JC Master Legal News Issue 985

Key Takeaways for This Issue

Xi Jinping: Deepen Reform of the New Third Board and Establish the Beijing Stock Exchange

On the evening of September 2, President Xi Jinping delivered a video address at the Global Services Trade Summit of the 2021 China International Fair for Trade in Services. President Xi stated that China will continue to support the innovative development of small and medium-sized enterprises, deepen the reform of the New Third Board, establish the Beijing Stock Exchange, and build it into a key platform for serving innovative SMEs.
Banks are scaling back the share of housing-related loans, and the focus of credit allocation is expected to shift.
With the release of their 2021 interim reports, the share of personal housing loans among listed banks has come into focus. Compared with year-end last year, most banks—including the six major state-owned banks—have reduced the proportion of personal housing loans. Nevertheless, as of the end of June, some banks still exceeded the regulatory cap on this ratio. Industry insiders note that, going forward, banks will continue to steadily lower the share of real-estate‑related lending by prioritizing risk management and shifting the direction of credit allocation. It is expected that, during the transition period, the vast majority of banks will complete the necessary adjustments, keeping the overall impact manageable.
Tax and fee services are being enhanced to support the steady growth of small and micro enterprises.

　Small and micro enterprises are the lifeblood of the market; when they thrive, all sectors flourish. Amid a still‑complex domestic and international environment, the CPC Central Committee and the State Council have attached great importance to the development of small and micro businesses, rolling out a series of tax and fee‑reduction policies to help them overcome difficulties. Since the beginning of this year, in conjunction with Party history study and education, the tax authorities have launched the “Doing Practical Things for Taxpayers and Payers” initiative and the Spring Breeze Campaign to facilitate tax services, promptly addressing the personalized needs of small and micro enterprises. Ongoing enhancements to tax and fee‑related support measures continue to provide robust backing for their growth and expansion, helping these businesses strengthen their resilience and boost their vitality.
Supreme People’s Court: Guides local courts to actively advance the practice of natural-person bankruptcy.

Bankruptcy does not mean the enterprise is “dead.” On September 3, the Supreme People’s Court released ten exemplary civil and commercial cases in which the people’s courts have promoted the high-quality development of the private sector.

Finance & Capital Markets
Xi Jinping: Deepen Reform of the New Third Board and Establish the Beijing Stock Exchange

On the evening of September 2, President Xi Jinping delivered a video address at the Global Services Trade Summit of the 2021 China International Fair for Trade in Services. President Xi stated that China will continue to support the innovative development of small and medium-sized enterprises, deepen the reform of the New Third Board, establish the Beijing Stock Exchange, and build it into a key platform for serving innovative SMEs.
The Beijing Stock Exchange has been officially established, ushering in a new landscape for China’s capital markets after three decades. Following the successive launches of the Shanghai and Shenzhen stock exchanges in 1990, mainland China’s capital market has now gained another nationwide securities exchange more than 30 years later. As of now, the Shanghai and Shenzhen exchanges together host 4,467 listed companies, with a combined market capitalization of RMB 86.7 trillion. We believe that the establishment of the Beijing Stock Exchange will enable differentiated development and enhanced connectivity with both the Shanghai and Shenzhen exchanges as well as regional equity markets, thereby further advancing the overall development of China’s capital markets.
This will further help small and medium-sized enterprises achieve high-quality development. In light of President Xi’s remarks and the China Securities Regulatory Commission’s statements, the establishment of the Beijing Stock Exchange reflects an intrinsic need for the capital market to better support the growth and expansion of SMEs. Adhering to the principle of “one clear positioning,” the Beijing Stock Exchange will remain committed to serving innovative SMEs, respecting the developmental patterns and growth stages of such enterprises, and enhancing the inclusiveness and precision of its institutional framework. In line with the three overarching objectives, the Beijing Stock Exchange will: 1) establish a foundational set of systems tailored to the characteristics of innovative SMEs, covering issuance and listing, trading, delisting, ongoing supervision, and investor suitability management; 2) strengthen its role as a bridge among the various tiers of the capital market, fostering a direct‑financing growth pathway for SMEs that is mutually complementary and mutually reinforcing; and 3) cultivate a cohort of specialized, refined, distinctive, and innovative SMEs, thereby nurturing a healthy market ecosystem marked by robust enthusiasm for innovation and entrepreneurship, active participation by qualified investors, and responsible performance by intermediary institutions.
The establishment of the Beijing Stock Exchange marks a new historical phase in the reform of the New Third Board. Since 2019, the New Third Board has developed a tiered market structure comprising the Base Layer, the Innovation Layer, and the Select Layer, with companies advancing sequentially from one layer to the next. Currently, the three tiers comprise 5,988, 1,250, and 66 listed companies, respectively, with total share capital of 345 billion, 129.5 billion, and 10.8 billion shares, respectively. In line with the CSRC’s planned arrangements, the newly established Beijing Stock Exchange will broadly adopt the existing foundational systems of the Select Layer, ensure that all listed companies on the Beijing Stock Exchange originate from the Innovation Layer, maintain the current market structure linking the Base Layer, the Innovation Layer, and the Beijing Stock Exchange, and concurrently pilot a registration-based securities issuance regime. This reform heralds a new chapter in the development of the New Third Board.
In the near term, three key beneficiary sectors deserve close attention. 1) The establishment of the Beijing Stock Exchange heralds a new landscape for the capital markets. We believe that the upgrades to the Select Tier—bringing changes in financing, trading, and other areas—will bolster the growth of relevant financial institutions, with particular focus on securities offices and venture‑capital‑related sectors. 2) The current listed companies on the Select Tier, as well as those that may be promoted from the Basic or Innovation Tiers to the Beijing Stock Exchange, are likely to see marked improvements in trading and financing conditions and attract heightened market scrutiny. For a list of the 66 Select‑Tier‑listed companies, please refer to the original report published by CICC. 3) Positioned to support the development of small and medium‑sized enterprises, especially those that are specialized, refined, distinctive, and innovative, the Beijing Stock Exchange is expected to draw increased attention from the capital markets toward these companies.

Leaders from the People’s Bank of China, the China Securities Regulatory Commission, and the China Banking and Insurance Regulatory Commission have jointly stated that China’s financial markets are highly attractive and that the country will further open its futures market to foreign participation.
　On September 4, at the “2021 China International Finance Annual Forum” held during the Financial Services Special Exhibition of the 2021 China International Fair for Trade in Services, Yin Yong, Member of the Standing Committee of the Beijing Municipal Party Committee and Vice Mayor; Chen Yulu, Deputy Governor of the People’s Bank of China; Zhou Liang, Vice Chairman of the China Banking and Insurance Regulatory Commission; Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission; and Zheng Wei, Deputy Director of the State Administration of Foreign Exchange, attended and delivered remarks, addressing key market concerns such as the two-way opening-up of capital markets, strengthened risk prevention, and the ongoing improvement of the foreign exchange market.
Yin Yong: Attracting International Financial Institutions to Develop in Beijing
At the forum, Yin Yong outlined Beijing’s significant progress in opening up its financial markets. Specifically, the city has welcomed a number of landmark foreign‑invested financial institutions, established innovative financial market platforms, launched pioneering cross‑border financial services and products, and spearheaded cutting‑edge fintech initiatives. In addition, Beijing has implemented a series of pilot policies to improve the business environment for the financial sector, including a mechanism for recognizing international securities and futures professional qualifications, under which overseas securities and futures professionals may undergo a special admission procedure in Beijing, exempted from all examinations except those mandated by law.
Regarding the future development of Beijing’s financial sector, Yin Yong emphasized that during the 14th Five-Year Plan period, Beijing will take the lead in exploring effective pathways for establishing a new development paradigm. The city will aim to build a financial system that aligns with its capital‑city functions, leveraging higher‑level financial opening-up to foster financial development that is of higher quality, safer, and more sustainable.
First, we will elevate the status and capabilities of the national financial center, support the headquarters of major financial institutions in enhancing their functions, attract international financial institutions to establish and expand their operations in Beijing, and build a diversified, mutually beneficial platform for international financial cooperation and governance.
Second, we will build a new high ground for two-way financial opening-up. We will further leverage cross-border financial pilot instruments such as the QFLP and QDLP RMB international investment and lending funds.
Third, we will accelerate the improvement of the capital’s financial market system. Going forward, we will proactively coordinate and support all preparatory work for the establishment of the Beijing Stock Exchange, striving to bring it into operation as soon as possible and to build a securities exchange that is distinguished by its focus on serving innovative small and medium-sized enterprises.
Fourth, consolidate and enhance our leading edge in digital finance.
Fifth, we will establish an international green finance center to support the goals of peaking carbon emissions and achieving carbon neutrality, refine the green finance service system and its functional architecture, promote the establishment of an internationally oriented, market‑based carbon‑finance institution, build a national‑level green exchange to a high standard, and undertake the development of national carbon‑trading centers for voluntary emission reductions and other carbon‑related markets.
Sixth, we will continue to optimize the world-class financial business environment, further strengthen support and services for financial institutions and high‑end talent, leverage the Beijing Financial Court’s leading role in shaping the financial legal framework, elevate the internationalization and professionalization of financial adjudication, improve the mechanisms for monitoring and early warning of financial risks, enhance our capacity to prevent and resolve risks in an open environment, and safeguard the capital’s financial security.
Chen Yulu: China has nearly completed the liberalization of financial institutions and market access.
At the forum, Chen Yulu stated that in recent years, China has steadfastly pursued the independent and orderly opening-up of its financial sector, with significant力度 and broad coverage, achieving groundbreaking progress. Foreign‑owned financial institutions are actively and systematically entering the Chinese market, creating a vibrant landscape of diverse players. Since 2018, China has approved the establishment of more than 100 foreign‑invested banking and insurance entities, 10 securities, fund management, and futures companies with foreign controlling stakes, and six foreign‑owned credit rating, payment, and clearing institutions. In the first half of this year, overseas investors increased their holdings of onshore RMB‑denominated assets—including equities, bonds, and deposits and loans—by a total of 1.27 trillion yuan, underscoring the strong appeal of China’s financial markets.
Chen Yulu believes that, under the new circumstances, China’s pursuit of high-quality economic development requires a higher‑level opening-up policy and the forging of a new landscape of win‑win cooperation, which in turn places even greater demands on the financial sector. To this end, we must remain committed to the principles of marketization, rule of law, and internationalization, continue to deepen financial sector opening-up, ensure the effective implementation of our commitments, and accelerate the refinement of relevant institutional frameworks, thereby advancing systemic and institutional reforms. Key priorities include:
First, we will refine the pre-establishment national treatment plus negative list regime. Going forward, we will continue to improve this regulatory framework and fully leverage the positive role of the negative list approach in advancing high-standard opening-up.
Second, we will optimize regulatory policies to foster a favorable business environment. At present, China has largely completed the liberalization of financial institutions and market access; however, certain regulatory measures still warrant refinement. By improving these policy frameworks, we can create a more conducive environment for foreign-invested enterprises to expand their operations.
Third, we will continuously enhance our capacity for economic and financial management and our ability to manage risks in an open environment. In line with the requirements of high‑level financial sector opening-up, we will further refine the monetary policy framework and the macroprudential policy framework, expand the policy toolkit, establish a comprehensive system for monitoring, assessing, and issuing early warnings of systemic financial risks, and optimize the dual‑pillar framework that integrates macroprudential measures with micro‑prudential supervision in the foreign exchange market. We will also accelerate efforts to address gaps in fintech regulation and bring all financial institutions, financial activities, and financial products under a prudent regulatory framework. By raising the professionalism and effectiveness of financial oversight, building robust safeguards, and officely upholding the bottom line of preventing systemic risk, we will ensure financial stability.
Fang Xinghai: Expanding the Opening-Up of Commodity and Financial Futures Markets to the Outside World
Vice Chairman of the China Securities Regulatory Commission, Fang Xinghai, stated that in recent years, the CSRC has steadily advanced the opening-up of China’s capital market, introducing a series of measures with tangible results and establishing a robust framework for international engagement. Today, China’s capital market has grown into the world’s second-largest, with nearly 4,500 listed companies, while its commodity futures and bond markets rank among the largest globally, attracting an increasing number of international financial institutions and investors to participate actively. The quality of market operations and its global influence have improved markedly, and the ongoing opening-up has injected fresh vitality into the capital market, helping to enhance its overall ecosystem.
Going forward, the China Securities Regulatory Commission will remain steadfast in expanding opening-up, balancing development with security, and introducing more pragmatic measures to support the establishment of a high-standard, open economic system.
First, we will further advance the institutional opening-up of the capital market by implementing measures to facilitate the participation of overseas institutional investors in the exchange‑traded bond market, making it easier for foreign institutions to issue panda bonds in China, expanding the international openness of commodity and financial futures markets, introducing more internationally oriented products, broadening channels and mechanisms for foreign investment in the capital market, deepening connectivity between domestic and overseas capital markets, refining and expanding the Shanghai–London Stock Connect mechanism, and improving the regulatory framework for companies listing abroad.
Secondly, further leverage Hong Kong’s role as an open gateway in the capital markets. The China Securities Regulatory Commission will officely safeguard Hong Kong’s status as an international financial center, support comprehensive and pragmatic cooperation between Hong Kong and the mainland, expand the range of eligible securities under the Shanghai–Shenzhen–Hong Kong Stock Connect, and prudently advance all preparatory work for the launch of A‑share index futures in Hong Kong. It will also continue to facilitate domestic and overseas companies seeking listings in Hong Kong and support the development of the Guangdong–Hong Kong–Macao Greater Bay Area.
Finally, we will further strengthen regulatory capacity and risk‑prevention capabilities in an open environment, adhering to the principles of “liberalization where appropriate, clear oversight, and effective regulation.” We will enhance monitoring, analysis, and assessment of cross‑border investment activities, ensure the stable functioning of the capital markets, and guard against risks associated with large‑scale capital inflows and outflows.
In addition, Fang Xinghai stated that the China Securities Regulatory Commission sincerely welcomes qualified international financial institutions and investors to continue seizing opportunities to expand the scale and sophistication of their investments and business operations in China, thereby jointly sharing the benefits of China’s sound and stable economic development.
Zhou Liang: Over the past four years, financial crimes and illegal activities in China have been severely punished.
Zhou Liang stated that, over the past two years, while maintaining stable economic growth, China has also made significant progress in preventing and controlling financial risks. Specifically, this includes effectively implementing cross-cycle adjustments to macro policies, orderly resolving risks in key sectors, and markedly enhancing the resilience of the financial system.
“Over the past four years, we have cumulatively resolved non‑performing loans totaling RMB 8.8 trillion, surpassing the combined total of the previous 12 years. High‑risk shadow banking assets have been reduced by RMB 23 trillion from their historical peak, reforms and restructuring of small and medium‑sized financial institutions are progressing steadily, financial crimes and illegal activities have been severely punished, and market order has improved markedly,” said Zhou Liang.
Next, Zhou Liang stated that the China Banking and Insurance Regulatory Commission will accurately grasp the new stage of development, fully implement the new development philosophy, accelerate the establishment of a new development pattern, and steadily advance higher‑level opening-up.
First, we will foster a fair business environment. We will ensure the effective implementation of opening-up measures, revise relevant laws and regulations to expand from factor‑based openness to institutional openness, further streamline administrative approval procedures, and accelerate the development of an open, transparent, stable, and predictable environment that is consistent both domestically and internationally. We will also encourage win‑win cooperation between domestic and foreign financial institutions.
Second, we will attract high-quality international financial resources. Leveraging China’s market strengths, we will promote both domestic and international dual circulation by bringing in foreign‑owned financial institutions that boast specialized expertise, sound operations, and strong credentials across such sectors as wealth management, consumer finance, green finance, health and elderly care, and risk management. This will help diversify and innovate our product offerings and enhance the quality of financial services.
Third, steadily advance the financial sector’s “going global” strategy, encouraging Chinese-funded financial institutions to optimize their presence in countries along the Belt and Road, strengthen their services, and promote joint credit underwriting, syndicated lending, risk-sharing, and benefit-sharing.
Fourth, deepen international financial cooperation. Actively participate in the formulation of international financial rules, promote mutual recognition of domestic and international regulatory standards, strengthen monitoring of cross-border capital flows and law enforcement cooperation on anti‑money laundering, enhance fintech collaboration and data security governance, and fortify the safeguards for financial stability.
Zheng Wei: We will further diversify foreign-exchange market products and expand the participation of both domestic and international market participants.
In outlining the state of China’s foreign exchange market, Zheng Wei stated that in the first half of 2021, the market operated steadily overall, with stable and orderly exchange-rate expectations, more rational and active foreign-exchange trading, and well-maintained market order. The renminbi exchange rate remained stable within an appropriate range, the current-account balance stayed within a reasonable band, direct investment continued to register a relatively high net inflow, and the size of foreign-exchange reserves remained broadly stable.
In the next phase, Zheng Wei stated that the State Administration of Foreign Exchange will closely align with the needs of market entities, focus on the quality of policy transmission, and enhance the overall effectiveness of reform.
First, we will continue to enhance the level of trade and investment liberalization and facilitation, support the orderly and free flow of production factors both domestically and internationally, further optimize the financial environment, bolster the development of the digital economy, leverage innovation as a driving force, and promote industrial transformation, upgrading, integrated development, and improved quality and efficiency.
Second, we will steadily and orderly advance the opening-up of capital accounts, launch pilot programs for cross-border investment by equity investment funds, improve the administration of foreign direct investment, and carry out pilot projects to integrate domestic and foreign currency pooling for multinational corporations.
Third, we will build an open, diversified, and well‑functioning foreign exchange market, further expand the range of FX products and the pool of domestic and international participants, and continuously enhance the market’s infrastructure.

Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, stated that opening up to the outside world has established a favorable framework.
At a financial forum, Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission (CSRC), stated that the capital market’s high‑level opening-up is steadily advancing. In recent years, the CSRC has introduced a series of measures to further open up the market, fostering a favorable landscape for international engagement. At the beginning of 2020, the CSRC lifted, one year ahead of schedule, restrictions on foreign ownership caps in securities, fund, and futures offices, allowing them to hold 100% equity. Foreign institutions now enjoy national treatment in terms of business scope and regulatory requirements. In July 2020, the CSRC revised its rules to permit eligible branches and subsidiaries of foreign banks operating in China to apply for fund custody qualifications, with eligibility criteria such as net assets calculated based on the overseas head office’s figures.
Fang Xinghai stated that the China Securities Regulatory Commission will continue to support qualified foreign institutions in conducting business in China’s capital markets, either through wholly owned subsidiaries or joint ventures. The new regulations for Qualified Foreign Investors, implemented since November 2020, have further lowered entry barriers, broadened the scope of eligible investments, and made it more convenient for foreign investors to engage in investment activities. In addition, over the past few years, the Shanghai–Hong Kong Stock Connect and Shenzhen–Hong Kong Stock Connect mechanisms have been continuously refined; the Shanghai–London Stock Connect has operated steadily; the China–Japan ETF mutual access product has run smoothly; and the Shenzhen–Hong Kong and Shanghai–Hong Kong ETF mutual access products have been officially launched. Meanwhile, the proportion of A‑shares included in internationally recognized indices has been steadily increasing, significantly expanding both the scope and convenience of overseas investor participation in A‑share markets.
The central bank has just issued a statement: it is optimizing the market access thresholds for foreign-funded banks, insurance companies, and other financial institutions.
On September 4, the Financial Services Special Exhibition of the 2021 China International Fair for Trade in Services was held at the Shangri-La Hotel’s banquet hall in Beijing’s Shougang Park. During the exhibition, the 2021 China International Finance Annual Forum took place. The forum was guided by the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and the People’s Government of Beijing, and co-organized by the Beijing Local Financial Supervision and Administration, the People’s Government of Shijingshan District, and the People’s Government of Xicheng District, all in Beijing.
Chen Yulu, a member of the Party Committee and Vice Governor of the People’s Bank of China, attended the conference and delivered a keynote address. He stated that in recent years, China has steadfastly pursued the independent and orderly opening-up of its financial sector, with broad scope and substantial efforts, achieving groundbreaking progress. Moreover, two-way market access continues to expand, and foundational supporting systems—covering accounting, taxation, trading, and other areas—are gradually aligning with international standards. At the same time, foreign‑invested financial institutions are actively and systematically entering the Chinese market, fostering a vibrant landscape of diverse participation.
Chen Yulu stated, “Under the new circumstances, we will continue to uphold the principles of marketization, rule of law, and internationalization, further deepen the opening-up of the financial sector, earnestly implement our commitments on financial-sector liberalization, and at the same time accelerate the improvement of relevant institutional frameworks, thereby advancing systemic and institutional openness.”
First, it is necessary to refine the pre‑entry national treatment plus negative list regime. The negative list approach strikes a balance between high‑level openness and effective risk management. In terms of opening up, the positive list model tends to lead to fragmented liberalization, whereas the negative list model enhances the systematic and institutional nature of opening-up, boosts policy transparency and predictability, and better stimulates market dynamism. As for risk prevention, the negative list allows sectors that are not yet ready for liberalization to be explicitly excluded, preserving policy‑making autonomy and flexibility, thereby effectively safeguarding economic and financial security.
Chen Yulu stated, “Going forward, we will continue to refine the pre-establishment national treatment plus negative list regime, fully leveraging the positive role of the negative list approach in advancing high-standard opening-up.”
Second, we will optimize regulatory policies to foster a favorable business environment. Chen Yulu pointed out that China has largely completed the liberalization of financial institutions and market access; however, it is also important to recognize that certain regulatory measures still have room for improvement. Refining these policy frameworks will help create a more conducive environment for foreign investors to expand their operations. At its executive meeting on July 21, the State Council called for lowering entry barriers for foreign‑owned banks, insurance companies, and other financial institutions; refining rules governing cross‑border transactions between parent and subsidiary entities; and improving the mechanisms and institutional arrangements for foreign participation in the domestic financial market—these are the priorities we are working to advance.
Third, we must continuously enhance our capacity for economic and financial management and our risk‑prevention and control capabilities in an open environment, ensuring they are aligned with the requirements of high‑level financial sector opening-up. We will further refine our monetary policy framework and macroprudential policy framework, expand our policy toolkit, establish a comprehensive system for monitoring, assessing, and issuing early warnings of systemic financial risks, and optimize the dual‑pillar framework that integrates macroprudential measures with micro‑prudential supervision in the foreign exchange market. We will also accelerate efforts to address gaps in fintech regulation, bring all financial institutions, financial activities, and financial products under a prudent regulatory framework, improve the professionalism and effectiveness of financial oversight, build robust safeguards, and officely uphold the bottom line of preventing systemic risks.
Chen Yulu stated, “Looking ahead, the People’s Bank of China will, as always, support Beijing in developing a high-quality financial industry, encourage foreign‑invested financial institutions to expand their operations in the city, and help Beijing strengthen its development as a national financial management center.”
At the meeting, Zhou Liang, Vice Chairman of the China Banking and Insurance Regulatory Commission and a member of its Party Committee, shared his views on the international financial landscape and the opening-up of China’s financial sector. He noted that, as major advanced economies are expected to shift their macroeconomic policies, some countries are facing multiple pressures—capital outflows, currency depreciation, and accelerating inflation—leading to heightened financial vulnerabilities. Under the current circumstances, all nations should strengthen coordination and cooperation to jointly safeguard the stability of international markets and promote a healthy, sustainable recovery of the global economy.
Zhou Liang stated that in 2020, China was the only major economy to achieve positive economic growth. In 2021, the economy continued to recover steadily, with overall stability and improvement, and the financial system played a crucial supporting role. The China Banking and Insurance Regulatory Commission launched dozens of measures, including pilot programs for loan repayment deferrals and emergency loans, as well as initiatives to extend preferential treatment to the real economy, to promote innovative credit and insurance products that ensure targeted and direct support. Efforts were focused on bolstering key sectors and addressing weak links; new credit in areas such as advanced manufacturing, technological innovation, small and micro enterprises, and green and ecological development maintained robust growth, while the risk‑mitigation functions of insurance were effectively leveraged.
While maintaining stable growth, significant progress has also been made in preventing and controlling financial risks:
First, we will ensure effective cross-cycle adjustments in macro policies. We will maintain the continuity, stability, and sustainability of these policies, resolutely refrain from adopting overly loose monetary measures, and focus on smoothing the transmission mechanism of monetary and credit policies. The overall macro leverage ratio has remained broadly stable; this year, it has even declined by several percentage points, while the growth rates of money supply and credit have been kept at reasonable levels.
Second, risks in key sectors have been systematically brought under control. Over the past four years, we have cumulatively resolved RMB 8.8 trillion in non‑performing loans—more than the total of the preceding 12 years. High‑risk shadow banking assets have been reduced by RMB 23 trillion from their historical peak, reforms and restructuring of small and medium‑sized financial institutions have advanced steadily, financial crimes and illegal activities have been severely punished, and market order has improved markedly.
Third, the resilience of the financial system has improved markedly. Corporate governance at banking and insurance institutions continues to strengthen, progress has been made in enhancing internal control and compliance management, and key regulatory indicators remain robust. Commercial banks’ capital adequacy ratio stands at 14.48%, while insurance institutions’ solvency ratios have remained above 240%.
Zhou Liang stated that reform and opening-up is a fundamental national policy of China. Since 2018, we have successively introduced more than 50 measures to further open up the financial sector, fully implemented the “pre-establishment national treatment plus negative list” regime, and established over 100 new foreign‑invested banking and insurance institutions. In 2020, foreign direct investment into China grew by 14%, and the attractiveness of RMB‑denominated assets has continued to strengthen, prompting overseas investors to increase their allocations to Chinese financial assets. We will steadfastly ensure effective implementation, accurately grasp the new stage of development, comprehensively apply the new development philosophy, accelerate the establishment of a new development pattern, and steadily advance higher‑level opening-up.
First, we will foster a fair business environment. We will ensure the effective implementation of opening-up measures, revise relevant laws and regulations to expand from factor‑based openness to institutional openness, further streamline administrative approval procedures, and accelerate the development of an open, transparent, stable, and predictable environment that is consistent both domestically and internationally. We will also encourage win‑win cooperation between domestic and foreign financial institutions.
Second, by attracting high-quality international financial resources and leveraging China’s market strengths, we will promote both domestic and international dual circulation. In areas such as wealth management, consumer finance, green finance, health and elderly care, and risk management, we will bring in financial institutions that boast specialized expertise, sound operations, and strong credentials, thereby enriching our portfolio of innovative products and enhancing the quality of financial services.
Third, we will steadily advance the internationalization of the financial sector, encouraging Chinese-funded financial institutions to optimize their presence in countries along the Belt and Road, strengthen their services, and promote joint credit underwriting, syndicated financing, risk-sharing, and benefit-sharing. We stand ready to share with foreign financial institutions and our peers our best practices in inclusive finance—particularly in agriculture‑related, poverty‑alleviation, and micro‑and small‑enterprise lending—to jointly enhance the reach and accessibility of financial services.
Fourth, deepen international financial cooperation. Actively participate in the formulation of international financial rules, promote mutual recognition of domestic and international regulatory standards, strengthen monitoring of cross-border capital flows and law enforcement cooperation on anti–money laundering, enhance fintech collaboration and data‑security governance, and fortify the safeguards for financial stability.
The China Securities Regulatory Commission has publicly sought public input on the Beijing Stock Exchange’s foundational institutional arrangements.
　On September 3, the China Securities Regulatory Commission (CSRC) held a press conference. At the event, a CSRC official stated that the Commission is strictly in compliance with the provisions of the Securities Law and the Company Law, respects the development patterns and growth stages of small and medium-sized enterprises, and, based on the systems governing the Select Tier, has drafted the “Administrative Measures for the Registration of Public Offerings of Shares by the Beijing Stock Exchange to Unspecified Qualified Investors (Trial)” and the “Administrative Measures for the Registration of Securities Issuance by Listed Companies of the Beijing Stock Exchange (Trial),” as well as the “Administrative Measures for the Ongoing Supervision of Listed Companies of the Beijing Stock Exchange (Trial).” In parallel, the “Administrative Measures for Stock Exchanges” have been revised and are now being publicly solicited for comments.
The specific measures are as follows: First, establish an inclusive and precise system for issuance and listing. Clarify that newly listed companies on the Beijing Stock Exchange will be drawn from Innovation‑Layer offices that have been listed on the New Third Board for at least twelve months, thereby maintaining a “tiered, progressive” market structure. Pilot a registration‑based system for public offerings of securities, and set up an examination‑and‑registration process in which the Beijing Stock Exchange’s review and the CSRC’s registration each have distinct focuses yet remain closely coordinated; overall arrangements will be broadly aligned with those of the STAR Market and the ChiNext Board. Effectively raise the cost of violations, strengthen end‑to‑end, full‑process supervision, rigorously enforce the responsibilities of issuers as well as sponsoring and underwriting intermediaries, and solidify a comprehensive, multi‑dimensional accountability framework.
Second, we will implement a flexible and diversified system of ongoing financing. Centered on the needs of innovative small and medium-sized enterprises, and drawing on the practical experience gained in building the Select Tier, we will further strengthen a refinancing framework that is “small‑amount, fast‑track, flexible, and diversified.” In terms of financing instruments, we will develop a rich array of equity‑based tools, including common stock, preferred stock, and convertible bonds, to better align with the actual requirements of SMEs. Regarding issuance methods, we will adopt a variety of approaches—such as public offerings to unspecified qualified investors and private placements—and introduce flexible mechanisms like authorized issuance, shelf registration, and self‑underwritten offerings, thereby further reducing financing costs for SMEs. As for pricing, we will remain market‑oriented, fostering robust competition between existing and new shareholders, adhering to the principle of “bidding as the norm and pricing as the exception,” refraining from administrative intervention in issue prices and sizes, strengthening investor protection, and enhancing both pricing efficiency and the orderly conduct of issuances.
Third, establish a sustainable regulatory framework that strikes an appropriate balance between rigor and flexibility. Adhering strictly to the legal framework governing listed companies, we will develop a continuous supervision regime tailored to the characteristics of small and medium-sized enterprises.
Fourth, the regulatory framework for stock exchanges organized as corporations has been clarified. The Beijing Stock Exchange operates as a corporation, adhering to the fundamental requirements of the Securities Law and the Company Law, and has established operational mechanisms for the shareholders’ meeting, the board of directors, the general manager, and the supervisory board, thereby fostering an efficient and transparent corporate governance structure.
Regarding the key institutional arrangements of the Beijing Stock Exchange, it has been reported that, in terms of financing access, the exchange emphasizes the operational characteristics of innovative small and medium-sized enterprises. It has broadly adopted the issuance criteria from the Select Tier, along with listing requirements covering profitability, growth potential, market recognition, and R&D capabilities, thereby enhancing both inclusiveness and precision.
In terms of the trading regime, the Select Tier will retain its relatively flexible trading framework, implementing continuous auction trading. On the first day of a new share’s listing, there will be no daily price limit; starting from the second day, the price limit will be set at 30%, thereby enhancing market flexibility.
With regard to delisting arrangements, the market will maintain a “both entry and exit” and “entry‑and‑exit‑capable” ecosystem, establish a diversified set of delisting criteria, and refine both periodic and immediate delisting mechanisms. While respecting the operational characteristics of small and medium-sized enterprises, the market’s function of orderly exit will be strengthened. A differentiated exit framework will be put in place: companies delisted from the Beijing Stock Exchange that meet the relevant conditions may transfer to the Innovation Layer or the Basic Layer for continued trading; however, those found to have engaged in serious violations of laws or regulations shall be directly delisted.
In terms of market connectivity, we will strengthen the organic linkages among multi-tiered capital markets and diversify pathways for corporate growth. Enterprises that have grown and matured on the Innovation and Basic tiers of the New Third Board will be encouraged to pursue a listing on the Beijing Stock Exchange. At the same time, we will uphold the transfer mechanism, allowing well‑established companies listed on the Beijing Stock Exchange to choose to continue their development on the Shanghai or Shenzhen stock exchanges.

Commercial & Corporate
Top of the form
Banks are scaling back the share of housing-related loans, and the focus of credit allocation is expected to shift.
Bottom of the form
Top of the form
With the release of their 2021 interim reports, the share of personal housing loans among listed banks has come into focus. Compared with year-end last year, most banks—including the six major state-owned banks—have reduced the proportion of personal housing loans. Nevertheless, as of the end of June, some banks still exceeded the regulatory cap on this ratio. Industry insiders note that, going forward, banks will continue to steadily lower the share of real-estate‑related lending by prioritizing risk management and shifting the direction of credit allocation. It is expected that, during the transition period, the vast majority of banks will complete the necessary adjustments, keeping the overall impact manageable.
Top of the form
Adjustments by large and medium-sized banks are proving effective.
The real estate loan concentration management system stipulates that domestically incorporated Chinese-funded banking financial institutions must ensure that the proportion of their outstanding real estate loans and the proportion of their outstanding individual housing loans comply with the regulatory requirements set by the People’s Bank of China and the China Banking and Insurance Regulatory Commission, namely, they may not exceed the respective caps established by these authorities. Specifically, the upper limits for the share of individual housing loans are 32.5% for large Chinese‑funded banks (Tier 1) and 20% for medium‑sized Chinese‑funded banks (Tier 2).
Following the implementation of the new regulations on real estate loan concentration management, large and medium-sized banks have made adjustments and, based on current data, have already achieved notable results.
The first-tier group comprises six major state-owned banks. Compared with year-end data from last year, as of the end of the first half of the year, the share of personal housing loans in the total loan portfolios of all six major state-owned banks had declined; however, Postal Savings Bank and China Construction Bank still slightly exceeded the regulatory threshold.
Nine joint-stock banks listed on the A-share market belong to the second tier. Data show that Industrial Bank, China Merchants Bank, and CITIC Bank all exceeded the regulatory cap; as of the end of the first half of the year, the share of their outstanding personal housing loans stood at 25.95%, 24.71%, and 20.25%, respectively. Compared with the end of last year, the proportion of personal housing loans in these three banks has declined, while for some other joint-stock banks that were already well below the upper limit, the share has edged up slightly.
Industry insiders say that residential mortgage loans remain “high-quality assets” for banks. “The contraction of mortgage lending at large banks is, to some extent, favorable to smaller and medium-sized banks, but it is also constrained by two factors: first, these smaller banks must have sufficient mortgage‑lending capacity; second, some may be limited by their size and scale,” according to Guangda Bank analyst Zhou Maohua.
The credit structure may change.
In addition to individual housing loans, real estate‑related lending is another key component of banks’ property‑exposed loan portfolios. The reporter noted that, weighed down by large borrowers, the non‑performing loan ratio in the real estate sector has risen at some banks.
According to Wind data, among the 40 A-share listed banks—excluding Shanghai Rural Commercial Bank—20 disclosed their real estate‑related non‑performing loan ratios in their 2021 interim reports. Of these, 13 reported an increase in such ratios compared with year‑end 2020.
Specifically, the non‑performing loan ratio for the real estate sector stood at 4.29% at the Industrial and Commercial Bank of China, 4.91% at the Bank of China, 1.69% at the Bank of Communications, and 1.56% at the China Construction Bank—each up from year‑end levels. By contrast, the Agricultural Bank of China reported a ratio of 1.54%, down from year‑end. The Postal Savings Bank of China did not disclose this figure.
Industry analysts attribute the rise in non‑performing loan ratios in the banking sector’s real estate portfolio primarily to factors such as certain property developers failing to meet expected leasing and sales targets and experiencing a decline in their repayment capacity.
An analyst at a bank stated that, for now, risks in the real estate sector remain within expected bounds, and banks are adjusting the proportion of their real estate loans.
Mingming, deputy director of the CITIC Securities Research Institute, pointed out that, with stringent controls on the concentration of real estate‑related loans this year and no net increase in the overall volume of corporate real estate lending, banks’ credit‑allocation structures may undergo changes.
Lending for housing-related loans is becoming more cautious.
In the face of increasingly stringent real estate regulations, listed banks are currently adopting a cautious approach to housing-related lending, prioritizing high-quality borrowers while stepping up credit support for emerging manufacturing and other sectors.
Tu Hong, Chief Business Officer of Bank of Communications, recently stated that the bank will strengthen differentiated management going forward, prioritizing three major metropolitan areas—the Yangtze River Delta, the Guangdong–Hong Kong–Macao Greater Bay Area, and the Beijing–Tianjin–Hebei region—as well as other regions with strong advantages in industrial development and population attraction, such as the Chengdu–Chongqing dual-city economic circle. The bank will also focus on high-quality real estate developers with sound financial strategies and on residential projects that benefit from clear locational and cost advantages. Meanwhile, it will accelerate the reduction of exposure to regions experiencing net population outflows and to highly leveraged, heavily indebted real estate offices.
“In the second half of the year, the share of real estate loans in the overall loan portfolio is expected to continue to decline. At the same time, credit allocation will be prioritized toward key national sectors, with sustained support directed toward inclusive finance, emerging manufacturing industries, green finance, and strategic emerging industries,” said Guo Danghuai, Vice President of China CITIC Bank.
Judging from the statements of major banks, most institutions are expected to continue steadily reducing the share of real estate loans in their portfolios. However, there remain doubts in the market as to whether banks that have exceeded the regulatory caps will be able to complete the required adjustments within the prescribed timeframe.
In accordance with the relevant requirements, for institutions whose real estate loan ratio and individual housing loan ratio exceed the regulatory limits by no more than 2 percentage points as of the end of December 2020, the transition period for adjusting business operations shall be two years, commencing on January 1, 2021. For those exceeding the limits by 2 percentage points or more, the transition period shall be four years, also beginning on January 1, 2021.
In response, Zhou Maohua said: “At present, the proportion of banks that have exceeded regulatory thresholds is not particularly severe; meanwhile, with strengthened domestic oversight, it is expected that the vast majority of banks will complete their rectification within the transition period. Going forward, some banks that have overshot their limits may see a slowdown in the growth of mortgage lending, while others might increase other types of loans to boost their denominator.”
Cheng Yuanguo, Chief Risk Officer of China Construction Bank, stated that, in the short term, adjustments to the concentration of real estate lending will to some extent affect the growth and share of the bank’s new individual housing loans. However, thanks to a sufficiently long transition period, any existing loan balances exceeding the regulatory cap will be gradually reduced year by year, ensuring that the overall impact this year remains manageable.
Bottom of the form
Top of the form
1.03 billion kilowatts: China has built the world’s largest clean power generation system.
Bottom of the form
Top of the form
The HPR1000 nuclear power unit has entered commercial operation, all generating units at the Wudongde Hydropower Station have been commissioned and are now generating electricity, and the first batch of generating units at the Baihetan Hydropower Station have also begun operation… Since the beginning of this year, major clean-energy projects have continued to deliver encouraging progress. At a recent press conference held by the State Council Information Office, an official from the Ministry of Ecology and Environment stated that China has built the world’s largest clean‑energy generation system.
As of the end of July, the nation’s non‑fossil‑fuel power generation capacity stood at 1.03 billion kilowatts, up 18.0% year on year—equivalent to the installed capacity of more than 40 Three Gorges hydropower stations—and accounted for 45.5% of the country’s total power generation capacity, an increase of 3.3 percentage points over the same period last year. China’s transition to clean, low‑carbon energy is accelerating, with its installed capacities in hydropower, wind power, photovoltaics, and nuclear power under construction all remaining among the highest in the world.
——The capacity to supply clean energy continues to expand. In terms of installed capacity, as of the end of July, China’s hydropower installed capacity stood at 380 million kilowatts, up 4.9% year on year; nuclear power installed capacity reached 53.26 million kilowatts, up 9.2%; wind power installed capacity totaled 290 million kilowatts, up 34.4%; solar power installed capacity amounted to 270 million kilowatts, up 23.6%; and biomass power installed capacity was 34.09 million kilowatts, up 31.2%. In terms of total electricity generation, in the first half of the year, cumulative output from hydropower, nuclear power, wind power, and solar power increased by 10.2% year on year. As for power‑sector investment, during the first seven months, investments in clean energy sources—including hydropower, nuclear power, and wind power—accounted for 91.7% of total power‑source investment.
— The level of clean energy utilization continues to improve. In the first half of the year, the hydropower utilization rate in major river basins nationwide reached 98.43%, the national average wind power utilization rate stood at 96.4%, and the national average photovoltaic power utilization rate was 97.9%, up by 0.07, 0.3, and 0.07 percentage points, respectively, compared with the same period last year.
——The layout of wind and solar power capacity continues to be optimized. Development and construction are shifting from resource‑rich regions to areas with concentrated electricity demand, and moving from a predominantly large‑scale, contiguous approach toward a balanced mix of centralized and distributed deployment. In the first half of the year, newly installed wind power capacity was approximately 59% in the central, eastern, and southern regions, compared with about 41% in the “Three North” region. For solar power, the regions with the highest new installations in the first half were North China, East China, and Central China, accounting for 44%, 22%, and 14% of the national total, respectively. Residential solar projects added 5.86 million kilowatts of capacity, representing 45% of all new solar capacity and emerging as a notable highlight.
— The clean and efficient utilization of coal-fired power has been vigorously advanced. By the end of last year, the share of coal-fired capacity fell below 50% for the first time, and the total capacity of ultra-low-emission coal-fired units reached approximately 950 million kilowatts. In the first seven months of this year, the national coal consumption rate for power generation stood at 303 grams per kilowatt-hour, down 1 gram per kilowatt-hour year on year.
An official from the National Energy Administration stated that, going forward, efforts will be accelerated to reduce coal consumption and strictly control coal-fired power projects; at the same time, the development of non‑fossil‑fuel power generation—such as wind and solar—will be stepped up to steadily expand the supply of green, low‑carbon energy. During the 14th Five-Year Plan period, wind and solar power are expected to become the main drivers of clean‑energy growth.
Bottom of the form
Top of the form
Under the “dual carbon” goals, phasing out coal cannot be implemented in a one-size-fits-all manner.
Bottom of the form
Top of the form
Under the “dual carbon” goals, the coal-fired power industry is facing tough times. Since the beginning of this year, driven by pressure to reduce carbon emissions, local authorities have stepped up efforts to shut down coal-fired generating units, with some regions adopting a one-size-fits-all approach that has led to the rapid and direct closure of large numbers of such plants. In certain areas, timetables have even been set for the complete phase-out of all coal-fired capacity. Coupled with the sharp rise in market coal prices during the second quarter, many coal‑fired power companies have encountered severe operational difficulties, while also triggering localized electricity shortages and posing challenges to grid security.
Carbon neutrality is a grand strategic challenge, and the power sector—accounting for the largest share of carbon emissions—bears a critical responsibility. Some argue that decarbonizing the power system amounts to “cleaning up the house before inviting guests”: without promptly retiring coal-fired units, it will be impossible to integrate renewable sources such as wind and solar. In the long run, phasing out coal power in favor of renewables like solar and wind is an inevitable trend toward zero‑carbon electricity. However, for a considerable period, coal power will continue to serve as baseload generation and a stabilizing anchor for the grid, a role that is unlikely to change anytime soon. Blindly abandoning coal power could lead to severe consequences.
This summer, power shortages in some regions speak volumes. While China as a whole currently enjoys an overall surplus of electricity, localized gaps persist in certain areas and during specific periods. During this year’s heat wave, temperatures soared across many parts of the country, with daily electricity consumption repeatedly breaking historical records. The load on 11 provincial grids—including those in Guangdong, Jiangsu, Zhejiang, Anhui, Fujian, and Shaanxi—reached all-time highs. At precisely the moments when demand was at its peak, new energy sources, with their small individual capacities, large numbers, dispersed deployment, and pronounced intermittency, volatility, and randomness, proved unable to serve as a reliable backup. Consequently, the burden of ensuring a stable power supply once again fell squarely on coal-fired power plants.
According to the “2021 Annual Development Report of China’s Power Industry” released by the China Electricity Council, in 2020, the nation’s total electricity generation reached 7.62 trillion kilowatt-hours, with thermal power accounting for 67.9%—the clear mainstay of supply. Meanwhile, wind and solar power contributed only 9% of total generation. Although installed capacity for new energy sources has grown rapidly in recent years, challenges such as lower generation efficiency continue to make it difficult to keep pace with the rapid increase in electricity demand. To ensure a stable power supply, this summer the National Development and Reform Commission issued notices to several major domestic power-generation groups, mandating that they raise coal inventories at their plants within a specified timeframe to prevent coal shortages from forcing units to shut down during peak demand periods. Should coal-fired power generation decline sharply and on a large scale in the short term, particularly amid tight grid‑load conditions, the consequences could be disastrous.
Even in Europe, where environmental standards are stringent, a complete phase-out of coal-fired power is not yet achievable. Although EU financial institutions introduced nearly 40 policies restricting coal in 2020, some EU member states will still miss the 2030 deadline for phasing out coal. Germany plans to retire all coal-fired plants by 2038, while Poland, Romania, and Bulgaria have no plans for a gradual phase-out, and the Czech Republic and Slovenia are still deliberating on a timeline.
On the path to carbon neutrality, how we approach coal-fired power generation is of paramount importance—and must be assessed in light of China’s national conditions. For a long time, as a country that is poor in oil and natural gas but relatively rich in coal, coal has accounted for two-thirds of China’s energy mix, providing strategic support to the national economy and social development. Until challenges related to the large-scale integration of new energy sources and the safe, stable operation of the power grid are fully addressed, coal-fired power will continue to play a vital role in the electricity system. Moreover, as the electricity market mechanism continues to improve, once coal-fired plants can secure reasonable revenues through ancillary services markets and other mechanisms, they will be better positioned to fulfill their regulatory function.
In the future, coal-fired power will transition from its current role as baseload generation to a peaking‑capacity source, serving as a reliable backup energy supply. Coupled with CCUS—carbon capture, utilization, and storage—coal power can also achieve near‑zero carbon emissions, ensuring grid flexibility while providing dependable electricity. Under the vision of carbon neutrality, renewable generation, energy storage, conventional thermal power, and CCUS can be integrated into a cohesive technological portfolio. This transformation will be driven by continuous advances in technology, ongoing development, and systemic shifts. Therefore, there is no need to view coal through an overly negative lens.
Bottom of the form

Taxation TAXATATION
Tax and fee services are being enhanced to support the steady growth of small and micro enterprises.

Small and micro enterprises are the lifeblood of the market; when they thrive, all sectors flourish. Amid a still‑complex domestic and international environment, the Party Central Committee and the State Council have attached great importance to the development of small and micro businesses, introducing a series of tax and fee‑reduction policies to help them overcome difficulties. Since the beginning of this year, in conjunction with Party history study and education, the tax authorities have launched the “Doing Practical Things for Taxpayers and Payers” initiative and the Spring Breeze Action to facilitate tax services, promptly addressing the personalized needs of small and micro enterprises. Ongoing enhancements to tax and fee‑related services continue to provide robust support, safeguarding their growth and helping them build strength and vitality.
Precise Policy Delivery: Enjoy Tax and Fee Benefits Promptly
Since the 18th National Congress of the Communist Party of China, thanks to a series of supportive policies—including tax and fee relief measures—small and micro enterprises, individual business households, and other market entities have grown rapidly, becoming an important driving force for China’s economic prosperity, employment expansion, and improvement of people’s livelihoods. Since the beginning of this year, the CPC Central Committee and the State Council have further strengthened their support for small and micro enterprises and individual business households. In July 2021, the State Taxation Administration issued the “Guidance on Tax and Fee Preferential Policies for Small and Micro Enterprises and Individual Business Households,” systematically summarizing 27 tax and fee preferential policies aimed at these entities across three key areas—reducing burdens, facilitating financing, and supporting entrepreneurship—thereby helping taxpayers and payers promptly access and understand the applicable measures.
Located in the Huanglong Industrial Cluster Zone of Kaifeng, Henan Province, Kaifeng Hushi Furniture Co., Ltd. is a small and micro enterprise that manufactures and sells modern, New‑Chinese‑style furniture. Recently, after receiving a personalized guidance package on tax and fee preferential policies from the local tax authorities, General Manager Chen Jiancong exclaimed, “I never expected this.” “These measures are exactly what we’ve been in urgent need of lately—truly, I hadn’t imagined the tax bureau could provide such precise and meticulous support.” Seeing such well‑tailored preferential policies, Chen Jiancong was pleasantly surprised.
Behind the phrase “unexpected” lies the tax authorities’ precision‑driven, differentiated approach—spanning content curation, target‑group selection, mechanism design, and performance analysis—to ensure that taxpayers and payers of different types can promptly and comprehensively understand policies, master the relevant procedures, and readily benefit from them, thereby enabling swift and direct access to tax and fee preferential measures.
　In Shanxi Province, the “Jinxiang Tax Benefits” smart assistant was recently launched and put into operation. According to Qi Zhihong, Party Secretary and Director of the Shanxi Provincial Tax Service Bureau, the “Jinxiang Tax Benefits” system leverages big data technology to disaggregate taxpayer information and tax‑related policy details across multiple dimensions. It precisely consolidates tax incentives—covering 16 tax categories and scattered across various laws, regulations, departmental rules, and normative documents—into tailored “policy packages” that are highly relevant to different taxpayers. This enables one‑click access to a comprehensive overview of available benefits, shifting the paradigm from “people seeking policies” to “policies finding people,” thereby ensuring that eligible taxpayers fully and promptly benefit from all applicable tax incentives. At present, the system has been rolled out on the Shanxi Provincial Tax Service Bureau’s official website, accessible without registration. Going forward, it will be integrated into the electronic tax service platform, the WeChat official account, and other channels, allowing taxpayers to search for and review tax benefits anytime, anywhere, right from their mobile devices.
“This system is designed with taxpayers’ needs in mind and developed from a ‘user-centric’ perspective, delivering precise, personalized services that enhance the accuracy of advisory support—making it highly practical,” said Han Mingming, Manager of the Technical Support Department at Zhonghui Shanxi Tax Consulting Office.
In Ningbo, Zhang Qianle, the financial director of Anjiyou Automation Co., Ltd., a small and micro enterprise, told reporters, “The tax authorities promptly notified us of the relevant policies, and our newly purchased equipment, valued at 3.52 million yuan, qualified for a one-time pre-tax deduction.” Thanks to the intelligent online consultation system and the “list management” feature integrated into Ningbo’s tax‑payer communication platform, preferential policies are automatically matched and delivered in a targeted manner, ensuring that the company is fully informed and can quickly access the benefits it is entitled to.
“Spring Rain Nurtures Seedlings” Provides Support, Helping Small and Micro Enterprises Overcome Difficulties
As a key initiative under the 2021 “Doing Practical Things for Taxpayers and Payers and the Spring Breeze Action for Convenient Tax Services,” starting this May, the State Taxation Administration and the All-China Federation of Industry and Commerce jointly launched the “Spring Rain Nurtures Seedlings” special campaign to support the development of small and micro enterprises. The campaign introduces 12 measures across three major categories—“Bringing Beneficial Policies to Every Household,” “Providing High-Quality Support Services,” and “Safeguarding Growth to Promote Development”—to help small and micro businesses overcome difficulties and pursue sustainable growth.
“With more than 20 instructional videos covering common business operations, we can learn anytime by simply clicking on them. And when we encounter tricky issues, we can even connect via video with back‑office experts, making tax compliance increasingly convenient for small and micro enterprises like ours. During my last visit, I inquired about the consolidated filing of property and behavioral taxes. This time, I noticed that relevant explanatory videos have already been uploaded to the intelligent guidance knowledge base,” said Xie Han, a finance professional at Anhui Xubin Construction Engineering Co., Ltd., after experiencing the smart tax service hall firsthand.
In response to the realities faced by small and micro enterprises—namely, limited staffing and weak tax‑filing capabilities—the tax authorities have expanded convenient tax‑service channels under the “Supporting Small Businesses, Enhancing User Experience” initiative. By strategically coordinating service resources and recruiting tax‑and‑fee service experience officers, they are working to strengthen these enterprises’ sense of gain and help them master tax‑filing procedures while enjoying a superior user experience. Today, tax authorities across all provinces, autonomous regions, and municipalities directly under the central government have established dedicated experience zones in their tax service halls, providing personalized guidance to small and micro enterprises and organizing both online and offline training sessions on invoice issuance.
Han Guorong, Director-General of the Taxpayer Services Department of the State Taxation Administration, stated that for small and micro enterprises to thrive, they not only need targeted, comprehensive guidance on tax and fee policies and streamlined, efficient tax‑filing and payment services, but also a normalized, institutionalized mechanism to provide ongoing support. The “Protecting Seedlings, Fostering Growth” initiative establishes a model for boosting the development of small and micro enterprises that integrates point‑level, line‑level, and area‑level measures while balancing short‑term and long‑term needs, thereby building a regular, coordinated response system to help these businesses achieve stable growth and sustainable development. At present, tax authorities across the country have all established joint response mechanisms with federations of industry and commerce to address the concerns of small and micro enterprises, collecting tax‑related requests from their affiliated chambers of commerce and handling them promptly in accordance with an expedited response protocol.
Deepening “Tax-Bank Collaboration” to Alleviate Enterprises’ Financing Pressures
Guangzhou Benchang Ecological Agriculture Co., Ltd. is a farming and agricultural‑product‑processing enterprise founded by local villager Deng Zhifeng upon his return to his hometown. In the height of summer, the 100 mu of hillside he has contracted is lush with fruit trees—such as lychee, wampee, and sugar mandarin—as well as ornamental flowers like azaleas and orchids.
These lush, vibrant orchards and gardens owe their vitality to the financial “fresh water” provided by the “tax‑bank‑credit” initiative. “Farmers rely on the weather for their livelihoods, and it takes several years from planting to harvest, placing significant pressure on cash flow. Coupled with the impact of last year’s pandemic, we faced serious difficulties in managing working capital,” said Deng Zhifeng. “After visiting our farm and assessing our situation, the Guangzhou tax authorities leveraged the ‘tax‑bank‑credit’ program to secure a bank credit loan of RMB 200,000, helping us overcome our financing challenges. As a result, we expect to further expand our planting operations this year.”
　In recent years, the tax authorities and the banking and insurance regulatory authorities have worked closely together to continuously refine the “tax‑bank‑interaction” cooperation mechanism, leveraging taxpayers’ credit ratings to ease financing pressures on law-abiding small and micro enterprises and address their most urgent needs. In the face of the pandemic’s impact, tax and banking‑insurance regulators at all levels have remained committed to the “tax‑bank‑interaction” framework—focusing on and serving small and micro businesses—and have rolled out a series of targeted measures to provide robust support as these enterprises navigate these challenging times.
In Shandong, thanks to the expansion of the “Tax‑Bank Interaction” program—from A‑rated taxpayers to include B‑ and M‑rated enterprises—Lin Yao Wood Industry Co., Ltd. in Linqing City recently secured a loan. “Because we’re on a strong growth trajectory, operate in compliance with regulations, and have no record of tax violations, we applied for the loan via our mobile app, and the 3 million yuan ‘Cloud Tax Loan’ was approved almost immediately,” said Hou Dongyue, the company’s head.
Recently, several authoritative reports have indicated that, since the first quarter of this year, small and micro enterprises have shown signs of recovery, with steady rebounding growth and steadily improving resilience to risks. Han Guoyong stated that the tax authorities will continue to thoroughly study and implement the spirit of General Secretary Xi Jinping’s important speech on July 1, deepen reforms in the tax sector to streamline administration, delegate power, improve regulation, and enhance services, and translate the outcomes of Party history study and education into concrete actions that deliver tangible results and open up new prospects. By providing stronger support and higher‑quality services, they will help small and micro enterprises flourish, conscientiously nurture and invigorate market entities, and promote high‑quality economic development in China.

The Ministry of Commerce, the Ministry of Public Security, and the State Taxation Administration are accelerating the implementation of cross-provincial one-stop services for used-car transactions and registration.
To implement the State Council’s directives on advancing “inter-provincial one-stop services” for government affairs and to accelerate the rollout of inter-provincial registration for transactions of small, non-commercial used vehicles, thereby facilitating convenient second-hand car trading, relevant departments have recently issued a notice to expedite the promotion and application of cross‑location registration for used‑car transactions.
The notice specifies that, effective September 1, 2021, the first batch of pilot programs for cross‑jurisdictional registration of small, non‑commercial used‑car transactions will be rolled out, covering a total of 218 cities (see the attached list). Compared with the earlier pilot in 20 cities, the number of cities offering interprovincial one‑stop processing for used‑car transaction registration has increased significantly, making cross‑jurisdictional used‑car transactions much more convenient.
The notice requires that regions promoting and applying these measures attach great importance to the task and handle related business in strict accordance with the “Notice on Promoting Cross-Provincial One-Stop Processing of Used-Car Transaction Registration and Facilitating Inter‑Provincial Used-Car Transactions” issued by the Ministry of Commerce, the Ministry of Public Security, and the State Taxation Administration, as well as with the recently promulgated relevant work standards. It calls for strengthened organizational planning and effective implementation of supporting measures, including equipment, systems, and personnel. Furthermore, it emphasizes enhanced inter‑departmental coordination to standardize used‑car transaction practices, while intensifying publicity, guidance, and professional training to provide the public with more efficient and convenient services.

The Law on Deed Tax and the Law on Urban Maintenance and Construction Tax came into effect on September 1. All matters delegated to local authorities have been fully implemented, and preparatory work for tax collection and administration is now in place.
The Law of the People’s Republic of China on Deed Tax and the Law of the People’s Republic of China on Urban Maintenance and Construction Tax will come into effect on September 1. At present, all 31 provinces, autonomous regions, and municipalities directly under the central government have, in accordance with these laws, completed the necessary local‑level authorization procedures, specifying the applicable deed tax rates, tax reduction and exemption measures, and the precise scope of the taxpayer’s location for urban maintenance and construction tax. The State Taxation Administration has recently issued a series of announcements clarifying related administrative and collection matters, while also completing the necessary adjustments to relevant forms, certificates, documents, and the tax administration information system. This indicates that all preparatory work prior to the entry into force of the two laws is now in place.
Tax Rate Alignment: Local Authorization Highlights Legislative Principles
On August 11, 2020, the 21st Meeting of the Standing Committee of the 13th National People’s Congress adopted the Law on Deed Tax and the Law on Urban Maintenance and Construction Tax. Both laws contain provisions regarding matters delegated to local authorities.
The Law on Deed Tax stipulates that provinces, autonomous regions, and municipalities directly under the central government may set specific applicable tax rates within a range of 3% to 5%, and may establish differentiated tax rates for transfers of property rights involving different entities, regions, or types of housing. Furthermore, these local authorities may grant tax reductions or exemptions in cases where land or housing is expropriated or requisitioned by people’s governments at or above the county level, or when housing is destroyed due to force majeure. Such measures shall be proposed by the people’s governments of provinces, autonomous regions, and municipalities directly under the central government, submitted to the standing committees of the people’s congresses at the same level for decision, and reported to the Standing Committee of the National People’s Congress and the State Council for record.
After reviewing the decisions on authorized matters across various regions, reporters found that, with respect to the applicable tax rate for deed tax, 27 provinces, autonomous regions, and municipalities directly under the central government have set the rate at the statutory minimum of 3%; Hunan Province has set it at 4%; and three provinces—Hebei, Liaoning, and Henan—have adopted a two-tiered rate structure of 3% and 4%, with Hebei and Liaoning applying the 3% rate to individuals purchasing ordinary residential housing, and Henan applying it to transfers of housing ownership.
“Overall, compared with the current deed tax rates, most regions across the country have maintained the existing rates following the enactment of the new tax law, while eight provinces—including Heilongjiang, Henan, and Hubei—have slightly reduced their rates,” said a responsible official from the Property and Behavioral Tax Department of the State Taxation Administration. “By aligning local tax rates with the current levels, the legislation upholds the principle of keeping the overall tax burden unchanged. Meanwhile, lowering the existing rates is intended to implement the policy of tax and fee reductions, effectively easing the burden on taxpayers and further boosting the vitality of market entities.”
According to reports, calculations indicate that Hubei Province’s reduction of the deed tax rate from 4% to 3% is expected to unlock policy benefits totaling nearly RMB 4 billion annually for market entities across the province.
According to the Law on Urban Maintenance and Construction Tax, taxpayers whose locations are in urban districts, county seats, towns, or outside these areas are subject to tax rates of 7%, 5%, and 1%, respectively. The taxpayer’s location refers to the taxpayer’s domicile or other places associated with their production and business activities; the specific criteria for determining such locations are set by the provinces, autonomous regions, and municipalities directly under the central government. At present, all 31 provinces, autonomous regions, and municipalities directly under the central government have issued notices one after another, clearly defining the specific scope of taxpayers’ locations.
“Granting local authorities greater flexibility in determining the taxpayer’s place of residence is a key feature of the Urban Maintenance and Construction Tax Law,” said a responsible official from the Department of Property and Behavioral Taxes. On the basis of nationwide uniformity in the fundamental elements of the tax system, localities, taking into account the practicalities of administering the Urban Maintenance and Construction Tax, are empowered to define the specific scope of the taxpayer’s place of residence, which helps to better fulfill the tax system’s functions and roles.
Optimizing Filing: Tax Administration Preparedness Focuses on Streamlining Tax Services
With the imminent implementation of the Deed Tax Law and the Urban Maintenance and Construction Tax Law, how are the tax authorities progressing with preparatory work for tax collection and administration, and what are the key features?
A relevant official from the Department of Property and Behavioral Taxes stated that the State Taxation Administration has successively issued supporting operational guidelines for the tax laws, adjusted the related forms, certificates, and tax administration information systems, and that preparatory work for tax collection and administration is now in place.
“To further ease the tax compliance burden on taxpayers, we have, in accordance with tax laws, focused on enhancing convenience and streamlined our administration and service offerings,” the official told reporters.
Simplified declaration process. The Stamp Tax Law merges the two steps of tax filing and tax payment into a single “declaration and payment” stage, with a uniformly specified deadline. In response, the State Taxation Administration has revised the tax return forms and the tax administration information system, adding an option to enter the date of certificate issuance. While standardizing administrative procedures, it has also proactively streamlined other form fields: the number of options for tax categories has been reduced from the original 25 to 12, further enhancing convenience for taxpayers.
Integrate tax return forms. The Urban Maintenance and Construction Tax is levied on the amounts of value-added tax and consumption tax, making it an additional tax imposed alongside these two taxes. Starting August 1 this year, the State Taxation Administration has implemented the integration of separate return forms for value-added tax and consumption tax with those for the Urban Maintenance and Construction Tax and other ancillary taxes and fees, thereby reducing taxpayers’ processing time and further enhancing the convenience of tax compliance.
Reducing the tax compliance burden. In its “Announcement on Several Matters Concerning Taxpayer Services and Collection Administration for Deed Tax,” the State Taxation Administration stipulates that, for documents submitted by taxpayers in the course of handling deed tax matters, if the tax authorities of provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan can verify such information promptly through information sharing, they may explicitly announce that taxpayers are no longer required to submit those documents.
Tax authorities across the country are also making intensive preparations for the implementation of the two tax laws. In Qinghai Province, the tax system has organized training sessions for frontline tax collection and administration personnel to ensure they have a thorough grasp of the relevant regulations. The Anhui Provincial Tax Service Bureau has used taxpayer service halls, tax‑related publicity bulletin boards, and other channels to provide taxpayers with detailed explanations of the changes and differences between the new tax law and the previous provisional regulations. Meanwhile, the Ningbo Municipal Tax Service Bureau has assigned experienced specialists to conduct targeted tests on key procedural steps, analyze and assess potential reporting burdens and various contingencies, and develop contingency plans to guarantee the smooth enforcement of the tax laws.
A responsible official from the State Taxation Administration stated that the tax authorities will thoroughly implement the “Opinions on Further Deepening Tax Collection and Administration Reform” issued by the CPC Central Committee and the State Council, and, in accordance with the requirements for deepening the tax administration reform of “delegation, regulation, and service” and optimizing the business environment, continue to strengthen the collection, administration, and service of deed tax and urban maintenance and construction tax. This effort aims to create a higher‑quality tax‑related business environment for taxpayers, ensure the effective implementation of the provisions of these two tax laws, and better support high‑quality economic and social development.

Litigation & Arbitration
Supreme People’s Court: Guides local courts to actively advance the practice of natural-person bankruptcy.
Bankruptcy does not mean a company is “dead.” On September 3, the Supreme People’s Court released ten exemplary civil and commercial cases in which people’s courts have supported the high-quality development of the private sector.
A Supreme People’s Court official, while commenting on a case involving judicial reorganization, pointed out that both bankruptcy reorganization and bankruptcy settlement serve to “protect” and “rescue” enterprises. With regard to the issue of personal guarantee debts in corporate bankruptcy, the Supreme People’s Court will guide local courts to actively advance the implementation of personal bankruptcy procedures.
The Paper has noted that, in recent years, the Supreme People’s Court has successively issued three judicial interpretations and a series of judicial documents concerning bankruptcy liquidation and judicial reorganization, thereby actively improving the bankruptcy legal framework. According to Liu Guixiang, a vice-minister‑level special commissioner on the Judicial Committee of the Supreme People’s Court, on the one hand, the court has adopted necessary judicial measures, made effective use of the creditors’ committee mechanism, and supported and promoted pre‑reorganization and out‑of‑court settlements for distressed enterprises, helping them navigate their difficulties. On the other hand, courts at all levels have continuously refined the government‑court coordination mechanism, adhered to the principles of rule of law and market orientation, and fully leveraged judicial reorganization as an institutional tool to attract strategic investment and advanced technologies, carry out restructuring of debts, liabilities, and equity, and assist a number of viable but troubled enterprises in overcoming debt crises and liquidity constraints, enabling them to achieve a rebirth.
As of the end of 2020, more than 30 enterprises with total debts exceeding RMB 10 billion had completed judicial reorganization, turning losses into profits. In 2020 alone, people’s courts revitalized a total of RMB 470.8 billion in assets through judicial reorganization, enabling 532 companies to regain viability.
Bankruptcy reorganization of a privately owned listed company: the court facilitates strategic investment to resolve the crisis.
Among the typical cases, the judicial reorganization of China’s first privately owned passenger vehicle manufacturer listed on the A-share market was selected.
According to the case details, Lifan Industry (Group) Co., Ltd. (hereinafter referred to as Lifan Shares) was established in 1997 and listed on the Shanghai Stock Exchange in 2010, raising RMB 2.9 billion through an initial public offering of 200 million shares. It became China’s first privately owned passenger vehicle manufacturer to be listed on the A-share market.
Due to the profound transformation of the automotive and motorcycle industries, coupled with strategic investment losses and poor internal management, Lifan‑affiliated companies have gradually fallen into operational and debt crises since 2017. They have defaulted on substantial financial obligations, pledged or mortgaged their key assets, and seen their core businesses virtually brought to a standstill.
In June 2020, creditors filed with the court a petition to initiate reorganization proceedings against Lifan Co., Ltd., on the grounds that it was unable to pay its maturing debts and clearly lacked the ability to repay them. In July of the same year, creditors also filed with the court petitions to commence reorganization proceedings against ten wholly owned subsidiaries of Lifan Co., Ltd.—including Lifan Passenger Vehicle, Lifan Auto Sales, Lifan Import & Export, Lifan Motorcycle, and Lifan Auto Development—on the grounds that these subsidiaries were unable to settle their due debts and that their assets were insufficient to cover all outstanding liabilities or that they clearly lacked the capacity to repay their debts.
The Fifth Intermediate People’s Court of Chongqing Municipality has ruled to accept the reorganization applications filed against Lifan Co., Ltd. and its ten subsidiaries, and has appointed liquidation committees for each of the Lifan‑affiliated entities as administrators. As of the valuation base date in 2020, the total assessed value of the assets of Lifan Co., Ltd. and its ten wholly owned subsidiaries exceeded RMB 7.715 billion; by November 2020, creditors had filed claims totaling more than RMB 26.771 billion. Under a hypothetical bankruptcy liquidation scenario, the repayment rate for ordinary creditors of Lifan Co., Ltd. would be 12.65%.
To preserve the enterprise’s operational value, after accepting the reorganization application, the Fifth Intermediate People’s Court of Chongqing decided that Lifan Shares and its ten subsidiaries would continue to operate. Beginning in August 2020, the court also guided the administrator in issuing a public notice soliciting reorganization investors. Following rigorous review, a consortium comprising the state‑owned investment platform Chongqing Liangjiang Equity Investment Fund Management Co., Ltd. and the private enterprise Geely Majie Investment Co., Ltd. was ultimately selected as the strategic investor.
In November 2020, Lifan Shares, its investors’ meeting, and the creditors’ meetings of its ten wholly owned subsidiaries all approved the draft reorganization plan by a large majority. The Fifth Intermediate People’s Court of Chongqing approved the reorganization plan and terminated the reorganization proceedings. In February 2021, the Fifth Intermediate People’s Court of Chongqing issued an order conofficeing that the reorganization plan had been fully implemented and that the reorganization proceedings were hereby concluded.
“The judicial reorganization case of Lifan Co., Ltd. is the first such case involving a listed company in the automotive and motorcycle industry in China.” In highlighting its exemplary significance, the Supreme People’s Court noted that, through judicial reorganization, the enterprise’s crisis was comprehensively resolved, the legitimate rights and interests of more than 60,000 small and medium-sized investors and over 5,700 employees were safeguarded, and the normal production and operations of more than a thousand enterprises across the upstream and downstream supply chains were ensured.
According to the Supreme People’s Court, during the judicial reorganization of this case, the Fifth Intermediate People’s Court of Chongqing fully leveraged the coordination mechanism between government and the judiciary, innovatively adopting a “financial investor + industrial investor” model to bring in strategic investors. This approach created a dual impetus for the company’s revitalization: on the one hand, a state‑owned platform company and private enterprises jointly established an investment fund to attract social capital into the restructuring process, providing crucial financial support for the enterprise’s development; on the other hand, leading companies in the industry introduced new technologies and business models, upgrading the traditional automobile and motorcycle manufacturing sectors into a new ecosystem centered on the smart new‑energy vehicle industry. As a result of the judicial reorganization, Lifan Shares successfully achieved industrial transformation and upgrading, thereby promoting high‑quality growth among private enterprises. Subsequently, the Shanghai Stock Exchange lifted the delisting risk warning and other risk alerts imposed on Lifan Shares (601777). The former “ST Lifan” has now been renamed “Lifan Technology,” with a total market capitalization of RMB 28.035 billion as of August 27 this year. Furthermore, Lifan Shares and its ten subsidiaries have all turned around from losses to profitability, marking a comprehensive recovery and rebirth of the enterprise.
Bankruptcy does not mean the “death” of an enterprise; we should actively advance the implementation of personal bankruptcy procedures.
Some enterprises face severe operational challenges and seek to resolve their crises through bankruptcy, yet they often lack a clear understanding of its role and functions. How does the bankruptcy system actually work? “In everyday practice, we tend to equate bankruptcy with liquidation. In reality, beyond liquidation, bankruptcy also encompasses two other mechanisms: composition and reorganization,” said Lin Wenxue, Chief Judge of the Second Civil Division of the Supreme People’s Court. He emphasized that bankruptcy is an inevitable social phenomenon in a market economy, driven by the principle of survival of the fittest; however, it does not signify the “death” of an enterprise. Both reorganization and composition serve to protect and rescue businesses. The bankruptcy‑related protective measures prescribed by law—such as suspension of enforcement, cessation of interest accrual, release of asset‑preservation measures, and centralized jurisdiction over bankruptcy cases—are equally applicable to applications for composition or reorganization. Under this protective framework, it is possible to comprehensively address a company’s debt crisis and maximize the interests of both debtors and creditors.
At present, 14 specialized bankruptcy courts have been established nationwide, and nearly 100 intermediate and primary-level people’s courts have set up liquidation and bankruptcy tribunals, marking significant progress in the professionalization of bankruptcy adjudication.
Lin Wenxue stated that in recent years, the people’s courts have consistently advanced corporate reorganization through market‑oriented and rule‑of‑law approaches. They have duly and appropriately adjudicated reorganization cases involving Chongqing Lifan, Peking University Founder, HNA Group, and others, thereby fully realizing the inherent functions of the reorganization system: promoting economic structural adjustment, preventing and defusing major risks, and rescuing enterprises in distress. In particular, when a company has promising prospects but is temporarily facing liquidity challenges, judicial tools such as bankruptcy reorganization can be effectively deployed.
In reality, some business owners also seek to discharge their personal guarantees through individual bankruptcy. How should we view the system of individual bankruptcy? In this regard, Lin Wenxue notes that, in practice, it is quite common for business owners or their family members to provide personal guarantees for corporate debts. Even after a company goes bankrupt, individuals often continue to bear liability; rather than face public censure and flee, they dare not file for bankruptcy—or are reluctant to do so.
“With regard to the issue of personal guarantee debts in corporate bankruptcy, as far as we know, in the vast majority of countries, honest but unfortunate debtors can be afforded relief through personal bankruptcy proceedings,” Lin Wenxue said, citing Shenzhen’s courts as an example. Under the special economic zone’s legislation, Shenzhen has accepted and concluded the first-ever personal bankruptcy case. Meanwhile, provinces such as Zhejiang, Jiangsu, and Shandong have been actively exploring mechanisms for clearing personal debts—akin to personal bankruptcy systems. The Supreme People’s Court will guide local courts to vigorously advance the practice of personal bankruptcy, accumulating practical experience to lay the groundwork for establishing a nationwide personal bankruptcy regime, while closely coordinating with legislative bodies to formulate and refine the relevant legal framework.
。
China Banking and Insurance Regulatory Commission: Insurance clauses and premium rates may not be altered after approval or filing.
The China Banking and Insurance Regulatory Commission has upgraded its oversight of property insurance companies’ policy provisions and premium rate management.
Insurance terms and premium rates may not be altered after approval or filing.
The China Banking and Insurance Regulatory Commission recently issued the newly revised Measures for the Administration of Insurance Clauses and Premium Rates of Property Insurance Companies (hereinafter referred to as the “Measures”). The Measures comprise six chapters and 40 articles, covering general provisions, clause development and rate setting, approval and filing, supervisory management, legal liabilities, and supplementary provisions. They shall take effect as of October 1, 2021.
Compared with the previous version, the Measures have revised and improved numerous aspects, including the regulatory framework and mechanisms for insurance products, business oversight, and the handling of violations.
Approval, filing, and archiving
Insurance business is a licensed activity, and the regulation of insurance clauses and premium rates directly affects the interests of the broad insured population.
Professor Qiang Li of the School of Economic Law at Northwest University of Political Science and Law argues that, in understanding the Administrative Measures, one must first elevate their perspective to the overarching goals of safeguarding public interests, upholding market order, and preventing and defusing financial risks. Only thereafter should attention turn to interpreting the specific provisions. Insurance contracts are unilaterally drafted by insurers and constitute standard-form contracts, leaving policyholders with limited room to negotiate terms. Consequently, regulatory authorities, in addition to overseeing insurers’ organizational structures—such as their establishment, corporate governance, and termination—must also regulate their business practices, including the formulation of insurance clauses and premium rates.
However, this does not mean that all business activities of insurance companies are subject to uniformly stringent regulation. According to Qiangli, regulatory approaches vary across countries: some impose very strict oversight, leaving insurers virtually no discretion over policy terms and premium rates—Japan is a prime example of this model—while others adopt a highly liberal approach, allowing offices to set their own terms and conditions—this is the case in the United Kingdom. The vast majority of countries, meanwhile, strike a balance between relatively stringent and more flexible regulation.
Ren Zili, Secretary-General of the Insurance Law Research Association of the China Law Society and a professor at the School of Law of Beijing University of Aeronautics and Astronautics, stated that China’s administrative model—under which insurance company policy terms are subject to both approval and filing—is grounded in law. The Insurance Law explicitly stipulates that policy terms and premium rates for insurance types that affect public interests, those subject to compulsory insurance under the law, and newly developed life insurance products must be submitted to the State Council’s insurance regulatory authority for approval. In conducting such reviews, the State Council’s insurance regulatory authority shall adhere to the principles of safeguarding public interests and preventing unfair competition. As for other types of insurance, their policy terms and premium rates shall be filed with the insurance regulatory authority.
The relevant provisions of the Administrative Measures are consistent with this: “Property insurance companies shall submit to the CBIRC for approval the insurance clauses and premium rates for insurance lines that affect public interests and for those subject to compulsory insurance under law. With respect to other insurance lines, property insurance companies shall file the insurance clauses and premium rates with the CBIRC or its provincial-level branch. The specific insurance lines that require submission for approval or filing shall be separately prescribed by the CBIRC.”
“Prior to implementation, approval is required; post‑implementation, a filing must be submitted to the regulatory authorities,” Qiangli stated. He added that, whether it is an approval or a filing, once completed, it must be strictly enforced.
The Measures stipulate that, with respect to insurance clauses and premium rates subject to approval, property insurance companies may not commence their use or operation prior to obtaining approval from the China Banking and Insurance Regulatory Commission. As for insurance clauses and premium rates required to be filed, property insurance companies shall submit them to the CBIRC or its provincial-level branch for record within ten working days of commencing their use.
Improve the regulatory system
In Qiangli’s view, the refinement of the regulatory framework and mechanisms for insurance products is a salient feature of the Measures.
The Administrative Measures stipulate that property insurance companies and their branches shall strictly adhere to the approved or filed insurance clauses and premium rates, and shall not, in any manner, alter such clauses or rates in violation of these Measures.
If insurance clauses or premium rates used by property insurance companies and their branches are found to violate laws, administrative regulations, or the provisions of these Administrative Measures, the China Banking and Insurance Regulatory Commission or its provincial-level branch shall order them to cease use and set a deadline for amendment; in cases of serious violations, they may be prohibited, for a specified period, from submitting applications for new insurance clauses or premium rates.
The Administrative Measures require property insurance companies to establish a system for the development and management of insurance clauses and premium rates, and to set up a review mechanism to deliberate on significant matters related to the development and administration of such clauses and rates.
The Administrative Measures strengthen end-to-end management. Under these Measures, property insurance companies are required to designate a dedicated department to assume responsibility for the development and management of insurance clauses and premium rates, overseeing the entire process—including research and development, submission for approval and filing, validation and revision, as well as clearance and cancellation. Companies must also enhance oversight of in-use insurance clauses and premium rates by assigning a specialized unit to conduct ongoing monitoring and evaluation, refine and revise them as necessary, and promptly retire those that are no longer in use.
Strictly hold accountable
Ren Zili stated that, prior to the implementation of the Administrative Measures, both the CIRC and the CBIRC had imposed penalties on property insurance companies found in violation. The most recent penalty was disclosed by the CBIRC on August 30.
According to an investigation by the China Banking and Insurance Regulatory Commission, People’s Insurance Company of China Property & Casualty Co., Ltd. (hereinafter referred to as PICC P&C) engaged in illegal conduct by failing to use approved or filed insurance clauses and premium rates as required. Specifically, after the revised insurance clauses and premium rates had been approved or filed, PICC P&C continued to apply the original clauses and rates in newly concluded insurance contracts; it also failed to strictly enforce the premium rates and clauses that had been approved or filed with the CBIRC. In accordance with the law, the CBIRC imposed an administrative penalty, fining PICC P&C RMB 500,000, and issuing warnings and fines of RMB 100,000 each to the persons responsible, Wu Jianlin and Ni Hong.
A review by reporters reveals that, in August alone, excluding branch offices, the China Banking and Insurance Regulatory Commission itself issued two penalty decisions. In addition to these penalties, on August 2, the CBIRC also disclosed an administrative penalty decision against ZhongAn Online Property Insurance Co., Ltd. (hereinafter referred to as ZhongAn Property Insurance).
According to an investigation by the China Banking and Insurance Regulatory Commission, ZhongAn Property & Casualty Insurance engaged in four types of illegal conduct: deceiving policyholders through promotional and sales pages on its own online platform, with marketing language that did not conform to the policy terms or to the facts; deceiving policyholders through promotional and sales pages on third-party platforms, using marketing claims such as “critical illness insurance” and “6 million yuan in medical coverage” that were inconsistent with the facts; and failing to use approved or filed insurance clauses and premium rates as required.
According to Qiangli, due to their unilateral drafting and highly technical nature, most policyholders find insurance contracts difficult to understand. Even when sales representatives present the terms in an appealing manner that seems perfectly suitable, many policyholders fail to read the contract carefully; and even if they do, they often struggle to spot discrepancies between the actual terms and the promotional claims. This is also a common tactic used by insurance companies to circumvent regulations.
The CBIRC also found that ZhongAn Property & Casualty Insurance engaged in illegal acts by preparing or submitting false reports, statements, documents, and materials.
The China Banking and Insurance Regulatory Commission imposed penalties for each of the aforementioned violations, totaling RMB 1.45 million against ZhongAn Property & Casualty Insurance. Among these, the highest fine—RMB 500,000—was levied for the last type of violation, namely the falsification of information; the other three types of misconduct were penalized with fines of RMB 300,000 or RMB 350,000. In addition, individual parties involved were each fined between RMB 70,000 and RMB 100,000, and received warnings.
The Administrative Measures impose stricter requirements on insurance companies, which also means that penalties for violations will be more stringent.
As stated by a relevant official of the China Banking and Insurance Regulatory Commission, the amendments to the Administrative Measures clarify the direct accountability for policy terms and premium rates, as well as the corresponding penalties for violations, and set forth requirements for companies’ product management practices.
The Administrative Measures stipulate that the head of the department responsible for developing and managing insurance clauses and premium rates at an property‑and‑casualty insurer bears direct responsibility for the company’s work in this area. The compliance officer bears direct responsibility for reviewing insurance clauses, while the chief actuary bears direct responsibility for reviewing premium rates. With respect to unlawful conduct by these three categories of personnel, the China Banking and Insurance Regulatory Commission or its provincial‑level branch shall order corrective action and require a written self‑examination, and may also mandate that the company impose accountability measures.
Zhejiang’s Wenzhou has piloted an intelligent trial system for dangerous driving cases, which has proven effective.
Dangerous driving cases have been among the most frequently occurring criminal offenses in recent years. In 2020 alone, the courts across Wenzhou handled 1,370 such cases, accounting for approximately 12% of all local criminal cases. Beginning in September 2020, the Wenzhou Intermediate People’s Court launched a pilot program to implement end-to-end intelligent adjudication of dangerous driving cases across all city‑level courts, exploring the development of an AI‑driven judicial module tailored to this category of offenses.
This module integrates with the Zhejiang Courts Website and the Integrated Political and Legal Platform, enabling seamless data linkage. It can systematically analyze 49 case‑specific factors, such as the defendant’s blood alcohol concentration and whether a hit-and-run occurred. Combined with intelligent document parsing, it automatically extracts information on the parties’ basic details and prior criminal records, performs automated cross‑checking and data backfilling, and guides judges in verifying each factor one by one, thereby reducing routine administrative tasks. For sentencing, in accordance with sentencing guidelines, the system categorizes and organizes 61 sentencing considerations, establishing a theoretical sentencing framework. By factoring in vehicle type, blood alcohol level, and other relevant circumstances, it automatically generates sentencing recommendations, ensuring consistent and precise sentencing outcomes.
In addition, this module has strengthened the seamless coordination among investigation, arrest, prosecution, and trial, breaking down barriers to inter‑agency cooperation and establishing a robust working mechanism that ensures rapid response by public security organs, centralized prosecution by the procuratorate, swift adjudication by the courts, and timely coordination with judicial administrative departments. This achieves seamless integration across all stages—investigation, arrest, prosecution, and trial—and, in principle, criminal cases involving dangerous driving are adjudicated and their judgments served on the spot.
Since the launch of the pilot program, Wenzhou courts have handled 30 dangerous‑driving cases through intelligent adjudication, achieving 100% on‑the‑spot generation of judicial documents, on‑the‑spot pronouncement of judgments, and on‑the‑spot service of process. The average case‑handling duration is 3.57 days, representing a 44.2% reduction in time.

JC Master Law Office
Address: 9th Floor, National Water Resources Building, No. 70 Qingjiang South Road, Nanjing City
Postal code: 210036
Phone: 025-84503333
Fax: 025-84505533
Website: www.jcmaster.com
This legal notice is provided solely for informational purposes and does not constitute legal advice or a legal analysis of any specific case. The transmission of this legal notice does not establish an attorney–client relationship between JC Master Law Office and the user or reader. JC Master Law Office assumes no responsibility for any third-party content accessible via the internet. If you do not wish to receive this legal notice, please notify us by email at jcm@jcmaster.com.
The copyright of this legal information is owned by JC Master Law Office ©. Without written permission, no organization or individual may reproduce, publish, or cite it in any form.