JC Master Legal News Issue 966

Key Takeaways for This Issue
The China Securities Regulatory Commission has revised the “Guidelines for Evaluating Science and Technology Innovation Attributes (Trial).”
On the 16th, the China Securities Regulatory Commission announced that it will revise the “Guidance on Evaluating Sci-Tech Innovation Attributes (Trial)” for the STAR Market, thereby refining the criteria for defining “hard technology” on the exchange. The revisions include adding a new indicator requiring R&D personnel to account for more than 10% of total staff, thus establishing a 4+5 framework for assessing sci-tech innovation; instituting a negative‑list system; improving the expert‑pool mechanism; and mandating that exchanges, during the issuance review process, scrutinize whether issuers’ self‑assessments are objective and whether intermediary institutions have exercised due diligence and responsibility.
Yangtze River Pharmaceutical was fined 764 million yuan for engaging in a monopoly agreement.
On April 15, the State Administration for Market Regulation announced that, in accordance with Articles 46 and 49 of the Anti-Monopoly Law, it has imposed an administrative penalty on Yangtze River Pharmaceutical Group Co., Ltd. (hereinafter referred to as “Yangtze River Pharmaceutical”), ordering the company to cease its unlawful conduct and imposing a fine equal to 3% of its 2018 sales revenue of RMB 25.467 billion, amounting to RMB 764 million.
Announcement of the State Taxation Administration on Matters Relating to the Consolidation of Tax and Fee Declarations
The State Taxation Administration has issued an announcement on matters related to the consolidation of tax and fee declarations, specifying that, effective June 1, 2021, the combined filing of property and behavioral taxes will be fully implemented. Additionally, starting May 1, 2021, pilot programs will be conducted in Hainan, Shaanxi, Dalian, and Xiamen to integrate the VAT and consumption tax return forms with those for the urban maintenance and construction tax, the education surcharge, and the local education surcharge.
Decision of the Supreme People’s Court on Amending the “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Proceeds Derived Therefrom”
The new Judicial Interpretation on the Crime of Concealing or Covering Up Criminal Proceeds and Proceeds from Crime, which came into effect on April 15, has abolished the previous interpretation’s quantitative threshold for this offense. It now requires people’s courts, when adjudicating criminal cases involving the concealment or covering up of criminal proceeds and proceeds derived therefrom, to comprehensively consider factors such as the nature of the upstream crime, the circumstances and consequences of the concealment or covering up, and the degree of social harm, and to impose convictions and penalties in accordance with the law.

Table of Contents
Table of Contents

Finance & Capital Markets
The China Securities Regulatory Commission has revised the “Guidelines for Evaluating Science and Technology Innovation Attributes (Trial).”
The Shanghai Stock Exchange has issued the “Provisional Regulations on Filing and Recommendation for Issuance and Listing of Companies on the STAR Market of the Shanghai Stock Exchange (Revised in April 2021).”
A responsible official from the relevant department of the China Securities Regulatory Commission answered questions from reporters on the issue of the special representative lawsuit involving Kangmei Pharmaceutical.
Pan Gongsheng, Vice Governor of the People’s Bank of China, answered questions from reporters regarding the financial regulators’ latest round of talks with Ant Group.

Corporate & Commercial
Yangtze River Pharmaceutical was fined 764 million yuan for engaging in a monopoly agreement.
Hefei has released detailed rules for the lottery system for new homes: 30% of units will be allocated to first-time homebuyers, and properties won through the lottery will be subject to a three-year resale restriction.
LeEco was fined RMB 240 million, and both the company and Jia Yueting were each fined RMB 240 million for financial fraud and other violations.
Waterdrop Inc. has filed for an IPO in the United States.

Taxation
Announcement of the State Taxation Administration on Matters Relating to the Consolidation of Tax and Fee Declarations
Interpretation of the “Announcement of the State Taxation Administration on Matters Related to the Consolidation of Tax and Fee Declarations”
Notice of the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration on Import Tax Policies Supporting the Development of the New Display Industry for the Period 2021–2030
Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology, General Administration of Customs, and State Taxation Administration: Regarding Import Support for the Development of the New Display Industry from 2021 to 2030
Notice on the Administration Measures for Tax Policies

Litigation & Arbitration
Supreme People’s Court Decision on Amending the “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Proceeds Derived Therefrom”
The decision
Interpretation of the Revised “Rules on the Administration of Internship for Applicants for Lawyer’s Practice”
The Supreme People’s Court has released typical cases of combating counterfeit agricultural inputs.
The Shanghai Financial Court’s adjudicatory rules have been endorsed by the regulatory authorities.

Other

Finance & Capital Markets
The China Securities Regulatory Commission has revised the “Guidelines for Evaluating Science and Technology Innovation Attributes (Trial).”
Since the establishment of the STAR Market and the launch of the pilot registration-based system, the China Securities Regulatory Commission, in close coordination with the Shanghai Stock Exchange, has resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council. Upholding the “hard technology” positioning, it has steadily advanced the pilot registration system and key institutional innovations, achieving the expected outcomes and eliciting an overall positive and constructive market response.
I. Background of the Revision
In March 2020, based on a review of earlier registration‑review practices and after careful deliberation with relevant ministries and commissions, the China Securities Regulatory Commission issued the “Guidelines for Evaluating Sci‑Tech Innovation Attributes (Trial).” Over the past year, the implementation of this evaluation framework has enhanced the objectivity, transparency, and operability of the review and registration standards, playing a crucial role in attracting high‑quality sci‑tech enterprises to the STAR Market. To date, the STAR Market has more than 250 listed companies, spanning sectors such as integrated circuits, biopharmaceuticals, new materials, and high‑end manufacturing. According to 2019 annual reports, these companies exhibit an average R&D expenditure ratio of 12%, an average R&D investment of RMB 117 million, and an average of 75 invention patents—each significantly higher than in other market segments. Moreover, unprofitable offices, red‑chip companies, and enterprises with special equity structures have successively gained listings, gradually highlighting the STAR Market’s commitment to “hard tech” and its growing market inclusiveness. Nevertheless, among the applicants and those undergoing review, a small number of companies have been found to lack core technologies, demonstrate insufficient innovation capacity, or enjoy limited market recognition—issues that call for further refinement through ongoing research informed by advances in technological innovation and the ongoing reforms of the registration‑based IPO system.
II. Revision Approach
The design of all systems on the STAR Market must be officely centered on fostering a greater number of innovative enterprises with robust “hard‑tech” capabilities and market competitiveness—this is the primary benchmark for assessing the STAR Market’s success. In refining the evaluation framework for sci‑tech innovation attributes, the overarching approach is to focus on the core objective of supporting “hard tech,” emphasize substance over form, adopt a tiered classification and negative‑list management regime, further enrich the set of evaluation indicators, and strengthen comprehensive assessment. At the same time, we will hold intermediary institutions accountable, intensify oversight and inspection of compliance with relevant rules and regulations, and thereby enhance the quality of STAR Market‑listed companies at the source.
III. Main Revisions
This revision of the science-and‑technology innovation‑related evaluation indicator system represents a significant institutional adjustment for the STAR Market, involving amendments to both the “Guidelines for Evaluating Science‑and‑Technology Innovation Attributes (Trial)” and the exchange’s relevant review rules. Specifically, the changes encompass the following: First, a new standard has been introduced—requiring that R&D personnel account for more than 10% of total staff—to fully recognize the pivotal role of scientific and technological talent in driving innovation. Following this amendment, the evaluation framework will adopt a “4+5” structure. Second, industry sectors eligible for listing on the STAR Market will be categorized into support‑type, restriction‑type, and prohibition‑type categories, with the establishment of a negative‑list regime. Third, the working rules of the advisory committee have been refined to enhance the expert database and the public consultation mechanism, thereby fostering coordinated regulatory efforts. Fourth, during the issuance and listing review process, the exchange will adhere to the principle of substance over form, placing particular emphasis on whether the issuer’s self‑assessment is objective, whether the sponsor’s verification of the issuer’s science‑and‑technology innovation attributes is thorough, and ultimately rendering a comprehensive judgment.
Successfully launching the STAR Market and effectively piloting the registration-based reform are pivotal to the overall reform and development of the capital market. Further refining the evaluation framework for the STAR Market’s science-and‑technology‑focused attributes is a concrete manifestation of upholding the market’s “hard‑tech” positioning, which will help ensure its sustained, sound development, better support the national strategy for scientific and technological innovation, and promote high‑quality economic growth.

The Shanghai Stock Exchange has issued the “Provisional Regulations on Filing and Recommendation for Issuance and Listing of Companies on the STAR Market of the Shanghai Stock Exchange (Revised in April 2021).”
Regarding the Issuance of the “Shanghai Stock Exchange STAR Market Enterprise Issuance and Listing…”
Notice on the Provisional Regulations for Application and Recommendation (Revised in April 2021)
SSE Document No. 23 [2021]
To all market participants:
To further clarify the positioning and criteria of the STAR Market, support and encourage hard‑tech enterprises to list on the STAR Market, guide and standardize issuers’ filing processes and sponsoring institutions’ recommendation work, and promote the sustained, sound development of the STAR Market, in accordance with relevant provisions including the “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration System,” the “Administrative Measures for the Registration of Initial Public Offerings on the STAR Market (Trial),” the “Guidelines for Evaluating Sci‑Tech Innovation Attributes (Trial),” and the “Shanghai Stock Exchange Rules for the Review of Issuance and Listing of STAR Market Stocks,” the Shanghai Stock Exchange (hereinafter referred to as “the Exchange”) has revised the “Provisional Regulations on Filing and Recommendation for the Issuance and Listing of STAR Market Enterprises.” The revised “Provisional Regulations on Filing and Recommendation for the Issuance and Listing of STAR Market Enterprises (Revised April 2021)” (see attachment) has been reviewed and approved by the Exchange’s Board of Directors and submitted to the China Securities Regulatory Commission for approval. It is hereby promulgated and shall take effect from the date of its publication. The “Provisional Regulations on Filing and Recommendation for the Issuance and Listing of STAR Market Enterprises” issued by the Exchange on March 27, 2020 (SSE Document No. [2020] 21) is hereby repealed simultaneously.

This is to notify you.

Shanghai Stock Exchange
April 16, 2021
Attachment:
Issuance and Listing of Companies on the STAR Market of the Shanghai Stock Exchange
Interim Provisions on Filing and Recommendation
(Revised April 2021)
Article 1: In order to further clarify the positioning and criteria of the STAR Market, support and encourage hard‑tech enterprises to issue and list on the STAR Market, guide and standardize the filing procedures of issuers and the recommendation work of sponsoring institutions, and promote the sustained and sound development of the STAR Market, these Provisions are hereby formulated in accordance with the “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration System,” the “Administrative Measures for the Registration of Initial Public Offerings on the STAR Market (Trial),” the “Guidance on Evaluating Sci‑Tech Innovation Attributes (Trial)” (hereinafter referred to as the “Guidance”), and the “Rules for the Review of Issuance and Listing of Stocks on the STAR Market of the Shanghai Stock Exchange” (hereinafter referred to as the “Review Rules”).
Article 2: The issuance and listing applications, as well as the recommendation process, for companies listed on the STAR Market shall be conducted in accordance with the requirements regarding sci-tech innovation attributes set forth in the Guidelines and these Provisions, with due consideration given to whether the issuer aligns with the positioning of the STAR Market.
When an issuer applies for issuance and listing on the STAR Market, it shall conduct a self-assessment of its alignment with the STAR Market’s positioning, in accordance with the requirements regarding sci‑tech innovation attributes set forth in the Guidelines and these Provisions. When a sponsor recommends an issuer’s application for issuance and listing on the STAR Market, it shall verify and rigorously assess whether the issuer meets the sci‑tech innovation attribute requirements relevant to the STAR Market’s positioning, and render a professional judgment.
Article 3: The STAR Market shall give priority to the issuance and listing of science and technology innovation enterprises that align with the national strategy for scientific and technological innovation, possess advanced technologies such as critical core technologies, demonstrate outstanding capabilities in scientific and technological innovation and in translating research findings into practical applications, enjoy a prominent position in their respective industries, or enjoy high market recognition.
Article 4 Issuers applying for issuance and listing on the STAR Market shall belong to the high-tech industries and strategic emerging industries in the following sectors:
(1) In the field of next-generation information technology, the key areas include semiconductors and integrated circuits, electronic information, next-generation information networks, artificial intelligence, big data, cloud computing, software, the Internet, the Internet of Things, and smart hardware, among others.
(2) In the high-end equipment sector, the main areas include intelligent manufacturing, aerospace, advanced rail transit, marine engineering equipment, and related services;
(3) In the field of new materials, the main areas include advanced steel materials, advanced non‑ferrous metal materials, advanced petrochemical and chemical new materials, advanced inorganic non‑metallic materials, high‑performance composite materials, cutting‑edge new materials, and related services.
(4) In the new energy sector, this primarily includes advanced nuclear power, large-scale wind power, high-efficiency photovoltaic and solar‑thermal technologies, high-efficiency energy storage, and related services;
(5) In the energy conservation and environmental protection sector, the key areas include high-efficiency energy-saving products and equipment, advanced environmental protection technologies and equipment, cutting-edge eco-friendly products, resource recycling, complete new-energy vehicles, critical components for new-energy vehicles, power batteries, and related services, among others.
(6) In the biopharmaceutical sector, this primarily encompasses biologics, high-end chemical pharmaceuticals, advanced medical devices and equipment, as well as related services;
(7) Other sectors that align with the positioning of the STAR Market.
Restrictions are imposed on fintech and model-innovation enterprises seeking to issue and list on the STAR Market. Real estate companies, as well as those primarily engaged in financial or investment‑related businesses, are prohibited from issuing and listing on the STAR Market.
Article 5: Enterprises in the industries and sectors specified in the STAR Market’s positioning guidelines, which simultaneously meet the following four criteria, shall be supported and encouraged to apply for an IPO on the STAR Market:
(1) Over the most recent three years, the cumulative R&D expenditure accounts for at least 5% of the cumulative operating revenue, or the cumulative R&D expenditure exceeds RMB 60 million; in particular, for software enterprises, the cumulative R&D expenditure over the most recent three years must account for at least 10% of the cumulative operating revenue.
(2) The proportion of R&D personnel to the total number of employees in the current year shall be no less than 10%;
(3) Possess at least five invention patents (including national defense patents) that generate revenue from the entity’s principal business, except for software enterprises;
(4) The issuer’s revenue has achieved a compound annual growth rate of 20% over the most recent three years, or its revenue for the most recent year has reached RMB 300 million. This requirement does not apply to issuers that have filed for an IPO on the STAR Market pursuant to Item (5) of Paragraph 2 of Article 22 of the Review Rules.
Article 6: Enterprises in the industries and sectors specified in the positioning requirements for the STAR Market, which do not meet the criteria set forth in Article 5 of these Regulations but fall under any of the following circumstances, may apply to issue and list on the STAR Market:
(1) The core technologies owned have been recognized by the competent national authorities as being internationally leading, pioneering, or of major strategic significance to the nation;
(2) Having, as a principal participating entity or as a key technical personnel, received the National Natural Science Award, the National Science and Technology Progress Award, or the National Invention Award, and having applied the relevant technologies to the company’s principal business activities;
(3) Independently or as the lead entity, undertake major national science and technology special projects related to the company’s principal business and core technologies;
(4) The principal products (services) developed on the basis of core technologies fall within the categories of critical equipment, key products, essential components, and vital materials that are encouraged, supported, and promoted by the state, and have achieved import substitution.
(5) Develop a total of at least 50 invention patents (including national defense patents) that are closely related to core technologies and principal business revenues.
Article 7. When filing its application, the issuer shall submit a special statement on compliance with the STAR Market’s positioning, in accordance with the model format attached to these Regulations. The special statement shall be focused, concise, and clearly targeted, enabling a reasoned assessment of whether the issuer meets the requirements for STAR Market eligibility.
Article 8: The sponsor shall, in accordance with the positioning of the STAR Market, conduct due diligence on matters related to the issuer’s self-assessment, with particular focus on verifying whether the basis for determining the issuer’s science and technology innovation attributes is true, objective, and reasonable, as well as on reviewing and ensuring the accuracy of relevant information disclosed in the application documents. In addition, the sponsor shall prepare a special opinion in accordance with the model format attached to these Regulations, detailing the specific verification content, procedures, and other relevant aspects, and shall set forth the verification conclusions and their supporting rationale in the listing sponsorship report.
When conducting its verification, the sponsor shall make a comprehensive assessment based on factors such as the issuer’s technological advancement and other relevant considerations, and shall not simply conclude that the issuer meets the STAR Market’s positioning criteria solely on the basis of certain quantitative indicators.
Where Article 4, Paragraph 1, Item (7) of these Provisions applies, the sponsor institution shall conduct a thorough justification and make a prudent recommendation.
Article 9. During the issuance and listing review process, this Exchange, in accordance with the principle of substance over form, shall focus on the following aspects to assess whether the issuer’s self-assessment is objective, whether the sponsor’s verification and oversight are adequate, and to render a comprehensive judgment:
(1) Whether the issuer aligns with the STAR Market’s areas of support;
(2) Whether the issuer’s industry sector falls within the industries listed in the Guidelines and these Regulations;
(3) Whether the issuer’s science and technology innovation attributes comply with the relevant indicator requirements set forth in the Guidelines and these Provisions;
(4) If the issuer’s science and technology innovation attributes do not meet the relevant indicator requirements, does it nonetheless fall under the circumstances of outstanding scientific and technological innovation capability as stipulated in these Regulations?
(5) Other requirements stipulated by this office.
Article 10. This Exchange may, with respect to the issuer’s science and technology innovation attributes, follow a formal consultation procedure with the STAR Market Science and Technology Innovation Advisory Committee, make an assessment of whether the issuer meets the STAR Market’s positioning in light of the advisory opinion, and issue an audit opinion in accordance with the prescribed procedures.
Article 11: The issuer shall, in the prospectus, disclose information corresponding to the support directions, industry sectors, science and technology innovation attributes, or relevant circumstances specified in Articles 3 through 6 of this Measures.
Article 12: If information that the issuer intends to disclose, which is related to the STAR Market’s positioning, constitutes state secrets or commercial secrets and its disclosure could result in a violation of relevant state confidentiality laws and regulations or cause serious harm to the company’s interests, the issuer and its sponsor may apply to this Exchange for an exemption from disclosure.
Article 13. The issuer and its sponsor may, prior to filing, seek clarification from the Exchange regarding the interpretation and application of the relevant provisions of these Rules.
Article 14: This Exchange shall exercise self-regulatory oversight over the activities of sponsoring institutions in recommending enterprises for listing on the STAR Market. Sponsoring institutions that violate these Provisions may, in accordance with applicable rules, be subject to self-regulatory measures or disciplinary sanctions.
Article 15: This Regulation shall be interpreted by this office.
Article 16: These Provisions shall take effect as of the date of their promulgation. The former “Interim Provisions on the Filing and Recommendation for Issuance and Listing of Companies on the STAR Market of the Shanghai Stock Exchange” (SSE Document No. [2020] 21) is hereby repealed concurrently. In the event of any inconsistency between these Provisions and other relevant provisions of this Exchange, these Provisions shall prevail.

A responsible official from the relevant department of the China Securities Regulatory Commission answered questions from reporters on the issue of the special representative lawsuit involving Kangmei Pharmaceutical.
1. Question: What is the significance of implementing the special representative litigation for securities disputes in the capital market?
Answer: The system of special representative litigation for securities disputes represents a significant achievement in strengthening the foundational institutional framework of the capital market and constitutes an important innovation in China’s civil litigation system. Implementing this type of litigation in the capital market is a crucial measure for thoroughly implementing the CPC Central Committee and the State Council’s principle of “zero tolerance” toward illegal and criminal activities in the capital market. It also serves as a powerful tool for safeguarding the legitimate rights and interests of investors, particularly small and medium-sized investors, and for ensuring the comprehensive deepening of reforms in the capital market. Moreover, it plays a vital role in upholding the principles of fairness, justice, and openness in the market and in promoting the high-quality development of the capital market.
First, it helps drive improvements in the financial market ecosystem and enhance the effectiveness of social governance through innovation in the judicial system. Fraudulent issuance, financial fraud, and other “cancerous” practices in the capital markets not only gravely infringe upon the legitimate rights and interests of a broad base of investors and generate adverse social repercussions, but also seriously undermine market order and financial stability, potentially triggering factors of social instability. Launching special representative lawsuits for securities disputes—under a “constructive participation, explicit opt-out” framework—can substantially raise the costs of illegal and non‑compliant conduct, effectively deter and reduce unlawful and criminal activities in the capital markets, foster a sound financial market environment, and better support the high‑quality development of the real economy. At the same time, by providing comprehensive civil compensation for unlawful acts, such measures can efficiently and appropriately resolve mass‑scale, public‑interest disputes, significantly boosting the overall effectiveness of social governance.
Second, it helps advance the comprehensive deepening of capital market reforms. The registration‑based IPO system reform is the cornerstone of this round of capital market restructuring. Whether the market‑oriented reform of issuance‑stage access can be implemented smoothly hinges to a large extent on the effectiveness of subsequent regulatory and enforcement measures. Special representative litigation in securities disputes addresses the fundamental institutional shortcomings that have left civil compensation for securities investors inadequate, forming a three‑pronged institutional synergy with administrative and criminal accountability mechanisms, thereby providing robust judicial support for the comprehensive deepening of capital market reforms, particularly the registration‑based IPO system reform.
Third, it helps injured small and medium-sized investors obtain fair and efficient compensation. China’s securities market is dominated by retail investors; when they are harmed by securities‑related violations, their dispersed nature and the relatively small amounts involved often lead many of them to forgo legal redress—resulting in widespread reluctance or inability to bring lawsuits. By contrast, representative litigation in securities disputes, with the participation of investor protection agencies, leverages a representative‑plaintiff mechanism, professional expertise, and measures such as reduced litigation costs to substantially lower both the cost of asserting rights and the risks associated with litigation. This approach effectively addresses the challenges of difficult litigation and high维权 costs that arise when victims are numerous and widely scattered.
Fourth, it helps listed companies and intermediary institutions enhance their internal governance and standardize market operations, thereby fostering a capital market that is well‑regulated, transparent, open, dynamic, and resilient. The special representative litigation system for securities disputes is primarily applicable to cases involving false statements, insider trading, market manipulation, and other misconduct in the securities market. It can effectively compel listed companies and their senior executives to operate in compliance with the law and disclose information as required, improve operational transparency, cultivate a sound corporate governance culture, and continuously elevate the quality of listed companies. At the same time, it ensures that intermediary institutions fulfill their duties and responsibilities, fully playing their role as “gatekeepers,” thus jointly raising the overall level of integrity in the capital market.
2. Question: What are the salient features of China’s special representative litigation for securities disputes?
Answer: The Securities Law and the Provisions of the Supreme People’s Court on Several Issues Concerning Representative Litigation in Securities Disputes (Fa Shi [2020] No. 5, hereinafter referred to as the Judicial Interpretation) provide that, following the issuance by the people’s courts of a notice of rights registration for ordinary representative litigation, an investor protection institution, upon receiving special authorization from no fewer than 50 investors during the registration period, may, in accordance with the law, act as the representative in securities civil compensation litigation. China’s system of special representative litigation for securities disputes is a civil securities litigation mechanism that is well-suited to China’s national conditions and bears distinct Chinese characteristics.
First, it grants public-interest organizations whose purpose is to safeguard investors’ legitimate rights and interests the status of litigation representatives. The aforementioned provision clarifies that investor protection agencies may, upon authorization by investors, acquire the legal standing of a representative; moreover, a transition from an ordinary representative action to a special representative action requires the participation of an investor protection agency, while no other entities, such as private attorneys, are vested with the authority to initiate a special representative action. This constitutes one of the key distinctions between this system and those in other jurisdictions, effectively mitigating the risk of frivolous litigation that might arise from the self‑interest of other actors.
Second, the law establishes a litigation participation mechanism whereby investors “implicitly join and explicitly opt out.” As the representative, the investor protection agency may register with the court on behalf of those whose rights have been conofficeed by the securities registration and clearing institution, thereby eliminating the need for individual investors to prove their status as rights holders and file their own registration. This significantly reduces the evidentiary burden and costs borne by investors in litigation.
Third, we will uphold public‑interest and technology‑driven approaches to enhance the efficiency of rights protection while reducing its costs. Investor protection institutions participating in litigation as representatives shall not charge any fees other than those necessary for conducting special representative lawsuits; they are exempt from prepaying court filing fees, and even if they lose the case and are required to bear litigation expenses, they may apply for fee reductions or exemptions under specified circumstances. Moreover, when seeking property preservation during litigation, they are not required to provide security. At the same time, China leverages information‑technology tools to streamline case filing and registration, service of process, public announcements and notifications, rights registration, and disbursement of enforcement funds, thereby providing investors with greater convenience and realizing the goal of “having data travel more while minimizing the need for investors to make in-person visits.”
Fourth, emphasis is placed on ensuring that litigation procedures are preventable and controllable. With respect to the initiation of proceedings, it is stipulated that an investor protection agency may only commence a representative action if it has obtained authorization from at least 50 rights holders, and the court retains discretion to determine whether to apply the representative‑action procedure. As for the mechanism governing the exercise of representative authority, a system is established requiring that any special powers exercised by the representative be conducted under the supervision of the court, thereby fully safeguarding investors’ rights to vote, to be informed, to object, and to withdraw.
Fifth, we will strengthen the application of diversified dispute-resolution mechanisms to establish a multi‑dimensional framework for protecting investors’ rights. The judicial interpretation stipulates that people’s courts shall fully leverage the functions of these mechanisms, and, in accordance with the principles of voluntariness and legality, guide and encourage parties to resolve securities disputes through non‑litigious means such as industry‑specific mediation and specialized mediation. Where parties opt to resolve their disputes through litigation, the people’s courts shall promptly accept the case, and during the trial process, they shall place particular emphasis on mediation.
3. Question: On April 16, the Small and Medium Investor Service Center, acting on behalf of more than 50 investors, initiated a representative action against Kangmei Pharmaceutical. As a regulatory authority, how do you view this litigation?
Answer: The conversion of the Kangmei Pharmaceutical ordinary representative lawsuit into a special representative lawsuit marks China’s first-ever special representative action in securities disputes. This represents a landmark event in the history of capital market development, carrying significant implications for the sound and sustainable growth of the capital market and for safeguarding investors’ legitimate rights and interests, with far-reaching positive effects. It also constitutes a concrete implementation of the State Council Financial Stability and Development Committee’s “zero tolerance” policy toward illegal and non-compliant conduct. At multiple meetings, the Committee has emphasized that financial fraud by listed companies is a “cancerous tumor” in the securities market, severely undermining the legitimate rights and interests of a broad base of investors, generating adverse social repercussions, and jeopardizing market order and the stable development of the financial system—actions that must be met with rigorous, swift, and severe enforcement.
In May 2020, the China Securities Regulatory Commission imposed administrative penalties and market‑wide bans on Kangmei Pharmaceutical for violations of information disclosure laws and regulations, and referred the company and relevant individuals to judicial authorities on suspicion of criminal offenses. From 2016 to 2018, over three consecutive years, Kangmei Pharmaceutical deliberately, systematically, and organizedly engaged in financial fraud amounting to approximately RMB 30 billion. The scale of the misconduct was enormous, its duration prolonged, its nature particularly grave, and its social impact profoundly negative. Such conduct trampled on the rule of law, showed utter disregard for the market and investors, seriously infringed upon investors’ legitimate rights and interests, and gravely undermined the healthy functioning of the capital market. In response to strong market demand, investor protection institutions duly accepted mandates from affected investors and participated as representatives in the class-action lawsuit against Kangmei Pharmaceutical. The CSRC has expressed its support and will, in accordance with the law, oversee the participation of these investor protection bodies in the litigation process to effectively safeguard investors’ lawful rights and interests.
Going forward, the China Securities Regulatory Commission will continue to strengthen communication and coordination with the Supreme People’s Court, steadily advance the improvement of the institutional framework for representative litigation, and, in accordance with the law, ensure the regular and systematic implementation of such litigation.

Pan Gongsheng, Vice Governor of the People’s Bank of China, answered questions from reporters regarding the financial regulators’ latest round of talks with Ant Group.
On April 12, 2021, 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—along with other financial regulators—once again held a joint meeting to summon Ant Group. Pan Gongsheng, Vice Governor of the People’s Bank of China, answered questions from reporters on behalf of the four agencies regarding the outcome of the meeting.
Q: What considerations led the financial regulators to once again summon Ant Group for a meeting?
Answer: The Fifth Plenary Session of the 19th CPC Central Committee, the Central Economic Work Conference, and the Ninth Meeting of the Central Financial and Economic Affairs Commission all explicitly called for strengthening anti-monopoly enforcement and preventing the disorderly expansion of capital, while effectively guarding against risks. From the strategic perspective of building new national competitive advantages, it is essential to establish and improve a governance system for the platform economy and promote its standardized, sound, and sustainable development.
Since the joint regulatory meeting convened by four departments last December, Ant Group has established a dedicated task force and, under the guidance of financial regulators, formulated a rectification plan and actively implemented it. This latest joint regulatory meeting with Ant Group’s relevant personnel underscores the need for the company to squarely confront the serious issues in its financial operations and the imperative of rigorous compliance with the prescribed rectification measures. Ant Group must align its efforts with regulatory requirements and the agreed‑upon remediation plan, carrying out thorough and effective reforms to ensure lawful operations, sound innovation, and sustainable development. Moreover, it must remain committed to serving the real economy and the public, proactively supporting national development strategies, and—while adhering to prudent regulatory standards—intensify fintech innovation, enhance its international competitiveness in the fintech sector, and play an even greater role in fostering the new development paradigm of dual circulation.
Q: What are the main components of Ant Group’s rectification plan?
A: Since the launch of Ant Group’s rectification efforts, financial regulators have engaged in in-depth discussions with the company on the remedial measures and have urged Ant Group to develop a comprehensive and feasible plan for compliance.
The rectification measures primarily cover five areas: First, to address unfair competition in payment services, consumers will be afforded greater choice in payment methods; inappropriate links between Alipay and other financial products such as Huabei and Jiebei will be severed, and violations—including the embedding of credit‑related services within payment workflows—will be corrected. Second, information monopolies will be dismantled, with strict compliance with the Regulations on the Administration of Credit Reporting; personal credit reporting activities will be conducted under license in accordance with the law, and personal information will be collected and used in line with the principles of legality, minimization, and necessity, thereby safeguarding both individual and national information security. Third, Ant Group will apply to become a financial holding company, bringing all institutions engaged in financial activities under its umbrella and subjecting them to regulatory oversight; risk‑separation mechanisms will be strengthened, and related‑party transactions will be standardized. Fourth, prudential regulatory requirements will be rigorously enforced, corporate governance will be improved, and non‑compliant financial activities—including credit, insurance, and wealth management—will be thoroughly rectified, with high leverage and the potential for risk contagion brought under control. Fifth, liquidity risks associated with key fund products will be managed, and the balance of Yu’ebao will be proactively reduced.
Financial regulators will urge Ant Group to earnestly implement its rectification plan, carefully manage the pace of work, ensure business continuity and normal operations, and safeguard the quality of financial services for the general public while continuously enhancing the level of inclusive financial services.
Question: What steps will financial regulators take next to strengthen oversight of platform enterprises?
A: Financial regulators will uphold the principles of fair and stringent oversight, balancing long-term vision with immediate needs, addressing shortcomings, strengthening weak areas, fostering fair competition, opposing monopolies, and preventing disorderly capital expansion. First, we will adhere to the principle of “finance as the foundation, technology as the enabler.” Platform enterprises engaging in financial activities must prioritize serving the real economy and safeguarding financial stability; technology must not be used as a shield for illegal or non-compliant conduct. Any violations will be investigated and prosecuted rigorously in accordance with the law. Second, we will ensure that all financial activities are brought under financial regulation. Financial services must be conducted by licensed entities; regulatory capacity and standards will be enhanced, the regulatory framework optimized, and regulatory arbitrage prevented. Third, we will give equal weight to development and regulation. We will strengthen oversight in line with the law, standardize market order, curb market monopolies, and protect data rights and personal privacy; at the same time, we will align with the inherent dynamics of platform‑economy development, improve the quality of financial services, and consolidate and bolster the international competitiveness of platform enterprises.
Financial regulators will, as always, uphold the principle of “two unwavering commitments,” foster a fair and competitive market environment, continue to support private capital in conducting fintech activities in accordance with the law, safeguard property rights in line with legal provisions, promote the entrepreneurial spirit, and unleash the market dynamism and technological innovation capacity of private capital.
Q: What are the considerations of China’s financial regulators in strengthening international cooperation on fintech regulation?
Answer: In recent years, financial technology and the platform economy have grown rapidly, playing a crucial role in enhancing the efficiency of financial services, promoting financial inclusion, and reducing transaction costs. At the same time, owing to their cross‑border, multi‑industry, and cross‑regional operating characteristics, these sectors exhibit faster risk contagion, broader spillover effects, and stronger negative externalities, posing new challenges to financial regulation and emerging as a shared concern for regulators worldwide.
Regulators in the world’s major economies have paid close attention to this issue and have taken concrete actions, implementing regulatory adjustments and policy responses. In terms of regulatory philosophy, they adhere to the principle of “same business, same regulation,” striving to strike a balance between fostering fintech innovation and safeguarding against financial risks. On the methodological front, they are exploring the use of technological advances such as big data, cloud computing, and artificial intelligence to enhance risk‑monitoring capabilities and enable more granular, end‑to‑end supervision. As for regulatory content, emphasis is placed on personal data protection and antitrust enforcement. For example, the European Union enacted the General Data Protection Regulation in 2018 and has been accelerating work on the Data Governance Act; in recent years, the United States has launched a series of antitrust investigations into large technology offices; and Germany adopted the tenth amendment to its Act Against Restraints of Competition in 2020, among other measures.
China’s financial regulators are committed to further strengthening cooperation with international financial institutions and national supervisory authorities in areas such as antitrust enforcement, data regulation, operational management, and consumer protection. They will work to develop regulatory frameworks for financial technology, enhance regulatory coordination, and jointly foster an open, inclusive, and secure fintech ecosystem, thereby boosting the financial sector’s innovation capacity while guarding against cross-border regulatory arbitrage and the cross-border transmission of financial risks.

Commercial & Corporate
Yangtze River Pharmaceutical was fined 764 million yuan for engaging in a monopoly agreement.
On April 15, the State Administration for Market Regulation announced that, in accordance with Articles 46 and 49 of the Anti-Monopoly Law, it has imposed an administrative penalty on Yangtze River Pharmaceutical Group Co., Ltd. (hereinafter referred to as “Yangtze River Pharmaceutical”), ordering the company to cease its unlawful conduct and imposing a fine equal to 3% of its 2018 sales revenue of RMB 25.467 billion, amounting to RMB 764 million.
Since 2021, the pharmaceutical industry has been hit with multiple antitrust fines. On January 29, CSPC Pharmaceutical Group Co., Ltd. was fined RMB 100.7 million by the State Administration for Market Regulation for alleged monopolization in the active pharmaceutical ingredient (API) market. On April 1, Tianjin Tianyao Pharmaceutical Co., Ltd. received a “Notice of Administrative Penalty Hearing” from the Tianjin Municipal Administration for Market Regulation, which, on suspicion of entering into a monopolistic agreement regarding the API fluticasone acetate, plans to impose an administrative penalty totaling RMB 44.02 million in fines and confiscations.
Based on currently available public reports, the fine imposed on Yangtze River Pharmaceutical this time has at least set a new record for antitrust penalties in the pharmaceutical industry in 2021. Following the announcement of the penalty, Yangtze River Pharmaceutical stated on its official website that it respects the decision, complies with regulatory requirements, and has learned from the experience, taking concrete measures to carry out comprehensive and thorough rectification in strict accordance with applicable standards. In response to the 764 million yuan fine, Yangtze River Pharmaceutical noted that the “hidden king of pharmaceuticals” was penalized for monopolistic practices in the retail sector. Although Yangtze River Pharmaceutical is not a publicly listed company, it is undoubtedly one of the leading enterprises in China’s pharmaceutical industry. According to information on its official website, Yangtze River Pharmaceutical was founded in 1971 and is headquartered in Taizhou, Jiangsu Province. The company employs more than 16,000 people and operates over 20 subsidiaries across Taizhou, Beijing, Shanghai, Nanjing, Guangzhou, Chengdu, Suzhou, Changzhou, and other locations, with a marketing network that spans all provinces, municipalities, and autonomous regions nationwide.
From 2014 to 2019, Yangtze River Pharmaceutical Group ranked first on China’s Top 100 Pharmaceutical Manufacturers list for six consecutive years. Industry insiders even dub it the “unseen king of pharmaceuticals.” Compared with emerging biopharmaceutical companies that focus on innovative drugs, Yangtze River—being a well-established pharmaceutical office—is better known for its generic products. Against the backdrop of the national policy promoting centralized bulk procurement, Yangtze River has repeatedly secured favorable positions in multiple rounds of such tenders, with numerous product lines making the cut. According to Xu Jingren, Chairman of Yangtze River Pharmaceutical Group, as of April 1, the company has had 58 products either approved or deemed to have passed consistency evaluations, and among the first four rounds of centralized procurement, 21 of its products were selected. Drug distribution channels can broadly be divided into hospital‑based and non‑hospital‑based sales. Through centralized procurement, winning bids gain rapid access to hospital markets, while non‑hospital sales rely primarily on chain drugstores and independent retail pharmacies. Liu Xu, a special researcher at Tsinghua University’s National Strategy Institute, notes that although these two sales channels differ in form, their pricing remains interconnected. Consequently, pharmaceutical companies like Yangtze River have an incentive to influence end‑user prices at non‑hospital retail outlets.
According to the administrative penalty decision issued by the State Administration for Market Regulation, from 2015 to 2019, Yangtze River Pharmaceutical Group, across mainland China (excluding Hong Kong, Macao, and Taiwan), entered into agreements with downstream entities—including pharmaceutical wholesalers and retail pharmacies—through methods such as signing cooperation agreements, issuing price‑adjustment notices, and making verbal instructions, to fix resale prices and set minimum resale prices for its products. The company further ensured compliance with these agreements by implementing internal rules, strengthening performance assessments and oversight, penalizing distributors that engaged in below‑cost sales, and commissioning intermediary agencies to monitor online pricing of its pharmaceuticals. Put plainly, these practices amounted to Yangtze River Pharmaceutical Group using various means to keep drug prices above a certain threshold.
The State Administration for Market Regulation has determined that Yangtze River Pharmaceutical’s conduct has excluded and restricted competition, infringed upon the legitimate rights and interests of consumers and the public interest, and violated Article 14 of the Anti-Monopoly Law, which prohibits business operators from entering into the following monopoly agreements with their trading counterparts: (1) fixing the resale price of goods to third parties; and (2) setting a minimum resale price for goods to third parties.
In fact, antitrust enforcement in the pharmaceutical sector is far from a recent development. In February of this year, the “Action Plan for Building a High-Standard Market System” explicitly called for the formulation of specialized antitrust guidelines and guidance on the application of exemption regimes in areas such as active pharmaceutical ingredients. Moreover, in 2020, the State Council Anti-Monopoly Committee, through the State Administration for Market Regulation, issued the “Antitrust Guidelines for the Active Pharmaceutical Ingredient Sector (Draft for Public Comment).”
In its announcement of penalties against Yangtze River Pharmaceutical, the State Administration for Market Regulation also emphasized that drug prices are vital to both national economic development and people’s livelihoods, touching on critical issues such as alleviating the financial burden of medical care and enhancing public well-being. The Administration will continue to strengthen antitrust enforcement in the pharmaceutical sector, effectively prevent and curb monopolistic practices, safeguard fair market competition, protect consumers’ legitimate rights and interests and the public interest, and promote the sound development of the socialist market economy.

Hefei has released detailed rules for the lottery system for new homes: 30% of units will be allocated to first-time homebuyers, and properties won through the lottery will be subject to a three-year resale restriction.
Effective April 6, for residential projects within Hefei’s urban area where the ratio of registered homebuyers to available units is greater than or equal to 1.5, real estate developers shall conduct public sales through a lottery system notarized by a certified notary agency. During the notarized lottery‑based unit selection process, at least 30% of the units offered must be reserved for first‑time homebuyers with genuine housing needs.
On April 15, the Hefei Municipal Housing Security and Real Estate Administration and the Hefei Municipal Justice Bureau jointly issued the “Notice on Matters Relating to the Notarized Lottery-Based Public Sale of Newly Built Commodity Housing” (hereinafter referred to as the “Notice”), which sets out specific provisions governing the notarized lottery-based public sale of newly built commodity housing. The Notice shall take effect from the date of its issuance and remain in force for a period of two years.
The Notice sets forth a total of 15 measures, including that real estate developers must conduct public sales through a lottery system notarized by a certified notary agency; during the notarized lottery for housing selection, at least 30% of the units available in the current phase must be reserved for first-time homebuyers; and properties obtained through the lottery may not be transferred within three years of receiving the real estate ownership certificate.
In fact, since April 6, Hefei has officially implemented an eight‑point real estate policy package that includes restrictions on the purchase of secondhand homes, a school‑district‑based enrollment system, and a “lottery plus resale‑restriction” regime for popular housing projects. Specifically, households with local Hefei residency that already own two or more properties are prohibited from purchasing secondhand homes in the Binhu New Area, the Government and Culture New Area, the High‑Tech Industrial Development Zone, and within the boundaries of 17 designated school districts. Furthermore, each residential unit may be allocated only 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. Popular developments in the urban area are subject to a lottery system combined with resale restrictions. The policy also suspends corporate purchases of commercial housing and stipulates that the registered average price of such properties may not exceed the pre‑land‑sale forecasted average price.

The original text is attached below:
Notice on Matters Concerning the Notarized Lottery-Based Public Sale of Newly Built Commodity Housing
To all relevant notary institutions, real estate development enterprises, real estate brokerage agencies, and related entities:
To further safeguard the order of our city’s real estate market and standardize the sale of commodity housing, in accordance with the “Notice on Further Promoting the Stable and Healthy Development of Our City’s Real Estate Market” (He Fang Lian [2021] No. 1) issued by the Hefei Municipal Joint Conference on Real Estate Market Regulation, the following matters concerning the notarized lottery‑based public sale of newly built commodity housing are hereby notified:
I. Effective April 6, 2021, for residential developments within the urban area of this city where the ratio of registered homebuyers to available units is greater than or equal to 1.5, real estate developers shall conduct public sales through a notarized lottery system administered by a notary agency. The notarized lottery must utilize computer‑generated random‑selection software provided by the notary agency, and all costs associated with the notarization shall be borne by the real estate developer.
II. The lottery-based housing selection process shall adhere to the principle of giving priority to first-time homebuyers with genuine housing needs. During the notarized lottery, real estate developers shall allocate at least 30% of the units available for sale in the current phase to first-time homebuyers. Participants in the lottery who meet the criteria of first-time homebuyers must simultaneously satisfy the following conditions:
1. The registered homebuyer complies with the city’s housing purchase restriction policy;
2. The registered homebuyer and their family members must not own any housing with property rights within the urban area of this city, nor have any record of housing transfers prior to the date of registration.
3. Within the three years preceding the date of registration for home purchase, the applicant must have continuously paid individual income tax or social insurance in the urban area for at least two years.
4. The purchaser must be under 35 years of age as of the date of registration (based on the age stated on their ID card).
III. Prior to obtaining the pre-sale permit for commercial housing, real estate developers shall formulate a notarized, lottery‑based public sales plan, which shall specify the number of available units, the name of the notary institution, the lottery procedure, and related operational steps. The lottery plan must be publicly posted at the sales site and submitted to the Municipal Housing Security and Real Estate Administration and the Municipal Justice Bureau before the lottery is conducted.
IV. Prior to the launch of sales, real estate developers shall establish home‑purchase registration rules that clearly specify the start and end dates and times, the registration location (including the registration website), and the eligibility criteria. Such rules must comply with applicable regulations; they may not impose registration conditions that favor only internal personnel or specific related parties, nor may they include any form of tied‑selling arrangements or charges beyond the listed price. Furthermore, for first‑time homebuyers with genuine housing needs, registration conditions may not require a down payment exceeding the minimum down‑payment ratio set by financial institutions. The home‑purchase registration rules shall be publicly posted at the sales site and on the relevant websites prior to the commencement of registration.
V. Within 10 days from the date of obtaining the pre-sale permit for commercial housing, real estate developers shall publicly disclose, in a single announcement, all units eligible for sale in the current phase and promptly organize registration for prospective buyers, with a registration period of no less than three days (72 hours). Registration must be conducted online; registered buyers shall upload documentation verifying their own and their family members’ identity, marital status, household registration, and other eligibility requirements. The real estate developer shall verify whether registered buyers meet the criteria under the home‑purchase restriction policy and shall refuse to register any applicants who do not comply. From the commencement of registration for the current phase until the public announcement of the lottery‑based housing selection results, registered buyers may not participate in lottery registration for any other projects.
6. After the deadline for housing purchase registration has passed, real estate developers shall prepare a “Registration and Lottery Roster” categorized by priority‑need buyers and general buyers, publicly post it at the sales site, submit it to a notary agency, and simultaneously report it to the Municipal Housing Security and Real Estate Administration and the Municipal Justice Bureau. The public notice period shall be no less than two days.
Within the registration period, for housing units where the ratio of registered buyers to available units is less than 1.5 and which meet the registration requirements, the real estate developer may sell such units independently upon approval by the Municipal Housing Security and Real Estate Administration; however, the conditions stipulated in the registration rules may not be altered. Otherwise, the buyer registration must be re‑conducted in accordance with the requirements set forth in this Notice.
VII. Notary institutions, upon being entrusted by real estate developers to conduct notarized lottery draws, shall invite three to five representatives of registered homebuyers to participate, and the entire lottery process must be recorded and archived. The results of the lottery ranking shall be conofficeed by the notary institution and then publicly posted by the real estate developer at the sales site for a period of no less than two days.
VIII. Lottery Procedures. (1) Lottery for Housing Eligibility: 1. Priority‑need homebuyers shall participate in a lottery to determine housing eligibility; the number of eligible slots shall be no less than 30% of the total number of units available for sale. If the number of priority‑need homebuyers is fewer than 30% of the total available units, all such buyers shall automatically qualify for housing eligibility. 2. General homebuyers shall also participate in a lottery for housing eligibility. Priority‑need homebuyers who do not win in their own category may enter the general‑category lottery. The ratio of eligible slots to the total number of units available for sale shall be 1:1. 3. Registered homebuyers who fail to secure housing eligibility in the initial lottery shall be eligible to participate in a supplementary lottery; the number of supplementary slots shall equal 20% of the total units available for sale. 4. Real estate developers shall submit to the Municipal Housing Security and Property Administration the relevant documentation of those who win eligibility in the primary and supplementary lotteries, for verification of homebuyer eligibility. If a buyer who has won eligibility fails to pass the eligibility review, the next eligible buyer in line—based on the order determined by the supplementary lottery—shall step in to fill the vacancy. (2) Lottery for Order of Selection: All homebuyers who have obtained eligibility and passed the review shall participate in a single lottery to determine the order of selection. The sequence established by the lottery shall serve as the official order of selection. For those who have secured supplementary eligibility and passed the review, their lottery order shall simultaneously constitute the supplementary selection ranking.
9. Under the supervision of a notary public, real estate developers shall organize housing selection in accordance with the order determined by the lottery results, including any supplementary selection rankings. If a prospective buyer fails to select a unit within the designated timeframe, the developer shall provide an explanatory statement, which, upon conofficeation by the notary public, shall be deemed a waiver of the right to select.
X. Following the apartment selection process, the real estate developer shall publicly post the selection results at the sales site and on its relevant website for no less than three days. The registrant, the lottery‑selected purchaser, and the contract signatory must be the same person and may not be changed. Any property acquired through the lottery may not be put on the market for sale within three years from the date of obtaining the real estate ownership certificate.
11. Real estate development enterprises shall, within 10 days from the date of completion of the notarized lottery‑based housing selection, submit to the Municipal Housing Security and Real Estate Administration the notarized certificates of the lottery ranking and housing selection results, together with the lists of those who have waived their right to select a unit and those who have waived their right to sign the contract.
12. Registered homebuyers shall accurately declare their household’s real estate information and provide a written commitment to the veracity of all submitted documents. Those who submit false information to fraudulently obtain home‑purchase eligibility or priority lottery eligibility shall have their lottery‑based home‑purchase registration revoked for a period of three years. If a registered homebuyer, after being selected through a notarized lottery, cumulatively declines to purchase a home on two occasions, their eligibility to participate in lottery‑based home selection in this city shall be suspended for six months, commencing from the conclusion of their most recent selection.
Thirteen. Real estate developers shall strictly comply with the city’s real estate market regulation policies and the requirements set forth in this Notice, implement the lottery‑based housing selection procedures, and may not unreasonably refuse to accept home‑purchase registrations. Any real estate developer found to be in violation of the provisions of this Notice shall, upon verification, have its online registration eligibility for newly launched residential units suspended for the current sales cycle.
14. Notary institutions shall formulate notarial rules. When conducting public sales of commercial housing through a lottery system, they shall ensure openness, fairness, and impartiality, and charge reasonable fees. Any acts of fraud or corruption in the notarized lottery process shall be subject to legal accountability; if such acts constitute a crime, criminal liability shall be pursued in accordance with the law.
15. The Municipal Housing Security and Real Estate Administration and the Municipal Justice Bureau will, based on the progress of the notarized lottery‑based public sale of newly built commercial housing, further supplement and refine the relevant regulations. This Notice shall be interpreted by the Municipal Housing Security and Real Estate Administration and the Municipal Justice Bureau.
16. This Notice shall take effect from the date of its issuance and shall be valid for a period of two years. Fendong County, Feixi County, Changfeng County, Lujiang County, and Chaohu City may implement it by reference.

Hefei Municipal Housing Security and Real Estate Administration Hefei Municipal Justice Bureau
April 14, 2021

LeEco was fined RMB 240 million, and both the company and Jia Yueting were each fined RMB 240 million for financial fraud and other violations.
On the evening of April 12, Leshi Internet (3; 400084.OC), which has been delisted and transferred to the New Third Board, announced that it had received an “Administrative Penalty Decision” from the Beijing Securities Regulatory Bureau. For violations including financial fraud and fraudulent issuance, the Bureau has imposed a fine of RMB 240.6 million on Leshi Internet and a fine of RMB 241.2 million on Jia Yueting, the company’s actual controller.
Upon investigation, it has been determined that LeEco and Jia Yueting, among others, engaged in the following violations: First, from 2007 to 2016, LeEco committed financial fraud, with false statements appearing in the documents it submitted and disclosed in connection with its application for an initial public offering and listing, as well as in its annual reports for the period 2010 to 2016. Second, LeEco failed to disclose related-party transactions as required. Third, LeEco did not disclose guarantees it had provided to entities such as LeEco Holdings. Fourth, LeEco failed to accurately disclose the status of loan commitments made by Jia Moufang and Jia Yueting to the listed company. Fifth, LeEco’s 2016 non‑public issuance of shares constituted fraudulent issuance.
From the announcement of the investigation on April 30, 2019, to the present, the nearly two-year-long probe has finally reached a conclusion. The total fines, amounting to nearly RMB 500 million, may set a new record for the highest penalty ever imposed in A‑share market cases of financial fraud.
Public records show that LeTV was founded in late 2004 and listed on the Shenzhen Stock Exchange’s ChiNext board in August 2010, with its market capitalization once reaching as high as RMB 165 billion, earning it the reputation of “the leader of the ChiNext.” In 2017, a funding crunch in its smartphone business plunged the entire LeEco ecosystem into crisis; even Sun Hongbin, who stepped in with tens of billions of yuan to bail it out, was unable to turn the situation around. On July 21, 2020, LeTV delisted from the A-share market, with a delisting price of RMB 0.18 and its stock abbreviation changed to LeTV3.
According to an announcement by LeEco, the fines consist of two main components: First, for LeEco’s ten consecutive years of financial fraud from 2007 to 2016—resulting in false statements in its 2010 IPO filing and annual reports from 2010 to 2016, failure to disclose related-party transactions and external guarantees as required by law, and false or materially incomplete disclosures regarding Jia Yueting and Jia Moufang’s fulfillment of their commitments—a penalty of RMB 600,000 was imposed on LeEco and RMB 900,000 on Jia Yueting. Second, for the fraudulent issuance in LeEco’s 2016 non‑public offering, a fine of 5% of the funds raised—RMB 240 million—was levied against LeEco, and a fine of RMB 240.3 million was imposed on Jia Yueting.
Unlike violations of information disclosure, fraudulent issuance has emerged as the primary driver of these fines. How was the 240 million yuan fine for fraudulent issuance calculated? Under Article 189 of the former Securities Law, “If an issuer fails to meet the issuance conditions and obtains approval through deceptive means, and has already issued securities, it shall be subject to a fine of between 1% and 5% of the illegally raised funds.” In July 2016, LeTV raised nearly 4.8 billion yuan through a targeted share offering; multiplying 4.8 billion by 5% yields a fine of 240 million yuan. Compared with the old Securities Law, the new law significantly increases the severity of penalties. The new law stipulates: “If an issuer conceals material facts or fabricates significant false information in its issuance documents, and the securities have not yet been issued, a fine of no less than 2 million yuan but no more than 20 million yuan shall be imposed; if the securities have already been issued, a fine of between 10% and 100% of the illegally raised funds shall be imposed.” In other words, under the new Securities Law, even applying the lower end of the 10% threshold, the penalty for the 2016 targeted‑share‑offering fraud alone would amount to 480 million yuan.
Following its delisting from the Shenzhen Stock Exchange on July 21, 2020, Leshi Internet was transferred to the National Equities Exchange and Quotations (NEEQ) system for trading on February 3, 2021, with its stock abbreviation changed to Leshi Internet 3. Financial data indicate that, as of the third quarter of 2020, the company remained insolvent. In 2019, Leshi Internet reported audited net assets attributable to shareholders of the listed company of approximately RMB 14.329 billion, net profit attributable to the listed company of about RMB 11.279 billion, and net profit after deducting non-recurring gains and losses of roughly RMB 2.305 billion. Despite management’s efforts to restructure the business model and control costs, the company continued to face operational challenges due to substantial historical receivables and prepayments that could not be recovered in a timely manner, leaving its financial performance unchanged. According to the data, in the first three quarters of 2020, Leshi Internet recorded revenue of RMB 223 million and a net loss after excluding non-recurring items of RMB 932 million. As of the end of September 2020, total assets stood at RMB 5.083 billion, while net assets attributable to shareholders of the listed company remained negative, at RMB −15.282 billion. On the asset side, as of June 30, 2020, Leshi Internet held RMB 271 million in cash; however, due to settlement disputes with suppliers, RMB 54 million of this bank balance was subject to mortgage, pledge, or freeze. During the same period, the company’s accounts receivable totaled RMB 4.865 billion, of which RMB 4.581 billion had been provided for bad‑debt reserves.
Another major asset of LeEco is its long-term equity investments. According to available data, as of June 2020, the company’s year‑end balance in its investment in TCL Multimedia Technology Holdings Limited stood at RMB 2.415 billion, with an equity‑method‑recognized investment gain or loss of RMB 58 million. Substantial liabilities continue to plague LeEco, leaving it mired in cash‑flow difficulties. As of June 2020, among the company’s accounts payable totaling RMB 2.996 billion, the top five suppliers—whose outstanding balances remain unpaid or have been carried forward and are over one year old—accounted for a combined RMB 657 million, reflecting insufficient repayment capacity. During the same period, other payables and other current liabilities amounted to RMB 6.213 billion and RMB 3.639 billion, respectively. Notably, non‑financial institution borrowings within other current liabilities reached RMB 3.539 billion. Concurrently, LeEco reported estimated liabilities of RMB 3.504 billion, including RMB 3.388 billion attributable to losses from unauthorized external guarantees and RMB 117 million set aside for pending litigation. Furthermore, as of the first half of 2020, LeEco had disclosed that related parties had appropriated RMB 478 million in funds, with Beijing Leyang Film & Television Media Co., Ltd. accounting for RMB 202 million of that amount.
Jia Yueting, who was also fined RMB 241 million, currently has his shares in Leshi Internet under freeze. According to Leshi Internet’s Q3 2020 report, Jia Yueting, his elder brother Jia Yuemin, and Leshi Holdings (Beijing) Co., Ltd. collectively held 947 million shares, all of which remain frozen. Following the company’s delisting from the New Third Board trading system, Leshi Internet’s stock price surged; as of April 12, 2021, the share price stood at RMB 0.48, valuing the three shareholders’ holdings at RMB 456 million.
Notably, FF, which has been held in high regard by Jia Yueting, plans to pursue a U.S. IPO. According to reports, on April 5 U.S. time, FF formally filed its S‑4 registration statement with the U.S. Securities and Exchange Commission. The filing indicates that, following its merger with PSAC, FF will become a wholly owned subsidiary of PSAC, and it is expected to list on the Nasdaq in the second quarter of 2021, with an estimated valuation of $3.4 billion.

Waterdrop Inc. has filed for an IPO in the United States.
On April 17, insurance and health‑services technology platform Waterdrop Inc. formally filed its IPO application with the U.S. Securities and Exchange Commission, planning to list on the New York Stock Exchange. Underwriters include Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, as well as Chinese brokerage offices such as Agricultural Bank of China Securities, China Merchants Securities, and CITIC Securities. If the offering is successful, Waterdrop will become the first domestic insurtech company to list on the NYSE, and the second Chinese insurance‑related stock to do so after China Life Insurance in 2003.
According to the prospectus, from 2018 to 2020, Waterdrop Insurance generated first-year premiums (FYP) of RMB 972.5 million, RMB 6.6681 billion, and RMB 14.4259 billion, respectively. Waterdrop Inc.’s revenues were RMB 238 million, RMB 1.511 billion, and RMB 3.028 billion, with an annualized compound growth rate of as high as 257%. During the same period, the company reported net losses of RMB 209 million, RMB 322 million, and RMB 664 million, while adjusted EBITDA stood at RMB 140 million, RMB 159 million, and RMB 247 million, corresponding to EBITDA loss margins of 58.93%, 10.52%, and 8.17%, respectively.
According to the prospectus, as of December 31, 2020, ShuiDi Bao had partnered with 62 insurance companies, including China Taiping, ZhongAn, and HongKang Life, to offer 200 online health and life insurance products, most of which were co‑branded, custom‑designed policies. In 2018, 2019, and 2020, the cumulative number of insured users reached 1.7 million, 8.8 million, and 19.2 million, respectively.
Based on 2020 premium revenues for health and life insurance, Waterdrop is China’s largest independent third-party insurance platform, generating over RMB 14.4 billion in first-year premiums (FYP) in 2020. As of December 31, 2020, Waterdrop Insurance had cumulatively issued 30.7 million policies. The share of long-term insurance business has been steadily increasing: in 2020, first-year premiums from long-term health and life insurance products reached RMB 2.51 billion, up 356% year over year. Commission revenue from long-term insurance has risen from 1% in 2018 to 24% in 2020.
In July 2016, Waterdrop Inc. launched “Shuidichou,” a free platform for individuals seeking assistance with major medical expenses, leveraging social networks to help patients facing financial hardship secure funding for their treatment. As of December 31, 2020, more than 340 million people had collectively donated over RMB 37 billion through Shuidichou to support more than 1.7 million patients. According to iResearch data, Shuidichou ranks first among all personal major‑illness fundraising platforms in China. The prospectus also indicates that the Shuidichou business has yet to generate any revenue.
As an insurtech company, Waterdrop has consistently invested in R&D, with spending rising from RMB 69.2 million in 2018 to RMB 215 million in 2019 and RMB 244 million in 2020, accounting for 8.1% of net revenue. According to its prospectus, Waterdrop Insurance has successfully digitized and智能化 key underwriting, renewal, policy cancellation, and policy maintenance processes, achieving near‑100% automation and enabling end-to-end self‑service for users, thereby advancing standardization across the insurance industry. Waterdrop also provides insurtech solutions to partner insurers and institutions, which has become one of the company’s revenue streams; technology service revenues for 2018, 2019, and 2020 were RMB 59.09 million, RMB 51.71 million, and RMB 194 million, respectively, representing 6.4% of total revenue. As of December 31, 2020, Waterdrop held RMB 2.255 billion in cash, cash equivalents, and short-term investments, a 120% increase from RMB 1.025 billion at the end of 2019.
Prior to the IPO, the core management team—including Shen Peng, founder and CEO of Waterdrop Inc.; Yang Guang, General Manager of Waterdrop Insurance; and Hu Yao, General Manager of Waterdrop Fundraising—held 26.4% of the company’s equity. Tencent held a 22.1% stake, while Boyu Capital, Gaorong Capital, and Swiss Re each held 11.9%, 6.5%, and 5.7%, respectively.
In its prospectus, Waterdrop Inc. stated that it “will seek opportunities to strengthen collaboration with healthcare partners such as hospitals and pharmaceutical companies, with the goal of streamlining various medical payment channels and offering consumers a broader range of healthcare options.” Furthermore, its strategic vision is to build an ecosystem integrating “insurance + health services.”
Taxation TAXATATION
Announcement of the State Taxation Administration on Matters Relating to the Consolidation of Tax and Fee Declarations
State Taxation Administration Announcement No. 9 of 2021
In order to implement the “Opinions on Further Deepening Tax Collection and Administration Reform” issued by the General Office of the CPC Central Committee and the General Office of the State Council, to advance the “delegation, regulation, and service” reform in the tax field, to optimize the business environment, and to effectively reduce the reporting burden on taxpayers and payers, and in accordance with the “Opinions of the State Taxation Administration on Launching the 2021 ‘I Do Practical Things for Taxpayers and Payers and the Spring Breeze Action for Convenient Tax Services’” (Tax Total Issue [2021] No. 14), the following matters concerning the consolidation of tax and fee declarations are hereby announced:
I. Effective June 1, 2021, when taxpayers file and pay one or more of the following taxes—urban land use tax, property tax, vehicle and vessel tax, stamp tax, farmland occupation tax, resource tax, land value-added tax, deed tax, environmental protection tax, and tobacco leaf tax—they shall use the “Property and Behavioral Tax Return Form” (Attachment 1). When a taxpayer adds a new tax source or experiences a change in an existing tax source, they must first complete the “Detailed List of Property and Behavioral Tax Sources” (Attachment 2). The documents and provisions listed in the “List of Repealed Documents and Provisions” (Attachment 3) are hereby repealed simultaneously.
II. Effective May 1, 2021, Hainan, Shaanxi, Dalian, and Xiamen will conduct a pilot program to integrate the VAT and consumption tax return forms with those for the urban maintenance and construction tax, the education surcharge, and the local education surcharge. The following forms will be put into use: the “Value-Added Tax and Additional Taxes Return Form (for General Taxpayers),” the “Value-Added Tax and Additional Taxes Return Form (for Small-Scale Taxpayers),” the “Value-Added Tax and Additional Taxes Advance Payment Form,” along with their supplementary schedules, and the “Consumption Tax and Additional Taxes Return Form” (Attachments 4–10). At the same time, the documents and provisions listed in the “List of Documents and Provisions Temporarily Suspended from Implementation” (Attachment 11) shall also be suspended.

This is hereby announced.

State Taxation Administration
April 12, 2021

Interpretation of the “Announcement of the State Taxation Administration on Matters Related to the Consolidation of Tax and Fee Declarations”
To thoroughly implement the spirit of the Fifth Plenary Session of the 19th CPC Central Committee and the Central Economic Work Conference, to carry out the CPC Central Committee and the State Council’s directives on deepening the “delegation, regulation, and service” reform and optimizing the business environment, and to put into practice the “Opinions on Further Deepening Tax Collection and Administration Reform” issued by the General Office of the CPC Central Committee and the General Office of the State Council, in accordance with the requirements of the “Opinions of the State Taxation Administration on Launching the 2021 ‘I Do Practical Things for Taxpayers and Payers and the Spring Breeze Action for Convenient Tax Services’” (Tax Total Issue [2021] No. 14), the State Taxation Administration has issued the “Announcement on Matters Related to the Consolidation of Tax and Fee Declarations,” deciding to comprehensively implement the combined declaration of property and behavioral taxes, and to conduct a pilot program in Hainan, Shaanxi, Dalian, and Xiamen—four provinces and municipalities—integrating the value-added tax and consumption tax return forms with those for urban maintenance and construction tax, the education surcharge, and the local education surcharge. The following is an interpretation:
I. What is the combined filing of property and behavioral taxes?
Property and behavioral taxes are a collective term for property‑related and behavior‑related tax categories within the existing tax system. The consolidated filing of property and behavioral taxes, in simple terms, means “streamlining the return forms so that one form can be used to report multiple taxes.” When taxpayers file returns for several property and behavioral tax types, they no longer need to use separate forms for each tax; instead, they can declare multiple taxes on a single tax return. For taxpayers, this simplifies the documentation required, reduces the number of filing occasions, and shortens the time needed to complete tax procedures. The scope of taxes covered by the consolidated filing includes ten levies: urban land use tax, property tax, vehicle and vessel tax, stamp tax, farmland occupation tax, resource tax, land value‑added tax, deed tax, environmental protection tax, and tobacco leaf tax.
The Urban Maintenance and Construction Tax is an additional tax levied alongside value-added tax and consumption tax. It has been integrated into the VAT and consumption tax return forms and is not included in the scope of the consolidated filing for property and behavioral taxes.
II. What is the integration of the value-added tax and consumption tax return forms with the supplementary tax and fee return forms?
When filing value-added tax (VAT) and consumption tax returns, taxpayers shall simultaneously declare the associated surcharges, including urban maintenance and construction tax, the education surcharge, and the local education surcharge. The integration of VAT and consumption tax return forms with their respective surcharge‑related forms means that the “VAT Return Form (for General Taxpayers),” the “VAT Return Form (for Small-Scale Taxpayers)” together with their supplementary schedules, the “VAT Advance Payment Return Form,” and the “Consumption Tax Return Form” are each consolidated into the “Urban Maintenance and Construction Tax, Education Surcharge, and Local Education Surcharge Return Form.” Accordingly, the “VAT and Surcharges Return Form (for General Taxpayers),” the “VAT and Surcharges Return Form (for Small-Scale Taxpayers),” the “VAT and Surcharges Advance Payment Return Form” along with its supplementary schedules, and the “Consumption Tax and Surcharges Return Form” have been put into effect.
III. Why is it necessary to streamline tax and fee reporting?
To further optimize the tax-related business environment, enhance tax administration efficiency, and improve the taxpayer experience, the State Taxation Administration, building on the successful implementation in 2019 of the combined filing for urban land use tax and property tax, has expanded the scope of such combined filings to include all property‑related taxes. Additionally, it has launched pilot programs to integrate the value-added tax and consumption tax return forms with those for their respective surcharges and levies.
First, the tax‑filing process has been streamlined. Previously, the ten property and behavioral taxes each required separate filings, leading to issues such as multiple entry points, numerous forms, and redundant data collection. The consolidated filing approach adopts the principle of “single‑form submission with source‑data collection front‑loaded,” optimizing and reengineering the filing workflow: all ten taxes are now filed through a single portal, and source‑data collection is separated from the filing stage and moved to an earlier phase, facilitating integrated data management and enhancing data‑use efficiency. Additionally, surcharges and additional taxes are levied alongside value‑added tax (VAT) and consumption tax. Separate filing for these surcharges often results in misalignment with VAT and consumption‑tax returns. To address this, the main‑tax and surcharge/extra‑tax return forms have been integrated under the principle of “single‑form submission, joint collection and administration,” with surcharge‑related information incorporated as supplementary schedules to the VAT and consumption‑tax returns. This enables shared use of information across VAT, consumption tax, and surcharges, thereby improving filing efficiency and providing greater convenience for taxpayers.
Second, it reduces the tax compliance burden. By streamlining tax and fee reporting, the new system comprehensively reviews and consolidates existing forms and data items, thereby decreasing both the number of forms and the number of data fields. The revised return forms make full use of inter‑agency shared data and data from other administrative processes, enabling automatic pre‑population of existing information, which significantly lightens the filing workload for taxpayers and lowers the likelihood of errors in their submissions.
Third, we will enhance the quality and efficiency of tax administration. By streamlining tax and fee declarations and leveraging information technology, we can automate tax calculation, link and cross‑check data, and flag declaration anomalies, thereby effectively preventing underreporting and misreporting, ensuring high‑quality filings, and facilitating the timely implementation of preferential policies. Furthermore, by consolidating return forms for all tax types, we have achieved “one form, one submission, one payment, one receipt” for multiple taxes, significantly improving administrative efficiency.
IV. How do I file tax returns?
(1) Combined Filing of Property and Behavioral Taxes
When filing tax returns, all tax types shall uniformly use the “Property and Behavioral Tax Return Form.” This form consists of a main form and a supplementary schedule for tax reductions and exemptions: the main form reports the taxpayer’s tax situation, while the supplementary schedule details the various tax reductions and exemptions claimed. Prior to filing, taxpayers must first maintain their tax‑source information. If the tax‑source information remains unchanged, conoffice that no changes have occurred and proceed directly with the tax return; if there are changes, update and maintain the data by completing the “Tax‑Source Details Schedule” before submitting the tax return.
Taxpayers may freely choose the timing for maintaining their tax‑source information, either before or during the filing period. To ensure consistency between tax‑source data and the tax return and to reduce the reporting burden on taxpayers, the tax administration system will automatically generate a new return based on the tax‑source information for each tax type; once the taxpayer reviews and conoffices it, the filing is complete. Regardless of the filing method selected, the system will automatically produce the return using the taxpayer’s registered tax‑source detail statements at the time of submission.
(II) VAT, Consumption Tax, and Additional Taxes and Fees Filing
In the newly implemented “Value-Added Tax and Additional Taxes and Fees Return (for General Taxpayers),” “Value-Added Tax and Additional Taxes and Fees Return (for Small-Scale Taxpayers),” “Value-Added Tax and Additional Taxes and Fees Advance Payment Return,” along with their supplementary schedules, and the “Consumption Tax and Additional Taxes and Fees Return,” the additional taxes and fees return is treated as a supplementary schedule or annex. Taxpayers may file the additional taxes and fees return concurrently with their value-added tax and consumption tax returns.
Specifically, after the taxpayer completes the VAT and consumption tax return information, the system automatically populates the supplementary schedules for additional taxes and fees. Once the taxpayer has entered the remaining details for these additional taxes and fees, they are returned to the main VAT and consumption tax return form, thereby generating the amounts of VAT, consumption tax, and additional taxes and fees payable for the current period. All pre‑filled data in the aforementioned forms is generated automatically by the system.
V. How do I provide tax source information for property and behavioral taxes?
Tax source information serves as the foundational data for tax returns and subsequent administration across all property and transaction taxes, and it constitutes the primary basis for preparing tax return forms. Taxpayers provide tax source information by completing tax source detail forms. Taxpayers are required to complete the relevant tax source detail form only for those tax types for which a tax liability has arisen.
The tax‑source detail forms for each tax type are designed to reflect the specific characteristics of that tax. For stable tax sources such as urban land use tax, property tax, and vehicle and vessel tax, a “one‑time submission with long‑term validity” approach may be adopted. For example, if an enterprise pays urban land use tax and property tax on a quarterly basis and acquires a factory building on August 15, and the reporting period for that quarter runs from October 1 to October 20, the enterprise may complete the tax‑source detail forms for these two taxes at any time between August 15 and October 20 and then file its return. As long as there are no changes—such as transfer or damage—to the factory building, the same tax‑source detail form can remain in use indefinitely.
For one-time tax sources such as the farmland occupation tax, stamp tax, and resource tax, taxpayers may either complete the tax source detail form immediately upon the occurrence of the tax liability or report all tax source information at the time of filing. For example, if a coal enterprise sells taxable coal and receives payment on August 5, 10, and 15, it may fill out the resource tax source detail form on the same day, or it may consolidate and report all tax source information before the end of the filing period.
VI. How do I correct property and behavioral tax source information?
When a taxpayer discovers that tax‑source information has been incorrectly or incompletely reported, they may directly amend the completed tax‑source detail form. For example, if a taxpayer has filed an stamp‑duty tax‑source detail form and, prior to filing, identifies that taxable contract information was omitted, they can immediately revise the submitted form, add the relevant contract details, and then proceed with the filing or correct the return.
VII. Must all property and behavioral taxes be filed in a single submission?
Combined filing does not require taxpayers to declare all tax types at once; taxpayers may choose to file all current‑period taxes in a single submission or file them separately. For example, if a taxpayer is required to file four taxes—urban land use tax, property tax, stamp tax, and resource tax—in July, and only files three of them—urban land use tax, property tax, and stamp tax—on July 5, omitting the resource tax, the taxpayer may submit a separate return for the resource tax before the filing period ends, without needing to amend the earlier filings.
8. If the tax payment deadlines for property tax and various behavioral taxes differ, can they be filed jointly?
Taxpayers may file consolidated returns for property and behavioral taxes under different tax periods.
Tax types that are filed on a periodic basis but have different tax payment deadlines may be filed jointly. For example, if an enterprise pays urban land use tax quarterly and stamp tax on a monthly aggregated basis, during the April filing period, it may file a combined return for the first‑quarter urban land use tax and the March stamp tax.
Tax types subject to both periodic and per‑instance filing may also be filed jointly. For example, if a company pays urban land use tax on a quarterly basis and receives a written notice from the competent natural resources authority on March 15 regarding procedures for occupying cultivated land, it may, during the April tax collection period, file a combined return for the first quarter’s urban land use tax and the cultivated land occupation tax due as of March 15.
9. If, after filing a combined return for property and behavioral taxes covering multiple tax types, you only need to correct the return for one tax type, what should you do?
Combined filing supports corrections for individual tax types. When a taxpayer corrects the return for one or some tax types, it does not affect other tax types that have already been filed. For example, if a taxpayer files returns for four taxes—urban land use tax, property tax, stamp tax, and resource tax—in a single submission and subsequently discovers an error in the resource tax return, they may file a corrected return solely for the resource tax. During the correction process, the taxpayer can simply amend the resource tax source details sheet and submit the corrected return separately, without needing to adjust any of the other previously filed tax types.
X. Will the consolidated filing of property and behavioral taxes affect tax reporting for real estate transactions?
At present, taxpayers typically use the incremental‑property transaction tax return, the existing‑property transaction tax return, and the land‑transaction tax return—available within the real estate registration tax‑filing module—when filing taxes on real estate transactions, thereby consolidating the declaration of value‑added tax and its surcharges, income tax, stamp duty, deed tax, and other levies. Following the consolidation of property and behavioral taxes, the relevant tax return forms under the real estate registration system may continue to be used.
11. Following the consolidation of tax return forms, what changes have been made to the VAT return?
In the newly filed tax return forms, in addition to the consolidated filing of main taxes and ancillary taxes and fees, the VAT return has also been optimized and adjusted.
(1) After adopting the new tax return form, what changes have been made to the VAT return filing requirements for general taxpayers?
The newly implemented “Value-Added Tax and Additional Taxes Return (for General Taxpayers)” and its supplementary schedules feature three major changes: First, columns 39 through 41 under the “Additional Taxes” section have been added to the main form of the original “Value-Added Tax Return (for General Taxpayers),” and the form’s title has been revised to “Value-Added Tax and Additional Taxes Return (for General Taxpayers).” Second, column 23 of the original “Supplementary Schedule II to the Value-Added Tax Return (Details of Input Tax for the Current Period)” — titled “Other Cases Requiring Transfer of Input Tax” — has been split into two new columns: column 23a, “Input Tax Transferred Due to Abnormal Certificates,” and column 23b, “Other Cases Requiring Transfer of Input Tax.” The schedule’s title has also been adjusted to “Supplementary Schedule II to the Value-Added Tax and Additional Taxes Return (Details of Input Tax for the Current Period).” Specifically, column 23a is dedicated to reporting the transfer of input tax arising from abnormal VAT credit certificates, while column 23b continues to reflect the content previously reported in column 23. Third, a new supplementary schedule, “Supplementary Schedule V to the Value-Added Tax and Additional Taxes Return (Schedule of Additional Taxes),” has been added.
The main change concerning VAT tax return filing is that, when filing their returns, taxpayers must report the input VAT amounts that, in accordance with regulations, are to be transferred out as abnormal VAT credit certificates in the current period, entering them in Column 23a of “Supplementary Information (II) to the VAT and Additional Tax Return” (Details of Input VAT for the Current Period), labeled “Input VAT Transferred Out Due to Abnormal Certificates.” For cases where such transfers were previously made, but the abnormal status has since been lifted or the tax authorities have verified that the credits may continue to be deducted, and the taxpayer has re‑conofficeed the input VAT to be used for deduction, a negative figure should be entered in this column.
(2) After adopting the new tax return form, what changes have been made to the VAT return filing requirements for small-scale taxpayers?
The newly implemented “Value-Added Tax and Additional Taxes and Fees Return (for Small-Scale Taxpayers)” and its supplementary schedules introduce three major changes: First, columns 23 through 25 under the “Additional Taxes and Fees” section have been added to the main form of the original “Value-Added Tax Return (for Small-Scale Taxpayers),” and the form’s title has been revised to “Value-Added Tax and Additional Taxes and Fees Return (for Small-Scale Taxpayers).” Second, the names of certain columns in the main form of the original “Value-Added Tax Return (for Small-Scale Taxpayers)” related to sales revenue from special VAT invoices and ordinary invoices have been adjusted to more precise wording: specifically, columns 2 and 5 have been renamed from “Sales Revenue Excluding Tax on Special VAT Invoices Issued by the Tax Authorities” to “Sales Revenue Excluding Tax on Special VAT Invoices”; and columns 3, 6, 8, and 14 have been renamed from “Sales Revenue Excluding Tax on Ordinary Invoices Issued via Tax-Controlled Devices” to “Sales Revenue Excluding Tax on Other VAT Invoices.” The specific reporting requirements for these columns remain unchanged. Third, a new supplementary schedule, “Supplementary Schedule (II) to the Value-Added Tax and Additional Taxes and Fees Return (for Small-Scale Taxpayers)” (the Additional Taxes and Fees Information Form), has been added.
The content and scope of the VAT return, as set forth in the “Value-Added Tax and Additional Taxes Return (for Small-Scale Taxpayers)” and its supplementary schedules, remain unchanged.
(3) For general VAT taxpayers in the pilot regions, if, for tax periods beginning in April 2021 and thereafter, they receive a Tax Matter Notification from the competent tax authority informing them that the special VAT invoices they have already declared for credit are classified as abnormal VAT credit certificates, how should such taxpayers handle this when filing their tax returns?
In accordance with the Instructions for Completing the “Value-Added Tax and Additional Taxes Return (for General Taxpayers)” and its supplementary schedules, column 23a of “Supplementary Schedule (II) to the Value-Added Tax and Additional Taxes Return,” titled “Input VAT Transferred Out Due to Abnormal Certificates,” shall be used to report the amount of input VAT transferred out this period as a result of abnormal VAT credit certificates.
If a taxpayer’s tax credit rating is not Class A, in accordance with Article 3, Paragraph (1) of the State Taxation Administration Announcement No. 38 of 2019 (“Announcement on Matters Relating to the Administration of Abnormal VAT Credit Certificates, etc.”), when filing the VAT and additional tax returns for the tax period corresponding to the relevant tax‑related notice received, the taxpayer shall, as required by the instructions for completing Form II of the VAT and Additional Tax Return, enter the VAT amount already credited against the corresponding special invoice in Column 23a of Form II.
If a taxpayer’s tax credit rating is Class A, in accordance with Article 3, Paragraph (4) of Announcement No. 38, the taxpayer may, within ten working days from the date of receiving notification from the tax authority, submit a verification request to the competent tax authority. Until the tax authority issues its verification result, no outbound transfer of input VAT shall be made, nor is it necessary to enter the VAT amount already credited on the corresponding special invoice into Column 23a of “Supplementary Information (II)” of the Value-Added Tax and Additional Tax Return Form.
If a taxpayer fails to submit a verification request within the prescribed time limit, or if a verification request is submitted but the relevant invoice is subsequently verified and found not to comply with the applicable provisions governing the input VAT credit, the taxpayer shall continue to account for the input tax as an outgoing transfer.
(4) For general VAT taxpayers in the pilot regions, if, for tax periods beginning in April 2021 and thereafter, they receive a Tax Matter Notification from the competent tax authority informing them that an abnormal VAT input tax credit certificate—previously subject to transfer-out—has been de‑listed as abnormal, the corresponding special VAT invoice may continue to be used for input tax credit in accordance with the current regulations. How should taxpayers handle this when filing their tax returns?
In accordance with the “Value-Added Tax and Additional Taxes and Fees Return (for General Taxpayers)” and its accompanying instructions, fill in Column 23a, “Input VAT Transferred Out Due to Abnormal Certificates,” of the “Supplementary Schedule (II) to the Value-Added Tax and Additional Taxes and Fees Return” with the amount of input VAT transferred out for abnormal VAT credit certificates during the current period. If, after verification, such certificates are deemed eligible for continued deduction and the taxpayer re‑conoffices their use for deduction, enter a negative figure in this column.
For taxpayers in the pilot regions, with respect to abnormal input tax credit certificates that were treated as input tax transfers for the April 2021 period and subsequent periods, once the abnormality has been resolved, taxpayers shall first re‑select the relevant invoices for deduction through the Integrated VAT Invoice Service Platform. Subsequently, when filing the VAT and additional tax returns for the period to which the deduction selection pertains, they shall, in accordance with the instructions in the “Supplementary Information (II) to the VAT and Additional Tax Returns,” enter the amount of tax eligible for continued deduction as a negative figure in Column 23a of the same form. For abnormal input tax credit certificates that had already been treated as input tax transfers prior to the April 2021 period, no further deduction selection is required; upon verification by the tax authorities, the amount of tax eligible for continued deduction may be directly entered as a negative figure in Column 23a of the “Supplementary Information (II) to the VAT and Additional Tax Returns.”
XII. Following the consolidation of tax return forms, what changes have been made to consumption tax filing?
Under the new tax return form, in addition to the consolidated filing of main taxes and ancillary surcharges, the consumption tax return has also been streamlined and optimized.
(1) After adopting the new tax return form, what changes have been made to the consumption tax return?
First, the original eight main forms of the consumption tax return, which were previously organized by tax category, have been consolidated into a single master form. The basic framework remains unchanged, comprising three sections—sales information, tax calculation, and tax payment—and incorporates additional line‑item numbers and cross‑reference relationships within the form. Three items that do not factor into the consumption tax calculation, such as “taxes unpaid at the beginning of the period,” have been removed, thereby facilitating a smooth transition for taxpayers to the new return format.
Second, the original 22 supplementary schedules to the consumption tax return forms, categorized by tax item, have been consolidated into 7 schedules: 4 are general-purpose schedules, 1 is a dedicated schedule for taxpayers of refined petroleum product consumption tax, and 2 are dedicated schedules for cigarette consumption tax taxpayers.
(2) After adopting the new tax return form, are taxpayers subject to different excise tax categories required to complete all main forms and supplementary schedules?
The new tax return form integrates the original main and supplementary forms of the consumption tax return, which were previously separated by tax category. Based on the taxpayer’s registered information on the consumption tax‑subject items, the system automatically populates the “Taxable Consumption Tax Name,” “Applicable Tax Rate,” and other relevant fields in the main form, as well as the supplementary schedules that the taxpayer is required to complete, thereby simplifying the filing process. Special supplementary schedules are required only for taxpayers of refined oil consumption tax and cigarette consumption tax; other taxpayers are not required to file these schedules, nor will they be automatically displayed by the system.
(3) In the consignment processing stage, does the enterprise still need to complete the “Calculation Form for Withheld and Remitted Taxes” for the consumption tax withheld and remitted by the processor?
The “Tax Collection and Remittance Calculation Form” is no longer required; instead, the universally applicable “Detailed Report on Withholding and Collection of Taxes” for each tax type shall be completed.
(4) If an enterprise is engaged in the production of lubricating oils, does it still need to complete the “Consumption Tax Return for Refined Petroleum Products” after adopting the new tax return form?
The original “Consumption Tax Return for Refined Petroleum Products” is no longer required. The new return form has been designed to fully accommodate the functions of all previous consumption tax return formats and automatically links to taxpayer registration information. During filing, the system will automatically populate the “Current Period Allowable Deduction Calculation Form (for Refined Petroleum Product Consumption Taxpayers),” which is specific to refined petroleum product taxpayers, and will also automatically import the beginning inventory of refined petroleum products, enabling taxpayers to continue calculating their deductible tax amounts.
13. When will the consolidation of tax and fee declarations begin?
The streamlined tax and fee filing process will be advanced in phases, following the principle of piloting first and then scaling up.
(1) Combined Filing of Property and Behavioral Taxes
Building on the initial pilot programs in Jiangsu, Anhui, Hainan, Chongqing, and Ningbo, starting June 1, 2021, taxpayers nationwide are required to file a consolidated return when declaring property and behavioral taxes, which include urban land use tax, property tax, vehicle and vessel tax, stamp tax, farmland occupation tax, resource tax, land value-added tax, deed tax, environmental protection tax, and tobacco leaf tax—excluding urban maintenance and construction tax, which is filed jointly with value-added tax and consumption tax.
(2) The value-added tax and consumption tax return forms have been integrated with the supplementary tax and fee return forms.
Effective May 1, 2021, a pilot program was launched in four provinces and municipalities—Hainan, Shaanxi, Dalian, and Xiamen—to integrate the value-added tax and consumption tax return forms with their respective supplementary tax and fee declaration forms. Based on the outcomes of the pilot, the State Taxation Administration will roll out the initiative nationwide at an appropriate time in 2021.
XIV. Additional Matters to Note When Filing Value-Added Tax, Consumption Tax, and Related Surcharges
Taxpayers who file and pay value-added tax, consumption tax, and related surcharges on a monthly basis shall apply the provisions of this Announcement when filing and paying such taxes for the tax period of April 2021 and thereafter. Taxpayers who file and pay these taxes on a quarterly basis shall apply the provisions of this Announcement when filing and paying for the second quarter of 2021 and thereafter. Where taxpayers adjust tax and fee matters pertaining to prior tax periods, they shall do so in accordance with the relevant rules set forth in the tax return forms applicable to those respective periods.

Notice of the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration on Import Tax Policies Supporting the Development of the New Display Industry for the Period 2021–2030
Finance and Customs Letter [2021] No. 19
To the Finance Departments (Bureaus) of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan; to the Finance Bureau of the Xinjiang Production and Construction Corps; to the Guangdong Sub‑Administration of the General Administration of Customs and all directly affiliated customs offices; to the tax bureaus of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan under the State Taxation Administration; to the local supervisory bureaus of the Ministry of Finance; and to the resident commissioner offices of the State Taxation Administration:
To accelerate the development and expansion of next-generation information technology and support the growth of the new‑type display industry, the relevant import tax policies are hereby notified as follows:
I. From January 1, 2021, to December 31, 2030, import duties shall be exempted on self‑used production‑related (including R&D‑related) raw materials, consumables, cleanroom support systems, and spare parts for production equipment (including both imported and domestically produced equipment) that are imported by manufacturers of new‑type display devices—namely thin‑film transistor liquid crystal displays, active‑matrix organic light‑emitting diode displays, and Micro‑LED displays (hereinafter the same)—when such items cannot be produced domestically or their performance fails to meet domestic requirements. Additionally, import duties shall be exempted on self‑used production‑related raw materials and consumables imported by manufacturers of key raw materials and components for the new‑type display industry—namely sputtering targets, photoresists, photomasks, polarizing films, and color filter substrates—when such items cannot be produced domestically or their performance fails to meet domestic requirements.
In light of domestic industrial development and technological progress, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, in coordination with the National Development and Reform Commission and the Ministry of Industry and Information Technology, will make timely adjustments to the aforementioned categories of critical raw materials and components.
II. Enterprises undertaking major projects for the development of new‑type display devices, during the period from January 1, 2021, to December 31, 2030, may, with respect to newly imported equipment—except for items listed in the “Catalogue of Imported Goods Not Eligible for Duty Exemption in Domestic Investment Projects,” the “Catalogue of Imported Goods Not Eligible for Duty Exemption in Foreign‑Invested Projects,” and the “Catalogue of Major Technological Equipment and Products Not Eligible for Duty Exemption upon Import”—provide customs‑approved tax guarantees for any unpaid duties. Accordingly, they shall be permitted to pay the value‑added tax levied at the import stage in installments over a period of six years (consecutive 72 months) following the import of the first unit, with annual payments—over twelve consecutive months—amounting to 0%, 20%, 20%, 20%, 20%, and 20% of the total import‑stage VAT, respectively. Taxes already paid from the date of the first equipment’s import shall not be refunded. During the installment‑payment period, customs shall refrain from imposing late‑payment penalties on the taxes approved for installment payment.
III. The list of duty‑free imported goods that cannot be produced domestically or whose performance fails to meet domestic requirements, as referred to in Article 1, shall be formulated and promulgated separately by the Ministry of Industry and Information Technology in coordination with the National Development and Reform Commission, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, and shall be updated on an ongoing basis.
IV. The Measures for the Administration of Import Tax Policies Supporting the Development of the New‑Generation Display Industry for the Period 2021–2030 shall be formulated and promulgated separately by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, in coordination with the National Development and Reform Commission and the Ministry of Industry and Information Technology.
Ministry of Finance, General Administration of Customs, State Taxation Administration
March 31, 2021

Notice of the Ministry of Finance, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the General Administration of Customs, and the State Taxation Administration on the Administrative Measures for the Import Tax Policy Supporting the Development of the New Display Industry from 2021 to 2030
Finance and Customs Letter [2021] No. 20
To the Finance Departments (Bureaus), Development and Reform Commissions, and departments in charge of industry and information technology of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan; to the Finance Bureau, Development and Reform Commission, and Industry and Information Technology Bureau of the Xinjiang Production and Construction Corps; to the Guangdong Sub‑Administration of the General Administration of Customs and all directly affiliated customs offices; to the tax bureaus of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan under the State Taxation Administration; to the local supervisory bureaus of the Ministry of Finance; and to the resident commissioner offices of the State Taxation Administration in various localities:
To implement the “Notice of the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration on Import Tax Policies Supporting the Development of the New Display Industry for the Period 2021–2030” (Cai Guan Shui [2021] No. 19, hereinafter referred to as the “Notice”), the administrative measures for implementing this policy are hereby notified as follows:
I. The National Development and Reform Commission, in conjunction with the Ministry of Industry and Information Technology, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, shall formulate and jointly issue a list of enterprises engaged in the production of new‑type display devices, as well as enterprises producing key raw materials and components for the new‑type display industry, that are eligible for exemption from import duties.
II. The Ministry of Industry and Information Technology, in coordination with the National Development and Reform Commission, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, shall formulate and jointly issue a list of duty‑free imported goods comprising raw materials, consumables, cleanroom support systems, and spare parts for production equipment (including both imported and domestically produced equipment) that cannot be manufactured domestically or whose performance fails to meet domestic requirements.
III. The National Development and Reform Commission, in conjunction with the Ministry of Industry and Information Technology, shall formulate the criteria for major new‑display‑device projects eligible for installment payment of value‑added tax at the import stage on newly imported equipment, as well as the eligibility requirements for enterprises undertaking such projects. Based on these criteria and requirements, it shall draw up proposed lists of major new‑display‑device projects and of undertaking enterprises, and notify the Ministry of Finance, with copies sent to the General Administration of Customs and the State Taxation Administration. The Ministry of Finance, together with the General Administration of Customs and the State Taxation Administration, shall finalize the lists of major new‑display‑device projects and of undertaking enterprises, and issue notifications to the provincial finance departments (including those of provinces, autonomous regions, municipalities directly under the central government, cities separately listed in state planning, and the Xinjiang Production and Construction Corps; the same applies hereinafter), the customs offices directly affiliated with the enterprises’ locations, and the provincial tax authorities.
The undertaking enterprise shall, no later than three months prior to the import of the first new piece of equipment under the major project for the development of next‑generation display devices, submit an application to the provincial finance department (bureau), attaching information such as the project’s investment amount, the scheduled date of equipment import, the annual value of newly imported equipment, the annual VAT liability on such imports, and a tax‑guarantee plan. A copy of the application shall be sent to the directly affiliated customs authority and the provincial tax bureau at the enterprise’s location. Following a preliminary review conducted jointly by the provincial finance department (bureau), the directly affiliated customs authority, and the provincial tax bureau, the application shall be submitted to the Ministry of Finance, with copies forwarded to the General Administration of Customs and the State Taxation Administration.
The Ministry of Finance, in coordination with the General Administration of Customs and the State Taxation Administration, has finalized the phased‑payment tax plan for major new‑display‑device projects—covering the project name, the name of the undertaking enterprise, the start and end dates of the phased payments, the total amount of taxes to be paid in installments, and the quarterly payment amounts—and has notified the provincial finance departments (bureaus), the directly affiliated customs offices at the enterprises’ locations, and the provincial tax authorities. The directly affiliated customs offices at the enterprises’ locations are then responsible for informing the relevant enterprises.
During the implementation of the installment‑payment tax scheme, if the project name is changed or the contractor undergoes changes to its name or business scope, the contractor shall, within 60 days from the date of completing the relevant registration of such changes, submit a written explanation of the changes to the provincial finance department (bureau), the directly affiliated customs authority at the place of the enterprise, and the provincial tax authority, and apply for corresponding amendments to the installment‑payment tax scheme. The provincial finance department (bureau), in coordination with the directly affiliated customs authority at the place of the enterprise and the provincial tax authority, shall determine the outcome of the amendment and notify the directly affiliated customs authority at the place of the enterprise by official letter, with a copy sent to the provincial tax authority, and file the decision with the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration. The directly affiliated customs authority at the place of the enterprise shall then inform the contractor of the amended outcome. If the contractor submits the explanation of changes beyond the time limit specified above, the provincial finance department (bureau), the directly affiliated customs authority at the place of the enterprise, and the provincial tax authority shall refuse to accept the submission; the project will no longer be eligible for the installment‑payment tax treatment, and any unpaid taxes on imported equipment must be paid in full within three months following the month in which the registration of the change was completed.
Imported new equipment benefiting from installment tax payment shall be declared for import within the customs jurisdiction of the directly affiliated customs office where the enterprise is located. In accordance with the provisions on customs‑related guarantees, the undertaking enterprise shall provide a customs‑approved tax guarantee for any unpaid duties. Customs shall not impose late‑payment penalties on taxes approved for installment payment. At the time of the final tax payment, the customs authority shall complete the final settlement and clearance of all taxes due for the project. Should the enterprise fail to comply with these requirements and fail to remit taxes on time, the project will no longer be eligible for installment tax payment; any outstanding taxes on imported equipment must be paid in full within three months, starting from the month following the occurrence of the overdue situation.
IV. Under Article 2 of the Notice, for enterprises importing new equipment, the cumulative scope of goods listed in the “Catalogue of Imported Goods Not Eligible for Tax Exemption for Domestic Investment Projects,” the “Catalogue of Imported Goods Not Eligible for Tax Exemption for Foreign-Invested Projects,” and the “Catalogue of Major Technological Equipment and Products Not Eligible for Tax Exemption upon Importation” shall apply concurrently to the period in which the import is declared.
V. Units eligible for duty-free import shall, in accordance with the relevant customs regulations, complete the procedures for tax exemption or reduction on the imported goods.
VI. In Articles 1 and 2 of these Measures, the lists and inventories formulated under the respective leadership of the National Development and Reform Commission and the Ministry of Industry and Information Technology shall indicate the batch number. The first batch of such lists and inventories shall take effect as of January 1, 2021; customs duties that have been collected within 30 days following the date of issuance of the first batch list may, upon application by the duty‑exempt import entity, be refunded. Subsequent batches of lists and inventories shall take effect on the 20th day following their respective dates of issuance.
VII. Where a duty‑free import entity undergoes changes such as a change of name or scope of business, it shall, within the validity period of this Notice, promptly submit to the National Development and Reform Commission a written explanation of the relevant changes. In accordance with the provisions of Article 1, the National Development and Reform Commission shall determine whether the entity, following the change, may continue to enjoy the policy benefits from the date of registration of the change, and shall specify the date of such registration. The Commission shall notify the General Administration of Customs of its determination by official letter (when there are numerous determinations, at least two batches shall be notified annually), with copies sent to the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Taxation Administration.
VIII. Units authorized to import duty‑free goods shall use such goods in accordance with the relevant regulations. If, in violation of these regulations, they unlawfully transfer, divert for other purposes, or otherwise dispose of the duty‑free imported goods, and are consequently held criminally liable, they shall be barred from benefiting from the policy for the remainder of the period during which this Notice remains in effect.
9. If a duty‑free import entity has obtained duty‑free status through false or misleading declarations, the National Development and Reform Commission, in coordination with the Ministry of Industry and Information Technology, the Ministry of Finance, the General Administration of Customs, the State Taxation Administration, and other relevant departments, shall verify the facts. Upon such verification, the NDRC shall notify the General Administration of Customs in writing; from the date of such notification, the entity shall cease to enjoy the relevant policy for the remainder of the validity period specified in the Notice.
X. Where the finance authorities and other relevant departments, as well as their staff, engage in conduct that violates the provisions governing policy implementation, or commit unlawful or disciplinary offenses such as abuse of power, dereliction of duty, or favoritism and corruption, they shall be held accountable in accordance with applicable state regulations; if their actions constitute a crime, they shall be prosecuted for criminal liability in accordance with the law.
XI. This Measures shall be effective from January 1, 2021, to December 31, 2030.
Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology
General Administration of Customs, State Taxation Administration
March 31, 2021

Litigation & Arbitration
Decision of the Supreme People’s Court on Amending the “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Proceeds Derived Therefrom”
The Decision of the Supreme People’s Court on Amending the Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds from Crime and Proceeds Derived Therefrom was adopted at the 1835th Meeting of the Judicial Committee of the Supreme People’s Court on April 7, 2021. It is hereby promulgated and shall enter into force as of April 15, 2021.
Supreme People’s Court
April 13, 2021

Decision of the Supreme People’s Court on Amending the “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Proceeds Derived Therefrom”
(Adopted at the 1835th Meeting of the Judicial Committee of the Supreme People’s Court on April 7, 2021; effective as of April 15, 2021)
Interpretation of the Supreme People’s Court No. 8 [2021]
In accordance with the needs of judicial practice and pursuant to the decision adopted at the 1835th meeting of the Judicial Committee of the Supreme People’s Court, the “Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Benefits Derived Therefrom” (Fa Shi [2015] No. 11) is hereby amended as follows:
Effective from the date of promulgation of this Decision, the monetary thresholds for the crimes of concealing or disguising criminal proceeds and proceeds of crime set forth in Article 1, Paragraph 1, Item (1), Paragraph 2, and Article 2, Paragraph 2 of the Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Disguisement of Criminal Proceeds and Proceeds of Crime (Fa Shi [2015] No. 11) shall no longer apply. When hearing criminal cases involving the concealment or disguisement of criminal proceeds and proceeds of crime, people’s courts shall, in accordance with the law, render convictions and impose penalties after comprehensively considering such factors as the nature of the upstream offense, the circumstances and consequences of the concealment or disguise of the proceeds and their gains, and the degree of social harm.
This Decision shall enter into force on April 15, 2021.

Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Proceeds Derived Therefrom
(Adopted at the 1651st Meeting of the Judicial Committee of the Supreme People’s Court on May 11, 2015, and amended in accordance with the Decision on Amending the Interpretation on Several Issues Concerning the Application of Law in the Trial of Criminal Cases Involving Concealment or Cover-up of Proceeds of Crime and Proceeds Derived Therefrom, adopted at the 1835th Meeting of the Judicial Committee of the Supreme People’s Court on April 7, 2021; the amendment shall take effect as of April 15, 2021.)
In order to punish, in accordance with the law, criminal activities involving the concealment or cover-up of proceeds of crime and gains derived therefrom, and in light of the relevant provisions of the Criminal Law and the actual practice of criminal adjudication in the people’s courts, the following interpretations are hereby issued on certain issues concerning the specific application of the law in the trial of such cases:
Article 1: Where a person knowingly harbors, transfers, acquires, sells on behalf of another, or otherwise conceals or disguises proceeds of crime or any gains derived therefrom, and the circumstances fall under any of the following, such person shall be convicted and punished for the crime of concealing or disguising proceeds of crime and gains derived therefrom, in accordance with Article 312, Paragraph 1 of the Criminal Law:
(1) A person who, within one year, has already been subject to an administrative penalty for concealing or disguising proceeds of crime and the income derived therefrom, and who subsequently commits another act of concealing or disguising such proceeds and income;
(2) The proceeds of crime that are concealed or disguised are electric power equipment, transportation facilities, radio and television facilities, public telecommunications facilities, military facilities, or funds and materials intended for disaster relief, emergency rescue, flood control, preferential treatment, poverty alleviation, resettlement, or relief.
(3) Where the act of concealing or covering up results in the upstream crime being unable to be promptly investigated and prosecuted, and causes irreparable losses to public or private property;
(4) Engaging in other acts of concealing or disguising criminal proceeds and the gains derived therefrom, thereby obstructing judicial authorities from prosecuting the upstream offenses.
When hearing criminal cases involving the concealment or cover-up of proceeds of crime and gains derived therefrom, people’s courts shall, in accordance with the law, render convictions and impose penalties after comprehensively considering such factors as the nature of the underlying offense, the circumstances and consequences of the concealment or cover-up of the proceeds and gains, and the degree of social harm.
Where judicial interpretations have already established criminal liability for the concealment or disguise of proceeds derived from crimes involving data of computer information systems or control over such systems, as well as any gains generated therefrom, cases of this type shall be adjudicated in accordance with those provisions.
In accordance with the Interpretation of Articles 341 and 312 of the Criminal Law of the People’s Republic of China issued by the Standing Committee of the National People’s Congress, anyone who knowingly purchases wild animals obtained through illegal hunting in quantities of fifty or more shall be convicted and punished for the crime of concealing or covering up proceeds of crime.
Article 2: Where the act of concealing or disguising proceeds of crime and any gains derived therefrom falls within the scope of Article 1 of this Interpretation, and the offender pleads guilty, demonstrates remorse, returns the illicit gains and makes restitution, and also meets one of the following circumstances, such conduct may be deemed to constitute a minor offense, and criminal punishment may be waived:
(1) Where there are statutory circumstances warranting a lighter punishment;
(2) Where the offender conceals or disguises proceeds of crime and any gains derived therefrom for a close relative, and is a first-time or occasional offender;
(3) Where there are other circumstances that are minor.
Article 3: Concealing or covering up proceeds of crime and any gains derived therefrom shall be deemed to constitute “serious circumstances” as stipulated in Article 312, Paragraph 1 of the Criminal Law if any of the following circumstances applies:
(1) The total value of the proceeds of crime and any gains derived therefrom, when concealed or hidden, amounts to RMB 100,000 or more;
(2) Concealing or covering up proceeds of crime and any income derived therefrom on ten or more occasions, or on three or more occasions where the total value amounts to RMB 50,000 or more;
(3) Where the proceeds of crime that are concealed or disguised consist of electrical equipment, transportation facilities, radio and television facilities, public telecommunications facilities, military facilities, or disaster relief, emergency rescue, flood control, preferential treatment, poverty alleviation, resettlement, or relief funds and materials, with a total value of RMB 50,000 or more;
(4) Where the act of concealing or covering up results in the upstream crime being unable to be promptly investigated and prosecuted, and causes irreparable significant losses to public or private property or other serious consequences;
(5) Engaging in other acts of concealing or disguising criminal proceeds and the gains derived therefrom, thereby seriously obstructing judicial authorities from prosecuting the upstream offenses.
Where judicial interpretations have already established criteria for determining “serious circumstances” with respect to the concealment or disguise of proceeds derived from crimes involving motor vehicles, data in computer information systems, or control over computer information systems, such cases shall be adjudicated in accordance with those provisions.
Article 4. The amount of proceeds of crime and any gains derived therefrom that are concealed or disguised shall be determined as of the time such concealment or disguise is carried out. Where the price at which property is acquired or sold on behalf of another exceeds its actual value, the calculation shall be based on such acquisition or sale price.
Where an individual repeatedly engages in acts of concealing or disguising criminal proceeds and the gains derived therefrom, and such acts, if not subject to administrative penalties, are legally subject to prosecution, the amounts of the criminal proceeds and the gains derived therefrom shall be calculated cumulatively.
Article 5: Where a person, prior to the commission of a crime, conspires with perpetrators of theft, robbery, fraud, or snatching, and then conceals or disguises the proceeds of such crimes or any gains derived therefrom, such person shall be prosecuted as an accomplice to the respective crime of theft, robbery, fraud, or snatching.
Article 6: Where acts of theft, robbery, fraud, or snatching are committed with respect to proceeds of crime and any gains derived therefrom, and such acts constitute a crime, the offender shall be convicted and punished respectively as guilty of theft, robbery, fraud, or snatching.
Article 7: Anyone who, knowing that property is proceeds of crime or derived therefrom, conceals or disguises it, thereby committing the offense stipulated in Article 312 of the Criminal Law, and at the same time commits another offense, shall be convicted and punished in accordance with the provision prescribing the heavier penalty.
Article 8: In determining the crime of concealing or covering up proceeds of crime or gains derived therefrom, the establishment of the underlying criminal offense shall be a prerequisite. If the underlying criminal offense has not yet been adjudicated in accordance with the law but has been verified as true, such fact shall not affect the determination of the crime of concealing or covering up proceeds of crime or gains derived therefrom.
Even if the underlying criminal facts have been duly verified but, for reasons such as the perpetrator not having reached the age of criminal responsibility, criminal liability is not pursued in accordance with the law, this shall not preclude the establishment of the crime of concealing or covering up proceeds of crime or gains derived therefrom.
Article 9: Where an act of concealing or disguising proceeds of crime and any gains derived therefrom is committed in the name of an entity, and the illegal proceeds are divided among the perpetrators, such conduct shall be prosecuted and punished in accordance with the provisions of the Criminal Law and relevant judicial interpretations pertaining to crimes committed by natural persons.
Article 10: Illicit proceeds and stolen goods obtained directly through criminal activity shall be deemed “proceeds of crime” as defined in Article 312 of the Criminal Law. Any孳息, rent, or other income derived by the perpetrator of the upstream offense from the disposition of such proceeds shall likewise be deemed “income derived from proceeds of crime” as stipulated in Article 312 of the Criminal Law.
Where, knowing that property is proceeds of crime or derived therefrom, one employs methods other than concealment, transfer, acquisition, or acting as an agent for sale—such as brokering the buying and selling of such property, receiving it, possessing it, using it, processing it, providing financial accounts, assisting in converting the property into cash, financial instruments, or securities, or facilitating the transfer or remittance of funds abroad—such conduct shall be deemed to constitute “other methods” as stipulated in Article 312 of the Criminal Law.
Article 11. The crime of concealing or covering up proceeds of crime and gains derived therefrom is an alternative offense; in adjudicating such cases, the applicable charge shall be determined based on the specific criminal conduct and the object it targets.

Interpretation of the Revised “Rules on the Administration of Internship for Applicants for Lawyer’s Practice”
The newly revised “Rules on the Administration of Internship for Applicants for Lawyer’s Practice” (hereinafter referred to as the “Rules”) was deliberated and adopted by the Standing Council of the Ninth National Lawyers Association of the People’s Republic of China and shall enter into force on May 1, 2021.
I. Background to the Revision of the Rules
The administration of the internship program for applicants seeking to practice law is an important statutory duty conferred upon bar associations by the Lawyers Law. It bears on the admission of lawyers to the profession, on the development of a high‑caliber contingent of lawyers who are both virtuous and competent, and on the sustained, healthy growth of the legal profession. To ensure the proper and standardized management of internships, the All China Lawyers Association promulgated and implemented the “Rules on the Administration of Internships for Applicants Seeking to Practice Law (Trial)” in 2007, and, based on an assessment of the trial period, formally adopted the “Rules” in 2010. Since their implementation, bar associations across the country have conscientiously fulfilled their statutory obligations: rigorously conducting internship registration, meticulously organizing training, strengthening practical instruction, and enforcing stringent internship assessments. As a result, internship management has been carried out in a solid and orderly manner, yielding significant results. At the same time, with the evolution of practice, China’s legal profession has expanded rapidly, and lawyers— as a vital force in advancing the rule of law in all respects—have assumed an increasingly prominent role in serving the broader goals of economic and social development and in deepening the practice of governing the country according to law. This has, in turn, placed new and higher demands on the administration of internship programs.
The CPC Central Committee and the State Council attach great importance to the work of lawyers. At the CPC Central Committee Conference on Comprehensively Promoting Law-Based Governance, Xi Jinping Thought on the Rule of Law was established as the guiding principle for advancing law-based governance across the board. The conference explicitly stipulated that upholding the leadership of the Communist Party of China and the socialist rule of law shall be a fundamental requirement for all legal service professionals, including lawyers; that they must adhere to the correct political orientation, practice with integrity in accordance with laws and regulations, conscientiously fulfill their social responsibilities, and devote themselves wholeheartedly to building a country under the rule of law. This provides clear direction and fundamental guidance for carrying out all aspects of the legal profession—including internship management—in the new context. To better implement the CPC Central Committee and the State Council’s series of decisions and arrangements on legal work, and in light of the actual circumstances surrounding the successive formulation or revision of the Lawyers Law, the Measures for the Administration of Lawyers’ Practice, and the Articles of Association of the All-China Lawyers Association, this effort seeks to elevate the successful experiences gained in recent years from China’s lawyer‑system reforms into institutional provisions. It also aims to address, in a targeted manner, such issues as insufficient clarity of responsibilities, inadequate procedural optimization, lack of uniform standards, and weak safeguards in internship management. Accordingly, the All-China Lawyers Association has initiated this revision of the Rules. This revision is guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era—particularly Xi Jinping Thought on the Rule of Law—strengthening the Party’s leadership over the legal profession, promoting the establishment of a more scientific, standardized, and effectively functioning system and working mechanism for internship management, further enhancing and improving internship administration, and ensuring that the first gateway to the legal profession is rigorously controlled, thereby building a high‑quality contingent of people’s lawyers who are united in heart and mind with the Party.
II. Main Revisions to the Rules
The revised Rules comprise seven chapters and forty-nine articles, with the main revisions covering the following areas:
(1) Strengthen the political requirements for internship management and uphold the correct political orientation. To further enhance the Party’s leadership over legal practice and ensure that internship management consistently adheres to the correct political direction, the revised Rules stipulate that bar associations shall be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly study and implement Xi Jinping’s Thought on the Rule of Law, and, in light of the positioning of lawyers as an important component of the socialist rule-of-law workforce with Chinese characteristics, organize and manage the internship activities of applicants seeking to practice law. The revised Rules integrate the role of primary-level Party organizations within the legal profession throughout the entire internship application process, reinforcing the gatekeeping function of law office Party organizations over interns. Specifically, they require law office Party organizations to assess interns’ political conduct during their internship, and mandate that law offices seek the opinions of their Party organizations before issuing an “Internship Evaluation Report” for each intern. Moreover, the revised Rules explicitly stipulate that applicants must meet such criteria as upholding the leadership of the Communist Party of China, supporting the socialist rule of law, and respecting the Constitution of the People’s Republic of China. At the same time, clear political requirements are set forth for supervising attorneys and lawyers serving as instructors in centralized training programs.
(II) Improving the qualification certification for law offices and supervising attorneys, and strengthening their supervisory and management responsibilities. To further tighten and reinforce the accountability of law offices in supervising and managing interns, in accordance with relevant provisions of the Ministry of Justice’s Measures for the Administration of Law Offices, Measures for the Annual Inspection and Assessment of Law Offices, Measures for the Punishment of Illegal Conduct by Lawyers and Law Offices, and the All China Lawyers Association’s Rules on Disciplinary Actions for Violations by Members of the Bar Association (Trial), the revised Rules have tightened the conditions under which law offices may accept interns, stipulating that law offices that have previously been subject to administrative or professional disciplinary sanctions, or that have failed to adequately fulfill their supervisory duties, shall be prohibited from accepting interns for a specified period. The Rules have also supplemented and refined the respective responsibilities of law offices in managing internships, ensuring that they can effectively discharge their obligations. At the same time, the revised Rules have further tightened the qualifications for supervising attorneys, particularly by setting clear requirements regarding political integrity and professional ethics, and by adding provisions stating that supervising attorneys who fail to perform or negligently perform their duties, or who engage in conduct violating public morals and whose circumstances are serious or who refuse to rectify such behavior, shall be subject to appropriate disciplinary measures.
(3) Improve the regulations governing the professional conduct review system to raise the ethical standards of the legal profession at the source. By refining and perfecting the professional conduct review mechanism and establishing a rigorous screening process, we can create an initial safeguard at the stage of admission to the legal practice, ensuring strict control over the entry threshold for the legal profession. The revised Rules, building on the original six categories of “unfit conduct” listed in the previous version, have been further amended and enhanced in accordance with relevant national provisions, now enumerating a total of ten such circumstances. Specifically, four additional situations have been added: being dismissed from public office; having received a disciplinary sanction of removal from Party position or more severe for violating Party discipline; being subject to joint punitive measures for serious breaches of trust; and being subject to a disqualification from reapplying for internship that has not yet expired. These additions provide local bar associations with clear criteria for accurately assessing compliance with the “good conduct” standard. Through these revisions, effective alignment with relevant national regulations and requirements has been maintained, thereby establishing a more comprehensive framework for professional conduct review.
(4) Optimize the internship assessment procedures and requirements to enhance work efficiency and service quality. While maintaining rigorous standardization of the assessment process, the revised Rules, in line with the principles of streamlining and improving effectiveness, have further refined and streamlined the internship assessment procedures. First, the application process has been simplified: the original provisions requiring interns to apply for assessment within 90 days after completing their internship, as well as the procedures for requesting an extension and for review and approval by the bar association, have been consolidated and simplified, with the application deadline uniformly set at one year after the completion of the internship. Second, the assessment procedures themselves have been simplified by removing certain overly detailed stipulations from the previous Rules. Third, the administrative workflow has been optimized: in order to deepen implementation of the “delegation, regulation, and service” reform spirit, reduce costs for all parties, and improve service efficiency, the revised Rules have shortened the review period for internship assessment materials from 60 days to 20 days. Fourth, the requirements for retaking the assessment have been relaxed. Taking into account local circumstances, the revised Rules have eliminated the previous provisions specifying the format and content of centralized training assessments, leaving it to the local bar association organizing the training to determine these matters independently. At the same time, the rule requiring a re-assessment six months after an initial failure has been removed; instead, the bar association responsible for the assessment will, in accordance with its assessment regulations and specific circumstances, decide when a re-assessment may be conducted, while granting interns up to three opportunities to pass the assessment.
(5) Enhance internship support measures and foster a conducive internship environment. In response to issues such as interns’ inability to independently handle legal matters during their internship, generally modest compensation, and the difficulty of meeting basic living needs for some interns—factors that undermine their peace of mind—the revised Rules require law offices, when entering into an “Internship Agreement” with interns, to clearly specify the remuneration or living allowance standards and set minimum thresholds for such payments. The Rules also stipulate that the Internship Agreement must not contravene relevant provisions of the Labor Contract Law. Furthermore, to effectively alleviate the financial burden on interns, law offices and supervising attorneys are prohibited from imposing fees on interns or establishing revenue‑generation targets for them. By further refining internship safeguards and creating a supportive working environment, the revised Rules ensure that interns can fully appreciate the care and warmth extended by the legal profession.
In short, the revision of the Rules is guided by Xi Jinping’s Thought on the Rule of Law, reflects a thorough implementation of the CPC Central Committee and the State Council’s major decisions and arrangements regarding legal practice, and serves to ensure that legal work remains officely aligned with the correct political direction. It also aims to cultivate and supply qualified professionals to the legal profession, thereby building a high‑caliber contingent of people’s lawyers who are wholeheartedly committed to the Party. Moreover, it responds to the need to adopt a problem‑oriented approach, further strengthen and improve internship management, and enhance the quality, efficiency, and service standards of this work. All bar associations and law offices must deeply appreciate the significance of revising these Rules, accurately understand and grasp their various provisions and underlying principles, and conscientiously organize efforts to study, publicize, and implement the newly revised Rules. At the same time, we urge those applying for admission to the bar to study the Rules diligently and abide by them in good faith, so as to become, at an early date, highly qualified legal professionals who meet the needs of the Party and the people, and to make positive contributions to advancing the rule of law in all respects and to building a socialist country under the rule of law.

The Supreme People’s Court has released typical cases of combating counterfeit agricultural inputs.
　Springtime rewards those who seize the moment, and agricultural seasons are never missed. At present, spring plowing and sowing have entered a critical phase. The people’s courts have consistently attached great importance to “agriculture, rural areas, and farmers” work, providing robust judicial safeguards to advance rural revitalization, promote high-quality, efficient agriculture, foster livable and business‑friendly rural communities, and ensure farmers’ prosperity. To further strengthen the adjudication of cases involving the crackdown on counterfeit agricultural inputs in 2021 and effectively protect farmers’ interests, the Supreme People’s Court recently released three typical cases.
Case One: The Case of Li Mouwei and Xiang Mouzhong for Selling Substandard and Fake Seeds
In the spring of 2017, the defendant Li Mowei purchased peanuts originating from southern China—whose outer packaging bore no markings—and, without seed labels or instructions and without filing with the agricultural authorities, fraudulently sold them as “Sili Hong” peanut seeds. He sold approximately 110,000 jin to the defendant Xiang Mozong and about 59,600 jin in total to Li Mowen (being prosecuted separately), Xu Mobing, Zhang Moxiang, Sun Mowu, and others (all sentenced in separate cases). Xiang Mozong, fully aware that the “seeds” he obtained from Li Mowei lacked proper labeling and essential quality indicators such as purity, cleanliness, moisture content, and germination rate, nevertheless, for profit, falsely represented them as “Shandong seeds” or “Tongyu Sili Hong.” A portion was resold to Xu Mobing, while another portion was distributed by Yang Moxiang, Zheng Mohong, Zhou Moqiong, Zhang Mobao, and others (all sentenced in separate cases) for sale to farmers. Li Mowen, in turn, resold the counterfeit seeds to Fu Mou (also prosecuted separately). Xiang Mozong, Fu Mou, Xu Mobing, Zhang Moxiang, Sun Mowu, and others sold these fake seeds to a total of 322 farming households in Zhaoyuan County, Heilongjiang Province; Tongyu County and Qian Gorlos Mongol Autonomous County, Jilin Province, generating sales totaling approximately RMB 2.38 million and covering a planted area of roughly 1,450 hectares. All affected farmers experienced varying degrees of yield reduction, resulting in aggregate economic losses of approximately RMB 14.48 million. Forensic examination conofficeed that the seeds involved were counterfeit. In both first- and second-instance trials, the court convicted defendant Li Mowei of selling substandard seeds and sentenced him to fifteen years’ imprisonment and a fine of RMB 1.2 million; defendant Xiang Mozong was sentenced to ten years’ imprisonment and a fine of RMB 800,000.
Case No. 2: The case of Liu, Zhou, Liu Kaikai, and others for the production and sale of substandard and fake products.
The defendant Liu, together with the defendant Zhou, established “Sichuan Kangwei Animal Pharmaceutical Co., Ltd.” (unregistered) in Jinshui District, Zhengzhou City, Henan Province, and engaged exclusively in the production and sale of counterfeit veterinary drugs. From early March 2015 until the case was uncovered, Liu rented two makeshift warehouses at a food plaza in Jinshui District, Zhengzhou, where he organized the manufacture of fake veterinary medicines. He hired the defendant Liu Kaikai as the company’s manager, who was specifically responsible for the production and sales of these counterfeit products. After purchasing veterinary drug raw materials from third parties, Zhou entrusted the defendants Yang and Yuan with processing and manufacturing; they arbitrarily added ingredients such as glucose to the raw materials, producing more than a dozen types of counterfeit veterinary drugs. These were then falsely labeled as “amoxicillin, flufenicol, tilmicosin, doxycycline hydrochloride, colistin,” among others, and affixed with the trademarks “Sichuan Kangwei” or “Kangwei Muxin.” Zhou and Liu Kaikai oversaw the distribution and sale of these products via online channels and telephone. During periods of peak production, Zhou even instructed his younger brother, the defendant Zhou Xing, to assist with manufacturing or shipping. The defendants Fang Cheng and Fan Kai, fully aware that Liu, Zhou, and others were producing and selling counterfeit veterinary drugs, nevertheless violated relevant regulations by helping them print packaging bags for these fake products in order to seek profit. According to an audit, from March 1, 2015, to March 7, 2018, the total revenue of “Sichuan Kangwei Animal Pharmaceutical Co., Ltd.”—including bank deposits and funds collected on behalf of logistics companies—amounted to approximately RMB 10.8015 million. Forensic examination conofficeed that the veterinary drugs involved were indeed counterfeit. Liu voluntarily turned himself in and truthfully confessed to his crimes, thus qualifying as a self‑surrenderer. In both first- and second-instance courts, the defendant Liu was sentenced to fifteen years’ imprisonment and fined RMB 5 million for the crime of producing and selling substandard products; the defendant Zhou was sentenced to twelve years’ imprisonment and fined RMB 3 million; the defendant Liu Kaikai was sentenced to nine years’ imprisonment and fined RMB 400,000; and the remaining defendants likewise received corresponding penalties.
Case No. 3: The case of Wang Mouchun, Wang Mouhui, Wang Mouyong, Bi Mouhuan, and others for the production and sale of substandard and fake products.
From 2014 to September 2018, the defendant Wang Mouchun invested in purchasing equipment and raw materials and recruited workers. He then, together with others, illegally manufactured counterfeit pesticides of multiple brands and sold them from an abandoned factory near Dushan Village in Liangshan Town, Liangshan County, Shandong Province; a livestock farm in Housi Village, Yangying Town, Liangshan County; and another livestock farm in Wulou Village, Heihu Temple Town, Liangshan County. During this period, the defendant Wang Mouhui provided bank cards to facilitate settlement of payments for the counterfeit pesticides and occasionally transported workers to and from work. The defendants Wang Mouyong, Bi Mouhuan, and others all participated in portions of the illegal production and sale of counterfeit pesticides. In these criminal activities, Bi Mouhuan leased two factory premises in Yangying Town and Heihu Temple Town, managed the workers there, and at times handled the transportation of goods; Wang Mouyong transported the counterfeit pesticides, arranged shipping procedures, and collected payment on behalf of others; while the defendants Bi Mocun, Wang Muling, Yang Mouyun, and Xue Muxiang assisted in the production of counterfeit pesticides at the two factory sites in Yangying Town and Heihu Temple Town. Investigations revealed that Wang Mouchun and Wang Mouhui collectively produced and sold counterfeit pesticides totaling over RMB 2.1899 million; Wang Mouyong participated in the sale of counterfeit pesticides amounting to RMB 659,400; and Bi Mouhuan, Bi Mocun, Yang Mouyun, Xue Muxiang, and Wang Muling were involved in the production and sale of counterfeit pesticides worth more than RMB 350,000. Bi Mouhuan, Wang Mouyong, and others voluntarily surrendered themselves and truthfully confessed their crimes, thus qualifying as self-surrenders. The courts at both first and second instance convicted the defendants of the crime of producing and selling substandard products, sentencing Wang Mouchun to fifteen years’ imprisonment and a fine of RMB 900,000; Wang Mouhui to seven years’ imprisonment and a fine of RMB 100,000; Wang Mouyong to four years’ imprisonment and a fine of RMB 60,000; and Bi Mouhuan to two years’ imprisonment and a fine of RMB 30,000. The remaining defendants were likewise sentenced to appropriate penalties.
The head of the First Criminal Division of the Supreme People’s Court pointed out that, in 2020, thanks to the concerted efforts of the entire Party and all ethnic groups across the country, China achieved a complete victory in the battle against poverty, lifting all rural residents living below the current poverty line out of poverty. As the nation stands at a historic juncture on the path toward the second centenary goal, people’s courts at all levels must fully recognize the importance and urgency of adjudicating cases involving the counterfeiting of agricultural inputs. They should continue to maintain a high-pressure stance and unwavering enforcement against crimes of manufacturing and selling counterfeit agricultural inputs, proactively extend the scope of their judicial functions, and do their utmost to safeguard farmers’ interests, thereby providing robust judicial support for consolidating and expanding the achievements of poverty alleviation, comprehensively advancing rural revitalization, and accelerating the modernization of agriculture and rural areas.

The Shanghai Financial Court’s adjudicatory rules have been endorsed by the regulatory authorities.
On January 4, 2021, the Shanghai Financial Court, for the first time under the Civil Code, concluded a second-instance case involving a financial loan contract dispute. The court ruled that lending institutions have an obligation to clearly disclose the effective interest rate in loan contracts, and any interest collected in excess of the contractually agreed rate due to the institution’s failure to disclose the effective rate must be refunded. This judicial principle has been endorsed by the regulatory authorities. Recently, the People’s Bank of China issued Announcement No. 3 of 2021, explicitly requiring all entities engaged in lending activities to conspicuously display the annualized interest rate to borrowers. This underscores the positive synergy between financial adjudication and financial regulation.
To this end, the Shanghai Financial Court hereby publishes the People’s Bank of China’s announcement and the case’s judicial interpretation for reference as follows:
People’s Bank of China Announcement No. 3 [2021]
To uphold the order of competition in the loan market and safeguard the legitimate rights and interests of financial consumers, all loan products must clearly disclose their annualized interest rates. The relevant matters are hereby announced as follows:
I. All institutions engaged in lending activities shall, when conducting marketing through websites, mobile applications, promotional posters, and other channels, conspicuously display the annualized interest rate to borrowers and include it in the loan agreement. They may, as necessary, also disclose daily or monthly interest rates, but such disclosures shall not be more prominent than the annualized rate.
II. Institutions engaged in lending activities include, but are not limited to, depository financial institutions, auto finance companies, consumer finance companies, micro‑loan companies, and internet platforms that provide advertising or display services for lending activities.
III. The annualized interest rate on a loan shall be calculated as the ratio of all loan‑related costs charged to the borrower to the principal amount actually outstanding, and expressed on an annual basis. Such loan costs shall include interest and all fees directly attributable to the loan. The principal amount shall be specified in the loan agreement or other evidence of the creditor’s rights. If the principal is repaid in installments, the outstanding principal shall be determined based on the remaining balance after each installment is paid.
IV. The annualized interest rate on a loan may be calculated using either the compound‑interest or the simple‑interest method. The compound‑interest method is equivalent to the internal rate of return method; a specific example is provided in the appendix. If the simple‑interest method is used, it must be clearly stated as such.
V. Private lending is encouraged to be conducted in accordance with this announcement.
People's Bank of China
March 12, 2021
 
Reference for Judgment Interpretation of the Shanghai Financial Court
Lending institutions are obligated to disclose the effective interest rate to financial consumers—Case of Tian v. Zhou and Zhongyuan Trust Co., Ltd. regarding a dispute over a financial loan contract.
[Key Points of the Judgment]
The interest rate is a core element of the loan contract, directly affecting the borrower’s fundamental interests under the agreement; therefore, the lender must clearly disclose the effective interest rate to the borrower. If the lender sets the interest rate through standardized terms, it must also, in a reasonable manner, draw the borrower’s attention to such provisions and, upon the borrower’s request, provide an explanation thereof. In the absence of explicit disclosure of the effective interest rate, the method for calculating loan interest shall be determined in accordance with the principles of contract interpretation, taking into account the relevant contractual provisions, the nature and purpose of the conduct, prevailing practices, and the principle of good faith.
[Basic Facts of the Case]
Borrowers Tian and Zhou entered into a loan agreement with Zhongyuan Trust Company, stipulating a principal of RMB 6 million and a term of eight years. The contract specifies that the loan interest rate shall be determined in accordance with the Repayment Schedule, with an average annual rate of 11.88%, and provides for installment repayments. The Repayment Schedule attached to the contract sets forth the monthly principal and interest payments as well as the outstanding principal balance. However, the schedule neither indicates the total amount to be repaid nor explains how the interest was calculated to arrive at the 11.88% rate.
After repaying 15 installments of principal and interest as agreed, the borrower made an early repayment, having paid a total of over RMB 7.4 million in principal and interest. Subsequently, the borrower contended that the disputed loan’s interest rate was excessively high and that Zhongyuan Trust had failed to disclose the actual rate; accordingly, the interest should be calculated at an annualized rate of 11.88%, and Zhongyuan Trust ought to refund more than RMB 880,000 in overcharged interest. In response, Zhongyuan Trust argued that the “Repayment Schedule” was prepared by multiplying the initial principal of RMB 6 million by an annual interest rate of 11.88% and the eight-year loan term to determine the total interest due, then allocating this amount—along with the principal—across each monthly installment. The borrower’s signature conofficeing repayment according to the “Repayment Schedule” was deemed to constitute acceptance of its method for calculating interest. Based on the installment amounts specified in the “Repayment Schedule,” the actual interest rate applicable to the disputed loan amounted to an annualized 20.94%.
[Controversial Issue]
The issue in this case is how the interest rate on the loan at dispute should be determined.
[Judgment and Reasons]
On July 3, 2020, the People’s Court of Putuo District, Shanghai, rendered Civil Judgment No. (2019) Hu 0107 Min Chu 13944, holding as follows: First, the claims of Mr. Tian and Ms. Zhou seeking that Zhongyuan Trust refund the overcharged sum of RMB 887,190.19 are dismissed; second, the claims of Mr. Tian and Ms. Zhou for compensation for interest losses on the funds unlawfully occupied—calculated at an annual rate of 11.88% on the principal of RMB 887,190.19, from December 17, 2018, until the date of actual repayment—are dismissed; third, the claim of Mr. Tian and Ms. Zhou for compensation of attorney’s fees in the amount of RMB 10,000 is dismissed; and fourth, Zhongyuan Trust is ordered to compensate Mr. Tian and Ms. Zhou with RMB 200,000, to be paid in a lump sum within ten days from the date the judgment becomes effective. Following the pronouncement of the judgment, Mr. Tian and Ms. Zhou filed an appeal. On January 4, 2021, the Shanghai Financial Court issued Civil Judgment No. (2020) Hu 74 Min Zhong 1034, finding that part of the appellants’ grounds were well-founded; while the findings of fact in the first-instance judgment were clear, the court erred in its application of the law and accordingly reversed the decision. The revised judgment reads as follows: First, Civil Judgment No. (2019) Hu 0107 Min Chu 13944 rendered by the People’s Court of Putuo District, Shanghai, is hereby revoked; second, Zhongyuan Trust shall, within ten days from the date the judgment becomes effective, return to Mr. Tian and Ms. Zhou the sum of RMB 844,578.54, together with interest calculated at the prevailing RMB deposit rate published by the People’s Bank of China, applicable to the same period, from December 18, 2018, until the date of actual repayment; and third, the remaining claims of Mr. Tian and Ms. Zhou are dismissed.
The court’s final judgment holds that a lender shall clearly disclose the effective interest rate to the borrower, or explicitly inform the borrower of the method for calculating interest that reflects the effective rate. If the lender stipulates an interest rate through standardized terms, it must also, by reasonable means, draw the borrower’s attention to such terms and, upon the borrower’s request, provide an explanation thereof.
In this case, Zhongyuan Trust was required to clearly disclose and explain the actual interest rate; its claim to collect interest pursuant to the “Repayment Schedule” lacks legal basis. In the absence of an explicit disclosure of the actual interest rate by Zhongyuan Trust, the method for calculating interest should be determined in accordance with the principles of contract interpretation, taking into account the relevant provisions of the contract, the nature and purpose of the parties’ conduct, prevailing practices, and the principle of good faith. The borrowers, Mr. Tian and Mr. Zhou, contend that interest should be calculated at an annual rate of 11.88% based on the outstanding principal, a position that is consistent with commercial practice and the principle of good faith and therefore should be upheld.
[Explanation of Opinions]
In recent years, China’s retail lending sector has experienced rapid growth, with loan penetration rates rising significantly. In practice, some lenders have exploited information asymmetries with borrowers by presenting only low daily or monthly interest rates to conceal higher annual rates; by disclosing only a low nominal rate or the interest or fees paid per installment to mask the true, higher effective rate; and by charging upfront “discounted” interest under the guise of service fees, thereby creating an “interest-rate illusion” for financial consumers. This case arises from a dispute over a tiered principal-and-interest repayment loan product, where a discrepancy exists between the nominal rate and the effective rate. The average annual rate of 11.88% stated at the head of the contract represents the nominal rate; however, based on calculations derived from the Repayment Schedule, the actual annual rate is approximately 20.94%.
First, lenders must clearly disclose the effective interest rate to borrowers. To begin with, the interest rate is a core element of the loan contract and directly affects the borrower’s fundamental interests under the agreement. Interest represents the consideration paid by the borrower for the right to use the borrowed funds over a specified period; paying interest constitutes the borrower’s primary contractual obligation, and the level of the interest rate significantly influences the borrower’s decision whether to enter into the contract. Second, only the effective interest rate accurately reflects the borrower’s cost of capital. Interest is, in essence, the fee for the use of money over a given period; when the principal is repaid in installments and thus gradually diminishes, an interest rate calculated on the original principal will necessarily be lower than the effective rate and fail to capture the borrower’s true cost of borrowing. Third, explicitly disclosing the effective interest rate is an essential requirement for ensuring equal contracting and safeguarding the rights and interests of financial consumers. The effective interest rate is what ordinary financial consumers understand as the interest rate, yet interest calculations are inherently technical, and varying methods of principal and interest repayment further complicate the computation. Without specialized knowledge, the average financial consumer lacks the ability to calculate the effective interest rate. In recent years, China has steadily strengthened its protection of financial consumers’ rights. The revised Consumer Rights Protection Law added Article 28, bringing financial services within the scope of consumer protection, and Article 26(1), expanding the obligation to conspicuously disclose standard terms to cover “content that has a significant impact on consumers’ interests.” Subsequently, the General Office of the State Council issued the Guiding Opinions on Strengthening the Protection of Financial Consumers’ Rights, while relevant regulatory authorities have also promulgated departmental rules on this subject. These administrative regulations explicitly mandate the protection of financial consumers’ right to information, requiring that information likely to affect their decisions be disclosed promptly, truthfully, accurately, and comprehensively, in plain and easily understandable language, and communicated in ways that facilitate the consumer’s receipt and comprehension. Moreover, they require explanations and clarifications regarding key information—such as interest rates and fees—that bears directly on consumers’ vital interests. Such regulatory requirements align with the civil law principles of fairness and good faith, aiming to ensure that both parties enter into contracts voluntarily, based on fully transparent and symmetrical information, and express their intentions in accordance with their genuine inner convictions. Accordingly, when concluding a loan contract with a financial consumer, the lender should either clearly communicate the effective interest rate in plain, accessible language or specify an interest‑calculation method that accurately reflects the effective rate. If the lender adopts standard terms to set the interest rate, it must also take reasonable measures to draw the borrower’s attention to such provisions and, upon the borrower’s request, provide a detailed explanation of those terms.
Second, the provisions in the Civil Code regarding the obligation to provide adequate notice and explanation of standard terms have retroactive effect in this case. Article 496 of the Civil Code embodies the fundamental principles of fairness and good faith in the contractual context; building upon Article 39 of the Contract Law and drawing on relevant provisions from the Consumer Rights Protection Law and the Judicial Interpretation of the Contract Law, it extends the duty of the party offering standard terms to include “clauses that significantly affect the other party’s interests,” while further clarifying the legal consequences of failing to fulfill this obligation. Accordingly, if, due to the lender’s failure to disclose and explain the interest-rate standard term, the borrower neither noticed nor understood the actual interest rate under the loan contract, it should be deemed that the parties did not reach agreement on “calculating interest at such actual rate,” and the lender is therefore not entitled to collect interest on that basis. Article 9 of the Supreme People’s Court’s Provisions on the Temporal Effect of Applying the Civil Code of the People’s Republic of China stipulates: “For contracts concluded before the Civil Code came into force, where the party providing standard terms failed to perform its obligations to provide notice or explanation, and where the validity of such standard terms is at issue, the provisions of Article 496 of the Civil Code shall apply.” Thus, Article 496 of the Civil Code has retroactive effect on the disputed Loan Contract.
Third, when a dispute arises and it is necessary to determine whether the lender has fulfilled its obligation to disclose the effective interest rate, the meaning of the expression of intent shall be ascertained by interpreting the words used in light of the relevant provisions, the nature and purpose of the conduct, prevailing practices, and the principle of good faith. Pursuant to Article 466, Paragraph 1, and Article 142, Paragraph 1 of the Civil Code, where the parties disagree on the interpretation of contractual terms, the interpretation of the expression of intent shall be determined by considering the words employed, together with the relevant provisions, the nature and purpose of the conduct, customary practices, and the principle of good faith. It should be noted that Articles 466, Paragraph 1, and 142, Paragraph 1 of the Civil Code, while building upon the provisions of the Contract Law, have been refined—most notably by adding “the nature of the conduct” to the factors considered and by shifting the interpretive objective from ascertaining the “true intention” to determining the “meaning of the expression of intent.” This approach better reflects the characteristics of contract interpretation and more effectively safeguards the legitimate rights and interests of the contracting parties; accordingly, these provisions should apply retroactively to contracts concluded prior to the entry into force of the Civil Code. On this basis, contract interpretation should adhere to the principle of balancing internal intent with external manifestation, while the interpretation of standard-form clauses should follow the principle of ordinary understanding. In both cases—whether assessing external manifestation or applying ordinary understanding—the standard of the reasonable person should be applied.
In this case, the most critical issue is the method by which the interest rate is determined. The average annual interest rate of 11.88% stated at the head of the contract—how was it calculated? The Repayment Schedule merely specifies the principal and interest payments for each installment and the outstanding principal balance; it does not disclose the actual interest rate or an interest‑calculation methodology that would reflect it, nor does it indicate the total interest amount or its calculation formula. Without specialized financial expertise, an ordinary person would find it difficult to independently verify the actual interest rate. (Table 1)
Table 1: Contract Appendix “Repayment Schedule”
Installment Number Principal and Interest Repayment (RMB) Remaining Principal (RMB)
1 141,000.00 5,971,158.06
2 141,000.00 5,941,776.98
…… …… ……
13 138,000 5,579,834.02
14 138,000 5,543,012.26
…… …… ……
96 80,556.00 0.00
 
In fact, the calculation spreadsheet that the lender prepared and retained internally, without presenting it to the other party, was produced during the trial, thereby demonstrating how the 11.88% interest rate was determined. (Table 2)
Table 2: The Lender Has Prepared a Separate, Non-Public “Repayment Schedule”
Serial Number Due Date Principal Interest Interest Rate Total Remaining Principal
1 2017/9/27 28841.94 112158.06 21.8% 141000 5971158.06
…… …… …… …… …… ……
13 2018/9/27 36165.97 101834.03 19.6% 138000 5579834.02
…… …… …… …… …… ……
……
…… …… …… …… 1.32% …… ……
96 2025/8/27 79539.56 1016.44 80556 0
Total 6,000,000 5,702,400 11.88% 11,762,400
 
 
 
According to this table, the lender calculated a simple average of the interest rates for different years, arriving at an annual rate of 11.88%, and structured the yearly rates as progressively decreasing—21.8% in the first year, followed by 19.6%, 17.2%, 14.43%, 10.01%, 6.67%, 3.92%, and 1.32%. Since each period’s interest was always computed based on the original principal of RMB 6,000,000, the stated annual rates do not reflect the actual effective rates, nor does their average of 11.88% constitute the true effective rate. Notably, by presenting the annual rates as declining over time, the lender created significant misrepresentation, leading readers to mistakenly believe that interest would consistently decrease as the outstanding principal diminished, thereby obscuring the true method of interest calculation in this case. In reality, during the first four years of the loan, the lender charged rates exceeding 11.88%, with the highest reaching 21.8%, yet it disclosed only an average annual rate of 11.88% to the borrower, which could easily give rise to the misconception that the lender consistently applied a flat annual rate of 11.88% when calculating interest. By failing to disclose the actual methodology for computing interest, the lender effectively concealed the higher rates, infringed upon consumers’ right to information, and acted unfairly. Under such circumstances, judicial intervention is warranted. The original contractual provisions cannot be construed as satisfying the lender’s obligation to disclose the true effective interest rate.
Relying on the provisions of the Civil Code regarding the disclosure of standard terms and the interpretation of contracts, this case holds that lending institutions have a contractual obligation to clearly disclose the effective interest rate, which plays a positive role in regulating the lending industry and encouraging financial institutions to implement policies aimed at ensuring that financial services support the real economy.

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