Key Takeaways for This Issue

The China Securities Regulatory Commission has launched the listing process for Shenzhen 100 ETF options.

To enrich the multi-tiered capital market product ecosystem, the China Securities Regulatory Commission has initiated the listing process for Shenzhen 100 ETF options and, in accordance with established procedures, approved the listing of these options on the Shenzhen Stock Exchange.

The China Securities Regulatory Commission is soliciting public comments on the “Regulations on Reporting Securities and Futures Law‑Violating and Rule‑Breaking Activities (Draft for Public Comment).”

Drawing on practical experience in handling whistleblower reports, the China Securities Regulatory Commission has revised the Interim Provisions on the Handling of Reports of Securities and Futures Law‑Violating and Rule‑Breaking Conduct (CSRC Announcement [2020] No. 7), resulting in the Draft Regulations on the Handling of Reports of Securities and Futures Law‑Violating and Rule‑Breaking Conduct, which is now being made public for public comment.

Several brokerage offices have swiftly launched dedicated sections for individual pension services, with some already allowing the purchase of Y‑shares.

The individual pension system has been launched, and securities offices have swiftly rolled out their own individual pension services.

The tax authorities have, in accordance with the law, investigated and prosecuted Wu Yifan for tax evasion. Entertainment industry professionals must remain constantly vigilant.

On November 25, the Beijing Municipal Tax Service disclosed the tax evasion case involving Wu Yifan, ordering him to pay back taxes, late payment penalties, and fines totaling RMB 600 million in accordance with the law. The investigation found that, between 2019 and 2020, Wu Yifan evaded RMB 95 million in taxes by fabricating business transactions to disguise the nature of his income and making false tax declarations, as well as by concealing his personal income through multiple related entities both within and outside China. He also underpaid an additional RMB 84 million in taxes.

Announcement of the State Administration for Market Regulation on Public Solicitation of Comments on the Draft Amendment to the Anti-Unfair Competition Law of the People’s Republic of China

In order to foster a fair competitive market environment, safeguard the legitimate rights and interests of business operators and consumers, protect the public interest, effectively address prominent issues in regulatory practice, and accelerate the improvement of the legal framework for combating unfair competition, the State Administration for Market Regulation has drafted the “Anti-Unfair Competition Law of the People’s Republic of China (Draft for Public Comment),” which is now being made available for public consultation.

Finance and Capital Markets

FINANCE &CAPITAL MARKETS

The China Securities Regulatory Commission has launched the listing process for Shenzhen 100 ETF options.

To enrich the multi-tiered capital market product ecosystem, the China Securities Regulatory Commission has initiated the listing process for Shenzhen 100 ETF options and, in accordance with established procedures, approved the listing of these options on the Shenzhen Stock Exchange.

ETF options are a fundamental risk-management tool in the equity market. Over the past seven-plus years, the ETF options market has operated smoothly and in an orderly manner, with steady growth in market size, the gradual realization of product functionality, and an increasingly improved market ecosystem. In September this year, the SSE CSI 500 ETF options, as well as the SZSE ChiNext ETF options and CSI 500 ETF options, were successfully listed and began trading, effectively attracting additional capital and stabilizing the spot market, thereby laying a solid foundation for further expanding the range of ETF options products.

The CPC Central Committee and the State Council attach great importance to the reform, development, and stability of the capital market, explicitly calling for the creation of a capital market that is standardized, transparent, open, dynamic, and resilient. The SZSE 100 ETF options represent the first exchange‑traded options product in China based on the SZSE 100 Index, featuring distinct characteristics as an innovation‑driven blue‑chip index and complementing existing ETF options products. The launch of SZSE 100 ETF options is a key measure to implement the decisions and arrangements of the CPC Central Committee and the State Council and to comprehensively deepen capital market reform. It also constitutes a concrete step to support the development of the Guangdong–Hong Kong–Macao Greater Bay Area and the Shenzhen Pilot Demonstration Zone for Socialism with Chinese Characteristics, helping to meet diversified trading and risk‑management needs, enhance market vitality and resilience, attract additional capital into the market, and contribute to the high‑quality development of the capital market.

The China Securities Regulatory Commission will guide the Shenzhen Stock Exchange in completing all preparatory work for the listing and trading of the SZSE 100 ETF options, strengthen oversight of the stock options market, continuously refine regulatory systems, rules, and standards, and effectively fulfill the exchange’s frontline supervisory functions to ensure the stable and sustainable development of the stock options market.

The China Securities Regulatory Commission is soliciting public comments on the “Regulations on Reporting Securities and Futures Law‑Violating and Rule‑Breaking Activities (Draft for Public Comment).”

To thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council on rigorously cracking down on securities‑related illegal activities in accordance with the law, to fulfill the requirements of the new Securities Law, the Futures and Derivatives Law, and other relevant laws, and to ensure seamless coordination with efforts to optimize the operation of the 12386 service platform, the Commission has further refined its whistleblower reward system and effectively addressed concerns from all stakeholders. Drawing on practical experience in handling whistleblower reports, the Commission has revised the Interim Provisions on Reporting Securities and Futures‑Related Illegal and Violative Conduct (CSRC Announcement [2020] No. 7), resulting in the draft Regulations on Reporting Securities and Futures‑Related Illegal and Violative Conduct, which is now being made public for public comment.

The draft for public comment comprises 24 articles, with the main revisions as follows: First, the whistleblower reward system has been refined to enhance incentives; for insiders who make significant contributions, the upper limit of the reward amount has been substantially raised. Second, the system has been seamlessly aligned with the 12386 service platform: the online channel for receiving reports of securities and futures violations has been consolidated under the China Securities Regulatory Commission’s 12386 platform, and the mechanisms for receiving and forwarding such reports have been further clarified. Third, requirements for handling whistleblower reports have been strengthened: eligible reports shall be registered by the competent authority, which will verify the facts through appropriate means and take relevant measures in accordance with the law.

We welcome valuable feedback from all sectors of society. The China Securities Regulatory Commission will, based on the results of the public consultation, further revise and refine the measures before issuing and implementing them.

Think Tank on China’s Economy: Returning Growth to a Reasonable Range Is the Top Priority

Affected by the ongoing pandemic, the Ukraine crisis, and other factors, several of China’s economic indicators have seen a moderation in year-on-year growth. A number of think tank experts argue that it is now imperative to swiftly implement more robust measures to bring economic growth back into an appropriate range.

　　In the first ten months of this year, several key economic indicators—including investment, consumption, and imports and exports—recorded slower year-on-year growth compared with the first three quarters. In October alone, total retail sales of consumer goods fell 0.5% year on year.

　　At the annual forum of the China Macroeconomic Forum at Renmin University of China, held online on the 26th, Yang Weimin, a member of the Standing Committee of the National Committee of the Chinese People’s Political Consultative Conference and deputy director of its Economic Affairs Committee, stated that over the past three years since the onset of the pandemic, China’s average economic growth rate has consistently fallen short of its potential growth rate. He emphasized the urgent need to reverse this trend and bring economic growth back into an appropriate range. This is both a prerequisite for achieving high-quality development and a key factor enabling China to secure its footing amid profound changes unseen in a century.

　　He believes that, to achieve the goal of raising per capita GDP to a new, higher level by 2035—reaching the standard of a mid‑level developed country—the Chinese economy should strive for an average annual growth rate of 5.5% during the first five-year period starting in 2020, 5% in the second five-year period, and 4.5% in the third. Under these circumstances, over the next five years—particularly in 2023—it will be a crucial task to bring economic growth back into a reasonable range.

　　Liu Shijin, Vice Chairman of the Economic Committee of the National Committee of the Chinese People’s Political Consultative Conference, also stated that if economic growth remains persistently below its potential rate, both the quantity and quality of growth will suffer. This could lead to a decline in total factor productivity, undermine offices’ long-term operational and developmental capacity, and disrupt the transition from old to new growth drivers. Therefore, bringing economic growth back into an appropriate range—where actual growth aligns with its potential level—should be made an urgent priority.

　　Recently, China has introduced a series of policies and measures to stabilize the economy, including announcing on December 5 that it would lower the reserve requirement ratio for financial institutions by 0.25 percentage points, as well as unveiling 16 measures across six areas—among them ensuring steady and orderly financing for the real estate sector. According to Liu Shijin, with the rollout of these policies, favorable conditions for China’s economic growth are steadily mounting.

　　Analysts here believe that focusing on several key areas and stepping up policy efforts will help provide stronger support for economic growth.

　　In Yang Weimin’s view, household consumption, the real estate sector, and the platform economy are the three key factors currently weighing on China’s economic growth, and targeted, more effective, and robust policy measures should be adopted. These include accelerating reforms to the income distribution system, promptly formulating comprehensive, long-term, and institutionalized new policies for the real estate market, and introducing additional measures to stabilize expectations for the development of the platform economy.

　　Liu Yuanchun, President of Shanghai University of Finance and Economics, suggests that, in addition to focusing on overall consumption levels, efforts should also target emerging bottlenecks in the consumption sector and address them with tailored measures. Furthermore, strategies should be devised to maximize the strengths and mitigate the weaknesses of investment. By adopting innovative approaches, we can identify and implement projects that foster mutual reinforcement and coordination between consumption and investment—for example, increasing investment in affordable housing—which could yield more favorable outcomes.

　　Mao Zhenhua, Co-Director of the Institute of Economics at Renmin University of China, argues that the transmission mechanisms of fiscal and monetary policies should be further streamlined, ensuring that these policies not only achieve greater coordination but also effectively permeate the real economy.

　　A report released that day by the China Macroeconomic Forum at Renmin University of China forecasts that, driven by sustained endogenous momentum in the manufacturing sector and a rebound in consumer demand, China’s economy will achieve a moderate recovery next year.

Business and Corporations

COMMERCIAL & CORPORATE

National Bureau of Statistics: The profit structure of industrial enterprises continued to improve from January to October.

Zhu Hong, a senior statistician with the Industrial Statistics Department of the National Bureau of Statistics, stated when interpreting industrial enterprise profit data that, from January to October, the performance of large-scale industrial enterprises exhibited the following key characteristics:

　　First, industrial enterprises maintained relatively rapid revenue growth, while profits declined year on year. From January to October, the operating revenue of industrial enterprises above designated size nationwide increased by 7.6% year on year, continuing to post robust growth. However, affected by sporadic domestic COVID‑19 outbreaks and a shift in the year-on-year change of the industrial producer price index from positive to negative, the pace of revenue growth slowed compared with the January–September period. Meanwhile, industrial enterprise profits fell 3.0% year on year, with the decline widening by 0.7 percentage points compared with the January–September period.

　　Second, profits in the equipment manufacturing sector have rebounded markedly. From January to October, equipment‑manufacturing profits rose 3.2% year on year, with the growth rate accelerating by 2.6 percentage points compared with the January–September period, marking the sixth consecutive month of improvement. In October alone, profits surged 25.9%, reflecting rapid expansion. The industrial profit structure continues to improve: from January to October, equipment manufacturing accounted for 32.2% of total profits in industries above designated size, up 7.1 percentage points from January–February. All eight major subsectors within equipment manufacturing reported improved profitability compared with the January–September period. Driven by the new‑energy sector, the electrical machinery industry saw a substantial 29.0% increase in profits, with the growth rate accelerating by 3.7 percentage points; the railway, shipbuilding, aerospace, and transportation equipment sector posted a 13.7% rise in profits, with its growth rate picking up by 4.2 percentage points. Meanwhile, as policies aimed at boosting automobile consumption continued to take effect, car sales maintained robust growth, lifting industry profits by 0.8% and reversing the year‑to‑date trend of declining cumulative profits for the first time.

　　Third, profit growth in the electricity, heat, gas, and water sectors accelerated. From January to October, profits in the electricity, heat, gas, and water production and supply industry rose 15.5% year on year, a pace that picked up by an additional 10.6 percentage points compared with the turnaround from negative to positive recorded between January and September. In particular, as efforts to ensure coal supply and stabilize prices continued to advance, cost pressures in the power sector eased, driving a 28.1% year-on-year increase in profits—16.7 percentage points faster than the January–September period. This contributed 1.0 percentage point to the overall growth of profits in large-scale industrial enterprises, up 0.5 percentage points from January–September, making it the sector that most significantly boosted the rebound in industrial profit growth.

　　Fourth, profits among foreign-invested enterprises and small and medium-sized enterprises have improved. From January to October, as policies to stabilize foreign investment continued to take effect, the year-on-year decline in profits of enterprises invested by foreign, Hong Kong, Macao, and Taiwan investors narrowed by 1.7 percentage points compared with the January–September period, marking the third consecutive month of improvement. On a monthly basis, in October, profits of these enterprises rose 9.4% year on year. Since the beginning of this year, policies aimed at helping SMEs alleviate their difficulties have been implemented and yielded results; from January to October, SME profits increased by 1.4% year on year, maintaining a steady growth trend.

　　Zhu Hong stated that, overall, industrial enterprise profits have declined, but the structural adjustment continues to improve, with notable profit recovery in certain mid- and downstream sectors. At the same time, it is important to recognize that sporadic domestic COVID‑19 outbreaks have become more frequent, and the risk of a global economic recession has intensified, placing significant pressure on the recovery of industrial offices’ profitability. Moving forward, we must thoroughly implement the spirit of the 20th National Congress of the Communist Party of China, fully carry out the decisions and arrangements of the CPC Central Committee and the State Council, efficiently coordinate epidemic prevention and control with economic and social development, ensure the comprehensive implementation and effectiveness of the package of policies and follow-up measures for stabilizing the economy, safeguard the stability and smooth functioning of industrial and supply chains, accelerate the release of consumer demand, and rigorously and meticulously implement policies to support businesses and alleviate their difficulties, thereby fostering the sustained and steady recovery of the industrial economy.

A full‑line rally! Stocks with “China” in their names are staging a surge to the daily limit—what’s behind it?

Recently, management’s views on establishing a valuation framework with Chinese characteristics and on the need to further highlight the value‑investment role of state-owned enterprises have sparked an enthusiastic market response.

　　This week, China‑concept stocks have emerged as the star performers in both the A-share and Hong Kong stock markets. Even amid a broad market pullback, these stocks surged across the board, with many hitting their daily upper limits. Over the course of the week, some individual shares notched two to four consecutive trading limits, with gains approaching 50% at their peak.

　　According to incomplete statistics from Securities Times China’s “Investment Little Red Book,” as of November 23, there were a total of 1,120 state-owned listed companies whose actual controllers are held by central government‑owned state capital, provincial‑level state capital, or city‑level state capital, with a combined market capitalization of RMB 26.5 trillion.

　　Against a backdrop of undervaluation, the long-term equity return can be viewed as the sum of the dividend yield and the earnings growth rate. These 26 trillion yuan worth of state‑owned and state‑controlled listed companies account for one-third of the total A‑share market capitalization; their large size, high dividend yields, steady earnings growth, and low valuations together form a long‑term “stabilizer” and “ballast” for the A‑share market.

　　From a dividend‑yield perspective, these state‑owned listed companies distributed a total of RMB 687.3 billion in cash dividends during the 2021 reporting period, yielding an aggregate dividend yield that has now reached 2.6%. They also boast a long‑standing record of consistent annual dividend payouts; some SOEs that went public in the early 2000s have maintained year‑after‑year cash dividends for the past two decades.

　　Moreover, some state-owned listed companies with relatively modest capital expenditures posted dividend payout ratios exceeding 90%—and in some cases reaching as high as 100%—during the 2021 reporting period. This indicates that these offices distributed nearly all of their annual profits to shareholders in the form of dividends, setting a benchmark for shareholder returns.

　　From the perspective of earnings growth, these companies operate in sectors—such as transportation, power, steel, coal, and basic chemicals—that enjoy long-term, stable demand, enabling their earnings growth to remain broadly in line with, or even slightly outpace, GDP growth over the long term. Recent official data from the Shenzhen Stock Exchange further indicate that, over the past three years, state-owned enterprises listed on the Shenzhen market have posted compound annual growth rates of 18% for operating revenue and 35% for net profit, both exceeding the overall market average.

　　Capital flows among pools of assets with varying yields; in fact, equities are often bonds in disguise. When a stock’s dividend yield is attractive relative to the yields of fixed-income securities, investors tend to treat it as a high‑grade bond. Because the pool of funds allocated to fixed-income products is far larger than that for equities, this effectively constrains the downside risk in the stock market.

Several brokerage offices have swiftly launched dedicated sections for individual pension services, with some already allowing the purchase of Y‑shares.

The individual pension system has been launched, and securities offices have swiftly rolled out their own individual pension services.

　　On November 26, GF Securities (000776.SZ, 01776.HK), CITIC Securities (600030.SH, 06030.HK), China Merchants Securities (600999.SH, 06099.HK), Huatai Securities (601688.SH), Guosen Securities (002736.SZ), and GTJA (601211.SH, 02611.HK) have launched dedicated sections, and certain Y‑class shares of individual pension funds are now available for purchase.

　　In simple terms, Class Y shares are a separate share class specifically established for individual pension‑fund investment products. Investors can purchase these shares using their individual pension accounts and enjoy preferential management and custody fee rates; in most cases, the fee rates for Class Y shares are discounted by 50% compared with those of standard share classes.

　　In addition, Haitong Securities (600837.SH, 06837.HK), Industrial Securities (601377.SH), China Galaxy (601881.SH, 06881.HK), CITIC Securities (601066.SH), Orient Securities (600958.SH), Changjiang Securities (000783.SZ), Sinolink Securities (000166.SZ, 06806.HK), and CICC Wealth Securities have all launched appointment services for opening individual pension accounts or related offerings.

　　 Securities offices swiftly launch personal pension services.

　　It has been one week since the China Securities Regulatory Commission released the “List of Personal Pension Fund Sales Institutions” on November 18. How are the brokerage offices that secured their entry tickets in the first batch faring?

　　Previously, securities offices such as GF Securities were conducting “gray‑box testing” of industry‑wide platforms. Now, the relevant preparatory work appears to be complete.

　　On November 26, the Junhong official account of Guotai Junan announced that its dedicated personal pension section has officially launched, featuring five core functional modules—pension investment education, intelligent pension tools, carefully curated pension products, systematic pension investment planning, and ongoing support services—to provide participants with end-to-end personal pension wealth management.

　　Earlier on the evening of November 25, GF Securities’ official WeChat account announced that its dedicated personal pension services section had officially gone live. A search by a The Paper reporter revealed that the GF Securities Yitaojin app has also launched this personal pension service area, allowing investors to log in to their pension‑funded accounts; certain Y‑class shares of personal pension funds are now available for purchase.

　　Beyond GF Securities, Huatai Securities’ ZhangLe Wealth app has also launched a dedicated retirement‑focused section within its wealth‑management channel, offering services such as individual pension account opening, product selection, and investor education.

　　The Guoxin Securities Golden Sun app has also launched a dedicated retirement‑focused section, where investors can open accounts and purchase retirement‑related products.

　　CITIC Securities’ “Xin e Tou” app has also launched a dedicated section for individual pension services, which currently features more than ten Y‑share classes of target‑date retirement funds. In addition, CITIC Securities has introduced its retirement‑focused brand, the “Xin Yang Plan.”

　　In addition, the China Merchants Securities app has launched a dedicated personal pension section, and pension‑related wealth management services will be available soon.

　　Also on November 25, the official WeChat account of Industrial Securities announced that individual pension investment accounts have gone live, and the Youshili Bao app now supports appointment-based account opening.

　　According to Industrial Securities, an individual can open a personal pension investment account by meeting three criteria: “one person,” “two cards,” and “three accounts.” “One person” means the participant must be a worker who is enrolled in either the urban employee basic pension insurance or the urban–rural resident basic pension insurance within China. “Two cards” refer to the national ID card and the bank card number of a personal pension funds account, along with a tripartite custody bank card (customers opening a personal pension investment account exclusively do not need a tripartite custody bank card). The account comprises three types of accounts: a general funds account, a personal pension funds account, and a personal pension investment account.

　　In addition, the personal pension reservation channels have been opened on the China Galaxy Securities app, the CITIC Securities “Qingting Dianjin” app, the Orient Securities “Orient Winner” app, the CICC Wealth Securities app, the Sinolink Securities “Great Winner” app, and the Changjiang Securities “Changjiang e‑Number” app.

　　 It is expected to accelerate the development and transformation of the securities industry.

　　What changes might the launch of individual pension services bring to securities offices?

　　“The development of the individual pension business will further drive the service transformation of the securities industry and, for wealth management—currently in a phase of rapid growth—will serve as a powerful catalyst for its deeper expansion,” said Xu Haining, Vice President of Orient Securities.

　　Xu Haining pointed out that the individual pension system will inject long-term incremental capital into the wealth management market. China’s current multi-tiered pension security system comprises three pillars: basic old-age insurance, enterprise and occupational annuities, and individual pensions. Structurally, the first two pillars dominate, while the third pillar accounts for a relatively small share. With policy incentives such as tax breaks and preferential fee rates, the development of the third pillar—individual pensions—will bring over one trillion yuan in additional funds to the wealth management market.

　　Xu Haining further pointed out that the individual pension system will promote the long-term orientation of capital on the funding side of the capital market. By nature, pension funds possess long-term investment characteristics, which help foster an investment approach focused on stable, long-term returns and reduce market volatility. For securities offices’ wealth management businesses, the long-term nature of client funds also facilitates the establishment of enduring, stable service relationships with clients.

　　“Ordinary investors often fall into the habit of frequent trading and chasing gains while cutting losses. In contrast, the individual pension system can help residents cultivate sound practices of value investing and long-term investing, enabling them to build greater wealth over time. Assuming an average annualized return of 12% in equity markets, an annual contribution of 12,000 yuan could yield more than 3 million yuan after 30 years. Therefore, for households, the individual pension system places even greater emphasis on the power of compounding and the time value of money,” said Xu Haining.

　　In addition, Xu Haining emphasized that the individual pension system, following the 2019 pilot program for public‑fund investment advisory services, represents another major service transformation in the wealth‑management market and opens up new possibilities for innovation in securities offices’ wealth‑management business models.

　　Industrial Securities similarly points out that, for securities offices, first, the individual pension business provides a new growth driver for customer acquisition, enabling them to channel client resources and attract additional customers; second, individual pension assets inherently possess long-term characteristics and sustained investment demand, which helps steadily expand the scale of product sales and client holdings; and third, by leveraging the pension business as an entry point and offering end-to-end, multi‑asset “pension plus” professional wealth management services, offices can enhance customer stickiness and foster synergistic development across multiple lines of business.

The quality of listed companies needs to leap to a higher level.

　 Another significant measure has been introduced to enhance the quality of listed companies. Recently, the China Securities Regulatory Commission formulated and issued the “Three-Year Action Plan for Enhancing the Quality of Listed Companies (2022–2025),” further consolidating the achievements made in this area and, from a new starting point, driving the quality of listed companies to a higher level.

　　As the “leading force” of China’s economy, the quality of listed companies is of paramount importance. At the micro level, it directly affects investors’ returns and serves as the source of investment value in the capital market; at the macro level, it underpins the quality of high‑quality economic development and constitutes a key pillar of China’s economic transformation and upgrading.

　　For a long time, enhancing the quality of listed companies and presenting the market with offices that are transparent, compliant, and of high caliber has been the top priority of regulatory efforts. Since December 2020, the China Securities Regulatory Commission has launched a two-year special campaign on corporate governance, conducting a comprehensive “health check” of listed companies’ governance practices, which has led to the resolution of numerous prominent issues. Listed companies have gradually shifted from quantitative growth to qualitative improvement: their number has surpassed the 5,000 mark, with more diversified industries, larger scales, stronger profitability, and more balanced financing, while their contributions to national strategies continue to grow in both quality and efficiency.

　　The larger a listed company is, the greater its responsibilities: investors expect more substantial investment returns; the capital market expects listed companies to shoulder greater accountability; and the Chinese economy calls on them to lead the way forward. Further enhancing the quality of listed companies is now an urgent priority.

　　Improving quality begins with streamlining; striking the right balance between cutting and retaining is key. For enterprises seeking growth, the priority should be addressing issues such as an unclear core business and weak competitive advantages—especially as both internal and external uncertainties intensify. Listed companies, in particular, must remain level-headed, pruning non‑core activities to focus on their main businesses and cultivating them with meticulous effort. Over the past two years, many listed offices have proactively narrowed their scope, strengthened their core operations, and pressed ahead against headwinds, emerging as bright spots in the capital markets. By contrast, the lessons from those that recklessly expanded into unrelated ventures and launched ill‑conceived projects are stark: such strategies often hollow out their core businesses, shift resources away from the real economy toward speculative pursuits, and ultimately lead to the unfortunate outcome of delisting.

　　Improving quality necessarily requires strengthening the enterprise’s core capabilities, and investment in innovation must remain robust. Innovation is a perennial topic that remains relevant and enduring, yet it should not be pursued for its own sake. Listed companies must engage in purposeful, forward-looking, and high‑quality innovation; throughout the process, they should thoroughly understand market dynamics, stay officely focused on profitability, maintain rigorous research and analysis, and tackle critical “bottleneck” challenges in key core technologies. By driving progress through technological, managerial, and business‑model innovation, they can bolster their long-term growth momentum and truly leverage innovation to elevate corporate performance to a new level.

　　Quality enhancement requires a long-term perspective and a well‑thought‑out business strategy. It is essential to fully recognize the cyclical nature of both the economy and the industry, aligning strategic direction and growth pace with prevailing market conditions. During an upcycle, companies can accelerate; during a downcycle, they should proceed more cautiously. Based on their specific circumstances, and taking into account market trends, corporate strategy, and investment returns, offices should prudently explore diversified sectors that offer broad growth prospects, exhibit weak cyclicality, and leverage their own resource advantages. At the same time, they should emphasize cross‑business hedging to mitigate the risk of disruptive shocks stemming from volatility in any single industry.

　　Improving quality also hinges on a favorable market environment, and regulatory authorities must rigorously manage both entry and exit. At the entry point, they should continue to refine listing criteria, maintain stringent review standards, and step up support for high‑quality enterprises. At the exit end, they must consolidate and deepen the normalized delisting mechanism, strengthen enforcement of relevant rules, and resolutely weed out “shell companies” and “bad actors,” striving to foster a development landscape in which high‑quality offices proliferate, low‑quality ones dwindle, and the overall corporate sector steadily improves.

　　“A nine-story tower begins with a heap of earth.” Enhancing the quality of listed companies is no overnight achievement; it requires listed offices to strive for excellence and persevere over the long term, as well as concerted efforts and synchronized action from all market participants. We are confident: China’s economy is resilient, brimming with potential, and endowed with ample policy flexibility. It boasts the world’s most complete industrial system, the broadest unified market, and the largest investor base—over 200 million individuals—all of which provide robust underpinning and unwavering support for the healthy development of the capital market and for listed companies to become stronger and more competitive. Raising the quality of listed companies is both a necessity dictated by the current landscape and a path that will yield lasting success.

Taxation

TAXATION

The tax authorities have, in accordance with the law, investigated and prosecuted Wu Yifan for tax evasion. Entertainment industry professionals must remain constantly vigilant.

On November 25, the Beijing Municipal Tax Service disclosed the tax evasion case involving Wu Yifan, ordering him to pay back taxes, late payment penalties, and fines totaling RMB 600 million in accordance with the law. The investigation found that, between 2019 and 2020, Wu Yifan evaded RMB 95 million in taxes by fabricating business transactions to disguise the nature of his income and making false tax declarations, as well as by concealing his personal income through multiple related entities both within and outside China. He also underpaid an additional RMB 84 million in taxes.

Strict investigations and prosecutions demonstrate the state’s determination to combat tax evasion.

Since 2018, when the state introduced regulations to standardize tax compliance in the film and television industry, relevant authorities have worked closely together to tackle issues such as exorbitant actor fees, “yin-yang contracts,” and tax evasion. The tax authorities have publicly disclosed a number of high-profile cases involving egregious tax fraud and substantial sums, sparking widespread public outcry across all sectors of society.

A responsible official from the tax authorities stated that, in recent years, leveraging tax‑related big data, the tax authorities have established a long‑term, comprehensive governance mechanism to strengthen tax oversight in the cultural and entertainment sectors. For cases involving tax risks, they apply a five‑step approach: “providing prompts and reminders, urging rectification, conducting cautionary interviews, initiating formal investigations, and publicly exposing violations.” Furthermore, following rigorous enforcement against celebrities and artists found to have committed tax‑related offenses, the routine practice of publicizing high‑profile cases has become standard. Any lawbreaker who harbors侥幸 and dares to evade taxes will, once they cross the red line set by tax laws and regulations, be subject to strict legal investigation and punishment.

Industry experts and scholars believe that, against this broader backdrop, Wu Yifan has continued to act in defiance of the law, seriously undermining national tax revenues and compromising social fairness and justice. The tax authorities’ rigorous investigation and prosecution of Wu Yifan’s case once again demonstrate the state’s zero‑tolerance stance and resolute determination to crack down hard on tax evasion and other illegal and criminal activities. This approach helps uphold the fairness, authority, and solemnity of tax laws, strengthens public awareness of lawful tax compliance, and serves as a powerful deterrent and educational reminder.

The penalty outcomes reflect compliance with laws and regulations and ensure that the punishment is proportionate to the offense.

According to a responsible official from the tax authorities, although Wu Yifan holds Canadian nationality, he spent more than 183 days in China in both 2019 and 2020. Under the provisions of the Individual Income Tax Law of the People’s Republic of China, he is considered a Chinese tax resident and is required to pay individual income tax on all his income derived from both within and outside China in accordance with the law.

Professor Tang Jiqiang of Southwestern University of Finance and Economics stated that, despite leveraging foreign nationality and capitalizing on their celebrity status to compel domestic enterprises or overseas entities established by domestic offices to remit their personal service fees to their offshore‑registered companies—thereby “packaging” domestic income as income earned by an overseas entity in order to conceal the fact that they have derived taxable income within China or to reclassify the nature of such income—they were nonetheless detected and prosecuted. This has effectively safeguarded national tax sovereignty and tax revenue security, underscoring the principle of equality before the law.

Based on the administrative penalty imposed in this case, the tax authorities have consistently adhered to the principles of legality, compliance with regulations, and proportionality between the offense and the penalty, fully taking into account such factors as the facts, nature, circumstances, and social harm caused by the violation, thereby exercising their discretionary power in imposing administrative penalties in a standardized manner.

Article 63, Paragraph 1 of the Law of the People’s Republic of China on the Administration of Tax Collection stipulates that, in cases of tax evasion by a taxpayer, the tax authority shall recover the unpaid or underpaid taxes and any applicable late payment penalties, and impose a fine ranging from 50% to 500% of the unpaid or underpaid taxes.

Experts stated that, in the case of Wu Yifan (WU YI FAN), the Second Inspection Bureau of the Beijing Municipal Tax Service, in accordance with relevant laws and regulations, imposed a penalty equal to four times the amount of tax evaded through fictitious transactions and false declarations—totaling RMB 345 million—and applied the maximum statutory penalty of five times the amount for concealing personal income—amounting to RMB 42 million—thereby upholding the principle of proportionality between the offense and the punishment.

Promote the long-term, standardized development of the film and television industry.

Experts emphasize that celebrity status is no “magic shield,” and no one enjoys immunity from the law. As public figures, celebrities and artists who command substantial incomes should shoulder greater social responsibilities and serve as role models, setting an appropriate example for others.

The exposure of the Wu Yifan case has undoubtedly served as a powerful and vivid lesson in legal awareness for celebrities, reminding them to respect the law, to never cross the red line of tax evasion, and to conscientiously fulfill their obligation to pay taxes in good faith. They must avoid letting short‑term gains lead to long‑term ruin and jeopardize their entire entertainment careers.

Tang Jiqiang stated that taxation plays a fundamental, pivotal, and safeguarding role in national governance. The tax authorities’ ongoing efforts to standardize tax compliance in the film and television industry are of great significance for addressing key industry challenges and improving the tax oversight system, and will undoubtedly help the sector achieve both orderly growth and sustainable development.

Jiangsu: Using “retreat” to drive “progress,” tax and fee relief packages inject strong momentum into economic development.

Since the implementation of tax and fee reduction policies, the “subtraction” in taxes and fees has continuously translated into “addition” in corporate profitability and “multiplication” in market vitality. Since the beginning of this year, a coordinated package of new integrated tax and fee support measures, along with a comprehensive set of policies to stabilize the economy and follow-up actions, has worked in tandem to play a crucial role in helping businesses overcome difficulties and fostering economic growth.

In the face of a complex economic environment at home and abroad, the implementation of a large-scale policy to refund outstanding input VAT credits has provided Jiangsu’s manufacturing offices with a valuable financial buffer. As of November 10, RMB 223.96 billion in refunded input VAT credits had been directly disbursed to market entities in Jiangsu, bolstering their internal growth momentum and amplifying the synergistic effects of the province’s high-quality economic development.

“The incremental refund of outstanding input VAT that we applied for was credited to our account very quickly, and it will be put to good use in upgrading and modernizing our 2.5D and 3DIC chip‑integration production lines,” said Hu Xiaorong, the finance director of Shenghe Jingwei Semiconductor (Jiangyin) Co., Ltd.

“Shortly after submitting our application, we received a refund of 1.0779 million yuan in outstanding tax credits, which has significantly improved the company’s cash flow,” said Li Yanan, the finance director of Lianyungang Guanyun Liqun Supermarket. She added that the company will continue to expand its product range, launch attractive promotions, and ensure that residents have access to affordable, high-quality food—covering their “vegetable basket,” “rice bag,” and “meat platter.”

As financial resources continue to flow into the manufacturing sector, helping real‑world enterprises stabilize and improve, the tangible fiscal and tax benefits are steadily reaching Jiangsu’s science‑and‑technology‑driven offices, injecting robust endogenous momentum into the province’s high‑quality economic development.

“In the first three quarters of this year, the company’s R&D expenditures totaled approximately RMB 270 million, already surpassing last year’s full-year R&D spending,” said Bi Wenxin, CFO of Nanjing Novozymes Biotechnology Co., Ltd. He added that the policy increasing the additional deduction rate for R&D expenses has effectively bolstered the company’s confidence in ramping up its R&D investment.

Zheng Yuchun, the financial director of Yancheng Tianhe Guoneng Photovoltaic Technology Co., Ltd., stated that, thanks to the policy allowing high-tech enterprises to enjoy an additional deduction for R&D expenses, the company expects to benefit from an R&D expense super‑deduction totaling RMB 5.86 million for the full year 2022.

For the overall socio-economic development, small, medium, and micro enterprises serve as vital capillaries, playing a crucial role in stabilizing growth and employment. The deferral of tax and fee payments amounts to an “interest-free loan” for these businesses and individual business households; with the extension of this measure by four months beyond its original expiration date on September 1, it has bought valuable time for millions of such market entities across the province, ensuring their survival and continued development.

In Changzhou, due to a decline in demand from downstream enterprises, Changzhou Wujin Hualian Nonwoven Machinery Co., Ltd. saw its sales volume in the first half of this year fall by nearly 50 percent. The continued extension of the policy allowing small and medium-sized manufacturing enterprises to defer payment of certain taxes and fees is undoubtedly a timely relief for businesses.

Following the introduction of the new policy, tax officials promptly visited the company to provide guidance on how to avail itself of the preferential tax and fee measures, enabling it to swiftly benefit from a deferral of RMB 600,000 in value-added tax, RMB 720,000 in corporate income tax, and RMB 60,000 in urban construction and maintenance tax and education surcharge—totaling a deferred tax and fee payment of RMB 1.38 million.

The Jiangsu tax authorities leverage a tax‑big‑data platform to ensure that policies reach the right taxpayers. Through an integrated “online plus offline” approach, they provide services such as policy explanations, operational guidance, and answers to taxpayers’ questions, ensuring that small and micro enterprises can promptly learn about relevant policies, understand how to implement them, and swiftly benefit from them.

“To apply for a deferral of tax and fee payments, companies don’t need to submit any documents—simply conoffice your eligibility through the electronic tax bureau. With increasingly digital and streamlined procedures, handling tax matters has become ever more convenient for businesses,” said Shu Hong, the financial director of Suqian Shuyang Kangshun Magnetic Equipment Co., Ltd.

Tang Zhishui, Party Secretary and Director of the Jiangsu Provincial Tax Service Bureau of the State Taxation Administration, stated that the tax authorities in Jiangsu Province will meticulously implement and officely put into practice the series of decisions and arrangements issued by the CPC Central Committee and the State Council to stabilize market entities and employment. They will continue to ensure the effective delivery of preferential policies down to the “last mile,” roll out pragmatic and practical measures to facilitate taxpayers, and harness the power of taxation to bolster enterprises’ confidence, resolve, and momentum for growth.

The State Taxation Administration has publicly released the 2021 Annual Report on Advance Pricing Arrangements, in both Chinese and English.

In November 2022, the State Taxation Administration released, in both Chinese and English, the “Annual Report on China’s Advance Pricing Arrangements (2021).” This marks the 13th time China has published an annual report on advance pricing arrangements (hereinafter referred to as APA). The report outlines China’s APA implementation procedures and related work, and presents statistical data and analyses covering APAs concluded between 2005 and 2021.

An APA refers to an agreement reached between a taxpayer and the tax authorities, in which the taxpayer submits an application to the tax authorities outlining the pricing principles and calculation methods for its related-party transactions in future years. Following consultation and conofficeation in accordance with the arm’s-length principle, this agreement constitutes a service provided by the tax authorities to the taxpayer. Depending on the number of participating national (or regional) tax administrations, APAs can be classified into unilateral, bilateral, and multilateral types. While a unilateral APA provides taxpayers with tax certainty, bilateral or multilateral APAs further help taxpayers prevent and eliminate international double taxation.

By the end of 2021, China had reached a “double‑hundred” milestone in the number of APA agreements signed, with 125 unilateral APAs and 101 bilateral APAs. That year, to further enhance the efficiency of negotiating and concluding unilateral advance pricing arrangements, the State Taxation Administration issued the “Announcement on Matters Relating to the Application of the Simplified Procedure for Unilateral Advance Pricing Arrangements,” providing taxpayers with a more streamlined and expedited pathway to obtain tax certainty.

Regularly publishing information and statistical data on APAs helps enhance the transparency of APA proceedings, enabling more taxpayers to understand and apply for APAs. This report carries no legal force and shall not serve as a basis for enterprises or Chinese tax authorities in negotiating or concluding APAs.

Litigation and Arbitration

LITIGATION & ARBITRATION

Announcement of the State Administration for Market Regulation on Public Solicitation of Comments on the Draft Amendment to the Anti-Unfair Competition Law of the People’s Republic of China

In order to foster a fair competitive market environment, safeguard the legitimate rights and interests of business operators and consumers, protect public interests, effectively address prominent issues in regulatory practice, and accelerate the improvement of the legal framework for combating unfair competition, the State Administration for Market Regulation has drafted the “Anti-Unfair Competition Law of the People’s Republic of China (Draft for Public Consultation).” The draft is now being made available to the public for comments. Members of the public may submit their views through the following channels and methods:

　　I. By logging onto the official website of the State Administration for Market Regulation (website: http://www.samr.gov.cn) and submitting your comments under the “Public Consultation” section within the “Interactive” menu on the homepage.

　　II. Please send your submissions by email to fgs@samr.gov.cn, and clearly indicate “Public Consultation on the Draft Amendment to the Anti-Unfair Competition Law of the People’s Republic of China” in the email subject line.

　　III. By mail, to the Department of Legislation, State Administration for Market Regulation, No. 8, Sanlihe East Road, Xicheng District, Beijing (Postal Code: 100820), with the words “Public Solicitation of Comments on the Draft Amendment to the Anti-Unfair Competition Law of the People’s Republic of China” clearly marked on the envelope.

　　The deadline for submitting feedback is December 22, 2022.

Interpretation of the Measures for Rewarding Reports on the Illegal and Non‑Compliant Use of Medical Security Funds

Recently, the National Healthcare Security Administration and the Ministry of Finance jointly formulated the Measures for Rewarding Reports on Illegal and Non‑Compliant Use of Medical Security Funds (hereinafter referred to as the “Measures”), which will officially come into effect on January 1, 2023. The following is an interpretation of the Measures.

　　I. Background to the Issuance of the “Reward Measures”

　　Since its establishment, the National Healthcare Security Administration has resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council, consistently prioritizing the safeguarding of the security of the medical insurance fund. It has continuously explored innovative approaches to fund oversight and actively encouraged and supported the participation of all sectors of society in such oversight. In November 2018, the National Healthcare Security Administration, in conjunction with the Ministry of Finance, jointly issued the Interim Measures on Rewarding Reports of Fraudulent Acquisition of Medical Insurance Funds (hereinafter referred to as the “Original Reward Measures”), thereby establishing a system for rewarding individuals who report fraudulent activities involving medical insurance funds.

　　This system has played a vital role in mobilizing societal participation in fund oversight and safeguarding the security of medical insurance funds. At present, all 31 provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps have established corresponding reward‑for‑whistleblowing schemes, fostering positive interaction between government regulation and public oversight and cultivating a favorable environment of collaborative governance and shared responsibility in fund supervision. Public awareness of oversight continues to grow, with citizens actively engaging in the monitoring of medical insurance funds; the number of reported cases, the total amount of rewards disbursed, and the sums recovered through investigations have all increased year by year, underscoring the increasingly significant role of social oversight in combating fraud and abuse of insurance benefits. Medical insurance authorities at all levels have rewarded whistleblowers more than 2,570 times, awarding nearly RMB 5 million in total. In three provinces, autonomous regions, and municipalities—Tianjin, Zhejiang, and Guangxi—individual whistleblowers have received top awards of RMB 100,000 each. Based on leads provided by the public, authorities have verified and recovered RMB 158 million in improperly used medical insurance funds.

　　In recent years, as nationwide fund‑supervision efforts have deepened, the legal and regulatory framework in this field has been continuously refined. In particular, the promulgation of regulations such as the Regulations on the Supervision and Administration of the Use of Medical Security Funds and the Interim Measures for Handling Reports on the Supervision and Administration of the Use of Medical Security Funds has enabled the comprehensive establishment of a multi‑dimensional fund‑supervision system that incorporates public oversight. At the same time, all acts of illegal or non‑compliant use of medical insurance funds have been explicitly brought within the scope of reporting. To better adapt to the new landscape of fund supervision, fully mobilize, rely on, and encourage public participation in the oversight of medical insurance funds, and further strengthen the role of social oversight, thereby jointly safeguarding the people’s “healthcare money” and “life‑saving money,” the National Healthcare Security Administration, in collaboration with the Ministry of Finance, has revised the original Reward Measures in accordance with relevant laws and regulations and taking into account the actual practices of reward‑for‑reporting programs across different regions.

　　II. Main Contents of the “Reward Measures” and Their Purpose and Significance

　　The “Reward Measures,” as a supplementary document to the “Interim Measures for Handling Reports on the Supervision and Administration of the Use of Medical Security Funds,” comprises fifteen articles. It sets forth the purposes and legal basis of the whistleblower reward system, its scope of application, as well as the principles, conditions, standards, disbursement, receipt, redemption, and recovery procedures for rewards. At the same time, it fully reflects considerations aimed at further refining the rewarded reporting mechanism and encouraging public participation in oversight.

　　(1) Effectively broaden the scope and raise the standards, and actively encourage the public to participate in social oversight.

　　As China continues to intensify its efforts to combat fraud and abuse of medical insurance funds, overt fraudulent practices have been effectively curbed. However, some illicit schemes have shifted from the open stage to behind the scenes, increasingly taking the form of improper medical practices and overcharging beyond established standards. In the medical insurance sector, violations are becoming more covert, fraud is being carried out with greater sophistication, and the methods employed are more diverse. Relying solely on the administrative authorities’ efforts makes it difficult to detect these evolving forms of fraud—often cloaked in disguise or hidden under seemingly legitimate pretenses. To further encourage public reporting, broaden the scope of citizen participation, and reinforce the critical role of social oversight in combating illegal and non‑compliant behavior, thereby strengthening the overall regulatory framework for medical insurance funds and fostering a collaborative governance model, the Rewards Measures explicitly include reports on all unlawful or improper uses of medical insurance funds within the scope of rewards. Taking into account local conditions, the measures also stipulate that whistleblowers will receive a one‑time reward calculated as a certain percentage of the case value. At the same time, the maximum reward has been increased from RMB 100,000 to RMB 200,000, while a minimum reward of RMB 200 has been set, fully leveraging the incentive effect of the rewards to actively encourage and guide the public to engage in social oversight.

　　(2) Uphold the principles of unimpeded channels and streamlined procedures to effectively facilitate public participation in social oversight.

　　To facilitate public reporting, medical insurance authorities at all levels have publicly announced multiple channels—including online platforms, telephone, fax, and mail—through which whistleblowers may submit reports. Whistleblowers may choose any of these avenues based on their circumstances, and all submissions meet the basic eligibility criteria for receiving rewards. In practice, medical insurance agencies are required to register all received reports, implement end-to-end management of investigative leads, and process them in strict accordance with relevant regulations such as the Regulations on the Supervision and Administration of the Use of Medical Security Funds. At the same time, they should streamline procedures and establish convenient mechanisms for disbursing rewards, in line with the provisions of the Reward Measures, thereby maximizing standardization and convenience for whistleblowers seeking to claim their rewards. Furthermore, to support the promulgation and implementation of the Reward Measures, the National Healthcare Security Administration has developed and deployed a dedicated reporting and complaint management system on the National Medical Security Information Platform. This system aims to achieve precise, end-to‑end, full‑chain, and comprehensive management of leads received through all channels. On the one hand, it ensures end-to‑end oversight of complaints and reports across regions, preventing cases from being ignored and guaranteeing that every report is investigated. On the other hand, it promptly supervises local medical insurance authorities to disburse rewards on time and in full, ensuring that all eligible rewards are paid. Currently, this system is undergoing pilot implementation in Hebei, Zhejiang, and Jiangxi provinces, with plans to roll it out nationwide once conditions are ripe.

　　(3) Strengthen the confidentiality of cases and information security, and resolutely safeguard the public’s right to participate in social oversight.

　　The “Reward Measures” emphasize the lawful protection of whistleblowers’ legitimate rights and interests. Medical insurance authorities at all levels shall maintain the confidentiality of whistleblowers’ information and may not disclose their personal details or the particulars of their reports to the reported party or to any person unrelated to the handling of the report. In practice, public reports may be submitted either under one’s real name or anonymously. Medical insurance authorities encourage whistleblowers to report in their own names; when reporting under one’s real name, individuals must provide their true identity information and a valid, verifiable contact method. The medical insurance authorities shall strictly safeguard the confidentiality of such information. If a whistleblower submits an anonymous report but expresses an intention to claim the reward, they may, upon notification from the medical insurance authority to collect the reward—provided they supplied a valid contact method at the time of reporting—promptly furnish proof of identity, bank account details, and other relevant documentation, so that the authority can verify the information and disburse the reward. With regard to the procedures for awarding rewards in cases of anonymous reporting, provincial- and municipal-level medical security administrative and financial departments may establish specific provisions when formulating implementing rules.

　　(4) Strictly enforce the investigation and handling of reports, rigorously review reward applications, and positively guide the public to participate in social oversight.

　　Whistleblowers shall be responsible for the authenticity of their reports and the materials they submit. Anyone who fabricates or distorts facts to falsely accuse or frame others shall bear the corresponding legal liabilities in accordance with the law. Medical insurance and medical care have never been adversarial; rather, they are mutually dependent, mutually restraining, and jointly developing, working together to safeguard the health of the people. While encouraging the public to report illegal or non‑compliant use of medical insurance funds, we also emphasize the need to protect, in accordance with the law, the legitimate rights and interests of designated medical institutions. In response to relevant leads, medical insurance authorities must conduct thorough investigations, carry out in‑depth analyses, and seek the truth while discarding falsehoods—neither conducting perfunctory inquiries nor stopping at a superficial examination, nor presuming guilt against the reported parties, and certainly not issuing reward payments indiscriminately or arbitrarily. The “Reward Measures” stipulate that medical insurance authorities must subject reward disbursements to rigorous review; moreover, if a whistleblower obtains rewards by means such as falsifying documents or concealing facts, the authorities are empowered to revoke the reward and hold the responsible individuals accountable under the law, thereby promoting lawful and compliant reporting by the public.

Reply of the State Council Approving the Temporary Adjustment to the Implementation of Relevant Administrative Regulations in Guangdong Province

State Council

National Letter [2022] No. 129
 

To the People’s Government of Guangdong Province, the General Administration of Customs, the Ministry of Justice, and the Hong Kong and Macao Affairs Office:

We have received your request to implement a guarantee‑exemption policy for eligible Hong Kong and Macao motor vehicles entering or leaving the mainland, and to temporarily adjust the application of relevant administrative regulations in Guangdong Province. We hereby reply as follows:
I. To support the development of the Guangdong–Hong Kong–Macao Greater Bay Area, it is hereby approved that, effective immediately, certain provisions of the Regulations of the People’s Republic of China on Customs Bonding and the Regulations of the People’s Republic of China on Import and Export Tariffs shall be temporarily adjusted in Guangdong Province (the list is attached). Specifically, Hong Kong‑registered motor vehicles entering or leaving the mainland under the “Hong Kong Vehicles Heading North” policy via the Zhuhai Highway Port of the Hong Kong–Zhuhai–Macao Bridge, as well as Macao‑registered motor vehicles entering or leaving the mainland under the “Macao Vehicles Heading North” policy via the same port, shall be exempt from the requirement to provide a customs bond, provided they meet the relevant eligibility criteria.

II. The People’s Government of Guangdong Province, the General Administration of Customs, and other relevant departments shall, in accordance with the aforementioned adjustments and in line with their respective responsibilities, advance the implementation of the “Hong Kong Vehicles Heading North” and “Macao Vehicles Heading North” policies; promptly revise the regulations and normative documents issued by their respective provinces and departments as necessary; establish corresponding management systems; and, on the premise of effectively controlling and mitigating guarantee‑free risks, implement each measure as it matures.
III. The State Council will, in light of the implementation of the relevant policies in Guangdong Province, make timely adjustments to the contents of this reply as appropriate.

Attachment: Catalog of Relevant Administrative Regulations Whose Implementation Is Temporarily Adjusted in Guangdong Province by Decision of the State Council
 

State Council
November 17, 2022

Attachment
Catalog of Provisions of Relevant Administrative Regulations Temporarily Adjusted for Implementation in Guangdong Province, as Determined by the State Council

Status of the implementation and adjustments of relevant administrative regulations

Regulations of the People’s Republic of China on Customs Bonding
　　Article 5, Paragraph 1: When a party applies to handle the following specific customs procedures, it shall provide a guarantee in accordance with the Customs Regulations:
　　……
　　(2) Goods and articles temporarily imported or exported;
　　……
Regulations of the People’s Republic of China on Import and Export Tariffs
　　Article 42: With respect to the following goods temporarily imported or temporarily exported, if the taxpayer pays to the Customs a deposit equivalent to the payable duties or provides other forms of security upon importation or exportation, such goods may be exempted from the payment of customs duties and shall be re-exported or re-imported within six months from the date of importation or exportation. If an extension of the period for re-exportation or re-importation is required, the taxpayer shall, in accordance with the regulations of the General Administration of Customs, apply to the Customs for the relevant extension procedures.
　　(1) Goods exhibited or used at exhibitions, trade fairs, conferences, and similar events;
　　(2) Performance and competition equipment used in cultural and sports exchange activities;
　　(3) Instruments, equipment, and supplies used for news reporting or for the production of films and television programs;
　　(4) Instruments, equipment, and supplies used in research, teaching, and medical activities;
　　(5) Vehicles and special-purpose vehicles used in the activities listed in subparagraphs (1) through (4) of this paragraph;
　　(6) Samples of goods;
　　(7) Instruments and tools used for the installation, commissioning, and testing of equipment;
　　(8) Containers for holding goods;
　　(9) Other goods used for non-commercial purposes.
　　If the temporarily imported goods listed in paragraph 1 are not re-exported within the prescribed time limit, or if the temporarily exported goods are not re-imported within the prescribed time limit, the customs authorities shall impose customs duties in accordance with the law.
　　Other temporarily imported goods not falling within the scope of tariff exemption specified in paragraph 1 shall be subject to import duties calculated on the basis of their dutiable value and the ratio of their period of stay in the territory to the depreciation period. The specific procedures shall be prescribed by the General Administration of Customs.

　　For the time being, the relevant provisions of Article 5, Paragraph 1, Item 2 of the Regulations of the People’s Republic of China on Customs Bonding and Article 42 of the Regulations of the People’s Republic of China on Import and Export Tariffs will be temporarily adjusted to implement a bond‑exemption policy for eligible Hong Kong and Macao motor vehicles entering or leaving the mainland under the “Hong Kong Vehicles to the Mainland” and “Macao Vehicles to the Mainland” schemes. The People’s Government of Guangdong Province, in coordination with relevant authorities, will advance the implementation of these policies by refining source‑level management and local‑jurisdictional oversight responsibilities for the relevant motor vehicles, concluding pertinent agreements, formulating specific administrative measures, strengthening the application of information technology and scientific‑technological tools, and establishing and improving an early‑warning and control mechanism for motor vehicles entering and exiting the mainland. On the premise of effectively mitigating bond‑exemption risks, implementation will proceed on a case‑by‑case basis as conditions mature.