JC Master Legal News Issue 965

Key Takeaways for This Issue
The People’s Bank of China and three other ministries have issued the “Opinions on Financial Support for Hainan’s Comprehensive Deepening of Reform and Opening-Up.”
Recently, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the “Opinions on Financial Support for Hainan’s Comprehensive Deepening of Reform and Opening-Up” (hereinafter referred to as the “Opinions”). The document sets forth 33 specific measures across six key areas: enhancing the convertibility of the renminbi to support the liberalization and facilitation of cross-border trade and investment; improving Hainan’s financial market system; expanding the opening-up of Hainan’s financial sector; strengthening innovation in financial products and services; elevating the quality of financial services; and reinforcing financial regulation to prevent and defuse financial risks.
The Ministry of Housing and Urban–Rural Development held talks with five cities, including Guangzhou and Hefei, to resolutely curb speculative real estate trading.
On the 8th, Ni Hong, Vice Minister of the Ministry of Housing and Urban–Rural Development, held talks with the heads of the governments of five cities—Guangzhou, Hefei, Ningbo, Dongguan, and Nantong—urging them to raise their political awareness, align their thinking and actions with the decisions and arrangements of the CPC Central Committee and the State Council, and fully recognize the importance of ensuring the stable and sound development of the real estate market. He emphasized the need to officely uphold the principle that housing is for living in, not for speculation; refrain from using real estate as a short-term tool to stimulate the economy; and earnestly assume responsibility at the city level to achieve the goals of stabilizing land prices, housing prices, and market expectations.
Announcement of the Ministry of Finance and the State Taxation Administration on the Implementation of Preferential Income Tax Policies for Small and Micro Enterprises and Individual Business Households
The Ministry of Finance and the State Taxation Administration have issued an announcement on the implementation of preferential income tax policies for small and micro enterprises and individual business households. For small, low-profit enterprises, the portion of their annual taxable income not exceeding RMB 1 million will be subject to an additional 50% reduction in corporate income tax, on top of the preferential policy stipulated in Article 2 of the “Notice of the Ministry of Finance and the State Taxation Administration on Implementing Universal Tax Relief Measures for Small and Micro Enterprises” (Cai Shui [2019] No. 13). The validity period of this announcement is from January 1, 2021, to December 31, 2022.
The full text of the “Administrative Measures for Litigation Representation of the All-China Patent Agents Association” has been released.
On April 8, 2021, the All-China Patent Agents Association published the “Administrative Measures for Litigation Representation of the All-China Patent Agents Association” on its official website. The Measures comprise five chapters—General Provisions, Litigation Representatives, Rules Governing Litigation Representation Services, Supervision and Administration, and Supplementary Provisions—totaling 30 articles, and shall enter into force as of the date of their promulgation, February 24, 2021.

Table of Contents
Table of Contents

Finance & Capital Markets
The People’s Bank of China and three other ministries have issued the “Opinions on Financial Support for Hainan’s Comprehensive Deepening of Reform and Opening-Up.”
Xiao Gang, former chairman of the China Securities Regulatory Commission, stated that the return of Chinese concept stocks would help improve the structure of A-share listed companies.
The Financial Commission meeting sent a clear signal: it encourages sound institutions to acquire troubled ones, while cautioning local financial institutions against overemphasizing scale expansion and rapid growth.
The State Administration for Market Regulation has imposed an administrative penalty on Alibaba.

Corporate & Commercial
The Ministry of Housing and Urban–Rural Development held talks with five cities, including Guangzhou and Hefei, to resolutely curb speculative real estate trading.
Danke Apartment was delisted, falling from its peak to rock bottom in just 455 days.
Lianyirong Technology opened nearly 10% higher on its debut trading day.
SF Express expects a massive loss of over RMB 900 million in the first quarter.

Taxation
Announcement of the Ministry of Finance and the State Taxation Administration on the Implementation of Preferential Income Tax Policies for Small and Micro Enterprises and Individual Business Households
Announcement of the State Taxation Administration on Matters Relating to the Implementation of Income Tax Preferential Policies Supporting the Development of Small and Low-Profit Enterprises and Individual Business Households
Announcement of the Ministry of Finance and the State Taxation Administration on the Extension of Value-Added Tax Preferential Policies for the Publicity and Cultural Sectors
Shanghai: Implementing a Multi‑Pronged Approach to Further Enhance the Tax‑Related Business Environment

Litigation & Arbitration
The full text of the “Administrative Measures for Litigation Representation of the All-China Patent Agents Association” has been released.
Notice of the Jiangsu Provincial Higher People’s Court on the Monetary Limit for Civil Cases Heard under the Small-Claims Procedure
The Jiangsu Provincial Higher People’s Court has released the Ten Typical Cases of Consumer Rights Protection for 2020.
Beijing’s first case of the crime of obstructing safe driving was pronounced in court.

Other

Finance & Capital Markets
The People’s Bank of China and three other ministries have issued the “Opinions on Financial Support for Hainan’s Comprehensive Deepening of Reform and Opening-Up.”
To thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council, and with the approval of the State Council, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange recently issued the “Opinions on Financial Support for Hainan’s Comprehensive Deepening of Reform and Opening-Up” (hereinafter referred to as the “Opinions”).
Hainan is China’s largest special economic zone, endowed with unique advantages for advancing comprehensive deepening of reform and piloting the highest‑level opening‑up policies. The “Opinions” set forth 33 specific measures across six key areas: enhancing the convertibility of the renminbi to support the liberalization and facilitation of cross‑border trade and investment; improving Hainan’s financial market framework; expanding the opening up of Hainan’s financial sector; strengthening innovation in financial products and services; elevating the quality of financial services; and reinforcing financial regulation to prevent and defuse financial risks. The issuance of these “Opinions” has essentially established the foundational framework—“four pillars and eight beams”—for financial support of Hainan’s efforts to comprehensively deepen reform and opening up, helping to address the province’s financial shortcomings and solidify its financial infrastructure.
Attached is the “Opinions of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange on Financial Support for Hainan’s Comprehensive Deepening of Reform and Opening-Up”:
Yinfa [2021] No. 84
Hainan Provincial People’s Government:
To thoroughly implement the spirit of General Secretary Xi Jinping’s important speech at the conference marking the 30th anniversary of Hainan Province’s establishment and the launch of the Hainan Economic Special Zone, to carry out the relevant strategic arrangements set forth in the “Guiding Opinions of the CPC Central Committee and the State Council on Supporting Hainan’s Comprehensive Deepening of Reform and Opening-Up” and the “Overall Plan for the Construction of the Hainan Free Trade Port,” and to support Hainan’s comprehensive deepening of reform and opening-up and the establishment of a financial policy and institutional framework aligned with the Hainan Free Trade Port, with the approval of the State Council, the following opinions are hereby put forward.
I. General Principles
(1) Supporting the development of Hainan’s real economy. We will steadfastly deepen structural reform on the financial supply side, innovate financial policies, products, and instruments, and focus on developing tourism, modern services, and high‑tech industries. Priority will be given to supporting key sectors such as the marine industry, healthcare, tourism and convention‑exhibition services, transportation, modern agriculture, and service outsourcing, with the aim of establishing an open, eco‑friendly, and service‑oriented industrial system, upgrading and optimizing the service sector, and promoting high‑quality economic growth.
(II) Supporting the development of the Hainan Free Trade Port. In line with its strategic positioning as a pilot zone for comprehensively deepening reform and opening-up, a national ecological civilization pilot zone, an international tourism and consumption center, and a support and guarantee area for major national strategies, we will facilitate financial flows between Hainan and other regions of China and promote the liberalization and facilitation of cross-border trade and investment. By implementing, in phases and steps, a range of financial reform, opening-up, and innovation measures, we will help Hainan become a new benchmark for comprehensively deepening reform and opening-up in the new era.
(3) Deepen financial reform and opening-up with institutional innovation at its core. Adhering to the principle of benchmarking against international standards, we will further advance financial reform and opening-up. Guided by a work approach that balances short-term and long-term goals, proceeds in a step-by-step manner, and prioritizes key areas, we will pioneer and experiment in such fields as the free and convenient cross-border flow of capital, the facilitation of investment‑financing and foreign‑exchange transactions, and the opening-up of the financial sector, while actively exploring a more flexible system of financial policies, regulatory frameworks, and governance mechanisms.
4. Strengthen the financial risk prevention and control system. Adhering to a bottom-line mindset, we will proceed steadily and methodically, advancing step by step. We will refine the risk‑management framework for cross‑border capital flows to align with financial opening-up and innovation, and, on the premise of ensuring effective regulation and controllable risks, we will prudently and orderly implement various measures to promote financial openness and innovation. We will carefully calibrate the pace and progress of opening-up, advancing one initiative only when it is fully mature, and officely safeguard the bottom line of preventing systemic financial risks.
II. Enhance the convertibility of the Renminbi and support the liberalization and facilitation of cross-border trade and investment.
(5) Further facilitate cross-border trade in goods, trade in services, and new forms of international trade settlement. In accordance with the “Know Your Customer, Know Your Business, and Due Diligence” principles, qualified banks in the Hainan Free Trade Port may, on a pilot basis, process settlement for genuine and compliant trade in goods and services for high‑quality clients based solely on payment instructions, thereby shifting the bank’s authenticity review from ex‑ante scrutiny to ex‑post verification. A corresponding system for fund payments and transfers supporting cross‑border trade in services shall be implemented. Banks participating in the pilot program in the Hainan Free Trade Port are encouraged, while strengthening customer‑tiered management, to further streamline cross‑border settlement for genuine and compliant new‑type international trade.
(6) Explore new forms of cross-border investment foreign exchange management that align with market demands. On the premise of controllable risks, permit qualified foreign limited partners (QFLPs) within the Hainan Free Trade Port to freely remit funds in and out under a balance‑based management model, while streamlining foreign exchange registration procedures. Include the Hainan Free Trade Port in the Qualified Domestic Limited Partner (QDLP) pilot program, grant it an initial QDLP quota, and allow for annual increases to its QDLP quota in accordance with prescribed rules.
(7) Refine the macroprudential policy framework for cross-border financing across all sectors. The cross-border financing ceilings for non-financial enterprises registered in the Hainan Free Trade Port—excluding real estate offices and local government financing platforms—may be appropriately raised, thereby enabling a higher aggregate level of cross-border capital inflows.
(8) Explore the launch of pilot programs for cross-border asset management. Support overseas investors in investing in asset management products issued by financial institutions within the Hainan Free Trade Port, including wealth management products, private‑placement asset management products offered by securities and futures offices, public mutual funds, and insurance asset management products.
(9) Explore the relaxation of policies governing individuals’ cross-border transactions. Support overseas individuals employed within the Hainan Free Trade Port in engaging in various types of domestic investments, including securities investments. Permit eligible non-residents to purchase real estate within the Hainan Free Trade Port on a bona fide basis, and provide foreign-exchange facilitation for eligible non-resident property purchases. Conduct research to further streamline foreign-exchange procedures for Hainan residents.
(10) Launch a pilot program in Hainan for a unified cross-border funds pool operating in both domestic and foreign currencies. Eligible multinational corporate groups will be supported in centrally managing the allocation and pooling of surplus and deficit funds among their domestic and overseas members; funds held in dedicated accounts will be converted on a need‑based basis, and two‑way macroprudential controls will be applied to cross‑border capital flows.
(11) Support eligible non-bank financial institutions in conducting pilot programs for foreign exchange settlement and sales. Upon meeting certain conditions, such eligible non-bank financial institutions may participate in the interbank foreign exchange market and, in accordance with applicable laws and regulations, engage in RMB‑foreign currency spot transactions and related derivative trading.
III. Improving Hainan’s Financial Market System
(12) Support the development of Hainan’s banking sector. Facilitate the establishment of branches in Hainan by national joint-stock commercial banks. Conduct research on the reform of Hainan’s rural credit cooperatives to enhance their capacity to support the implementation of the rural revitalization strategy. Strengthen financial services for sectors such as the marine industry and high‑tech industries. Support Hainan in attracting foreign investment and taking equity stakes in local asset management companies.
(13) Support eligible Hainan enterprises in making their initial public offerings and achieving growth and expansion through the multi-tiered equity market. Continue to facilitate M&A and restructuring activities among Hainan enterprises to drive transformation and upgrading.
(14) Support Hainan enterprises in issuing bonds to raise capital. Actively encourage eligible Hainan enterprises to issue corporate credit bonds in both the interbank market and the exchange market, thereby further expanding the scale of direct financing. Facilitate market entities by broadening their scope of autonomous choices regarding trust management institutions, trading venues, and other related aspects. Assist Hainan enterprises in leveraging asset securitization to unlock the value of existing assets and diversify their funding sources.
(15) Support the development of relevant funds in Hainan. Facilitate the establishment of public‑offering funds in Hainan; permit eligible institutions to apply, in accordance with the law, to set up joint‑venture public‑offering fund management companies in Hainan; and allow qualified foreign financial institutions to wholly own or hold a controlling stake in futures companies in Hainan. For private equity investment funds that invest in key sectors such as Hainan’s seed industry and modern agriculture, provide an expedited registration and filing process.
IV. Expanding the Opening-Up of Hainan’s Financial Sector to the Outside World
(16) Expand the opening-up of the banking sector. Encourage foreign financial institutions to establish a presence in Hainan and support the establishment of Sino‑foreign joint‑venture banks. Support Hainan’s banks in attracting qualified overseas strategic investors, thereby optimizing their equity structures, enhancing corporate governance, and further elevating the degree of openness of Hainan’s banking sector.
(17) Expand the opening-up of the insurance sector. Conduct in-depth research on strengthening cooperation between Hainan and the insurance markets of Hong Kong and Macao. Drawing on international experience and prevailing practices, explore the development of solvency regulatory policies tailored to offshore reinsurance activities.
(18) Establish an expedited review channel for banking sector access matters, institute a time-bound processing system for such applications, and enhance approval efficiency.
(19) Implement the requirement of national treatment for foreign investment, and support eligible foreign-invested institutions in obtaining payment business licenses in Hainan in accordance with the law and relevant regulations.
(20) Chinese-funded commercial bank headquarters that have obtained offshore banking qualifications are permitted to authorize their branches within the Hainan Free Trade Port to conduct offshore banking business.
V. Strengthening Innovation in Financial Products and Services
(21) Encourage innovation in RMB‑denominated financial products and services targeted at international markets, and expand the range of offshore RMB‑investable financial products available in Hainan. On the basis of compliance with applicable laws and regulations, permit Hainan‑based market entities to issue RMB‑denominated bonds and other instruments overseas to attract offshore RMB capital, with a particular focus on supporting the development of high‑tech industries, healthcare, tourism and conventions, as well as transportation.
(22) Steadily expand the scope of cross-border asset transfers. Under the macroprudential regulatory framework, and in accordance with the principles of controllable risks and adjustable scale, pilot initiatives will be launched within the Hainan Free Trade Port to broaden both the range of credit assets eligible for cross-border transfer and the pool of participating institutions.
(23) Support Hainan in exploring and piloting the mortgage‑based collateralization of state‑owned agricultural land use rights, and promote the improvement of supporting measures, including property‑rights conofficeation, registration and certification, mortgage‑collateral registration, the development of land‑transfer platforms, and the appraisal of collateral values.
(24) Innovate and develop insurance business. Support eligible insurance institutions in establishing insurance asset management companies in Hainan, and, on the premise of independent accounts and risk isolation, issue RMB‑denominated asset management products overseas. Support Hainan‑based insurance institutions in conducting overseas investment activities. Encourage insurance institutions to strengthen innovation and, focusing on areas such as the environment, agriculture, tourism, health, and elderly care, develop specialized insurance products tailored to Hainan’s needs.
(25) Develop green finance. Encourage pilot initiatives in green financial innovation in Hainan, and support the development of the National Ecological Civilization Pilot Zone. Increase investment and financing support for ecological and environmental protection, particularly for addressing climate change.
(26) Support the development of science and technology finance and promote marine science and technology. On the premise of compliance with laws and regulations and controllable risks, encourage Hainan-based banks to strengthen cooperation with venture capital institutions, explore new models of science and technology finance, and support Hainan in bolstering innovation in deep-sea technologies. Innovate science and technology finance policies, products, and instruments.
(27) Strengthen the innovative application of financial technologies, provided that such applications comply with laws and regulations and remain under controllable risk. Support the Hainan Free Trade Port in conducting pilot programs for fintech innovations under the unified coordination of financial regulatory authorities, and steadily advance the deep integration of technology and financial services.
VI. Enhancing the Level of Financial Services
(28) Support the pilot implementation in Hainan of a unified domestic and foreign currency bank account system.
(29) Support commercial banks and China UnionPay, in collaboration with various industry stakeholders, to advance initiatives such as small and micro‑enterprise cards and rural revitalization cards. Focus on payment settlement, financing and credit enhancement, and enterprise value‑added service systems that serve small and micro‑enterprises and the “agriculture, rural areas, and farmers” sector, thereby meeting their needs for internet‑based and mobile‑enabled payment and settlement solutions.
(30) Enhance the convenience of cross-border mobile payments. Facilitate the use of mobile electronic payment tools by overseas residents in Hainan. Support domestic mobile payment institutions in expanding their operations abroad, and gradually broaden the geographical scope of cross-border mobile payments conducted through the Cross-Border Interbank Payment System (CIPS) via its overseas participating institutions.
(31) Continuously advance the development of a credit system for small, medium, and micro enterprises in Hainan; support the establishment of an integrated financial service platform for such enterprises, and ensure its interconnection with the national “Xinyidai” platform. Strengthen the collection and application of credit information for SMEs, thereby facilitating more efficient access to financial services. Deeply promote the construction of a rural credit system in Hainan, broaden the coverage of credit information in rural areas, enhance credit information services, and effectively align these efforts with inclusive finance and the rural revitalization strategy, thus supporting the real economy and the development of Hainan’s distinctive industries. Support Hainan in attracting credit rating agencies with significant market influence. Establish and improve mechanisms for sharing credit information, and bolster the development of Hainan’s local social credit system.
(32) Support Hainan in accelerating the development of modern service industries such as shipping finance and ship financing leasing.
(33) Support the development of the cultural, sports, and tourism sectors. Strengthen financial services in these fields. Establish a credit‑big‑data platform for cultural, sports, and tourism enterprises to address financing bottlenecks arising from insufficient credit information and information asymmetry between these enterprises and financial institutions. Promote special-purpose bonds for the cultural, sports, and tourism industries, optimize their financing structure, and gradually reduce financing costs. Build regional financial service platforms for culture and tourism, and improve the industry’s financial service system. With respect to Hainan’s distinctive industries—such as cruise ships and yachts—prioritize support for the development of cruise‑and‑yacht industrial clusters and related public‑service infrastructure.
(34) Under the framework of a long-term mechanism for the real estate sector, Hainan will be supported in developing real estate investment trusts (REITs) in the housing rental market, and banking and financial institutions will be encouraged to innovate financial products and services to foster the sound and orderly development of the housing rental market.
VII. Strengthen financial regulation and prevent and defuse financial risks.
(35) Establish a macroprudential financial management system, strengthen the identification of major risks, and enhance the prevention of systemic financial risks. Relying on the funds‑flow information monitoring and management system, put in place a robust framework for monitoring capital flows and managing risks. Improve the institutional framework and working mechanisms for anti‑money laundering, counter‑terrorist financing, and anti‑tax evasion, and explore the establishment of a money‑laundering risk‑assessment mechanism to conduct regular evaluations of money‑laundering and terrorist‑financing risks. Develop a financial regulatory coordination mechanism tailored to the development of the Hainan Free Trade Port, effectively fulfill local financial regulatory responsibilities, and ensure that risk‑prevention capabilities are aligned with financial reform and innovation.
(36) Support Hainan in establishing specialized judicial bodies for financial and bankruptcy matters, centralizing the adjudication of financial and bankruptcy cases to enhance the level of professional handling of such cases, and providing parties with higher‑quality, more efficient judicial protection.
(37) Strengthen the protection of financial consumers’ rights and interests. Support consumer dispute mediation organizations in the banking, securities, and insurance sectors in Hainan to fully play their roles, and establish a fair, efficient, and convenient non-litigious third-party mechanism for resolving financial disputes. Enhance communication and cooperation with local people’s courts and judicial administrative departments, implement the mechanism for linking litigation and mediation in the banking, securities, and insurance sectors, leverage the professional strengths of industry‑specific mediation bodies, and explore the establishment of a system for judicial conofficeation of mediation agreements in financial disputes. Conduct large‑scale financial literacy campaigns and set up a demonstration base for financial education in Hainan. Further enhance the role of securities and futures investor education bases.

People's Bank of China
China Banking and Insurance Regulatory Commission
China Securities Regulatory Commission
State Administration of Foreign Exchange
March 30, 2021

Xiao Gang, former chairman of the China Securities Regulatory Commission, stated that the return of Chinese concept stocks would help improve the structure of A-share listed companies.
On April 10, the Tsinghua Wudaokou Chief Economists Forum, hosted by the Wudaokou School of Finance at Tsinghua University, was officially held. Xiao Gang, a member of the National Committee of the Chinese People’s Political Consultative Conference and former Chairman of the China Securities Regulatory Commission, delivered a keynote address and fielded questions from reporters on hot‑button issues in the capital markets, including the registration-based IPO system and the return of Chinese concept stocks.
Xiao Gang stated that the full implementation of the registration-based IPO system will still require time and favorable conditions. The institutional adjustments and the development of a healthy market ecosystem during this process will take time; therefore, it is essential to avoid rushing and never lose confidence. Meanwhile, in recent years, Chinese companies listed in the U.S. have experienced a wave of delistings and returns to China. Commenting on this trend, Xiao Gang said: “If these U.S.-listed Chinese offices were to return to the A-share market, it would help improve the structure of A-share listed companies and enable domestic investors to share in the growth dividends of these enterprises.”
I. Fully implementing the registration-based system will still require a certain amount of time and favorable conditions.
In October 2020, Yi Huiman, Chairman of the China Securities Regulatory Commission, presented a report to the Standing Committee of the National People’s Congress on the progress of reforms related to the stock issuance registration system. Yi Huiman noted that, following pilot programs on the STAR Market and the ChiNext Board, the conditions for implementing the registration system across the entire market are gradually in place. Regarding the timing for fully rolling out the registration system, Xiao Gang stated that its comprehensive implementation will still require time and favorable conditions; therefore, at present, it is essential to proactively create the necessary prerequisites to pave the way for the next phase of full-scale adoption. He acknowledged that, as the registration‑based reform advances, certain challenges may arise, urging that these issues be analyzed and viewed objectively from a historical perspective. “China’s capital market has only been developing for about thirty years—a relatively short period—but its growth has been rapid, and it now ranks second globally. Compared with our own past, we have achieved remarkable progress: in such a brief span, we have traversed a journey that took Western countries over a century to complete.”
He stated: As a reform of the issuance system, the registration-based system is, in essence, a “key‑lever” initiative. On the surface, it appears to be an overhaul of the issuance regime, but in reality it touches upon the broader construction of the entire capital market ecosystem—a pivotal undertaking. Its reform will inevitably drive and catalyze systemic changes across the capital market, which in turn requires time to develop and mature. Specifically, under the registration‑based system, issuers bear primary responsibility for information disclosure; how they uphold integrity is closely tied to the establishment of an integrity‑based institutional framework and a culture of trust. For instance, intermediary institutions must assume the role of gatekeepers, and enhancing their accountability, governance structures, and professional capabilities will also take time. From the regulator’s perspective, this entails a shift in the regulatory paradigm—moving from ex‑ante oversight toward more robust ex‑post and ongoing supervision. Moreover, issues such as investor protection and the handling and punishment of violations have long been on the agenda. In the past, the cost of breaking the law was perceived as low; now, with legal reforms, the penalties for misconduct have risen substantially. Rigorous enforcement, coupled with the adoption of a framework that emphasizes sound institutions, non‑interference, and zero tolerance, involves all market participants and regulators alike. Accordingly, a mechanism for allocating responsibilities must be put in place, and the relevant systems will require further calibration and adaptation. The challenges currently emerging are precisely those that demand additional fine‑tuning and refinement as the registration‑based system is rolled out; there is simply no shortcut to this process.
He admitted, “In a sense, there may be some pain relief, but it is only temporary.” He believes that with several years of effort, coordination across all fronts will improve, so we should not let current challenges give rise to doubts or concerns about the registration‑based reform. “I think we must steadfastly press ahead in the direction of reform,” he said. He emphasized that the fundamental orientation of the registration‑based reform remains market‑oriented and governed by the rule of law, and this principle must be officely upheld. Building a sound ecosystem will inevitably take time; therefore, we must avoid rushing the process and, above all, maintain our confidence. We must continue to strengthen our resolve to advance the reform in a comprehensive manner.
II. If a large number of Chinese concept stocks delist from U.S. stock markets, U.S. interests will also be harmed.
On the issue of Chinese companies listed in the U.S. returning to China, Xiao Gang believes that the primary responsibility lies with the U.S. side. The China Securities Regulatory Commission and the U.S. Securities and Exchange Commission had previously reached a memorandum of understanding on audit-related matters for U.S.-listed Chinese offices. As everyone knows, however, the U.S. has disregarded this bilateral agreement and unilaterally introduced various regulations and administrative orders. Such measures are self‑defeating: they not only hinder Chinese companies from raising capital through U.S. listings but also undermine U.S. interests. By listing in the U.S., Chinese offices have contributed to the development of the American capital market, particularly benefiting U.S. financial intermediaries and the broader service sector.
He stated that if a large number of Chinese‑listed companies were to delist from U.S. stock markets, U.S. interests would also be harmed, making it a self‑defeating move. “We officely oppose this and believe that professional matters and regulatory issues in the securities market should not be politicized,” he emphasized. Of course, at present, there has not yet been a widespread wave of delistings among Chinese‑listed offices; however, judging from the U.S. stance, a significant number of such companies may choose to return. In doing so, they could first list in Hong Kong, which, as an international financial center with freely convertible and mobile capital, remains an attractive destination. Alternatively, those meeting the necessary conditions could opt for the A‑share market, which would help improve the structure of listed companies on China’s domestic exchanges and enable domestic investors to share in the growth dividends of these Chinese‑listed enterprises, given the increasing openness of the Chinese market. Nevertheless, he reiterated his hope that China and the United States will continue to strengthen cooperation in this area.

The Financial Stability and Development Committee meeting sent a signal: it encourages sound institutions to merge with troubled ones and local financial institutions.
Do not overemphasize scale expansion and growth speed.
According to the Chinese Government Website, on April 8, Vice Premier and Chairman of the Financial Stability and Development Committee Liu He presided over the 50th meeting of the State Council’s Financial Stability and Development Committee.
The meeting emphasized the importance of maintaining the continuity, stability, and sustainability of macro‑financial policies, effectively implementing a prudent monetary policy, ensuring the basic stability of the RMB exchange rate at an appropriate and balanced level, and fostering steady and sound economic performance. It is essential to keep prices broadly stable, with particular attention paid to trends in commodity prices. Efforts should focus on “letting the water rise to nurture the fish,” providing targeted support to enterprises facing difficulties, and further boosting the vitality of market entities. We must steadfastly uphold the principle of “two unwavering commitments” and vigorously support the healthy development of private enterprises and small, medium, and micro businesses.
It is worth noting that the meeting emphasized that, in accordance with market‑based and rule‑of‑law principles, sound institutions should be encouraged to merge with troubled ones, thereby promoting a balanced regional financial supply‑and‑demand structure. Furthermore, it called for enhancing the professional competence and ethical standards of financial practitioners, clearly defining behavioral red lines, and imposing appropriate constraints on the conduct of senior executives.
In recent years, provinces such as Sichuan and Guangdong have undertaken proactive efforts to restructure and merge rural credit institutions, achieving notable results. This approach is entirely consistent with the principle of preserving the county‑level legal entity status. Moreover, the interpretation of this principle should not be overly rigid. By means of restructuring and consolidation, the risk‑resilience of small and medium‑sized rural credit institutions can be strengthened, which, in the long run, will help safeguard their county‑level legal entity status.
I. Encourage sound institutions to merge with troubled ones.
The meeting noted that, through years of reform, China has gradually developed a financial institutional framework tailored to its national conditions, with large, medium-sized, small, and micro‑finance institutions engaging in division of labor and collaboration to jointly support economic and social development. Local financial institutions, serving as the “capillaries” of the financial system, have seen continuous improvements in overall quality, management capabilities, and market orientation, playing an irreplaceable role in serving agriculture, rural areas, and farmers; the grassroots level; and small, medium, and micro‑enterprises, while maintaining a generally sound momentum of healthy growth. At the same time, risks have begun to surface at some local financial institutions, and both internal governance and external supervision require further enhancement, warranting close attention.
The meeting called for a clear understanding of roles and an optimized structural framework. It urged local financial institutions to focus on their core businesses, remain rooted in their local markets, return to their fundamental mission, and adopt a prudent development philosophy. They should steadfastly uphold their positioning of serving the local economy, small and micro enterprises, and urban and rural residents, thereby fostering sustained and sound growth. In line with market‑based and rule‑of‑law principles, the meeting encouraged sound institutions to acquire troubled ones, thus helping to achieve a balanced regional financial supply‑and‑demand structure.
II. Strictly investigate and prosecute acts of dereliction of duty and malfeasance in financial regulation, among others.
Recently, the People’s Bank of China issued the Provisional Regulations on the Filing and Administration of Appointments for Directors, Supervisors, and Senior Management Personnel of Financial Holding Companies, stipulating that it will, in accordance with the law, implement a filing system for such personnel to promote the sound and orderly development of financial holding companies.
This meeting also called for strengthening regulation and enhancing its quality and effectiveness. Financial regulators are to intensify oversight of shareholders and ultimate controllers, risk concentrations, related-party transactions, and data authenticity, making full use of modern information technologies to bolster regulatory technology and improve both the efficiency and scope of supervision. Furthermore, accountability mechanisms must be reinforced, with rigorous investigations and sanctions imposed for failures or misconduct in financial regulation.
The meeting also called for strengthening governance and standardizing operations. Local financial institutions are required to improve corporate governance, enhance risk management, and uphold prudent operating practices, refraining from pursuing excessive expansion in scale or rapid growth. They must elevate the professional competence and ethical standards of financial personnel, clearly define behavioral red lines, and impose strict constraints on the conduct of top executives. Furthermore, Party building must be reinforced, corruption must be resolutely combated, and a zero‑tolerance policy must be maintained toward illegal and non‑compliant activities.

The State Administration for Market Regulation has imposed an administrative penalty on Alibaba.
According to the State Administration for Market Regulation, in December 2020, the Administration initiated an investigation under the Anti-Monopoly Law into Alibaba Group Holding Limited (hereinafter referred to as Alibaba Group) for abusing its dominant market position in China’s online retail platform services market.
The State Administration for Market Regulation established a special task force that, building on thorough preliminary work, conducted on-site inspections of Alibaba Group, interviewed relevant personnel, reviewed and copied pertinent documents and materials, and gathered substantial evidence. It also carried out extensive investigations and evidence collection among other competitive platforms and merchants operating on those platforms, undertook in-depth verification and big-data analysis of the case’s evidentiary materials, and organized experts to conduct repeated, comprehensive analyses and deliberations. Furthermore, it repeatedly heard Alibaba Group’s statements and views, thereby safeguarding its lawful rights and interests. The facts of this case are clear, the evidence is conclusive, the legal characterization is accurate, the disposition is appropriate, all formalities have been duly completed, and the procedures are lawful.
Upon investigation, it has been determined that Alibaba Group holds a dominant position in the online retail platform services market within China. Since 2015, Alibaba Group has abused this dominant position by imposing “choose one of two” requirements on merchants operating on its platforms, prohibiting them from opening stores or participating in promotional activities on competing platforms. Leveraging its market power, platform rules, and technological tools such as data and algorithms, Alibaba has employed a variety of incentive and penalty measures to ensure compliance with these requirements, thereby maintaining and strengthening its market dominance and securing an unfair competitive advantage.
The investigation has shown that Alibaba Group’s “choose one of two” practice has excluded and restricted competition in the online retail platform services market within China, impeded the free flow of goods, services, and production factors, undermined innovation and development in the platform economy, infringed upon the legitimate rights and interests of merchants on its platforms, and harmed consumer interests. Such conduct constitutes an abuse of a dominant market position prohibited under Article 17, Paragraph 1, Item (4) of the Anti-Monopoly Law, which prohibits “without just cause, restricting trading counterparties to transact only with itself.”
In accordance with Articles 47 and 49 of the Anti-Monopoly Law, and taking into account the nature, severity, and duration of Alibaba Group’s unlawful conduct, on April 10, 2021, the State Administration for Market Regulation issued an administrative penalty decision in accordance with the law, ordering Alibaba Group to cease its illegal practices and imposing a fine equal to 4% of its 2019 sales revenue within China, which amounted to RMB 455.712 billion, totaling RMB 18.228 billion. At the same time, in line with the principle enshrined in the Administrative Penalty Law of combining punishment with education, the Administration issued an Administrative Guidance Letter to Alibaba Group, requiring it to undertake comprehensive rectification measures focusing on strictly fulfilling its principal responsibilities as a platform enterprise, strengthening internal control and compliance management, safeguarding fair competition, and protecting the legitimate rights and interests of merchants and consumers on its platform, and to submit self‑inspection and compliance reports to the State Administration for Market Regulation for three consecutive years.

Commercial & Corporate
The Ministry of Housing and Urban–Rural Development held talks with five cities, including Guangzhou and Hefei, to resolutely curb speculative real estate trading.
On April 8, news that the Ministry of Housing and Urban–Rural Development had held talks with officials from five cities, including Guangzhou and Hefei, topped social media trending lists. According to Xinhua News Agency, Vice Minister Ni Hong convened meetings on the same day with heads of the governments of Guangzhou, Hefei, Ningbo, Dongguan, and Nantong, urging them to fully recognize the importance of ensuring the stable and sound development of the real estate market, officely uphold the principle that housing is for living in, not for speculation, refrain from using real estate as a short-term tool to stimulate the economy, and earnestly assume their responsibilities as local governments to achieve the goals of stabilizing land prices, housing prices, and market expectations.
Behind the roundtable talks lies the fact that housing prices in these five cities have risen markedly, and speculative activity is prevalent. Xu Xiaole, chief market analyst at the Shell Research Institute, noted that regulatory measures have shifted from first-tier cities to second-tier cities and even to hot third- and fourth-tier cities—wherever prices rise, regulation follows. At the same time, policies are becoming increasingly clear, and their response times are accelerating, helping to nip rising home prices in the bud and maintain stable expectations in the real estate market.
According to a Xinhua News Agency report, Ni Hong emphasized the need to strengthen the evaluation of policy implementation, promptly refine relevant policies, and enhance the targetedness and effectiveness of regulatory measures. City governments should demonstrate greater proactiveness and initiative, closely monitor emerging developments and challenges, swiftly introduce tailored measures, conduct precise regulation, resolutely curb speculative real estate activities, manage market expectations effectively, and ensure the stable functioning of the real estate market.
Ni Hong also emphasized the need to refine the coordinated mechanism linking population, land, and housing, strengthen integrated policy coordination with measures related to household registration and compulsory education, tighten oversight of second-hand housing transactions, and enhance the systemic, holistic, and collaborative nature of real estate market regulation.
According to Xinhua News Agency, five cities stated that they will resolutely implement the decisions and arrangements of the CPC Central Committee and the State Council, earnestly fulfill their primary responsibilities, closely monitor market developments, and take decisive action to address emerging issues and potential trends, thereby ensuring the goals of stabilizing land prices, housing prices, and market expectations. It is understood that the Ministry of Housing and Urban–Rural Development has added Dongguan and Nantong to its list of key cities for real estate market monitoring.
In fact, since April, cities including Guangzhou and Hefei have successively introduced real estate market‑regulation policies, which have played a role in stabilizing the market. On April 2, Guangzhou issued the “Opinions of the General Office of the Guangzhou Municipal People’s Government on Further Promoting the Stable and Healthy Development of the Real Estate Market,” setting out clear provisions on land prices, housing prices, and regulatory oversight, with the aim of keeping land prices, home prices, and market expectations stable and fostering the steady, healthy development of the real estate sector.
Among them, Guangzhou’s new policies—such as allowing the transfer of talent‑housing units only after three years and imposing restrictions on projects with excessively high pricing or those unable to obtain relevant permits—have drawn significant attention. Yan Yuejin believes these measures effectively integrate “prioritizing housing access for talent” with “curbing speculative real estate activity.” This approach not only helps attract and retain skilled professionals but also serves to prevent various forms of market speculation, thereby cracking down on the phenomenon of “fake talent used to fuel property speculation.” Moreover, it has largely closed loopholes that had previously undermined Guangzhou’s efforts to attract talent over the past two years.
Three days later, on April 5, Hefei issued the “Notice on Further Promoting the Stable and Healthy Development of the City’s Real Estate Market,” which introduced eight policy measures covering school‑district zoning, restrictions on second‑hand home purchases, and a lottery‑and‑sales‑restriction system for popular housing projects. The notice also stipulated that at least 30% of housing units must be allocated to first‑time homebuyers with genuine housing needs. Specifically, regarding school‑district housing, the new policy clarifies that, while adhering to Hefei’s existing compulsory education enrollment rules, each residential unit may only qualify for one primary‑school place within its designated school district over a six‑year period and one junior‑high‑school place over a three‑year period—except in cases involving twins or second children that comply with relevant laws and regulations. Industry insiders believe that the overheated housing markets in many cities are closely linked to speculative demand for school‑district properties; the introduction of such policies to curb this speculation is therefore highly significant.
In addition, Hefei’s new policy has expanded the scope of home‑purchase restrictions: it limits households with Hefei residency to owning no more than two properties when purchasing secondhand homes, suspends corporate eligibility to buy housing, and brings judicially auctioned properties within the purview of these restrictions. For hot‑spot developments, the policy also tightens oversight of property‑information disclosure: any project where the ratio of registered buyers to available units is 1.5 or higher must adopt a lottery‑based sales system, with units purchased through the lottery subject to a three‑year resale restriction. Meanwhile, in March, Hefei had already taken multiple measures to curb irregularities in the housing market, including introducing new regulations on online registration for secondhand home transactions, summoning the heads of 11 key real estate developers and four major real estate brokerage offices, and holding talks with homeowners engaging in speculative price‑gouging.

Danke Apartment was delisted, falling from its peak to rock bottom in just 455 days.
On the evening of April 6, the New York Stock Exchange (NYSE) announced that it would delist Danke Apartment (DNK.N), signaling the failure of China’s second long-term rental‑apartment operator to succeed in the U.S. capital markets. A former employee who left Danke years ago was not surprised by the news; in his view, the company’s challenges went beyond simply burning cash—its overall business model was inherently inefficient.
From its founding in early 2015 to its forced delisting in early 2021, Danke Apartment rapidly rose by leveraging the internet to transform the traditional rental industry, becoming a viral brand in the housing‑rental market. At the same time, it sparked widespread controversy over issues such as “driving up rents” and “explosive defaults.” Today, Danke Apartment finds itself mired in severe losses.
Eggshell Apartment is an apartment‑rental brand under Ziwutong, founded in early 2015. Over five years of growth, it has amassed a substantial user base and expanded its footprint across multiple cities, earning widespread acclaim from industry insiders and emerging as a leading player in the long‑term rental‑apartment sector. Just five years after its inception, in January 2020, Eggshell went public on the New York Stock Exchange, becoming the first Chinese‑concept stock to list on the exchange that year. At its peak, the company raised nearly $130 million through its IPO, with its market capitalization briefly surging to $2.7 billion. Prior to its listing, Eggshell enjoyed remarkable success: data shows it completed seven rounds of financing before going public, attracting investors such as Ant Financial, Joy Capital, Primavera Capital, and CMC Capital, among others.
Billed as “China’s first IPO to list on the NYSE in 2020,” Danke Apartment opened at $13.50 on its debut day—though this was below the previously announced price range of $14.50 to $16.50, it still placed it in the upper-middle tier among Chinese stocks listed on the NYSE. However, since the second half of last year, Danke Apartment’s share price has plummeted, ultimately settling at $2.367—a staggering 82% decline.
Tracing the sharp decline in Eggshell Apartment’s stock price, the most critical factor is the pandemic‑induced drop in rental income, which has led to a marked deterioration in the performance of long‑term rental offices. Take Qingke Apartment as an example: as of September 30, 2020, the company reported revenue of RMB 1.21 billion, down 2.1% year over year, while its net loss attributable to shareholders widened to RMB 1.53 billion.
Since 2017, Danke Apartment has embarked on a rapid expansion and, by 2019, had been recognized by third-party analysts as one of China’s largest and fastest-growing shared‑living platforms. For Danke Apartment, its strategy of acquiring high‑priced properties was further complicated by the COVID‑19 pandemic, which exacerbated its already challenging circumstances.
A steady stream of negative news has also weighed on investor confidence. At the end of 2020, Danke Apartment’s cash flow collapsed, leaving roughly 520,000 rooms under its management affected. In January this year, Danke Apartment was designated an ineligible issuer by the New York Stock Exchange for failing to file its 2020 interim report on time. Lacking the required data and information, Danke Apartment’s shares were ultimately deemed unsuitable for continued listing.

Lianyirong Technology opened nearly 10% higher on its debut trading day.
On April 9, Linklogis Technology (09959, HK) began trading on the Hong Kong Stock Exchange. With an IPO price of HK$17.58 per share, the stock opened nearly 10% higher in early trading, at HK$19.32 per share, breaking the wave of post-IPO price declines that has persisted in the Hong Kong market since March this year.
Lianyrong is known as the “first SaaS‑based supply chain fintech stock,” making it relatively rare in the Hong Kong stock market. According to reports, the well‑known investment office Zhenxin Valley has committed to four consecutive rounds of investment over five years, becoming the institutional investor with the most participation in Lianyrong’s funding rounds and currently holding a 11.92% stake.
According to the prospectus, Lianyi Rong Technology was founded in 2016. Tencent was an early investor in Series A and currently holds 18.89% of the company’s shares, making it the single largest shareholder—more than the personal stake held by the founder and CEO, Song Qun. Other investors include CITIC Capital, Zhenxin Valley Capital, Singapore’s Government Investment Corporation (GIC), and Standard Chartered Bank, with respective holdings of 12.03%, 11.92%, 9.2%, and 3.61%.
The cornerstone investors in Lianyirong’s Hong Kong IPO include BlackRock, Fidelity International, Janus Henderson Investors, the Ontario Teachers’ Pension Plan, Sequoia Capital, and EDB Investments, with subscription amounts of US$100 million, US$100 million, US$50 million, US$50 million, US$50 million, and US$15 million, respectively.
The substantial and prestigious roster of shareholders and cornerstone investors has added significant appeal to Lianyi Rong’s IPO. Most notably, Tencent, as the largest institutional shareholder, has consistently supported the company’s growth. As stated in Lianyi Rong’s prospectus, “the company can leverage Tencent’s cutting-edge foundational technologies, including blockchain, facial recognition, cloud computing, and payment systems.” This underscores the exceptionally close collaboration between the two parties. In fact, as a core member of Tencent’s B2B strategic ecosystem, Lianyi Rong has capitalized on its close ties with Tencent—through mutual engagement and resource sharing—to build robust competitive advantages and achieve rapid expansion.
In recent years, Lianyi Rong has achieved rapid growth. The total transaction value processed by the company’s supply-chain fintech solutions increased from RMB 29.3 billion in 2018 to RMB 82.6 billion in 2019, a year-on-year rise of 182%, and further climbed to RMB 163.8 billion in 2020, up 98.3% from 2019. The company’s total revenue and earnings also expanded, rising from RMB 383 million in 2018 to RMB 700 million in 2019—a growth rate of 83%—and posting a 47% year-on-year increase in 2020, reaching RMB 1.029 billion. Adjusted net profit reached RMB 192.3 million in 2020, compared with RMB 36.5 million in 2019. The company’s gross margin has improved steadily, standing at 50.6%, 51.9%, and 61.3% for the years 2018 through 2020, respectively. As of September 30, 2020, the group employed a team of 341 seasoned technology experts, accounting for 62% of its total workforce. As of the Latest Practicable Date, the company had filed and registered more than 340 patents and copyrights.
Lianyirong’s primary revenue model is to charge service fees for its technology solutions based on transaction volume. Its supply-chain fintech solution customer net expansion rate was approximately 125% in 2019 and about 116% in the first nine months of 2020. Moreover, during the same period, the customer retention rate for its supply-chain fintech solutions reached 99%. In terms of staffing, as of September 30, 2020, Lianyirong had a total of 548 employees, with roughly 62%—or 341 individuals—engaged in technology-related roles. During the same period, the company employed 89 staff members in sales and marketing and 118 in general administration.
According to the prospectus, Song Qun, the founder and controlling shareholder of Lianyirong, serves as its Chairman and CEO; co-founder Ji Kun is the President, and co-founder Zhou Jiaqiong holds the positions of Vice Chairman and Chief Risk Officer. The company’s senior management also includes Chief Technology Officer Zhong Songran, Vice President Li Xiaogang, and Chief Financial Officer Zhao Yu, among others.
According to publicly available information, Lianyi Rong’s shareholders and investors include Tencent, CITIC Capital, Zhenxin Valley, Bertelsmann Asia Investments (BAI), Standard Chartered Bank, among others. Prior to its IPO, Tencent held an 18.89% stake, while CITIC Capital’s shareholding stood at 12.03%. In August 2016, August 2017, and October 2018, Lianyi Rong completed three rounds of financing, raising RMB 100 million, RMB 200 million, and USD 200 million, respectively, with Tencent participating in each round. On December 31, 2019, the company secured C1‑round funding from Standard Chartered Bank. Under the terms of the deal, it agreed to issue and allocate 5,444,444 shares of C1‑round preferred stock to the C1‑round investors at a purchase price of USD 10.102 per share, for a total consideration of USD 54.9998 million. Notably, in 2020, Lianyi Rong also obtained a digital banking license from the Monetary Authority of Singapore (MAS), which was applied for by a consortium comprising Lianyi Rong, Greeland Financial Group under Greeland Holding, Beijing Xielichuangcheng Equity Investment Fund, and other entities. From an industry perspective, the supply-chain fintech sector in China remains in a relatively early stage of development, characterized by rapid growth, while policy measures continue to promote the orderly and healthy evolution of supply-chain finance.
Looking solely at the supply-chain fintech solutions market, relevant data projects that total spending by core enterprises and financial institutions on technology-driven solutions will grow from RMB 43.4 billion in 2019 to RMB 164.2 billion by 2024, reflecting a compound annual growth rate of 30.5%. This also underscores that Lianyi Rong continues to enjoy robust underlying support for sustaining rapid business expansion within this fast‑growing sector.

SF Express expects a massive loss of over RMB 900 million in the first quarter.
SF Express has posted its first-ever quarterly loss since going public. On the evening of April 8, SF Holding (002352.SZ) released its preliminary results for the first quarter of 2021, forecasting a net loss attributable to shareholders of at least RMB 900 million for the period. Dragged down by this negative news, SF Express opened today with an immediate limit-down.
According to the announcement, SF Express expects a net loss attributable to shareholders of RMB 900 million to RMB 1.1 billion in the first quarter of 2021, compared with a profit of RMB 907 million in the same period last year. Non‑GAAP net loss is projected at RMB 1.0 billion to RMB 1.2 billion, whereas non‑GAAP net income for the corresponding period in 2020 was RMB 832 million.
Meanwhile, SF Express’s previously released monthly operating data showed year-on-year growth. From January to February this year, the company’s cumulative revenue from express logistics and supply chain services totaled RMB 27.595 billion, up 33.72% compared with the same period last year; its total volume of express logistics shipments reached 1.602 billion parcels, a 53.89% increase over the prior-year period.
Regarding the reasons for the change in performance, SF Express explained that, in the first quarter of 2021, the company, aligned with its strategic direction of further enhancing its integrated logistics services and supply chain solutions capabilities, continued to ramp up investment in new business development and resource allocation, while integrating and optimizing its resources to strengthen its operational foundation. These investments have placed short-term pressure on the company’s cost structure. Specifically, as the company is in a critical phase of expanding into new business lines, it has continued to increase upfront investments to broaden its market share and build long-term core competitiveness.
Last year, the pandemic to some extent slowed the pace of the company’s capital expenditure. With a clear upward trend in customer demand and rapid growth in business volume, capacity bottlenecks emerged across multiple links in the express delivery chain. To ensure timeliness and service reliability, the company began ramping up temporary resource deployment in the fourth quarter of last year to handle the surge in volume, resulting in cost pressures in both the fourth quarter of last year and the first quarter of this year.
Based on its substantial volume of land‑transport‑related business, the company has reassessed resource allocation across all business lines, seamlessly integrating resources from its express delivery network, fast‑delivery network, warehousing network, and franchise network. In the initial phase of this integration, some resource duplication may occur. Additionally, labor costs have surged as employees continue to work throughout the Spring Festival holiday. SF Express stated that, to support e‑commerce platforms and customers’ plans for uninterrupted service during the holiday and in line with calls to reduce population mobility, the company provided record‑high subsidies to frontline and second‑tier staff in the first quarter.
The underperformance of the less-than-truckload (LTL) business also weighed on SF Express’s results. During last year’s pandemic, the surge in demand for epidemic‑prevention supplies and online consumer goods further fueled strong growth in time‑critical shipments; however, this year’s first‑quarter growth was constrained by that high base. Meanwhile, as competitors kept their operations open during the Spring Festival in certain regions, they captured a portion of the LTL market, resulting in slower-than-expected growth for SF Express’s LTL segment within its time‑critical offerings.
On April 9, SF Express opened at the daily limit-down price of RMB 72.72, with a market capitalization of RMB 331.3 billion. Compared to its February high of RMB 124.7, the company’s share price has fallen by more than 40%.

Taxation TAXATATION
Announcement of the Ministry of Finance and the State Taxation Administration on the Implementation of Preferential Income Tax Policies for Small and Micro Enterprises and Individual Business Households
Announcement No. 12 of 2021 by the Ministry of Finance and the State Taxation Administration
To further support the development of small and micro enterprises and individual business households, the following matters concerning the implementation of preferential income tax policies for such entities are hereby announced:
I. For small and low-profit enterprises, the portion of their annual taxable income not exceeding RMB 1 million shall be subject to an additional 50% reduction in corporate income tax, on top of the preferential policy stipulated in Article 2 of the “Notice of the Ministry of Finance and the State Taxation Administration on Implementing Universal Tax Relief Measures for Small and Micro Enterprises” (Cai Shui [2019] No. 13).
II. For individual business households, the portion of their annual taxable income not exceeding RMB 1 million shall be subject to personal income tax at a rate reduced by half, on top of the existing preferential policies.
III. The period of validity of this announcement is from January 1, 2021, to December 31, 2022.
This is hereby announced.

Ministry of Finance, State Taxation Administration
April 2, 2021

Announcement of the State Taxation Administration on Matters Relating to the Implementation of Income Tax Preferential Policies Supporting the Development of Small and Low-Profit Enterprises and Individual Business Households
State Taxation Administration Announcement No. 8 of 2021
In order to implement the “Announcement of the Ministry of Finance and the State Taxation Administration on the Implementation of Preferential Income Tax Policies for Small and Micro Enterprises and Individual Business Households” (No. 12, 2021), and further support the development of small and low-profit enterprises and individual business households, the following matters are hereby announced:
I. Matters Relating to the Policy of Halving Income Tax for Small and Low-Profit Enterprises
(1) For small and low-profit enterprises, the portion of annual taxable income not exceeding RMB 1 million shall be included in taxable income at a reduced rate of 12.5%, and corporate income tax shall be paid at a tax rate of 20%.
(2) With respect to specific administration and collection issues arising when small and low-profit enterprises benefit from the aforementioned policies, such matters shall be handled in accordance with the relevant provisions set forth in the State Taxation Administration’s Announcement on Issues Concerning the Implementation of the Universal Income Tax Relief Policy for Small and Low-Profit Enterprises (No. 2, 2019).
II. Matters Concerning the Policy of Halving Individual Income Tax for Self-Employed Individuals
(1) For the portion of an individual business household’s annual taxable income that does not exceed RMB 1 million, personal income tax shall be levied at half the rate applicable under the existing preferential policies. This measure applies to all individual business households, regardless of their tax collection method.
(2) Individual business households may enjoy the relevant tax benefits when making provisional tax payments. Their annual taxable income shall, for the time being, be determined based on the situation as of the end of the tax period to which the current return pertains, and the final annual settlement will calculate the tax liability on an annual basis, with any overpayment refunded and any underpayment made up. If an individual business household derives business income from two or more sources, it must, when filing its annual consolidated tax return, combine the annual taxable income from all such sources, recalculate the applicable tax reductions and exemptions, and adjust accordingly—refunding any excess and collecting any shortfall.
(3) Individual business households shall calculate the amount of tax reduction or exemption in accordance with the following methods:
Tax reduction or exemption amount = (Tax payable on the portion of an individual business household’s taxable income not exceeding RMB 1 million − Other policy‑based tax reductions and exemptions × [portion of taxable income not exceeding RMB 1 million ÷ total taxable income from business operations]) × (1 − 50%)
(4) Individual business households shall enter the tax reduction or exemption amount calculated in accordance with the aforementioned method into the “Tax Reduction/Exemption Amount” column of the corresponding income‑from‑business tax return, and submit the “Report Form for Personal Income Tax Reductions and Exemptions.” For individual business households filing through the electronic tax bureau, the tax authorities will provide a pre‑filled service for both the preferential policy’s tax reduction/exemption amount and the report form. For regularly and periodically fixed‑amount individual business households that adopt simplified filing, the tax authorities will remit taxes based on the amount after the reduction or exemption has been applied.
III. Matters Concerning the Cancellation of the Provisional Withholding of Individual Income Tax on Agency-issued Invoices for the Freight Transportation Industry
When issuing VAT invoices on behalf of individual industrial and commercial households, sole proprietorships, partnerships, and individuals in the freight transportation sector, no withholding of individual income tax shall be applied. Owners of individual industrial and commercial households, investors in sole proprietorships, individual partners in partnerships, and other individuals engaged in freight transportation activities shall, in accordance with the law, independently file and pay the individual income tax on business income.
IV. Regarding the Effective Date and Other Matters
Articles 1 and 2 of this announcement shall take effect on January 1, 2021, and cease to be in force on December 31, 2022. For the period from January 1, 2021, to the date of issuance of this announcement, individual business households that have already paid individual income tax on business income may have such payments automatically offset against their tax liabilities in subsequent months; any remaining balance not fully offset within the year may be refunded during the annual tax reconciliation and final settlement, or they may directly apply for a refund of the tax amount eligible for reduction or exemption. Article 3 of this announcement shall take effect on April 1, 2021.
Where Article 1 of the “Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Universal Income Tax Relief Policy for Small and Low‑Profit Enterprises” (No. 2, 2019) is inconsistent with this Announcement, the provisions of this Announcement shall prevail. The “Announcement of the State Taxation Administration on the Withholding Rate of Individual Income Tax for Invoices Issued on Behalf of the Freight Transport Industry” (No. 44, 2011) is hereby repealed simultaneously.

This is hereby announced.

State Taxation Administration
April 7, 2021

Announcement of the Ministry of Finance and the State Taxation Administration on the Extension of Value-Added Tax Preferential Policies for the Publicity and Cultural Sectors
Announcement No. 10 of 2021 by the Ministry of Finance and the State Taxation Administration
To promote the development of China’s publicity and cultural undertakings, the preferential value-added tax policy for publicity and cultural activities will continue to be implemented. The relevant matters are hereby announced as follows:
I. From January 1, 2021, to December 31, 2023, the following value-added tax policy of collection first and refund later shall be implemented.
(1) The following publications shall be subject to a 100% value-added tax collection‑and‑refund policy at the publishing stage:
1. The official newspapers and periodicals of the Communist Party of China and the organizations of the non‑Communist political parties at all levels; the official newspapers and periodicals of the people’s congresses, the Chinese People’s Political Consultative Conference, the governments, trade unions, the Communist Youth League, the All‑China Women’s Federation, the China Disabled Persons’ Federation, and the China Association for Science and Technology at all levels; the official newspapers and periodicals of Xinhua News Agency; and the official newspapers and periodicals of the military departments.
The aforementioned organizations at all levels do not include their respective subordinate departments. With respect to government‑affiliated newspapers and periodicals, the scope of the value‑added tax collection‑and‑refund policy is limited to one newspaper and one periodical per entity.
2. Newspapers and periodicals published and distributed specifically for children and adolescents, as well as textbooks for primary and secondary school students.
3. Newspapers and periodicals published and distributed specifically for the elderly.
4. Publications in minority languages.
5. Braille books and Braille periodicals.
6. Publications published by publishing entities registered in the five autonomous regions of Inner Mongolia, Guangxi, Tibet, Ningxia, and Xinjiang, with approval.
7. Books, newspapers, and periodicals listed in Annex 1 to this announcement.
(2) The policy of collecting value-added tax at the time of publication and then refunding 50% shall apply to the following publications:
1. All types of books, periodicals, audiovisual products, and electronic publications, except for those publications to which the 100% value-added tax collection‑and‑refund policy specified in Article 1, Paragraph (1) of this announcement applies.
2. Newspapers listed in Annex 2 to this announcement.
(3) The policy of collecting value-added tax at 100% and then refunding it shall be applied to the following printing and production services:
1. Printing or production services for publications in the languages of ethnic minorities.
2. The printing operations of printing enterprises in the Xinjiang Uygur Autonomous Region, as listed in Annex 3 to this announcement.
II. From January 1, 2021, to December 31, 2023, value-added tax shall be exempted on the wholesale and retail stages of book sales.
III. From January 1, 2021, to December 31, 2023, value-added tax shall be exempted on ticket revenues generated by science popularization institutions, as well as on ticket revenues derived from science popularization activities organized by Party and government departments at or above the county level and by science and technology associations.
IV. Taxpayers eligible for the value-added tax (VAT) “collect first, refund later” policy set forth in Items (1) and (2) of Article 1 of this Announcement must be publishing entities holding the relevant publication‑publishing license (including those that have obtained exclusive publishing rights through a “rental‑type” arrangement and are engaged in the printing and distribution of publications). Entities entrusted by provincial‑level or higher publishing administrative authorities with designated publishing and distribution tasks, as well as those that, due to restructuring or other reasons, have not yet completed the amendment procedures for their publishing and distribution licenses, may, upon approval by the local fiscal supervision bureaus of the Ministry of Finance (hereinafter referred to as the Fiscal Supervision Bureaus) in consultation with the respective provincial publishing administrative authorities, avail themselves of the corresponding VAT “collect first, refund later” policy.
Taxpayers shall maintain separate accounting for publications benefiting from the aforementioned tax preferential policies; those failing to do so shall not be eligible for the preferential treatment stipulated in this announcement. Publications found to be in violation of regulations, as well as publishing entities and book wholesale and retail enterprises that have repeatedly engaged in violations, shall not be entitled to the preferential policies set forth herein. The specific list of such non‑compliant publications, publishing entities, and book wholesale and retail enterprises shall be promptly communicated by the provincial‑level or higher publishing administrative authorities to the relevant fiscal supervisory bureaus and competent tax authorities.
V. Electronic publications that have already benefited from the value-added tax refund policy applicable to software products may not, under this Announcement, apply for the value-added tax “collect first, refund later” policy.
VI. The various value-added tax “collect first, refund later” policies stipulated in this announcement shall be administered by the Financial Supervision Bureau in accordance with the provisions of the “Interim Regulations on Budgetary Management Issues Concerning the Implementation of the ‘Collect First, Refund Later’ Policy for Certain Enterprises Following Tax Reform,” jointly issued by the Ministry of Finance, the State Taxation Administration, and the People’s Bank of China (Document No. [1994] Cai Yu Zi No. 55).
VII. Definitions Relevant to This Announcement
(1) For the purposes of this announcement, “publications” refer to books, newspapers, periodicals, audiovisual products, and electronic publications that are published in accordance with the relevant regulations of the State Council’s administrative department for press and publication. The aforementioned books, newspapers, and periodicals also include information carriers such as CDs, floppy disks, and magnetic tapes that are sold together with them and are inseparable.
(2) The scope of books, newspapers, and periodicals (i.e., magazines) shall be governed by the provisions set forth in the “Notice of the State Administration of Taxation on Issuing the ‘Annotations on the Scope of VAT Levies for Certain Goods’” (Guo Shui Fa [1993] No. 151); the scope of audiovisual products and electronic publications shall be governed by the provisions set forth in the “Notice of the Ministry of Finance and the State Taxation Administration on Policies Relating to the Simplification of VAT Rates” (Cai Shui [2017] No. 37).
(3) The “newspapers and periodicals published and distributed exclusively for children and adolescents” referred to in this announcement shall mean newspapers and periodicals whose primary audience is children and adolescents at or below the junior high school level.
(4) The “textbooks for primary and secondary school students” referred to in this announcement shall mean both general‑education textbooks for primary and secondary schools and textbooks for secondary vocational education. General‑education textbooks for primary and secondary schools are officially approved textbooks prepared in accordance with the national curriculum framework and standards, reviewed and approved by the State Council’s education administrative department or by the provincial education administrative departments, and provided by entities holding publishing and distribution qualifications authorized by the State Council’s press and publication administration. In practice, such textbooks shall be determined in line with the scope of “textbooks” listed in the annual “Catalogue of Textbooks for Primary and Secondary Schools” issued by the State Council and the provincial education administrative departments. Textbooks for secondary vocational education are those used by students at secondary vocational schools established in compliance with nationally prescribed standards and approval procedures and duly registered with the education administrative departments, as well as by students at technical schools registered with the human resources and social security administrative departments. In practice, these shall be identified according to the catalogues of teaching materials published by the State Council and the provincial education and human resources and social security administrative departments. The term “textbooks for primary and secondary school students” does not include any form of instructional reference books, illustrated atlases, readers, extracurricular reading materials, workbooks, or other types of supplementary teaching aids.
(5) The “newspapers and periodicals published and distributed exclusively for the elderly” referred to in this announcement shall mean newspapers and periodicals primarily intended for elderly readers; the specific scope is set forth in Annex 4.
(6) The books referred to in Items (1) and (2) of Article 1 of this Announcement include those published under the “rental‑type” model.
(7) The “science popularization entities” referred to in this announcement include science and technology museums, natural history museums, publicly accessible planetariums (stations or observatories), meteorological stations, seismic stations, as well as science popularization bases open to the public at institutions of higher learning and research institutes.
The “science popularization activities” referred to in this announcement are those that, through various media and in a clear, accessible manner that the public can easily understand, accept, and engage with, introduce knowledge of natural and social sciences to the general public, promote the application of science and technology, advocate scientific methods, disseminate scientific ideas, and uphold the spirit of science.
VIII. This Announcement shall take effect as of January 1, 2021. The “Notice of the Ministry of Finance and the State Taxation Administration on Extending the Value-Added Tax Preferential Policies for the Publicity and Cultural Sectors” (Cai Shui [2018] No. 53) is hereby repealed simultaneously.
With respect to the value-added tax that is exempted pursuant to Articles 2 and 3 of this Announcement, any amounts already collected and remitted to the treasury prior to the issuance of this Announcement may be offset against the taxpayer’s value-added tax liabilities for subsequent months or refunded. If a taxpayer has already issued a special value-added tax invoice to the purchaser, the exemption may be applied only upon the return of such special invoice. Where the special invoice cannot be retrieved, value-added tax shall be levied in accordance with the applicable regulations.

This is hereby announced.
Ministry of Finance, State Taxation Administration
March 22, 2021

Shanghai: Implementing a Multi‑Pronged Approach to Further Enhance the Tax‑Related Business Environment
On April 1, the Shanghai Municipal Tax Service of the State Taxation Administration held the launch ceremony for the 30th Tax Publicity Month at the North Shanghai High-Tech Park, inaugurated Shanghai’s first smart tax‑related social co-governance hub, and released the Shanghai Tax Business Environment White Paper, thereby marking the official start of Shanghai’s 30th Tax Publicity Month.
I. Launching Smart Tax Governance Community Co-Governance Hubs
At the launch ceremony, Ma Zhengwen, Secretary of the Party Committee and Director of the Shanghai Municipal Tax Service Bureau, together with Yu Yong, Secretary of the Jing’an District Party Committee, unveiled Shanghai’s first smart tax‑related social co‑governance hub.
The Smart Tax Co‑Governance Service Center in the North Shanghai High‑Tech Park is a “smart achievement” jointly developed by the Shanghai tax authorities and the Jing’an District Party Committee and Government. It integrates a range of commonly used taxpayer services, including tax‑related transaction processing, invoice issuance, and tax advisory support. Grounded in the principles of meticulous service and collaborative governance, and leveraging information‑based, intelligent, and socially integrated resources, this initiative represents a valuable effort to optimize and upgrade the tax‑friendly business environment. It has effectively addressed the “last‑mile” tax‑filing challenges faced by nearly 3,500 corporate taxpayers within the park and its surrounding area, covering roughly 4 square kilometers.
Song Guoxian, a financial officer at Shanghai Beigaoxin (Group) Co., Ltd., used a VRM terminal at a co-governance service point and, leveraging remote transmission and remote connection‑based consultation features, successfully completed the application process for a property tax refund.
In addition to intelligent tax‑processing equipment, convenience and efficiency are also key highlights of the co‑governance hub. Taking the common invoice‑collection process as an example, businesses can enjoy a “T+0” service—from application to receipt—without leaving the park, further reducing the time required to obtain invoices.
Zhao Mingfu, Party Secretary and Director of the Jing’an District Tax Service Bureau, stated: “The co-governance service point has pioneered four innovative features—remote tax processing, air‑based holographic consultations, interactive tax services with model workers, and integrated government‑service handling. Not only does it streamline tax‑related procedures through intelligent technologies, but by deploying ‘One‑Stop Online’ equipment, it has also, for the first time, extended a broader range of public services—including employment and entrepreneurship support, document processing, and marriage registration—to the tax service point. This initiative represents a pioneering effort to align with regional economic development and explore smart, collaborative approaches to tax administration.”
II. Release of the White Paper on the Tax-Related Business Environment
At the launch ceremony, the Shanghai Municipal Tax Service Bureau publicly released the “Shanghai Tax Business Environment White Paper” for the third consecutive year. Jiang Xutao, a member of the Party Committee and Deputy Director of the bureau, systematically outlined the measures and outcomes implemented in 2020 to improve Shanghai’s tax business environment, covering areas such as supporting pandemic response and economic recovery, serving major national strategies, streamlining the number of filing occasions, maximizing the impact of tax and fee reductions, shortening the time required to pay taxes and fees, advancing post‑filing procedures, and enhancing the taxpayer experience.
Since 2020, the Shanghai tax authorities have steadfastly pursued a policy of “practical and rigorous implementation,” fully and faithfully enacting a series of tax and fee reduction measures. At the same time, they have remained committed to “setting benchmarks and building a strong brand,” proactively innovating and making breakthroughs in service delivery to create a world-class business environment.
“The Shanghai tax authorities will continue to benchmark against the highest standards and best practices, vigorously implement reforms to streamline tax compliance, advance tax reform, deliver on tax and fee reductions, continuously enhance service quality, and improve governance effectiveness, thereby fostering an even more favorable tax‑related business environment for all types of market entities,” said Jiang Xutao.
It is understood that, in April this year, under the theme “Taxation Benefits the People and Delivers Practical Results; Deepening Reform Opens Up New Prospects,” tax authorities at all levels in Shanghai will launch a series of diverse promotional activities, including online and offline publicity campaigns, comprehensive policy guidance, outreach to schools on tax laws, and media engagement, thereby fostering a strong public‑opinion environment to advance tax modernization in the new stage of development, promote high‑quality economic and social growth, and ensure a solid start to the 14th Five‑Year Plan.

Litigation & Arbitration

Notice of the Jiangsu Provincial Higher People’s Court on the Monetary Limit for Civil Cases Heard under the Small-Claims Procedure
In accordance with Articles 157 and 162 of the Civil Procedure Law of the People’s Republic of China, Article 273 of the Interpretations of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, and the average annual wage for employees in urban non‑private enterprises in our province for 2019 as published in the Jiangsu Statistical Yearbook (2020), effective March 26, 2021, all primary people’s courts and their branch people’s tribunals throughout the province, as well as the Nanjing Maritime Court, shall apply the small‑claims procedure to newly filed civil, maritime, and admiralty cases where the facts are clear, the rights and obligations are well defined, the dispute is minor, and the amount in controversy does not exceed RMB 28,958 (inclusive).

This is to notify you.

Jiangsu Provincial Higher People’s Court
March 26, 2021

The Jiangsu Provincial Higher People’s Court has released the Ten Typical Cases of Consumer Rights Protection for 2020.
The 14th Five-Year Plan explicitly sets forth the strategy of “accelerating the establishment of a new development pattern featuring domestic circulation as the mainstay, with domestic and international circulations reinforcing each other.” Ensuring the smooth functioning of the domestic circulation hinges on the healthy and stable development of the consumer market. In recent years, as online consumption has continued to expand, new types of consumer disputes have emerged. On the eve of International Consumer Rights Day, the Provincial Higher People’s Court and the Provincial Consumer Protection Commission conducted a joint survey and jointly compiled a selection of landmark cases safeguarding consumer rights, which are hereby released. It is hoped that this will encourage consumers to assert their rights in an active and rational manner, thereby protecting their legitimate interests, while also reminding business operators to conduct their operations in compliance with the law, so as to jointly foster a healthy, harmonious, and dynamic consumer market environment that supports and underpins the nation’s “dual circulation” strategy.
Typical Case 1
If a ride-hailing driver has a record of violent criminal offenses, the ride-hailing platform is entitled, in accordance with the law, to suspend or ban that driver’s account.
Facts of the Case: In June 2018, Mr. Niu registered an account on Didi’s driver app and provided ride-hailing services as a Express‑class driver. On September 30, 2018, he obtained a professional qualification certificate for online‑booked taxi drivers issued by the Suzhou Municipal Transportation Administration. Subsequently, during a background check, Didi discovered that Mr. Niu had a prior conviction for extortion. Accordingly, on July 14, 2020, Didi suspended his driver account. Mr. Niu argued that he was a compliant driver holding all required licenses and permits, and that Didi Suzhou’s suspension of his account lacked legal basis; he therefore brought the matter before the court. The court held that, when applying for the online‑booked taxi driver qualification certificate, Mr. Niu twice assured the Suzhou Municipal Transportation Administration that he had no record of violent crimes and was willing to bear the corresponding legal liabilities. Moreover, Didi’s standard contract explicitly stipulated that users must have no criminal record; if such a record exists, the user would be subject to the contractual penalty of permanent service termination. Didi also fulfilled its obligations to provide adequate notice and explanation in a reasonable manner. Article 14 of the Interim Measures for the Administration of Online‑Booked Taxi Operations further provides that drivers engaged in ride‑hailing services must have no record of violent crimes. As Mr. Niu’s prior conviction for extortion falls within the category of violent crimes, Didi’s decision to suspend his account was lawful. The court dismissed all of Mr. Niu’s claims and issued judicial recommendations to the relevant authorities, achieving positive social outcomes. (People’s Court of Huqiu District, Suzhou)
Commentary: With the advancement of internet technology, ride-hailing platforms such as Didi have brought tremendous convenience to consumers’ travel. However, the repeated incidents of passenger homicides that have occurred in the past serve as a stark reminder that online platforms must assume greater responsibility for ensuring passenger safety. Ride-hailing services should take concrete steps—covering vehicle准入, platform oversight, safety measures, driver qualifications, and emergency response—to address all factors closely linked to safe travel, continuously improving these areas to maximize public safety. In this case, allowing individuals with a history of violent crimes to work in the public transportation sector clearly undermines the public’s sense of security when using such services. Although banning an account may impose certain restrictions on Mr. Niu’s occupational freedom, the potential impact on the career choices of specific professionals must yield to the paramount importance of safeguarding public travel safety. Recognizing the systemic management gaps exposed by this case, the court exercised its judicial initiative by issuing judicial recommendations to the Suzhou Municipal Transportation Administration, the Suzhou Public Security Bureau, the Bus Sub‑Bureau, and Didi Chuxing Technology Co., Ltd. All of these entities responded positively and have already begun implementing appropriate measures to close regulatory loopholes, thereby jointly contributing to the protection of consumers’ legitimate rights and the assurance of public travel safety.
Typical Case 2
When an operator sells substandard or counterfeit food and thereby defrauds an indefinite number of consumers, the People’s Procuratorate is authorized to file a public-interest lawsuit seeking punitive damages from the operator.
Facts of the case: Beginning in March 2017, Xie, Guo, and others independently blended and bottled a beverage made from water sourced from the Great Salt Lake, which they then marketed and sold through Qiangsheng Biotechnology Co., Ltd. and its retail outlets. During the sales process, they promoted the product as “Golden Energy,” claiming it contained 81 mineral elements and that oral consumption could alleviate symptoms of hypertension, heart disease, and other conditions, while topical application could relieve eczema, skin itching, and similar ailments. In total, they generated sales revenue amounting to RMB 23,368,530.5. Subsequent testing determined that there is currently no evidence to support the claimed health benefits of the Great Salt Lake water; moreover, the product’s primary ingredient—magnesium—can be adequately obtained through a normal diet, so individuals without magnesium deficiency do not require additional supplementation. Furthermore, long-term or high‑concentration consumption of the product may lead to electrolyte imbalances, gastrointestinal disorders such as diarrhea, and even adverse effects on cardiac function. The procuratorial organ brought a public interest lawsuit, arguing that the false advertising and sale of substandard products by Xie, Guo, Qiangsheng Biotechnology Co., Ltd., and others infringed upon the interests of an indefinite number of consumers, constituting fraud, and thus they should pay punitive damages equal to three times the total purchase price. The court held that Xie, Guo, and others engaged in false claims regarding the therapeutic effects of their products in the accompanying product manuals, while Qiangsheng Biotechnology Co., Ltd., leveraging its network for selling health supplements, employed pyramid‑selling tactics to falsely advertise and sell the products at issue. These actions violated Article 55 of the Consumer Rights Protection Law, infringing upon the legitimate rights and interests of numerous unspecified consumers. Accordingly, the court ordered Xie, Guo, Qiangsheng Biotechnology Co., Ltd., and others to pay punitive damages totaling RMB 70,105,591.5, equivalent to three times the sales revenue. (Intermediate People’s Court of Changzhou)
Commentary: For a long time, consumers have primarily sought punitive damages by filing individual lawsuits. However, some unscrupulous businesses sell counterfeit or substandard products, infringing upon the legitimate rights and interests of an indefinite number of consumers. Given the relatively low value of these products, consumers often lack the motivation to pursue litigation, which to some extent emboldens such operators to engage in unlawful practices. This case represents, to date, the consumer public-interest lawsuit nationwide with the highest awarded punitive damages. The “Jin Neng Liang” product—large‑scale salt‑lake water—was sold across more than twenty provinces and municipalities, affecting the legitimate rights and interests of a vast and unspecified group of consumers. In response, the procuratorial organ instituted a public-interest action in accordance with the law, and the people’s court, using the sales revenue as the basis for calculation, ordered the operator to pay punitive damages. This not only effectively deterred unlawful business conduct but also alleviated the litigation burden on consumers. Once the compensation has been fully enforced, consumers may submit proof of purchase to the relevant authorities to claim their share; any remaining funds may be allocated to other public-interest purposes related to consumer protection. This case offers valuable lessons and a useful reference for advancing the development of consumer‑focused compensatory public-interest litigation.
Typical Case 3
If a business operator engages in fraudulent conduct during the performance of a contract, it shall pay punitive damages.
Facts of the case: On October 13, 2019, Mr. Zong placed an order on Taobao with Piaopiao Tong Co., Ltd. for a ticket to the “The Untamed” concert scheduled for November 1, at an agreed price of RMB 7,980. The parties also stipulated that, should the group purchase fail due to exceptionally high demand, Piaopiao Tong would notify the customer around noon the day before the event, allowing the customer either to receive a full refund or to pay the difference to upgrade to a higher‑tier ticket. After placing his order on Taobao, on October 31, 2019, Mr. Zong inquired with a Piaopiao Tong representative about the approximate time the ticket would be issued. The representative replied, “You can pick it up in person tomorrow at 5 p.m. at the entrance of the stadium.” On November 1, 2019, upon arriving in Nanjing, Mr. Zong was informed that he would have to pay an additional fee to collect his ticket; otherwise, he could only opt for a refund. Dissatisfied, Mr. Zong filed a lawsuit with the People’s Court, seeking compensation for losses and punitive damages from Piaopiao Tong. The court held that, if the group purchase had indeed failed, Piaopiao Tong should have notified Mr. Zong around noon the day before the performance. However, Piaopiao Tong not only failed to provide such notice but, instead, instructed Mr. Zong to collect his ticket in person at 5 p.m. on the day of the concert. Accordingly, it may be inferred that Piaopiao Tong either deliberately misrepresented the availability of tickets when none were actually available, thereby deceiving consumers, or, when tickets were indeed available, intentionally withheld them and demanded an additional payment before handing them over. Both of these practices constitute consumer fraud, warranting a refund of the ticket price and, at the consumer’s request, an increase in compensation equal to three times the purchase price—totaling RMB 23,940. (People’s Court of Jiangyin City, Jiangsu Province)
Commentary: While the widespread practice of online shopping has brought convenience to consumers, it has also introduced new consumer‑related risks. Although fraudulent conduct by business operators typically occurs at the contract‑formation stage, consumers whose lawful rights and interests are infringed upon during the performance of the contract—whether through the purchase of goods or the receipt of services—are likewise protected under the Consumer Rights Protection Law, entitling them to seek compensation from the seller or service provider. Moreover, if a business operator engages in fraudulent practices in providing goods or services, consumers may claim punitive damages equal to three times the amount of their losses. In this case, Piaopiao Tong Company failed to fulfill its obligation to provide timely notice under the contract; instead, at the agreed ticket‑delivery time, it informed consumers that they would have to pay an additional fee to obtain a higher‑tier ticket, or else opt for a refund. This conduct can be characterized as either deliberate misrepresentation—claiming tickets were available when none were—and thereby defrauding consumers, or intentionally withholding tickets when they were indeed available and then demanding an ad hoc surcharge. Regardless of which scenario applies, such behavior constitutes fraud. In light of Piaopiao Tong’s intentional fraudulent conduct, consumers are entitled to seek compensation, including punitive damages. This case serves as a stark warning to online businesses to uphold the principles of good faith and ethical commerce.
Typical Case 4
If a car‑rental platform fails to provide the full amount of commercial third‑party liability insurance as promised, it shall be liable for compensating the consumer’s losses to the extent of the shortfall.
Facts of the Case: On November 8, 2018, Mr. Yang rented a small passenger vehicle with license plate Su EXXX through the Shenzhou Car Rental app and, as agreed, availed himself of the “Premium Service.” The rental app defined the Premium Service as follows: “To enhance your travel protection, Shenzhou Car Rental provides a Premium Service. Upon purchasing this service, you will not be liable for losses covered by insurance nor for tire damage outside the scope of insurance coverage.” In its insurance policy, the rental company pledged third-party liability coverage of RMB 200,000. However, it had only arranged compulsory traffic accident liability insurance and third-party liability insurance of RMB 50,000 for the vehicle with the insurer. On November 11, 2018, while driving the vehicle, Mr. Yang was involved in an accident for which he bore full responsibility. Due to insufficient commercial third-party liability coverage, he was ordered by the court to compensate the other party RMB 428,000. Subsequently, Mr. Yang brought suit, seeking compensation from the rental company. The court held that, although the rental company explicitly promised third-party liability coverage of RMB 200,000 at the time of rental, it had in fact insured only RMB 50,000; moreover, the Premium Service expressly stated that the renter would not bear losses within the scope of insurance coverage. In this case, following the accident, the third-party liability insurance paid out by the insurer amounted to only RMB 50,000 due to inadequate coverage, leaving a shortfall of RMB 150,000—losses that Mr. Yang could have avoided through adequate commercial insurance. Accordingly, the court ruled that the rental company must compensate Mr. Yang RMB 150,000. (People’s Court of Wujiang District, Suzhou City)
Commentary: To mitigate risks and boost profits, car rental companies often secure lower‑limit commercial insurance coverage for vehicles they rent out, while simultaneously making promises to consumers of higher policy limits. Yet, when an accident occurs, they frequently evade liability under various pretexts. In this case, the car rental company’s promised insured amount did not match the actual coverage, resulting in additional expenses for the consumer—expenses that were foreseeable at the time the contract was entered into. Accordingly, the car rental company should compensate the consumer for losses arising from this breach of contract. By holding the car rental company liable for damages caused by underinsurance, this judgment serves as a valuable reference for fostering sound value orientations, curbing dishonest practices, encouraging car rental offices to enhance their management and operate with integrity, and safeguarding the legitimate rights and interests of the broader consumer base.
Typical Case 5
If a courier company fails to proactively disclose the disclaimer when placing an order via its mobile app, such disclaimer shall have no legal effect.
Facts of the case: On August 9, 2019, Mr. Jiang placed an order via a mobile app by scanning a shipping‑label QR code, sending a pair of men’s shoes of a certain brand valued at RMB 26,380. After placing the order, the app’s conofficeation page displayed that the box preceding “I have read and agree to the Service Agreement and the Privacy Policy” had been pre‑selected by default, following which the shipment was conofficeed lost. As the parties failed to reach an agreement on compensation, Mr. Jiang brought the matter before this court, seeking damages in the amount of RMB 26,380. The court held that the app’s default pre‑selection of the checkbox for “I have read and agree to the Service Agreement and the Privacy Policy,” coupled with the absence of a separate pop‑up or other mechanism to provide explicit notice of the relevant limitation‑of‑liability clause, did not satisfy the requirement of proactive disclosure. Moreover, the shipper could not expressly click to accept that clause, as it had already been pre‑selected. This “default‑checked” web‑page configuration lacked reasonableness and prevented the shipper from effectively reviewing the limitation‑of‑liability provisions in the Service Agreement. Accordingly, the court found that the postal company had failed to fulfill its obligations to provide adequate notice and explanation, and ordered the postal company to compensate Mr. Jiang RMB 26,380. (People’s Court of Liyang City, Jiangsu Province)
Commentary: The rapid growth of new‑type e‑commerce is inextricably linked to the robust support provided by express delivery companies. At present, major courier offices have all launched mobile “scan‑to‑ship” services. Compared with traditional shipping methods, these online options save users time and money while enhancing their overall shopping experience. However, unlike the conventional practice of manually completing a paper waybill, the mobile “scan‑to‑ship” service enables shippers to place orders online by scanning a QR code via their smartphones. Accordingly, the relevant contractual terms, including clauses that exempt or limit liability, must be conspicuously displayed on the website through appropriate means. In this case, after Mr. Jiang placed his order, the mobile ordering interface automatically pre‑selected the box indicating “I have read and agree to the Service Agreement and the Privacy Policy,” leaving no option for the user to separately uncheck or otherwise highlight the clause concerning the compensation cap. This fails to meet the requirement of proactive disclosure. Such a default‑selection mechanism on the webpage lacks reasonableness and prevents the shipper from effectively reviewing the compensation‑cap provision in the Service Agreement and taking appropriate measures. Consequently, that compensation‑cap clause cannot produce legal effect.
Typical Case 6
When a business operator sells goods that have been in inventory for an extended period without proactively disclosing their true condition, it infringes upon consumers’ rights to information and to make informed choices, and consumers are entitled to request a replacement.
Facts of the case: On June 9, 2019, Li purchased one air conditioner of a certain brand from the Xinjiekou branch of Wuxing Electrical Appliances at a transaction price of RMB 11,300. During installation, Li discovered that the air conditioner’s manufacturing date was July 2016. Subsequently, Li went to the Xinjiekou branch to negotiate and requested replacement with a new unit; however, the store refused. Accordingly, Li filed a lawsuit. The court held that, at the time of purchase on June 9, 2019, the Xinjiekou branch had presented a physical sample to demonstrate the product’s condition, and Li’s decision to buy was based on his acceptance and trust in that sample. The actual product delivered by the Xinjiekou branch was five months after Li’s purchase, and the air conditioner’s manufacturing date was far earlier than the date of purchase—clearly exceeding both the reasonable expectations Li could have formed from the sample and the typical consumer’s general expectations. Furthermore, when delivering the air conditioner, the Xinjiekou branch failed to explicitly disclose its manufacturing date, thereby infringing upon Li’s rights to information and to make an informed choice. The court therefore ordered the Xinjiekou branch to replace the air conditioner with a new one. (People’s Court of Qinhuai District, Nanjing)
Commentary: As an important durable consumer good in everyday life, air conditioners have long lacked clear standards to guide consumers. In January 2020, the China Household Electrical Appliances Association convened the domestic appliance industry to develop and issue a series of association‑level group standards titled “Safety Service Life for Household Appliances,” setting forth specific service‑life limits for refrigerators, air conditioners, washing machines, range hoods, gas stoves, and other appliances. Notably, the safety service life for air conditioners is ten years, calculated from the date of manufacture, while for other products it is counted from the date of sale. Consumers’ right to information entails their entitlement to be fully informed about the true nature of the goods they purchase or use, as well as the services they receive. In this case, the manufacturing date of the air conditioner is closely linked to its service life, which in turn bears directly on the personal and property safety of the user. The seller offered an air conditioner manufactured three years earlier, with an excessively long storage period—far exceeding the reasonable expectations that a consumer could form based on the physical sample of the product. This situation undermined the consumer’s experience and the actual service life of the appliance. Accordingly, the court held that the seller’s failure to proactively disclose that the delivered unit was a stock item infringed upon both the consumer’s right to information and their right to make an informed choice. This case provides valuable guidance on how to determine a seller’s duty to inform and how to safeguard consumers’ rights to information and autonomous decision‑making.
Typical Case 7
The “gift amount” promised by the operator does not constitute a gift contract; upon termination of the consumer contract, the refund amount shall be determined in a reasonable manner.
Facts of the Case: On March 12, 2019, Mr. Chen transferred RMB 10,000 to Moliang Catering Store as a top-up, with an agreement that for every RMB 10,000 topped up, an additional RMB 10,000 would be credited. Between March 14, 2019, and September 11, 2019, Mr. Chen placed orders through the Moliang Catering Store’s mobile app; however, the store repeatedly delayed deliveries, omitted dishes, and served food that did not meet hygiene standards. On September 20, 2019, Mr. Chen mailed a notice of contract termination to Moliang Catering Store, which acknowledged receipt the following day. As Moliang Catering Store refused to negotiate a refund with Mr. Chen, he filed a lawsuit seeking return of the prepaid amount. Moliang Catering Store argued that the remaining unconsumed balance constituted a promotional gift and was therefore non‑refundable. The court held that Mr. Chen’s top-up was intended to establish a catering service contract with Moliang Catering Store, and the RMB 10,000 credit granted as a promotional incentive was part of a marketing strategy designed to encourage higher‑value prepayments by offering consumers a certain degree of preferential treatment. The court further determined that this “gift” did not constitute a gratuitous transfer of property under the legal concept of a gift contract; thus, it differed in meaning from a gift under contract law. Because Moliang Catering Store breached the contract, Mr. Chen was entitled to terminate it, and upon termination, any unperformed obligations ceased. Accordingly, Moliang Catering Store was obligated to refund the portion of the prepaid amount that had not yet been consumed, proportionate to the top-up. Since Mr. Chen’s prepaid card still contained a balance of RMB 8,142.2, and after deducting the prepaid amounts corresponding to orders he had already paid for, the court ruled that RMB 4,071.1—representing 50% of the remaining balance—constituted funds prepaid but not yet expended, and ordered Moliang Catering Store to refund this amount to Mr. Chen. (People’s Court of Sucheng District, Suqian City, Jiangsu Province)
Commentary: At present, in order to attract customers, merchants often make promotional promises such as “discounts,” “spend‑and‑save offers,” “buy‑one‑get‑one‑free,” and “coupons.” These promotional schemes are primarily tied to the price of the goods. After a consumer places an order for a particular item, the actual amount paid often differs from the price displayed on the product page. In such cases, these terms should generally be regarded as commitments made by the merchant for promotional purposes, and the amount actually paid by the consumer should be treated as the contract price under the online shopping agreement. In this case, the RMB 10,000 prepaid by Mr. Chen constitutes an advance payment under the catering service contract entered into by both parties. Furthermore, upon Mr. Chen’s RMB 10,000 prepayment, Magic Refining Restaurant granted him an additional RMB 10,000. This additional sum does not constitute a gratuitous gift in the legal sense; rather, it should be construed as a promotional discount provided by the operator to the consumer. During actual consumption, Mr. Chen may apply this bonus toward offsetting his order total. Upon refund, the prepaid amount should be returned proportionally based on the extent of actual consumption. This case provides valuable guidance for appropriately resolving disputes arising from promotional activities such as “buy one, get one free.”
Typical Case 8
If the marriage‑matching service contract cannot, in fact, be performed, the consumer has the right to terminate the contract and, depending on the extent of performance, may request a refund of the corresponding agency fees.
Facts of the case: In March 2018, Ms. Ding entered into a “Marriage Agency Service Contract” with a certain marriage agency and paid a service fee of RMB 28,880 to purchase the agency’s Premium Membership package. The contract stipulated a one-year term, under which the agency was obligated to introduce no fewer than 12 eligible men who met Ms. Ding’s criteria within that period. After the contract came into effect, between March and October 2018, the agency arranged seven meetings between Ms. Ding and potential suitors; however, none of these men satisfied her expectations. During this time, agency staff repeatedly made explicit or implicit remarks about Ms. Ding’s height, urging her to lower her standards for a partner. This left her increasingly dissatisfied, and she began to adopt a passive attitude toward the services provided by the agency. In December 2018, Ms. Ding requested termination of the contract and sought a partial refund. The agency refused, citing the contractual provision that “paid service fees are non‑refundable.” In April 2019, Ms. Ding filed a complaint with the local consumer rights protection organization, demanding a refund of RMB 12,000. Upon receiving the complaint, the Changshu City Consumer Rights Protection Committee engaged in negotiations with the agency regarding the refund. Despite multiple rounds of mediation and discussions, the agency continued to refuse the refund, leading to the termination of mediation efforts. To better safeguard consumers’ legitimate rights and interests, the Changshu City Consumer Rights Protection Committee, pursuant to Article 37 of China’s Law on the Protection of Consumers—which empowers it to “support harmed consumers in filing lawsuits”—provided support to Ms. Ding in bringing a lawsuit before the Changshu City People’s Court, thereby seeking judicial redress for her rights. Following trial, the Changshu City People’s Court rendered a judgment in accordance with the law, ordering the marriage agency to refund Ms. Ding RMB 12,033 in service fees. (Changshu City Consumer Rights Protection Committee)
Commentary: At present, there has been a marked increase in cases where consumers seek their ideal partners by entering into marriage‑matching service contracts with matchmaking agencies. Regrettably, these agencies frequently exploit consumers’ sense of urgency to impose unfair terms that infringe upon consumer rights. Article 26 of the Consumer Rights Protection Law stipulates: “Business operators may not, through standard terms, notices, statements, in‑store announcements, or other means, impose provisions that exclude or restrict consumers’ rights, reduce or exempt the operator’s liability, or increase consumers’ liabilities—provisions that are unfair or unreasonable to consumers—and they may not use standard terms coupled with technical measures to compel transactions. Any standard terms, notices, statements, in‑store announcements, or similar documents containing the contents listed in the preceding paragraph shall be deemed invalid.” In this case, the Marriage‑Matching Service Contract entered into by both parties was a standard form contract drafted by the matchmaking agency. As the party providing such standard terms, the agency was obligated to determine the rights and obligations of both parties in accordance with the principle of fairness. The contractual provision stating that “service fees already paid are non‑refundable” constitutes an unfair clause that exempts the agency from liability, imposes additional burdens on the consumer, and restricts the consumer’s essential rights; therefore, it should be declared invalid. Furthermore, the personal profiles of the seven men introduced to Ms. Ding by the matchmaking agency did indeed fall short of the standards promised under the relevant service offering. Dissatisfied with this outcome, the two parties ceased communication after December 2018, effectively bringing the contract to an end. Moreover, given the nature of the service contract, continued performance would be inappropriate, and Ms. Ding is entitled to terminate the agreement. Taking into account the circumstances of contract performance, the fault of each party, and other relevant factors, the matchmaking agency is required to refund Ms. Ding an appropriate portion of the price corresponding to services not rendered. This case serves as a reminder to consumers to exercise due diligence when selecting a matchmaking agency, carefully reviewing contract terms, and, in the event of a dispute, actively seeking redress through local consumer protection organizations.
Typical Case 9
If an operator changes the enterprise’s name and refuses to perform its contractual obligations, consumers are entitled to demand that the operator bear liability for breach of contract.
Facts of the case: On March 3, 2017, Mr. Jiang purchased a Samsung television valued at RMB 5,100 from a Lotte Mart store and paid the full amount. Lotte Mart issued a delivery note and an invoice in the name of the Huai’an Branch of Jiangsu Lotte Mart Commercial Co., Ltd., covering the full purchase price. The store also promised to deliver the television to Mr. Jiang within three days, but failed to honor this commitment. In March 2017, the store suspended operations due to fire‑safety concerns, and subsequently its operating entity was renamed Liqun Company. During this period, Mr. Jiang repeatedly sought arrangements for delivery, but Liqun Company refused, citing that it had not assumed the original entity’s liabilities. Consequently, Mr. Jiang filed a complaint with the Huai’an Municipal Consumer Rights Protection Commission (hereinafter referred to as “Huai’an CRC”). Upon receiving the complaint, the Huai’an CRC promptly contacted Liqun Company to conduct investigations, mediate, and hold discussions. The investigation revealed that Lotte Mart’s registered address, social credit code, and date of establishment remained unchanged; only its corporate name had been altered. Thereafter, the Huai’an CRC sent multiple letters to Liqun Company, requesting cooperation in mediation; however, Liqun Company consistently declined, arguing that it was not a proper party to the dispute and thus not obligated to assume the relevant liabilities, leading to the termination of mediation efforts. To safeguard consumers’ lawful rights and interests, the Huai’an CRC, in accordance with the law, supported Mr. Jiang in filing a lawsuit with the Qingjiangpu District People’s Court of Huai’an City, Jiangsu Province. Following the first-instance judgment, the court ruled in favor of Mr. Jiang, ordering the rescission of the television sales contract and the refund of the RMB 5,100 purchase price. (Huai’an Municipal Consumer Rights Protection Commission)
Commentary: Article 532 of China’s Civil Code stipulates: “After a contract takes effect, the parties may not refuse to perform their contractual obligations on the grounds of changes in names or titles, or in the legal representative, person in charge, or handler.” In this case, Lotte Mart merely altered the name and other outward appearances of its corporate identity, without substantively changing the contracting party; therefore, its attempt to invoke such formal changes as a defense against assuming its liabilities is untenable. Article 563 of the Civil Code provides: “A party may terminate a contract if any of the following circumstances exists: … (3) one party delays in performing a principal obligation and, after being urged to do so, still fails to perform within a reasonable period; (4) one party delays in performing its obligations or engages in other breaches of contract that render it impossible to achieve the purpose of the contract…” In the present case, Jiang entered into a sales contract with Lotte Mart. This contractual relationship remains unchanged despite Lotte Mart’s change of its corporate name to Liqun Company; both parties are obligated to strictly perform their respective duties as agreed. However, Liqun Company failed to deliver the goods as stipulated, thereby delaying performance of a principal obligation and preventing Jiang from achieving the contract’s intended purpose. Accordingly, Jiang is entitled to seek termination of the sales contract and a refund of the RMB 5,100 payment. This case serves as a reminder to business operators that they may not attempt to evade contractual obligations by changing their corporate name; otherwise, they shall bear the corresponding legal liabilities.
Typical Case 10
When a business operator unilaterally alters the terms of a contract without the consumer’s consent, it infringes upon the consumer’s right to information and constitutes a breach of contract, entitling the consumer to claim compensation for losses.
Case Summary: At the end of 2019, Mr. Zhang commissioned three Sophia-brand windows from a dealer at a shopping mall in Feng County, Xuzhou, for a total price of RMB 12,000, and paid a deposit of RMB 6,000. After the windows were installed, Mr. Zhang noticed while inspecting the window frame’s trademark that the installed units did not match the Sophia brand he had originally ordered; instead, they bore the “Xinliangdun” trademark. Feeling deceived, Mr. Zhang repeatedly sought negotiations with the dealer without success and subsequently filed a complaint with the Feng County Consumer Association in Xuzhou, Jiangsu Province. Upon receiving the complaint, the Feng County Consumer Association promptly contacted the dealer, who admitted to having unilaterally replaced the windows—without Mr. Zhang’s consent—with frames bearing the “Xinliangdun” trademark. The dealer agreed to compensate Mr. Zhang RMB 600. However, Mr. Zhang argued that the “Xinliangdun” windows lacked quality assurance and demanded that the dealer reinstall the originally customized Sophia-brand windows. The dealer refused, citing a shortage of stock from the manufacturer, and declined to either replace the windows or increase the compensation amount. Despite multiple rounds of negotiation, the two parties remained deadlocked, leading to the termination of mediation. To safeguard consumers’ legitimate rights and interests, the Feng County Consumer Association supported Mr. Zhang in filing a lawsuit with the People’s Court of Feng County, Jiangsu Province. Following pre-trial mediation, the dealer agreed to pay Mr. Zhang RMB 6,000 in compensation, which Mr. Zhang accepted. (Feng County Consumer Association, Xuzhou)
Commentary: Article 8 of China’s Law on the Protection of Consumer Rights and Interests stipulates that “consumers have the right to be informed of the true circumstances of the goods they purchase or use, or the services they receive.” In this case, the dealer concealed the true brand of the windows it supplied, thereby preventing Mr. Zhang from obtaining accurate and comprehensive information about the product, thus infringing upon his right to know. Article 543 of the Civil Code provides that “the parties may modify the contract by mutual agreement.” Here, Mr. Zhang explicitly requested custom‑made windows bearing the “Sophia” brand and paid a deposit of RMB 6,000; the subject matter of the contract was precisely those “Sophia” brand windows. However, without obtaining Mr. Zhang’s consent, the dealer unilaterally changed the window brand, constituting a breach of contract. Pursuant to Article 577 of the Civil Code, which states that “if one party fails to perform its contractual obligations or performs them in a manner inconsistent with the agreement, it shall bear liability for continued performance, remedial measures, or compensation for losses,” Mr. Zhang is entitled to hold the dealer accountable for the corresponding breach of contract.

Beijing’s first case of the crime of obstructing safe driving was pronounced in court.
On the morning of March 30, the People’s Court of Fangshan District, Beijing, held a public trial in accordance with the law and delivered its verdict on the city’s first case of the crime of obstructing safe driving. The defendant, Li, was found to have committed three separate offenses—obstructing safe driving, throwing objects from a height, and provoking trouble—and was accordingly sentenced under the principle of cumulative punishment, receiving a fixed-term imprisonment of one year and six months and a fine of RMB 4,000. Following the sentencing, Li stated in court that he would not appeal.
According to the prosecution, on October 15, 2020, the defendant, Li, was aboard a bus carrying more than ten passengers. While the vehicle was in motion, Li unprovokedly verbally abused the bus’s security guard and the driver. Subsequently, Li struck the driver, Chu, with a plastic bucket containing alcohol and grabbed Chu’s right shoulder. Even after Chu safely brought the bus to a stop, Li continued to hurl insults and kick Chu. The prosecution contends that Li’s conduct constitutes a violation of Article 133‑2 of the Criminal Law and that he should be held criminally liable for the crime of obstructing safe driving.
The public prosecution alleges that, at approximately 5:00 p.m. on March 12, 2020, the defendant, Li, while intoxicated, threw items—including a quilt and beer bottles—out of a window in the north‑side corridor on the sixth floor of Building No. 3 in his residential complex, causing them to fall onto the public roadway below. Resident Chang, who happened to be passing by, narrowly avoided being struck. The public prosecution maintains that Li’s conduct constitutes an offense under Article 291‑2 of the Criminal Law and that he should be held criminally liable for the crime of throwing objects from a height.
The public prosecution alleges that on December 21, 2019, the defendant, Li, called the “110” emergency hotline while intoxicated and verbally abused the responding police officer; on January 6, 2020, while riding a bus, Li engaged in a verbal altercation with a security guard over a seat‑request and pushed the guard, subsequently insulting and assaulting a conductor who intervened to mediate; at approximately 12:00 p.m. and 5:00 p.m. on January 28, 2020, and again around 5:00 a.m. on January 31, Li, while under the influence of alcohol, repeatedly smashed the glass panes of three guard booths—located at the west gate of the east district, the east gate of the west district, and the south gate of the west district—in his residential community using liquor bottles; on July 16, 2020, when Li was advised by the bus driver for not wearing a mask, he disregarded the warning, verbally abused the driver, and struck the driver’s cab’s glass door and rearview mirror with his hand. The driver then brought the bus to a stop and reported the incident to the authorities. The public prosecution maintains that Li’s conduct constitutes an offense under Article 293 of the Criminal Law and that he should be held criminally liable for the crime of provoking trouble.
After trial, the court found that the defendant, Li, within a two-year period repeatedly engaged in verbally abusing others, arbitrarily assaulting them, and intentionally damaging public and private property, thereby disrupting social order; such conduct constitutes the crime of provoking trouble. Furthermore, the defendant Li threw objects from a building under serious circumstances, constituting the crime of throwing objects from a height. Additionally, the defendant Li used violence against the driver of a moving public transportation vehicle, interfering with its normal operation and endangering public safety, thus also constituting the crime of obstructing safe driving. Accordingly, the court ordered cumulative sentencing for all three offenses. The defendant had previously been sentenced to fixed-term imprisonment for the crime of provoking trouble; within five years after completing that sentence, he committed another offense punishable by fixed-term imprisonment or above, making him a recidivist, and thus subject to enhanced punishment as prescribed by law. Moreover, the defendant Li has repeatedly been subjected to administrative penalties yet failed to reform, and now has committed multiple offenses, warranting further increased punishment at the court’s discretion. In view of the fact that, upon surrendering, the defendant Li truthfully confessed to the principal facts of his crimes—constituting a confession—and voluntarily pleaded guilty and accepted the penalty, he may be granted a more lenient sentence. Taking into account the foregoing circumstances, and considering the facts, nature, and circumstances of the defendant Li’s crimes, as well as the degree of harm they pose to society, the court ultimately sentenced the defendant Li to eight months’ imprisonment for the crime of provoking trouble; six months’ imprisonment and a fine of RMB 2,000 for the crime of throwing objects from a height; and six months’ imprisonment and a fine of RMB 2,000 for the crime of obstructing safe driving. The court decided to impose a total sentence of one year and six months’ imprisonment, together with a fine of RMB 4,000. Following the pronouncement of the judgment, the defendant Li stated that he accepts the court’s ruling and will not appeal.
According to Judge Chen Yanfei, who presided over the case, “civilization” and “harmony” are among the goals of China’s socialist modernization and constitute an important component of the country’s core socialist values. Building a society characterized by “civilization” and “harmony” is the duty of every citizen. To maintain social order, China’s Criminal Law brings within its scope such serious offenses as maliciously assaulting others, severely insulting others, and recklessly damaging others’ property. Furthermore, to ensure public safety—both in terms of what hangs above people’s heads and the safety of public transportation—the Eleventh Amendment to the Criminal Law has added to the criminal code the punishment of severe acts involving the throwing of objects from high places, as well as the use of violence against or the seizure of control devices on moving public transport vehicles, thereby interfering with normal operations and endangering public safety. Citizens who disregard these provisions and engage in conduct such as provoking trouble, throwing objects from heights, or obstructing safe driving—acts that gravely disrupt social order and threaten public safety—will be subject to criminal sanctions.
To regulate conduct that endangers safe driving, on January 8, 2019, the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security jointly issued the “Guiding Opinions on Lawfully Punishing Illegal and Criminal Acts That Impede the Safe Operation of Public Transportation Vehicles.” To address the issue of objects being thrown from high places, on October 21, 2019, the Supreme People’s Court promulgated the “Opinions on Lawfully and Properly Adjudicating Cases Involving Objects Thrown or Falling from High Places.” These opinions stipulate that acts endangering public safety—such as seizing the steering wheel, assaulting or pulling a driver—and intentional throwing of objects from height, even if no serious consequences have yet occurred but such acts are nonetheless sufficient to endanger public safety, may be prosecuted and punished as endangering public safety by dangerous methods. However, the offense of endangering public safety by dangerous methods carries a minimum sentence of three years’ imprisonment; for certain conduct that has not yet endangered public safety or resulted in harm, imposing a fixed-term imprisonment of three years or more would constitute an excessively severe punishment, contrary to the fundamental principle of proportionality between crime, culpability, and penalty enshrined in China’s Criminal Law. Accordingly, the Eleventh Amendment to the Criminal Law made appropriate adjustments to the penalties for such conduct, reducing the punishment for acts like throwing objects from height or seizing the steering wheel—where no serious consequences have yet occurred—to imprisonment of less than one year, detention, or public surveillance, together with or instead of a fine. Pursuant to the principle of applying the older, lighter law, for conduct committed prior to the entry into force of the Eleventh Amendment, if the penalty prescribed under the amendment is more lenient, the amended Criminal Law shall apply in convicting and sentencing the defendant. Accordingly, based on the amended Criminal Law, the aforementioned judgment was rendered against Li.

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