JC Master Legal News Issue 990

Key Takeaways for This Issue
The China Securities Regulatory Commission has announced the financial derivatives products that qualified foreign investors are permitted to trade.
Following consultations with the People’s Bank of China and the State Administration of Foreign Exchange, the China Securities Regulatory Commission recently announced that qualified foreign investors may now trade in three new categories of financial derivatives: commodity futures, commodity options, and stock index options. Participation in stock index options is limited to hedging purposes, and the measures will take effect on November 1, 2021.
China’s leading experts gather in the Guangdong–Hong Kong–Macao Greater Bay Area to chart a course for biopharmaceutical innovation.
On October 16, the Symposium on High-Quality Development of the Biopharmaceutical Industry in the Guangdong-Hong Kong-Macao Greater Bay Area was held in Shenzhen. Experts, scholars, and entrepreneurs attending the event engaged in in-depth discussions on industry openness, transformative innovation, and other topics, aiming to drive high-quality growth in the biopharmaceutical sector. The conference also hosted the global launch ceremony for Loto Life Sciences’ Bio‑CDMO platform.
Tax and fee incentives boost the development of private enterprises.
According to the “2021 Research and Analysis Report on China’s Top 500 Private Enterprises” recently released by the All-China Federation of Industry and Commerce, the top 500 private enterprises reported after-tax net profits totaling RMB 1.969738 trillion in 2020, a year-on-year increase of 41.4%. Behind the steady recovery and continued growth of the private sector lies a series of tax and fee‑reduction policies introduced by China in recent years.
The China Securities Regulatory Commission, in coordination with public security and procuratorial authorities, has launched a special law enforcement campaign to rigorously crack down on securities-related illegal and criminal activities in accordance with the law.
To implement the “Opinions on Strictly Cracking Down on Securities Law Violations in Accordance with the Law,” issued by the General Office of the CPC Central Committee and the General Office of the State Council (hereinafter referred to as the “Opinions”), and in line with the spirit of the first meeting of the Coordination Task Force for Combating Illegal Activities in the Capital Market, and officely adhering to the principle of “zero tolerance,” the China Securities Regulatory Commission, together with the Ministry of Public Security and the Supreme People’s Procuratorate, recently launched a special law-enforcement campaign to combat securities-related crimes and violations, centrally coordinating the investigation and prosecution of 19 major, high-profile cases.

Finance & Capital Markets
The China Securities Regulatory Commission has announced the financial derivatives products that qualified foreign investors are permitted to trade.
Following consultations with the People’s Bank of China and the State Administration of Foreign Exchange, the China Securities Regulatory Commission recently announced that qualified foreign investors may now trade in three new categories of financial derivatives: commodity futures, commodity options, and stock index options. Participation in stock index options is limited to hedging purposes, and the measures will take effect on November 1, 2021.
Expanding the investment scope for qualified foreign investors is an important measure to implement reforms of the onshore market and further open up the domestic securities and futures markets. It will provide overseas investors with a broader array of hedging products and allocation tools, helping to attract more foreign capital and enhance the international influence of the domestic capital market. Since their listing, the relevant instruments have generally operated smoothly, with clearly demonstrated market functions, thereby establishing a solid foundation for further opening.
Going forward, the China Securities Regulatory Commission, in coordination with the People’s Bank of China and the State Administration of Foreign Exchange, will continue to conduct assessments and work toward the timely opening of additional financial instruments, steadfastly advancing the further opening-up of the capital market.

Will regulatory measures for quantitative trading be introduced? Quantitative offices: Regulation is merely a process of gathering information.
As A-share trading volume has contracted following the National Day holiday, quantitative fund performance has recently shown increased volatility and underperformance, and the ongoing fallout from the MingShi Investment incident has kept the spotlight on quantitative trading. Meanwhile, a recent rumor that quantitative offices are about to come under regulatory scrutiny has begun circulating within the investment community.
Is it all because of quantification?
Before March, the market’s prevailing speculative themes were the consumer and pharmaceutical sectors, which were dubbed “YYDS” (forever god). “These two sectors have attracted considerable attention from public mutual funds, or rather, substantial allocation,” said Lu Shan.
After the first quarter, market attention shifted to cyclical sectors and the photovoltaic sector. “These sectors have never really been fund managers’ favorites,” said Lu Shan. “In fact, stocks in cyclical industries are better suited to private equity funds and quantitative hedge funds, which tend to prefer such sectors.”
However, following the National Day holiday, trading volume in the A-share market plummeted. In the eyes of some industry insiders, it is precisely quantitative trading’s “trend‑following” approach that has driven this decline in market turnover.
“Recently, both the previously red-hot cyclical and photovoltaic sectors have experienced pullbacks, prompting widespread speculation: could quantitative funds be behind this, perhaps by tracking certain trends or exploiting price‑volume factors, thereby shaping the current market dynamics?” said Zhou Shan, a buy-side analyst (pseudonym).
The underlying logic is that quantitative offices engage in trend‑following: when the market declines, they sell off or go short in line with the downtrend; and if a particular sector is rising, they keep chasing higher.
“They follow market trends and then amplify them. This time, perhaps triggered by the decline in the sectors they hold, they sold off in line with the trend, leading to sluggish trading volume. Within the industry, there’s widespread talk that regulators may introduce specific measures targeting quantitative offices in response to such moves,” Zhou Shan said.
A prominent private-equity influencer noted that, under certain extreme conditions, quantitative investment strategies characterized by lax risk controls and blind adherence to models can trigger a cascade of effects, exacerbating market volatility and amplifying risks.
Over the past month, quantitative fund performance has indeed declined. According to a statistical monitoring report by Chaoyang Yongsu on domestic quantitative private equity funds, from September 13 to October 13, quantitative private‑equity products with disclosed returns posted an average loss of 4.89% during this period.
On September 6, at the 60th Annual General Meeting of the World Federation of Exchanges (WFE), China Securities Regulatory Commission Chairman Yi Huiman expressed concern about the rapidly growing field of quantitative trading and urged exchanges to pay close attention to regulatory issues arising from emerging trading practices.
He stated that in mature markets, quantitative and high-frequency trading are widespread; while they help enhance market liquidity and improve pricing efficiency, they can also give rise to issues such as trading convergence, heightened volatility, and violations of market fairness.
“In recent years, quantitative trading in the Chinese market has grown rapidly. What is the exchange’s view on the structure of capital entering the market and on new types of trading instruments? I hope everyone will give this some thought,” said Yi Huiman.
Quantitative practitioners: Regulation is merely about gaining insight into the situation.
But can quantitative trading really have a substantial impact on A-share trading volume? Many industry insiders have expressed skepticism.
“Recently, there have been wildly exaggerated claims that quantitative trading accounts for 60 percent or even more of total market volume. In reality, I believe quantitative trading makes up only about 20 percent of overall market turnover, which is far from enough to significantly impact the A-share market’s aggregate trading activity,” said Li Zijing.
According to an analysis by a private-equity fund manager for Caixin, the daily turnover rate across all quantitative private‑equity offices currently hovers around 25%. Based on this figure, the overall trading volume in the quantitative private‑equity market is estimated to be approximately RMB 275 billion.
Li Zijing stated that, although he has never heard of regulators introducing specific measures to address quantitative trading, they are indeed conducting relevant investigations.
“Recently, regulators have conducted on-site inspections, held face-to-face briefings, and distributed survey questionnaires to investigate several large private equity offices. The main reason is that, in the absence of mandatory reporting for algorithmic trading, exchanges are actually unable to determine which specific accounts engage in such activities. Consequently, regulators seek to ascertain the current share of quantitative trading in the market and its key characteristics,” said Li Zijing.
Notably, quantitative offices at the center of recent market scrutiny have recently issued a joint statement. On October 15, at the symposium on “Compliant Development of Quantitative Private Fund Managers,” the Beijing Fund Town Investor Education Base, together with 11 quantitative private fund management offices, jointly released the “Initiative on Investor Protection for Quantitative Private Fund Managers.”
These 11 quantitative private equity offices include Lingjun, Jiukun Investment, Inno, Zhuoshi, TianSuan Quantitative, Shidai Fuxing, Hande Investment, Xinhong Tianhe, Jukuang Investment, XiYue Asset, and Fengrun Hengdao. The reporter noted that, in this initiative—aimed at demonstrating commitment to investors and regulators—quantitative institutions place “qualified” at the forefront of their industry culture.
Adopt pragmatic and effective measures to actively support insurance institutions in participating in infrastructure REITs.
Luo Yanjun, Deputy Director of the Funds Management Department of the China Banking and Insurance Regulatory Commission, stated at the 2021 Beijing Infrastructure REITs Industry Development Conference that investing in infrastructure REITs is both a necessity for insurance funds to support national strategies and a requirement for their long-term asset allocation.
Specifically, Luo Yanjun argues that, first, public‑offering REITs are characterized by infrastructure projects as their underlying assets, long operating cycles, mandatory income distribution, and transparent, publicly disclosed issuance. The listing of domestic infrastructure REITs has further broadened the avenues for insurance capital to participate in infrastructure development, helping to leverage the advantages of long‑term capital, address infrastructure shortcomings, increase the share of direct financing, and support national strategic priorities.
Secondly, compared with bank deposits and other forms of capital, insurance funds are characterized by long maturities, diversified asset allocation, and intensive management. Infrastructure REITs, which use infrastructure projects as their underlying assets, typically have long operating cycles—ranging from 20 to 30 years, or even perpetual—and mandate regular dividend distributions, thereby delivering stable, long-term cash flows that align closely with the long‑term nature of insurance funds. Particularly in the current environment of low interest rates and an intensifying “asset scarcity,” the long‑term investment value of infrastructure REITs becomes increasingly evident. From a risk–return perspective, infrastructure REITs exhibit low correlation with bonds, equities, and other asset classes, further enabling insurance funds to diversify their portfolios, stabilize returns, and manage risks.
In addition, Luo Yanjun emphasized that, from a regulatory perspective, the China Banking and Insurance Regulatory Commission will adopt pragmatic and effective measures to actively support insurance institutions’ participation in infrastructure REITs. “Among the first batch of nine projects, insurance funds have invested in eight of them. Earlier, we worked with relevant departments to clarify the investment guidelines for insurance capital. Going forward, the CBIRC will promptly issue regulatory documents and strengthen policy guidance to encourage insurance funds to increase their investments in infrastructure sectors such as transportation, water conservancy, energy, and ecological and environmental protection—through infrastructure REITs as well as debt and equity instruments—thereby contributing to high-quality economic development,” Luo Yanjun stated.

Targeting the Beijing Stock Exchange, local governments are matchmaking “specialized, refined, distinctive, and innovative” enterprises with service providers.
As a newly established platform dedicated to serving innovative small and medium-sized enterprises, the Beijing Stock Exchange (hereinafter referred to as the “BSE”) is steadily advancing all preparatory work. To seize the significant opportunities presented by the BSE’s establishment, localities are actively organizing matchmaking events between “specialized, refined, distinctive, and innovative” enterprises and service providers.
Zhou Yunnan, founder of Beijing Nanshan Investment, told a reporter from the Securities Daily that one of the BSE’s key objectives is to serve “specialized, refined, distinctive, and innovative” enterprises. Going forward, being designated as such will be a significant advantage when companies seek an IPO, and the BSE is poised to become the primary platform and growth accelerator for these enterprises.
At present, the goal of connecting “specialized, refined, distinctive, and innovative” enterprises with service institutions across regions is to leverage institutional expertise, mobilize social capital to expand financing supply, and other measures, with the aim of cultivating these enterprises into the mainstay of listings on the Beijing Stock Exchange.
As the host city of the Beijing Stock Exchange, Beijing has undoubtedly taken the lead. On October 12, Beijing held a launch event marking the signing of a strategic cooperation agreement to bring “specialized, refined, distinctive, and innovative” enterprises onto the Beijing Stock Exchange, along with a series of training and support initiatives.
The Zhejiang Provincial Department of Economy and Information Technology is coordinating with the Beijing Stock Exchange to launch ten key service‑matching initiatives, linking 470 “Little Giant” enterprises in Zhejiang that specialize in niche markets with 23 service providers listed by the Ministry of Industry and Information Technology. These efforts will primarily focus on capital‑market matchmaking: the Zhejiang Equity Exchange Center will establish a dedicated “Specialized, Refined, Distinctive, and Innovative” board, conduct specialized training for such enterprises, and facilitate connections with the Beijing Stock Exchange, the STAR Market of the Shanghai Stock Exchange, and the ChiNext Board of the Shenzhen Stock Exchange. Additionally, the initiative will attract angel investors, venture capitalists, and industrial funds, while engaging banks to promote integrated investment‑and‑lending financing solutions.
The Guangdong Provincial Department of Industry and Information Technology recently selected 19 service providers to offer free or discounted services to national-level “Little Giant” enterprises and provincial-level specialized, refined, distinctive, and innovative SMEs.
Jiangsu Province is home to 285 national-level “Little Giant” enterprises specializing in niche markets. To support these companies, the province has implemented a comprehensive set of measures, including financial incentives, credit‑financing matchmaking, and diagnostic‑and‑upgrade programs for thousands of enterprises.
Chen Li, Chief Economist and Director of the Research Institute at Chuancai Securities, told a reporter from the Securities Daily that, for the Beijing Stock Exchange, its primary strategic positioning is to support the innovative development of small and medium-sized enterprises and to establish itself as a key platform serving innovation-driven SMEs. Meanwhile, “specialized, refined, distinctive, and innovative” enterprises cannot achieve rapid growth without adequate financial backing. The Beijing Stock Exchange has created a relatively favorable environment to help these companies raise equity capital, thereby addressing their early-stage funding needs. Consequently, local governments are actively organizing matchmaking events of this kind.
According to data from Chuancai Securities, as of September 30, among the companies listed on the Select Tier, there are 12 national-level “Little Giant” enterprises specializing in niche fields, and 31 enterprises recognized at or above the provincial level as “specialized, refined, distinctive, and innovative.” Together, these account for nearly half of the total number of companies on the Select Tier.
In Chen Li’s view, the Select Tier boasts a high proportion of “specialized, refined, distinctive, and innovative” enterprises, which aligns perfectly with the Beijing Stock Exchange’s mission to support small and medium-sized innovative companies. Looking ahead, against the backdrop of China’s accelerated efforts to achieve independent and controllable industrial chains, fostering the rapid growth of these “specialized, refined, distinctive, and innovative” offices will also bolster the resilience of domestic supply chains and help prevent bottlenecks.
Chen Li expects that, in the future, an increasing number of “specialized, refined, distinctive, and innovative” enterprises will choose to list on the Beijing Stock Exchange, driving rapid expansion of the exchange’s overall scale. According to the first three batches of “specialized, refined, distinctive, and innovative” companies published by the Ministry of Industry and Information Technology, although only 12 such offices were included in the initial roster of BSE‑listed companies, roughly a hundred more—spanning the Innovation Layer and the Basic Layer—serve as a reserve pool; most of these also meet the criteria for future listing on the BSE and are poised to join, injecting a steady stream of fresh capital into the market.

The Beijing Stock Exchange revitalizes the New Third Board, with securities offices rushing to seize a new growth opportunity.
At present, the Beijing Stock Exchange (hereinafter referred to as the “BSE”) is making rapid progress across all fronts, while major securities offices are vigorously preparing for this new market segment by adjusting their business strategies, deeply exploring corporate needs, and seizing the opportunities presented by the BSE. They are also investing heavily in nurturing “specialized, refined, distinctive, and innovative” enterprises, striving to grow alongside small and medium-sized enterprises.
With the launch of the new market imminent, a seamless listing pathway from the New Third Board to the Beijing Stock Exchange has been established, giving securities offices with robust pipelines of pre‑IPO projects an opportunity to take the lead.
According to statistics, among the Select Tier and Innovation Tier, the securities offices that serve the largest number of entrepreneurs are Shenwan Hongyuan (129 companies), CITIC Securities Investment (44 companies), and Zhongtai Securities (41 companies). By consistently strengthening their presence in the New Third Board business, these offices have gradually developed distinctive competitive advantages.
Following the launch of the Beijing Stock Exchange, a large number of small and medium-sized enterprises will meet the listing criteria. In particular, those with profits ranging from RMB 40 million to RMB 60 million will create substantial business opportunities for securities offices. This is especially true for core business lines such as investment banking and wealth management: investment banking activities will generate robust revenues, while brokerage and margin‑financing businesses will also benefit from the increased trading volume spurred by the market’s expansion.
Among the province’s homegrown securities offices, Zhongtai Securities responded swiftly, promptly launching specialized training on the Beijing Stock Exchange and providing timely interpretations of regulatory policies and operational guidelines. Zhu Feng, General Manager of Zhongtai Securities’ Strategic Client Department and Deputy Director of the Investment Banking Committee, stated: “The Investment Banking Committee immediately organized and deployed a series of measures. Project leaders, sponsors, and supervisors, in accordance with their respective roles, conducted on-site visits to more than 50 high-quality existing companies under supervision and listing guidance, thereby fostering a virtuous development cycle characterized by ‘building up a reserve pool, filing applications for a batch, and facilitating listings and issuances for another batch.’”
Recently, at a specialized training session on Beijing Stock Exchange listings for Shandong-based enterprises, Li Feng, Party Secretary and Chairman of Zhongtai Securities, stated that as of the end of September, Zhongtai Securities had cumulatively recommended 556 companies to list on the New Third Board, ranking third in the industry; it has provided ongoing supervision to 272 listed companies on the New Third Board, placing it fifth; it has completed a total of 486 targeted share issuances on the New Third Board, ranking third; and it has participated in market-making for more than 350 companies, with cumulative investments in market-making and equity investments exceeding RMB 2 billion.
Following the establishment of the Beijing Stock Exchange, in line with the New Third Board and the BSE’s mandate to serve “earlier‑stage, smaller, and more innovative” enterprises, Zhongtai Securities promptly refined and adjusted its business strategy, focusing on innovative small and medium-sized enterprises and emphasizing their technology‑driven characteristics. “SMEs will gain access to a more specialized capital‑support platform, receive greater backing from the capital markets, and seize new opportunities for higher‑quality growth,” said Li Feng.
“Building on the early-stage reforms and explorations of the New Third Board, the establishment of the Beijing Stock Exchange has broken through institutional and systemic bottlenecks, creating an exchange tailored to innovative small and medium-sized enterprises and paving a path toward inclusive finance that supports SMEs’ technological innovation,” said Wang Zuowei, Deputy General Manager of the Shandong Investment Banking Headquarters at Zhongtai Securities and a seasoned sponsor representative. He added that, in the face of the opportunities presented by the Beijing Stock Exchange, proactively planning and positioning one’s enterprise is especially critical—indeed, it is a key factor for companies seeking to stand out in the capital markets.

Commercial & Corporate
China’s leading experts gather in the Guangdong–Hong Kong–Macao Greater Bay Area to chart a course for biopharmaceutical innovation.
On October 16, the High-Quality Development Symposium on the Biopharmaceutical Industry in the Guangdong–Hong Kong–Macao Greater Bay Area was held in Shenzhen. Experts, scholars, and entrepreneurs attending the event engaged in in-depth discussions on issues such as industrial openness and transformative innovation, aiming to drive the biopharmaceutical sector toward high-quality growth. The conference also hosted the global launch ceremony of Loto Life Sciences’ Bio‑CDMO platform.
Gong Xixiang: Implementing the Healthy China Strategy Requires Industry to Take the Lead
In his address, Gong Xixiang, a member of the Party Leadership Group and Secretary-General of Xinhua News Agency, stated that promoting the high-quality development of the biopharmaceutical industry is both an essential component of implementing the Healthy China strategy and an indispensable path to meeting the people’s growing demand for biopharmaceutical products.
Since the onset of the COVID‑19 pandemic, accelerating the development of the biopharmaceutical sector has become a global consensus. Science and technology are the primary productive forces, and innovation is the foremost driving force behind development; implementing the Healthy China initiative requires prioritizing industrial advancement.
Li Bin: Multi‑pronged Measures to Promote the Healthy and Sustainable Development of the Pharmaceutical Industry
Li Bin, Deputy Director of the National Health Commission and a member of its Party Leadership Group, attended the meeting and delivered a speech. He emphasized that by streamlining the links among research and development, production, distribution, and use, it is possible to effectively promote the healthy and sustainable development of the pharmaceutical industry.
“The biopharmaceutical industry is a strategic emerging sector. Its healthy, sustainable development will better meet the public’s needs for health care services and contribute to the comprehensive advancement of Healthy China,” said Li Bin.
Xu Jianping: The Greater Bay Area is a key hub for the open and dynamic development of the pharmaceutical industry.
Xu Jianping, Director-General of the Department of Regional Opening-Up at the National Development and Reform Commission, stated that the Guangdong–Hong Kong–Macao Greater Bay Area serves as a crucial hub for the convergence and integration of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and is also a key platform for the open development of the pharmaceutical industry. As China enters a new stage of development, the Greater Bay Area should further leverage its role as “three highlands,” contributing to the advancement of the Health Silk Road and the building of a global community of health for all.
First, fully leverage the region’s role as a hub for pharmaceutical‑industry collaboration to enhance and strengthen the biopharmaceutical sector in the Guangdong–Hong Kong–Macao Greater Bay Area. Second, capitalize on its position as a premier center for medical and health services, harnessing the Greater Bay Area’s geographic advantages to vigorously develop traditional Chinese medicine–based wellness and preventive care, TCM‑related health tourism, and elderly‑care services. Third, maximize its potential as a leading innovation hub for pharmaceutical and biomedical technologies.
Yu Gang: The biopharmaceutical industry will become a key growth engine for Shenzhen’s innovation-driven development.
Yu Gang, Vice Mayor of the Shenzhen Municipal People’s Government and a member of the Party Leadership Group, stated that in the future, Shenzhen will focus on industrial clusters such as the biopharmaceutical sector and high-end medical services, aiming to transform the biopharmaceutical industry into a key growth engine driven by innovation.
Yu Gang pointed out that, as a pilot demonstration zone, Shenzhen has established a comprehensive innovation ecosystem characterized by multi‑factor linkages and cross‑sectoral collaboration. As a result, its high‑end medical devices and gene‑sequencing technologies have risen to the forefront globally. Looking ahead, the city will further strengthen its biopharmaceutical industry by fostering industrial clusters, driving development through innovation.
Ma Weihua: Developing the life and health industry requires continuing to uphold the entrepreneurial spirit.
Ma Weihua, Chairman of the International Science and Technology Achievement Transformation Guidance Fund and Co‑Chairman of Shenzhen Letu Life Science Technology Investment Co., Ltd., stated that, to date, China’s life‑health industry still lags significantly behind the world’s most advanced standards. Continued efforts, sustained entrepreneurship, and the unwavering spirit of enterprise—characterized by a pioneering drive for innovation, a sense of responsibility to serve society, and a deep patriotic devotion to China—along with a global-minded entrepreneurial outlook, are essential for progress.
Liu Ruyin: Building a world-class biopharmaceutical development and manufacturing hub, both domestically and internationally.
Liu Ruyin, founder and chairman of Shenzhen Letu Life Science Technology Investment Co., Ltd., stated that Letu has currently accomplished three major milestones: first, it has attracted a substantial pool of international talent, focusing on both upstream and downstream segments of the industry chain, with initial agglomeration effects already emerging; second, it has begun to establish a precision‑medicine industrial ecosystem integrating genetic testing, new‑drug R&D, CDMO services, and cutting‑edge medical technologies; and third, it has filled a domestic gap by building China’s first large‑scale biopharmaceutical development and manufacturing (Bio‑CDMO) facility, which will significantly reduce biopharmaceutical production costs and, in the future, is poised to become a world‑class biotech hub—surpassing even the scale of South Korea’s Samsung Bio.
Michael Gao Wei: China could become the largest market in the healthcare industry by 2025.
Michael Garvey, President of Shenzhen Letai Life Science Investment Co., Ltd., stated that China is likely to become the largest market in the healthcare sector by 2025. Seizing this opportunity, Shenzhen Letai Life Science Investment Co., Ltd. will expand beyond its borders into the U.S. market and ultimately the global market, striving to become the world’s largest CDMO company within the next five years.
Fan Daiming: Enhancing the human body’s natural immunity will become the primary direction of future medical development.
Academician Fan Daiming of the Chinese Academy of Engineering stated that health has never been as highly valued by the public as it is today. He proposed that enhancing the human body’s natural immunity will become the primary focus of future medical development.
Fan Daiming stated, “Enhancing the human body’s natural immunity cannot be achieved solely through antiviral or antibacterial drugs. Just as a nation requires both border defense forces and robust complementary capabilities, natural resistance is the finest surgical scalpel and the most effective medicine.”
Liu Haijie: Centralized procurement is a matter of concern for every pharmaceutical company and investment institution.
Liu Haijie, Investment Director at Shenzhen Investment Control Capital Co., Ltd., addressed the recent “halving” of pharmaceutical companies’ valuations from an investment perspective. He stated, “Procurement‑driven price cuts are a concern for both pharmaceutical offices and investment institutions. As we can see, this issue affects especially generic drug manufacturers, as well as companies in the high‑value consumables and medical device sectors.”
Liu Haijie argues that, whether in the pharmaceutical, technology, or energy sectors, any industry grappling with industrialization and commercialization will inevitably face challenges related to costs, quality control, and scale. Once production capacity is ramped up, adopting a “volume‑for‑price” strategy can drive substantial sales, while scaling up further helps safeguard profitability. From the perspective of future international competition, achieving a cost advantage makes it exceedingly difficult for rivals to surpass or replace a company.
Wang Baoping: Innovative companies should focus on further strengthening their product pipelines.
Wang Baoping, Chief Operating Officer of Beijing Shengnuoji Pharmaceutical Technology Co., Ltd., participated in the symposium and stated that, against the backdrop of centralized drug procurement, innovative companies should focus on strengthening their product pipelines rather than simply being constrained by policy-driven price reductions.
In Wang Baoping’s view, price reductions through centralized drug procurement are an inevitable trend and an essential path forward. Under these circumstances, for pharmaceutical and biotech companies, the key to survival and growth lies in integrating their products with a broader range of medications and exploring innovative approaches.
Li Zhiliang: Officely Upholding the “Dual Circulation” Strategy—Rooted in the Domestic Market, with a Global Outlook
Li Zhiliang, Chief Technology Officer for New Technologies at Shenzhen Loto Life Science, participated in the symposium and stated that, under the national drug procurement policy, Shenzhen Loto Life Science will steadfastly pursue a dual‑circulation strategy—both domestically and internationally—committing to “Made in China” without succumbing to excessive internal competition, while also reaching out to the global market to drive growth.
Li Zhiliang pointed out that, with Hong Kong leading the way and Guangzhou following closely behind, the Greater Bay Area benefits from the robust support of the domestic market. At the same time, we are also looking to the vast global pharmaceutical market—several times larger than China’s—to explore how to drive innovation, accelerate its pace, and lower the barriers to entry, ensuring that people around the world can access high‑quality, affordable originator medicines.
This event is hosted by the Ethnic Branding Project Office of Xinhua News Agency, and co-organized by China News Development Shenzhen Co., Ltd., China Wealth Network, and Shenzhen Letu Life Science Technology Investment Co., Ltd., with support from the Dapeng New District Management Committee of Shenzhen and Shenzhen Investment Control Capital Co., Ltd.

Dual-carbon standards are being accelerated, and energy-saving policies are being strengthened.
Standards for peaking carbon emissions and achieving carbon neutrality are being accelerated and improved; eight mandatory national energy‑efficiency standards have been issued. On October 10, the CPC Central Committee and the State Council officially released the National Standardization Development Outline, calling for the expedited updating and upgrading of energy‑efficiency standards, the formulation of greenhouse‑gas emission standards for key industries and products, and the refinement of the low‑carbon product labeling system.
Improve renewable energy standards and develop standards for ecological carbon sinks, carbon capture, utilization, and storage. Moving forward, the Green Association’s Standards Committee will earnestly implement the requirements of the Outline and accelerate the establishment and refinement of dual‑carbon standards. We expect carbon‑emission allowances to tighten gradually, with carbon prices trending upward over the long term, which should encourage a rise in CCER projects and higher prices. Overall, “carbon emissions” are subject to increasingly comprehensive environmental regulations; we recommend focusing on: ① the waste‑to‑energy sector, which enjoys strong market conditions, a favorable industry structure, and significant growth potential—particularly companies with a track record of solid performance and excellent management, such as Hanlan Environment, and those that possess core incineration equipment manufacturing and sales capabilities along with outstanding ROE, like Weiming Environmental; and ② investment opportunities in niche environmental segments, including energy‑saving equipment and resource recycling. (2) Recently, the National Standardization Administration approved and released eight mandatory national energy‑efficiency standards. These new standards will officially take effect 12 months after their publication, providing enterprises and the market with a one‑year transition period to curb the unchecked expansion of “high‑carbon, high‑consumption” projects and phase out outdated production capacity through energy‑consumption limit thresholds. Under the dual‑carbon goals, attention should be paid to investment opportunities in specialized environmental fields such as energy‑saving equipment and resource recycling.
Financing is picking up, with ample room for growth, highlighting the value of allocating to the environmental protection sector. Since 2019, declining interest rates and state‑owned capital entering the picture have led to a marked improvement in debt financing for environmental offices, while new refinancing rules have addressed longstanding challenges in equity fundraising, removing the key factor that had been weighing down the sector’s P/E ratios. In 2019, the total issuance of special-purpose bonds for environmental projects reached RMB 54.6 billion; by 2020, this figure had surged to RMB 232.4 billion, and as of October 15, 2021, it stood at RMB 174.8 billion. Moreover, the share of such bonds has been rising: accounting for 2.5% of total bond issuance in 2019, the proportion climbed to 6.3% in 2020 and further increased to 7.3% as of October 15, 2021. The Fifth Plenary Session of the 19th CPC Central Committee reafofficeed an unwavering commitment to ecological progress, setting targets to achieve significant improvements in the ecological environment during the 14th Five-Year Plan period and to bring about a fundamental turnaround by 2035. Meanwhile, initiatives such as the comprehensive protection of the Yangtze and Yellow River basins and waste‑sorting programs are further expanding the industry’s growth potential.
Valuations have bottomed out; we are focusing on stable, operation‑driven assets and companies poised for a fundamental turnaround. Over the past three years, the environmental protection sector has underperformed, with both valuations and institutional holdings remaining at low levels. The launch of environmental REITs introduces a new equity‑based financing tool, while pollution‑control operations—particularly urban wastewater and waste treatment, as well as solid‑waste and hazardous‑waste management—are key areas of focus. We favor companies with strong technological advantages and high barriers to entry: 1) Waste‑to‑energy offices with robust growth prospects and high certainty; we recommend Weiming Environmental (leading ROE in the sector, with an ample order backlog) and Hanlan Environment (steady growth and clear valuation advantages); 2) Hazardous‑waste disposal companies with a rich project pipeline, strong technology, and high competitive barriers; we highlight Zhefu Holdings (emerging leader in hazardous waste, with a full‑chain industrial layout) and Gaoneng Environment (a soil‑remediation leader benefiting from improved financing conditions); 3) Water‑utility companies whose intrinsic value is likely to be re‑assessed; we recommend Hongcheng Water Industry (with significant potential in Jiangxi’s wastewater market, offering attractive valuations and dividend yields).

The Vanishing “Golden September, Silver October” Housing Market: Over 15 Cities Have Issued “Price-Capping Orders,” While Secondhand Home Prices in First-Tier Cities Are Rapidly Freezing
Zhang Dawei, chief analyst at Centaline Property, told reporters that the immediate trigger for this round of nationwide housing price declines is tighter credit conditions, with secondhand homes bearing the brunt. So far, first-tier cities have seen the sharpest drop in secondhand‑home transaction volumes. However, current “market‑stabilization” policies have yet to address the root causes of the downturn, and in many cities, measures such as “price‑floor orders” may even backfire.
The lackluster “Golden September, Silver October” period
This year’s traditionally robust “Golden September, Silver October” real‑estate season has been unusually subdued. Zhang Dawei noted that the number of cities issuing “price‑floor orders” has risen markedly, including Ezhou, Dongyang, Zhangjiakou, Heze, Yueyang, Kunming, Shenyang, Jiangyin, Guilin, Zhuzhou, Tangshan, Nantong, Xuzhou, Xinyi, and Anqing. And it’s not just third‑tier cities—provincial capitals like Harbin are also stepping in to curb sharp swings in housing prices. As reported by a 21st Century Business Herald journalist, on September 9 this year, the Housing and Urban–Rural Development Bureau of Songbei District in Harbin issued a notice titled “On Stabilizing the Real Estate Market,” emphasizing the need to maintain price stability for commercial housing. He added that, so far this year, average new‑home prices in Harbin have fallen by roughly RMB 2,000 per square meter; at one development, Songpu Guanjian International, unit prices once reached RMB 13,000 per square meter, but even north–south‑oriented units now sell for around RMB 10,000 per square meter. “Some buyers are holding back because they fear further price declines; the ‘price‑floor order’ is meant to reassure them.”
Zhang Dawei stated that, under the online registration rules, real estate transactions with an actual sale price 15% below the registered price typically fail to pass review. Previously, however, the focus was on preventing excessive price hikes, with little attention paid to potential declines. Now, though, relevant regulations are effectively curbing sharp price drops; while many cities have not formally issued “price‑ceiling orders,” de facto restrictions are nonetheless in place.
That is indeed the case. Our reporter learned about the situation in Xiamen, Fujian, and Huizhou, Guangdong. An Xiamen real estate agent told a reporter from the 21st Century Business Herald that the government’s “price‑capping order” typically covers two aspects: setting limits on selling prices and restricting discount rates.
“Our staff who sell new homes had originally planned to offer a 7% discount, but to prevent market instability, the government capped discounts at 5%,” the agent noted. The Xiamen housing market surged in March and April this year, but as banks tightened loan quotas and extended approval times, demand plummeted. Some buyers placed orders as early as May or June, yet they’re still waiting.
“This September and October, overall customer traffic has picked up compared to earlier periods, but asking prices remain sluggish,” noted the Xiamen real estate agent. He added that the market is expected to see more affordable homes toward year-end.
An real estate agent in Huizhou told reporters that in previous years, the housing market tended to pick up in the second half of the year, but this year it has instead seen a downturn. For their agency, the number of online-signed transactions across Huizhou fell by 22% in July and August.
“Bank policies have tightened lending, making it exceptionally difficult to sell existing homes, while new‑home prices are also being discounted,” said the Huizhou real estate agent. Some developments are offering discounts as high as 10%, and developers are exploring various promotional strategies, such as lowering down payments or even allowing installment plans for the down payment.
Secondhand homes in first-tier cities face a “rapid freeze”
According to data from the Centaline Property Research Center, secondhand housing sales in first-tier cities plummeted across the board in September, with overall figures hitting multi-year lows. Beijing’s secondhand housing market has come to a near standstill: September saw just 12,575 transactions, down 27% from 17,259 in 2020 and 21% month-on-month, marking the lowest level in 18 consecutive months. In Shanghai, September sales totaled only 11,000 units, roughly 40% lower than the 18,000 recorded in August. Meanwhile, Guangzhou reported 6,198 secondhand residential property signings in September, a 27.38% drop from the previous month and a 56.04% year-on-year decline. In Shenzhen, 1,765 secondhand homes changed hands in September, a 13.6% decrease compared with the prior month.
Zhang Dawei pointed out that, among secondhand homes, first-tier cities have seen the sharpest decline in transaction volume. First, these cities impose the strictest purchase restrictions of all; second, tighter credit conditions have had a substantial impact. “The most direct effect of credit tightening is on the secondhand housing market, with first-tier cities hit hardest and second- and third-tier cities experiencing relatively milder repercussions,” Zhang said. However, even third-tier markets are struggling, as supply there is already fairly saturated and they have been more acutely affected by the fallout from high-profile corporate defaults. Not only secondhand homes but also new‑build residential sales posted broad-based, significant declines in September: average transaction area in first-tier cities fell by more than 23% month over month and 47% year over year, while second-tier cities saw month‑on‑month drops of 6% and year‑on‑year declines of 30%. In third-tier cities, month‑on‑month sales contracted by 26%, and year‑on‑year sales plunged by 52%.
During the National Day holiday, data from Centaline Property showed that new home sales in most cities hit multi-year lows, with secondhand‑home transactions in first-tier cities nearly stalling. The usual post‑holiday surge of returning hometown buyers—common in third- and fourth‑tier cities—has virtually vanished, while aggressive price cuts have begun to emerge prominently in these markets. Zhang Dawei noted that the first factor behind the market’s rapid freeze is the across-the-board tightening of mortgage lending, with loan disbursements now routinely taking more than three months, bringing nationwide secondhand‑home sales to a near standstill; in Shanghai, Shenzhen, and Beijing, such transactions have already fallen to historic lows. In addition, real‑estate regulation has continued to intensify: in September alone, there were 62 policy measures nationwide, bringing the total for January–August to 420, for a cumulative 482 since the start of 2021.
“Judging from the current ‘market‑rescue’ policies, none have addressed the root causes of the market’s downward trend. Even the ‘price‑floor order’ has failed to stem the decline in housing prices in these cities. Many developers are circumventing the cap by offering incentives such as covering down payments, gifting cars, or providing 400,000‑yuan household‑asset cards,” said Zhang Dawei. He added that, amid the prolonged slump, the only self‑rescue strategy for property offices is to slash prices and ramp up promotions; however, with the introduction of price‑capping measures, corporate liquidity has grown increasingly strained.

The central bank stated that it is expediting the establishment of carbon‑reduction policy tools, adopting a “lend first, borrow later” mechanism.
On October 15, the People’s Bank of China held a press conference on financial statistics for the third quarter of 2021. At the event, Sun Guofeng, Director-General of the Monetary Policy Department, stated that the central bank is expediting the establishment of a carbon‑reduction tool. This tool will support three priority areas: clean energy, energy conservation and environmental protection, and carbon‑reduction technologies. To ensure direct targeting, a “lend first, borrow later” mechanism will be adopted: financial institutions will make independent lending decisions and assume their own risks when extending loans to enterprises in these key carbon‑reduction sectors. Subsequently, they may apply to the central bank for funding support under the carbon‑reduction program and publicly disclose information on their carbon‑reduction projects.

The upward trend in coal prices is unlikely to end anytime soon.
Against the backdrop of an energy crisis, economies such as those in Europe and India are grappling with electricity supply shortages, driving global coal prices to remain persistently high. On Thursday (the 14th), Australian coal giant Whitehaven Coal warned that, amid surging power demand and production challenges in major coal-supplying countries, coal prices could stay elevated for some time.
Whitehaven said in a production report on Thursday that, in the quarter ended September 30, the average price of high‑quality thermal coal at Australia’s Newcastle port—used as the benchmark for Asian coal pricing—rose to $167.52 per tonne, compared with around $52 per tonne in the same period last year. Whitehaven added, “With robust demand and persistently tight supply, both thermal and metallurgical coal prices are expected to remain elevated.”
Under the impact of the pandemic, global measures to stimulate economic recovery have driven a steady rise in fuel demand, yet output at major mining hubs has declined due to pandemic-related restrictions. The energy crisis has triggered power shortages across economies from Europe to India, severely affecting a wide range of other sectors.
In a statement, Whitehaven said that global seaborne coal supplies have tightened due to heavy rainfall and the Indonesian government’s restrictions on coal exports. Additionally, logistical challenges in Russia, South Africa, and Australia’s Hunter Valley have further disrupted coal market supply. Asia is the world’s largest consumer of thermal coal. Driven by rising prices for coal and certain high‑energy‑intensive industrial products, China’s PPI rose 10.7% year on year in September, an increase that widened by 1.2 percentage points from the previous month, marking the highest level since 1995.
According to a report by China’s National Bureau of Statistics, in September, the purchase prices of industrial producers rose by 30.3% for fuel and power products. To address soaring coal prices and the recent severe power crisis, the State Council Executive Meeting on October 8 decided to raise the allowable range of market‑determined electricity price fluctuations from no more than 10% and 15%, respectively, to a cap of 20% across the board. In addition, electricity tariffs for high‑energy‑consumption enterprises will be set by the market and will not be subject to the 20% ceiling. On Wednesday (the 13th), China’s National Development and Reform Commission stated that it would make every effort to boost coal production and supply. The commission added that it would expedite the commissioning and full‑capacity operation of open‑pit coal mines that have already been approved and largely completed, while also ensuring that mines temporarily shut down for rectification are brought back into operation as soon as possible in accordance with laws and regulations.
Lu Ting, Chief China Economist at Nomura Securities, stated that over the past two weeks, policymakers have been eager to ease the nationwide power crisis. With seasonal demand declines and the implementation of a new electricity pricing scheme, the energy crunch may abate somewhat in October.

Taxation TAXATATION
Tax Policy Services Boost Corporate R&D and Innovation
Recently, the State Taxation Administration issued the “Announcement on Further Implementing Relevant Issues Concerning the Policy of Additional Deduction for R&D Expenses” (hereinafter referred to as the “Announcement”), further encouraging enterprises to increase their R&D investment. To ensure the thorough and precise implementation of the new policy on additional deductions for R&D expenses, tax authorities have employed measures such as targeted推送 via tax‑related big data, expert guidance, and online training, enabling R&D‑intensive enterprises to fully benefit from tax incentives and bolstering their motivation to pursue innovation.
“The recently issued notice from the State Taxation Administration allowing taxpayers to claim the enhanced R&D expense deduction for the first three quarters in advance, starting with the October 2021 provisional tax return, has greatly boosted Yuchai Corporation’s morale and further strengthened the company’s enthusiasm for R&D and innovation,” said Lu Yuming, Chief Accountant of Guangxi Yuchai Machinery Co., Ltd.
According to a responsible official from the Yulin Municipal Tax Service Bureau, the bureau has established management mechanisms such as an enterprise roster and a “one‑enterprise‑one‑file” system, enabling it to comprehensively map the registration status of high‑tech enterprises and technology‑based SMEs across the city. It has also categorized corporate R&D projects into three tiers—red, yellow, and blue—and provides targeted outreach on tax and fee preferential policies, conducts regular reviews of data flagged for potential discrepancies in tax reductions and fee cuts, and promptly verifies and resolves issues where eligible enterprises have not yet benefited from applicable measures. These efforts ensure that the benefits of tax and fee reduction policies are delivered swiftly and directly to eligible entities.
To ensure the effective and thorough implementation of the Notice, the tax authorities of Qiannan Prefecture, in light of the specific circumstances of relevant enterprises within their jurisdiction, have provided tax and fee advisory services to companies such as Jinmeng Manganese Industry Co., Ltd. through a variety of channels, including on-site guidance by expert teams, targeted outreach via tax‑enterprise interaction platforms, and online live‑stream briefings. These measures enable eligible enterprises to fully benefit from tax incentives, further supporting their transition to intelligent manufacturing. To date, 25 on‑site visits have been conducted with policy‑eligible businesses, and more than 1,300 informational brochures have been distributed.

R&D Expense Additional Deduction Re‑adjusted: Enterprises Gain Confidence in Innovation and Upgrading

“Do we need to file a record‑keeping procedure?” “Has the format of the auxiliary ledger for R&D expenses changed, and can the 2015 version still be used?” Recently, the “One‑Enterprise‑One‑Call” hotline of the Lianyungang Municipal Tax Service Bureau in Jiangsu Province has seen a steady increase in inquiries related to the new policy on the additional deduction for R&D expenses.
As the most impactful measure among this year’s structural tax‑reduction policies, the policy of allowing an additional deduction for R&D expenses has drawn significant attention from market entities because it helps companies save substantial taxes and lowers their innovation costs. Effective January 1 this year, the additional deduction rate for R&D expenses incurred by manufacturing offices was raised from 75% to 100%. Recently, the State Taxation Administration issued an announcement clarifying that, in addition to the existing benefit of claiming the first‑half‑year R&D expense deduction during the October tax filing period, an extra quarter of preferential treatment will be granted. This means that whereas previously the R&D expense deduction could only be claimed during the annual final tax settlement in the following year, this year the timing of the benefit has been advanced, and the incentive has been further enhanced: enterprises may now choose to apply the additional deduction for the first three quarters of the year.
“The adjustments to the R&D expense super‑deduction policy—both in the deduction rate and the period of eligibility—have eased our financial pressures, revitalized our working capital, and given us greater confidence to invest in innovative R&D for new materials and fine chemical product lines,” said a responsible executive at Jiangsu Ruiheng New Materials Technology Co., Ltd. The company, a directly affiliated enterprise of Sinochem Group, primarily engages in the production and sale of synthetic materials. This year, its R&D expenditures have reached RMB 22.79 million, entitling it to nearly RMB 5.7 million in tax benefits. “With these favorable policies in place, we can confidently ramp up our R&D investments. On October 1, construction commenced on a 240,000‑ton‑per‑year bisphenol A expansion project within the plant premises, with a planned duration of 260 days. This initiative will further enhance the value added of C3‑based products and extend the industrial chain.”
In addition to Jiangsu Ruiheng, Jiangsu Ruizhaokе Electronic Materials Co., Ltd. has also been preparing its tax‑filing documents recently. In the first three quarters of this year, the company’s R&D expenditures totaled RMB 3.78 million; under the latest policy, this qualifies for a corporate income tax credit of RMB 945,000. “We will further strengthen our core competitiveness in technological innovation and generate greater economic and social benefits,” said Ruizhaokе.
To ensure that businesses truly benefit from the tax and fee reduction policies, it is essential not only to enhance the scale of preferential measures but also to upgrade tax‑filing services and ease the administrative burden. The tax authorities in Lianyungang City have streamlined the required documentation and further refined their operational guidelines, making the policy particularly supportive of small, medium, and micro enterprises with limited financial‑accounting capabilities and challenges in accurate cost allocation. Expenses such as expert consulting fees and travel expenses are now uniformly accounted for across all projects, requiring only a single calculation, thereby increasing the overall amount eligible for additional tax deductions.
“At present, it remains essential to intensify efforts to publicize relevant policies. To promptly address businesses’ concerns and ensure effective implementation, we have taken the ‘Spring Breeze Campaign for Convenient Tax Services’ as an opportunity to conduct on-site visits and surveys prior to the filing period, gaining a clear understanding of enterprises’ needs and operational challenges, and providing timely reminders and guidance. Meanwhile, during the filing period, we maintain dynamic monitoring, leverage the advantages of tax‑related big data, and deliver intelligent services to taxpayers, helping enterprises—especially small and medium‑sized ones—to fully benefit from policy incentives,” said a responsible official from the Lianyungang Municipal Tax Service Bureau.
It is reported that, since the beginning of this year, the tax authorities in Lianyungang City have further deepened reforms in tax collection and administration, strengthened refined management of tax sources, established long-term mechanisms for policy implementation, and made every effort to promote technological innovation and industrial upgrading. Moving forward, the tax authorities will, through organizing symposiums, providing on-site Q&A sessions, and offering one‑on‑one guidance, help enterprises within their jurisdiction fully leverage favorable tax policies and steer corporate R&D toward high‑end, sophisticated, and cutting‑edge sectors.

Tax and fee incentives boost the development of private enterprises.
According to the “2021 Research and Analysis Report on China’s Top 500 Private Enterprises” recently released by the All-China Federation of Industry and Commerce, the top 500 private enterprises reported after-tax net profits totaling RMB 1.969738 trillion in 2020, a year-on-year increase of 41.4%. Behind the steady recovery and continued growth of the private sector lies a series of tax and fee‑reduction policies introduced by China in recent years.
Continued tax and fee relief measures are being delivered to private enterprises in tangible, cash‑in‑hand terms. In 2020, nationwide tax and fee reductions exceeded RMB 2.5 trillion, with roughly 70% of this benefiting the private sector. Thanks to these policies, the tax and fee burden as a share of sales revenue for private enterprises fell by 9.5% year on year in 2020. Meanwhile, with the ongoing optimization and increased convenience of export‑tax rebate policies, private offices have actively expanded into international markets. According to the report, in 2020, the total export value of the top 500 private enterprises grew by 9.14% year on year, accounting for 5.11% of the nation’s total exports.
“From 2019 to 2020, the company benefited from tax incentives and reductions totaling over RMB 20 million. These two years coincided with a critical period for us as we invested in new‑infrastructure projects and advanced our digital transformation. The effective implementation of these tax benefits enabled us to seize opportunities, accelerate our transformation and upgrading, and gain greater strategic flexibility,” said Zhang Qirong, Chairman of the Board of Zhongqi Holding Group. He added that, as the company expanded into overseas markets, the tax authorities assembled expert teams to provide end‑to‑end guidance and on‑site policy briefings and consultations, offering substantial support.
Providing a higher‑quality tax‑related business environment for private enterprises. Since 2014, the national tax system has launched the “Spring Breeze Action for Convenient Tax Services” for eight consecutive years, introducing a total of 147 innovative service measures across 39 categories. Local tax authorities have further rolled out nearly 50,000 detailed supporting measures… This continuously improving tax‑related business climate has enhanced private enterprises’ sense of gain.
“In recent years, the tax authorities have continuously refined their service philosophy and approaches, vigorously promoting “non-contact” tax processing, establishing a “cloud‑based services” network, and promptly addressing taxpayers’ diverse needs, thereby fostering a favorable tax‑related business environment for private enterprises,” said Xu Zewei, Chairman of 91 Technology Group. He added that Beijing’s tax authorities have proactively implemented policies such as VAT reductions and exemptions, as well as extensions to the carryforward period for losses, yielding substantial benefits to businesses.
Supporting private enterprises in pursuing independent innovation and moving up the value chain to higher‑end segments. In 2020, tax reductions and exemptions under the national policy of additional R&D expense deductions exceeded RMB 360 billion, with an average annual growth rate of 37.8% from 2015 to 2020, effectively boosting the innovative vitality of private offices. In 2020, 92.4% of China’s high‑tech enterprises were privately owned, and the sales revenue of private high‑tech offices accounted for 70% of the national total. According to the report, among the policies supporting corporate innovation, the top 500 private enterprises rated “tax reduction and exemption measures” as having the most significant impact.
“In 2020, we benefited from an additional R&D expense deduction totaling over 7 million yuan, enabling us to focus wholeheartedly on research and development and accelerate product upgrades,” said Xing Qian, CFO of Hebei Xinglong Lifting Equipment Co., Ltd. She added that tax authorities at all levels in Tangshan City and Fengrun District have proactively coordinated with the company, ensuring it fully reaps the benefits of favorable tax policies. To date, the company has obtained 26 invention patents and has been recognized as a national-level “Little Giant” enterprise specializing in niche fields and demonstrating innovative strength.
Private enterprises have achieved rapid growth by benefiting from tax incentives, and in turn, their contribution to tax revenues has continued to rise. In 2020, taxes paid by the private sector accounted for 60.1% of the nation’s total tax revenue, making it a key pillar in stabilizing national tax collections. According to a report by the All-China Federation of Industry and Commerce, the top 500 private enterprises collectively paid RMB 1.36 trillion in taxes in 2020, representing 8.84% of the country’s total tax revenue.
Professor Li Xuhong of the National Accounting Institute in Beijing stated that tax incentives play a positive role in boosting the vitality of private enterprises and other market entities. In recent years, a series of tax support policies and efforts to optimize the tax-related business environment have yielded significant results, leading to a sustained increase in the dynamism of private enterprises, small and micro‑enterprises, and individual business households, thereby laying a solid foundation for the sound and healthy development of the market.

Xiangshui, Jiangsu: Tax Measures Bolster Capacity and Empower Enterprises to Steadily Pursue Innovative Development
Manufacturing is the primary battleground for technological innovation. In recent years, China has rolled out a series of policies and measures to encourage innovation among manufacturing enterprises. The continuous release of tax and fee incentives has further spurred corporate innovation and facilitated industrial upgrading, ushering in a new era of dynamic development for manufacturing offices.
“The increase in the additional deduction rate for manufacturing R&D expenses from 75% to 100% is the best possible support and encouragement for us. With these incentives now translating from paper into actual tax savings, companies are motivated to boost R&D investment and strengthen their independent innovation efforts, thereby enhancing their core competitiveness,” said Wang Xinbin, Chief Financial Officer of Jiangsu Yabang Epson Pharmaceutical Co., Ltd.
Recently, Yabang Pharmaceutical’s 50-mg sildenafil citrate tablets have received approval under the generic drug consistency evaluation program. This marks the company’s sixth such approval, conofficeing that the product meets the same quality and therapeutic efficacy as the originator drug.
Each year, 10% to 15% of profits is allocated to R&D, and the company has established long-term collaborative partnerships with institutions such as China Pharmaceutical University and the Tianjin Institute of Pharmaceutical Research. It has set up a postgraduate workstation, an engineering technology center for sustained- and controlled-release systems, and a provincial-level technology center, focusing on comprehensive research into drug formulation, manufacturing processes, quality control, and stability. To date, Yabang Pharmaceutical has developed and produced seven nationally approved new drugs, secured approval for five projects at or above the provincial level, and obtained certification for 14 provincial high-tech products.
“Pharmaceutical companies face substantial upfront R&D investments, which rely heavily on tax incentives. The tax authorities’ proactive, streamlined support—ensuring that eligible benefits are fully and promptly accessed—has strengthened our sense of gain and bolstered our confidence in future growth,” said Yang Xuyue, the company’s general manager. He added that the company will continue to enhance its capacity to translate scientific and technological advances into commercial value, with an ambitious goal of achieving a 30% increase in output value this year.
Cultivating more science and technology enterprises, harnessing the robust momentum of innovation across society, and leveraging technology to drive high-quality development are among the region’s key strategic priorities. In recent years, Xiangshui County has been approved as a provincial private science and technology enterprise for 118 companies, had 95 offices pass the national evaluation for technology-based SMEs, and now boasts a total of 46 national high-tech enterprises.
During the Mid-Autumn Festival, the workshops of Jiangsu Jinmilan Textile Co., Ltd. were bustling as usual, with all skilled workers on duty and equipment such as drawing frames, ring spinning machines, and winding machines operating at full capacity. In the second half of this year, the company increased its capital investment, adding new facilities including a fine‑yarn roving system and Swiss Rieter automatic doffing and drawing frames, which have significantly enhanced product quality and production efficiency. These advancements are helping the company’s colored spun yarn product line gain traction in the international mid‑to‑high‑end market, with the prospect of surpassing RMB 100 million in sales by the end of the third quarter.
From traditional textile enterprises to high-end, intelligent manufacturing offices, tax incentives that support research and development and innovation have played a crucial role in every phase of transformation and upgrading. “These policy benefits not only provide our company with tangible financial support but also bolster our confidence in expanding and strengthening our operations,” said Wan Xiuguo, legal representative of Jiangsu Jinmilan Textile Co., Ltd. The company has recently invested over 54 million yuan to acquire new production equipment; following the extension of its industrial chain, sales revenue is expected to increase by 30% compared with last year.
Xu Shixin, Director of the Xiangshui County Tax Service Bureau of the State Taxation Administration, stated that the bureau will collaborate with science and technology authorities to comprehensively review the list of technology‑based enterprises, fully ensure that tax incentives are delivered swiftly and directly to eligible businesses, and provide high‑quality, efficient services to support corporate innovation. The initiative will guide high‑tech enterprises in strengthening their research and development systems, accelerating technological R&D, translating research outcomes into practical applications, and promoting product commercialization, thereby enhancing the overall quality of these enterprises’ development and helping the county’s manufacturing sector move toward the mid‑to‑high end.

Litigation & Arbitration
The China Securities Regulatory Commission, in coordination with public security and procuratorial authorities, has launched a special law enforcement campaign to rigorously crack down on securities-related illegal and criminal activities in accordance with the law.
To implement the “Opinions on Strictly Cracking Down on Securities‑Related Illegal Activities in Accordance with the Law” (hereinafter referred to as the “Opinions”), issued by the General Offices of the CPC Central Committee and the State Council, and in line with the spirit of the first meeting of the Coordination Task Force for Combating Illegal Activities in the Capital Market, and officely adhering to the principle of “zero tolerance,” the China Securities Regulatory Commission, together with the Ministry of Public Security and the Supreme People’s Procuratorate, recently launched a special law‑enforcement campaign to combat securities‑related crimes and violations, centrally coordinating the investigation and prosecution of 19 major, high‑profile cases. This initiative represents an important step by the regulatory authorities to further strengthen collaboration between administrative enforcement and criminal justice, forge a synergistic force for effectively curbing securities‑related illegal activities, and raise the cost of such violations. At present, related investigations, inquiries, and review‑and‑prosecution procedures have been fully initiated, and significant breakthroughs have already been achieved in several key cases.
These cases primarily involve: First, eight instances of serious violations of information disclosure. Some bond issuers and listed companies engaged in financial fraud over multiple years, suspected of committing the crime of fraudulent issuance; others used acquisition targets that fabricated substantial business activities to meet performance commitments, suspected of violating regulations by failing to disclose or deliberately withholding material information; still others saw the actual controllers of listed companies exploit their positions to misappropriate company funds under the guise of equity transfer payments or debt assignments, suspected of breaching trust and harming the interests of the listed company; and certain intermediaries colluded with listed companies to fabricate financial statements, falsified audit evidence, and exhibited gross negligence in conducting bank conofficeations, suspected of providing false certification documents. Second, nine cases of malicious market manipulation. In some instances, the actual controllers, directors, and senior management of listed companies conspired with market institutions to manipulate their own stock prices; in others, “black‑mouth” stock analysts colluded with trading operators to illegally profit through manipulative trading tactics such as “pump‑and‑dump” schemes and “hat‑grabbing” trades. A few individuals repeatedly violated the law despite prior investigations, demonstrating a particularly egregious degree of criminal intent. Third, two typical insider‑trading cases. In these instances, insiders not only engaged directly in insider trading but also disclosed confidential information to other parties with special vested interests, participating in profit‑sharing arrangements. Overall, these cases exhibit characteristics such as organized criminal networks, diversified actors, and increasingly sophisticated and concealed methods, with prolonged periods of illegal conduct, large sums of money involved, and severe adverse consequences.
In recent years, in response to the severe and complex landscape of securities-related violations and crimes, our Commission has continuously strengthened coordination and cooperation between administrative enforcement and criminal justice. In the first half of 2021, we have cumulatively referred 119 cases and leads involving suspected criminal activity to public security authorities, and submitted 266 individuals implicated in such cases—both figures more than doubling compared with the same period last year. At the same time, we promptly forwarded 17 major cases to the procuratorial organs. To efficiently advance the investigation and prosecution of securities-related offenses, we have further refined our law‑enforcement collaboration mechanisms with criminal justice authorities. By jointly launching special enforcement campaigns under the “CSRC–Public Security–Procuratorate” framework, we are better able to leverage the respective strengths of each agency and enhance enforcement effectiveness. First, we have intensified joint consultations and assessments of leads, capitalizing on the advantages of having public security and procuratorial personnel stationed at the CSRC to foster close cooperation in areas such as information sharing and intelligence analysis. Second, we have strengthened the effective alignment between our inspection and enforcement activities and the case-handling bases of the public security and procuratorial organs, adopting measures such as simultaneous case filing and early intervention to provide mutual support in advancing investigations, thereby establishing a working model characterized by swift penalties, rapid investigations, and prompt prosecution. Third, we have stepped up oversight and coordination efforts, making comprehensive arrangements for quality control and the allocation of investigative resources, while reinforcing checks and balances to ensure both the quality and efficiency of case handling.
Going forward, the China Securities Regulatory Commission, in coordination with public security and procuratorial authorities, will resolutely implement the requirements set forth in the “Opinions,” steadfastly uphold a zero‑tolerance policy, and, guided by the overarching goal of safeguarding investors’ legitimate rights and interests and ensuring the sound development of the capital market, focus on key enforcement priorities, innovate case‑handling approaches, and continuously work to improve the securities‑related law‑enforcement and judicial system as well as mechanisms for coordination and cooperation. Efforts will be concentrated on enhancing the effectiveness of securities‑related law enforcement and judicial proceedings, rigorously cracking down on securities‑law violations in accordance with the law, and actively fostering a healthy market environment.
The Central Political and Legal Commission has publicized six typical cases of interference in judicial activities and meddling in the handling of specific cases.
Recently, the Central Political and Legal Commission publicly disclosed six typical cases involving leading cadres interfering in judicial activities and meddling in the handling of specific cases, as well as instances of internal personnel within judicial organs inquiring about cases and judicial officers failing to record and report such matters in accordance with regulations.
1. Case of improper interference in a case by Wang Yunju, a prosecutor at the People’s Procuratorate of Puyang City, Henan Province. In March 2021, Wang Yunju, while acting on another person’s request, called a classmate who worked at the People’s Procuratorate of a certain district in Kaifeng City to inquire whether Fang’s case could be granted bail pending trial within the limits prescribed by law. His classmate explicitly declined and, in accordance with regulations, duly recorded the matter in the procuratorial organ’s “Major Matters Reporting System.” The system’s “Key Personnel Analysis” module subsequently transmitted information regarding Wang Yunju’s interference in the case to the People’s Procuratorate of Puyang City. At present, the People’s Procuratorate of Puyang City has conducted admonitory education with Wang Yunju and issued a city-wide notification among all procuratorial organs.
2. Haosibai’er, the presiding judge of the People’s Court of Alxa Right Banner, Alxa League, Inner Mongolia Autonomous Region, failed to record and report a case in accordance with regulations. On October 26, 2020, Yang Shirong, former member of the Party Leadership Group and vice president of the Alxa Right Banner People’s Court, was sentenced for the crime of accepting bribes. Based on the facts revealed in the case, the court promptly conducted interviews with the case-handling personnel and members of the collegial panel involved in matters related to Yang Shirong, conducting a retrospective review to determine whether any staff had violated the “Three Regulations.” During the interview, Haosibai’er admitted that on December 24, 2018, Yang Shirong, then a member of the Party Leadership Group and vice president of the Alxa Right Banner People’s Court, had asked him to show favoritism toward the defendant in a construction‑engineering contract dispute. Although Haosibai’er refused Yang Shirong’s request and handled the case in accordance with the law, he failed to accurately record and report Yang Shirong’s interference in the matter. At present, Haosibai’er has been subjected to a cautionary talk.
3. Case involving improper interference by police officers Li Junqiang and Cheng Yi of the Hongqiao Branch of the Tianjin Municipal Public Security Bureau. Through the “Jingzhi” law enforcement and case-handling platform’s mandatory reporting system for compliance with the “Three Regulations,” the Tianjin Municipal Public Security Bureau screened and cross-referenced officers’ recorded information. It was found that on January 25, 2021, Officer Li Junqiang of the Hongqiao Branch, at the request of a person surnamed Cui, made a phone call to entrust Officer Cheng Yi of the same branch to inquire about the injury assessment results for Cui and Shi. Subsequently, Cheng Yi contacted the investigating officer, who informed him that the assessment had concluded the injuries were classified as minor and that both parties had been duly notified. The investigating officer then accurately documented this information in the system. At present, Li Junqiang and Cheng Yi have each received a cautionary admonishment.
4. Case involving Xiao Zhibin, former political instructor at the Yupeng Police Station of the Qingliu County Public Security Bureau in Sanming City, Fujian Province. Following a retrospective review and verification of the relevant case, on February 28, 2019, Cai Moumou, seeking to monopolize the logistics business for flowers in Songxi, assembled members of his triad‑like organization to block a logistics truck carrying fresh cut flowers belonging to a certain flower company. After the parties involved reported the incident to the police, Xiao Zhibin, who was then the political instructor at the Yupeng Police Station, despite being fully aware that the actions of Cai Moumou and others were unlawful, nevertheless accepted Cai Moumou’s request and instructed the responding officers not to take enforcement action. At present, Xiao Zhibin has been expelled from the Communist Party and dismissed from public office.
5. Case involving Dai Wujian, former deputy chief of the Third Enforcement Division of the Intermediate People’s Court of Jinan City, Shandong Province, who improperly intervened in judicial cases. Following a retrospective review and verification of relevant cases, it was determined that from June 2005 to April 2020, Dai Wujian, taking advantage of his official position and the convenient conditions arising from his authority and status, sought benefits for others by interfering with and inquiring into cases, and accepted cash, shopping cards, and other property. In addition, Dai Wujian was found to have engaged in other violations of discipline and law. At present, he has been expelled from the Communist Party and dismissed from public office; for the crime of accepting bribes, he was sentenced to three years and six months’ imprisonment and fined RMB 250,000.
6. Case involving Sun Yudong, a Level‑4 police sergeant at the Shijiazhuang Prison in Hebei Province, who interfered with judicial activities and meddled in the handling of a specific case. Following investigation and verification of relevant leads, between July and August 2016, Sun Yudong, then a Level‑2 police officer at the Provincial Juvenile Correctional Institution, acted on behalf of his classmate, Gao, by hosting banquets and offering cash, among other means, to solicit favorable treatment from the presiding judge for the case’s party, Qi. During the investigation, Sun Yudong cooperated fully and conducted a thorough self‑criticism; moreover, he neither sought personal gain nor compromised the lawful and impartial adjudication of the case. At present, Sun Yudong has been given a warning as a disciplinary sanction within the Party.
At present, the second phase of the nationwide education and rectification campaign targeting political and legal personnel is being vigorously advanced. Central and provincial political and legal organs are intensifying accountability through retrospective investigations into previously adjudicated cases involving organized crime, evil forces, official misconduct, and fraudulent litigation; strengthening verification and handling of public tip-offs; and conducting rigorous screening and cross-referencing of databases documenting interventions in cases reported by officers. These measures are aimed at uncovering violations of the “Three Regulations” among leading cadres and political‑legal personnel. Some have been disciplined for improperly interfering in cases, while others have faced disciplinary action for failing to record or report instances of others’ interference as required, thereby establishing a clear norm: “Every instance of intervention must be documented,” and a guiding principle that “whether or not there is interference, all cases will be handled in accordance with the law.” According to reports, this marks the second time since the launch of this year’s nationwide education and rectification campaign that the Central Political and Legal Commission has publicly disclosed typical cases involving leading cadres’ interference in judicial activities or meddling in specific case proceedings, internal staff of judicial organs inquiring about cases, and judicial personnel failing to record or report such matters as prescribed. The Central Political and Legal Commission will further strengthen oversight and inspection, adhering to the principles of no prohibited zones, full coverage, and zero tolerance—investigating and disciplining every case discovered—to ensure the comprehensive implementation of the “Three Regulations.”

The Supreme People’s Procuratorate has issued the “Regulations on Case Information Disclosure by People’s Procuratorates,” further expanding the scope of case information disclosed by procuratorial organs.
The Supreme People’s Procuratorate has issued the “Regulations on Case Information Disclosure by People’s Procuratorates.”
Further expand the scope of case information made public by the procuratorial organs.
The Supreme People’s Procuratorate recently promulgated and put into effect the newly revised Regulations on the Disclosure of Case Information by People’s Procuratorates (hereinafter referred to as the “Regulations”). Comprising seven chapters and 27 articles, the Regulations further standardize the work of disclosing case information by procuratorial organs, thereby effectively enhancing the transparency of judicial proceedings.
The Regulations conscientiously implement Xi Jinping’s Thought on the Rule of Law, uphold a people-centered approach, and consistently integrate the procuratorial organs’ principle of “justice for the people” throughout their work. Taking the needs of the public as both the starting point and the focal point, they strive to safeguard the people’s rights to information, participation, oversight, and privacy, and effectively fulfill the procuratorial organs’ role as social leaders in guiding the public to respect and abide by the law and in advancing the process of governing the country according to law.
The Regulations further expand the scope of case information that procuratorial organs make public. Specifically, while broadening access to procedural case information for parties, their legal representatives, close relatives, defense counsel, and litigation agents upon request, the Regulations also stipulate that, with respect to certain legal documents already served on the parties in accordance with the law—such as indictments, protest letters, and decisions not to prosecute—parties may likewise submit requests to the procuratorate to obtain such documents in compliance with established procedures. In addition to the existing practice of procuratorial organs proactively releasing information on criminal cases to the public, the Regulations now include provisions for disclosing to the public the handling of civil, administrative, and public-interest litigation cases that attract significant attention or have a substantial impact, thereby achieving full coverage of proactive public disclosure of case-handling activities across the procuratorate’s “four major areas of prosecution.” Furthermore, new provisions have been added to publicly release information on cases that serve as exemplary models and help advance social governance.
The Regulations also broaden the categories of legal documents subject to public disclosure. Building on the previously established categories, they extend public access to include criminal case indictments, protest letters, decisions not to prosecute, and notices of the outcomes of criminal appeals; civil protest letters, recommendations for retrial issued by the procuratorate, decisions rejecting applications for supervisory review, decisions concluding review proceedings, and other civil prosecutorial legal documents; administrative protest letters, recommendations for retrial issued by the procuratorate, decisions rejecting applications for supervisory review, and decisions concluding review proceedings, as well as other administrative prosecutorial legal documents; and civil public-interest litigation indictments and administrative public-interest litigation indictments.
While striving to enhance the transparency of case information, the Regulations place even greater emphasis on protecting the privacy rights of individuals involved in the cases. The Regulations stipulate: “Information pertaining to crimes involving minors shall generally not be made public; if disclosure is deemed necessary, relevant information must be redacted or anonymized in accordance with the law.” With respect to the personal information of parties and other litigation participants contained in publicly disclosed legal documents, the Regulations establish stringent standards for anonymization and introduce a “document‑redaction” provision, further specifying the scope of redaction to effectively prevent any adverse consequences that might arise from such disclosure.
The Regulations introduce a new chapter on “Publication of Operational Data,” stipulating that key case-handling data, data and information supporting economic and social development, data and information promoting and advancing social governance, as well as data and information of public警示 significance—collectively reflecting the work of the procuratorial organs—shall be proactively disclosed to the public through various channels and means. Additionally, a provision on “Supervision and Safeguards” has been added, specifying that any failure to perform duties diligently, dereliction of duty, or other disciplinary or legal violations in the disclosure of case-related information that result in serious consequences shall be investigated and dealt with by the relevant authorities in accordance with discipline and law.

The China Securities Regulatory Commission and the Ministry of Justice have jointly launched a pilot program for arbitration in the securities and futures industry, establishing a specialized securities and futures arbitration tribunal (center) and formulating arbitration rules tailored to the industry’s specific characteristics.
On October 15, the China Securities Regulatory Commission and the Ministry of Justice jointly issued the “Opinions on Piloting Arbitration in the Securities and Futures Industry in Accordance with the Law” (hereinafter referred to as the “Pilot Opinions”), which took effect on October 15, 2021.
Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Opinions on Strictly Cracking Down on Securities‑Related Illegal Activities in Accordance with the Law” (hereinafter referred to as the “Opinions”), which set forth the task of launching a pilot program for an arbitration system in the securities industry. To earnestly implement the “Opinions,” effectively safeguard the legitimate rights and interests of investors, improve the diversified dispute‑resolution mechanism for securities and futures disputes, and ensure the sound development of the securities and futures sector, the China Securities Regulatory Commission, in conjunction with the Ministry of Justice, has formulated the “Pilot Opinions” in light of the actual needs of capital market development.
The “Pilot Opinions” comprise ten provisions, with the following key elements: First, building on an explicit recognition of the significance of piloting arbitration in the securities and futures sector, the document sets out the overall requirements for the pilot. The pilot program shall adhere to the fundamental principles and rules governing capital markets, comply with relevant laws, administrative regulations, rules, normative documents, self-regulatory frameworks, and industry practices, establish a dedicated securities and futures arbitration tribunal (center), formulate arbitration rules tailored to the characteristics of the securities and futures industry, enhance the professional competence of arbitrators in this field, and ensure that dispute resolution is fair, impartial, efficient, and convenient. To strengthen protection of investors’ legitimate rights and interests, the rules mandate the inclusion of specific provisions emphasizing mediation, advance compensation, expedited adjudication, and online arbitration. Second, the document supports and encourages arbitration institutions in Beijing, Shanghai, and Shenzhen—three cities where securities and futures activities are particularly robust—to conduct internal pilot projects aimed at establishing securities and futures arbitration tribunals (centers) that apply specialized arbitration rules and handle disputes arising in the capital market. Capital market regulators and self-regulatory organizations are to provide professional support. Third, the scope of arbitration administered by these tribunals (centers) is defined, encompassing disputes over securities and futures contracts as well as other property‑rights disputes, with civil compensation claims related to securities and futures explicitly brought within the ambit of arbitration. Fourth, specific provisions are laid out for the arbitration of civil compensation disputes in the securities and futures sphere and for disputes among members of capital market self‑regulatory organizations. First, recognizing that arbitration institutions lack the authority to determine violations of law, procedures requiring prior administrative or judicial review are established for civil compensation disputes involving securities and futures. Second, rules governing arbitration agreements and clauses are set forth, stipulating that if a company’s articles of association or a member’s charter contains provisions on the arbitration of relevant disputes, parties may invoke such provisions to initiate arbitration. Furthermore, for disputes arising between members of self‑regulatory organizations in connection with securities and futures business, if the parties opt for arbitration, they must select one of the pilot arbitration committees as the arbitral institution. Fifth, mechanisms for the selection and appointment of arbitrators are specified, with measures to enhance their expertise in securities and futures matters; clear eligibility criteria are established, and a dedicated roster of specialized securities and futures arbitrators is to be maintained. Professional arbitration associations and stock exchanges are required to submit lists of qualified candidates. Sixth, provisions are made to facilitate cooperation between the pilot arbitration committees and capital market regulators and self‑regulatory organizations, to improve the effective linkage among arbitration, mediation, and litigation in securities and futures disputes, and to provide guidance and oversight for the pilot program.
It is understood that, in the next phase, the China Securities Regulatory Commission will work with the Ministry of Justice to thoroughly implement the spirit of the “Opinions,” earnestly carry out the requirements set forth in the “Pilot Opinions,” proactively resolve disputes and conflicts in the securities and futures sectors, continuously enhance the credibility and professional standards of arbitration in these industries, effectively safeguard the legitimate rights and interests of investors, and steadily improve the market environment.
Regulations of the Supreme People’s Procuratorate on Promoting the Coordination between Administrative Law Enforcement and Criminal Justice
Notice on the Issuance of the “Regulations of the Supreme People’s Procuratorate on Promoting the Coordination between Administrative Law Enforcement and Criminal Justice”
People’s Procuratorates of all provinces, autonomous regions, and municipalities directly under the central government; the Military Procuratorate of the People’s Liberation Army; and the People’s Procuratorate of the Xinjiang Production and Construction Corps:
The “Regulations of the Supreme People’s Procuratorate on Promoting the Coordination between Administrative Law Enforcement and Criminal Justice” were adopted at the 68th Meeting of the 13th Session of the Procuratorial Committee of the Supreme People’s Procuratorate on June 2, 2021. They are hereby circulated to you; please conscientiously comply with and implement them.

Supreme People’s Procuratorate Release Document No. 4 [2021]
Regulations of the Supreme People’s Procuratorate on Promoting the Coordination between Administrative Law Enforcement and Criminal Justice
Article 1: In order to improve the mechanism for coordinating administrative law enforcement and criminal justice, these Provisions are formulated in accordance with the Organic Law of the People’s Procuratorates of the People’s Republic of China, the Administrative Penalty Law of the People’s Republic of China, the Criminal Procedure Law of the People’s Republic of China, and other relevant provisions, and in conjunction with the Regulations on the Transfer by Administrative Law Enforcement Agencies of Cases Suspected of Criminal Offenses.
Article 2: People’s Procuratorates, in carrying out the work of linking administrative law enforcement with criminal justice, shall act strictly in accordance with the law, accurately and promptly, and strengthen coordination and cooperation with supervisory organs, public security organs, judicial administration organs, and administrative law enforcement agencies, so as to ensure the effective linkage between administrative law enforcement and criminal justice.
Article 3: The People’s Procuratorate shall carry out the work of coordinating administrative law enforcement with criminal justice in accordance with the jurisdictional categories of cases handled by the department responsible for arrest and prosecution. The department responsible for arrest and prosecution may, during the course of handling such cases, solicit the opinions of other case-handling departments.
Other case-handling departments of this procuratorate, in the course of performing their prosecutorial functions, shall promptly refer any leads involving the coordination between administrative law enforcement and criminal justice to the department within this procuratorate responsible for arrest and prosecution.
Article 4: When exercising their duties in accordance with the law, the People’s Procuratorates shall pay due attention to examining whether administrative law enforcement agencies have failed to refer cases suspected of criminal offenses to public security organs for investigation and prosecution, or whether public security organs have failed to initiate investigations into cases suspected of criminal offenses referred by administrative law enforcement agencies.
Article 5: After a public security organ receives from an administrative enforcement agency a case suspected of constituting a crime, if it should initiate an investigation but fails to do so, and the administrative enforcement agency requests the People’s Procuratorate to exercise legal supervision, the People’s Procuratorate shall accept the request in accordance with the law and conduct a review.
Article 6: With respect to reports alleging that administrative law enforcement agencies fail to refer cases suspected of criminal offenses as required by law, or that public security organs fail to initiate an investigation when they are obligated to do so, the People’s Procuratorate shall accept and review such reports if they fall within this court’s jurisdiction and meet the conditions for acceptance.
Article 7: After reviewing the leads referred to in Articles 4 through 6 of these Provisions, if the People’s Procuratorate finds that an administrative law enforcement agency has failed to transfer a case suspected of constituting a crime as required by law, it shall, upon approval of the Chief Procurator, issue a prosecutorial opinion to the administrative law enforcement agency at the same level, requiring it to promptly refer the case to the public security organ and to forward the relevant materials to the People’s Procuratorate. The People’s Procuratorate shall also transmit a copy of its prosecutorial opinion to the judicial administrative organ at the same level; where the administrative law enforcement agency is subject to vertical management, it shall likewise transmit a copy to its superior authority.
If, upon receiving a prosecutorial opinion, an administrative law enforcement agency fails to refer the case without justifiable grounds, the People’s Procuratorate shall notify the public security organ of the relevant circumstances in writing.
Where public security organs may have failed to initiate a case when they should have done so, the People’s Procuratorate shall, in accordance with the law, conduct oversight of case initiation.
Article 8: In cases where the People’s Procuratorate decides not to prosecute, it shall simultaneously examine whether administrative penalties should be imposed on the person not prosecuted. If administrative penalties are warranted, with the approval of the Chief Procurator, the People’s Procuratorate shall submit a prosecutorial opinion to the competent authority at the same level and, within three days from the date the decision not to prosecute is rendered, serve such opinion together with the decision itself. The People’s Procuratorate shall also forward a copy of the prosecutorial opinion to the judicial administration organ at the same level; where the competent authority is subject to vertical management, a copy shall be sent to its superior authority.
The procuratorial opinion shall set forth the measures taken and lifted with respect to criminal coercive measures, as well as the seizure, impoundment, or freezing of property involved in the case, and any admonishment imposed on the person not prosecuted, or the order requiring such person to make a written statement of repentance, offer an apology, or compensate for losses. Where confiscation of unlawful gains is required, the People’s Procuratorate shall transfer, together with the case, all seized, impounded, or frozen property involved in the case. With regard to relevant evidentiary materials collected during the course of the investigation, the People’s Procuratorate may also submit them concurrently.
Article 9: When the People’s Procuratorate submits a prosecutorial opinion recommending administrative penalties against a person who has not been prosecuted, it shall require the relevant competent authority to provide, within two months from the date of receipt of the prosecutorial opinion, a written response to the People’s Procuratorate detailing the outcome of the handling or the progress of the proceedings. In cases where urgent circumstances necessitate immediate action, the People’s Procuratorate may, in light of the actual situation, determine an appropriate deadline for such response.
Article 10: Where it is necessary to submit prosecutorial opinions to the relevant higher-level authorities, such opinions shall be submitted for decision and formulation by the people’s procuratorate at the same level; alternatively, the people’s procuratorate handling the case may prepare a written prosecutorial opinion, which shall then be submitted to the people’s procuratorate at the same level of the higher-level authority for review and onward transmission.
Where it is necessary to submit prosecutorial recommendations to subordinate relevant units, the competent authority shall instruct the corresponding lower-level People’s Procuratorate to do so.
Where it is necessary to submit procuratorial opinions from a different jurisdiction, the opinion of the people’s procuratorate at the same level in the location of the relevant unit shall be sought. If the opinions differ, the matter shall be reported hierarchically to the common higher-level people’s procuratorate for a decision.
Article 11: If a relevant entity fails to respond within the prescribed time limit or fails to take appropriate action without justifiable reasons, the People’s Procuratorate may, upon decision of the Chief Prosecutor, notify in writing the judicial administrative organ at the same level, or request the higher-level People’s Procuratorate to notify its superior authority. When necessary, it may also report to the Party Committee at the same level and to the Standing Committee of the People’s Congress at the same level.
Article 12: When the People’s Procuratorate discovers that administrative law enforcement personnel are suspected of committing official misconduct or crimes, it shall refer the case leads to the supervisory authority for handling.
Article 13: When an administrative law enforcement agency consults the People’s Procuratorate on matters such as the criteria for initiating criminal proceedings and prosecuting cases, or on the collection, fixation, and preservation of evidence, or when a public security organ, in response to a case suspected of constituting a crime referred by an administrative law enforcement agency, proactively seeks the views and recommendations of the People’s Procuratorate, the People’s Procuratorate shall provide a timely reply. In the case of written consultations, the People’s Procuratorate shall issue a written response within seven days.
During the course of handling cases, the People’s Procuratorate may seek advice from the relevant administrative enforcement authorities on specialized issues pertaining to administrative law enforcement.
Article 14: The People’s Procuratorate shall, on a regular basis, inform the relevant authorities of the progress in coordinating administrative law enforcement with criminal justice. Where issues are identified that require improvement in the working mechanisms, it may solicit the views of the advised entities and, in accordance with the law, issue procuratorial recommendations.
Article 15: In accordance with its work requirements, the People’s Procuratorate may, in conjunction with relevant authorities, conduct research and analysis on issues arising in the coordination between administrative law enforcement and criminal justice, and propose solutions.
Article 16: People’s Procuratorates shall cooperate with judicial administrative organs in establishing an information-sharing platform for the linkage between administrative law enforcement and criminal justice. People’s Procuratorates that have already connected to the information-sharing platform shall, within seven days from the date of making the relevant decision, enter the pertinent case information. Those that have not yet established such a platform shall promptly notify the relevant authorities of the pertinent case information.
Article 17: These Provisions shall enter into force as of the date of their promulgation, and the “Provisions of the People’s Procuratorates on Handling Cases of Suspected Criminal Offenses Referred by Administrative Law Enforcement Agencies” (Gao Jian Fa Shi Zi [2001] No. 4) shall be repealed concurrently.

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