JC Master Legal News Issue 970

Key Takeaways for This Issue
Upholding the principle of seeking progress while ensuring stability, optimizing the development ecosystem, and advancing new strides in the high-quality development of the securities industry — Remarks by Chairman Yi Huiman at the Seventh Members’ Congress of the China Securities Industry Association.
On May 22, Chairman Yi Huiman delivered a speech at the seventh members’ conference of the China Securities Industry Association, focusing on the high-quality development of the securities industry. Securities offices are the most important intermediaries in the capital market. Over the past three decades, the securities industry has grown and matured alongside the capital market, becoming an integral part of China’s financial system and playing an increasingly vital role. In this new stage of development, the implementation of the new development philosophy and the establishment of a new development pattern have set forth higher and more stringent expectations for both the capital market and the securities industry. The industry must earnestly shoulder its new responsibilities and missions, leveraging its own high‑quality development to support the high‑quality development of the capital market and make a proactive contribution to economic and social progress.
The National Equities Exchange and Quotations Company and the Government of the Inner Mongolia Autonomous Region have signed a strategic cooperation memorandum to establish the New Third Board’s Inner Mongolia Base.
On May 21, 2021, the National Equities Exchange and Quotations Company (NEEQ) and the People’s Government of the Inner Mongolia Autonomous Region signed a strategic cooperation memorandum in Beijing and held a ceremony to officially designate the NEEQ’s Inner Mongolia Base. Huang Zhiqiang, Vice Chairman of the Inner Mongolia Autonomous Region and a member of the Party Leadership Group of the regional government, and Xu Ming, Secretary of the Party Committee and Chairman of the NEEQ, attended the event and exchanged views on further deepening cooperation between the two sides. Jiang Hua, Director of the Inner Mongolia Financial Regulatory Bureau, and Sui Qiang, General Manager of the NEEQ, signed the memorandum on behalf of their respective sides. Also in attendance were Luan Tianmeng, Deputy Secretary-General of the Inner Mongolia Autonomous Region Government; Wang Kun, Deputy Director of the Inner Mongolia Securities Regulatory Bureau; and Li Yongchun, Deputy General Manager of the NEEQ, among others.
Guidance on the New Policy for Pre-Tax Additional Deduction of R&D Expenses
With the exception of the tobacco manufacturing, accommodation and catering, wholesale and retail trade, real estate, leasing and business services, and entertainment sectors, all other enterprises are eligible for the policy of additional tax deductions for R&D expenses.
The next round of real estate tax pilot programs is expected to precede legislative reform: Shenzhen and Hainan may take the lead in conducting trials.
Recently, responsible officials from the Ministry of Finance, the Budget Committee of the Standing Committee of the National People’s Congress, the Ministry of Housing and Urban–Rural Development, and the State Taxation Administration convened a symposium in Beijing on the pilot program for real estate tax reform. The meeting heard views from leading officials of several municipal governments and from a number of experts and scholars, sparking widespread public debate over the pilot initiative.

Finance & Capital Markets

Uphold the principle of seeking progress while maintaining stability, optimize the development ecosystem, and advance new strides in the high-quality development of the securities industry.
— Speech by Chairman Yi Huiman at the Seventh Members’ Congress of the China Securities Industry Association
Distinguished industry representatives, comrades:
Good morning!
Today, the Securities Association of China convened its Seventh Members’ Congress. On behalf of the China Securities Regulatory Commission, I would like to extend my warm congratulations on the convening of this congress and convey my sincere greetings to all delegates and to all professionals in the industry.
Securities offices are the most important intermediaries in the capital market. Over the past three decades, the securities industry has grown and matured alongside the capital market, becoming an integral part of China’s financial system and playing an increasingly pivotal role. In this new stage of development, the adoption of a new development philosophy and the establishment of a new development paradigm have set forth higher and more stringent expectations for both the capital market and the securities industry. The industry must earnestly shoulder its new responsibilities and missions, leveraging its own high‑quality development to underpin the high‑quality growth of the capital market and to make a proactive contribution to economic and social progress. Next, I will focus on the theme of high‑quality development in the securities industry and share some thoughts with you.
　I. The securities industry has made solid progress in achieving high-quality development.
Over the past four years, the securities industry has pursued steady progress while forging ahead with determination, further enhancing its service capabilities and standards. The industry’s scale and capital strength have grown steadily, and its market competitiveness and public image have improved gradually, laying a solid foundation for high-quality development.
First, the industry’s ability to serve the real economy and investors has continued to strengthen. Over the past four years, the securities sector has remained true to its core mission of supporting the real economy, helping enterprises raise more than RMB 5 trillion through equity financing, over RMB 15 trillion through debt financing, and facilitating M&A and restructuring transactions totaling more than RMB 3 trillion. It has also actively participated in the establishment of the STAR Market and the pilot registration-based system, playing a proactive role in major capital market reforms, including the ChiNext reform, the New Third Board reform, investor‑side reforms, efforts to enhance the quality of listed companies, and measures to protect investors’ rights and interests. Upholding the principle of “upholding fundamentals while fostering innovation,” the sector has proactively developed innovative products and services around key themes such as technological self-reliance, relief for private enterprises, green development, and the Belt and Road Initiative. Focusing on meeting the growing wealth‑management needs of households, it has diversified its investment offerings, enhanced account‑service experiences, and managed entrusted assets exceeding RMB 10 trillion. By the end of 2020, the securities industry employed nearly 350,000 professionals, with steadily improving expertise and a workforce characterized by higher education levels, younger age profiles, and greater specialization.
Second, the compliance and risk management systems have been steadily improved. Over the past four years, the securities industry has pursued progress while maintaining stability, keeping operational risks generally under control and successfully weathering multiple shocks, including the COVID‑19 pandemic and a complex external environment. By proactively planning for and promptly addressing risks in key areas such as conduit business, stock pledge financing, and bond defaults, the industry has achieved notable results, making a significant contribution to the battle against major financial risks. At the same time, a comprehensive risk management framework has been preliminarily established across industry institutions, with a compliance‑oriented approach increasingly integrated into all business processes, resulting in overall steady growth. By the end of 2020, the industry’s total assets reached RMB 8.9 trillion, and its net capital stood at RMB 1.82 trillion, with average annual growth rates of 11.35% and 5.48%, respectively. Key risk‑management indicators—including the risk coverage ratio, the liquidity risk coverage ratio, and the net stable funding ratio—have all exceeded regulatory requirements.
Third, the industry has achieved remarkable results in fulfilling its social responsibilities. In recent years, leveraging its talent and professional strengths, the securities sector has intensified research on macroeconomics, industrial economics, and regional economies, enabling its chief economists to play an active role in providing policy advice and guiding market expectations. Last year, amid the severe impact of the pandemic, the industry worked closely with regulatory authorities, taking proactive measures such as extending maturities on stock‑pledge financing and adopting flexible approaches to margin trading and short selling. It promptly donated various supplies to support epidemic‑stricken areas, facilitated the issuance of “pandemic‑control bonds,” and helped enterprises resume work and production. The industry also launched asset‑management programs to support the development of private enterprises and created credit‑protection instruments to assist struggling private offices. Since 2016, through initiatives like the “One Office, One County” program, the sector has actively engaged in poverty alleviation efforts, with 102 securities offices pairing up to provide targeted assistance to 307 nationally designated impoverished counties, thereby making a significant contribution to China’s comprehensive victory in the battle against poverty.
Fourth, the cultivation of industry culture has been put into practice. In November 2019, the industry convened a mobilization conference on cultural development, articulating the cultural ethos of “compliance, integrity, professionalism, and prudence,” which gradually gained consensus across the sector and spurred proactive implementation. At the beginning of this year, drawing on the experiences of securities offices in cultural development and benchmarking against best practices from international financial regulators, the Securities Association of China released the “Ten Elements for Building a Culture in the Securities Industry.” Organized around three dimensions—mindset, organization, and conduct—the document provides concrete guidance for translating the industry’s cultural principles into action, receiving enthusiastic support from the entire sector. This effort serves as a cornerstone for the long-term, healthy development of the capital market; it requires attention to even the smallest details, sustained commitment, and persistent effort over time, fostering a new professional ethos and cultivating a fresh industry image, thereby injecting fresh momentum and providing robust support for high-quality industry growth.
High‑quality development in the industry hinges on the concerted efforts of individual offices and on meaningful improvements to the governance framework of the capital market. Self‑regulatory organizations are a vital component of the capital market’s governance system. Over the past four years, the Securities Association has proactively adapted to the demands of high‑quality industry development, diligently fulfilling its mandate to “self‑regulate, serve, and transmit,” and undertaking extensive work to enhance the industry’s operating environment and foster a sustainable development ecosystem, thereby playing a constructive role. In recent years, in line with the overarching goal of deepening reform across the capital market, the Association has strengthened its service orientation and shifted its service philosophy—moving from a focus on supporting business growth to a greater emphasis on nurturing a robust industry ecosystem. This has been achieved through refining self‑regulatory rules, reinforcing professional accountability and capacity building, and improving operational standards to elevate the quality of practice. The Association has also taken a proactive stance in ensuring the smooth implementation of the registration‑based IPO reform pilot, yielding notable results in bolstering the industry’s compliance, risk‑management, and internationalization capabilities; in preventing and mitigating risks; and in promoting sound innovation, digital transformation, and cultural development. Looking ahead, we hope the Association will continue to build on these achievements and assume an even more active role in advancing high‑quality industry development.
　II. Accurately Grasping the Essential Connotations of High-Quality Industry Development
After four years of concerted effort, the securities industry has achieved a solid start in pursuing high-quality development, further strengthening the foundation for advancing steadily while upholding sound principles and fostering innovation. Without investment banks that deliver high-quality growth, there can be no highly developed capital markets. As to what constitutes high-quality development in the securities sector and how it can be realized, further in-depth reflection is still needed. In my view, such high‑quality development goes far beyond simply expanding scale; more importantly, it requires staying officely focused on core responsibilities and principal businesses, with greater dedication to specialization, excellence, refinement, and enhanced strength. Specifically, this entails at least the following key characteristics.
(1) We must officely implement and uphold the new development philosophy.
High-quality development is development that embodies the new development philosophy. As a market driver and price discoverer, the securities industry should strive to be both a practitioner and a promoter of this philosophy, clearly defining its role and proactively positioning itself within the framework of the new development paradigm. It must shoulder the historic mission of optimizing the financing structure, invigorating economic vitality, and fostering innovation-driven growth; intensify efforts to support the transformation and upgrading of industrial structures; and help the real economy undergo similar upgrades. In pursuing the “carbon peak and carbon neutrality 30/60 goals,” the industry should leverage the market‑ and price‑oriented functions of investment banking to facilitate the establishment of a low‑carbon, green, and circular economic system. At the same time, it should enhance its international competitiveness and comprehensive financial service capabilities, building competitive advantages amid the higher‑level opening-up of capital markets. Furthermore, by strengthening its wealth‑management role, the industry can help boost investors’ sense of gain and ensure they share in the fruits of economic development. Finally, it should actively fulfill its social responsibilities, reinforce investor protection, safeguard financial stability, and effectively manage risks.
(II) It is imperative to focus on the real economy and enhance service capabilities.
Serving the real economy is both the fundamental purpose and the core mission of the securities industry’s high‑quality development, as well as the original aspiration and enduring commitment of capital market reform. The securities sector must adhere to General Secretary Xi Jinping’s important principles on financial work, return to its roots, optimize its structure, strengthen regulation, and remain market‑oriented, striving to enhance its capacity to serve the real economy. It must uphold both upholding fundamental principles and pursuing innovation, taking the implementation of supply‑side structural reform in finance as its central task, intensifying support for direct financing, and proactively adapting to the overarching trend of development increasingly driven by innovation, creativity, and ingenuity. By aligning business models with the needs of the real economy, improving service quality, and innovating products and instruments, the industry should prioritize supporting innovation‑driven growth and China’s drive toward scientific and technological self‑reliance, providing a more diversified array of financial tools to facilitate the smooth circulation of technology, capital, and the real economy at a higher level. With regard to the development and innovation of capital‑intensive businesses, it is essential to maintain clear oversight and effective regulation while pursuing moderate growth. Efforts should be focused on delivering higher‑quality, more targeted financial services that contribute to the growth of the real economy and household wealth.
(3) It is imperative to adhere to the path of specialized development.
Professionalism is the cornerstone of an industry’s survival and growth. To achieve high-quality development, the industry must steadfastly pursue a path of specialized advancement, investing heavily in “distinctive features, core strengths, niche expertise, and premium offerings.” As capital market reforms deepen across the board, the operating environment for the industry is undergoing profound transformation. Only by emphasizing professional competence, distinctive strengths, and competitive advantages, and by cultivating a talent pool imbued with a spirit of professionalism, can we ensure steady, long-term progress, gradually build up reputational capital, earn the trust of clients and society, and open up broader avenues for high‑quality development. Each office should leverage its comparative advantages to enhance its specialized capabilities in targeted segments, chart a course toward excellence and specialization, and foster an industry landscape characterized by differentiation and distinctiveness.
The registration‑based reform is the pivotal initiative in this round of comprehensive, deepened capital market reforms and constitutes the central task for the present and the foreseeable future. It entails not only optimizing review priorities, procedures, and division of responsibilities, but also establishing market‑driven mechanisms to constrain issuers’ quality, pricing, and timing. Crucially, this requires leveraging market‑oriented and rule‑of‑law approaches to ensure that intermediary institutions fulfill their due responsibilities. To better harness investment banks’ role in value discovery, industry participants must further emphasize the centrality of professional expertise, continuously enhance their technical capabilities, align with the requirements of the registration system, and accelerate the transition from channel‑driven, passive management toward specialized, active management, thereby substantially strengthening core competencies such as sponsorship, valuation, and underwriting.
(4) It is imperative to continuously strengthen risk management capabilities and compliance awareness.
Securities offices are specialized institutions for risk pricing and risk management, yet they themselves can easily become focal points for risk accumulation. Compliance‑based operations remain an inviolable bottom line for the survival and sustainable development of securities companies, while robust risk‑control capabilities serve as an effective lever for striking a balance between risk and return and ensuring long-term, healthy growth. The industry must consistently elevate compliance and risk management to a more prominent position: not only should it refine a risk‑management framework aligned with its strategic objectives—establishing sound pre‑emptive control procedures, comprehensive risk‑management systems, and a strong risk‑culture—but also lay a solid institutional foundation for compliant business practices and sustained, steady progress. Furthermore, it must continually enhance the accountability framework to support the registration‑based system, fostering market‑driven mechanisms that constrain issuers in terms of quality and pricing, and substantially strengthen its own risk management across technology, capital, liquidity, and reputation.
At the industry‑wide symposium in July 2019, I emphasized that securities offices must adhere to the “four priorities,” with the core principle being to put stability first and seek progress within a framework of stability. Stability is the foundation—essential for achieving greater progress. Whether it is the sector’s own development or the reform and opening-up of the capital market, we must avoid both reckless haste and complacency, stay on course, and pursue steady, long‑term growth. Progress, meanwhile, is the guiding direction: only by forging ahead with determination—resolving challenges through reform and creating new opportunities through innovation—can we ensure enduring stability. Particularly at present, as both domestic and global economic and financial conditions remain complex and volatile, it is all the more critical that we maintain clarity and composure, uphold our resolve, and prioritize prudent, compliant operations. By strengthening our internal capabilities, staying true to fundamentals while embracing innovation, we can lay a solid foundation for sustainable development.
(5) It is imperative to effectively enhance the effectiveness of corporate governance.
At last year’s Central Economic Work Conference, clear requirements were set forth for “improving corporate governance in financial institutions.” In my view, sound corporate governance is the micro‑level foundation for any company’s stable and sustainable development. As an essential function of investment banks, we are tasked with helping enterprises refine their corporate governance frameworks; accordingly, we ourselves must establish robust and effective governance to underpin healthy, long‑term growth. In recent years, the industry has grappled with issues such as prioritizing market expansion over risk control, emphasizing project execution at the expense of proper准入, and focusing on short‑term gains while neglecting long‑term strategic considerations. Moreover, the emergence of risk‑related incidents at certain financial institutions points to deeper systemic problems: internal‑control by insiders, the hollowing out of the “three committees and one layer,” and the breakdown of checks and balances—deficiencies that have been key contributors to these challenges. In this regard, industry participants must accord these matters the highest priority, exercise proactive initiative, and anchor corporate governance squarely on rectifying business conduct and effectively mitigating risks. By leveraging the dual strengths of Party leadership and modern corporate governance, they should continue to strengthen corporate governance structures, ensuring that effective governance serves as a vital safeguard for enduring success. Building on earlier efforts, further refinements are needed to optimize equity structures, clarify shareholder qualifications, and standardize shareholder behavior, so that shareholders neither fail to fulfill their roles nor occupy inappropriate positions or overstep their mandates. Regulatory authorities will, in accordance with the principle of “substance over form,” intensify穿透式 (penetrative) oversight of shareholders and tighten supervision of ultimate controllers. With respect to all forms of illegal and non‑compliant conduct, we will uphold end‑to‑end accountability, imposing strict penalties for every violation discovered, with zero tolerance for leniency.
(6) We must steadfastly and pragmatically advance the development of a sound corporate culture in the securities industry.
Industry culture is a vital manifestation of the soft power and core competitiveness of securities offices, serving as the “internal strength” and foundational pillar for the high-quality development of the securities sector. It embodies a comprehensive integration of values, risk management principles, and development philosophies, requiring steadfast adherence to the correct direction of progress, continuous cultivation and nurturing of the industry ecosystem, and vigilance against disorderly capital expansion. In particular, in response to widely‑concerned issues within the industry’s ethos and culture, it is imperative to swiftly address shortcomings in craftsmanship, professional integrity, investor protection awareness, and sound professional ethics; to rectify unhealthy practices such as excessive or short‑term incentives; and to encourage all stakeholders to earnestly assume primary responsibility for building industry culture. This entails embedding cultural development into corporate governance, fostering deep integration between corporate culture and strategic objectives, and striving to seamlessly align cultural enhancement with professional capability building, holistic human development, and the inheritance of historical and cultural traditions. By doing so, we can ensure that “compliance, integrity, professionalism, and prudence” are deeply internalized and externally manifested across the entire industry, steadily cultivating a robust cultural foundation rooted in loyalty, expertise, and practicality, thereby providing value‑driven guidance and spiritual support for the long‑term, stable, and healthy development of the capital market.
This year marks the inaugural year of the 14th Five-Year Plan. The 14th Five-Year Plan represents a critical period of opportunity for the securities industry to advance toward high-quality development. To this end, it is essential to further build consensus around high-quality development, implement the objectives set forth in the plan, strengthen top-level design, and formulate a clear timetable, roadmap, and action plan for the industry’s high‑quality growth. By doing so, we can ensure that the sector’s development is more closely aligned with and deeply integrated into the nation’s broader development blueprint, thereby achieving even more substantial results in building high‑quality investment banks and wealth management institutions.
III. Properly Managing Several Key Relationships in the Industry’s High-Quality Development
To build a capital market that is standardized, transparent, open, dynamic, and resilient, we must steadfastly adhere to the principle of “establishing sound institutions, non‑interference, and zero tolerance,” uphold the direction of market‑based, law‑based, and internationalized development, and continuously enhance the governance capacity and modernization of the capital market system. At present, it is essential to further strike an appropriate balance among several key issues of concern to the industry, foster a better development environment, and steadily cultivate and nurture a healthy ecosystem conducive to high‑quality growth.
(1) On the Relationship Between Deregulation and Strengthened Regulation
The capital market is a marketplace driven by information and investor confidence. For the securities industry, regulatory oversight, self‑regulation, and corporate objectives are aligned; however, fostering mutual trust is essential, as only through such trust can we generate the synergies needed to propel industry growth. On the one hand, as the regulator, the China Securities Regulatory Commission will continue to uphold the principle of “non‑interference,” vigorously advance administrative streamlining and delegation of power, and emphasize the market’s decisive role in resource allocation. Matters that should be handled by market participants themselves will be left to their independent judgment, while adhering to categorized and differentiated regulation—supporting the strong and restraining the weak—to create room for high‑quality securities offices to innovate and develop. In response to industry calls for improving infrastructure and enhancing business capabilities, we will remain market‑oriented, conduct prudent assessments, and actively facilitate progress. On the other hand, greater regulatory flexibility must rest on robust self‑governance within the industry. Market participants must officely uphold red lines, operate with integrity, strengthen their capacity for self‑discipline, and strive to become responsible, visionary, and respected enterprises, thereby cultivating a positive public image and opening up new avenues for innovative development. As for entities that engage in unlawful practices or undermine market order, we will maintain a zero‑tolerance stance, impose strict penalties without exception, and work resolutely to purify the market environment.
Recently, the market has been paying close attention to “pseudo‑market‑capitalization management.” At its core, this practice involves listed companies and their controlling shareholders colluding with relevant institutions and individuals to abuse their advantages in shareholding, capital, and information to manipulate stock prices, thereby infringing upon investors’ legitimate rights and interests and disrupting market order. Both domestic and international markets have designated it as a key target for enforcement. In response, we will maintain a zero‑tolerance stance: any party involved in the illicit profit chain—regardless of who they are—will be rigorously, swiftly, and severely punished upon verification, with timely public disclosure. Hereby, we solemnly remind listed companies and their controlling shareholders, industry institutions, and practitioners to respect the rule of law and honor investors; to steer clear of market manipulation, insider trading, and other illegal practices; and to cherish their reputations and professional integrity, so as to jointly uphold an open, fair, and just market order.
(II) On the Relationship Between Prudent Operations and Innovative Development
As I mentioned earlier, the industry’s high-quality development must adhere to the principle of seeking progress while maintaining stability. However, emphasizing “stability” does not mean shunning innovation; rather, it calls for more effective and prudent innovation. The securities industry stands at the forefront of the market economy, with a strong spirit of innovation and ample momentum. Yet, as capital markets directly engage millions of households and involve diverse stakeholders, innovation in this sector must be approached with the utmost care and prudence. Therefore, the industry must prioritize stability above all else, balancing innovative development with robust compliance and risk management, and carefully managing the relationship between growth and security. It must ensure that “management is underpinned by sound policies, operations follow clear procedures, processes are continuously monitored, and risks remain manageable.” Moreover, high‑quality development in the industry must remain officely aligned with national development strategies, serving the real economy and meeting the wealth‑management needs of residents, thereby ensuring that innovation stays on the right track.
(3) On the Relationship Between Strengthening Accountability and Clarifying the Scope of Responsibility
Earlier, at the China Development Forum, I outlined the evolving role of intermediary institutions, a topic that has drawn significant attention across the industry. In my view, under the registration‑based system, intermediary offices—particularly securities companies—must fully embrace their responsibility as “gatekeepers,” while simultaneously serving both issuers and investors. They must strengthen their sponsorship capabilities to ensure high‑quality listed companies from the outset, selecting only truly viable enterprises and striving to identify those with strong growth potential. At the same time, they should enhance their pricing expertise, integrate investment banking activities more closely with buy‑side research, and consistently promote value‑oriented, long‑term, and rational investing, thereby helping companies with genuine market prospects secure capital. This constitutes a critical benchmark for assessing the governance standards and professional competence of securities offices. Of course, the issuance and listing process involves multiple stakeholders—including issuers, sponsoring and underwriting institutions, accounting offices, and law offices—and appropriately delineating their respective responsibilities is essential to ensuring that each party fulfills its duties. We will further clarify the boundaries of accountability among these entities, working to establish a mechanism in which each plays its designated role, assumes its own responsibilities, and exercises mutual checks and balances. In this regard, industry associations can also assume an even greater role.
(4) On the Relationship Between Administrative Regulation and Self-Regulation
Administrative regulation and self‑regulation are two crucial pillars of capital market governance. Each plays a distinct role, collaborates through clear division of responsibilities, complements one another, and ensures seamless coordination, thereby forging a unified force for industry governance. The new Securities Law further clarifies the China Securities Association’s self‑regulatory duties, and last year the CSRC issued the “Opinions on Further Strengthening the Self‑Regulatory Functions of the China Securities Association,” which delineates the Association’s functional positioning and strategic direction. It is hoped that the Association will continue to leverage member‑driven self‑governance to build a platform for co‑construction, co‑governance, and shared benefits; uphold the differentiated roles of self‑regulation and administrative oversight; and more effectively harness the forward‑looking guidance and preventive regulatory functions of self‑regulation. Moreover, it should ensure coordinated synergy between self‑regulation and administrative supervision, fully leveraging the transmission effect of self‑regulation; adhere to the exemplary and leading role of self‑regulatory rules and business standards in guiding industry institutions to conduct business in compliance; and reinforce the market‑based disciplinary mechanisms of self‑regulatory measures, strengthening moral, integrity, reputational, and rule‑based constraints.
On February 25 this year, at the National Conference Commemorating and Awarding Achievements in Poverty Alleviation, the Association was recognized—on behalf of the industry—as a National Advanced Collective in the fight against poverty. This honor reflects the CPC Central Committee and the State Council’s afofficeation and encouragement of the securities industry for upholding its social responsibility to assist those in need and for staying true to its original aspiration and mission in the battle against poverty. At today’s conference, the Association will issue an initiative calling on the industry to consolidate the achievements of the “One Office, One County” poverty‑alleviation program and to continue contributing to rural revitalization. It hopes that the industry will actively fulfill its social responsibilities, further leverage its professional strengths, and make its due contributions to advancing ecological civilization and fostering a low‑carbon, green, circular economy across the broader landscape.
Comrades, today’s conference is about to elect the Association’s new Board of Directors and Supervisory Board. This year also marks the 30th anniversary of the Association’s founding. Over the years, the Association has grown alongside the industry, overcoming countless challenges and milestones. As we enter a new stage of development, we hope the Association will steadfastly implement the new development philosophy, earnestly put into practice the principle of “four respects and one concerted effort,” and continue to work hand in hand with the industry on the path of high-quality development. In doing so, we will actively contribute to building a capital market that is standardized, transparent, open, dynamic, and resilient, and make fresh contributions to the comprehensive advancement of a modern socialist country.
We wish the conference every success! Thank you all!

Commercial & Corporate
The National Equities Exchange and Quotations Company and the Government of the Inner Mongolia Autonomous Region have signed a strategic cooperation memorandum to establish the New Third Board’s Inner Mongolia Base.
On May 21, 2021, the National Equities Exchange and Quotations Company (NEEQ) and the People’s Government of the Inner Mongolia Autonomous Region signed a strategic cooperation memorandum in Beijing and held a ceremony to officially designate the NEEQ’s Inner Mongolia Base. Huang Zhiqiang, Vice Chairman of the Inner Mongolia Autonomous Region and a member of the Party Leadership Group of the regional government, and Xu Ming, Secretary of the Party Committee and Chairman of the NEEQ, attended the event and exchanged views on further deepening cooperation between the two sides. Jiang Hua, Director of the Inner Mongolia Financial Regulatory Bureau, and Sui Qiang, General Manager of the NEEQ, signed the memorandum on behalf of their respective sides. Also in attendance were Luan Tianmeng, Deputy Secretary-General of the Inner Mongolia Autonomous Region Government; Wang Kun, Deputy Director of the Inner Mongolia Securities Regulatory Bureau; and Li Yongchun, Deputy General Manager of the NEEQ, among others.
Under the Memorandum of Strategic Cooperation, the two parties will further strengthen collaboration in areas including the identification and cultivation of pre‑listed enterprises, information sharing and personnel exchanges, comprehensive capital market services, as well as risk prevention and resolution for listed companies. As part of this cooperation, the two sides have decided to establish a New Third Board service hub at the Inner Mongolia Equity Exchange Center, with the aim of enhancing the New Third Board’s capacity to provide localized support to market entities in Inner Mongolia.
Vice Chairman Huang Zhiqiang stated that, with the strong support of the National Equities Exchange and Quotations Company, Inner Mongolia’s capital market has witnessed encouraging progress in recent years. The autonomous region has been vigorously promoting enterprises’ tiered development through the New Third Board, and is currently formulating new policies to support listings and public offerings, further boosting companies’ enthusiasm and initiative in leveraging the New Third Board for growth. He expressed hope to strengthen communication and deepen cooperation with the National Equities Exchange and Quotations Company, achieving new breakthroughs in areas such as assisting high-quality Inner Mongolian enterprises in entering the Select Tier, cultivating a robust pipeline of pre‑IPO candidates, enhancing talent exchange and collaboration in the capital markets, and jointly developing a multi‑tiered capital market service model.
Chairman Xu Ming stated that the reform and development of the New Third Board have received strong support from governments at all levels in the autonomous region as well as from relevant financial authorities. The New Third Board has consistently placed great emphasis on serving Inner Mongolia’s small and medium-sized enterprises and the real economy. In recent years, in collaboration with local governments and financial regulators across the region, it has organized numerous training and promotional events in various cities, helping listed companies pursue a high-quality development path that prioritizes ecological sustainability and green growth. With the implementation of comprehensive deepening‑reform measures, the New Third Board’s market positioning has become clearer, its ecosystem further optimized, and its functions more fully developed. The National Equities Exchange and Quotations Company will continue to strengthen the market’s functions, enhance the efficiency of its services, and fully leverage its role as a platform to provide greater support for the autonomous region’s capital market and its economic and social development.

The Inner Mongolia Autonomous Region is an important base for energy and strategic resources, a major production hub for agricultural and livestock products, and a key gateway for China’s northward opening-up. As of May 20, 2021, the region had 48 companies listed on the New Third Board, with 1 company in the Select Tier, 11 in the Innovation Tier, and 36 in the Basic Tier.
Taxation TAXATATION

Guidance on the New Policy for Pre-Tax Additional Deduction of R&D Expenses
I. Scope of Application of the Policy on Additional Deduction for R&D Expenses
[Applicable Industries]
With the exception of the tobacco manufacturing, accommodation and catering, wholesale and retail, real estate, leasing and business services, and entertainment sectors, all other enterprises are eligible to enjoy…
[Applicable Activities]
A systematic, goal‑oriented activity that enterprises undertake on an ongoing basis to acquire new scientific and technological knowledge, creatively apply such knowledge, or substantially improve technologies, products (or services), and processes.
The following activities are not eligible for the pre-tax additional deduction policy:
1. Routine upgrades of the enterprise’s products (services).
2. The direct application of a particular scientific or technological achievement, such as the immediate adoption of publicly disclosed new processes, materials, devices, products, services, or knowledge.
3. Technical support activities provided by the enterprise to customers after product commercialization.
4. Repetitive or minor modifications to existing products, services, technologies, materials, or processes.
5. Market research, efficiency assessments, or management studies.
6. As a component of industrial (service) processes, or for routine quality control, testing and analysis, and repair and maintenance.
7. Research in the social sciences, arts, or humanities.
[Policy Basis]
Notice of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Improving the Policy for Pre-Tax Additional Deduction of Research and Development Expenses (Cai Shui [2015] No. 119)
II. For enterprises other than those in the manufacturing sector, R&D expenses are subject to an additional 75% tax deduction.
[Applicable Entities]
Enterprises other than manufacturing, and which do not fall under the tobacco manufacturing, accommodation and catering, wholesale and retail trade, real estate, leasing and business services, or entertainment industries.
[Offer Details]
For research and development expenses actually incurred by enterprises in their R&D activities that are not capitalized as intangible assets and are instead charged to current profit or loss, before December 31, 2023, in addition to the standard actual‑cost deduction, an additional pre‑tax deduction of 75% of the actual amount may be claimed. If such expenses result in the formation of intangible assets, during the aforementioned period, a pre‑tax amortization allowance equal to 175% of the cost of those intangible assets may be applied.
[Policy Basis]
1. “Notice of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Raising the Pre-Tax Additional Deduction Rate for Research and Development Expenses” (Cai Shui [2018] No. 99)
2. Announcement of the Ministry of Finance and the State Taxation Administration on Extending the Validity Period of Certain Tax Preferential Policies (No. 6, 2021)
III. The additional deduction rate for R&D expenses of manufacturing enterprises has been increased to 100%.
[Applicable Entities]
Manufacturing enterprise
[Offer Details]
For manufacturing enterprises, research and development expenses actually incurred in R&D activities that are not capitalized as intangible assets and are instead charged to current profit or loss may, in addition to the standard actual‑cost deduction, be subject to an additional pre‑tax deduction equal to 100% of the actual amount, effective January 1, 2021. If such expenses result in the formation of intangible assets, starting January 1, 2021, a pre‑tax amortization allowance of 200% of the cost of those intangible assets shall apply.
[Policy Basis]
1. Notice of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Improving the Policy for Pre-Tax Additional Deduction of Research and Development Expenses (Cai Shui [2015] No. 119)
2. “Notice of the Ministry of Finance, the State Taxation Administration, and the Ministry of Science and Technology on Relevant Policy Issues Concerning the Pre-Tax Additional Deduction for Expenses Incurred by Enterprises in Commissioning Overseas Research and Development” (Cai Shui [2018] No. 64)
3. Announcement of the Ministry of Finance and the State Taxation Administration on Further Improving the Policy for Pre-Tax Additional Deduction of R&D Expenses (No. 13, 2021)
IV. Determination of Whether a Diversified Enterprise Qualifies as a Manufacturing Enterprise
[Applicable Entities]
Enterprises that generate revenue from both manufacturing and other business activities.
[Criteria for Determination]
Enterprises whose primary business is manufacturing and whose manufacturing revenue accounts for 50% or more of their total revenue in the relevant year shall be classified as manufacturing enterprises. Enterprises whose manufacturing revenue accounts for less than 50% of their total revenue shall be classified as other enterprises.
Total income shall be determined in accordance with Article 6 of the Enterprise Income Tax Law, which specifically refers to all income obtained by an enterprise in both monetary and non-monetary forms from various sources, including revenue from sales of goods, revenue from provision of services, revenue from transfer of assets, equity investment income such as dividends and bonuses, interest income, rental income, royalty income, income from donations received, and other income.
[Policy Basis]
Announcement of the Ministry of Finance and the State Taxation Administration on Further Improving the Policy for Pre-Tax Additional Deduction of R&D Expenses (No. 13, 2021)
V. The October provisional tax return may be used to claim in advance the enhanced deduction for R&D expenses applicable to the first half of the year.
[Applicable Entities]
Enterprises in all industries except tobacco manufacturing, accommodation and food services, wholesale and retail trade, real estate, rental and business services, and entertainment.
[Offer Details]
1. Effective January 1, 2021, when making the October provisional corporate income tax return for the third quarter of the year (for quarterly filers) or the September return (for monthly filers), enterprises may elect to claim the additional deduction policy for R&D expenses incurred in the first half of the year.
The “self-assessment, declaration for benefits, and retention of relevant documentation for record‑keeping” approach shall be adopted. Eligible enterprises shall independently calculate the amount of the additional deduction, complete the “People’s Republic of China Enterprise Income Tax Monthly (Quarterly) Provisional Tax Return (Type A)” to claim the tax benefit, and, based on the R&D expenses eligible for the additional deduction as reported for the first half of the year, fill out the “Detailed Statement of Additional Deduction for R&D Expenses” (A107012) (no submission to the tax authorities is required). This form shall be retained together with other documents prescribed by the relevant policies for record‑keeping purposes.
2. Enterprises may also elect, when making their October provisional tax payments, not to claim the additional deduction for R&D expenses incurred in the first half of the year, and instead defer this benefit until the annual final tax settlement in the following year.

Litigation & Arbitration

The next round of real estate tax pilot programs is expected to precede legislative reform: Shenzhen and Hainan may take the lead in conducting trials.
According to the Securities Times, recently, officials from the Ministry of Finance, the Budget Committee of the Standing Committee of the National People’s Congress, the Ministry of Housing and Urban–Rural Development, and the State Taxation Administration convened a symposium in Beijing on the pilot program for real estate tax reform. The meeting heard views from officials of several municipal governments and from a number of experts and scholars on the pilot work, sparking widespread discussion across all sectors of society.
Several experts interviewed by the Securities Times believe that this symposium has signaled a move to launch pilot programs for a property tax ahead of formal legislation, and that China today already possesses both the demand and the conditions necessary for such reforms. Going forward, the holding‑phase component of the property tax will become the focal point of reform—aligning with the reform priorities outlined in the 14th Five-Year Plan while addressing a key weak link in the existing property‑tax framework, thereby offering ample room for further progress. It is recommended that the next round of property‑tax reform be piloted first in Shenzhen and Hainan.
Pilot programs precede legislation.
Since the 13th Five-Year Plan explicitly called for “advancing legislation on the real estate tax,” relevant authorities have, year after year, focused their statements on the legislative dimension of real estate tax reform.
However, this symposium differs from previous ones, focusing instead on the pilot program for a property tax—a topic on which the relevant authorities have rarely commented.
Yan Yuejin, Research Director at the E-House Institute’s Think Tank Center, pointed out to a Securities Times reporter that in 2011, the National Development and Reform Commission mentioned “pilot programs for property tax reform” in an official report; that same year, Shanghai and Chongqing indeed launched pilot property tax schemes. By this line of reasoning, the current reference to “reform pilot programs” carries significant indicative weight, suggesting that following this meeting, property tax reform may be rolled out as a pilot in select cities.
At a time when legislative work on the property tax still requires careful, long-term planning, is it necessary to launch pilot programs prior to formal legislation? Experts generally agree that, although enacting property‑tax legislation during the 14th Five-Year Plan period will be challenging, China has now entered a window of opportunity to initiate a new round of property‑tax pilot projects.
“At this juncture, advancing the real estate tax is both necessary and well‑grounded,” said Peng Xuhui, a postdoctoral researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, to reporters. From the perspectives of rebalancing the real estate market toward its residential function and optimizing housing resource allocation, introducing a real estate tax is highly imperative—particularly given its critical role in fostering the market’s sound and stable development. On the other hand, China boasts an extensive stock of housing assets, and the technical infrastructure for implementing such a tax is already in place, providing the foundational conditions for reforming the real estate tax system.
Zhao Xiuchi, Vice President and Secretary-General of the Beijing Real Estate Law Society and a professor at the Capital University of Economics and Business, also believes that China will likely launch pilot programs before the real estate tax legislation is enacted. This is because, in advancing legislative efforts, pilot projects are often conducted to test and refine the law and correct any potential deviations. Given the complexity and breadth of issues involved in real estate tax legislation, as well as the considerable time required for its formulation, conducting pilot programs is all the more essential.
The focus of the reform is on the holding stage.
The so‑called “real estate tax” today is, in fact, a composite concept that encompasses a range of levies, including the land value‑added tax levied during the development and construction phase, the deed tax imposed at the transaction stage, and the urban land use tax and property tax applicable during the holding period. However, regardless of whether future reforms in the real estate taxation sphere involve revising existing taxes or introducing new ones, many experts agree that the holding‑period component of the real estate tax will be the focal point of reform.
Earlier, Ou Wenhan, Assistant Minister of Finance, stated during a briefing on the Ministry of Finance’s efforts to implement the Outline of the 14th Five-Year Plan and accelerate the establishment of a modern fiscal and taxation system that it is necessary to continuously optimize the tax structure, improve the local tax and direct tax systems, and appropriately increase the share of direct taxes.
Real estate taxes levied on the holding stage, as taxes directly borne by taxpayers, align with the national tax policy priorities for the 14th Five-Year Plan period. However, at present, in China’s overall tax revenue, tax receipts from the real estate holding stage remain significantly lower than those from the development and construction stage and the transaction stage.
According to the Ministry of Finance’s 2020 fiscal revenue and expenditure report, among China’s land‑ and real estate‑related taxes in 2020, most such levies were concentrated in the development, construction, and transaction stages. Specifically, the land value‑added tax—imposed during the development and construction phase—totaled RMB 646.8 billion, while the deed tax—levied at the transaction stage—amounted to RMB 706.1 billion. By contrast, the urban land use tax and the property tax, which apply during the holding period, amounted to only RMB 205.8 billion and RMB 284.2 billion, respectively.
“The focus of real estate tax reform should be on the holding phase, which is currently the most underdeveloped component of China’s real estate tax system,” Peng Xuhui told reporters. The absence of a property tax on holdings means that the existing tax framework fails to effectively regulate and optimize the real estate market. Moreover, this “transaction‑centric, holding‑light” tax structure is inconsistent with internationally established, mature real estate tax systems. Ultimately, real estate tax reform should aim to foster the stable and healthy development of the housing market, refine the allocation of housing resources, and provide local governments with a steady, reliable source of tax revenue.
Tao Jin, deputy director of the Macroeconomic Center at Suning Institute of Finance, pointed out that currently, various taxes already cover aspects such as land use, development and construction, sales, and transactions; however, there are still no clear tax provisions for the holding phase. Imposing a property tax on held real estate could prove to be both a key focus and a significant challenge in the reform process.
Shenzhen and Hainan may conduct pilot programs on a trial basis.
To further advance the pilot program for the real estate tax, the selection of pilot cities must be carefully considered. Experts anticipate that the next round of real estate tax reform pilots will broaden the scope, with potential candidates including major cities that have accumulated practical experience or enjoy a head start in previous pilot initiatives.
As “long-standing” pilot cities, Shanghai and Chongqing possess ample experience in property‑tax piloting and should logically serve as the pilot jurisdictions for the next round of real‑estate tax reform. However, judging from the current economic performance of these two cities, the property‑tax pilot has yielded only modest results. Housing prices and transaction volumes in both Shanghai and Chongqing show no significant divergence from those of other first‑ and second‑tier cities. According to calculations based on Shanghai’s 2020 tax‑revenue statistics, property‑tax revenue accounted for just 1.2% of the city’s total tax receipts that year.
Peng Xuhui told reporters that the previous property tax pilot programs in Shanghai and Chongqing yielded unsatisfactory results, owing to factors such as excessively low tax rates and limited coverage. He added that these two cities should build on their existing experience to further strengthen related pilot initiatives and raise the tax rate thresholds applicable to property holdings.
He also pointed out that Shenzhen, as a pilot demonstration zone, and Hainan, as a base for building a free trade port, are both at the forefront of reform and opening-up and should therefore be included in the scope of the real estate tax pilot program. In particular, Shenzhen ranks among the highest nationwide in both housing prices and the rate of price increases, and speculative activity is rampant; accordingly, it should promptly launch and refine the pilot reforms for the real estate tax.
Yan Yuejin also agrees that the property tax should be piloted first in Shenzhen and Hainan. He believes that, as a demonstration zone for socialism with Chinese characteristics, Shenzhen naturally needs to take the lead in testing key policies. As China enters a new phase of reform and opening-up, Shenzhen is once again undertaking reforms, and it is highly likely that these will focus on the property tax. Meanwhile, as a free-trade port, Hainan is bound to see its related reforms accelerate. Moreover, compared with some major cities, housing issues on Hainan Island are relatively simpler, making the implementation of a property tax face less resistance. In addition, as the capital, Beijing would send a powerful signal if it were to pilot the property tax, and it enjoys inherent advantages in policy formulation and pioneering experimentation.
In Peng Xuhui’s view, as reform pilot programs continue to advance, a number of pilot cities could be gradually incorporated based on housing price thresholds—starting with cities where average prices exceed RMB 30,000 per square meter, then expanding to those above RMB 20,000, and eventually extending to cities with average prices exceeding RMB 10,000 per square meter—progressing step by step until nationwide coverage of major urban centers is achieved.
Market impact remains the biggest challenge of reform.
Although the symposium on the pilot program for real estate tax reform sent out positive signals, the current weaknesses in the holding‑phase taxation of real estate, the potential market impacts following the rollout of the pilot, and the challenges ahead in enacting related legislation all underscore the formidable obstacles China faces in advancing both the legislative framework and the reform of the real estate tax.
“The biggest challenge in levying a property tax remains its potential impact on the market,” Tao Jin told a Securities Times reporter. He added that if a comprehensive property tax targeting the holding phase were introduced, it would inevitably exert systemic effects on both the buying and selling activities and investment behavior of property owners, ultimately shaping the market over the long term. Therefore, when formulating relevant regulations and standards, both principles and practical considerations must be taken into account.
In Yan Yuejin’s view, as pilot programs for real estate tax reform advance, they are bound to affect both new‑home and existing‑home prices. For new‑home prices, if major cities implement real estate tax reforms, the cost of holding housing will rise, dampening buyers’ willingness to purchase and potentially leading to a decline in home prices or a moderation in price increases. As for existing‑home prices, such reforms would raise the cost of property ownership and reduce potential returns, prompting some landlords to sell their properties. With more secondhand homes entering the market, downward pressure on prices is likely to intensify.
Yan Yuejin also pointed out that both land prices and rental rates will be affected. If major cities lead the way in pilot programs, this could objectively prompt property developers to shift their land‑acquisition activities to other prefecture‑level cities or weaker provincial capitals. Coupled with a possible simultaneous cooling of the housing market in large cities, this would likely drive down land prices. As for rental rates, as housing‑market activity eases and the supply of existing rental units expands, downward pressure on rents is expected to ease, leading to a decline in rental prices.
Zhao Xiuchi cautioned that, in advancing the legislation and reform of the real estate tax, the focus should be on safeguarding the public interest, with careful consideration given to the design of the real estate tax system, the composition of tax categories, the overall tax burden—including land transfer fees—and the appropriate allocation of tax burdens, as well as a comprehensive set of arrangements for the real estate tax framework under a dual‑track approach of renting and purchasing.

The Standing Committee of the National People’s Congress has launched an enforcement inspection of the Animal Husbandry Law.
BEIJING, May 20 (Xinhua) — To thoroughly study and implement Xi Jinping’s Thought on the Rule of Law, further promote the transformation and upgrading of China’s animal husbandry sector, and foster its sustained and sound development, the Standing Committee of the National People’s Congress has launched an enforcement inspection of the Animal Husbandry Law.
At the first plenary meeting of the NPC Standing Committee’s enforcement inspection group for the Animal Husbandry Law, held in Beijing on the 20th, reporters learned that, to enhance the overall effectiveness of the inspection, a combined approach will be adopted: field inspections conducted by the enforcement inspection groups themselves, supplemented by inspections entrusted to the standing committees of provincial people’s congresses. From June through early July, each inspection team will travel to six provinces and autonomous regions—Inner Mongolia, Jilin, Hunan, Sichuan, Yunnan, and Qinghai—to carry out on-site assessments. At the same time, the standing committees of the people’s congresses in eight other provinces, autonomous regions, and municipalities—Heilongjiang, Shandong, Henan, Hubei, Guangdong, Chongqing, Ningxia, and Xinjiang—will be tasked with examining the implementation of the Animal Husbandry Law within their respective jurisdictions.
According to reports, the enforcement inspection team will focus on assessing the protection of livestock and poultry genetic resources; the selection, breeding, and production‑and‑operation of breeding stock; the stabilization and development of animal husbandry; the quality and safety of livestock and poultry products; the implementation of legal responsibilities; and the formulation of supporting regulations and rules under the Animal Husbandry Law. During the organization and implementation of the enforcement inspection of the Animal Husbandry Law, the team will also concurrently conduct an enforcement survey on the newly revised Animal Disease Prevention Law.
In mid-July, the enforcement inspection team will convene its second plenary meeting to deliberate and discuss the draft enforcement inspection report. In late August, the Standing Committee of the National People’s Congress will hear and review the report on the implementation of the Animal Husbandry Law.
[Provincial Policy Document] Notice on the Issuance of the “Anhui Province Measures for the Administration of Scientific Research Integrity (Trial)”
To the Science and Technology Bureaus of all cities and to all relevant units:
To further strengthen the building of research integrity, standardize its management, foster a sound research ecosystem, elevate the overall level of research integrity, and create an environment of honesty and trustworthiness in scientific and technological innovation—thereby ensuring the achievement of science and technology program objectives and the safeguarding of public funds—this Measures for the Administration of Research Integrity in Anhui Province (Trial) is hereby formulated in accordance with relevant national and provincial guidelines. It is now circulated to you; please implement it accordingly.
Attachment: Measures for the Administration of Scientific Research Integrity in Anhui Province (Trial)
Anhui Provincial Department of Science and Technology
March 31, 2021
(This document is proactively disclosed.)

Administrative Measures on Research Integrity of Anhui Province (Trial)

Chapter I General Provisions
Article 1: In order to further strengthen the building of research integrity, foster a sound research environment characterized by honesty and trustworthiness, standardize the management of research integrity in Anhui Province, and ensure the achievement of science and technology program objectives as well as the security of public funds, this Measures is formulated in accordance with the spirit of the “Several Opinions on Further Strengthening the Building of Research Integrity” and the “Opinions on Further Promoting the Spirit of Scientists and Enhancing Ethical and Academic Conduct” issued by the General Offices of the CPC Central Committee and the State Council; the “Guiding Opinions on Further Improving the System of Constraints on Dishonesty and Establishing a Long-Term Mechanism for Building Integrity” issued by the General Office of the State Council; the “Interim Provisions on the Recording of Serious Acts of Dishonesty in National Science and Technology Programs (Special Projects, Funds, etc.)” and the “Rules for the Investigation and Handling of Cases of Research Integrity” (Trial) issued by the Ministry of Science and Technology and other relevant departments; as well as the “Interim Provisions on the Handling of Violations in Scientific and Technological Activities” and the “Provisions on the Handling of Solicitation in the Review Process of Scientific and Technological Activities” (Trial) issued by the Ministry of Science and Technology.
Article 2. For the purposes of these Measures, “research integrity management” refers to the objective recording of the adherence by relevant competent authorities, entrusted management institutions and their staff, entities implementing scientific and technological activities, scientific and technological personnel, advisory and review experts, third-party scientific and technological service institutions and their staff, and other responsible parties—whether under the jurisdiction of this province or participating in research activities organized by this province—to their commitments and obligations, as well as their observance of scientific ethical standards and compliance with norms governing research activities. It also encompasses related work such as incentives for good faith and sanctions for breaches of trust, conducted on the basis of such records.
Article 3: Scientific integrity management shall be implemented in a comprehensive, end-to-end manner, in accordance with the relevant administrative systems and policies governing innovation activities under science and technology programs, as well as with supporting documentation, contracts or task assignments, letters of commitment, evaluation reports, scientific and technological reports, audit reports, acceptance conclusions, investigation findings, and other pertinent materials.
Chapter 2: Management Responsibilities
Article 4. The Anhui Provincial Department of Science and Technology is responsible for the overall coordination and macro‑level guidance of research integrity in the natural sciences across the province. It shall, in collaboration with relevant authorities, formulate pertinent policies and measures, advance the development of a research integrity system, collect and record the research‑related credit information of relevant accountable entities, conduct credit assessments and apply the resulting outcomes, investigate and handle major cases of research integrity violations, and establish mechanisms for inter‑departmental joint investigations and coordinated disciplinary actions.
Article 5: Science and technology administrative departments at all levels shall be responsible for advancing the development of research integrity within their respective administrative jurisdictions, fulfilling their duties in managing research integrity at their level, strengthening publicity, education, and oversight and guidance, playing a pivotal role in linking higher and lower levels, and organizing investigations into cases and coordinating with superior authorities to carry out joint disciplinary measures.
Article 6: All types of research institutes, universities, enterprises, public institutions, social organizations, professional service agencies, and other entities engaged in scientific research activities under the jurisdiction of this province or organized by this province shall be the primary entities responsible for fostering research integrity and for investigating and handling related cases. They shall exercise strict self-discipline, implement standardized management, strengthen internal oversight, comply with all regulations on research integrity management, fulfill requirements for research credit, and establish and improve systems for education and prevention, recording of research activities, preservation of research archives, and accountability.
Chapter 3: Integrity Management
Article 7: A research integrity commitment system shall be implemented. Relevant responsible entities shall, when conducting or participating in research activities, commit to complying with requirements related to research integrity, research ethics, and safety and confidentiality.
Article 8: A sound system for reviewing research integrity shall be established. Science and technology authorities at all levels shall conduct integrity reviews of the entities responsible for applying to participate in research activities; those found to have engaged in serious breaches of trust shall be subject to a “one‑vote veto.”
Article 9: Leverage the oversight role of the general public, the media, and other stakeholders in the management of research integrity, and guide relevant responsible entities to strengthen the cultivation of sound professional conduct and academic ethics.
Article 10: A scientific and technological credit information system shall be established to create an integrity‑recording platform that covers the entire process, from project application and project approval review to ongoing management, evaluation, review and advisory services, final acceptance, and the utilization of research outcomes. In accordance with the principle of “who certifies, who lists, who is responsible,” the scientific integrity status of relevant entities shall be documented, and a science and technology program management model linked to levels of scientific integrity shall be progressively implemented.
Article 11: Standardize the collection and use of science and technology credit information, establish and improve regulations on the administration of such information, clearly define the implementing entities, procedures, and requirements, and progressively promote interconnection between the provincial science and technology credit information system and the provincial public credit information sharing service platform. This will enable the provision of public services such as access to science and technology credit information, thereby supporting the implementation of joint punitive measures across departments and regions.
Chapter 4: Credit Rating
Article 12: A classified evaluation system for research integrity shall be implemented. Evaluations shall be conducted based on the credit performance of the relevant responsible entities, and three categories—good credit, general dishonesty, and serious dishonesty—shall be established to maintain a credit roster and carry out corresponding record-keeping and management.
Good Credit: The relevant responsible entities, in participating in scientific research activities, comply with applicable management systems and policies and regulations, fulfill their research responsibilities and obligations, adhere to the code of conduct for scientific research, observe research ethics, and have maintained a record free of any instances of research misconduct for at least two consecutive years.
General Dishonesty: The relevant responsible entity engages in dishonest conduct during participation in scientific research activities, but such conduct does not result in serious consequences or adverse impacts.
Severe Dishonesty: When a relevant responsible entity engages in dishonest conduct during participation in scientific research activities, resulting in serious consequences or adverse impacts.
Article 13: The following acts constitute scientific misconduct:
(1) Obtaining qualifications for undertaking, managing, consulting, or providing services in scientific research activities, as well as certifications such as technical testing and project completion acceptance, through improper means including falsification, collusion, or duplicate submissions;
(2) Plagiarizing, appropriating, or misappropriating the scientific research achievements of others, thereby infringing upon their intellectual property rights;
(3) Engaging in the buying and selling of, or commissioning others to write or submit on one’s behalf, papers or project applications, or fabricating peer-review experts and review comments;
(4) Intentionally exaggerating research findings and concealing technical risks, thereby causing adverse social repercussions and economic losses;
(5) Failure to comply with the provisions of the research contract, or unauthorized adjustments to research tasks or budget allocations;
(6) Failure to report significant changes in research activities to the relevant authorities as required;
(7) Failing to perform the principal obligations stipulated in the contract for the administration of scientific and technological activities without justifiable reasons;
(8) Refusing to cooperate with supervisory inspections, assessments, or evaluations organized by the competent administrative authorities for science and technology, or failing to effectively implement relevant corrective measures;
(9) Violating regulations pertaining to the confidentiality of scientific research activities;
(10) Violating regulations on the administration of research funds by falsely reporting, fraudulently claiming, embezzling, withholding, misappropriating, diverting, or illegally obtaining fiscal research funds;
(11) In scientific research activities such as consultation, evaluation, and review, failing to perform duties in accordance with regulations, violating the recusal system, abusing authority, engaging in favoritism or fraud, or issuing false or inaccurate conclusions;
(12) In activities such as the application, review, implementation, acceptance, supervision and inspection, and evaluation of scientific research projects, any acts of soliciting favors—such as “making phone calls” or “pulling strings”—are prohibited.
(13) Negligence in research administration, including concealing, shielding, or condoning violations of laws and regulations;
(14) Any research conduct that endangers national security, harms the public interest, jeopardizes human health, or violates research ethics;
(15) Other instances of scientific research misconduct occur.
Article 14: Where any relevant responsible entity engages in any of the untrustworthy acts listed in Article 13 in the course of participating in scientific research activities, it shall be recorded as either a general case of untrustworthiness or a serious case of untrustworthiness, depending on the severity of the circumstances. The following acts shall be directly recorded as serious cases of untrustworthiness:
(1) Those who have been subject to criminal or administrative penalties and have been officially announced as such;
(2) Those that have been investigated and officially reported by audit authorities, disciplinary inspection and supervision bodies, or other relevant departments;
(3) Those that have been investigated and officially documented by the relevant departments and entities in the context of science and technology planning, project management, or supervisory inspections;
(4) Cases in which an individual’s work has been retracted by peer-reviewed academic journals published domestically or internationally due to serious research misconduct such as fabrication, falsification, or plagiarism, or in which the individual has had their eligibility for review and award consideration revoked and been formally notified of such revocation by the relevant domestic or international government award‑reviewing bodies;
(5) Other serious violations of rules and discipline that have been verified and for which the notification procedure has been duly followed.
Chapter 5: Investigation and Handling
Article 15: The science and technology administrative departments at each level shall be responsible for receiving reports, conducting investigations, and taking appropriate measures with respect to alleged violations of scientific integrity within their respective jurisdictions. For cases that fall outside their jurisdiction, they shall refer such matters to the competent higher-level authorities for investigation and handling.
Article 16: Reports that simultaneously meet the following conditions shall be promptly accepted:
(1) Those with correct contact information;
(2) Where there is a clearly identified subject of the report and clear facts of violation;
(3) Where there is objective evidence or investigative leads.
Real-name reporting is encouraged; malicious or false reports are prohibited.
Article 17: The competent science and technology authorities at all levels shall proactively accept the following leads concerning cases of research integrity and strengthen oversight and inspection:
(1) Leads referred by higher-level authorities or relevant departments;
(2) Issues and leads identified in routine scientific research management activities, as well as in the administration of science and technology programs, science and technology awards, and science and technology talent management;
(3) Leads regarding scientific misconduct disclosed by the media.
Article 18: An investigation shall be conducted in accordance with a prepared investigation plan, which shall clearly specify the scope of the investigation, personnel involved, methods to be employed, the schedule, and supporting measures, and shall be implemented only after approval by the relevant responsible person of the unit.
Article 19: The science and technology administrative departments at all levels shall verify reports or other relevant leads. Where the conditions for acceptance are met, they shall promptly initiate an investigation. Such investigations shall focus on ascertaining the factual circumstances of the case, including verifying and validating pertinent original data, contracts, invoices, and other supporting documents, as well as examining the research process and any associated financial gains. For cases involving highly specialized issues, an expert panel—comprising peer scientific and technological experts, management specialists, and research ethics experts in the relevant field—may be convened, as necessary, to review and evaluate the academic matters at issue.
During the investigation, any suspected violations of law or crime shall be referred to the judicial authorities for prosecution.
Article 20: Individuals under investigation and witnesses in cases of research integrity shall actively cooperate with the investigation, truthfully state the facts, and provide relevant evidence; they shall not conceal or destroy any evidentiary materials. No organization or individual may obstruct or interfere with the investigation and handling of research integrity cases, nor may they shirk responsibility or cover up misconduct. The investigation and handling procedures shall strictly adhere to the recusal system.
Article 21: When conducting investigations that require interviews with the person under investigation, witnesses, or other relevant parties, at least two investigators shall participate in the interview. The content of the interview shall be recorded in writing and signed by both the interviewer and the interviewee for conofficeation. Subject to compliance with the notification procedures, audio and video recording may also be conducted.
Article 22: Investigators may, in accordance with applicable regulations and procedures, inspect, excerpt, photocopy, or seal relevant documents and equipment. Any documents or equipment inspected or sealed shall be documented in writing and signed for conofficeation by both the investigator and the custodian of such documents or equipment.
Article 23: During the investigation, the statements and defenses of the person under investigation shall be heard, and the relevant facts, grounds, and evidence shall be verified. Upon necessity, the whistleblower may be requested to submit additional materials; where appropriate and with the whistleblower’s consent, a face-to-face confrontation between the whistleblower and the person under investigation may be arranged.
Article 24: Science and technology administrative departments at all levels shall, in accordance with the relevant provisions of their superior authorities and the requirements of these Measures, investigate and handle cases involving scientific integrity. Based on the facts, nature, and circumstances ascertained through the investigation, they shall render a decision on the appropriate course of action and notify both the whistleblower and the relevant responsible parties of the findings and recommendations regarding the case.
Article 25 A review application mechanism shall be established. If the relevant responsible parties disagree with the findings and recommendations of the case investigation, they may submit a request for review within fifteen days from the date of receipt of such findings and recommendations.
Article 26: The science and technology administrative departments at all levels shall, within fifteen working days from the date of receipt of the review application, organize a review; the review opinion shall constitute the final disposition.
Chapter Six: Rewards and Penalties Mechanism
Article 27: For entities with good credit standing that have not engaged in any acts of dishonesty for five consecutive years, the competent authority may adopt the following incentive measures:
(1) In areas such as applying for science and technology programs, participating in review and advisory activities, and undertaking science and technology service tasks, priority support shall be given under otherwise equal conditions.
(2) Reduction or exemption from mid-term evaluations and supervisory inspections;
(3) Grant broader authority over project management processes, and delegate greater powers to adjust major matters and reallocate funds.
(4) Submit trustworthy‑behavior information to “Credit Anhui” and other platforms.
Article 28: With respect to entities and individuals responsible for acts of dishonesty, the science and technology administrative departments at all levels may, individually or in combination, impose the following punitive measures:
(1) Warnings and reminders, admonitory talks on research integrity, and public criticism;
(2) Suspend the disbursement of fiscal funds and, in consultation with the finance department, recover all or part of the disbursed funds.
(3) Revoke any awards or honorary titles conferred and recover any prize money;
(4) Designate the relevant responsible entities as key subjects of oversight and increase the frequency of inspections.
(5) Depending on the severity of the circumstances, revoke the individual’s eligibility to participate in research-related activities for a specified period or indefinitely.
(6) Notify the relevant authorities of the pertinent acts of dishonesty.
Article 29: Where any of the following circumstances exists, a lighter penalty may be imposed:
(1) Actively reporting leads on issues that are subsequently verified as true;
(2) Actively acknowledge the wrongdoing and fully cooperate with the investigation and corrective measures;
(3) Actively return any benefits obtained as a result of the untrustworthy conduct;
(4) Actively mitigating losses or waste, or effectively preventing the occurrence of harmful consequences;
(5) Publicly commit, through national media, to strictly comply with relevant national laws and administrative regulations governing scientific research activities and to refrain from engaging in any further acts of dishonesty;
(6) Other circumstances in which lenient treatment may be granted.
Article 30: Any of the following circumstances shall be subject to aggravated disciplinary measures:
(1) Falsifying, destroying, or concealing evidence;
(2) Preventing others from providing evidence, or interfering with or obstructing the investigation and verification;
(3) Harassing or retaliating against whistleblowers;
(4) Engaging in acts of dishonesty in an organized manner;
(5) Repeated breaches of trust or the concurrent existence of multiple types of untrustworthy conduct;
(6) Other circumstances that warrant more severe disciplinary action.
Article 31: During the period of disciplinary measures, any entity or individual responsible for acts of dishonesty may apply for credit restoration by fulfilling their obligations, undertaking proactive rectification, and compensating for losses to mitigate adverse effects. If the conditions for restoration are met, the relevant science and technology authorities shall review and approve the request, and, in accordance with applicable regulations, remove the entity or individual from the list of untrustworthy subjects.
Article 32: Science and technology administrative departments at all levels shall establish a joint punitive mechanism, submit information on untrustworthy conduct to the development and reform authorities, and strengthen the sharing of credit information and coordinated management with relevant administrative departments in sectors such as education and finance. For entities responsible for serious acts of dishonesty that are particularly egregious and have a significant adverse social impact, a zero-tolerance policy shall be adopted, with lifelong accountability, and joint punitive measures shall be implemented.
Chapter VII Supplementary Provisions
Article 33: The science and technology administrative departments of each city (county) shall implement the management of research integrity in accordance with these Measures.
Article 34: These Measures shall enter into force as of the date of their promulgation, and the Provincial Department of Science and Technology shall be responsible for their interpretation.

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