JC Master Legal News Issue 981

Release Date:

2021-08-09 18:49

Key Takeaways for This Issue
The China Securities Regulatory Commission has launched a special campaign to improve the governance of securities, futures, and fund management institutions.
To implement the decisions and arrangements of the Central Economic Work Conference on improving corporate governance in financial institutions, to better fulfill the three key tasks of serving the real economy, preventing and controlling financial risks, and deepening financial reform, and to further leverage the dual strengths of Party leadership and corporate governance, the China Securities Regulatory Commission has decided, effective immediately, to launch a special campaign to strengthen corporate governance among securities, futures, and fund management institutions.

“Chip shortages” are not an excuse for “chip speculation.”
In response to pressing issues such as price gouging and soaring prices in the automotive chip market, the State Administration for Market Regulation has taken decisive action, recently launching investigations into auto‑chip distributors suspected of inflating prices. At this juncture, those engaging in speculative trading should promptly cease their practices and pull back before it’s too late—this would be a prudent course of action.
Announcement of the State Taxation Administration on Matters Relating to the Application of the Simplified Procedure for Unilateral Advance Pricing Arrangements

Finance & Capital Markets
The China Securities Regulatory Commission has launched a special campaign to improve the governance of securities, futures, and fund management institutions.
To implement the decisions and arrangements of the Central Economic Work Conference on improving corporate governance in financial institutions, to better fulfill the three key tasks of serving the real economy, preventing and controlling financial risks, and deepening financial reform, and to further leverage the dual strengths of Party leadership and corporate governance, the China Securities Regulatory Commission has decided, effective immediately, to launch a special campaign to strengthen corporate governance among securities, futures, and fund management institutions.
Good corporate governance is the foundation for ensuring the industry’s long-term, healthy development. In recent years, securities, futures, and fund management institutions have consistently implemented comprehensive risk management and organization-wide compliance requirements, steadily enhancing their internal control and compliance standards. They have established and refined a modern corporate governance framework featuring effective operations and checks-and-balances among the shareholders’ meeting, board of directors, supervisory board, and management, yielding positive results in corporate governance. Nevertheless, overall, there remains room for further improvement in the governance practices of these institutions. This targeted governance initiative addresses current weaknesses in corporate governance across the industry, focusing on the following four key areas: First, strengthening the institutional and regulatory framework. Building on the Securities Law and the Fund Management Law, we will revise or introduce rules and regulations governing equity management, internal control, public‑fund management, and senior‑management oversight, thereby establishing the “four pillars and eight beams” of institutional supervision. Second, continuously refining the administrative regulatory system. Adhering to the principle of combining deregulation with effective oversight, we will focus on core issues to enhance the effectiveness of institutional supervision, pursuing scientific, categorized, professional, and ongoing regulation. Third, constructing an effective modern corporate governance system. We will urge industry institutions to further integrate Party leadership with corporate governance, strengthen穿透式 (penetrative) shareholder oversight, ensure that the “three meetings and one layer” fulfill their respective roles and responsibilities, and rigorously enforce comprehensive risk management and organization-wide compliance, thereby substantially elevating internal control and compliance standards. Fourth, gradually improving the market‑based constraint mechanism. We will refine the information‑disclosure regime, requiring institutions to ensure that disclosures are truthful, accurate, and complete, and explore the establishment of a professional‑practice quality‑evaluation system to enhance transparency in professional conduct.
The China Securities Regulatory Commission has specifically formulated a work plan to strengthen corporate governance among securities, futures, and fund management institutions. Going forward, it will organize industry self‑inspections and on‑site examinations to effectively enhance the intrinsic drivers of sound corporate governance, establish long‑term mechanisms, and lay a solid foundation for high‑quality enterprise development.
The China Securities Regulatory Commission has completed the first phase of self-inspection for its special campaign on corporate governance of listed companies.
To implement the spirit of the State Council’s “Opinions on Further Enhancing the Quality of Listed Companies” (hereinafter referred to as the “Opinions”), the China Securities Regulatory Commission launched a Special Campaign on Corporate Governance of Listed Companies (hereinafter referred to as the “Special Campaign”) on December 11, 2020. Over a two-year period, the campaign will advance a comprehensive upgrade of corporate governance through three phases: self‑examination by companies, on-site inspections, and corrective measures and improvements. To date, the first phase—self‑examination—has been completed, with all 3,867 companies listed before June 30, 2020, having submitted their self‑assessment reports. Since the launch of the Special Campaign, listed companies have seized the opportunity of self‑examination to systematically study regulatory requirements, comprehensively review internal policies and procedures, and conduct in-depth assessments of governance issues, addressing identified shortcomings as they go. This approach has further strengthened the intrinsic drive for sound corporate governance. Meanwhile, the regulatory authorities have remained actively engaged throughout the process, providing repeated guidance and oversight, thereby achieving, for the first time in recent years, a thorough baseline assessment of the governance status of Chinese listed companies and laying the groundwork for subsequent on-site inspections, rule‑making, and academic research.
Improving corporate governance among listed companies is a complex and arduous task that requires sustained efforts from the companies themselves, securities regulators, and all relevant stakeholders. Thanks to these collective endeavors, listed companies have gradually emerged as model examples in implementing modern corporate systems. The results of self-assessments indicate that internal governance rules and regulations are generally comprehensive: corporate governance frameworks—centered on the company’s articles of association, the rules of procedure for the three committees, information disclosure policies, and investor relations management systems—are largely in place. Corporate organizational structures continue to be refined, with the “three committees and one layer” configuration now becoming standard; some companies have established dedicated governance departments tailored to their specific circumstances, further enhancing coordination and collaboration across functional units. The operations of the three committees have grown increasingly standardized, with decision-making processes becoming more open and transparent, and meeting procedures largely compliant with applicable laws and regulations. Communication mechanisms between listed companies and investors have been further improved, and institutional investors’ willingness to engage in corporate governance has strengthened. Moreover, listed companies’ commitment to delivering value to investors continues to rise, with cash dividend payout ratios remaining stable at or above 30 percent. Nevertheless, certain issues cannot be overlooked and warrant close attention. This self-assessment also identified several pressing areas requiring corrective action, including: irregular conduct by controlling shareholders and actual controllers; persistent occurrences of illegal practices such as misappropriation of funds and unauthorized guarantees; room for improvement in the competence and performance of directors, supervisors, and senior management, with insufficient independence among independent directors and inadequate safeguards for board secretaries; limited transparency, particularly in cases where equity structures are opaque or non-compliant, and where major matters are not disclosed as required; and inadequate implementation of internal control systems, with incomplete segregation of incompatible duties and, in some instances, weak or even lost oversight over subsidiaries.
Going forward, the China Securities Regulatory Commission will, in accordance with the principle of “classification and phased implementation,” promote substantive rectification of issues identified through self‑inspections, strengthen the application of self‑inspection findings, and continuously enhance and refine regulatory oversight of corporate governance among listed companies, thereby fostering a new landscape in which listed offices reinforce sound governance practices.

Regulatory “case-based legal interpretation” has led to a significant increase in the severity of penalties.
　Since July 6, when the General Office of the CPC Central Committee and the General Office of the State Council issued the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law” — commonly referred to in the industry as the “zero-tolerance” document (hereinafter referred to as the “Opinions”) — exactly one month has now elapsed. During this period, the China Securities Regulatory Commission has laid out specific arrangements for implementing the key tasks outlined in the Opinions and has publicly disclosed a number of cases involving violations of laws and regulations.
Market participants interviewed by reporters believe that, over the past month, regulators have significantly intensified penalties for violations of laws and regulations, underscoring a office commitment to zero tolerance in enforcement. They anticipate that further measures will be introduced, including strengthening issuers’ and other market participants’ disclosure obligations, building an integrity framework for the capital market, and refining investor protection mechanisms and enforcement‑coordination arrangements.
Frequent announcements of penalty cases
Continuously sending a “zero tolerance” signal.
According to a review by reporters, over the past month, the China Securities Regulatory Commission and local securities regulatory authorities have repeatedly announced penalties imposed for serious violations of laws and regulations.
On July 9, the China Securities Regulatory Commission (CSRC) laid out specific arrangements for implementing the key tasks outlined in the “Opinions” and issued work requirements for their thorough execution. On the same day, the CSRC released an update on its enforcement actions since 2020 against securities‑related violations such as market manipulation and insider trading. Specifically, it imposed administrative penalties in 176 cases involving market manipulation and insider trading, with total fines and confiscations exceeding RMB 5 billion; additionally, it referred 41 leads related to suspected market‑manipulation crimes and 123 leads concerning insider trading to public security authorities.
On July 15, the China Securities Regulatory Commission (CSRC) issued the Measures for Administrative Penalties for Securities and Futures Law Violations. On July 16, the CSRC announced that it has launched a series of targeted enforcement actions to crack down on serious violations such as financial fraud, misappropriation of funds, illegal guarantees, market manipulation, and insider trading, and has initiated swift, stringent, and severe investigations into 16 major, high-profile cases in accordance with the law.
On July 23, the China Securities Regulatory Commission (CSRC) announced progress in its investigation into stock price manipulation cases involving companies such as Zhongyuan Home and Litong Electronics. On the same day, the CSRC also disclosed penalties imposed in the first batch of financial fraud cases subject to the new Securities Law, with three penalty notices each proposing fines and confiscations exceeding RMB 10 million.
From the perspective of local securities regulatory authorities, on July 28, the Shenzhen Securities Regulatory Bureau announced that it had imposed a lifetime ban from the securities market on two senior executives of the private equity office Qianhai Huineng. This marks the first time the bureau has imposed such a market ban in the private equity sector.
“Recently, the China Securities Regulatory Commission and local securities regulators have significantly intensified their enforcement against illegal and non-compliant activities, imposing stricter oversight on both institutions and individuals,” said Chen Li, chief economist at Chuan Cai Securities, in an interview with a reporter from the Securities Daily. He added that this reflects the regulators’ zero‑tolerance stance toward misconduct, aiming to purify the investment environment by cracking down on “black sheep” that disrupt market order, thereby enhancing market fairness and safeguarding the interests of small and medium‑sized investors.
“Over the past month, securities regulators have maintained a zero-tolerance stance, rigorously and swiftly imposing severe penalties for violations of laws and regulations in the capital markets,” said Zhu Yiyi, an attorney at Grandall Law Office (Shanghai), in an interview with a reporter from the Securities Daily. She added that, among the new developments, this includes enforcing the enhanced penalties stipulated in the revised Securities Law, as well as meting out stringent sanctions against the “key few.”
Zhu Yiyi believes that the regulatory authorities’ public announcements of cases involving stringent crackdowns on illegal activities serve to deter market participants from engaging in misconduct, clearly signaling a “zero-tolerance” stance. This helps ensure that all market actors fulfill their disclosure obligations and exercise due diligence, while also guiding them toward compliant behavior, thereby safeguarding market order and protecting investors’ rights.
Strengthening Unified Enforcement in the Bond Market
Future policies across multiple fronts are worth looking forward to.
Recently, the China Securities Regulatory Commission imposed administrative penalties on Yongmei Holding and Kangde Xin for violations of information disclosure requirements in the interbank bond market, drawing widespread market attention. Specifically, Kangde Group and its actual controller, Zhong Yu, were collectively fined RMB 900,000, while Yongmei Holding and its relevant responsible persons were collectively fined RMB 5.3 million.
The “Opinions” propose strengthening unified enforcement in the bond market. They call for reinforcing coordinated law enforcement against all types of illegal activities in the bond market, with a particular focus on cracking down on fraudulent bond issuance, falsification of information disclosure, and failure by intermediary institutions to exercise due diligence.
In fact, as early as 2018, the “Opinions on Further Strengthening Law Enforcement in the Bond Market” stipulated that the China Securities Regulatory Commission would, in accordance with the law, conduct unified enforcement actions against illegal activities in both the interbank bond market and the exchange‑traded bond market.
“Since the implementation of unified enforcement, the China Securities Regulatory Commission has investigated and prosecuted numerous cases. Recently, Yongmei Group, Huachen Group, and Kangde Xin have been among the most high‑profile instances of violations of information disclosure in the bond market,” said Chen Bo, a partner at Deheng Shanghai Law Office, in an interview with a reporter from the Securities Daily. He added that, as bond‑issuance conditions continue to improve and the scale of China’s bond market keeps expanding, the number of bond‑market violations uncovered by the CSRC is likely to rise steadily amid the broader crackdown on securities‑related misconduct.
Regarding what additional “zero-tolerance” regulatory policies or measures can be anticipated going forward, Zhu Yiyi stated that the CSRC is expected to continue introducing policies and initiatives to enforce disclosure obligations of market participants and to establish an integrity framework for the capital market. Furthermore, in terms of inter‑agency coordination, additional policies and measures are likely to be rolled out, with a focus on refining the administrative and legal framework and on building a comprehensive, multi‑dimensional law‑enforcement and judicial system.
Chen Li believes that, going forward, regulators are likely to continue focusing enforcement efforts on issuers’ information disclosure, ensuring strict compliance with the law and holding violators accountable for offenses such as false or misleading disclosures and insider trading, thereby safeguarding investors’ legitimate rights and interests and fostering a sound investment environment.
CSRC: Promote the substantive rectification of self-inspection issues in a categorized and phased manner.
The China Securities Regulatory Commission stated yesterday that it has completed the first phase of self-inspection for its special campaign on corporate governance. All 3,867 companies listed as of June 30, 2020, have submitted their self-assessment reports. The Commission will ensure that the issues identified in these self-inspections are substantively rectified, strengthen the utilization of the self-assessment findings, and continue to enhance and improve regulatory oversight of corporate governance among listed companies.
To implement the spirit of the State Council’s “Opinions on Further Enhancing the Quality of Listed Companies,” the China Securities Regulatory Commission launched a special campaign on corporate governance for listed companies on December 11, 2020. Over a two-year period, the campaign will advance a comprehensive upgrade of corporate governance through three phases: self‑examination by companies, on-site inspections, and corrective measures to enhance governance. To date, the first phase—self‑examination—has been completed, with all 3,867 companies listed as of June 30, 2020, having submitted their self‑assessment reports. Since the campaign’s launch, listed companies have seized the opportunity to conduct thorough self‑assessments, systematically study regulatory requirements, comprehensively review internal policies and procedures, and rigorously identify governance gaps, addressing issues as they go and thereby strengthening their intrinsic drive for sound corporate governance. Meanwhile, the regulatory authorities have provided full‑scale participation and repeated oversight, enabling, for the first time in recent years, a comprehensive baseline assessment of the governance status of Chinese listed companies, thus laying the groundwork for subsequent on‑site inspections, rule‑making, and academic research.
The China Securities Regulatory Commission stated that improving corporate governance among listed companies is a complex and arduous task that requires sustained efforts from listed offices, securities regulators, and all relevant stakeholders. Thanks to these collective endeavors, listed companies have increasingly become model examples of modern corporate governance. The results of the self‑inspections indicate that internal rules and regulations on corporate governance are generally comprehensive: governance frameworks—centered on the company’s articles of association, the rules of procedure for the three committees, information disclosure policies, and investor relations management systems—are largely in place. Corporate organizational structures continue to be refined, with the “three committees and one layer” configuration now standard; some companies have established dedicated governance departments tailored to their specific circumstances, further enhancing coordination and division of labor across functional units. The operations of the three committees have grown increasingly standardized, with decision‑making processes becoming more open and transparent, and meeting procedures largely compliant with applicable laws and regulations. Communication mechanisms between listed companies and investors have been further improved, and institutional investors’ willingness to engage in corporate governance has strengthened. Moreover, listed companies’ commitment to delivering value to investors continues to rise, with cash dividend payout ratios remaining stable at or above 30 percent. Nevertheless, certain issues cannot be overlooked and warrant close attention. This round of self‑inspections also identified several pressing areas requiring rectification, including: irregular conduct by controlling shareholders and actual controllers; persistent occurrences of illegal practices such as misappropriation of funds and unauthorized guarantees; room for improvement in the competence and performance of directors, supervisors, and senior executives, with insufficient independence among independent directors and inadequate safeguards for board secretaries; limited transparency, particularly in cases where equity structures are opaque or non‑compliant, and where material matters are not disclosed as required; and inadequate implementation of internal control systems, with incomplete segregation of incompatible duties and, in some instances, weak oversight—or even loss of control—over subsidiaries.
The China Securities Regulatory Commission stated that, in the next phase, it will, in accordance with the principle of “classification and phased implementation,” promote substantive rectification of issues identified through self‑inspections, strengthen the application of self‑inspection findings, continuously enhance and improve regulatory oversight of corporate governance among listed companies, and foster a new landscape in which listed companies reinforce sound governance practices.
Building the “four pillars and eight beams” of institutional supervision and improving the market‑based constraint system.
Starting yesterday, the China Securities Regulatory Commission has launched a special campaign to strengthen corporate governance among securities, futures, and fund management institutions. The CSRC has specifically formulated a work plan to enhance governance in these sectors, under which it will subsequently conduct industry self‑inspections and on‑site examinations. These efforts aim to effectively bolster and refine the intrinsic drivers of corporate governance, establish long‑term mechanisms, and lay a solid foundation for high‑quality enterprise development.
The China Securities Regulatory Commission stated that this measure is being implemented to carry out the decisions and arrangements made at the Central Economic Work Conference on improving corporate governance in financial institutions, thereby better fulfilling the three key tasks of serving the real economy, preventing and controlling financial risks, and deepening financial reform, and further leveraging the dual strengths of Party leadership and sound corporate governance. Sound corporate governance serves as the foundation for ensuring the industry’s long-term, healthy development. In recent years, securities, futures, and fund management institutions have consistently upheld comprehensive risk management and organization-wide compliance requirements, steadily enhancing their internal control and compliance standards. They have established and refined a modern corporate governance framework characterized by effective operations and robust checks and balances among the shareholders’ meeting, the board of directors, the supervisory board, and the management team, yielding positive results in corporate governance.
The CSRC emphasized that, overall, there is still room for further improvement in the corporate governance of securities, futures, and fund management institutions. This targeted governance initiative addresses current weaknesses in industry‑wide corporate governance, focusing on four key areas: First, to strengthen the institutional framework, building upon the Securities Law and the Fund Management Law, it will revise or introduce regulations on equity management, internal control, public fund managers, and senior executives, thereby establishing the “four pillars and eight beams” of institutional supervision. Second, it will continue to refine the administrative regulatory system, adhering to a balanced approach of deregulation and regulation, and centering on enhancing the effectiveness of institutional oversight through scientific, categorized, professional, and ongoing supervision. Third, it will establish an effective modern corporate governance system by urging industry participants to further integrate Party leadership with corporate governance, reinforce shareholder‑level transparency and oversight, ensure that the board of directors, supervisory board, shareholders’ meeting, and management team fulfill their respective roles and responsibilities, and rigorously implement comprehensive risk management and organization‑wide compliance requirements to substantially elevate internal control and compliance standards. Fourth, it will gradually improve the market‑based constraint mechanism by refining information disclosure rules to ensure that disclosures are truthful, accurate, and complete, and by exploring the development of a professional‑practice quality‑evaluation system to enhance transparency in the industry.
Yi Huiman, Chairman of the China Securities Regulatory Commission, stated at the seventh members’ congress of the Securities Association of China that industry institutions must officely anchor corporate governance in rectifying business conduct and effectively mitigating risks. They should fully leverage the dual advantages of Party leadership and modern corporate governance, continuously improve their corporate governance frameworks, and ensure that sound corporate governance serves as a vital safeguard for long-term sustainability. Building on earlier efforts, they should further optimize equity structures, clarify shareholder qualifications, and standardize shareholder behavior, ensuring that shareholders neither fail to fulfill their duties nor overstep their mandates. Regulatory authorities will, in accordance with the principle of “substance over form,” strengthen穿透管理 of shareholders and intensify oversight of ultimate controllers. With respect to all types of illegal and non‑compliant activities, they will uphold end‑to‑end accountability, imposing strict penalties for every case discovered, with zero tolerance for leniency.

Commercial & Corporate
Top of the form
Bottom of the form
“Chip shortages” are not an excuse for “chip speculation.”
In response to pressing issues such as price gouging and soaring prices in the automotive chip market, the State Administration for Market Regulation has taken decisive action, recently launching investigations into auto‑chip distributors suspected of inflating prices. At this juncture, those engaging in speculative trading should promptly cease their practices and pull back before it’s too late—this would be a prudent course of action.
The “chip shortage” has been plaguing the automotive market for some time, and this year several automakers have even been forced to suspend or cut production due to the lack of semiconductors. Accompanying the chip shortage is a sharp rise in prices—compared with the first half of last year, automotive chip prices have now surged by 10 to 20 times, and securing even a single chip remains extremely difficult. A senior executive at one automaker admitted that “grabbing chips” has become the new normal. Unless this trend is reversed, it will inevitably have adverse consequences for the vast automotive industry.
Who is driving up chip prices? Some argue that prices are determined by supply and demand: when supply falls short, prices naturally rise—a fundamental principle of the market economy. But the reality may be far more complex. Industry insiders reveal that, compared with the first half of last year, chip manufacturers have raised prices by 20% to 60% on average; yet at the retail level, markups have surged tenfold or even twentyfold year over year—an astonishing increase. When these two trends are juxtaposed, it’s clear that while “chip shortages” certainly play a role in fueling sky-high prices, the primary driver is often speculative hoarding and exorbitant price‑gouging by certain distributors.
Some dealers have engaged in malicious price hikes, disrupting market pricing and exacerbating panic. In response, automakers have been forced to stockpile large quantities of chips, boosting their inventories to hedge against future risks—only to further deepen the chip shortage and trigger a vicious cycle. To some, “chip speculation” appears an inevitable consequence of the shortage; yet when more automakers unable to secure chips can no longer sustain operations—shutting down or even going bankrupt—who ultimately bears the brunt? The stark contrast between “garlic you’re ruthless” and “garlic you’re miserable” serves as a cautionary tale.
“Chip shortages” are no excuse for “speculative hoarding.” Regulatory authorities will show zero tolerance in cracking down on illegal pricing practices and safeguarding market order. At the same time, it is in times of adversity that true character, genuine intentions, and unwavering integrity come to light. We urge all market participants to strengthen self-discipline, refrain from hoarding or price gouging, and uphold market stability through honest and ethical business conduct.
IKEA’s fine serves as a wake-up call: Don’t treat “formaldehyde‑free” as a gimmick—“environmental protection” should mean genuine, lasting safeguards.
In recent years, as public awareness of health has grown, so too has concern about air quality, creating a substantial market for products marketed on the promise of “air purification.” Well-known examples include air purifiers, air-purifying wall coverings, and air‑filtering curtains. Meanwhile, advertising for such products has become ubiquitous, permeating every aspect of daily life.
Among these, given the well‑known hazards of formaldehyde, “formaldehyde removal” has become one of the most important selling points for such products. However, it remains debatable how much of the advertising for these products is genuinely effective, and how much amounts to generalizing from limited evidence or even exaggeration. Take IKEA’s “GUNRID” curtains, which recently drew a penalty, as an example: the reason for the fine was that the advertisement failed to clearly disclose certain key information, thereby misleading consumers into making a purchase. Following the penalty, on August 3, IKEA issued an official statement of apology regarding the matter.
From its official statement, we can identify two key points. First, the “Apology” statement clarifies that the air-purifying performance claimed in the advertising for the “GUNRID” curtain product was determined under specific test conditions and for particular target pollutants; in real-world living environments, the actual purification efficacy may vary depending on changing environmental factors.
Simply put, the “air-purification” claims made in its product advertising are based on laboratory test results, not real-world performance. These results depend on specific, controlled conditions and, in theory, such lab settings are rarely replicable in everyday life. Consequently, the purported purification effects observed in the lab may be negligible in real‑world scenarios. For example, in a simulated microgravity environment, people can appear to “float,” yet in reality they inevitably “fall.” Similarly, while certain products might achieve some degree of formaldehyde removal in a sealed space with high concentrations, their efficacy in an open‑plan home with lower formaldehyde levels could be minimal or even nonexistent. When advertising conveys messages that lead consumers to believe these products deliver lab‑level performance under real‑world conditions, it misleads them—this is why the company was penalized. Second, the apology statement reads: “We at IKEA sincerely apologize for the oversight in our advertising, which failed to clearly disclose that ‘air purification’ is based on experimental results obtained under specific, limited conditions.”
“IKEA” is not “exclusive,” and “formaldehyde‑removal ads” have long been ubiquitous.
IKEA has managed to carve out a prominent spot among the many trending topics on Weibo recently, and there are two reasons for this.
First, as a leading home‑goods company, the issues identified in its advertising may well be mirrored by other brands. Second, in recent years, air‑purification and formaldehyde‑removal products—given their direct impact on consumers’ indoor health—have consistently been a focal point of public concern.
As home‑decor and furniture products are a major source of formaldehyde, many brands have long positioned “formaldehyde‑free” as a key selling point. Over time, this has evolved from “zero‑formaldehyde” offerings to today’s “formaldehyde‑removing” products—such as formaldehyde‑neutralizing flooring, boards, wall‑covering compounds, and paints—which have increasingly captured consumers’ attention in recent advertising campaigns.
Take the highly popular “formaldehyde‑removal board” as an example: there’s Oppein’s formaldehyde‑removal and antibacterial Aixin board, Holike (603898, stock forum)’s “Original‑State Formaldehyde‑Removal Board,” and Tubaobao (002043, stock forum)’s “Formaldehyde‑Eliminating and Antibacterial Homeboard,” among others. Although the wording varies slightly, a key marketing claim for these products is their ability to purify indoor air.
For example, in April this year, the custom‑home‑furnishings brand Oppein Wardrobe launched its second‑generation formaldehyde‑free, aldehyde‑removing, antibacterial “Ai Xin” board. The company stated that, while achieving zero formaldehyde emissions at the material level, the board also boasts built-in aldehyde‑removal capabilities, fully leveraging the high proportion and extensive usage of panel materials in interior spaces to deliver powerful, long‑lasting purification of formaldehyde in the air—thereby fundamentally eliminating the health risks posed by formaldehyde in home environments.
“Formaldehyde removal” shouldn’t be just a gimmick; “environmental protection” should mean genuine, lasting protection.
Given that formaldehyde poses a serious threat to consumers’ health, “formaldehyde‑removal” products not only hold significant commercial value but also carry important social implications.
In particular, as the country is set to introduce two new national standards for man-made boards, China’s home‑furnishings market will usher in the highest environmental‑protection rating—ENF (formaldehyde‑free)—opening up new market opportunities for a healthier, more sustainable upgrade of the industry. This presents both an opportunity and a challenge.
As an industry leader, at a time like this, companies should not treat “formaldehyde removal” as a mere marketing gimmick to mislead consumers. Instead, they should turn “environmentally friendly technology” into genuinely protective products that earn consumers’ trust.
As is well known, the issues we commonly discuss—such as formaldehyde and formaldehyde removal—are, in fact, matters of an entire ecological system, rather than being determined by any single factor.
For example, whether a room’s formaldehyde levels exceed the threshold isn’t determined by a single piece of furniture; it depends on the interplay of various hard and soft furnishings throughout the space. Remove that specific environment, and any discussion becomes meaningless.
For example, in a closed space with very high formaldehyde concentrations, certain products can indeed help reduce formaldehyde levels. However, formaldehyde is not only widely prevalent but also continuously emitted—often over a period of 3 to 15 years—and its release is influenced by indoor temperature and humidity. Moreover, formaldehyde concentrations indoors differ significantly depending on whether windows are open or closed.
In these diverse and specific contexts, can so‑called “formaldehyde‑removing” products truly deliver lasting, hassle‑free air quality to consumers? Probably not. Meanwhile, overly exaggerated advertising may lead consumers to take such claims at face value, lowering their guard and even causing unnecessary harm. This not only harms consumers but also undermines the industry’s credibility and tarnishes the reputations of some brands.
The primary cause of this “lose-lose-lose” scenario is companies’ lack of self‑discipline. A secondary factor is information asymmetry, which fuels consumers’ unwarranted anxiety and fosters unhealthy industry-wide competition—such as exaggerated or false advertising aimed at poaching customers.
We must change this situation. The only way to do so is by closing the information gap: the more consumers understand the facts—such as the sources and health risks of formaldehyde, the actual effectiveness of various products in removing it—the better they can make informed decisions, which in turn will improve the overall environment. Specifically, we can start with the following approaches.
First, industry regulation must be tightened to crack down on information that stokes anxiety and engages in false advertising.
Secondly, brands must exercise self-discipline—especially leading enterprises, which should set a benchmark by refraining from false advertising to avoid misleading consumers and preventing “false involution.”
Only in this way can industry competition be brought back on track, and brand messaging avoid going off course. Consumers will receive not mere “psychological reassurance,” but genuinely effective products. Although these may still fall short of perfection, they also leave ample room for brands to break new ground.
After all, when the tide goes out, consumers will ultimately see who’s really swimming naked.
ByteDance’s education division has carried out large-scale layoffs, cutting nearly 90% of its workforce, and is set to pivot its educational business.

On August 5, a screenshot claiming that “ByteDance’s entire education division has been laid off, leaving all employees unemployed on the spot” circulated on social media. In response, a First Financial reporter interviewed multiple industry insiders to verify the report. While it is true that ByteDance’s education segment has undergone large-scale layoffs, the cuts did not affect the entire division; they primarily targeted certain staff members at Qingbei Online School and Guagua Long, accounting for roughly 90 percent of the workforce in those units.
Another source close to ByteDance’s education division revealed that the laid-off employees primarily held roles in content moderation, curriculum development, teaching, and sales, and were offered severance packages of N+2. The company retained its headquarters management team as well as staff from the product‑design department. Following this round of layoffs, ByteDance’s education segment will shift its strategic focus and continue to pursue its core education business; meanwhile, the Qingbei Online School and Guagua Long operations will not be shut down outright for now, but will instead pivot to explore other innovative ventures.
Public records show that Qingbei Online School primarily offers K‑12 large‑class, dual‑teacher courses, while Guagua Long focuses on children aged 3 to 8—both falling within the scope of recent education policy oversight. On October 29, 2020, ByteDance launched a new education brand, “Da Li Education,” which took over all of the company’s education products and operations; Chen Lin, the former head of ByteDance’s education business, was appointed CEO of Da Li Education. ByteDance founder Zhang Yiming stated, “Our exploration of the education sector is still in its early stages. The independent branding of Da Li Education is just the beginning—we will remain patient and committed to education over the long term.” Earlier, during an internal sharing session, Chen Lin also discussed his vision for the education business, emphasizing that the company is optimistic about its value and prospects, planning to maintain substantial annual investments in this area and, for the next three years, prioritizing growth over profitability.
In late July, online education platforms offering subject‑based tutoring—including New Oriental, TAL Education Group, Gaotu, Zuoyebang, and Zhangmen One‑to‑One—announced layoffs one after another. On July 29, Zhang Yi, founder of Zhangmen, posted on his WeChat Moments, stating: “Guided by the nation’s new education policies, our existing businesses will evolve in a more sound, orderly, and sustainable manner. At the same time, we are ramping up investment in quality‑oriented education. Regrettably, we must bid farewell to some colleagues from certain business lines, while actively seeking to recruit more talent in the field of holistic education to meet society’s expectations.” On the evening of July 30, Chen Xiangdong, founder of Gaotu Group, issued an internal letter conofficeing the layoffs, though he did not disclose the exact number or percentage of employees affected. In his message, he explained that in 2021, amid profound external changes, failure to implement significant adjustments would leave the company in an extremely precarious position: relentless cash burn could consume the entire organization, pushing it once again toward collapse.
According to data from Lagou’s Recruitment Data Research Institute, the job posting index for the online education sector over the past year has experienced significant volatility. Starting in May 2021, demand for talent plummeted, and this downward trend has persisted to the present day. The institute also found that, within the online education industry, a staggering 98.5% of candidates are currently “resigned and available to start immediately,” whereas across the broader internet sector, this figure stands at just 63.2%.

Taxation TAXATATION
Announcement of the State Taxation Administration on Matters Relating to the Application of the Simplified Procedure for Unilateral Advance Pricing Arrangements

In order to implement the “Opinions on Further Deepening Tax Collection and Administration Reform” issued by the General Office of the CPC Central Committee and the General Office of the State Council, to deepen the “delegation, regulation, and service” reform in the tax field, to optimize the business environment, to promote tax‑enterprise cooperation, and to enhance the level of personalized services and tax certainty for cross‑border investors, and in accordance with the relevant provisions of the Enterprise Income Tax Law of the People’s Republic of China and its Implementing Regulations, as well as the Tax Collection and Administration Law of the People’s Republic of China and its Detailed Rules for Implementation, the following matters concerning the application of the simplified procedure for unilateral advance pricing arrangements are hereby announced:
I. Enterprises that apply for a unilateral advance pricing arrangement in accordance with the relevant provisions of the State Administration of Taxation’s Announcement on Matters Concerning the Improvement of the Management of Advance Pricing Arrangements (No. 64 of 2016, hereinafter referred to as Announcement No. 64), and that meet the requirements set forth in this announcement, may be subject to the simplified procedure.
II. The simplified procedure comprises three stages: application for assessment, negotiated signing, and monitoring of implementation.
III. An enterprise that, for each of the three tax years preceding the tax year in which the competent tax authority serves it with the “Notice of Tax Matters” acknowledging acceptance of its application, has engaged in related-party transactions totaling RMB 40 million or more per year and meets one of the following conditions may apply to avail itself of the simplified procedure.
(1) The taxpayer has submitted to the competent tax authority contemporaneous documentation for the three tax years preceding the year in which the application is filed, in compliance with the requirements set forth in the State Administration of Taxation’s Announcement No. 42 of 2016 on Improving the Management of Related‑Party Reporting and Contemporaneous Documentation.
(2) Within the ten tax years preceding the tax year in which the enterprise submits its application, the enterprise has previously entered into an advance pricing arrangement, and the outcomes of such arrangements were consistent with the terms of the arrangements;
(3) Within the ten tax years preceding the tax year in which the enterprise submitted its application, it has been subject to a special tax investigation and adjustment by the tax authorities, and the case has since been closed.
IV. Enterprises shall submit an application to the competent tax authority for the application of the simplified procedure. Following analysis and assessment, the competent tax authority shall decide whether to accept the application.
(1) Enterprises intending to apply shall submit to the competent tax authority the “Application Form for the Simplified Procedure of a Unilateral Advance Pricing Arrangement” (see attachment), together with an accompanying application report. The application report shall include the following contents:
1. Related parties and related-party transactions involved in unilateral advance pricing arrangements;
2. The applicable year for the unilateral advance pricing arrangement;
3. Does the unilateral advance pricing arrangement apply retroactively to prior years?
4. The organizational structure and management framework of the enterprise and its affiliated corporate group;
5. The enterprise’s production and operating performance, financial accounting reports, audit reports, and contemporaneous documentation for the most recent three to five tax years;
6. A description of the functions and risks of each related party involved in the unilateral advance pricing arrangement, including the entities, personnel, costs, assets, and other factors upon which the allocation of functions and risks is based;
7. The pricing principles and calculation methods applied in the unilateral advance pricing arrangement, together with the functional risk analysis, comparability analysis, and underlying assumptions that support these principles and methods;
8. Value chain or supply chain analysis, along with consideration of region-specific advantages such as cost savings and market premiums;
9. Description of the market conditions, including industry development trends and the competitive landscape;
10. The annual operating scale, projected operating performance, and business plan for the period of application of the unilateral advance pricing arrangement;
11. Relevant domestic and foreign industry laws and regulations that may affect unilateral advance pricing arrangements;
12. Situations falling under the provisions set forth in Article 3 of this announcement;
13. Other matters requiring clarification.
(2) The competent tax authority shall not accept an application submitted by an enterprise if any of the following circumstances applies:
1. The tax authorities have initiated a special tax adjustment investigation or other tax-related investigations against the enterprise, and such cases remain unresolved.
2. Failure to file the annual related-party transaction report as required by relevant regulations, and failure to make timely corrections;
3. Failure to prepare, maintain, and submit contemporaneous documentation in accordance with the relevant provisions;
4. Failure to provide the relevant materials as required by this announcement, or provision of materials that do not meet the tax authorities’ requirements, and failure to rectify or correct such deficiencies in a timely manner;
5. Refusal to cooperate with the tax authorities in conducting on-site interviews regarding functions and risks.
(3) Upon receipt of an enterprise’s application, the competent tax authority shall conduct an analytical assessment, carry out on-site interviews to evaluate functions and risks, and, within 90 days from the date of receipt of the application, issue a “Notice on Tax Matters” to the enterprise, informing it whether the application has been accepted; if the application is not accepted, the reasons shall be stated.
V. Upon receipt of an enterprise’s application, the competent tax authority shall consult with the enterprise to determine whether its related-party transactions comply with the arm’s-length principle, and shall complete such consultation within six months from the date of service of the “Notice of Tax Matters” acknowledging acceptance of the application. During the consultation period, the competent tax authority may request the enterprise to submit additional relevant documentation; any time taken by the enterprise to provide such supplementary materials shall not be counted toward the aforementioned six-month period.
(1) Where the competent tax authority and the enterprise have reached mutual agreement, they shall draft a text of the unilateral advance pricing arrangement. The unilateral advance pricing arrangement shall be signed by the legal representatives of both parties or by representatives authorized by the legal representatives.
(2) If the competent tax authority is unable to reach a consensus with the enterprise, it shall serve the enterprise with a “Notice of Tax Matters” terminating the simplified procedure. The enterprise may, in accordance with the provisions of Announcement No. 64, re‑apply for a unilateral advance pricing arrangement. Documents already submitted need not be resubmitted.
VI. Tax authorities shall, in accordance with the requirements of Announcement No. 64, effectively carry out monitoring and enforcement of unilateral advance pricing arrangements.
During the period of implementation of a unilateral advance pricing arrangement, if an enterprise experiences a material change that affects the arrangement and necessitates its termination, it may, in accordance with the provisions of this Announcement, reapply for a unilateral advance pricing arrangement.
VII. A unilateral advance pricing arrangement applies to related-party transactions for a period of three to five tax years beginning with the tax year in which the competent tax authority serves the enterprise with the “Notice of Tax Matters” acknowledging acceptance of the application.
VIII. Unilateral advance pricing arrangements that involve the tax authorities of two or more provinces, autonomous regions, municipalities directly under the central government, or separately planned cities shall, for the time being, not be subject to the simplified procedure.
9. With respect to other matters concerning unilateral advance pricing arrangements not specifically addressed in this Announcement, the provisions of Announcement No. 64 shall apply.
X. This Announcement shall take effect as of September 1, 2021.

Fulfill political responsibilities, deepen inspection and oversight, and ensure the steady and sustainable advancement of tax modernization in the new stage of development.

Recently, the National Tax System Inspection and巡察 Work Conference was held in Beijing. The meeting thoroughly studied and implemented the spirit of General Secretary Xi Jinping’s important speech on July 1, the Fifth Plenary Session of the 19th CPC Central Commission for Discipline Inspection, the National Inspection Work Conference, and the symposium on inspection work in central government organs. It reviewed the inspection and巡察 efforts of the tax system and outlined key tasks for the next phase. Wang Jun, Party Secretary and Director of the State Taxation Administration and head of the Inspection Work Leading Group, attended the meeting and emphasized that the national tax system must adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, strengthen the “Four Consciousnesses,” officely uphold the “Four Confidences,” and ensure “Two Safeguards.” It must conscientiously shoulder and earnestly fulfill its principal responsibility for inspection and巡察, effectively translate the institutional strengths of these mechanisms into enhanced tax governance, and provide robust support for the steady and sustained modernization of taxation in the new stage of development, thereby making new and greater contributions from the tax authorities toward the comprehensive building of a strong socialist modern country. Wu Haiying, head of the Discipline Inspection and Supervision Group of the Central Commission for Discipline Inspection and the National Supervisory Commission stationed at the State Taxation Administration, member of the Party Committee of the State Taxation Administration, and deputy head of the Inspection Work Leading Group, delivered a speech. Yao Laiying, member of the Party Committee of the State Taxation Administration, Deputy Director, and deputy head of the Inspection Work Leading Group, presided over the meeting.
Wang Jun pointed out that since the 18th National Congress of the Communist Party of China, the Party Committee of the State Taxation Administration has thoroughly studied and implemented General Secretary Xi Jinping’s important expositions on inspection work, aligned itself with the requirements of the CPC Central Committee, and consciously regarded inspection and巡察 as a key mechanism for fulfilling the principal responsibility for exercising full and rigorous Party self‑discipline. To this end, it has established and put into practice a tax‑related inspection and巡察 system featuring unified leadership by the SAT Party Committee and tiered accountability at the provincial and municipal tax bureau Party committees—“one‑level inspection, two‑level巡察.” This approach has ensured that pressure is cascaded from top to bottom, fostering more conscious and resolute study and implementation of General Secretary Xi Jinping’s important expositions on inspection work; strengthening and solidifying the principal responsibility for inspection and巡察; fully leveraging the political oversight role of these mechanisms; ensuring that the follow‑up measures of inspection and巡察 are carried out in greater depth and yield tangible results; and laying a more robust and enduring foundation for inspection and巡察 work. As a result, the successful implementation of major tax reform tasks has been effectively guaranteed, providing strong support for deepening and advancing the comprehensive and rigorous self‑discipline of the tax system.
Wang Jun called for the national tax system to continue to study and implement in depth the spirit of General Secretary Xi Jinping’s important speech on July 1, as well as his important expositions on inspection work and the new guiding principles of the CPC Central Committee’s inspection work. In conjunction with Party history study and education, it is essential to thoroughly identify gaps, shortcomings, and weak links; to steadfastly deepen political inspections and strengthen political oversight, thereby ensuring that the building of politically oriented organs progresses in a solid and effective manner; to remain people-centered and maintain close ties with the masses, thus guaranteeing the effective implementation of measures that deliver convenient, people‑oriented services; to focus on the central tasks and serve the overall situation, so as to enhance the effectiveness of tax‑related contributions to national governance; to keep a tight grip on power and responsibility and rigorously enforce strict standards, thereby fostering a cadre team that is resolute and motivated; and to pinpoint key areas of convergence and concentrate efforts where they matter most, so as to ensure that inspection and巡察 mechanisms play an even more robust role. All these efforts will continuously drive improvements in quality and efficiency through upholding fundamental principles while pursuing innovation, providing strong political support for advancing tax modernization in the new stage of development with high quality.
Wang Jun emphasized that, to effectively carry out inspection and巡察 work within the tax system both now and in the period ahead, it is essential to fully implement the guiding principles of inspection work, regard “upholding the Two Upholds” as the fundamental political task, and focus closely on the functions, responsibilities, and key priorities of the tax authorities. We must continue to refine the working framework of “political inspection sets the direction, coordinated linkage amplifies synergy, comprehensive coverage ensures tangible and effective oversight, and closed-loop management drives development.” We need to strengthen theoretical grounding, continuously elevate our political awareness, deeply study and thoroughly grasp the new spirit of the CPC Central Committee, earnestly implement the new requirements of the Party Leadership Group of the State Taxation Administration, and constantly enhance our ideological, political, and practical consciousness in performing inspection and巡察 duties. We should promote coordinated linkage and pooled efforts in political oversight, actively exploring ways to integrate supervisory resources across all vertical levels and among horizontal departments within the tax system, and to share supervisory outcomes. We must officely shoulder principal responsibility and improve the quality of full‑coverage oversight, keeping a close watch on the study and implementation of the spirit of General Secretary Xi Jinping’s important speech on July 1, as well as on key tasks such as building politically strong organs, conducting Party history study and education, implementing the “Opinions on Further Deepening Tax Collection and Administration Reform,” and launching the “I Do Practical Things for Taxpayers and Payers—Spring Breeze Action for Convenient Tax Services.” We must ensure thorough rectification following inspections, deepen and expand the application of inspection findings, strengthen case analysis and cautionary education, and do a solid job on the “second half” of inspection and巡察 work—particularly by drawing broader lessons from identified problems and establishing sound systems and mechanisms. Finally, we must consolidate the foundations of our work, continuously strengthen organizational support, and make steady progress in standardizing, informatizing, and professionalizing inspection and巡察 operations.
Wu Haiying pointed out that in recent years, the Party Committee of the State Taxation Administration has officely shouldered its political responsibility for Party governance, upheld the positioning of political inspection, and adhered to a problem-oriented approach. As a result, inspection and巡察 work has yielded positive results, effectively advancing the tax system’s comprehensive and rigorous Party self‑discipline in greater depth. All levels of Party committees within the tax system must thoroughly study and implement General Secretary Xi Jinping’s important expositions on comprehensively strengthening Party self‑discipline and on inspection and巡察 work, as well as the relevant decisions and arrangements of the CPC Central Committee. They should earnestly carry out the “five key areas of focus” put forward by Comrade Zhao Leji at the symposium on research into inspection work among central government organs, uphold a systems‑thinking approach, and strive to explore institutional mechanisms that promote the integrated advancement of the “three no’s”: ensuring that officials dare not engage in misconduct, cannot do so, and are unwilling to do so. By continuously promoting high‑quality development of inspection and巡察 work, they can fully leverage the strategic role of these efforts in addressing both symptoms and root causes. Meanwhile, disciplinary inspection bodies at all levels within the tax system should concentrate on their roles of assisting and exercising oversight, strengthen information sharing prior to inspections and巡察, ensuring that Party committees have a clear understanding of the situation; enhance the handling of leads and clues following inspections and巡察, adhering to regulations, discipline, and law, and precisely applying the “four forms” of supervision and discipline; and intensify routine oversight of rectification measures arising from inspections and巡察, thereby improving the quality and effectiveness of the “second half” of this work and actively fostering a favorable environment in which the “two responsibilities” reinforce each other.
The meeting was held via video conference. The Party committees of the tax bureaus of Shanghai, Anhui, Fujian, Hubei, and Sichuan delivered exchange remarks. Leading officials from the member units of the State Taxation Administration’s Party Committee Inspection Work Leading Group, along with all staff members of the Party Building Bureau (Inspection Work Office), attended the meeting at the main venue. At the sub-venues, leaders of the Party committees of provincial, municipal, and county tax bureaus, the State Taxation Administration’s resident special offices, and the State Taxation Administration Cadre College, as well as leading officials from the member units of the inspection work leading group and all staff members of the party building departments (inspection work offices), participated in the meeting.

Chongqing: Instant Access to Input VAT Credit Refunds Through the “Reporting and Refund Integration” System

According to the latest data from the Chongqing Municipal Tax Service of the State Taxation Administration, from May to the end of the July tax filing period this year, 575 enterprises in Chongqing applied for a refund of outstanding input VAT credits totaling RMB 3.17 billion through the integrated “declaration-and-refund” function, accounting for 65.6% of all applications during the same period and reflecting a significant improvement in the efficiency of such refund applications.
It is understood that the “integrated filing and refund” system for value-added tax is one of the 54 measures outlined in the Chongqing Municipal Government’s 2021 Implementation Plan for Deepening the “Delegation, Regulation, and Service” Reform and Optimizing the Business Environment. In May this year, the Chongqing Municipal Tax Service Bureau launched the “integrated filing and refund” function on the electronic tax platform. When taxpayers file their VAT returns online, the system automatically determines whether the enterprise meets the basic eligibility criteria for the input‑VAT credit refund policy. For those who qualify, the system provides an immediate notification, enabling taxpayers to apply for a refund right away; the system then directly redirects them to the refund application page, thereby streamlining the process and ensuring that eligible preferential policies are promptly accessed.
“There are numerous requirements for applying for a carryforward VAT refund, and the calculation process is rather complex. Now, the filing system automatically assesses eligibility and issues timely reminders; once the conditions are met, taxpayers can submit their refund application right away, making the process extremely convenient.” Recently, Zhan Hongyu, a finance professional at Chongqing Chang’an Vehicle Connectivity Technology Co., Ltd., utilized the new “integrated filing and refund” feature for VAT, and the company promptly received a refund of RMB 4.94 million.
Bao Gang, Deputy Director of the Goods and Services Tax Division of the Chongqing Municipal Tax Service Bureau, stated that the integration of VAT filing and refund processing is a key initiative aimed at delivering refined services and promoting smart tax administration. The Chongqing tax authorities will continue to deepen tax collection and administration reforms, fully leveraging big data to introduce innovative service measures in areas such as filing and login, refund reminders, and tax and fee payments, while enhancing the functionality of the electronic tax bureau. These efforts seek to improve taxpayers’ overall experience, enable market entities to benefit more quickly and conveniently from tax incentives, and support high-quality economic development.

Litigation & Arbitration
The State Administration for Market Regulation has issued the Measures for the Supervision and Administration of Cosmetic Production and Operation, which will take effect on January 1, 2022.
Recently, the State Administration for Market Regulation reviewed and approved the Measures for the Supervision and Administration of Cosmetic Production and Operation (hereinafter referred to as the “Measures”) at its 12th Bureau Meeting of 2021. The Measures will take effect on January 1, 2022.
During the drafting process, the National Medical Products Administration convened numerous symposiums, conducted on-site investigations, and held specialized discussions, extensively soliciting opinions and recommendations from local regulatory authorities, industry associations, enterprises, as well as legal and technical experts. The Measures implement the “four strictest” requirements and refine the regulatory framework; they introduce innovative regulatory approaches to ensure that principal responsibilities are fulfilled; and they prioritize key links and critical products, enhancing regulatory efficiency in line with risk‑management principles.
The Measures comprise 7 chapters and 66 articles, with key provisions covering four main areas:
First, in line with the requirements of the “delegation, regulation, and service” reform, we have streamlined the production licensing process. We have explicitly adopted an “inform-and-commit” system for the renewal of cosmetic production licenses and strengthened post‑commitment oversight, ensuring that licenses are revoked in accordance with the law when conditions are not met. We have also clarified the principles for classifying cosmetic production license categories, emphasizing the special production requirements applicable to children’s skincare and eye‑care cosmetics. Furthermore, we have refined and improved the review and approval procedures for license amendments under various circumstances; where a full on‑site inspection is required due to such amendments, a new cosmetic production license will be issued upon verification of compliance, with the license’s validity period recalculated, thereby reducing burdens and enhancing efficiency for enterprises.
Second, the regulations further refine and clarify requirements for cosmetic production management. They mandate that cosmetic registrants, filers, and contract manufacturers establish production quality management systems, implement a system of accountability for quality and safety, and specify detailed provisions on sample retention, self‑inspection requirements, as well as obligations related to corrective actions, suspension of production, and reporting. The qualifications and specific duties of the person responsible for quality and safety are also refined. Moreover, the conditions and obligations of both commissioning parties and contract manufacturers are clearly defined. In addition, label‑management requirements are elaborated in areas such as cosmetic naming, special labeling for children’s cosmetics, and the determination of label defects; with a strong focus on addressing key issues, the regulations further clarify requirements concerning false or unlawful claims in cosmetic advertising.
Third, the requirements for the operation and management of cosmetics have been refined and clarified. Provisions governing record‑keeping related to incoming‑goods inspection, product testing, storage, and transportation have been improved. Obligations have been specified for beauty and hairdressing establishments, hotels, and other entities that use cosmetics in their services or provide cosmetics to consumers. In light of actual regulatory practice, the responsibilities of e‑commerce platforms, centralized trading markets, and trade fair organizers—such as conducting reviews, submitting reports, carrying out inspections, and preventing illegal activities—have been further detailed, with particular emphasis on the platforms’ obligation to report material information concerning product quality and safety.
Fourth, strengthen the regulatory measures and responsibilities of supervisory authorities. The regulations specify the detailed content of the Cosmetic Production Quality Management Standards and clarify the key inspection items and criteria for assessing compliance as established by the National Medical Products Administration. They also tighten management requirements for priority-regulated entities and refine the sampling and testing procedures for drug regulatory agencies at all levels. In addition, the regulations stipulate that when cosmetic samples fail to pass inspection, the cosmetic product registrant or filer shall, in accordance with the law, conduct self‑inspections and carry out product recalls. Furthermore, it is explicitly stated that adverse reaction monitoring of cosmetics shall adhere to the principle of reporting any suspected cases.

The central bank is advancing the formulation of the Measures for the Administration of Cross-Border Payment Services.
Recently, Yang Tao, deputy director of the National Financial and Development Laboratory, published a signed article titled “Mobile Payments Contribute to Improving People’s Livelihoods,” in which he revealed, “At present, the People’s Bank of China is advancing the formulation of the Measures for the Administration of Cross-Border Payment Services, continuously refining the institutional framework to address key risks in cross-border payments.”
“Key risks include: risks related to the verification of transaction authenticity, risks of money laundering and illicit capital flows, risks in the management of reserve funds, risks of circumventing individual foreign exchange settlement and sale restrictions, risks associated with the reporting, management, and monitoring of international balance-of-payments data, and risks to the security of customers’ personal information. Compliance with overseas market regulatory requirements helps mitigate policy risks.”
In 2020, the People’s Bank of China’s 2020 Regulatory Development Plan included a provision for the formulation of the Measures for the Administration of Cross-Border Payment Services.
In March 2021, 28 departments, including the National Development and Reform Commission, the People’s Bank of China, and the China Banking and Insurance Regulatory Commission, jointly formulated the “Implementation Plan for Accelerating the Development of New Forms of Consumption.” The plan stipulates the formulation and promulgation of the “Administrative Measures for Cross-Border Payment Services” to refine the regulatory framework governing cross-border payment services.
Due to historical developments and market demand, many overseas institutions currently provide cross-border payment services to Chinese cross-border sellers, raising numerous compliance concerns—such as issues related to funds, data, and licensing. Consequently, how to implement effective regulation without undermining the healthy development of the market has become a pressing challenge for regulatory authorities.
Meanwhile, against the backdrop of the global COVID‑19 pandemic, China’s cross‑border e‑commerce sector has risen rapidly thanks to effective epidemic control measures and a range of supportive policies. In May 2020, the State Administration of Foreign Exchange issued the “Notice on Supporting the Development of New Forms of Trade,” followed in August 2020 by the General Office of the State Council’s “Opinions on Further Stabilizing Foreign Trade and Foreign Investment.” In July 2021, the General Office of the State Council released the “Opinions on Accelerating the Development of New Forms and Models of Foreign Trade.”
Against this backdrop, compliance requirements for cross-border payments have also accelerated the formulation of the Measures for the Administration of Cross-Border Payment Services.
Meanwhile, cross-border payments are also undergoing rigorous regulatory scrutiny.
Previously, in April 2019, the State Administration of Foreign Exchange issued the Measures for the Administration of Foreign‑Exchange Business by Payment Institutions. Following the promulgation of these measures, payment institutions’ cross‑border foreign‑exchange business pilot program was officially formalized. At the same time, encouraged by regulators, banks also began to join the ranks of providers offering cross‑border collection services.
The recently issued Measures for the Administration of Reporting Major Matters by Non-Bank Payment Institutions, which will take effect on September 1, 2021, also explicitly stipulates that any cooperation with overseas institutions to conduct cross-border payment services must be reported in advance to the local branch of the People’s Bank of China.
The numerous risks addressed in the Measures for the Administration of Cross-Border Payment Services will, once the regulations are implemented, further standardize the industry’s development.
According to Mobile Payment Network, at the beginning of this year, regulators issued the “Administrative Measures for Cross-Border Payment Services (Draft for Comments)” to certain institutions, addressing compliance issues related to foreign companies providing cross-border payment services in China, as well as matters such as the disconnection of direct links for cross-border RMB payments. The measures clearly delineate the rights and responsibilities of service providers, business operations, customer rights and information security protection, supervisory oversight, and legal liabilities in the context of cross-border payment services.

Zhejiang High People’s Court: Strengthen the “Four Powers” to Effectively Combat Fictitious Litigation
In recent years, the judicial authorities have issued numerous judicial documents and institutional regulations aimed at preventing and combating fraudulent litigation. Notably, in September 2018, the Supreme People’s Court and the Supreme People’s Procuratorate jointly promulgated the “Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Fraudulent Litigation,” and in March 2021, the “Two High Courts and Two Ministries” again jointly issued the “Opinions on Further Strengthening Efforts to Punish the Crime of Fraudulent Litigation.” These measures have played a positive role in clarifying the legal standards for addressing such offenses, effectively curbing fraudulent litigation, and deterring unlawful conduct in this area. Nevertheless, instances of fraudulent litigation persist in civil and commercial adjudication at people’s courts across the country, particularly at the primary level, drawing strong public concern. How to further enhance the effectiveness of law-based efforts to combat fraudulent litigation has thus become a critical issue facing the people’s courts today. To effectively prevent and suppress fraudulent litigation, it is essential to address the problem from four key dimensions, further strengthening the “four capabilities” and improving practical outcomes.
I. Enhance conceptual awareness and further strengthen the impetus for combating fraudulent litigation.
First, from a legal perspective, fraudulent litigation—being an unlawful and criminal act—must be severely punished. Fraudulent litigation is a malignant tumor within the judicial system, gravely undermining judicial order and infringing upon the legitimate rights and interests of stakeholders. Like the crime of refusing to enforce judgments or rulings, the crime of fraudulent litigation as defined in the Criminal Law protects both judicial order and judicial authority. However, in a certain sense, it is even more egregious than the former: while the crime of refusing to enforce judgments or rulings primarily reflects a passive, reactive attitude toward judicial decisions, fraudulent litigation constitutes an active interference with judicial order, exhibiting a far greater degree of subjective malice. Accordingly, considering the level of subjective intent and maliciousness underlying such offenses, fraudulent litigation should be met with even stricter enforcement.
Second, from the perspective of practical needs, cracking down on fraudulent litigation and related criminal offenses is an objective imperative for alleviating the imbalance between caseloads and judicial resources and for elevating the overall level of social governance. In practice, a large number of fraudulent litigation cases severely squander precious judicial resources, exacerbating this imbalance. In recent years, the number of cases filed with courts nationwide has remained persistently high, making the mismatch between caseloads and available resources particularly acute. Some of these cases are suspected of involving fraudulent litigation, consuming substantial judicial resources and seriously undermining the quality and effectiveness of case adjudication. Therefore, from the standpoint of strengthening grassroots social governance, it is essential to raise awareness and enhance capabilities in preventing and combating fraudulent litigation, thereby effectively curbing such practices. This will enable the courts to devote greater attention to resolving genuine disputes and conflicts, thus facilitating conflict resolution and advancing social governance.
Third, from the perspective of social development, combating fraudulent litigation is an essential requirement for advancing the establishment of a societal integrity mechanism. Judicial credibility is a vital component of the broader social integrity system; fraudulent litigation not only gravely undermines judicial credibility but also severely disrupts the construction of that system. To address the issue of fraudulent litigation, it is necessary to tackle its root causes by strengthening citizens’ moral self‑discipline and guiding them to adopt sound values and proper attitudes toward litigation. In terms of specific institutional mechanisms, drawing on the successful experience of the list of discredited persons subject to enforcement, we could explore adding perpetrators of fraudulent litigation—whether they commit criminal or civil offenses—to such lists. Furthermore, civil litigants, litigation agents, and other participants who fabricate or engage in fraudulent litigation should be incorporated into the social credit system for public disclosure, with appropriate restrictions imposed on their eligibility to participate in litigation or practice law, thereby raising the costs of dishonest litigation.
II. Effectively leveraging information technology to bolster efforts to prevent and combat fraudulent litigation.
Preventing problems before they arise is the prerequisite and foundation for rigorously cracking down on fraudulent litigation in accordance with the law. Fully leveraging information technology to promptly identify clues of illegal and criminal conduct in such cases constitutes an effective approach to both preventing and combating fraudulent litigation.
First, at the case‑filing stage, efforts to collect information should be intensified, and risk‑warning measures strengthened. This includes posting notices in the filing hall prohibiting frivolous litigation, proactively sharing typical cases with parties, and promptly informing them of the severe consequences of such conduct. In particular, people’s courts should make full use of information channels such as the 12368 SMS platform and the Mobile Micro‑Court to proactively alert parties to the potential legal liabilities they may face for engaging in fraudulent or unlawful litigation, ensuring that litigants are fully aware of the repercussions even at the time of filing and thus deter them from initiating baseless claims. When registering a case for filing, courts may also require plaintiffs to provide details on their litigation history and any records of sanctions for false litigation, and employ information‑technology tools to conduct cross‑case searches, reviewing the parties’ involvement in other lawsuits and enforcement proceedings. Relevant information is then transferred along with the case file to the adjudicating division, enabling judges to remain vigilant against fraudulent litigation. During the trial phase, adjudicating judges should enhance their awareness of proactive measures to prevent false litigation and continuously improve their judicial competence and capacity for scrutiny and assessment.
Second, it is necessary to improve the mechanism for identifying fraudulent litigation. In the current context of acute caseload pressures, discerning fraudulent claims amid a large volume of civil and commercial cases poses a significant challenge to judicial discretion. Surveys and symposiums have revealed that certain types of cases—such as private loan disputes, divorce disputes, wage‑recovery disputes, judicial conofficeations of people’s mediation agreements, as well as third‑party actions to set aside judgments, third‑party objections to enforcement, applications by third parties for retrial, and bankruptcy proceedings—are particularly prone to fraudulent litigation and related illegal conduct. People’s courts should therefore focus on these high‑risk areas, strengthen scrutiny of factual evidence, and make full use of information technology to harness technological advances in enhancing productivity. By conducting big‑data analysis of judgment documents in key civil and commercial sectors, courts can identify irregular civil rulings and establish an integrated fraud‑litigation identification framework comprising “intelligent screening, manual review, in-depth investigation, referral to investigative authorities, and judicial oversight.”
III. Cultivating Both Internal and External Measures to Forge Synergy Between Civil Sanctions and Criminal Prosecution
First, people’s courts must be adept at employing civil sanctions to combat fraudulent litigation. In light of the current inadequacy of civil sanctions against such conduct, courts should fully and effectively utilize these measures to deter and punish unlawful acts of fraudulent litigation. At the case‑filing stage, if a case is reviewed and determined to be fraudulent, the court may, in accordance with the law, issue a warning to the parties and refuse to accept the case. For cases that have already entered the trial or enforcement stages, the people’s courts should, depending on the severity of the fraudulent conduct, impose warnings, detention, or other appropriate sanctions, and, taking into account the value of the subject matter involved and the consequences of the misconduct, levy fines commensurate with the circumstances. Where fraudulent litigation has caused direct economic losses to the opposing party or to third parties, the court may, based on the specific facts of the case, uphold claims by the non‑faulting party for compensation of reasonable expenses, including attorney’s fees. As for parties involved in civil cases of fraudulent litigation that do not yet constitute a criminal offense, it may be advisable to explore placing them on a blacklist of untrustworthy individuals engaged in fraudulent litigation, thereby imposing credit‑related sanctions.
Second, it is essential to ensure smooth referral channels to public security organs for case initiation and investigation, thereby fostering a conducive environment for concerted efforts to combat fraudulent litigation. Due to factors such as the lack of uniform evidentiary standards between civil and criminal proceedings, judicial authorities often hold differing views on the determination of fraudulent litigation in specific cases, resulting in situations where some cases referred to public security organs for potential criminal offenses fail to lead to criminal prosecution or conviction. According to preliminary statistics, from 2016 to 2018, courts across Zhejiang Province referred a total of 655 cases suspected of fraudulent litigation to public security organs; however, only 137 of these ultimately resulted in convictions and penalties. To address these issues, the civil adjudication divisions of the people’s courts should refine their internal review mechanisms: promptly convene personnel for deliberation on cases suspected of fraudulent litigation, submit them for discussion at specialized judges’ conferences, and, when necessary, refer them to the adjudication committee. Following such procedural scrutiny and verification, if there are reasonable grounds to suspect fraudulent litigation, the presiding judge shall promptly forward to the public security organs all relevant evidentiary materials—such as civil and commercial complaint pleadings, answers, court transcripts, investigation records, and interview transcripts—that can substantiate the alleged criminal conduct. At the same time, it is crucial to strengthen communication and coordination with public security and procuratorial organs, build consensus on the criteria for applying the crime of fraudulent litigation, and, in accordance with the law, jointly and resolutely crack down on such criminal behavior.
Third, criminal penalties shall be applied in accordance with the law to strengthen criminal enforcement. People’s courts must impose strict punishments on the crime of false litigation, increase the application of fines, and raise the cost of committing such offenses. A comprehensive analysis of the facts of each case is required to determine, in accordance with the law, whether the conduct constitutes the crime of false litigation, fraud, obstruction of testimony, aiding in the fabrication of evidence, embezzlement, or other offenses. Where multiple co‑offenders are involved, the status and role of each perpetrator, as well as the appropriate sentence, must be accurately assessed. If a perpetrator’s conduct of false litigation simultaneously violates two or more offenses, the court shall, in accordance with the law, impose cumulative sentencing or convict and punish under the offense carrying the heavier penalty. With respect to private criminal complaints filed by a party alleging that another person’s false litigation has infringed upon their legitimate rights and interests, the people’s court shall rigorously examine whether the statutory conditions are met and, in accordance with the law, decide whether to institute proceedings and accept the case.
IV. Strengthen judicial supervision and management, and exert pressure to combat frivolous litigation.
In light of the current judicial practice, where some staff members of people’s courts are reluctant or unwilling to address the illegal and criminal conduct of false litigation, and instead allow such misconduct to go unchecked, it is imperative to further enforce judges’ principal responsibility for case handling and strengthen trial supervision and management. The supervisory and managerial duties of court presidents and division chiefs should be refined, fully leveraging their gatekeeping and oversight roles to ensure that adjudicating personnel conscientiously fulfill their obligations to prevent and combat false litigation. For cases suspected of involving illegal or criminal false litigation, trial personnel must be promptly reminded to take appropriate measures and carry out thorough investigations and prosecutions. Furthermore, efforts should be made to integrate the prevention and suppression of false litigation into judges’ performance evaluations and link these efforts with mechanisms for adjusting judicial quotas, imposing disciplinary measures, and providing incentives. Where judges fail to exercise due diligence in reviewing cases involving false litigation, they shall be held accountable in accordance with the requirements of the judicial accountability system.
In addition, people’s courts at all levels should intensify public awareness campaigns to build strong momentum against the serious crime of fraudulent litigation. By holding press conferences and launching targeted enforcement operations, they must rigorously prosecute such offenses in accordance with the law, raise public awareness of the risks and consequences of fraudulent litigation, deter perpetrators, and further enhance the credibility of the judiciary.

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