JC Master Legal News Issue 980

Key Takeaways for This Issue
Improve the regulatory framework for overseas listings and continue to make effective use of both domestic and international resources.
At its meeting on the 30th, the Political Bureau of the CPC Central Committee proposed to improve the regulatory framework for companies listing overseas. This move not only represents a concrete step by China to adapt to evolving circumstances, continuously refine its regulatory system, and standardize corporate conduct, but also underscores the country’s unwavering commitment to making full use of both domestic and international resources and advancing opening-up.
Amid the booming energy-storage sector, who will be the next Sungrow?

New energy remains a hot sector, and the energy‑storage segment could soon produce super‑potential stocks—like Sungrow Power Supply (300274, stock forum)—that deliver 15‑fold gains in a single year. The underlying rationale is easier to grasp when viewed through the lens of common sense: new energy has long been recognized as a high‑quality, long‑term growth theme, and among its subsectors, photovoltaic‑based energy storage stands out as the most certain and promising niche.
Guidance on Tax and Fee Preferential Policies for Software Enterprises and Integrated Circuit Enterprises
The software industry and the integrated circuit industry are the core of the information sector and serve as key drivers of the new round of scientific and technological revolution and industrial transformation. In recent years, the Party Central Committee and the State Council have attached great importance to the development of software enterprises and integrated circuit companies, introducing a series of tax‑related support policies that have provided strong backing for national informatization and fostered the sustained, healthy development of the national economy and society.
The Supreme People’s Court has released the 28th batch of guiding cases.
On the 30th, the Supreme People’s Court announced that it had recently released the 28th batch of six guiding cases, all pertaining to intellectual property, for reference by people’s courts at all levels when adjudicating similar cases.

Finance & Capital Markets
Improve the regulatory framework for overseas listings and continue to make effective use of both domestic and international resources.
At its meeting on the 30th, the Political Bureau of the CPC Central Committee proposed to improve the regulatory framework for companies listing overseas. This move not only represents a concrete step by China to adapt to evolving circumstances, continuously refine its regulatory system, and standardize corporate conduct, but also underscores the country’s unwavering commitment to making full use of both domestic and international resources and advancing opening-up.
Listing overseas is an independent decision made by enterprises in line with their own development needs. Regardless of the jurisdiction in which they list, listed companies must comply with the applicable laws, regulations, and regulatory requirements of both the listing venue and the country where they operate. On this basis, China supports enterprises in leveraging the two markets and two sets of resources to finance their growth in accordance with the law and in full compliance with relevant rules. This open‑minded stance will remain unchanged.
At the same time, it is important to recognize that, amid profound changes in the global economic and financial landscape, new business models and technologies are constantly emerging, posing fresh demands on both industry regulation and market oversight of companies listed overseas. These developments represent common challenges faced worldwide, necessitating a careful balancing of openness and security. In response to these evolving circumstances, refining the regulatory framework for overseas listings and ensuring compliant corporate conduct are essential measures to promote the orderly development of such listings and help prevent and mitigate associated risks.
Improving the regulatory framework for companies’ overseas listings is a systemic undertaking that requires further strengthening inter‑agency coordination, more precise delineation of the scope and criteria for policy implementation, and a more prudent approach to the effective rollout of regulatory measures. As global financial markets become increasingly interconnected, financial regulators worldwide must enhance regulatory cooperation and policy dialogue, working together to foster sound policy expectations and a stable institutional environment for the market.
It should be recognized that the refinement of the regulatory framework for overseas listings by Chinese enterprises has been put forward against the backdrop of China’s steadfast commitment to further opening up. In recent years, China’s capital market has advanced steadily and rapidly in its opening-up process, with growing participation from foreign financial institutions and investors. Overseas listings constitute an important component of the two-way opening of China’s capital market and must also align with the imperatives of high-quality development.
Looking ahead, the global economic and financial landscape will continue to face significant uncertainties. However, China will further open its doors, sharing development opportunities with countries around the world, and the level of openness of China’s capital markets is set to rise steadily.
The China Banking and Insurance Regulatory Commission is streamlining and standardizing the business activities of non-financial subsidiaries of trust institutions, with a cleanup period not exceeding “3+1” years.
Regulators have taken notice of market irregularities at trust companies’ non-financial subsidiaries.
On July 30, 2021, the China Banking and Insurance Regulatory Commission issued the “Notice of the General Office of the China Banking and Insurance Regulatory Commission on Rectifying and Standardizing the Business Activities of Non-Financial Subsidiaries of Trust Companies” (hereinafter referred to as the “Notice”).
The Notice comprises seven articles, guided by the overarching principles of “streamlining hierarchical structures and standardizing business operations,” to strengthen oversight over trust companies’ first-tier domestic non-financial subsidiaries and to clarify the arrangements for their cleanup and standardization.
First, streamline the hierarchical structure. Effective from the date of issuance of this Notice, trust companies shall no longer establish new first-tier non‑financial subsidiaries within China. Existing first-tier non‑financial subsidiaries in China shall also refrain from making additional investments in domestic or overseas enterprises. Trust companies may choose to retain one such subsidiary currently engaged in specific business activities and, in accordance with the requirements of this Notice, shall systematically unwind their investments in related entities through methods such as equity transfers.
Second, standardize business operations. On the one hand, regulate the new business activities of domestic first-tier non-financial subsidiaries that trust companies choose to retain, and set requirements for their existing business portfolios. On the other hand, clarify that, pending completion of the cleanup process, relevant entities shall, in principle, refrain from initiating any new business.
Third, clarify the arrangements for streamlining and standardizing the work. Ensure that trust companies assume their principal responsibilities, strengthen the supervisory and regulatory duties of the competent authorities, and jointly promote the orderly implementation of this initiative.
Regarding the background behind the issuance of the Notice, a responsible official from the relevant department of the China Banking and Insurance Regulatory Commission stated at today’s press conference that, in recent years, some trust companies have established, directly or indirectly, domestic first-tier non‑financial subsidiaries engaged in private equity investment and other businesses using their proprietary assets. While these entities have played a positive role in serving the real economy and strengthening strategic synergy with their parent companies, certain offices, due to relatively weak operational management and a lack of compliance awareness, have also given rise to market irregularities and accumulated risks in the course of their business activities. For example, they have engaged in regulatory arbitrage and conduit‑type operations that conceal risks, and have been involved in improper related‑party transactions—such as providing funds to their parent companies, transferring assets, and channeling benefits. In light of this, the General Office of the CBIRC has issued the Notice, aiming to streamline corporate hierarchies and standardize business practices, thereby rectifying and regulating trust companies’ non‑financial subsidiaries and addressing market distortions.
With regard to the “Notice,” which enterprises’ investments are trust companies required to wind up, and how is the timeline for this cleanup stipulated?
An official from the relevant department of the China Banking and Insurance Regulatory Commission stated that trust companies’ investments in the following entities fall within the scope of rectification stipulated in the Notice: first, enterprises invested in by domestic Tier‑1 non‑financial subsidiaries that trust companies have chosen to retain pursuant to the Notice, both within and outside China; second, all other domestic Tier‑1 non‑financial subsidiaries of trust companies and their investees, whether located domestically or abroad. Trust companies must complete the clearance of such investments through methods such as equity transfers, with a maximum clearance period of three years. For those entities that continue to engage in fund‑management business, the aforementioned time limit shall not apply; however, the investment clearance must be completed within one year after the relevant projects are liquidated. If clearance proves particularly challenging, trust companies may submit a request to the local banking and insurance regulatory bureau for a single extension of the clearance deadline, which shall not exceed one year.
It is worth noting that, in the “Notice on Conducting a ‘Look-Back’ Inspection of Market Disorder Rectification in the Banking and Insurance Sectors” issued by the China Banking and Insurance Regulatory Commission on June 24, 2020, issues related to the management of non‑financial subsidiaries of trust companies were highlighted. Specifically, trust companies and their non‑financial subsidiaries engaged in unauthorized related-party transactions, such as lending funds, transferring assets, and channeling benefits; moreover, these non‑financial subsidiaries often exhibited excessive hierarchical layers and complex organizational structures, exceeding the trust companies’ capacity for effective oversight.
Regarding the background behind the issuance of the Notice, on July 30, Shuai Guorang, a researcher at Yongyi Trust, told reporters that regulators’ efforts to clean up non‑financial subsidiaries are primarily aimed at addressing non‑standard financing and fund‑pooling activities, as trust companies have extensively conducted business through such subsidiaries, thereby evading regulatory oversight.
Furthermore, regarding the significance of this Notice, Shuai Guorang stated that, first, it helps prevent regulatory arbitrage and mitigate risks; second, it fosters reform and deep‑seated transformation in the trust industry; and third, it supports the industry’s long‑term, stable development.

China Banking and Insurance Regulatory Commission: Strengthen regulatory penalties to effectively address the issue of excessively low costs for violations in the financial sector.

On July 27, the China Banking and Insurance Regulatory Commission convened a mid-year work symposium for the entire system in 2021, along with a videoconference on discipline inspection and supervision, to review the first-half performance, analyze the current situation, and outline key tasks for the second half of the year.
Guo Shuqing, Secretary of the CPC Leadership Group and Chairman of the China Banking and Insurance Regulatory Commission, attended the meeting and delivered a speech. Li Xinran, Head of the Commission’s Resident Discipline Inspection and Supervision Team and a member of the CPC Leadership Group, outlined arrangements for discipline inspection and supervision work. Cao Yu, Member of the CPC Leadership Group and Vice Chairman of the Commission, chaired the meeting, while the other members of the CPC Leadership Group also attended.
The meeting called for further strengthening regulatory capacity. It emphasized conducting in-depth investigations and research to elevate the level of professional analysis, continuously refining the risk monitoring and early-warning system as well as the regulatory rating framework, leveraging the combined strengths of off-site supervision and on-site inspections, and enhancing the ability to anticipate and assess risks. In line with the Constitution’s purposes and the spirit of legislation, the meeting urged intensifying regulatory penalties to effectively address the issue of excessively low costs associated with violations in the financial sector. It also stressed solidifying the regulatory data infrastructure, efficiently integrating data resources, bolstering information security safeguards, and enhancing digital regulatory capabilities. Finally, it called for optimizing human resource allocation, strengthening inter‑regulatory coordination, and steadily improving the overall systemic regulatory capacity.
The meeting emphasized the need to deepen the comprehensive and rigorous governance of the Party. It called for upholding the CPC Central Committee’s centralized and unified leadership over financial work, taking the “two safeguards” as the highest political principle and fundamental political discipline, and continuously enhancing political judgment, political comprehension, and political execution. Efforts should be sustained to improve the quality of Party building, ensure strict adherence to intra‑Party political life, and strengthen political education and political guidance. The implementation of the “two responsibilities” must be further refined to ensure that all tasks of comprehensively and rigorously governing the Party are carried out. The Party’s organizational line for the new era must be earnestly implemented, with a clear orientation toward valuing practical work, tangible results, and the grassroots level, guiding Party members and cadres to undergo training and hone their capabilities on the front lines of risk management, in major struggles, and in challenging and demanding posts.
The meeting called for disciplinary inspection and supervision bodies at all levels within the system to prioritize the implementation of Party history study and education as a key focus of political oversight, strengthen supervision and inspection, and ensure that this initiative is carried out in depth and with tangible results. Continued efforts are needed to conduct special clean-up and rectification campaigns—such as those addressing inadequate “three shifts” in financial support for sustained economic recovery and high-quality development—to further enhance the quality and effectiveness of oversight. We must remain steadfast in upholding proper conduct, enforcing discipline, and combating corruption, intensifying investigations into corruption cases and exploring mechanisms to coordinate anti-corruption efforts with financial risk management. We will resolutely investigate and address violations of the spirit of the CPC Central Committee’s Eight‑Point Decision on Improving Party and Government Conduct, maintaining an unwavering high-pressure stance against the “Four Undesirable Trends.” Cases must be handled strictly in accordance with regulations, discipline, and the law, with integrated planning that links case investigation, reform based on lessons learned, and systemic governance, ensuring thorough follow‑up work after each case is concluded. Coordination and collaboration among regulatory authorities, industry associations, and financial institutions should be strengthened to advance the building of a culture of integrity in the financial sector. Upholding the principle that one must first be strong oneself, we will reinforce the ranks of disciplinary inspection and supervision personnel and continuously elevate their capacity and competence in oversight and enforcement.
The meeting emphasized the need to officely hold Party secretaries at all levels within the system and institutions accountable as the primary persons responsible for workplace safety, to effectively prepare for and respond to extreme weather events and other disasters, to implement science-based disaster prevention and relief measures, and to do everything possible to ensure the safety of the lives and property of cadres and employees. It also called for resolutely overcoming complacency and rigorously implementing all requirements for epidemic prevention and control.
Preventing and defusing financial risks hinges on sustained, targeted efforts.
Continuously strengthen and improve macroeconomic financial regulation, and steadfastly prevent and defuse financial risks. Recently, the Party Committee of the People’s Bank of China, while thoroughly studying the spirit of General Secretary Xi Jinping’s important speech at the rally celebrating the 100th anniversary of the founding of the Communist Party of China, once again emphasized the need to prevent and defuse financial risks.
Preventing and defusing major risks is one of the three critical battles identified at the 19th National Congress of the Communist Party of China, and it constitutes a key measure for securing a decisive victory in building a moderately prosperous society in all respects. Following intensive efforts in recent years, prominent risks in China’s key financial sectors have been brought under orderly control, and the upward trend of systemic risk has been effectively contained. At present, financial risks in China are trending toward convergence, and the overall risk profile remains under control.
The recently released semi-annual economic report indicates that China’s macroeconomy remains stable and is trending upward, with the long-term fundamentals of the economy unchanged. Overall, Chinese financial institutions are operating soundly, macroeconomic policy tools are ample, the regulatory framework is relatively robust, and there is extensive experience in preventing and defusing financial risks. As a result, the financial system is well‑equipped, confident, and capable of overcoming various challenges.
At the same time, risk prevention is a perennial priority in financial work. We must never underestimate the difficulties and risks we face now and in the period ahead; instead, we must remain vigilant in times of peace, make proactive moves, and fight with the initiative. Going forward, building on the significant gains achieved in the tough battles already won, we need to strengthen macroeconomic policy adjustments and steadily advance all tasks aimed at defusing systemic risks.
On the one hand, we must further strengthen and refine macroeconomic regulation and deepen supply-side structural reform in the financial sector. We need to optimize the structure of the financial system, enhancing its adaptability, competitiveness, and inclusiveness. We should improve financial services, particularly those directed toward the real economy—especially private enterprises and small and micro businesses—so as to significantly increase the availability of loans and substantially reduce overall financing costs, thereby better supporting the development of the real economy.
On the other hand, it is essential to “defuse risks with precision” and manage risks in key areas in a targeted manner. Risks at systemically important institutions should continue to be addressed in an orderly fashion. At the same time, we will support small and medium-sized financial institutions in replenishing capital through multiple channels and improving corporate governance, intensify efforts to dispose of non‑performing loans, and enhance the resilience of financial institutions. We will also establish a sound, long‑term regulatory framework for internet finance and crack down rigorously on illegal fundraising and other illicit financial activities.
In addition, efforts should be accelerated to address gaps in the regulatory framework, such as expediting the issuance of implementing rules for the supervision of financial holding companies and refining the regulatory framework for systemically important financial institutions and the oversight regime for financial infrastructure.
In short, we must uphold the coordinated approach of development and security, proactively prevent and defuse financial risks, identify and address potential issues at an early stage, adopt a forward-looking, precautionary stance, conduct precise risk assessments, and officely safeguard the bottom line of preventing systemic risks, thereby ensuring that overall financial risks remain under control and continue to decline.
Securities offices enhance their competitiveness through standardized development.
The annual “major assessment” of securities offices’ ratings was recently announced. On July 23, the China Securities Regulatory Commission released the 2021 classification results for securities companies: 15 offices received an AA rating, 35 an A rating, 18 a BBB rating, 16 a BB rating, 5 a B rating, 11 a CCC rating, and one each in the CC, C, and D categories.
According to disclosures by the China Securities Regulatory Commission, among the 138 offices in the industry in 2021, 35 were evaluated on a consolidated basis with their parent companies as required, leaving 103 securities offices eligible for assessment. In addition, the CSRC will implement differentiated regulatory policies—based on the classification results—regarding the allocation of regulatory resources and the frequency of on-site and off-site inspections for securities offices in different categories.
According to reporters’ calculations, there are 50 Class A securities offices this year, accounting for 49% of the industry—three more than last year. Specifically, the Class A ratings are divided into AA and A tiers: 15 offices received an AA rating, unchanged from last year, while 35 offices were rated A, up three from the previous year. Furthermore, no offices were assigned an AAA rating in this round of classification.
Companies rated AA are predominantly leading securities offices in the industry. Specifically, these include Anxin Securities, Orient Securities, Everbright Securities, GF Securities, Guotai Junan, Guoxin Securities, Huatai Securities, Ping An Securities, Sinolink Securities, Industrial Securities, Galaxy Securities, China Merchants Securities, CICC, CITIC Securities, and CITIC Securities.
According to a report by Huachuang Securities, the current rating system primarily affects securities offices in the following ways: first, in stock‑pledge financing, A‑, B‑, and C‑rated offices are capped at 150%, 100%, and 50% of their own capital, respectively; second, in over‑the‑counter options trading, AA‑rated offices may apply to become primary dealers, while A‑rated and higher‑rated offices may apply to become secondary dealers; third, with respect to funding costs, generally speaking, the lower a office’s rating, the higher its borrowing costs for bond issuance and credit; and fourth, for innovative business initiatives, the classification results and the whitelist serve as key criteria for piloting new products and services.
It is understood that the classification results for securities offices do not constitute an assessment of their creditworthiness or rating; rather, they represent a comprehensive evaluation conducted by the securities regulatory authorities based on prudent supervisory requirements. This evaluation takes into account the offices’ risk management capabilities and ongoing compliance status, as well as their business development trends, and primarily reflects the overall condition of each office—its corporate governance structure, internal controls, compliance management, risk management, and risk‑control indicators—in alignment with its business activities.
According to the Regulations on Categorized Supervision of Securities Companies, companies in all tiers of Categories A, B, and C are considered to be operating normally; the classification and tiering merely reflect a company’s relative standing within the industry, as measured by the alignment between its business activities and its risk management capabilities and compliance‑management standards. Companies in Categories D and E, respectively, are those whose potential risks may exceed their capacity to absorb such risks or those that have been subject to legally mandated risk‑resolution measures due to the occurrence of material risks.
The reporter found that, compared with 2020, this round of ratings saw 26 securities offices upgraded and 27 downgraded. Unlike previous years, when A‑class ratings were predominantly awarded to large brokerage houses, this year several mid‑size and small offices have also moved into the A‑class tier.
“The presence of numerous small and medium-sized securities offices in the A‑tier rating indicates that, amid stringent regulatory oversight and intense market competition, some of these offices have managed to develop their core competencies by leveraging their relative strengths and pursuing sound, compliant growth,” said Tian Lihui, Director of the Institute for Financial Development at Nankai University. He added that the registration‑based IPO reform and the launch of new business lines have created fresh opportunities for small and medium‑sized securities offices. In the first half of this year, investment banking revenues across the industry surged, with the fastest growth recorded among smaller and midsize players such as Hualin Securities, Huabao Securities, and Dongguan Securities. Meanwhile, Dongxing Securities ranked prominently in revenue from financial advisory services.

Commercial & Corporate
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Amid the booming energy-storage sector, who will be the next Sungrow?
New energy remains a hot sector, and the energy‑storage segment could soon produce super‑potential stocks—like Sungrow Power Supply (300274, stock forum)—that deliver 15‑fold gains in a single year. The underlying rationale is easier to grasp when viewed through the lens of common sense: new energy has long been recognized as a high‑quality, long‑term growth theme, and among its subsectors, photovoltaic‑based energy storage stands out as the most certain and promising niche.
The reason is simple: if energy storage cannot keep pace, the grid will be unable to accommodate additional solar power, severely constraining the rapid growth of the entire photovoltaic industry. Photovoltaic‑energy storage has become the most significant bottleneck in the PV value chain, and the recently introduced national policy mandating that solar farms be equipped with 20% energy storage has served as the catalyst for a surge in the energy‑storage sector.
Public data indicate that over the next decade, the global energy storage market will post a compound annual growth rate exceeding 60%, with China’s growth rate potentially reaching as high as 70%. Such robust overall growth is exceedingly rare in any industry.
In fact, the robust growth in the energy storage sector has persisted for more than six months. Recent research on companies within this space reveals that both energy‑storage batteries and photovoltaic inverters and power converters are experiencing severe supply shortages. In the first three months of this year, China’s exports of photovoltaic inverters surged by 120% year over year, while every segment of the energy‑storage battery value chain is facing tight supply conditions.
Clearly, the energy storage sector is the most certain and explosively growth‑driven sub‑segment across the entire new‑energy value chain—perhaps without exception.
Leading photovoltaic‑energy‑storage company Sungrow has already surged 15-fold in just over a year, setting a clear example. Going forward, the energy‑storage sector is likely to see more stocks with five- or even ten‑fold upside potential emerge. For quite some time to come, any stock on the secondary market that bears the “energy storage” label could well experience a significant rally.
Given that the energy storage industry has entered a long-term, high‑growth phase characterized by clear fundamentals, current and, for the foreseeable future, future production capacity is essentially a money‑printing machine.
Accordingly, stock selection becomes relatively straightforward: in addition to continuing to hold long-term positions in leading companies like Sungrow Power Supply, investors can directly target individual stocks that are expected to see the largest capacity expansions over the next one to two years and offer the strongest share-price upside. BaiChuan Shares (002455, Stock Forum) and Shangneng Electric were identified along these lines; at present, with market capitalizations below RMB 10 billion, their stock prices mirror the levels seen just before Sungrow Power Supply’s rally began a year ago.
Research based on publicly available information reveals that the key highlight of Baichuan Shares is the significant valuation gap currently perceived by the market. Investors still view the company as a traditional chemical player, whereas in reality, it is poised to transform into one of the most promising players in the lithium‑battery and photovoltaic energy‑storage sectors.
The company’s business is comprised of three segments:
First is the traditional fine chemicals business. Currently, it holds a 30% market share in this niche segment, ranking first nationwide. The company has already announced that its first-half profits surged sevenfold year over year. Although this line of business is steadily improving, it is not the primary area we are focusing on in this analysis.
Second, energy storage. The company’s 32%-owned subsidiary, Haiji Energy Storage, is a grid‑side energy storage provider and one of the earliest and most technologically advanced players in the sector nationwide. With current capacity of 1 GW, it expects to add another 1.5 GW by year-end, and its capacity is projected to grow rapidly in the future, putting the company on a fast track of expansion.
Third, there is the lithium‑battery energy‑storage project in Ningxia, which has received an investment of 3 billion yuan. This is Baichuan’s key highlight: after two years of construction, it is slated to achieve full commercial operation before May next year—coinciding with the photovoltaic and energy‑storage sectors’ broad entry into a period of rapid growth. (Some components of the project have already been commissioned ahead of schedule, in the first half of this year.)
According to publicly disclosed information, the project comprises two major components: energy‑storage batteries and the recycling of spent lithium batteries. Industry experts estimate that, once operational, Baichuan Lithium Battery’s individual production capacities for needle coke, anode materials, and graphitization will rank among the top five nationwide, while its integrated operations—accounting for roughly 40% of the overall battery value—are poised to place it at the forefront of the industry.
In addition to supplying Haiji Energy Storage under Baichuan, the product is primarily sold to lithium‑battery energy‑storage companies. The project has already been commissioned and is in operation, with photovoltaic‑plus‑energy‑storage offices such as Sungrow among its customers. Once full production is achieved, annual revenue is expected to exceed RMB 8 billion, delivering a substantial contribution to the company’s profitability. Given Baichuan’s current market capitalization of roughly RMB 6 billion, this revenue and profit scale implies significant upside potential for the stock price.
The key highlights of Shangneng Electric include:
The company focuses on inverters and power converters for large-scale photovoltaic power plants, and PV inverters—accounting for 20% of the entire photovoltaic industry’s value—represent the segment with the most favorable competitive landscape within the industry.
Public information indicates that, despite its market capitalization remaining below RMB 10 billion even after its share price has doubled recently, the company has added 10 GW of new capacity this year and could reach a total capacity of 30 GW by the end of next year. Meanwhile, Sungrow, with a market cap of RMB 230 billion, recorded only 35 GW of energy‑storage shipments last year.
Public data shows that Shangneng’s inverters hold a 5% share of the global market, ranking sixth worldwide and third in China—behind only Sungrow and Huawei. This performance far outstrips that of competitors such as GoodWe, with a market capitalization of over RMB 40 billion, and Jinlang, valued at around RMB 30 billion.
This year, the company demonstrated a clear advantage in China’s large-scale utility‑scale solar project tenders, emerging as the clear winner across virtually all categories. In the first batch of “Leading Runner” projects, the company stood out, with its order backlog surging; major utilities such as Datang, SDIC, and China Three Gorges are among its key customers.
In addition, key members of the company’s R&D team, including Li Fei, all come from Huawei. The company holds full ownership of its product intellectual property, and its robust technological capabilities constitute its core competitive advantage.
As the typhoon’s impact gradually subsides, coal prices remain supported.
Coal prices at the point of origin continue to rise: As of July 30, according to Coal Resource Network, the price of Q5500 thermal coal at Qinhuangdao Port closed at RMB 942 per ton, unchanged from the previous week. In the Datong region of Shanxi, Q5500 closed at RMB 904 per ton, up RMB 42 per ton week-on-week. In the Yulin area of Shaanxi, the Q5800 index closed at RMB 927 per ton, a RMB 52 per ton increase from the prior week. Meanwhile, in Ordos, Inner Mongolia, Q5500 closed at RMB 854 per ton, up RMB 19 per ton from the previous week.
Inventory at key ports edged up, while stockpiles at ports along the Yangtze River declined. According to Wind data, as of July 30, inventory at major ports—namely Guotou Jingtang Port, Qinhuangdao Port, and Caofeidian Port—stood at 8.41 million tonnes, up 650,000 tonnes from the previous week. Meanwhile, inventory at ports in the Yangtze River estuary totaled 3.69 million tonnes, down 140,000 tonnes week over week.
As the impact of the typhoon gradually subsides, coal prices continue to find support. According to Coal Resource Network, production in the Yulin region remains disrupted due to safety inspections, while in the Ordos area, a shortage of coal‑production permits has led to an increase in mines halting operations, keeping supply relatively tight. On the demand side, typhoon‑related disruptions have caused a slight decline in daily coal consumption in East China; however, as the storm’s influence wanes and temperatures begin to rise, electricity demand is expected to rebound to elevated levels, providing further upward momentum for coal consumption and supporting coal prices.
Ordos is expected to increase production, helping to ease supply constraints, though the overall impact will be limited. According to the NDRC website, the Inner Mongolia Autonomous Region has approved land-use procedures for 38 open-pit coal mines in Ordos that had previously suspended operations due to incomplete land‑use documentation, covering a combined capacity of 66.7 million tonnes per year. These mines have now all resumed production and are accelerating stripping operations; actual output is expected to begin in early August, with full‑capacity operation potentially adding 200,000 tonnes per day. Based on data from the Coal Resources Network, total thermal coal consumption in 2020 totaled 3.214 billion tonnes, translating to an average daily consumption of 8.93 million tonnes. The additional 200,000 tonnes represents roughly 2.2% of this figure. Moreover, since the resuming mines are open‑pit facilities whose coal generally has lower calorific value, the actual impact may be even smaller than the calculated estimate. Overall, the release of additional supply should help alleviate tightness, but given the relatively modest scale, the net effect is expected to remain limited.
Correcting campaign-style carbon reduction? Downstream coal demand remains robust. According to Xinhua News Agency, a meeting of the Political Bureau of the CPC Central Committee stated that an action plan for peaking carbon emissions before 2030 will be issued promptly, upholding a nationwide coordinated approach, rectifying campaign‑style “carbon reduction” measures, prioritizing establishment before dismantling, and resolutely curbing the blind expansion of high‑carbon and high‑capacity projects.
We believe that future carbon‑reduction efforts will not be indiscriminate, implying that downstream coal demand will not face arbitrary production cuts in the near term and that industry demand remains secure for now. Overall, supply growth is expected to be limited, demand is stable in the short run, and price support remains robust.
This week, coking coal prices at ports and production sites remained stable. According to Wind data, as of July 30, Tangshan’s Grade‑2 metallurgical coke closed at RMB 2,850 per ton, unchanged from the previous week; Linfen’s Grade‑2 metallurgical coke settled at RMB 2,420 per ton, also flat week over week. At the port level, Tianjin Port’s Grade‑1 metallurgical coke was quoted at RMB 2,850 per ton, with no change compared to the prior week.
Coking coal supply is tightening, and prices are expected to remain office. According to Jiaolian Information, this week, production at some coking enterprises remains constrained due to environmental inspections and other factors, while in certain regions, coking offices have grown more reluctant to sell.
On the demand side, steel mills’ in‑plant inventories are trending lower, maintaining a steady appetite for coking coal. Recently, some mills have become more proactive in restocking, actively building up their reserves. Overall, elevated raw‑material coal prices have pushed up production costs for coking enterprises, while shortages of certain coal grades have constrained output to varying degrees, tightening coking‑coal supply. Coupled with renewed downstream buying activity, producers’ sentiment has shifted, turning increasingly optimistic about the outlook. As a result, the coking‑coal market is expected to remain broadly stable with a slight upward bias in the near term.
Coking coal prices at ports and in producing regions have risen: According to Wind data, as of July 30, the price of prime coking coal at Jingtang Port stood at RMB 2,600 per ton, up RMB 150 per ton week-on-week. Meanwhile, the price of Australian Peak Downs hard coking coal was USD 238 per ton, unchanged from the previous week but up USD 3.5 per ton. On the production side, according to Coal Resource Network, this week CCI Shanxi low-sulfur coal increased by RMB 187 per ton week-on-week, Shanxi high-sulfur coal rose by RMB 97 per ton, and Liulin low-sulfur coal gained RMB 150 per ton.
Coking coal is expected to remain strong. According to the Coal Resource Network, stringent safety and environmental regulations across regions have kept coal output from returning to previous highs, further tightening coking‑coal supply. On the downstream side, as transportation gradually resumes, coking‑steel producers are seeing improved deliveries of coking coal compared with earlier periods; however, plant‑level inventories remain generally at moderate to low levels, leaving a continued need to replenish raw‑material stocks. Overall, the domestic coking‑coal market is forecast to stay broadly stable with a slight upward trend in the near term.
Investment Recommendation: With thermal coal prices currently exceeding expectations and sector valuations at historic lows, we believe that a sustained uptick in coal prices could drive earnings growth for listed companies, thereby boosting the sector’s valuation. We recommend keeping an eye on Yanzhou Coal Mining, Lu’an Environmental Energy, Shanxi Coking Coal, China National Coal Group, Xinji Energy, and Shaanxi Coal Industry.
Risk Warning: Macroeconomic expectations may not reverse as anticipated, inventory destocking could proceed more slowly than expected, coal prices could decline sharply, and environmental policies in the coking industry may undergo significant changes.

Hongxing Erke’s meteoric rise reveals the essence of Gen Z’s consumption mindset.
Hongxing Erke’s “48 Hours”
On the afternoon of July 21, Hongxing Erke announced on its official Weibo account that it would donate 50 million yuan worth of relief supplies through the Zhengzhou Charity Federation and One Foundation to support the disaster-stricken areas in Henan.
At first, amid the flood of news about corporate and celebrity donations trending on Weibo, Hongxing Erke’s announcement failed to make much of a splash. In the hours following its release, it drew just over a hundred comments from users.
However, on July 22, a popular Weibo comment—“Oh my, it feels like you’re on the brink of bankruptcy yet you’ve still donated so much”—propelled Hongxing Erke into the spotlight. The hashtag #HongxingErkeWeiboCommentsAreSoHeartbreaking# promptly soared to the top of Weibo’s trending list, amassing 1.03 billion views and 172,000 discussions.
Sharp-eyed netizens noticed that, as a corporate official account, Hongxing Erke’s Weibo page is just an ordinary one. “It feels like your official account can’t even afford to upgrade to a Weibo VIP membership, yet you’ve donated 50 million—truly remarkable,” one commenter remarked. As of the 23rd, users had renewed the official account’s VIP subscription all the way to the year 2140, prompting another netizen to quip, “Even Weibo might not last that long.”
“Hongxing Erke is determined to become a century-old brand; otherwise, we’d be letting down the fans who’ve shown us their support,” Hongxing Erke’s official Weibo account replied.
Within 48 hours, topics related to Hongxing Erke appeared on the trending lists of platforms including Weibo, Douyin, Baidu, and Toutiao.
Following the explosive surge of attention surrounding Hongxing Erke across the internet, a wave of unprecedented consumer enthusiasm swept through the platform. Netizens flocked en masse to Hongxing Erke’s e‑commerce livestreams, with over two million people joining in to snap up products, using their orders to show support for this “conscientious domestic brand.”
On the 23rd, Hongxing Erke’s sales surged more than 52-fold year over year. In just two days—November 22 and 23—the total sales across its main livestream channels approached RMB 190 million. As of the 24th, Hongxing Erke’s Taobao livestream channel had amassed over 10 million followers.
Behind “wild consumption,” young people are voting with their wallets.
Unlike previous trending topics, after 48 hours, Hongxing Erke continues to dominate the headlines across major social media platforms. In addition to the keyword “5,000 tons of donated supplies,” the phrase “wild consumption” has also emerged, as this chain reaction sparked by generous donations shows no sign of abating.
People express their attitudes through straightforward, no‑holds‑barred shopping sprees. Beyond the sheer volume of purchase data, the myriad viral memes and chat jokes that emerge in livestreams have gone viral online, sparking wave after wave of consumer spending.
In Hongxing Erke’s Douyin livestream, the host urged viewers to shop rationally and not buy anything they don’t like. In response, a viewer quipped: “You’re so generous with your donations—why should we be expected to shop rationally?”
Hongxing Erke’s restraint only fueled consumers’ urge for retaliatory spending—so much so that warehouses were overwhelmed, with shoppers even quipping, “Don’t bother shipping the goods; just send us a tag,” “Just ship the raw materials—we’ll sew them ourselves,” and “Let the boss go back to operating the sewing machine.”
The humor and goodwill interwoven with intense emotions have struck a chord with the public, keeping Hongxing Erke’s popularity sky-high.
The emergence of this remarkable consumption phenomenon in the business world stands in stark contrast to conventional commercial logic, compelling us to reexamine the latent momentum it embodies and the broader directions it points to.
It’s easy to see that the biggest driving force behind this wave of consumer enthusiasm—and the very people who enthusiastically create buzz and spread it—are Generation Z, who have come of age in the internet era. Behind the “revenge spending” on Hongxing Erke lies this cohort’s deep‑seated sentiment about supporting domestic brands; it is precisely this sentiment that has extended the consumption boom from Hongxing Erke to other established Chinese brands like Guiren Niao (603555, stock forum) and Huiyuan.
In a sense, Hongxing Erke’s second resurgence can be seen as a microcosm of the recent national‑trend revival—a result shaped by both specific, contingent events and broader, inevitable trends. Its distinctiveness and scale further underscore the Z‑generation’s powerful influence on consumer behavior, prompting the business world to delve even deeper into the unique characteristics of this demographic.
Generation Z’s “Consumer Perspective”: Personal Values—When I Buy, I Am
In recent years, the most significant shift in domestic consumer trends has been a move from rational, “value‑for‑money”–driven consumption to emotional, “I buy, therefore I am”–oriented spending—led and epitomized by Generation Z.
Take the phenomenon of retaliatory consumption surrounding Hongxing Erke as an example—this has completely upended traditional consumption logic. While the brand itself offers excellent value for money, that’s not what drives Gen Z to buy; rather, it’s the exhilarating sense of patriotic pride they feel.
At this moment, the practicality of the product is infinitely diminished, while the emotions attached to the brand are infinitely amplified, transforming mass consumption into a performative act of pursuing value and meaning.
Looking at the new consumer brands that have risen in recent years—whether it’s Chayan Yuese, Lamian Shuo, Florasis, or Li Ziqi—they all articulate a distinct value proposition, resonating deeply with their audiences and forging stronger emotional bonds. Leveraging social networks, these brands cultivate niche‑based word‑of‑mouth dissemination, transforming themselves into veritable symbols of consumption.
Zhi Dun Business School recently invited Fang Wencui, founder and CEO of Xiaoguo, to deliver a special presentation titled “Hello, Generation Z—Focusing on the New Power in Consumption.” Fang Wencui specializes in understanding the consumption patterns and behavioral insights of those born after 1995 and Generation Z. He argues that shifts in Gen Z’s consumer mindset are creating substantial market opportunities. After years of interviewing and researching this demographic, he has identified three key characteristics driving their purchasing decisions: first, social connection—using consumption to cultivate and expand their social circles; second, self‑branding—leveraging purchases to shape their personal identity; and third, self‑indulgence—seeking pleasure and happiness through spending.
Looking at these three key characteristics, one can discern a strong desire for self-expression and a distinct sense of individuality. This is readily understandable: as generations succeed one another, rapid social changes and robust economic growth naturally give rise to a shift from functional consumption to personalized consumption— a market dynamic that holds true across countries worldwide.
For merchants and brands, the era of uniform, one-size-fits-all consumption is long gone. Gen Z consumers care less about how storied your past or how dominant your market share once was; they’re far more concerned with whether you’re engaging, fun, and aligned with their values or aesthetic preferences.
The shift in consumer influence has compelled brands to set aside their traditional airs and present themselves to Generation Z with a more down-to-earth, human‑centered image, carefully attuning themselves to the tastes and preferences of this younger cohort.
Hongxing Erke’s unexpected resurgence is just the beginning; in this new era of consumption, where Generation Z reigns supreme, everything is being redefined.

Taxation TAXATATION
Guidance on Tax and Fee Preferential Policies for Software Enterprises and Integrated Circuit Enterprises
The software industry and the integrated circuit industry are the core of the information sector and serve as key drivers of the new round of scientific and technological revolution and industrial transformation. In recent years, the Party Central Committee and the State Council have attached great importance to the development of software enterprises and integrated circuit companies, introducing a series of tax‑related support policies that have provided strong backing for national informatization and fostered the sustained, healthy development of the national economy and society.
To help software and integrated circuit enterprises promptly understand the applicable tax and fee preferential policies, the State Taxation Administration has systematically reviewed these policies. Following a standardized format—covering the eligible entities, the nature of the benefits, the eligibility criteria, and the policy basis—it has compiled guidance on 20 tax and fee preferential measures targeted at software and integrated circuit enterprises. Specifically, this includes:
I. Tax Incentives for Software Enterprises
1. Value-added tax on software products is subject to an immediate refund upon collection when the tax burden exceeds the statutory rate.
2. Software enterprises encouraged by the state are eligible for periodic reductions or exemptions from corporate income tax.
3. Key software enterprises encouraged by the state are eligible for reductions or exemptions from corporate income tax.
4. Income tax policy for software enterprises that use the value-added tax refunds received on a “collect-and-refund” basis to fund software product research and development and to expand and upgrade their production facilities.
5. For eligible software enterprises, employee training expenses may be deducted before tax based on the actual amount incurred.
6. Enterprises may shorten the depreciation or amortization period for externally purchased software.
II. Tax and Fee Preferences for Integrated Circuit Enterprises
7. Refund of the outstanding input VAT credit for enterprises engaged in major integrated circuit projects
8. The end-of-period input VAT credit refunded to integrated circuit enterprises shall be deducted from the tax base for urban maintenance and construction tax, the education surcharge, and the local education surcharge.
9. Enterprises undertaking major integrated circuit projects may pay the import value-added tax on new equipment in installments.
10. Integrated circuit manufacturing enterprises with line widths of less than 0.8 micrometers are eligible for periodic reductions or exemptions from corporate income tax.
11. Integrated circuit manufacturing enterprises with line widths of less than 0.25 microns are eligible for periodic reductions or exemptions from corporate income tax.
12. Integrated circuit manufacturing enterprises with an investment exceeding RMB 8 billion shall be eligible for periodic reductions or exemptions from corporate income tax.
13. Integrated circuit production enterprises or projects with an investment exceeding RMB 15 billion shall be eligible for periodic reductions or exemptions from corporate income tax.
14. The state encourages integrated circuit production enterprises or projects with a line width of less than 28 nanometers to enjoy periodic reductions or exemptions from corporate income tax.
15. The state encourages integrated circuit production enterprises or projects with a line width of less than 65 nanometers to enjoy periodic reductions or exemptions from corporate income tax.
16. The state encourages integrated circuit production enterprises or projects with a line width of less than 130 nanometers to enjoy periodic reductions or exemptions from corporate income tax.
17. The state encourages integrated circuit manufacturing enterprises with a line width of less than 130 nanometers to extend the carryforward period for losses.
18. The state encourages integrated circuit design, equipment, materials, packaging, and testing enterprises to enjoy periodic reductions or exemptions from corporate income tax.
19. Key integrated circuit design enterprises encouraged by the state are eligible for periodic reductions or exemptions from corporate income tax.
20. Shortened depreciation periods for production equipment of integrated circuit manufacturing enterprises

Guidance on Tax and Fee Preferential Policies for Small and Micro Enterprises and Individual Business Households

In recent years, the CPC Central Committee and the State Council have attached great importance to the development of small and micro enterprises and individual business households, introducing a series of tax and fee‑support policies and continuously strengthening efforts to cut taxes and fees, thereby helping these entities reduce operating costs and alleviate financing challenges. Small and micro enterprises, individual business households, and other market entities have grown rapidly, becoming an important driving force for China’s economic prosperity, job creation, and improved living standards. During the 2021 Two Sessions, in light of the economic situation, the CPC Central Committee and the State Council further increased support for small and micro enterprises and individual business households, providing additional impetus for their expansion and development.
To help small and micro enterprises and individual business households promptly access applicable tax and fee preferential policies, the State Taxation Administration has systematically reviewed these measures. Following a structured format—covering the eligible entities, the nature of the benefits, the eligibility criteria, and the policy basis—the Administration has compiled guidance on 27 tax and fee preferential policies tailored to small and micro enterprises and individual business households, organized around three key areas: reducing burdens, facilitating financing, and supporting entrepreneurship. Specifically, this includes:
I. Reduction or Exemption of Tax and Fee Burdens
1. Eligible small-scale VAT taxpayers are exempt from VAT.
2. Temporary reduction or exemption of value-added tax for small-scale VAT taxpayers
3. Small and low-profit enterprises are exempted from or receive reductions in corporate income tax.
4. For individual business households, personal income tax on the portion of taxable income not exceeding RMB 1 million shall be levied at half the standard rate.
5. Reduction in local “six taxes and two fees” for small-scale VAT taxpayers
6. Enterprises that meet the eligibility criteria are temporarily exempt from paying the Employment Guarantee Fund for Persons with Disabilities.
7. Eligible payers are exempt from relevant government funds.
8. Eligible small-scale VAT taxpayers are exempt from the cultural undertakings construction fee.
II. Promoting the Development of Inclusive Finance
9. Interest income from small and micro enterprise and individual business loans is exempt from value-added tax.
10. Reduction in corporate income tax on interest income from small agricultural loans provided by financial institutions
11. Pre-tax deduction for loan loss reserves of financial institutions related to agriculture and small and medium-sized enterprises
12. Pre-tax deduction for loan losses incurred by financial institutions on agricultural and small- and medium-sized enterprise loans
13. Stamp duty is exempted on loan contracts entered into between financial institutions and small and micro enterprises.
14. Interest income from small loans to rural households earned by microfinance companies is exempt from value-added tax.
15. Interest income from small agricultural loans earned by microloan companies is treated as a reduction in taxable income for corporate income tax purposes.
16. Pre-tax deduction for loan loss reserves of microfinance companies under corporate income tax
17. Value-added tax is exempted on financing guarantee and reinsurance services provided to rural households and small and micro enterprises.
18. Pre‑tax deduction for corporate income tax on reserves held by small and medium‑sized enterprise financing (credit) guarantee institutions.
19. Stamp Duty Exemption for Accounting Books
III. Tax Incentives for Entrepreneurship Among Priority Groups
20. Tax and fee deductions for entrepreneurship among key groups
21. Tax and fee deductions for veteran entrepreneurs
22. Value-added tax exemption for military family members engaged in entrepreneurship.
23. Personal income tax is exempted for military family members who start their own businesses.
24. Value-added tax exemption for entrepreneurship by demobilized military personnel.
25. Military officers who have chosen to pursue civilian employment are exempt from personal income tax.
26. Value-added tax exemption for entrepreneurship by persons with disabilities
27. Value-added tax is immediately refunded upon collection for entities and individual business households that employ persons with disabilities.

Guidance on Tax and Fee Preferential Policies for “Mass Entrepreneurship and Innovation”
　Promoting mass entrepreneurship and innovation is both a source of momentum for development and a pathway to prosperity, a means of ensuring fairness, and a strategy for strengthening the nation. In recent years, these efforts have advanced on an ever broader scale, at higher levels, and with greater depth, with innovation and entrepreneurship deeply integrated into economic and social development. This has played a vital role in facilitating the transition from old to new growth drivers and upgrading the economic structure, expanding employment and improving people’s livelihoods, and fostering a fair business environment and a culture of innovation. As of June 2021, China had introduced 102 tax and fee preferential policies and measures targeting key stages and critical areas of innovation and entrepreneurship, covering the entire life cycle of enterprises.
I. Tax and Fee Preferences for Newly Established Enterprises
During the start-up phase, in addition to general tax incentives, eligible VAT small-scale taxpayers, small and low-profit enterprises, and individual business households—as well as entrepreneurs from special groups or employers who hire such groups (including college graduates, unemployed individuals, demobilized soldiers, transferred military officers, family members of military personnel, persons with disabilities, overseas returnees who have served abroad, and long-term foreign experts residing in China)—may also benefit from targeted tax and fee concessions. Meanwhile, the state provides tax breaks to entrepreneurship and employment platforms that support enterprise growth—such as science and technology incubators and university science parks—as well as to venture capital offices, financial institutions, enterprises, and individuals, thereby leveraging agglomeration effects and offering robust financial support to businesses. Specifically, these measures include:
(1) Tax and Fee Preferences for Small and Micro Enterprises
1. Eligible small-scale VAT taxpayers are exempt from VAT.
2. Temporary reduction or exemption of value-added tax for small-scale VAT taxpayers
3. Small and low-profit enterprises are exempted from or receive reductions in corporate income tax.
4. For individual business households, personal income tax on the portion of taxable income not exceeding RMB 1 million shall be levied at half the standard rate.
5. Reduction in local “six taxes and two fees” for small-scale VAT taxpayers
6. Enterprises that meet the eligibility criteria are temporarily exempt from paying the Employment Guarantee Fund for Persons with Disabilities.
7. Eligible payers are exempt from relevant government funds.
8. Eligible small-scale VAT taxpayers are exempt from the cultural undertakings construction fee.
(II) Tax and Fee Preferences for Entrepreneurship and Employment among Key Groups
9. Tax and fee deductions for entrepreneurship among key groups
10. Tax and fee deductions for employing key groups
11. Tax and fee deductions for veteran entrepreneurs
12. Tax and fee deductions for employing retired soldiers
13. Value-added tax is exempted for military family members engaged in entrepreneurship.
14. Personal income tax is exempted for military family members engaged in entrepreneurship.
15. Enterprises that provide employment for military family members are exempt from value-added tax.
16. Value-added tax exemption for entrepreneurship by demobilized military personnel.
17. Military officers who have chosen to pursue civilian careers are exempt from personal income tax.
18. Enterprises that provide employment for demobilized military personnel are exempt from value-added tax.
19. Value-added tax exemption for entrepreneurship by persons with disabilities
20. Value-added tax is immediately refunded upon collection for entities and individual business households that employ persons with disabilities.
21. Value-added tax is immediately refunded upon collection for employment of persons with disabilities by school-run enterprises in the field of special education.
22. Additional tax deduction for wages paid to employees with disabilities by enterprises that employ persons with disabilities
23. Units that employ persons with disabilities are entitled to reductions or exemptions from urban land use tax.
24. Experts who have settled in China on a long-term basis are exempt from the vehicle acquisition tax on passenger cars imported for their personal use.
25. Overseas students returning to China for service are exempt from the vehicle acquisition tax when purchasing domestically produced passenger cars for personal use.
(3) Tax incentives for entrepreneurship and employment platforms
26. Value-added tax exemption for science and technology business incubators and maker spaces.
27. Science and technology business incubators and maker spaces are exempt from property tax.
28. Science and technology business incubators and maker spaces are exempt from urban land use tax.
29. University science parks are exempt from value-added tax.
30. University science parks are exempt from property tax.
31. University science parks are exempt from urban land use tax.
(4) Tax incentives for venture capital investments
32. Venture capital enterprises may deduct a proportion of their investment in unlisted small and medium-sized high-tech enterprises from their taxable income.
33. For corporate partners of limited partnership venture capital offices, investments in unlisted small and medium-sized high-tech enterprises may be deducted from their taxable income on a proportional basis.
34. Tax credit for corporate venture capital offices investing in early-stage technology enterprises, applied against taxable income.
35. Corporate partners of limited partnership venture capital offices may deduct their investment in early-stage technology enterprises from the income allocated to them by the partnership.
36. Individual partners in limited partnership venture capital offices may deduct their investment in early-stage technology enterprises from the business income allocated to them by the partnership.
37. Tax deduction from taxable income for individual angel investors’ investments in early-stage technology startups
38. Venture capital offices may flexibly choose the tax accounting method for individual partners.
39. The Zhongguancun National Independent Innovation Demonstration Zone has implemented a trial preferential corporate income tax policy for corporate‑type venture capital enterprises.
(5) Financial Support and Tax Incentives
40. Value-Added Tax Preferential Policies for the Pilot Phase of Domestic Issuance of Depositary Receipts by Innovative Enterprises
41. Preferential Corporate Income Tax Policies for Innovative Enterprises During the Pilot Phase of Issuing Depositary Receipts in China
42. Preferential Personal Income Tax Policies for the Pilot Phase of Domestic Issuance of Depositary Receipts by Innovative Enterprises
43. Deferred payment of enterprise income tax on gains from the transfer of non-monetary assets recognized in connection with outbound investments made using non-monetary assets.
44. The income from the transfer of non-monetary assets recognized upon making outbound investments with such assets shall be subject to individual income tax payable in installments.
45. Interest income from small and micro enterprise and individual business loans is exempt from value-added tax.
46. Reduction in corporate income tax on interest income from small agricultural loans by financial institutions
47. Tax-deductible provision for loan losses on agricultural and small- and medium-sized enterprise loans by financial institutions
48. Pre-tax deduction for loan losses incurred by financial institutions on agricultural and small- and medium-sized enterprise loans
49. Financial institutions are exempt from stamp duty when entering into loan contracts with small and micro enterprises.
50. Interest income from small loans to rural households earned by microloan companies is exempt from value-added tax.
51. Interest income from small agricultural loans earned by microfinance companies is treated as a reduction in taxable income for corporate income tax purposes.
52. Pre-tax deduction for loan loss reserves of microfinance companies under corporate income tax
53. Value-added tax is exempted on financing guarantee and reinsurance services provided to rural households and small and micro enterprises.
54. Pre‑tax deduction for corporate income tax on reserves held by small and medium‑sized enterprise financing (credit) guarantee institutions.
55. Stamp Duty Exemption or Reduction on Accounting Books
II. Tax and Fee Preferences During the Enterprise Growth Phase
To foster a favorable tax environment for scientific and technological innovation and to promote the rapid, healthy growth of enterprises, the state has introduced a series of tax preferential policies aimed at bolstering companies’ momentum for transformation and upgrading. These measures include an income‑tax additional deduction for R&D expenses, with manufacturing offices eligible for a 100% additional deduction; accelerated depreciation of fixed assets, applicable to eligible instruments and equipment used by manufacturing enterprises and certain service‑sector businesses; and exemption from import duties, import‑stage value‑added tax, and consumption tax on scientific research, technological development, and educational supplies imported by research institutions, technology‑development organizations, schools, and libraries when such items are either unavailable domestically or fail to meet domestic performance requirements. In addition, tax incentives for the commercialization of scientific and technological achievements have been implemented to help enterprises and research institutions retain innovative talent and to stimulate researchers’ enthusiasm for R&D, innovation, and the practical application of their findings. Specifically, these measures encompass:
(1) Policy on Additional Deduction of R&D Expenses
56. Additional Deduction for R&D Expenses
57. 100% additional deduction for R&D expenses of manufacturing enterprises in corporate income tax
58. Additional Deduction for Overseas R&D Expenses under Entrustment
(II) Policy on Accelerated Depreciation of Fixed Assets
59. Accelerated depreciation or one-time deduction for fixed assets
60. Accelerated depreciation of eligible instruments and equipment for manufacturing enterprises and certain service-sector enterprises.
61. Accelerated depreciation of eligible instruments and equipment for small and micro-profit enterprises in the manufacturing sector and certain service industries.
(3) Tax incentives for the import of scientific research, technological equipment, and supplies
62. Value-added tax exemption for imports of major technological equipment
63. Research institutions, technology development organizations, schools, and other entities are exempt from value-added tax and consumption tax on imports.
(4) Tax incentives for the commercialization of scientific and technological achievements
64. Value-added tax is exempted on technology transfer, technology development, and related technical consulting and technical services.
65. Income from technology transfer is exempted from or reduced in corporate income tax.
66. Corporate income tax reductions or exemptions on gains from technology transfers for resident enterprises located within the designated area of the Zhongguancun National Independent Innovation Demonstration Zone.
(5) Tax incentives for research and innovation talent
67. Deferred Payment of Individual Income Tax on Equity Awards Granted by Research Institutions and Higher Education Institutions
68. Installment payment of individual income tax on equity awards granted to technical personnel of high-tech enterprises
69. Small and medium-sized high-tech enterprises may defer the payment of individual income tax on capitalizations to individual shareholders in installments.
70. Deferred payment of individual income tax on stock options, equity options, restricted stocks, and equity awards granted by non-listed companies.
71. Appropriate extension of the tax payment deadline for stock options, restricted stocks, and equity awards granted by listed companies.
72. Enterprises and individuals may defer the payment of income tax on income derived from investing technology-based achievements as equity contributions.
73. Science and technology awards conferred upon scientific and technical personnel by national-level, provincial- or ministerial-level bodies, and international organizations are exempt from personal income tax.
74. Personal income tax exemption or reduction on cash rewards for the commercialization of scientific and technological achievements in the course of employment
III. Tax and Fee Preferences During the Enterprise’s Maturity Phase
To help enterprises sustain growth and become stronger, the state has introduced a series of tax incentives across various sectors and dimensions, enabling Chinese companies to accelerate innovation, close the gap with global leaders, and seize technological advantages. Specifically, high-tech enterprises and technologically advanced service offices are subject to an enterprise income tax rate of 15%; the carryforward period for losses incurred by high-tech enterprises and technology‑based SMEs has been extended to 10 years; and taxpayers in advanced manufacturing are eligible for a refund of their end-of-period input VAT credit. For software products, a “collect‑and‑refund” mechanism is applied to offset the portion of VAT exceeding the statutory rate; software enterprises receiving national encouragement may enjoy periodic reductions or exemptions from enterprise income tax, with key encouraged software enterprises benefiting from an even lower tax rate of 10%. Furthermore, major integrated circuit projects are granted refunds of end-of-period input VAT credits; qualified integrated circuit manufacturers or projects receive periodic reductions or exemptions from enterprise income tax; depreciation periods for production equipment used by integrated circuit manufacturers are shortened; and animation enterprises that sell self‑developed animation software are entitled to a “collect‑and‑refund” policy on VAT exceeding the statutory rate, while exports of such software are exempt from VAT. These measures include:
(1) Tax incentives for high-tech enterprises and advanced manufacturing industries
75. High-tech enterprises are subject to the enterprise income tax at a reduced rate of 15%.
76. The carryforward period for losses of high-tech enterprises and technology-based small and medium-sized enterprises has been extended to 10 years.
77. Technology‑advanced service enterprises shall be subject to the enterprise income tax at a reduced rate of 15%.
78. Value-Added Tax Refund for Advanced Manufacturing Enterprises on Outstanding Input VAT at Period End
(II) Tax Incentives for Software Enterprises
79. Value-added tax on software products: excess tax burden is refunded immediately upon collection.
80. Software enterprises encouraged by the state are eligible for periodic reductions or exemptions from corporate income tax.
81. Key software enterprises encouraged by the state are eligible for reductions or exemptions from corporate income tax.
82. Corporate income tax policy for software enterprises that use the value-added tax refund received on a “collect-and-refund” basis to fund software product research and development and to expand and upgrade production.
83. For eligible software enterprises, employee training expenses may be deducted before tax based on the actual amount incurred.
84. Enterprises may shorten the depreciation or amortization period for externally purchased software.
(3) Tax and Fee Preferences for Integrated Circuit Enterprises
85. Refund of the outstanding input VAT credit for enterprises engaged in major integrated circuit projects
86. The end-of-period input VAT credit refunded to integrated circuit enterprises shall be deducted from the tax base for urban maintenance and construction tax, the education surcharge, and the local education surcharge.
87. Enterprises undertaking major integrated circuit projects may pay the import value-added tax on new equipment in installments.
88. Integrated circuit manufacturing enterprises with line widths of less than 0.8 micrometers are eligible for periodic reductions or exemptions from corporate income tax.
89. Integrated circuit manufacturing enterprises with line widths less than 0.25 microns are eligible for periodic reductions or exemptions from corporate income tax.
90. Integrated circuit manufacturing enterprises with investment exceeding RMB 8 billion are eligible for periodic reductions or exemptions from corporate income tax.
91. Integrated circuit production enterprises or projects with an investment exceeding RMB 15 billion are eligible for periodic reductions or exemptions from corporate income tax.
92. The state encourages integrated circuit production enterprises or projects with a line width of less than 28 nanometers to enjoy periodic reductions or exemptions from corporate income tax.
93. The state encourages integrated circuit production enterprises or projects with a line width of less than 65 nanometers to enjoy periodic reductions or exemptions from corporate income tax.
94. The state encourages integrated circuit production enterprises or projects with a line width of less than 130 nanometers to enjoy periodic reductions or exemptions from corporate income tax.
95. The state encourages integrated circuit manufacturing enterprises with a line width of less than 130 nanometers to extend the carryforward period for losses.
96. The state encourages integrated circuit design, equipment, materials, packaging, and testing enterprises to enjoy periodic reductions or exemptions from corporate income tax.
97. Key integrated circuit design enterprises encouraged by the state are eligible for periodic reductions or exemptions from corporate income tax.
98. Shortened depreciation periods for production equipment of integrated circuit manufacturing enterprises
(4) Tax incentives for animation and comic enterprises
99. Value-added tax on the sale of self-developed and produced animation software is subject to an immediate refund upon collection if the tax burden exceeds the statutory rate.
100. Eligible services such as animation design may opt to apply the simplified tax calculation method for the payment of value-added tax.
101. Export of animation software is exempt from value-added tax.
102. Eligible animation and comic enterprises may apply to benefit from the current national corporate income tax preferential policies that encourage the development of the software industry.

Litigation & Arbitration
The Supreme People’s Court has released the 28th batch of guiding cases.
On the 30th, the Supreme People’s Court announced that it had recently released the 28th batch of six guiding cases, all pertaining to intellectual property, for reference by people’s courts at all levels when adjudicating similar cases.
Guiding Case No. 157, “Zuoshang Mingshe Household Products (Shanghai) Co., Ltd. v. Beijing Zhongrong Hengsheng Wood Industry Co., Ltd. and Nanjing Mengyang Furniture Sales Center Copyright Infringement Dispute,” clarifies that works of applied art may be protected under copyright law as works of fine art, and that such protection extends to the artistic merit of these works rather than their practical utility. This case is highly representative and provides important guidance for determining infringement of works of applied art in the current legal context.
Guiding Case No. 158, “Shenzhen Weibang Technology Co., Ltd. v. Li Jianyi and Shenzhen Remote Intelligent Equipment Co., Ltd. on a Dispute over Patent Ownership,” provides a precise interpretation of how to understand and apply the concept of “related inventions or creations” as set forth in Article 12, Paragraph 1 of the Implementing Rules of the Patent Law. Patent‑ownership disputes involving official (work‑related) inventions concern the attribution of scientific and technological achievements arising from employment; the case’s clarified adjudicatory rules emphasize balancing the interests of the relevant parties and have standardized the criteria for adjudication.
Guiding Case No. 159, “Shenzhen Dunjun Technology Co., Ltd. v. Shenzhen Jixiang Tengda Technology Co., Ltd. et al. Dispute over Infringement of Patent for Invention,” clarifies the standards for determining infringement of method patents in the field of network communications, further specifies the application of rules governing the allocation of the burden of proof in calculating damages for infringement, and underscores the paramount importance of factual findings regarding the scale of the infringement in the calculation of damages.
Guiding Case No. 160, “Cai Xinguang v. Guangzhou Runping Commercial Co., Ltd. Dispute over Infringement of Plant Variety Rights,” takes whether the honey pomelo fruit constitutes propagating material as the central issue. The key points of the judgment address each stage of determining infringement in plant variety‑rights disputes involving propagating material, clarifying the scope of protection for plant variety rights and establishing criteria for assessing infringing conduct under different circumstances.
Guiding Case No. 161, “Guangzhou Wanglaoji Great Health Industry Co., Ltd. v. Jiaduobao (China) Beverage Co., Ltd. Dispute over False Advertising,” analyzes, based on everyday experience and the standard of ordinary attention of the relevant public, whether the advertising slogan in question is one-sided, ambiguous, or likely to mislead the relevant public, thereby clarifying the criteria and standards for determining false advertising. In addition, taking into account the specific facts of the case and the actual circumstances of the goods and trademarks being advertised, the case also assesses whether the disputed advertising slogan improperly appropriates another party’s goodwill.
Guiding Case No. 162, “Chongqing Jiangxiaobai Baijiu Co., Ltd. v. the National Intellectual Property Administration and Third Party Chongqing Jiangjin Distillery (Group) Co., Ltd. in an Administrative Dispute over the Declaration of Invalidity of a Trademark,” held, after comprehensively weighing all relevant factors, that prior to the filing date of the disputed trademark application, the “Jiangxiaobai” mark was not a trademark owned by Jiangjin Distillery, and that the application for registration of the disputed trademark did not violate Article 15 of the 2001 Trademark Law. As a result, brand innovation was effectively protected, yielding favorable legal and social outcomes.
How should facial recognition cases be adjudicated? The Supreme People’s Court has issued a document to clarify this.
Supreme People's Court
On the Adjudication of Cases Involving the Processing of Personal Information Using Facial Recognition Technology
Provisions on Several Issues Concerning the Application of Law in Relevant Civil Cases
(Adopted at the 1841st Meeting of the Judicial Committee of the Supreme People’s Court on June 8, 2021; effective August 1, 2021)
In order to ensure the proper adjudication of civil cases involving the processing of personal information through facial recognition technology, safeguard the legitimate rights and interests of the parties concerned, and promote the sound development of the digital economy, these Provisions are hereby formulated in accordance with the provisions of the Civil Code of the People’s Republic of China, the Cybersecurity Law of the People’s Republic of China, the Consumer Rights Protection Law of the People’s Republic of China, the E-Commerce Law of the People’s Republic of China, the Civil Procedure Law of the People’s Republic of China, and other relevant laws, and in light of judicial practice.
Article 1: These Provisions shall apply to civil cases arising from the use of facial recognition technology to process facial information, or to process facial information generated by such technology, in violation of laws or administrative regulations, or contrary to the agreements between the parties.
The processing of facial information encompasses the collection, storage, use, processing, transmission, provision, and disclosure of such information.
The “facial information” referred to in these Provisions falls under the category of “biometric information” as defined in Article 1034 of the Civil Code.
Article 2: Where a data processor handles facial information under any of the following circumstances, the people’s court shall deem such conduct to constitute an infringement upon the personality rights of natural persons:
(1) In business premises and public places such as hotels, shopping malls, banks, railway stations, airports, sports venues, and entertainment establishments, the use of facial recognition technology for facial verification, identification, or analysis in violation of laws and administrative regulations;
(2) Failing to disclose the rules governing the processing of facial information, or failing to clearly specify the purposes, methods, and scope of such processing;
(3) Where the processing of facial information is based on the consent of an individual, such consent has not been obtained separately from the natural person or their guardian, or written consent has not been obtained from the natural person or their guardian in accordance with the provisions of laws and administrative regulations;
(4) Violating the purposes, methods, or scope for processing facial information as explicitly stated by the data processor or agreed upon by both parties;
(5) Failing to implement appropriate technical measures or other necessary safeguards to ensure the security of facial information it collects and stores, resulting in the leakage, alteration, or loss of such information;
(6) Providing facial information to third parties in violation of laws, administrative regulations, or the agreements between the parties;
(7) Processing facial information in violation of public order and good morals;
(8) Other circumstances in which facial information is processed in violation of the principles of legality, legitimacy, and necessity.
Article 3: When a people’s court determines that an information processor shall bear civil liability for infringing the personality rights of a natural person, it shall apply the provisions of Article 998 of the Civil Code and, in light of the specific circumstances of the case, comprehensively consider such factors as whether the victim is a minor, the circumstances surrounding informed consent, and the degree of necessity of the information processing.
Article 4: Where any of the following circumstances exists, the people’s court shall not uphold the defense of an information processor based on the claim that consent has been obtained from the natural person or their guardian:
(1) Where a data processor requires a natural person to consent to the processing of their facial information in order to provide a product or service, such requirement shall not apply if the processing of facial information is necessary for the provision of that product or service;
(2) Where the information processor requires a natural person to consent to the processing of their facial information by means such as bundling it with other consents;
(3) Other circumstances in which a natural person is coerced, or indirectly coerced, into consenting to the processing of their facial information.
Article 5: Where any of the following circumstances exists, and the information processor claims that it shall not bear civil liability, the people’s court shall, in accordance with the law, uphold such claim:
(1) Processing facial information where such processing is necessary to respond to a public health emergency or, in emergency situations, to protect the life, health, and property of natural persons;
(2) Where facial recognition technology is used in public places in accordance with relevant national regulations for the purpose of safeguarding public safety;
(3) Processing facial information within a reasonable scope when carrying out activities such as news reporting and public opinion supervision in the public interest;
(4) Processing facial information reasonably within the scope of consent given by the natural person or their guardian;
(5) Other circumstances that comply with the provisions of laws and administrative regulations.
Article 6: Where a party requests that the data processor bear civil liability, the people’s court shall determine the burden of proof of both parties in accordance with Article 64 of the Civil Procedure Law, Articles 90 and 91 of the Interpretations of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, and the relevant provisions of the Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation.
Where a data processor claims that its conduct falls within the circumstances set forth in Article 1,035, Paragraph 1 of the Civil Code, it shall bear the burden of proof with respect to the facts on which such claim is based.
If a data processor claims that it bears no civil liability, it shall bear the burden of proof to demonstrate that its conduct falls within the circumstances set forth in Article 5 of these Provisions.
Article 7: Where multiple data processors, in processing facial information, infringe upon the personality rights of a natural person, and such natural person seeks to hold each processor liable for tort based on the degree of fault and the extent of the resulting harm, the people’s court shall, in accordance with the law, uphold such claim. If the circumstances fall within those specified in Articles 1168, Paragraph 1 of Article 1169, Article 1170, or Article 1171 of the Civil Code, and the natural person asserts that the multiple processors should bear joint liability, the people’s court shall, in accordance with the law, uphold such claim.
Where an information processor, by means of online services, processes facial information in a manner that infringes upon the personality rights and interests of natural persons, the provisions of Articles 1195, 1196, and 1197 of the Civil Code shall apply.
Article 8: Where an information processor’s handling of facial information infringes upon the personality rights of a natural person and causes property damage, and such natural person brings a claim for compensation for property damage pursuant to Article 1182 of the Civil Code, the people’s court shall, in accordance with the law, uphold such claim.
Reasonable expenses incurred by a natural person in order to stop an infringement may be recognized as property losses under Article 1182 of the Civil Code. Such reasonable expenses include the costs reasonably incurred by that natural person or by a commissioned agent in investigating the infringing act and gathering evidence. Upon request of the parties and in light of the specific circumstances of the case, the people’s court may include reasonable attorney’s fees within the scope of damages.
Article 9: Where a natural person has evidence demonstrating that an information processor, by using facial recognition technology, is engaging in or is about to engage in conduct that infringes upon the natural person’s right to privacy or other personal rights, and failure to promptly halt such conduct would result in irreparable harm to the natural person’s legitimate rights and interests, the natural person may apply to the people’s court for measures ordering the information processor to cease the relevant conduct. The people’s court may, in accordance with the specific circumstances of the case and as provided by law, issue an injunction against infringement of personality rights.
Article 10: Where a property service enterprise or other building manager uses facial recognition as the sole means of verifying the identity of owners or property users for entry into the property service area, and an owner or property user who objects requests that the entity provide alternative reasonable verification methods, the people’s court shall, in accordance with the law, uphold such request.
If a property service enterprise or other building manager falls under the circumstances set forth in Article 2 of these Provisions, and a party requests that such entity bear tort liability, the people’s court shall, in accordance with the law, uphold such request.
Article 11: Where an information processor, by way of standard terms, enters into a contract with a natural person and requires the natural person to grant it rights to process facial information that are unlimited in duration, irrevocable, and freely transferable, if the natural person seeks, pursuant to Article 497 of the Civil Code, a declaration that such standard terms are invalid, the people’s court shall, in accordance with the law, uphold such request.
Article 12: Where an information processor processes a natural person’s facial information in breach of the agreed terms, and the natural person requests that the processor bear liability for such breach, the people’s court shall, in accordance with the law, uphold the request. When the natural person seeks to hold the information processor liable for breach and simultaneously requests the deletion of the facial information, the people’s court shall, in accordance with the law, grant such request; if the information processor defends itself on the ground that the parties did not agree on the deletion of the facial information, the people’s court shall reject such defense.
Article 13: Where disputes arise from the infringement of natural persons’ personality rights due to the processing of facial information by the same data controller, and multiple victims file separate lawsuits with the same people’s court, the people’s court may, with the consent of the parties, consolidate the cases for joint adjudication.
Article 14: Where the conduct of an information processor in handling facial information complies with Article 55 of the Civil Procedure Law, Article 47 of the Consumer Rights Protection Law, or other relevant provisions of law governing civil public interest litigation, the people’s court shall accept a civil public interest lawsuit brought by the organs and relevant organizations prescribed by law.
Article 15: Where, following the death of a natural person, a data processor processes facial information in violation of laws or administrative regulations, or contrary to the agreement between the parties, and the deceased’s close relatives, pursuant to Article 994 of the Civil Code, seek to hold the data processor civilly liable, the provisions of this Regulation shall apply.
Article 16: These Provisions shall come into force on August 1, 2021.
Where the processing of facial information or the processing of facial information generated through facial recognition technology by a data processor occurred prior to the entry into force of these Provisions, such provisions shall not apply.

The Measures for the Administration of Intermediaries of Futures Companies (Trial) will take effect on September 1, clarifying a number of regulatory provisions governing intermediaries.
Definition: The Administrative Measures clearly define an intermediary as an institution or natural person that, upon being entrusted by a futures company, provides intermediary services for the conclusion of futures brokerage contracts, independently assumes civil liabilities arising from such intermediary services, and receives remuneration from the futures company in accordance with the agreed terms.
With regard to the conditions for intermediary cooperation, on the one hand, institutional cooperation requirements stipulate that futures companies shall engage in intermediary cooperation with financial institutions such as securities companies that have been established with the approval of the relevant financial regulatory authorities. Securities companies providing intermediary introduction services to futures companies shall comply with the “Provisional Measures for Securities Companies Providing Intermediary Introduction Services to Futures Companies.”
On the other hand, the requirements for natural persons include: being at least 18 years of age and possessing full civil capacity; maintaining good moral character and professional ethics; committing to comply with applicable laws, regulations, and the provisions of these Measures; holding a certificate of passing the Futures Practitioner Qualification Examination; completing the training courses mandated by the Association; and satisfying any other conditions stipulated by the Association.
At the same time, intermediaries are required to enter into intermediary agreements with no more than three futures companies concurrently.
Furthermore, with respect to the eligibility criteria for intermediaries, it is stipulated that any relevant persons who have a record of violations or illegal activities, are subject to administrative supervision, or have conflicts of interest may not serve as intermediaries for futures companies.
With regard to the code of conduct for intermediaries, the scope of their cooperation is clearly defined and includes, in particular: first, introducing investors to futures companies and facilitating the conclusion of futures brokerage contracts between investors and such companies; second, providing investors with basic information about the futures company; third, imparting fundamental knowledge about futures investing, including but not limited to account opening, trading, margin calls, forced liquidation, and fund deposits and withdrawals; fourth, informing investors of relevant laws and regulations, departmental rules, self-regulatory provisions, and the applicable internal policies of the futures company; fifth, disseminating promotional materials uniformly provided by the futures company; and sixth, engaging in other activities as determined by the association.
With respect to the essential terms of an intermediary contract, the Administrative Measures stipulate that futures companies must enter into a written intermediary contract with intermediaries. Such contracts shall include, but are not limited to, the principal rights and obligations of the parties, the method for calculating remuneration and the corresponding allocation ratios, details on the disbursement of remuneration, liability for breach of contract, and the contract’s term—key provisions that cannot be omitted. The contract must also provide that, upon successfully facilitating the conclusion of a futures brokerage agreement between an investor and the futures company, the intermediary is entitled to remuneration, with clear specifications regarding the calculation and payment methods. Futures companies may not pay remuneration to intermediaries who have failed to register their information as required, nor may they pay remuneration in excess of the prescribed amount or through disguised means. Furthermore, futures companies are obligated to issue invoices on behalf of intermediaries and to withhold and remit applicable taxes and fees in accordance with relevant regulations. A risk reserve shall be set aside from the intermediary remuneration at a specified rate. In addition, the term of the intermediary contract may not exceed twelve months.
In addition, the Measures set forth detailed provisions regarding internal management of futures companies, self-regulatory oversight of intermediaries, and the implementation period. The Measures shall enter into force on September 1, 2021, with a transitional period running from the date of entry into force until August 31, 2022. During the transitional period, futures companies shall not enter into new intermediary cooperation agreements with any intermediaries that do not comply with the provisions of these Measures. With respect to intermediaries whose contracts are still in effect, if they fail to meet the requirements of these Measures, the futures company shall, within the transitional period, terminate such contracts and complete all related follow-up matters.

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