal in Bull Group’s 500-million-yuan patent litigation case and remanded it for retrial.

China Wildlife Conservation Association Penalized for Illegally Establishing Branch Offices

Other

The General Office of the CPC Central Committee has issued the “Regulations on the Principal Responsibility of Party Committees (Party Leading Groups) for Comprehensively Strengthening Party Governance.”

Finance & Capital Markets

The China Securities Regulatory Commission has issued the revised Regulations on the Procedures for Formulating Securities and Futures Rules.

Recently, the China Securities Regulatory Commission issued the revised Regulations on the Procedures for Formulating Securities and Futures Rules (hereinafter referred to as the “Regulations”), which will take effect on April 13, 2020.

The China Securities Regulatory Commission (CSRC) attaches great importance to the development of the legislative and institutional framework for securities and futures regulation. As early as 2003, it issued the “Provisions on the Procedures for Formulating Securities and Futures Regulations (Trial),” which were subsequently formalized into the “Regulations” in 2008. Since then, the CSRC has further promulgated documents such as the “Trial Rules on Soliciting Public Comments on Draft Securities and Futures Regulations” and the “Notice on Further Improving the Mechanisms for Drafting, Reviewing, and Formulating Regulatory and Normative Documents.” Over the more than ten years since the implementation of the “Regulations,” both the Legislation Law and the Regulations on the Procedures for Formulating Regulations (hereinafter referred to as the “Regulations”) have been amended in recent years. Meanwhile, the capital market has undergone significant changes, posing new demands on legislative work, including the formulation and revision of relevant regulations. In response, the CSRC has implemented the relevant provisions of the Legislation Law and the Regulations, drawing on a thorough review of past experience and taking into account the distinctive characteristics of capital market legislation. Accordingly, it undertook a revision and refinement of the “Regulations” and, from October 25 to November 24, 2019, publicly solicited comments from the general public.

This revision, apart from splitting the original “Drafting and Review” chapter into two separate chapters—“Drafting” and “Review”—retains the existing structural framework. In terms of the text, the number of articles has been increased from 40 to 41, with 28 articles amended and 5 new articles added. The main revisions include: First, strengthening leadership over legislative work. For example, the formulation of regulations must implement the Party’s guidelines, policies, and decisions; annual regulatory drafting plans must be approved, and provisions are introduced to standardize the ad hoc addition of new regulatory items. Second, amending and supplementing the text in accordance with the requirements of the Regulations. For instance, it is emphasized that regulatory drafting must comply with higher-level laws; annual regulatory drafting plans must be made public; drafting departments are required to solicit public comments; where regulations involve significant adjustments to interests, feasibility studies and consultations shall be conducted, with hearings held when necessary; during the review of regulations, legal affairs bodies may solicit public input; and in cases of substantial disagreement, legal affairs bodies shall organize expert deliberations and research. Third, drawing on practical experience to refine the Association’s legislative procedures and mechanisms. For example, it is stipulated that important or comprehensive regulations may be drafted by the legal affairs body or by a specially established working group jointly responsible for drafting; the fair‑competition review system is elevated to the regulatory level; and the responsibilities of legal affairs bodies in reviewing regulations are clarified, further enriching the range of review measures and tools.

As a “regulation” within the category of “regulations,” the Regulations have systematically revised and improved the procedures for enacting, amending, repealing, and interpreting securities and futures regulations, thereby constituting an important component of the effort to refine the capital market’s foundational institutional framework. The implementation of these Regulations will help to thoroughly uphold the principles of democratic and scientific lawmaking, further standardize legislative activities such as the drafting and amendment of regulations, ensure the quality of regulatory drafting and review, and elevate the overall level of legislation in the securities and futures sectors.

The China Securities Regulatory Commission has officially lifted the foreign ownership cap on securities offices.

In accordance with the unified national plan for opening up the financial sector and in implementation of the requirements of the Phase One China–U.S. Economic and Trade Agreement, and following comprehensive deliberation, the restrictions on foreign ownership limits in securities companies will be lifted effective April 1, 2020. Eligible overseas investors may, in compliance with applicable laws and regulations, relevant provisions of the China Securities Regulatory Commission, and pertinent service guidelines, submit applications, in accordance with the law, to establish a securities company or to change the company’s actual controller.

Going forward, the China Securities Regulatory Commission will continue to steadfastly implement the country’s overarching strategy of opening up to the outside world, vigorously advance the internationalization of the capital market, and ensure the meticulous execution of all specific measures related to opening-up. It will also continue to conduct, in accordance with the law, in compliance, and with high efficiency, the review and approval processes for the establishment of joint‑venture or wholly foreign‑owned securities offices, as well as for changes in their ultimate controlling shareholders.

The China Securities Regulatory Commission and the Supreme People’s Court have established an online mechanism for connecting litigation and mediation in securities and futures disputes.

To support efforts to combat the COVID‑19 pandemic (hereinafter referred to as the “pandemic”) and to enable investors and market entities to resolve disputes in a cost‑effective and efficient manner, the Supreme People’s Court and the China Securities Regulatory Commission have recently earnestly implemented the spirit of the Fourth Plenary Session of the 19th CPC Central Committee and the important instructions of General Secretary Xi Jinping on accelerating the establishment of a multi‑tiered capital market system that effectively protects the legitimate rights and interests of investors and prioritizing non‑litigious dispute‑resolution mechanisms. In accordance with the relevant requirements set forth in the two institutions’ “Opinions on Comprehensively Promoting the Development of a Diversified Dispute‑Resolution Mechanism for Securities and Futures Disputes” (Fa [2018] No. 305) regarding the full utilization of online dispute‑resolution methods, they have jointly advanced the integration of data exchange and interconnectivity between the “People’s Courts Mediation Platform” (tiaojie.court.gov.cn, hereinafter referred to as the Court Mediation Platform) and the “China Investor Network Securities and Futures Online Dispute‑Resolution Platform” (www.investor.org.cn, hereinafter referred to as the Investor Network Platform), thereby establishing a coordinated, efficient, and convenient online litigation‑mediation linkage mechanism for securities and futures disputes.

At present, the court mediation platform has been connected to more than 2,800 courts at all levels nationwide, while the Investor Network platform hosts securities and futures mediation organizations (hereinafter referred to as “mediation organizations”) that cover all investment‑related sectors of the capital market and jurisdictions across the country. The integration of these two platforms enables online receipt of court‑assigned or court‑entrusted mediations, acceptance of investor mediation applications, selection of mediators, organization of mediation proceedings, and online submission for judicial conofficeation of mediation agreements.

On the one hand, when a party submits a case‑filing application to the people’s court, the court, through an inter‑agency coordination mechanism, either assigns or entrusts the case to a mediation organization—either prior to filing or after filing. The mediation organization then undertakes the mediation and, upon completion, reports the outcome to the court. If judicial conofficeation is required, the court conducts online judicial conofficeation of the mediation agreement; for cases where no settlement is reached, the court proceeds with the adjudication in accordance with applicable procedures. On the other hand, disputes that have been fully mediated by the mediation organization may, upon the parties’ request, be transferred online to the competent people’s court, which will then provide judicial conofficeation of the mediation agreement, thereby endowing it with enforceable legal effect. For investors, market institutions, and other parties, this enables them to complete the entire mediation process and obtain judicial conofficeation of the mediation agreement entirely online—without having to make a single in-person visit.

Recently, the Shanghai Financial Court, the Hangzhou Intermediate People’s Court, and mediation organizations including the China Securities Regulatory Commission’s Small and Medium Investor Service Center, the China Securities Investor Protection Fund Corporation, and the Zhejiang Securities Association have each leveraged the aforementioned mechanisms to conduct online litigation‑mediation linkage pilot projects. Two batches of false‑statement dispute cases that have already been concluded have successfully reached settlement agreements, with investors collectively receiving compensation totaling over RMB 3.2 million. The swift and proper resolution of these two sets of disputes marks the formal implementation of the online litigation‑mediation linkage mechanism, providing a model for future efforts by people’s courts and mediation bodies to carry out online litigation‑mediation coordination in securities and futures disputes.

Since the onset of the pandemic, in order to reduce mass gatherings and curb the spread of the virus, under the coordinated guidance of the China Securities Regulatory Commission, mediation organizations across the country have acted swiftly. While upholding the principle of resolving disputes in accordance with the law, they have vigorously promoted remote dispute‑resolution mechanisms, introducing measures such as “online mediation,” “remote communication,” and “online litigation‑mediation linkage,” thereby safeguarding investors’ legitimate rights and interests in a lawful and efficient manner. As of early March, these mediation bodies had processed more than 480 online mediation applications, successfully resolving over 310 of them. The achievements of the CSRC system in recent years—working in concert with people’s courts at all levels to advance the development of a diversified mechanism for resolving securities and futures disputes—have been fully applied and vividly demonstrated during this extraordinary period.

Establishing an online mechanism for the coordination of litigation and mediation in securities and futures disputes is a pragmatic measure and concrete implementation by the Supreme People’s Court and the China Securities Regulatory Commission (CSRC) to uphold the people-centered development philosophy and the fundamental strategy of governing the country according to law. This initiative will help reduce the costs of dispute resolution for investors, enhance the efficiency of dispute settlement, elevate the level of technology‑driven, information‑based regulatory oversight, and facilitate the resolution of disputes for investors and market participants during the COVID‑19 pandemic. Moving forward, with the strong support of the Supreme People’s Court and people’s courts at all levels, the CSRC will further streamline channels for investors to protect their rights, lower the costs of such protection, spare no effort in epidemic prevention and control, safeguard investors’ legitimate rights and interests in accordance with the law, and promote the stable and sound development of the capital market.

The China Banking and Insurance Regulatory Commission has issued the “Notice on Further Strengthening Financial and Insurance Support for Poverty Alleviation in the Deeply Impoverished Areas of the ‘Three Regions and Three Prefectures’.”

To earnestly implement the decisions and arrangements of the CPC Central Committee and the State Council and to concentrate resources on winning the battle against deep poverty, the China Banking and Insurance Regulatory Commission recently issued the “Notice on Further Intensifying Financial and Insurance Support for Poverty Alleviation in the Deeply Impoverished Areas of the ‘Three Regions and Three Prefectures’” (hereinafter referred to as the “Notice”), making specific arrangements and deployments to strengthen poverty‑alleviation efforts in these areas through the banking and insurance sectors.

The Notice states that the banking and insurance sectors must elevate their political awareness and earnestly assume their political responsibility to support poverty alleviation efforts in the deeply impoverished areas of the “Three Regions and Three Prefectures.” Focusing on key regions and vulnerable groups, they should significantly strengthen financial support for the 135 deeply impoverished counties within the “Three Regions and Three Prefectures,” particularly those that have not yet been removed from the poverty list and for populations that remain in poverty. Priority should be given to key areas of assistance, supporting the development of distinctive, competitive industries in these deeply impoverished areas. Efforts should also center on establishing long-term mechanisms to ensure sustainable poverty reduction, fully leveraging the risk‑mitigation role of insurance to prevent people from falling back into poverty due to illness or disaster. Finally, while coordinating COVID‑19 prevention and control with poverty alleviation, financial services must be strengthened to support epidemic response and the resumption of work and production in the deeply impoverished areas of the “Three Regions and Three Prefectures.”

The Notice emphasizes that banking and financial institutions should strive to ensure that, in the deeply impoverished areas of the “Three Regions and Three Prefectures,” the average growth rate of all types of loans exceeds the provincial loan‑growth rate, with the goal of achieving a substantial increase in the loan‑to‑deposit ratio in each deeply impoverished county by 2020. Furthermore, they are expected to achieve full coverage of insurance institutions in these counties, further refine the poverty‑alleviation insurance system centered on agricultural insurance and critical illness insurance, and work to enhance both the depth and density of insurance services.

The Notice states that banking and insurance regulatory authorities at all levels shall establish green channels for approval, support banking and insurance institutions in setting up branches in the deeply impoverished counties of the “Three Regions and Three Prefectures,” further raise the tolerance for non‑performing loans in these areas, give priority to launching pilot financial reforms—such as rural credit cooperative reform—in the “Three Regions and Three Prefectures,” and incorporate banks’ and insurers’ efforts to support poverty alleviation in these regions into their regulatory evaluation frameworks.

The Notice calls for further increasing the allocation of targeted poverty‑alleviation loans to the deeply impoverished areas of the “Three Regions and Three Prefectures,” thereby effectively improving living and working conditions. Credit criteria should be appropriately relaxed, financing costs striven to be reduced, and pricing based on the Loan Prime Rate (LPR) encouraged; where feasible, banking institutions may adopt even more favorable interest rates. Insurance‑based poverty alleviation efforts should be deepened, with a focus on providing adequate risk coverage. Banking and insurance institutions are to prioritize opening additional branches in the deeply impoverished areas of the “Three Regions and Three Prefectures, ensuring high‑quality, full‑coverage access to basic financial services. Active efforts should be made to secure support from local Party committees and governments, further refining mechanisms for sharing and compensating risks associated with poverty‑alleviation lending.

The Notice emphasizes the need to strengthen financial support for COVID‑19 prevention and control, to steadily resume work and production, and to give priority to restarting operations at leading poverty‑alleviation enterprises, poverty‑alleviation workshops, and key poverty‑reduction projects. It calls for the precise and standardized disbursement of micro‑credit loans for poverty alleviation, ensuring that impoverished households affected by the pandemic have access to the funds needed to restore and expand their production. Insurance institutions are required to streamline claims‑processing procedures for pandemic‑related losses, enhance service efficiency, and ensure timely and full compensation.

The Notice requires banking and insurance regulatory authorities at all levels to guide banking and insurance institutions to further increase resource allocation to the deeply impoverished areas of the “Three Regions and Three Prefectures,” to carefully summarize effective practices and successful experiences in the banking and insurance sectors’ efforts to support poverty alleviation in these areas, and to strengthen publicity and dissemination.

The reform of the targeted issuance system in the New Third Board market is beginning to yield results.

Pursuant to the China Securities Regulatory Commission’s “Decision on Amending the Measures for the Supervision and Administration of Non‑Listed Public Companies,” the National Equities Exchange and Quotations Company issued and implemented, on January 3, 2020, the revised Rules on Targeted Issuance of Shares on the National SME Share Transfer System. These rules have removed the cap of no more than 35 new shareholders per offering, permitted self‑conducted issuances as well as simultaneous targeted issuances upon listing, and streamlined the authorized issuance mechanism and the regulatory requirements for the use of raised funds. As a key component of the comprehensive deepening of reforms on the New Third Board, since the implementation of these targeted‑issuance reforms two months ago, financing efficiency in the market has improved, and the financing costs for listed companies have been reduced. As of March 12, ten listed companies had submitted applications for targeted issuances involving more than 35 new shareholders, while 70 listed companies have opted for self‑conducted targeted issuances. The effectiveness of the New Third Board’s targeted‑issuance reform in supporting the financing and development of small and medium‑sized enterprises and private offices is gradually becoming evident.

First, the cap on the number of investors in a single private placement has been lifted, thereby meeting the issuance needs of some listed companies and enhancing the efficiency of such offerings. In early March 2020, Juxing Media (833153) completed a private placement to 55 directors, supervisors, senior executives, and core employees, raising RMB 10.83 million. As of March 12, nine other listed companies had disclosed their private‑placement prospectuses, planning to issue shares to more than 35 new shareholders and raise a total of RMB 385 million. On average, each offering involved 59 investors, with external investors accounting for 27% of the total.

Second, the introduction of self‑underwritten offerings has reduced the overall financing costs for listed companies. As of March 12, a total of 70 listed companies had conducted private placements through self‑underwriting, accounting for 45.2% of all such offerings; in February alone, there were 34 such transactions, representing 51.5% of the month’s total. Self‑underwritten offerings not only shorten the time required to complete a private placement but also lower intermediary service fees. According to statistics, projects involving self‑underwritten offerings take an average of just four days from the convening of the shareholders’ meeting to the submission of application materials—about ten days less than conventional offerings.

Third, the division of responsibilities and coordination between self-regulatory review and administrative approval have been properly arranged to ensure the orderly conduct of targeted issuance activities in the New Third Board market. Following the reform of the targeted issuance regime, issuances involving no more than 200 investors have shifted from post‑issuance filing to pre‑issuance review by the National Equities Exchange and Quotations Company; for issuances exceeding 200 investors, after undergoing self‑regulatory review by the Company and receiving a corresponding regulatory opinion, the issuer must then complete the formal approval process. From January 3 to March 12, the National Equities Exchange and Quotations Company cumulatively completed reviews of 38 targeted issuances involving fewer than 200 investors. Additionally, it has concluded its review and issued a regulatory opinion letter on the first targeted issuance application submitted by Nanfang Pharmaceutical (831207), which involves more than 200 investors.

Going forward, the National Equities Exchange and Quotations Company will, drawing on its experience in reviewing targeted issuances on the New Third Board, continue to refine its issuance‑review framework, ensure the quality of self‑conducted review processes, further improve the coordination between self‑regulatory review and administrative approval, and steadily enhance the New Third Board’s financing capabilities, thereby supporting the development of small and medium-sized enterprises and the private sector.

Commercial & Corporate

The Shanghai Stock Exchange has revised its Trading Rules, which will take effect on March 13, 2020.

On March 13, the SSE website issued an announcement stating that, in order to implement the relevant provisions and requirements of the new Securities Law regarding the securities trading system, and with the approval of the China Securities Regulatory Commission, the Shanghai Stock Exchange has revised the “Shanghai Stock Exchange Trading Rules” (hereinafter referred to as the “Trading Rules”), which will take effect from March 13, 2020.

This revision of the provisions covers Articles 2.3, 5.1.1, 7.1, 7.4, 7.6, and 7.8 of the Trading Rules, and primarily addresses the inclusion of depositary receipts as tradable securities, the refinement of rules for handling trading irregularities and significant abnormal price fluctuations, and the clarification of requirements for the real-time dissemination of securities market quotations.

The Shanghai Stock Exchange stated that the “Notice on Revising the Shanghai Stock Exchange Trading Rules” (SSE Document No. [2018] 59), issued on August 6, 2018, and the “Notice on Amending Article 3.1.5 of the Shanghai Stock Exchange Trading Rules” (SSE Document No. [2020] 1), issued on January 7, 2020, are hereby repealed simultaneously.

The SSE also stated that, in light of market conditions and the technical readiness of member offices, certain provisions of the Trading Rules that had previously been deferred will remain temporarily suspended, with the specific implementation date to be announced separately by the SSE.

Forty-three companies have released their first-quarter earnings forecasts, with online entertainment offices posting particularly strong results.

As of March 11, 43 listed companies have released their first-quarter earnings forecasts, with 19 forecasting profit growth and several others reporting modest gains or continued profitability. By sector, listed companies in areas such as online entertainment have posted particularly strong results.

Game companies report strong financial results.

Among the 43 companies, nine reported year-on-year growth in earnings with a lower bound exceeding 100%, with Alpha Data standing out. According to the company’s performance forecast, first-quarter net profit is expected to range from RMB 70.3 million to RMB 73.1 million, representing a year-on-year increase of 393.92% to 413.59%. In addition, companies such as Sifangda and Yak Technology also posted strong first-quarter results.

In terms of net profit, one company has forecast a lower limit exceeding RMB 500 million, four companies fall within the RMB 100 million to RMB 500 million range, and 37 companies have forecast a lower limit below RMB 100 million. Yitong Shiji’s net profit lower limit is a loss of RMB 3.5 million, making it the only company among the 43 that may report a loss.

From an industry perspective, the online entertainment sector, led by Yaoji Technology, has delivered strong overall performance. Yaoji Technology forecasts that its net profit attributable to shareholders for the first quarter of 2020 will range from RMB 132 million to RMB 174 million, representing a year-on-year growth of 150% to 230%. Among the 43 listed companies that have already released their earnings forecasts, it ranks third, trailing only Aofei Data and Sifangda.

Will the first-quarter results of gaming stocks prove to be a flash in the pan, and is the surge in online entertainment demand sustainable?

Earlier, Kunlun Wanwei stated in its earnings forecast that, during the reporting period, the company’s various business segments performed strongly, with year-on-year and quarter-on-quarter growth across key operating metrics. In particular, Xianlai Interactive Entertainment and the domestic segment of GameArk saw significant increases in both active users and revenue, serving as major drivers of the company’s performance during this period.

Some enterprises have been significantly disrupted by the pandemic.

Some rejoice, while others grieve. The sudden COVID‑19 pandemic has indeed dealt a blow to the operations of certain listed companies. According to earnings forecasts, more than ten listed offices have reported that the pandemic has had a significant adverse impact on their financial performance.

Hanyu Group, ShuoBide, Runhe Materials, and Yitong Century are among the four companies with the most pronounced declines in performance; their lower-bound net profits have all fallen by more than 120% compared with the same period last year.

Yitong Century stated that, during the reporting period, the pandemic had a certain impact on the company’s network maintenance and network engineering businesses. Due to extended project timelines and a lower completion rate of maintenance work orders, it is expected to exert some pressure on the company’s first-quarter operating performance.

ShuoBide also acknowledged in its earnings forecast that delays in the resumption of production across the supply chain due to the pandemic have had a certain negative impact on the company’s operations and performance. For the first quarter of 2020, net profit attributable to shareholders of the listed company is expected to be approximately RMB 5 million to RMB 8 million, down 56.14% to 72.59% year over year.

However, a private-equity professional noted that the first-quarter earnings decline at some construction offices was within expectations. “Construction companies typically recognize revenue using the percentage-of-completion method; once the pandemic subsides, they can accelerate project schedules through overtime and other measures, thereby restoring revenue,” the professional said. He added that at such times, it’s crucial to conduct a thorough analysis of a company’s fundamentals to determine whether its performance has truly been hit by the pandemic or if the downturn was already underway prior to the crisis.

The central bank reported that preferential loans totaling RMB 182.1 billion have been disbursed, with an effective financing cost of 1.28%.

On March 15, Sun Guofeng, Director-General of the Monetary Policy Department of the People’s Bank of China, stated at a press conference held by the State Council Joint Prevention and Control Mechanism—focused on leveraging the role of relending and rediscount policies to support epidemic prevention and control as well as the resumption of work and production—that, as of March 13, the central bank had disbursed 184 billion yuan in special-purpose relending. Nine nationwide banks and local legal‑person banks in ten provinces and municipalities have extended preferential loans totaling 182.1 billion yuan to 4,708 key national and local enterprises, with an average of 40 million yuan per enterprise. The weighted average interest rate on these preferential loans stands at 2.56%; after a 50% fiscal subsidy, the effective financing cost for enterprises is approximately 1.28%, below the State Council’s target of no more than 1.6%.

On January 31, the People’s Bank of China announced the establishment of a 300 billion yuan special-purpose relending facility to support financial institutions in providing low-interest credit to key enterprises ensuring epidemic prevention and control.

Sun Guofeng stated that, at present, banks are disbursing preferential loans at a pace exceeding RMB 10 billion per day, with relatively rapid implementation. In terms of outcomes, according to incomplete statistics, from January 25 to March 10, the enterprises on the designated list produced 1.6 billion masks, 87.79 million protective suits, 4.21 million goggles, test kits sufficient for 10.29 million people, 4,143 negative-pressure ambulances, 2.49 million tons of vegetables, 3.74 million tons of grain, and 100,560 tons of meat. The special-purpose relending facility has also provided funding support for several key projects; for example, to facilitate the construction of additional beds at Beijing’s Xiaotangshan Hospital, a loan of RMB 330 million was swiftly extended to Beijing Urban Construction Group.

He stated that the shortage of medical supplies has eased significantly, and the supply of daily necessities is ample, with the policy measures for special-purpose loans yielding notable results.

In February, automobile production and sales posted a sharp decline.

On March 12, the China Association of Automobile Manufacturers (hereinafter referred to as “CAAM”) released its report on the economic performance of the automotive industry for February 2020. The data show that in February, China’s automobile production and sales reached 285,000 units and 310,000 units, respectively, down 83.9% month-on-month and 79.8% and 79.1% year-on-year, respectively.

In this regard, a relevant official from the China Association of Automobile Manufacturers (CAAM) analyzed that the automotive industry experienced a sharp decline in both production and sales in February. On the production side, slow resumption of work and disruptions in the supply of auto parts led to subdued output levels; on the consumption side, stagnant demand and severe constraints on market appetite are expected to weigh on the first-half automotive market.

　In response to the challenges and difficulties confronting the automotive industry, the China Association of Automobile Manufacturers has put forward five policy recommendations aimed at stabilizing growth and boosting consumption. These include accelerating the resumption of work and production for enterprises in Hubei Province; ensuring labor supply and improving logistics efficiency; implementing proactive measures to ease burdens, such as adjusting the “dual-credit” assessment and postponing compliance requirements for vehicles meeting National VI emission standards; optimizing and extending new‑energy vehicle subsidy policies to vigorously develop the NEV sector; and promptly introducing a series of policies designed to unlock consumer potential.

Xu Haidong, deputy secretary-general of the China Association of Automobile Manufacturers, believes that China’s auto industry hit bottom in February and is expected to rebound in March. “Under the current epidemic conditions, we project that the Chinese automotive sector will fully recover by the third quarter of this year.”

Multiple manufacturers are vying to establish a foothold in the Wi‑Fi 6 industry chain.

Recently, manufacturers including Samsung, Huawei, and Xiaomi have successively launched Wi‑Fi 6–compatible devices spanning smartphones, televisions, routers, and other categories. Industry analysts forecast that the Wi‑Fi 6 market will maintain robust growth, benefiting companies across the supply chain.

On March 11, MediaTek announced that it has recently teamed up with Samsung to launch the world’s first 8K‑resolution QLED TV equipped with a MediaTek‑customized Wi‑Fi 6 chip—the Samsung 8K QLED Y20 (Q950, Q900). This is currently the only 8K TV globally that supports Wi‑Fi 6.

Wi‑Fi 6 is the latest generation of wireless LAN technology, offering faster speeds, higher throughput, broader coverage, enhanced security, and lower latency compared to its predecessor, delivering a smoother, more seamless user experience.

In February, Xiaomi launched its new Xiaomi 10 series smartphones, which support Wi‑Fi 6 technology, and simultaneously introduced its first Wi‑Fi 6 router, the AX3600. Meanwhile, Huawei unveiled its Wi‑Fi 6+ router, the AX3 series, noting that it has submitted 240 technical proposals for the Wi‑Fi 6 standard, making it a major contributor to the specification. Huawei’s two end-to-end, in-house developed Wi‑Fi 6+ chips will be integrated into Huawei routers, smartphones, and other devices.

On March 11, Zhuoyi Technology stated on an interactive platform that its Wi‑Fi 6 routers are primarily supplied to brand-name customers such as Xiaomi and Huawei. The company’s Wi‑Fi 6 routers have delivered strong market performance, and the shipment volume of its collaborative products is expected to reach a new all-time high in 2020.

On March 7, Tianyi Shares announced that the company began mass shipments of Wi‑Fi 6 routers in the second half of 2019. To date, it has launched two Wi‑Fi 6 product models, and two additional models are currently undergoing the bidding process. Going forward, the company plans to introduce more product variants based on market demand, offering customers a range of options to meet their specific needs. At present, its Wi‑Fi 6 products serve domestic customers including China Telecom, China Mobile, and China Unicom, while efforts to expand its international customer base are also underway.

In addition, Wanlong Optoelectronics stated that its subsidiary, Yingmai Communications, is accelerating R&D and expects to launch Wi‑Fi 6‑compliant products in the first half of this year. On February 17, Skyworth Digital indicated that its Wi‑Fi 6 router products are currently in the development stage. Meanwhile, on January 22, Broadcom Integrated Systems announced on an interactive platform that its Wi‑Fi 6 products are also undergoing ongoing R&D, with progress aligning with expectations.

Currently, Wi‑Fi chip manufacturers are primarily Qualcomm, Broadcom, Huawei, and Espressif Systems. Home router and smart gateway providers include TP‑Link, Tenda, Xiaomi, ZTE, Huawei, Tianyi Shares, Ruijie Networks, Pingzhi Information, Tefa Information, and Gongjin Shares. As for wireless access point (AP) suppliers, the main players are Unisplendour Corporation (H3C), StarNet Ruijie (Ruijie Networks), Huawei, and ZTE.

Chips compliant with the Wi‑Fi 6 standard are expected to see global shipments surge from roughly 300 million units this year to over 2 billion units by 2022, with the market size far surpassing that of 5G baseband chips. 2020 may mark the beginning of a rapid increase in Wi‑Fi 6 adoption, as total device shipments supporting Wi‑Fi 6 are projected to grow from 116,000 units in 2019 to 58 million units in 2021.

Taxation TAXATATION

The State Taxation Administration has released the latest edition of the “Guidance on Tax and Fee Preferential Policies Supporting Epidemic Prevention and Control and Economic and Social Development.”

Since the onset of the COVID‑19 pandemic, the CPC Central Committee and the State Council have successively introduced three batches of tax and fee preferential policies to support epidemic prevention and control as well as the resumption of work and production. To further leverage the role of taxation in coordinating epidemic response with economic and social development, the State Taxation Administration recently issued a revised edition of the “Guidance on Tax and Fee Preferential Policies Supporting Epidemic Prevention and Control and Economic and Social Development.” The guidance provides detailed explanations for 17 specific policies across four key areas—supporting preventive measures and medical treatment, ensuring the supply of essential materials, encouraging charitable donations, and facilitating the resumption of work and production—helping taxpayers and payers better understand and promptly benefit from these newly introduced tax and fee incentives.

According to the head of the Policy and Regulations Department of the State Taxation Administration, the new edition of the “Guidance” is more comprehensive and offers more detailed explanations than the version issued in February, making it easier for taxpayers and payers to understand and apply. First, it incorporates new policies, including the second batch of temporary social security and medical insurance contribution reductions, as well as the third batch of measures such as temporary VAT exemptions for small-scale taxpayers. Second, the content has been refined; for example, under the provision “Exemption from VAT on income derived from providing public transportation services, lifestyle services, and express delivery and collection services for essential daily necessities,” tax‑item notes have been added to clarify the scope of public transportation services, lifestyle services, and express delivery and collection services. Third, a supplementary list has been included: under the provision “Exemption from VAT on income from transporting key materials for epidemic prevention and control,” a list of such priority‑assured materials has been appended.

— With regard to support for prevention, control, and treatment, temporary work allowances and bonuses for epidemic prevention and control that meet the standards set by the government are exempt from personal income tax; furthermore, personal income derived from medical and protective supplies provided by employers for the prevention of novel coronavirus pneumonia is also exempt from personal income tax.

— With regard to supporting material supply, the incremental input VAT credit of enterprises producing key materials for epidemic prevention and control is fully refunded; taxpayers’ income from transporting such key materials is exempt from VAT; taxpayers’ income from providing public transportation services, daily-life services, and express delivery and collection services for essential living supplies is also exempt from VAT; for enterprises producing key epidemic‑prevention materials that expand production capacity by purchasing equipment, the related expenses are allowed as a one‑time pre‑tax deduction for corporate income tax purposes; and customs duties are waived on materials directly imported by health authorities for the purpose of epidemic prevention and control.

— With regard to encouraging charitable donations, cash and in-kind contributions made through public‑interest social organizations or state organs such as people’s governments at or above the county level and their departments are eligible for full pre‑tax deduction from corporate income tax or individual income tax; direct donations of epidemic‑response supplies to hospitals tasked with epidemic prevention and control are likewise eligible for full pre‑tax deduction from corporate income tax or individual income tax; gratuitous donations of goods used to combat the epidemic are exempt from value‑added tax, consumption tax, urban maintenance and construction tax, the education surcharge, and the local education surcharge; and the scope of imported goods eligible for tax‑exempt donation has been expanded.

— With regard to supporting the resumption of work and production, the maximum carryforward period for losses incurred in 2020 by enterprises in severely affected industries has been extended to eight years; value-added tax is temporarily reduced or exempted for small-scale VAT taxpayers; employer contributions to enterprise pension, unemployment, and work-related injury insurance are temporarily reduced or exempted; employer‑paid pension, unemployment, and work‑related injury insurance premiums for individually registered business households participating through their employers are temporarily reduced or exempted; employer contributions to basic employee medical insurance are temporarily reduced; and local authorities are encouraged to support landlords in reducing or exempting property rents for individual business households through measures such as reductions or exemptions of urban land use tax.

An official from the Policy and Regulations Department of the State Taxation Administration stated that epidemic prevention and control is currently showing a sustained improvement, and the order of production and daily life is being restored in an orderly manner. The tax authorities will continue to thoroughly study and implement the important instructions and directives of General Secretary Xi Jinping, officely shoulder their political responsibility for effectively implementing all tax and fee preferential policies supporting epidemic prevention and control as well as the resumption of work and production, and further focus on ensuring that policy implementation is robust, “non-contact” tax services are strengthened, data‑driven support for the broader economic and social agenda is maximized, and epidemic prevention efforts are intensified. By delivering superior services, adopting more concrete measures, and achieving better results, they will translate the decisions and arrangements of the CPC Central Committee and the State Council into concrete actions, making new and greater contributions to coordinating epidemic prevention and control with efforts to boost economic and social development.

Tax Big Data Supports the Resumption of Work and Production in the Yangtze River Delta

The Yangtze River Delta is one of China’s most economically dynamic, open, and innovation‑driven regions. Leveraging tax‑related big data and a series of tax‑and‑fee reduction policies introduced by the central government, tax authorities in the region are helping businesses resume work and production while mitigating the impact of the pandemic.

As businesses resume work and production, industrial chains are tightly interconnected: a bottleneck in any single link can paralyze both upstream and downstream operations. Tax‑related big data—particularly VAT invoice data—offers the distinct advantages of objectively, comprehensively, and promptly reflecting the progress of business resumption and overall economic performance. Tax authorities in the Yangtze River Delta region leverage this tax‑related big data to provide enterprises with information support on raw materials, human resources, logistics, financing, and other critical areas, thereby facilitating the resumption of work and production.

In Ningbo, Zhejiang, Yixiang Blow Molding Furniture Co., Ltd., which specializes in plastic folding tables and chairs, faced shortages of raw materials such as welded steel pipes due to the pandemic. The company’s management worried that its $3 million‑worth of products might not be completed on schedule, putting it at risk of order delays. Leveraging the tax administration information system, the tax authorities in Yuyao City, Ningbo, conducted invoice‑flow analysis to compile a list of affected enterprises, helping the company identify new suppliers. As a result, 400 tons of welded steel pipes have now been secured, alleviating the company’s urgent supply constraints.

In Changzhou, Jiangsu Province, Mettler‑Toledo (Changzhou) Precision Instruments Co., Ltd. was under pressure due to its upstream suppliers’ inability to deliver. The tax authorities leveraged big data to identify and compile a list of potential suppliers, ensuring the company’s supply chain remained operational. In Suzhou, Jiangsu, Jin Chengzhe, the head of a company specializing in building energy‑saving technologies, faced a pressing challenge: his sole supplier had yet to resume operations, and his existing inventory of raw materials would last only ten days. Without securing new suppliers, the company would be forced to halt production. Upon learning of this situation, the Changshu Municipal Tax Bureau employed big‑data analytics to match supply‑chain needs, quickly identifying nine alternative suppliers in Anhui, Zhejiang, and other regions.

Following the resumption of work and production, enterprises are once again confronted with challenges such as rising costs and tight liquidity. In response to critical areas and key industries in epidemic prevention and control, China has successively introduced a series of tax and fee preferential policies. Tax authorities in the Yangtze River Delta region, taking into account businesses’ operational conditions and their tax-related needs, have provided services online and through digital platforms to help enterprises alleviate difficulties and overcome obstacles.

Industries such as transportation have been severely impacted, placing significant pressure on Shanghai Hengjian Tourism and Automobile Services Co., Ltd. According to the company’s general manager, Li Huimin, following the introduction of tax and fee reduction policies, the tax authorities promptly informed them that their shuttle bus services in January would be exempt from value-added tax, amounting to over RMB 30,000.

Tongling Hetian Chinese Herbal Medicine Pieces Co., Ltd., which produces over 10 tons of antiviral herbal medicine pieces, has been included on Anhui Province’s list of key enterprises ensuring supplies for pneumonia prevention and control. The local tax authorities have specially compiled a detailed checklist of tax and fee preferential policies for the company. According to He Sheng, the company’s chairman, these measures will result in tax reductions of at least RMB 200,000.

In Ningbo, Zhejiang—a major hub for foreign trade—the tax authorities processed a total of RMB 4.6 billion in export tax refunds and exemptions in February, providing a strong boost to the development of foreign trade.

In Nanjing, Jiangsu Province, machine tools are running at full speed in the production workshop of Nanjing High-Speed Gear Manufacturing Co., Ltd. Zhang Ling, director of the company’s general office, stated that this year the company’s order value has exceeded RMB 10 billion, up 25% year on year, and its resumption rate has reached 98%. Meanwhile, the tax authorities have established an intelligent platform for communication between tax authorities and taxpayers, providing strong support to help enterprises resume, stabilize, and expand production.

According to the latest VAT invoice data released by the State Taxation Administration on the 12th, since February 24, actual sales by enterprises resuming work and production in the Yangtze River Delta region have accelerated significantly. In the first week of March, the number of invoicing enterprises in the region increased by 16.9 percentage points compared with the previous week, while the total invoiced amount rose by 3.7 percentage points, signaling the onset of a broad wave of resumption of work and production and indicating that economic activity is steadily returning to normal.

Taxes, fees, energy costs, and transportation expenses have all been reduced, providing targeted support to small and micro enterprises.

Recently, a comprehensive package of measures—ranging from VAT reductions and exemptions to temporary cuts in social security contributions for pensions, unemployment, and work-related injuries, as well as deferred payments of housing provident fund contributions; from rent relief on commercial properties to lower electricity and gas costs and reduced financing expenses; and even to lowered port‑related and other transportation fees—has been rolled out at both the central and local levels. These concrete, cash‑in‑hand initiatives are helping businesses shoulder their burdens and navigate these challenging times, with anti‑epidemic relief measures totaling hundreds of billions of yuan now being implemented in rapid succession.

Energy and transportation costs have been successively reduced.

Transportation costs and energy‑related expenses are key areas for easing the burden on businesses. At a press conference of the State Council’s Joint Prevention and Control Mechanism, Vice Minister of Transport Liu Xiaoming stated that, in recent weeks, the CPC Central Committee and the State Council have issued multiple directives and arrangements, formulating a series of measures to help the transportation, express delivery, and other logistics sectors overcome difficulties and accelerate their recovery and development.

Following the outbreak, relevant authorities have, on the one hand, ensured energy supply and, on the other, further reduced enterprises’ energy costs through a package of measures involving “two reductions and one adjustment.”

On February 22, the National Development and Reform Commission issued a notice clarifying that, with the exception of high‑energy‑consumption users, electricity customers currently subject to general commercial and industrial tariffs or large‑industrial tariffs will see their electricity bills reduced by 5% from February 1 to June 30—settled at 95% of the original delivered‑to‑customer tariff rate. Meanwhile, the supportive two‑part tariff policy introduced on February 7 will remain in effect until June 30 this year, providing reductions or exemptions on demand (capacity) charges for key “two‑part” tariff customers.

Currently, the new policy to reduce electricity prices has been fully implemented, benefiting millions of enterprises. In Liaoning, a major industrial province, more than 1.8 million non‑high‑energy‑consumption businesses will receive electricity bill reductions, totaling approximately RMB 1.1 billion. In Jiangsu, a leading economic province, 4.6 million enterprises qualify for these reductions, with total bill savings estimated at around RMB 5 billion.

Corporate gas costs are also declining. The National Development and Reform Commission has clarified that, within the existing natural gas pricing framework, a seasonal pricing policy will be implemented ahead of schedule to minimize enterprises’ gas expenses as much as possible.

Small and micro enterprises receive prioritized support.

The most salient feature of this round of cost reductions is their temporary, phased nature. Under the current circumstances affected by the pandemic, these measures aim to alleviate enterprises’ cost and expense burdens on a temporary basis, thereby strengthening their resilience to risks and facilitating a smooth resumption of work and production.

Notably, among the array of cost‑reduction measures rolled out at both the central and local levels, small and micro enterprises have received prioritized support. For instance, from March 1 to May 31, 2020, value‑added tax was waived for small‑scale taxpayers within Hubei Province, while in other regions the VAT rate for such taxpayers was reduced from 3% to 1%. This marks the third batch of tax‑and‑fee cuts introduced within a single month, underscoring once again that these measures are squarely focused on small and micro enterprises.

Wang Daoshu, Chief Auditor of the State Taxation Administration and Director-General of the Department of Goods and Services Tax, stated that there are numerous tax and fee relief measures in place for small and micro enterprises and individual business households. These include policies that reduce or exempt value-added tax to support the resumption of work and production; other tax preferential policies issued by the state to address epidemic prevention and control; as well as the tax exemption policy introduced since last year for small-scale VAT taxpayers whose monthly sales revenue does not exceed RMB 100,000.

Local measures to ease the burden on businesses are also being rolled out in rapid succession. The Ningdong Energy and Chemical Base in Ningxia is one of China’s key energy and chemical hubs. According to Tian Yanhu, head of the Economic Development Bureau of the Ningdong Base Management Committee, the base has implemented a series of initiatives, including providing a subsidy of 2 cents per kilowatt-hour to small, medium, and micro enterprises that maintained normal production and operations during the pandemic; reducing guarantee fees for such enterprises facing financial difficulties due to the pandemic to below 1%; and granting a six-month grace period to those unable to make timely and full payments on loan guarantees because of the pandemic.

From the perspective of enterprises, the most pressing cost challenges today are labor costs and financing costs. Reducing financing costs can be approached from two angles: first, lowering the benchmark interest rate on bank loans and encouraging banks to pass on these reductions, thereby proactively bringing down the effective borrowing rates for businesses; second, broadening corporate financing channels—particularly by expanding direct financing avenues—so that more companies can access low-cost funding through equity markets.

The State Taxation Administration and 22 other departments have jointly issued guidelines to boost consumption expansion and quality improvement.

The State Taxation Administration and 22 other departments recently jointly issued the “Implementation Opinions on Promoting Consumption Expansion and Quality Improvement to Accelerate the Development of a Robust Domestic Market,” which focuses on enhancing the consumer environment, removing institutional and systemic barriers, and elevating governance in the consumption sector, and sets forth 19 policy measures.

Chang Tiewei, Deputy Director-General of the Department of Employment, Income Distribution, and Consumption at the National Development and Reform Commission, stated that boosting both the scale and quality of consumption will, in the short term, help offset the impact of the COVID‑19 pandemic by fully unleashing consumer demand that had been suppressed or frozen during the crisis, fostering and expanding new and upgraded forms of consumption that emerged in the course of epidemic prevention and control, and enabling a rebound in both goods‑based and service‑based spending. In the longer term, this approach will help dismantle institutional and systemic barriers that constrain consumption, better meet the people’s evolving consumption needs, and generate sustained momentum for economic growth.

The opinions aim to expand and enhance consumption by addressing six key areas: market supply, consumption upgrading, digital consumption networks, the consumer ecosystem, purchasing power, and the consumption environment.

First, we will vigorously optimize domestic market supply, comprehensively enhance the competitiveness of domestically produced goods and services, strengthen the development of indigenous brands, improve the supply of imported goods, and further refine policies governing the duty-free sector.

Second, we will prioritize the upgrading and enhancement of cultural, tourism, and leisure consumption by diversifying distinctive cultural tourism offerings, improving the inbound tourism and shopping experience, and innovating cultural tourism promotion and marketing strategies.

Third, we will focus on building an integrated urban–rural consumption network by aligning with regional development plans to establish consumption hubs, optimizing the layout of commercial outlets in both urban and rural areas, and strengthening the development of consumer‑oriented logistics infrastructure.

Fourth, we will accelerate the development of an “Intelligence Plus” consumption ecosystem, expedite the construction of next-generation information infrastructure, promote the growth of new consumption models such as online–offline integration, encourage the adoption of green and smart products, and vigorously advance the “Internet Plus Social Services” consumption model.

Fifth, continuously enhance residents’ purchasing power, boost income growth among key groups to unlock consumption potential, and stabilize and increase residents’ property‑income.

Sixth, we will comprehensively foster a secure and trustworthy consumer environment, strengthen oversight of market order, actively advance the development of a credit system in the consumer sector, and ensure smooth channels for consumers to protect their rights.

Against the backdrop of positive developments in epidemic prevention and control and the accelerated recovery of economic and social development, these measures send a strong signal of support for boosting consumption, helping to create a favorable policy environment for swiftly restoring the broader socio‑economic cycle of “production–distribution–consumption,” and fostering new forms of consumption—such as “smart+”—as well as emerging growth drivers.

Ministry of Finance: This year, a pilot program will be launched to publicly disclose procurement intentions.

The Ministry of Finance recently issued a notice stating that it will advance the public disclosure of government procurement intentions in accordance with the principle of “pilot first, phased implementation.” This year, pilot programs will be launched among central budgetary units and the municipal-level budgetary units in Beijing, Shanghai, and Shenzhen.

According to a notice issued by the Ministry of Finance on launching the public disclosure of government procurement intentions, for procurement projects implemented from July 1, 2020, central budgetary units and budgetary units at the municipal level in Beijing, Shanghai, and Shenzhen shall, in accordance with regulations, make their procurement intentions publicly available. Pilot regions should, based on local conditions, promptly advance the public disclosure of procurement intentions by budgetary units at all other levels. Other regions may determine the timing of such disclosures according to local circumstances; in principle, provincial-level budgetary units shall disclose procurement intentions for projects implemented from January 1, 2021, while budgetary units at or below the provincial level shall do so for projects implemented from January 1, 2022. Regions that meet the necessary conditions may, where appropriate, initiate the public disclosure of procurement intentions ahead of schedule.

The notice clarifies that procurement intentions shall be disclosed by the budget‑issuing entities. Procurement intentions of central budget‑issuing entities shall be published on the central portal of the China Government Procurement Website, while those of local budget‑issuing entities shall be published on the local sub‑portals of the same website. Additionally, procurement intentions may also be simultaneously disclosed through other media designated by fiscal authorities at or above the provincial level. The competent budget‑issuing authorities may aggregate and centrally disclose the procurement intentions of all budget‑issuing entities under their jurisdiction and within their respective systems; where feasible, such departments may also concurrently publish their own procurement intentions on their departmental portals.

The notice states that procurement intentions shall be made public on a project-by-project basis. The disclosed information shall include the procurement project name, an overview of the procurement requirements, the budget amount, and the anticipated procurement timeline. Procurement intentions should be as clear and comprehensive as possible to enable suppliers to prepare in advance for participation in procurement activities. Procurement intentions serve solely as a reference for suppliers to understand the preliminary procurement plans of various entities; the actual procurement requirements, budget amounts, and implementation schedules shall be determined by the final procurement announcements and documents issued by the budget‑allocating entities.

LITIGATION & ARBITRATION

The State Council has reformed the land management system, granting greater autonomy to provincial-level people’s governments.

With the approval of Premier Li Keqiang, the State Council recently issued the “Decision on Authorizing and Delegating Land-Use Approval Powers” (hereinafter referred to as the “Decision”).

The Decision states that, in order to implement the spirit of the Fourth Plenary Session of the 19th CPC Central Committee and the Central Economic Work Conference, and in accordance with the relevant provisions of the Land Management Law of the People’s Republic of China (hereinafter referred to as the Land Management Law), while strictly safeguarding arable land and promoting economical and intensive land use, it is necessary to further deepen the “delegation, regulation, and service” reform, overhaul the land management system, and grant greater autonomy over land use to the people’s governments at the provincial level.

The Decision clarifies that, with respect to the approval of converting agricultural land other than permanent basic farmland into construction land—matters that may be authorized by the State Council—the authority to approve such conversions is delegated to the people’s governments of provinces, autonomous regions, and municipalities directly under the central government. In accordance with Article 44, Paragraph 3 of the Land Management Law, for cities whose overall land-use plans have been approved by the State Council, where agricultural land other than permanent basic farmland is converted into construction land in batches within the scope of the approved construction land quota, as stipulated in the annual land-use plan, the State Council delegates the approval authority to the people’s governments of provinces, autonomous regions, and municipalities directly under the central government. Furthermore, pursuant to Article 44, Paragraph 4 of the Land Management Law, for cases where agricultural land other than permanent basic farmland is converted into construction land outside the construction land quotas for cities, villages, and towns as defined in the overall land-use plan, the State Council likewise delegates the approval authority to the people’s governments of provinces, autonomous regions, and municipalities directly under the central government.

The Decision stipulates that, on a pilot basis, the authority to approve the conversion of permanent basic farmland into construction land and the approval of land expropriation cases approved by the State Council will be delegated to the people’s governments of selected provinces, autonomous regions, and municipalities directly under the central government. Specifically, with respect to the approval of converting permanent basic farmland into construction land as provided in Article 44, Paragraph 2 of the Land Management Law, and the approval of land expropriation involving permanent basic farmland or cultivated land outside permanent basic farmland exceeding 35 hectares, as well as other types of land exceeding 70 hectares, as set forth in Article 46, Paragraph 1, the State Council has entrusted the people’s governments of certain pilot provinces, autonomous regions, and municipalities directly under the central government to exercise such approval powers. The initial batch of pilot provinces includes Beijing, Tianjin, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, and Chongqing, with a pilot period of one year. The State Council will establish and improve an evaluation mechanism for the land‑use approval work of provincial-level people’s governments, and, based on a comprehensive assessment of each province, autonomous region, and municipality’s level of land management, it will make dynamic adjustments to the list of pilot jurisdictions.

The Decision requires the people’s governments of all provinces, autonomous regions, and municipalities directly under the central government to conduct rigorous reviews and strict oversight in accordance with laws, administrative regulations, and relevant policies. In particular, they must rigorously scrutinize land-use applications involving the occupation of permanent basic farmland, ecological conservation red lines, and nature reserves, thereby effectively protecting arable land, promoting economical and intensive land use, revitalizing existing land stocks, safeguarding the legitimate rights and interests of farmers whose land has been expropriated, and ensuring that the authority to approve such land uses is “delegated appropriately, effectively assumed, and well managed.” The people’s governments of all provinces, autonomous regions, and municipalities directly under the central government may not further delegate or entrust the land‑use approval powers they have assumed. The Ministry of Natural Resources shall strengthen guidance, services, and supervisory inspections over land‑use approval work; upon identifying any violations, it shall promptly urge corrective action, and for significant issues, it shall report them to the State Council without delay.

The Supreme People’s Court has issued the “Key Tasks for Judicial Reform in the People’s Courts in 2020.”

Recently, the Supreme People’s Court issued the “Key Tasks for Judicial Reform in the People’s Courts in 2020” (hereinafter referred to as the “Key Tasks”), outlining a comprehensive plan for judicial reform in the people’s courts for 2020. 2020 is a pivotal year for the people’s courts in advancing and implementing the Fifth Five-Year Reform Outline. To ensure the steady progress and effective implementation of all reform tasks, the Supreme People’s Court has formulated the “Key Tasks” as both a “task list” and a “roadmap” for promoting judicial reform in the people’s courts in 2020.

The “Key Work Plan” sets forth 38 measures across eight areas, outlining arrangements and deployments for reform tasks related to earnestly fulfilling the people’s courts’ principal responsibility for reform, serving and safeguarding the overall work of the Party and the state, improving a people-centered judicial system that facilitates access to justice, refining the adjudicatory power‑exercise framework centered on the judicial accountability system, perfecting the court organizational structure and institutional functional system, upgrading the litigation system to keep pace with contemporary advances and technological development, strengthening the categorized management and professional保障 system for court personnel, and comprehensively building a modern, smart court application system. It exhibits the following characteristics:

First, we have comprehensively implemented the central government’s reform agenda. The “Key Work Points” consistently adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully embodying the spirit of the Fourth Plenary Session of the 19th CPC Central Committee, while ensuring seamless alignment and systematic integration with all reform tasks set forth by the central authorities. They take into account the guiding principles of the meetings of the Central Commission for Comprehensively Governing the Country According to Law and the Central Political and Legal Work Conference, as well as the key tasks outlined in the Implementation Opinions on Deepening Comprehensive Reform in the Political and Legal Fields and the Court’s “Fifth Five-Year Reform Plan.” In terms of scheduling and content coordination, these measures are carefully aligned and benchmarked, emphasizing complementary synergy and coordinated efficiency, thereby facilitating the integrated advancement, unified deployment, and concerted implementation of all reform initiatives.

Second, the document is closely aligned with the realities of judicial reform. Adhering to the principle of seeking truth from facts, the Work Plan will continue to consolidate and deepen proven practices and experiences in judicial reform, elevating them into institutional frameworks; it will intensify efforts and accelerate progress on ongoing reform initiatives; and it will promptly introduce and effectively integrate supporting measures that remain to be addressed. Furthermore, it will systematically review and refine the overall planning of relevant reform measures, striving to achieve new breakthroughs in systemic integration and coordinated efficiency.

Third, emphasis has been placed on practicality. The “Key Work Priorities” serve as the action guide for this year’s judicial reform efforts in the people’s courts. Throughout the process of formulating these priorities, opinions were repeatedly sought from relevant departments to ensure the coherence, feasibility, and operability of the reform tasks—both by making the tasks clear and specific and by guaranteeing that all reform measures can be successfully completed within the current year.

In addition, the Supreme People’s Court has concurrently issued a division-of-labor plan for the “Key Work Points,” further breaking down the agenda into specific reform tasks and clearly designating the responsible units for each. The Judicial Reform Leading Group of the Supreme People’s Court is tasked with overall coordination and oversight of the implementation of the 2020 Key Work Points, urging all responsible units to prioritize improving the quality of their plans, completing tasks on schedule, and ensuring effective execution. They are required to formulate work plans, specify timelines and assign accountability, and ensure that every task is fully implemented. Furthermore, the Office of the Judicial Reform Leading Group of the Supreme People’s Court is mandated to rigorously enforce the ledger‑based management of reform tasks and the accountability system for supervision and inspection, strengthening monitoring and follow-up to guarantee that all reform initiatives are completed on time and to the required standard.

Maliciously registering the “Huoshenshan” trademark: The Market Supervision Administration of Chaoyang District, Beijing, imposed the maximum penalty of RMB 100,000.

On March 4, the National Intellectual Property Administration issued a notice stating that it had, in accordance with the law, rejected 63 trademark applications—including “Huoshenshan”—that were related to the pandemic and deemed to have adverse effects. Pursuant to the notice, the Administration promptly conducted inspections of intellectual property agencies within its jurisdiction and launched investigations into those agencies that had filed applications to register pandemic‑related trademarks such as “Huoshenshan.” On March 11, the Chaoyang District Market Supervision Administration served the parties concerned with an administrative penalty decision, imposing a fine of up to RMB 100,000. This case thus became the first nationwide instance of cracking down on malicious trademark registration practices by agents.

According to reports, on March 7, the Chaoyang District Administration for Market Regulation initiated an investigation into Beijing Yijie Shunda International Intellectual Property Agency Co., Ltd. for allegedly engaging in the agency of malicious trademark registration applications; the investigation was concluded two days later. Today (March 11), the Chaoyang District Administration for Market Regulation issued an administrative penalty decision (No. Jing Chao Shi Jian Gong Fa [2020] No. 166) to the party concerned, issuing a warning and imposing a fine of up to RMB 100,000 for its act of representing malicious trademark application registrations.

Upon investigation, it was found that Beijing Yijie Shunda International Intellectual Property Agency Co., Ltd., between February 3 and February 13, 2020, on behalf of two companies—Guangzhou Yizi Beauty and Hairdressing Products Co., Ltd. and Laounsi Building Materials Industrial Hubei Co., Ltd.—filed a total of ten trademark applications with the National Intellectual Property Administration for the marks “Leishenshan” and “Huoshenshan.”

“Huoshenshan” and “Leishenshan” are the names of Wuhan Huoshenshan Hospital and Wuhan Leishenshan Hospital, respectively; they are coined terms that enjoy considerable public recognition and influence. These hospitals embody the heartfelt wishes of the entire nation for the swift recovery of those infected with the epidemic and symbolize the unwavering determination of all Chinese people to unite in the fight against the pandemic. Applications for the trademarks “Huoshenshan” and “Leishenshan” filed by entities other than Wuhan Huoshenshan Hospital and Wuhan Leishenshan Hospital not only infringe upon the prior rights of these hospitals but also harm the public interest, giving rise to significant adverse social repercussions.

Laowens Building Materials Industrial Hubei Co., Ltd. and Guangzhou Yizi Beauty and Hairdressing Products Co., Ltd. filed trademark registration applications designating “Huoshenshan” and “Leishenshan,” thereby infringing upon the prior rights of Wuhan Huoshenshan Hospital and Wuhan Leishenshan Hospital, likely to cause significant adverse social repercussions, and contravening Article 32 of the Trademark Law of the People’s Republic of China, which stipulates: “An application for trademark registration shall not infringe upon the existing prior rights of others, nor shall it involve improper means to preemptively register a trademark that has already been used by another party and has attained a certain degree of reputation.” During the epidemic prevention and control period, the parties, knowing or reasonably ought to have known of the aforementioned circumstances, nevertheless accepted representation from two applicants in filing registration applications for a total of ten trademarks bearing the marks “Huoshenshan” and “Leishenshan.” Such conduct violates Paragraph 3 of Article 19 of the Trademark Law of the People’s Republic of China, which provides: “A trademark agency shall not accept an entrustment if it knows or ought to know that the trademark for which the client seeks registration falls within the circumstances specified in Articles 4, 15, and 32 of this Law.” Accordingly, the conduct constitutes the act of acting as an agent in filing malicious trademark registration applications. Pursuant to Item (3) of Paragraph 1 of Article 68 of the Trademark Law of the People’s Republic of China, the Chaoyang District Administration for Market Regulation ordered the parties to immediately cease their unlawful conduct and imposed the following administrative penalty: 1. A warning; 2. A fine of RMB 100,000.

The Chaoyang District Administration for Market Regulation will also refer the relevant illegal acts of Guangzhou Yizi Beauty and Hairdressing Products Co., Ltd. and Laounsi Building Materials Industrial Hubei Co., Ltd. to the market regulation authorities in their respective jurisdictions for further handling.

The Supreme People’s Court has accepted the appeal in Bull Group’s 500-million-yuan patent litigation case and remanded it for retrial.

Bull Group (603195.SH), which went public successfully in February this year, saw its share price double within a month and its market capitalization approach nearly 100 billion yuan—yet it has still not shaken off the “shadow” of the patent dispute with its peers that dogged its IPO process.

On March 10, Bull Group disclosed an update on its litigation, stating that on March 6, the company received from the Supreme People’s Court the “Notice of Response to Appeal” (No. ﹝2020﹞ Supreme People’s Court Zhi Min Zhong No. 226–230) and the “Notice of Evidence Submission” (No. ﹝2020﹞ Supreme People’s Court Zhi Min Zhong No. 226–230). The Supreme People’s Court has decided to accept Jiangsu Tongling Technology Co., Ltd. (hereinafter referred to as “Tongling Technology”)’s appeals in five cases concerning the utility model patent for a “Power Socket Safety Protection Device.”

Among them, Tongling Technology has petitioned for the revocation of the first-instance Civil Ruling issued by the Intermediate People’s Court of Nanjing, Jiangsu Province, and for the case to be remanded to the Nanjing Intermediate Court for retrial; the five appealed cases involve a total amount of RMB 499 million.

The story begins in September 2018, when Bull Group initiated its IPO process on the A-share market. However, this promising start was short-lived: Tongling Technology, a peer company based in Suzhou, Jiangsu Province, filed a lawsuit against Bull Group, alleging patent infringement. In December 2018, Tongling Technology brought an infringement action before the Nanjing Intermediate People’s Court, naming Bull Group and others as defendants. The case concerned two patents: an invention patent titled “Supporting Sliding Safety Door” (Patent No. ZL201010297882.4) and a utility model patent titled “Power Outlet Safety Protection Device” (Patent No. ZL201020681902.3).

In response to patent “sniping” by its competitors, Bull Group has also mounted a corresponding counterattack.

In January 2019, Bull Group filed a request for invalidation of the aforementioned patents with the National Intellectual Property Administration. Six months later, Bull Group announced that it had received from the Reexamination and Invalidation Division of the Patent Office of the National Intellectual Property Administration the “Decision on Examination of Request for Declaration of Invalidity” (Nos. 40759 and 40829), which declared all of the disputed patent rights to be invalid. Against this backdrop, on July 21, 2019, the Nanjing Intermediate People’s Court dismissed Tongling Technology’s lawsuit.

As can be seen, Tongling Technology, whose lawsuit was dismissed by the Nanjing Intermediate People’s Court, remains dissatisfied. On the one hand, on July 3, 2019, Tongling Technology filed a motion to withdraw that portion of its appeal, citing the fact that the patent for the “support‑type sliding safety door” at issue had been declared invalid by the National Intellectual Property Administration. On the other hand, one month later, Tongling Technology appealed to the Supreme People’s Court, requesting that it overturn the Nanjing Intermediate Court’s ruling in the patent case concerning the “power outlet safety protection device” and remand the matter to the Nanjing Intermediate Court for retrial.

In an announcement disclosed by Bull Group on March 10, Tongling Technology argued that, at the time the Nanjing Intermediate People’s Court issued its first-instance ruling in this case, the National Intellectual Property Administration’s Invalidation Decision No. 40759 concerning the patent in question had not yet taken effect, and the appellant was still within the statutory three-month period during which it could file an administrative lawsuit against that decision. At this critical juncture, the Nanjing Intermediate People’s Court nevertheless directly determined that “the claims asserted by the appellant in the patent‑infringement litigation at issue have lost their legal basis,” thereby rendering the first-instance ruling erroneous in both its findings of fact and its application of the law.

At the same time, Tongling Technology emphasized: “During the first-instance proceedings in this case, the company has already invested substantial human, material, and financial resources. Given that the validity of the examination decision on the patent at issue remains undetermined, and that the appellant is entitled to file an administrative lawsuit with the court challenging the invalidation decision No. 40759 concerning the patent in question, the first-instance court nonetheless issued a ruling dismissing the infringement action outright. Such a decision will inevitably inflict significant and irreparable losses on the appellant, constituting a grave injustice, and will also result in a substantial waste of judicial resources.”

With respect to the aforementioned dispute, in its announcement dated March 10, Ningbo Liangji Industrial Co., Ltd., the controlling shareholder of Bull Group, pledged that, should the court rule in favor of the plaintiff and order Bull Group to compensate for losses arising from this litigation, the controlling shareholder will provide full indemnification for such losses.

China Wildlife Conservation Association Penalized for Illegally Establishing Branch Offices

Recently, the Ministry of Civil Affairs imposed an administrative penalty in the form of a warning on the China Wildlife Conservation Association for its unauthorized establishment of branch organizations.

The investigation revealed that, under its branch organizations—the Conservation, Breeding and Utilization Committee and the Aquatic Wildlife Conservation Branch—the China Wildlife Conservation Association illegally established third-level sub‑branches, including the Frog Farming Professional Committee, the Snake Farming Professional Committee, the Giant Salamander Professional Committee, and the Sturgeon Professional Committee.

It is understood that the aforementioned conduct violated Article 17 of the Regulations on the Registration and Administration of Social Organizations, which stipulates that “branch organizations of social organizations may not establish further branch organizations.” In accordance with the relevant provisions, the Ministry of Civil Affairs has imposed an administrative penalty of a warning on the China Wildlife Conservation Association and has ordered it to revoke the illegally established branch organization. Furthermore, pursuant to the Measures for the Administration of Credit Information of Social Organizations, effective from the date the administrative penalty decision takes effect, the Ministry of Civil Affairs has placed the association on the List of Abnormal Activities of Social Organizations.

The Ministry of Civil Affairs stated that all social organizations must comprehensively improve their internal management mechanisms, standardize the establishment of branch offices and representative offices, and refrain from setting up regionally‑based branches. Furthermore, they may not establish additional branches or representative offices under existing ones, nor may such branches or representative offices adopt the names of legal entities. The names of branch offices and representative offices must not include terms such as “China,” “Chinese,” “National,” or “State,” and any activities they undertake must use the full, standardized name of the parent social organization.

Meanwhile, the Ministry of Civil Affairs stated that it will further intensify its efforts to investigate and publicly expose such illegal and non-compliant activities, ensuring that every case is promptly addressed without any leniency, thereby effectively upholding the orderly registration and management of social organizations and fostering their healthy and sustainable development.

Other

The General Office of the CPC Central Committee has issued the “Regulations on the Principal Responsibility of Party Committees (Party Leading Groups) for Comprehensively Strengthening Party Governance.”

Recently, the General Office of the CPC Central Committee issued the “Regulations on the Principal Responsibility of Party Committees (Party Groups) for Comprehensively Strengthening Party Governance” (hereinafter referred to as the “Regulations”) and circulated a notice requiring all regions and departments to conscientiously implement them.

The notice points out that since the 18th National Congress of the Communist Party of China, the Party Central Committee with Comrade Xi Jinping at its core has advanced comprehensive and strict Party self-governance with office resolve, tenacious will, and unprecedented intensity, achieving major progress and remarkable results. At the same time, it must be recognized that problems within the Party—such as political impurity, ideological impurity, organizational impurity, and impure conduct—particularly some deep-seated issues, have yet to be fundamentally resolved. The entire Party must maintain strategic composure, uphold the spirit of struggle, continuously deepen the Party’s self-revolution, and unswervingly and consistently pursue comprehensive and strict Party self-governance.

The notice emphasizes that the promulgation of these Regulations represents an important measure taken by the CPC Central Committee to improve the accountability system for exercising full and rigorous Party self‑governance. All regions and departments must earnestly study and implement the Regulations, strengthen their political consciousness in upholding the “two safeguards,” and reinforce their sense of political responsibility to safeguard their respective areas, assume responsibility, and fulfill their duties conscientiously. By grasping the accountability system as the key leverage and focusing on Party committees (Party leading groups) as the principal actors, they should ensure the thorough and unwavering implementation of responsibilities for exercising full and rigorous Party self‑governance, continuously enhance their capacity to perform their duties, and strive to bolster their ability to overcome various risks and challenges, thereby advancing the modernization of the national governance system and governance capacity through new achievements in exercising full and rigorous Party self‑governance.

The notice requires that any significant developments and recommendations arising from the implementation of the Regulations be promptly reported to the CPC Central Committee.

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