JC Master Legal News Issue 996

Key Takeaways for This Issue

The China Securities Regulatory Commission is soliciting public comments on the relevant rules pertaining to the integration of the regulatory framework for listed companies.

The current departmental rules and subordinate regulations of the China Securities Regulatory Commission (CSRC) governing listed companies, together with the existing self-regulatory rules of the Shanghai and Shenzhen Stock Exchanges on listed‑company supervision, will be consolidated into 182 documents, representing a 60% reduction in number. This marks the first comprehensive integration and revision of the capital market’s regulatory framework for listed companies in the past 30 years. Public comments are now being solicited on the consolidation of 27 normative documents under the CSRC, which will result in the formulation of 6 new rules, the amendment of 17, and the repeal of 4.

Coal supply and demand tensions have eased, and coal prices have returned to a more rational level.
Looking ahead to next year, we expect China’s export growth to moderate as the impact of the COVID‑19 pandemic on global supply chains gradually diminishes. Coupled with subdued downstream real estate demand for steel and construction materials, we project a slowdown in the growth rate of coal demand. On the supply side, with accelerated capacity additions and improving import conditions, coal supply is likely to become further optimized. Overall, we believe that coal supply and demand in 2022 will see a marked improvement, and the center of coal prices may return to a more reasonable range.
Big Data Takes the Lead: China’s Tax-Related Business Environment Continues to Improve
In recent years, China’s tax authorities have vigorously advanced the development of “smart taxation,” implementing a range of measures to ensure that tax and fee reduction policies are fully and effectively put into practice, thereby delivering tangible financial benefits to businesses and the public.

Supreme People’s Procuratorate: The acceptance rate of sentencing recommendations is nearly 95%, and the system of leniency for those who plead guilty and accept punishment is advancing steadily and sustainably.
Recently, Zhang Jun, Procurator-General of the Supreme People’s Procuratorate, presided over a meeting of the Supreme People’s Procuratorate’s Prosecutorial Committee to deliberate and discuss the “Guiding Opinions on the Submission of Sentencing Recommendations in Cases Involving Plea Bargaining and Guilty Pleas” (hereinafter referred to as the “Opinions”) and the “Regulations on Synchronous Audio-Video Recording of Hearings in Cases Involving Plea Bargaining and Guilty Pleas” (hereinafter referred to as the “Regulations”).

Finance & Capital Markets

The China Securities Regulatory Commission is soliciting public comments on the relevant rules pertaining to the integration of the regulatory framework for listed companies.

To thoroughly implement the State Council Financial Stability and Development Committee’s guiding principles of “establishing sound systems, non-interference, and zero tolerance,” and to build a more scientific, standardized, user-friendly, and effective regulatory framework for listed companies—thereby enhancing the accessibility of market rules and bolstering stakeholders’ sense of gain—the China Securities Regulatory Commission (CSRC), in collaboration with the Shanghai and Shenzhen Stock Exchanges, has undertaken an integration of the existing regulatory framework governing listed companies. The CSRC’s current departmental regulations and lower-level rules, together with the self-regulatory rules currently in force at the Shanghai and Shenzhen Exchanges, will be consolidated into 182 documents, representing a 60% reduction in number. This marks the first comprehensive overhaul and consolidation of the capital market’s regulatory framework for listed companies in the past three decades. Public comments are now being solicited on the integration of 27 normative documents under the purview of the CSRC, which entails the formulation of 6 new rules, the amendment of 17, and the repeal of 4.
After years of development, China’s capital market has initially established a comprehensive regulatory framework for listed companies, encompassing laws, administrative regulations, departmental rules, normative documents, and exchange‑level self‑regulatory rules. Overall, the existing body of regulations covers a broad range of areas and comprises a substantial number of provisions, ensuring that all aspects of listed company supervision are underpinned by clear legal authority and marking a significant milestone in the provision of legal frameworks. As the number of rules continues to grow and supervisory practices evolve, the importance of optimizing the regulatory system, refining its content, and streamlining its scope has become increasingly evident. This consolidation of regulations aims to further enhance the scientific rigor, systematic structure, and standardization of the regulatory framework for listed companies, while facilitating access and use by market participants, thereby contributing to the ongoing improvement of listed company quality.
Given the clear hierarchical structure of the CSRC’s departmental rules and higher‑level regulations, this consolidation covers normative documents in the area of listed company supervision as well as lower‑level regulatory provisions. The CSRC and the Shanghai and Shenzhen Stock Exchanges are acting in concert, involving a large number of rules across multiple domains. In terms of the integration approach, we remain committed to market‑oriented and law‑based principles, adhering to the principle of “establishing a robust systemic framework while avoiding major revisions to substantive content.” The focus is on building a scientific and streamlined regulatory framework for listed companies, with provisions proven effective in practice remaining in force after consolidation. Specifically, the methodology emphasizes strengthening the organic linkages between ongoing supervision and key business areas such as issuance, refinancing, mergers and acquisitions, restructuring, and delisting, while also enhancing functional complementarity between CSRC rules and those of the Shanghai and Shenzhen Stock Exchanges, and ensuring consistency and coordination among the market rules of the two exchanges.
Following the consolidation, the regulatory framework for listed companies exhibits the following key features: First, the system has been streamlined and simplified. The business categories are organized into four major areas—information disclosure, corporate governance, mergers and acquisitions/restructuring, and regulatory responsibilities. At the institutional level, the CSRC has established three tiers—basic rules, regulatory guidance, and interpretations on rule application—while the stock exchanges have created three tiers—self-regulatory rules, self-regulatory guidance, and self-regulatory guidelines—ensuring effective coordination between administrative and self-regulatory oversight. Second, the content is more standardized and rational. On the premise of avoiding major overhauls to substantive provisions, the hierarchical relationship between rules has been optimized; the chapter structures of the Shanghai and Shenzhen Stock Exchange rules have been aligned as much as possible, while maintaining reasonable differences in content between the two exchanges. Technically, rules addressing the same matters have been consolidated, and those that no longer reflect practical needs or contain inconsistencies have been revised or repealed, with uniformity achieved in wording and formatting. Third, the overall number of rules has been significantly reduced. Following the integration, the CSRC now has 94 rules, and the Shanghai and Shenzhen Stock Exchanges together have 88 rules, resulting in a more concise, clear, and user-friendly regulatory landscape.
The specific contents of this regulatory consolidation are as follows: First, rules addressing the same regulatory matters but currently scattered across various provisions have been merged, and outdated, redundant, or contradictory provisions have been revised to create unified, clear, dedicated regulations. For example, several normative documents, including the “Administrative Measures for Share Repurchases by Listed Companies (Trial)” and the “Supplementary Provisions on Share Repurchases by Listed Companies via Centralized Auction Trading,” have been consolidated into the “Rules on the Administration of Share Repurchases by Listed Companies.” Similarly, the “Several Provisions on the Pilot Program for Domestic Listings of Subsidiaries Separated from Listed Companies” governing domestic spin-offs, together with the “Notice on Regulating Issues Related to Overseas Listings of Enterprises Affiliated with Domestic Listed Companies,” which governs overseas spin-offs, have been combined into the “Rules on the Spin-off of Listed Companies (Trial).” Furthermore, based on the “Notice on Regulating Funds Transactions between Listed Companies and Their Affiliates and Certain Issues Concerning External Guarantees by Listed Companies” and the “Notice on Regulating External Guarantee Activities of Listed Companies,” and incorporating relevant provisions from other documents—such as the “Notice on Centrally Addressing the Issue of Funds Misappropriation and Illegal Guarantees by Listed Companies”—a new regulation has been formulated: the “CSRC Regulatory Guidance No. 8—Regulatory Requirements for Funds Transactions and External Guarantees of Listed Companies.” Finally, the relevant content of the “Several Provisions on Strengthening the Protection of the Rights and Interests of Public Shareholders” has been systematically categorized and integrated into existing rules, including the “Guidelines on Articles of Association of Listed Companies” and the “Rules of General Meetings of Listed Companies.”
Second, provisions in the existing rules that are inconsistent with practice or conflict with newly issued regulations or higher-level laws have been revised, and the wording has been standardized. For example, the phrase “suspension of listing” in Opinion No. 7 on the Application of Article 62 of the Measures for the Administration of Takeovers of Listed Companies—Opinion on the Application of Securities and Futures Laws has been deleted, as the new delisting rules no longer provide for a “suspension of listing” stage. Likewise, “application for exemption from the obligation to make a mandatory offer” has been amended to “exemption from increasing shareholdings by way of a mandatory offer,” aligning with the Measures for the Administration of Takeovers of Listed Companies. In Opinion No. 10 on the Application of Article 3 of the Measures for the Administration of Major Asset Restructuring of Listed Companies—Opinion on the Application of Securities and Futures Laws, the term “proposed acquisition assets” has been changed to “target assets,” thereby extending its applicability to share‑exchange‑based absorption mergers and enhancing the practical utility of the regulation. The format of the Guiding Opinions on Improving the System for the Suspension and Resumption of Trading of Shares of Listed Companies has been adjusted from a policy‑guidance document to a formal legal instrument, and its title has been revised to the Rules on the Suspension and Resumption of Trading of Shares of Listed Companies. Furthermore, Rule No. 4 on the Preparation and Disclosure of Information by Companies Issuing Securities Publicly—Special Provisions on the Disclosure of Information by Insurance Companies and Rule No. 26 on the Preparation and Disclosure of Information by Companies Issuing Securities Publicly—Special Provisions on the Disclosure of Information by Commercial Banks (hereinafter referred to as “Rule No. 26”) have been updated in accordance with the latest provisions of higher‑level laws: Article 193 of the Securities Law has been replaced by Article 197, and Chapter VI of the Measures for the Administration of Information Disclosure by Listed Companies has been renumbered as Chapter V. In view of the existing provisions in the Securities Law, the stipulation in Rule No. 26 regarding the scope of periodic reports has been deleted.
Third, it summarizes and codifies practices that have already gained widespread acceptance in practice, thereby elevating them into formal rules. For example, the Rules on Shareholders’ Meetings of Listed Companies, in light of the new Securities Law, has added a provision stipulating that shares acquired in violation of regulations by shareholders may not be exercised for voting rights for a period of 36 months and shall not be counted toward the total number of shares entitled to vote at the shareholders’ meeting. Drawing on prior regulatory experience, Guidance No. 4 on the Supervision of Listed Companies—Commitments by Listed Companies and Related Parties—has expanded the scope of applicability to include directors, supervisors, senior management personnel, counterparties in asset transactions, and investors in bankruptcy reorganization proceedings, while also specifying three circumstances under which commitments may not be altered or waived: commitments made in accordance with relevant provisions, performance‑related commitments in restructuring, and commitments that the obligor has explicitly declared irrevocable or unchangeable.
Fourth, previously issued temporary provisions, phased‑in arrangements, and rules that conflict with current regulations have been repealed. For example, notice documents such as the “Announcement on Matters Relating to the 2008 Special Campaign to Deepen Corporate Governance of Listed Companies” and the “Notice on Matters Related to the Implementation of a Special Campaign to Strengthen Corporate Governance of Listed Companies,” whose specific requirements have already been incorporated into regulatory practice and other rules; likewise, the “Notice on Standardizing Information Disclosure by Listed Companies and the Conduct of Relevant Parties” and the “Notice on Matters Concerning the Initiation of Investigations and Information Disclosure by Listed Companies,” issued at an earlier date, are now inconsistent with subsequently promulgated rules and established practices.
Fifth, with respect to provisions that have been recently revised or have proven effective in practice, no substantive amendments will be made at this time; only minor adjustments such as renumbering will be undertaken to facilitate market access and use. For example, “Opinion on the Application of Article 62 and Article 63 of the Measures for the Administration of Takeovers of Listed Companies and Article 46 of the Measures for the Administration of Major Asset Restructurings of Listed Companies Regarding Restrictions on Share Transfers—Securities and Futures Law Application Opinion No. 4” and “Opinion on the Determination of the Completion Date of a Takeover Involving the Increase of Shares in a Listed Company Through Centralized Bidding Transactions under Article 74 of the Measures for the Administration of Takeovers of Listed Companies—Securities and Futures Law Application Opinion No. 9” are rules newly revised within the past two years. Meanwhile, the “Measures for the Implementation of the Chairman’s Interview System for Listed Companies” has performed well in practice; accordingly, it has been simply renamed and renumbered as “Regulatory Guidance No. 6 for Listed Companies—Measures for the Implementation of the Chairman’s Interview System for Listed Companies,” with its content remaining unchanged.
We welcome valuable feedback from all sectors of society. The China Securities Regulatory Commission will, based on the responses to the public consultation, further revise the measures and, after completing the requisite procedures, issue and implement them as soon as possible.

Strengthen financial regulation of platform enterprises and enhance穿透性 (penetrative) oversight of large internet platforms.
On November 27, Wang Xin, Director of the Research Bureau of the People’s Bank of China, stated at the 2022 Financial Forum that it is necessary to strengthen and improve financial regulation of platform enterprises, enhance prudential oversight of the business activities of large internet platforms, and safeguard the rights and interests of the broad base of financial consumers.
Wang Xin stated that, in order to meet the needs of digital economic development, it is essential to adhere to market‑based and rule‑of‑law principles, comprehensively review and rectify illegal and non‑compliant financial activities conducted online; strengthen oversight of financial activities undertaken by platform enterprises, explicitly requiring that all such activities be brought under financial regulation, with all financial services subject to licensed operation, thereby eliminating regulatory arbitrage. Furthermore, enhance prudential supervision of the business operations of large internet platforms, improve the comprehensiveness and transparency of information disclosure, and safeguard the rights and interests of the broad base of financial consumers.
In his view, the central bank should safeguard financial stability, foster steady economic growth, and better protect the interests of low-income groups. One key measure is to strike a balance between promoting benefits and mitigating risks by strengthening and refining financial regulation of platform enterprises.
Other related measures include improving the deposit insurance system and adopting a multi‑pronged approach to prevent and resolve risks associated with troubled financial institutions. Efforts will be made to foster the sound development of the real estate finance market, upholding the principle that “housing is for living, not for speculation,” and, in line with the goals of stabilizing land prices, housing prices, and market expectations, strengthening prudent regulation of real estate finance, accelerating the refinement of the housing finance policy framework, and ensuring the stable and healthy development of the real estate market while safeguarding the legitimate rights and interests of homebuyers. In addition, we will explore and enhance macroprudential management of cross‑border capital flows, further bolstering the flexibility of the renminbi exchange rate.

Public Consultation on Rules for Independent Directors of Listed Companies: Incorporating Provisions to Further Improve the Independent Director System
On November 26, the China Securities Regulatory Commission (CSRC) publicly sought comments from the public on the consolidation of 27 normative documents related to the CSRC—resulting in the formulation of 6 new rules, the amendment of 17, and the repeal of 4—including the “Rules on Independent Directors of Listed Companies (Draft for Comments)” (hereinafter referred to as the “Independent Director Rules”).
In its explanatory note on the drafting of the Rules on Independent Directors, the CSRC stated that the existing “Guiding Opinions on Establishing an Independent Director System in Listed Companies” (CSRC Document No. 102 [2001], hereinafter referred to as the “Independent Director Guiding Opinions”) provides guidance on matters such as the eligibility criteria for independent directors of listed companies, the election procedures, their duties, the independence they are required to maintain, and the safeguards for the performance of their duties.
This revision primarily addresses:
First, the text has been uniformly organized and rewritten. Building on the “Guiding Opinions on Independent Directors” as the core, it incorporates the relevant provisions pertaining to independent directors from the “Regulations on the Protection of Shareholders’ Rights.” Article 1 clearly sets forth the purpose of these rules and adds higher-level laws, such as the Company Law of the People’s Republic of China and the Securities Law of the People’s Republic of China, as the basis for their formulation.
Second, inconsistencies among the revised rules have been addressed. Specifically: First, both the “Guiding Opinions on Independent Directors” and the “Regulations on the Protection of Shareholders’ Rights” stipulate that independent directors may not be removed without just cause prior to the expiration of their term. However, in accordance with the principle that newer laws prevail over older ones, Article 17 of the “Rules on Independent Directors” has been amended to provide that “prior to the expiration of their term, a listed company may, in accordance with statutory procedures, terminate the independent director’s duties,” thereby aligning this provision with the relevant provisions of the “Guidelines for Articles of Association of Listed Companies” as revised in 2019.
Secondly, in the “Guiding Opinions on Independent Directors,” point 5, sub‑paragraph (1), which sets out the special powers that listed companies are required to confer upon independent directors, it is not explicitly stipulated whether matters such as the independent directors’ proposal to the board to appoint or dismiss an accounting office must first obtain the independent directors’ approval before being submitted to the board. This provision is inconsistent with Article 2, sub‑paragraph (3) of the “Regulations on the Protection of Shareholders’ Rights,” which provides that “major related‑party transactions and the appointment or dismissal of accounting offices may be submitted to the board for deliberation only upon the approval of more than half of the independent directors.” In light of these conflicting provisions, Article 22 of the “Rules on Independent Directors” adopts the relevant provisions of the later‑issued “Regulations on the Protection of Shareholders’ Rights.”
Third, it incorporates provisions that were previously scattered elsewhere. Articles 3, 21, and 22 incorporate the relevant content from Paragraph 2 of the Regulations on the Protection of Shareholders’ Rights, which addresses the improvement of the independent director system and the enhancement of their role.

The Beijing Stock Exchange is highly inclusive, with initial signs of internal differentiation emerging.
The market capitalization gap between the largest and smallest companies is 135-fold. As of the close on November 19, the highest‑valued company on the Beijing Stock Exchange was Betray, with a total market cap of RMB 81.059 billion, while the lowest‑valued company was Yintu Wanglian, at RMB 610 million—a 135‑fold difference. The average market capitalization of listed companies stood at RMB 3.328 billion, with a median of RMB 1.477 billion.
There is a clear divergence in both company size and profitability. Among the 81 companies that went public for the first time, disparities in scale and earnings are pronounced. In 2020, Yintai Bio reported the highest revenue at RMB 6.225 billion, while Northland recorded the lowest at RMB 41 million; the average revenue across the 81 offices was RMB 603 million, with a median of RMB 322 million. Regarding net profit attributable to shareholders, Betray posted the highest figure at RMB 495 million, whereas Northland incurred a loss of RMB 25 million; the aggregate average was RMB 69 million, and the median stood at RMB 49 million. As of the end of the third quarter of 2021, Sanyuan Gene boasted the highest gross profit margin at 81.24%, while Dezhong Auto had the lowest at 8.24%; the average gross margin for the 81 companies was 37.05%, with a median of 34.04%. At the same time, Jilin Carbon Valley led the pack in return on equity (weighted), at 36.54%; two companies reported negative ROE due to losses. The overall average ROE for the 81 offices was 9.05%, with a median of 8.97%.
The largest numbers of enterprises are classified as “medium-sized,” “private,” “industrial,” and “from Jiangsu.”
Among the 81 companies that made their debut on the Beijing Stock Exchange, 41 are mid-sized, 22 are small, and 18 are large, with mid-sized offices constituting the majority of listed entities. Xin’an Jie employs 13,648 people, making it the largest employer on the exchange, while Qudongli has just 62 employees, the smallest workforce among all listed companies. The average number of employees across the 81 offices is 791, with a median of 409. In terms of corporate ownership, the portfolio includes one central state-owned enterprise, one foreign-invested company, three public companies, seven local state-owned enterprises, and 69 private offices. By industry classification (Wind Industry Classification), the 81 listed companies comprise 10 healthcare offices, 22 information technology offices, 3 consumer staples offices, 9 consumer discretionary offices, 2 utility offices, 25 industrial offices, and 10 materials offices.
Risk Factors: The pandemic’s impact exceeds expectations; industry regulatory policies tighten further; policy developments fall short of expectations; the U.S.-China trade war continues to escalate; listed companies’ earnings growth disappoints; risks associated with a sustained deterioration in domestic and global economic conditions; and systemic risks in both domestic and international markets.

Commercial & Corporate
Coal supply and demand tensions have eased, and coal prices have returned to a more rational level.
Looking ahead to next year, we expect China’s export growth to moderate as the impact of the COVID‑19 pandemic on global supply chains gradually diminishes. Coupled with subdued downstream real estate demand for steel and construction materials, we anticipate a slowdown in the growth rate of coal demand. On the supply side, with accelerated capacity additions and improving import conditions, coal supply is likely to become further optimized. Overall, we believe that coal supply and demand in 2022 will see a marked improvement, and the center of coal prices may return to a more reasonable range.
Coal demand growth is moderating. CICC’s macro team projects that real GDP growth in 2022 will be around +5.3%, a deceleration from this year. Meanwhile, the power team forecasts that coal‑fired power generation growth will ease to roughly +3.0% year over year next year. Taking into account the slowdown in coal‑fired power demand and the ongoing downturn in the property sector, which is weighing on coal consumption in the steel and construction materials sectors, we expect commercial coal consumption to register modest growth next year, with the pace of expansion easing.
Coal supply has improved. From January to October, national raw coal production totaled 3.297 billion tonnes, up 4.0% year on year. With the production‑expansion and supply‑guarantee policies implemented since the second half of this year gradually taking effect, newly added coal capacity is being brought online at an accelerated pace, and we expect raw coal output to rise further next year. Cumulative coal imports for the first ten months reached 257 million tonnes, up 1.9% year on year. We believe coal imports are likely to improve, but rising import‑coal costs will likely cap any substantial increase in import volumes.
In the short term, coal prices are likely to remain relatively high, but we expect them to gradually return to more rational levels next year. With the onset of the peak coal‑consumption season and the likelihood—given that this year may be a “double La Niña year”—of cooler-than‑average weather, we anticipate stronger coal demand from downstream power plants. On the other hand, declining output in the steel and cement sectors is expected to moderate the pace of growth in coal demand. Meanwhile, as policies aimed at boosting production and ensuring supply take effect, coal output is poised to rise further. We believe the coal supply‑demand balance should improve this winter and next spring, suggesting that coal prices could ease further; however, in the near term, they may still remain above historical levels for this time of year. Looking ahead to 2022, with slower growth in coal‑fired power generation and potentially weaker demand from the steel and cement industries, we expect coal prices to revert to more sustainable, rational levels.
Coking coal prices have moved lower. Looking ahead to 2022, we expect construction‑related steel demand to remain subdued, while manufacturing‑related steel demand is likely to stay robust. However, given the ongoing downturn in the real estate sector, steel mills’ profitability faces downward pressure, limiting upward momentum for coking coal prices. Moreover, with coking coal imports expected to improve moderately in 2022, we anticipate a gradual rebalancing of supply and demand next year, leading to a modest decline in the coking coal price center compared with this year.
Coal supply has been released more than expected, while demand has declined more sharply than anticipated, leading to a sharper-than-expected drop in coal prices.

Traditional Chinese Medicine formula granules have entered the “filing‑based” era: the industry welcomes new regulations, and companies are swiftly making strategic arrangements.

This month, after more than two decades of pilot programs, Chinese medicinal formula granules have officially transitioned to a filing‑based regulatory system. At the same time, the National Health Commission and the State Administration of Traditional Chinese Medicine jointly issued the “Notice on Standardizing the Clinical Use of Chinese Medicinal Formula Granules in Medical Institutions” (hereinafter referred to as the “Notice”), which clarifies the requirements for sales venues of these products—marking another landmark document following the conclusion of the pilot phase.
According to data from the Ministry of Industry and Information Technology, the Chinese medicine formula granules market was valued at approximately RMB 50.3 billion in 2019 and about RMB 53.3 billion in 2020. With the pilot program now concluded and new policies being rolled out, the competitive landscape is beginning to shift, attracting more players to enter the market. Data show that nearly 80 companies nationwide have previously obtained pilot qualifications for producing Chinese medicine formula granules. Industry analysts project that the market could eventually exceed RMB 100 billion in size.
The pilot program for formulated granules has concluded, and the new policy is driving rapid industry growth.
Chinese herbal formula granules are granulated preparations derived from single‑herb decoction pieces through extraction and concentration, intended for use in traditional Chinese medicine clinical prescriptions. In the early 1990s, Jiangyin Tianjiang Pharmaceutical Factory in Jiangsu Province pioneered the development of single‑herb formula granules. In 2001, the Interim Provisions on the Administration of Chinese Herbal Formula Granules were issued, bringing these products under the regulatory framework for Chinese medicinal decoction pieces and subjecting them to approval‑number management. Subsequently, six enterprises—Guangdong Yifang Pharmaceutical, Jiangyin Tianjiang Pharmaceutical, Guangdong Sanjiu Pharmaceutical, Sichuan New Green Pharmaceutical, Beijing Kangrentang Pharmaceutical, and Peili (Nanning) Pharmaceutical—were designated as national pilot manufacturers of Chinese herbal formula granules. In 2015, the Measures for the Administration of Chinese Herbal Formula Granules (Draft for Public Comment) was released, proposing to relax restrictions on pilot production. Following this policy change, in addition to the aforementioned six national pilot companies, more than 60 locally registered pilot enterprises across provinces and municipalities nationwide emerged, with the number of distinct types of Chinese herbal formula granules used in clinical practice reaching approximately 700.
In February this year, the National Medical Products Administration and three other departments jointly issued the “Notice on Ending the Pilot Program for Traditional Chinese Medicine Granule Formulas,” stipulating that the pilot program would conclude on November 1 of this year. The notice also brought TCM granule formulas under the regulatory framework for TCM decoction pieces and placed them under a filing‑based management system. As a result, production of TCM granule formulas has been opened to qualified enterprises beyond the original provincial pilot operators, and companies are now permitted to sell across provinces after completing the required filing. With TCM granule formulas increasingly replacing traditional TCM decoction pieces, industry analysts anticipate the emergence of a market worth hundreds of billions of yuan, attracting more players to seize the window of opportunity created by the new policy and rapidly expand their presence in the TCM granule formula sector.
On November 16, the National Health Commission and the State Administration of Traditional Chinese Medicine jointly issued the aforementioned Notice, which stipulates that sales outlets for TCM formula granules must be medical institutions approved or filed to provide TCM services. These institutions are required to establish a prescription review system for TCM formula granules and promptly report any suspected adverse reactions, thereby promoting the standardized and rational use of such products. Furthermore, only physicians authorized to prescribe TCM decoction pieces and rural health workers may issue prescriptions for TCM formula granules; before doing so, physicians must inform patients, ensuring their rights to informed consent and freedom of choice.
The leading‑company sector is posting earnings growth, while new entrants are poised to make their move.
As among the earliest entrants, the six national‑level pilot enterprises command more than 80% of the market. Notably, China National Medicinal Herbs Co., Ltd., through its acquisitions of Guangdong Yifang Pharmaceutical and Tianjiang Pharmaceutical—both national‑level pilot companies—quickly ascended to the industry’s leading position, officely holding the top tier and capturing over half of the market share. Among the provincial‑level pilot offices, Chengtian Jinling Pharmaceutical, Zhonglian Pharmaceutical, Shuanglanxing Pharmaceutical, and Sanqiang Modern Chinese Medicine are all subsidiaries or equity‑participated companies of China National Medicinal Herbs Co., Ltd.
According to the 2021 interim report of China National Medicinal Herbs, the company recorded revenue of RMB 8.149 billion in the first half of this year, up 22.4% year on year. Among these, revenue from traditional Chinese medicine (TCM) granular formulas reached RMB 5.321 billion, a year-on-year increase of 16.4%, accounting for 65.3% of total revenue. China National Medicinal Herbs stated that since 2017, the company has positioned TCM granular formulas at its core, proactively laid out and developed upstream, midstream, and downstream segments of the TCM industry chain, and adopted an industrial group model to establish operations across key regions nationwide. As a result, economies of scale have gradually emerged: between 2017 and 2020, the number of provinces and municipalities covered by TCM granular formulas expanded from 10 to 22, and the company now has 17 subsidiaries aligned with the new policies governing TCM granular formulas. In terms of production capacity, the company’s annual extraction capacity for granular formulas stands at 50,000 tons, while its formulation capacity exceeds 150 million tons per year.
The second-tier players in the traditional Chinese medicine (TCM) granule market include listed companies such as Hongri Pharmaceutical, China Resources Sanjiu, and Shenwei Pharmaceutical. Beijing Kangrentang Pharmaceutical, a subsidiary of Hongri Pharmaceutical, is also one of the six national pilot enterprises. To date, it offers more than 600 TCM granule varieties, covering virtually all the most frequently used formulations in clinical practice. The company has established a full‑process traceability system, enabling end-to-end traceability for its entire product line. Products from several subsidiaries, including Henan Kangrentang, Chongqing Kangrentang, and Hubei Chenmei, have been filed with provincial drug regulatory authorities and have obtained the necessary sales licenses for TCM granules. In the first half of this year, the company’s TCM granules and decoction pieces generated revenue of RMB 1.8 billion, up 49.56% year over year.
China Resources Sanjiu currently produces over 600 varieties of single-herb formula granules. In its 2021 interim report, the company noted that its traditional Chinese medicine formula granule business has grown rapidly, contributing to the company’s overall performance.
However, among the provincial pilot enterprises, relatively few have actually entered full-scale production; a representative example is Shenwei Pharmaceutical. Benefiting from Hebei Province’s medical insurance policies, Shenwei Pharmaceutical’s traditional Chinese medicine (TCM) granule business has grown rapidly, capturing half of the province’s market share. In the first three quarters of this year, TCM granules—Shenwei Pharmaceutical’s top‑selling product—generated revenue of RMB 501 million, up 22.2% year over year. The company aims to become one of the nation’s leading suppliers of TCM granules by 2024.

Coal Mining Industry Strategy: Seeking Balance After Waves of Ups and Downs, with Value Reassessment Amid Energy Transition
The 2021 coal market is destined to go down in history. Initially, as demand expanded while supply remained constrained, coal prices surged relentlessly, breaking through the RMB 2,500 per ton mark. Subsequently, with the continuous strengthening of supply‑guarantee policies, prices were brought under control, and the market returned to a more rational trajectory. Year-to-date, the coal sector has posted a cumulative gain of 38.4%, outpacing the CSI 300 Index by 44.4 percentage points and ranking fourth among industries (according to CITIC) in terms of performance.
Several developments are shaping the coal market. First, policy adjustments have led to a V‑shaped rebound in production, underscoring that, as China’s foundational energy source, coal remains heavily influenced by government policies—what is lacking is not production capacity per se, but legally compliant and efficient capacity. Second, during the early stages of the energy transition, the continued reliance on outdated, high‑carbon‑intensity energy sources, coupled with the rapid expansion of new, electricity‑intensive industries, has been the primary driver of electricity demand exceeding expectations—and this trend is likely to persist in the near term. Third, to ensure the stability of China’s energy supply, the country aims to achieve 100% coverage of long‑term coal‑power contracts and plans to establish a long‑term coal pricing mechanism based on a “benchmark price plus upward and downward adjustments.”
Thermal Coal: Policy Pressures Curb Coal Supercycle; Prices Return to Rationality. At present, the coal market faces considerable uncertainty, with policy exerting a profound influence on the supply side and playing a decisive role in shaping market trends. Historically, regulatory authorities have pursued multi‑objective policies for the coal sector—balancing electricity‑utility cost pressures with coal‑company profitability, accommodating declining aggregate demand while supporting industry transformation, and aligning with carbon‑peak goals while managing high‑energy‑consumption industries. Based on an analysis of supply‑demand balance sheets and policy guidance, we expect thermal coal supply and demand to remain broadly balanced in 2022, with prices following seasonal fluctuations and generally trending lower first before rebounding (with a bottoming out in the first half), centered around RMB 800 per tonne.
Coking Coal: Supply‑demand tensions are easing, with imports remaining a key variable. The period of most acute supply‑demand imbalance has passed, and the supply gap is being further closed; coking coal prices have recently shown a rapid downward correction. In the short term, as end‑use demand across the black‑metals value chain picks up, coking coal demand should rebound, and prices may once again strengthen due to relatively tight supply. Looking ahead to 2022, based on our assessment of the supply‑demand balance, there is room for supply growth—though close attention must be paid to the resumption of Mongolian and Australian coal imports; a significant recovery in either source could deliver a substantial shock to supply. Demand is expected to remain broadly stable, making it unlikely that coking coal prices will replicate this year’s sharp rally. At the same time, long‑term contract pricing will continue to provide solid support, limiting downside risk, so overall price movements are likely to be volatile. We forecast the benchmark coking coal price at Jingtang Port to hover between RMB 2,200 and RMB 2,500 per tonne, slightly below this year’s level.
Investment strategy: Stick to core assets, favor valuation recovery in coal companies with a high proportion of long-term contracts and strong dividend payouts, and highlight the following:
China Shenhua, Shaanxi Coal Industry, Yanzhou Coal Mining, and Pingmei Share. Under the “dual carbon” goals, the transformation of traditional energy companies is promising; key stocks to watch include Huayang Shares (energy storage), Yanzhou Coal Mining (modern coal chemical industry), Meijin Energy (hydrogen energy), China Xuyang Group (hydrogen energy), and DianTou Energy (wind and solar). We are also actively positioning ourselves in Shanxi’s state‑owned enterprise reform, with particular recommendations for Jinkong Coal Industry and Shanxi Coking Coal, both of which have expectations of asset injections.
Risk Warning: Production ramp-up at under-construction mines exceeds expectations, demand declines more sharply than anticipated, feed-in tariffs are significantly reduced, and import restrictions on Australian coal are eased.

E-cigarettes shall be regulated in accordance with the provisions governing traditional cigarettes: lawful oversight is an inevitable trend.

　According to a report on the 26th from the Chinese Government Website, the State Council has issued a decision to amend the Regulations for the Implementation of the Tobacco Monopoly Law of the People’s Republic of China (hereinafter referred to as the “Regulations”). The Regulations have added a new Article 65, which states: “Electronic cigarettes and other new tobacco products shall be governed by the relevant provisions of these Regulations applicable to conventional cigarettes.”
This move signifies that the entire e‑cigarette industry has officially been brought under tobacco regulatory oversight, ensuring that its future development will be guided by clear legal frameworks. For companies operating in the e‑cigarette and related sectors, a long‑standing source of uncertainty has finally been resolved; the granting of legal status to e‑cigarettes has enabled industry players to more clearly define their strategic direction going forward.
Regulation in accordance with the law is an inevitable trend.
As a “harm-reduction” product, e-cigarettes are far from harmless and contain nicotine, which has inevitably made them the subject of considerable controversy. As a relatively new type of tobacco product, they have long operated in a state of unregulated growth, and consumer complaints about e-cigarette products have remained persistent.
On March 22 this year, the Ministry of Industry and Information Technology launched a public consultation on the “Decision on Amending the Regulations for the Implementation of the Tobacco Monopoly Law of the People’s Republic of China (Draft for Comments),” since which various speculative reports about “strict regulation” or even a ban on e-cigarettes have been circulating within the industry.
The recent amendment and formal adoption of the Regulations have brought a sigh of relief to the e‑cigarette industry. With e‑cigarettes now brought under the tobacco regulatory framework, they have been officially recognized at the national legal level, marking a significant milestone in the development of China’s e‑cigarette sector.
In fact, from an international perspective, the rule of law is the overarching trend in the future regulation of e‑cigarettes. In mid-October, the U.S. Food and Drug Administration (FDA) granted, for the first time in its history, authorization for e‑cigarette products to be legally sold in the U.S. market. Meanwhile, New Zealand has long aimed to become a smoke-free nation by 2025; to this end, its government has put forward a series of proposals, including recognizing e‑cigarettes as smoking‑cessation aids and formally acknowledging their status.
Flexible management fosters innovation.
It is worth noting that the amendments to the Regulations concerning e-cigarettes add only one provision: “E‑cigarettes and other new‑type tobacco products shall be governed by the relevant provisions of these Regulations applicable to conventional cigarettes.”
Notably, the term “reference” has drawn considerable attention and interpretation. Unlike “in accordance with,” “reference” implies drawing on or emulating, rather than exact conformity. This approach also indicates that regulatory authorities have not adopted a one-size-fits-all regulatory stance toward e‑cigarettes, but instead have left room for flexibility, taking a nimble and adaptive management approach to emerging innovations.
On November 25, the website of the State Tobacco Monopoly Administration issued the “Notice on Issuing the Implementation Plan for Deepening the ‘Separation of Licenses and Permits’ Reform to Further Stimulate the Vitality of Market Entities,” which stipulates: “Adopt a tolerant yet prudent regulatory approach toward new technologies, new industries, new business forms, and new models; tailor regulatory frameworks to specific circumstances; and, in accordance with the law, impose lighter, reduced, or exempt administrative penalties for minor violations.” This also underscores the regulatory authorities’ degree of tolerance toward emerging business models, exemplified by e‑cigarettes.
With sufficient policy leeway in place, the detailed regulations governing e‑cigarettes will continue to be refined. This inclusive approach toward emerging business models and new vaping technologies will foster a healthy ecosystem for industry development, further stimulate corporate innovation, and drive the market’s rapid and orderly growth.
Leading companies take the lead.
Following the release of the Regulations, requirements regarding e‑cigarette market access, production standards, and sales channels have been tightened. Although the national standard for e‑cigarettes has not yet been officially published, once it is, the industry will shift from its previous chaotic, unregulated growth to a framework of stringent, high‑level standards. This transition will bolster the advantages and competitiveness of companies that adhere to regulations and possess robust technological expertise.
Following the release of the revised Regulations, RELX promptly issued a statement saying, “As an industry participant in the e‑cigarette sector, we officely support the amendment to the Regulations. Moving forward, we will proactively implement regulatory requirements, continue to increase R&D investment, deliver high‑quality products to our users, earnestly fulfill our social responsibilities, and strive to contribute to the industry’s long-term, healthy development and to society at large.”
On the other hand, market‑based resource allocation will continue to play a significant role in the future, and the e‑cigarette industry will gradually transition to a path of standardized development under robust regulation. With stricter oversight in areas such as youth protection, product quality and safety, and consumer rights, the sector’s innovation capacity and growth potential will be further unlocked.

Taxation TAXATATION
Big Data Takes the Lead: China’s Tax-Related Business Environment Continues to Improve
In recent years, China’s tax authorities have vigorously advanced the development of “smart taxation,” implementing a range of measures to ensure that tax and fee reduction policies are fully and effectively put into practice, thereby delivering tangible financial benefits to businesses and the public.
Recently, the General Office of the State Council commended 48 exemplary practices identified during the State Council’s eighth large-scale inspection. Among them, Beijing’s initiative to build a “smart tax” system that facilitates the effective implementation of policies benefiting businesses and the public, Shanxi Province’s efforts to promote social insurance data sharing to enhance payment convenience, and Dandong City in Liaoning Province’s development of a unified tax service platform—“one core” driving the coordinated growth of small, medium, and micro enterprises—highlight the tax authorities’ achievements in delivering tax and fee reductions and optimizing the tax-related business environment.
In Beijing, in line with the State Taxation Administration’s directives, the tax authorities have been steadily advancing the development of “smart taxation,” fully implementing automated VAT refunds, intelligent income‑tax final settlement, integrated financial and tax filing, and streamlined social security contribution collection. These measures have effectively enabled taxpayers to promptly and directly access a range of policies designed to benefit businesses and the public.
In recent years, Beijing’s tax authorities have continuously upgraded their service measures, transforming the VAT refund process from manual review to a “system‑automated identification plus robotic cloud processing” model, thereby achieving “automatic initiation, automatic review, and automatic crediting.” According to reports, the time required for VAT credit refunds in Beijing has been reduced from eight hours to under one hour. Since the beginning of this year, 1,455 taxpayers have benefited from VAT credit refunds totaling RMB 13.69 billion.
The reporter learned that Beijing’s tax authorities have implemented a “ten‑taxs‑in‑one” filing system for financial and administrative taxes, unifying the submission portal and streamlining and consolidating forms. From June to September this year, the initiative was rolled out citywide to 288,000 taxpayer instances, involving tax liabilities totaling RMB 12.25 billion. In addition, leveraging an interdepartmental joint‑handling platform for real estate transactions, they developed and launched an intelligent tax‑calculation feature for existing‑home sales, enabling the review process to be completed within two minutes and issuing tax payment certificates instantly, thereby reducing the average processing time by 95%.
Meanwhile, Beijing’s tax authorities, in collaboration with the human resources and social security, medical insurance, and commercial banking sectors, have actively expanded three channels for social security contributions—online services, mobile app-based processing, and one-stop in‑person service—thereby diversifying contribution options and enabling rapid access to payment conofficeations. According to data, from January to September this year, a total of RMB 348.1 billion in contributions was collected on behalf of 660,000 enterprises, 8,200 government agencies and public institutions, 700,000 individuals in flexible employment, and 4 million urban and rural residents.
In Shanxi Province, the tax authorities have continued to deepen the “delegation, regulation, and service” reform in the tax sector, proactively exploring convenient service models. Guided by the bottlenecks and pain points experienced by taxpayers, they have collaborated with the Provincial Department of Human Resources and Social Security, the Medical Insurance Bureau, and the Taiyuan Central Branch of the People’s Bank of China, among other agencies, to promote data sharing on social insurance contributions. This effort has enhanced the effectiveness, accuracy, security, and controllability of data, enabling big‑data‑driven social insurance systems to lead the way in achieving “zero in‑person visits” for payment procedures, thereby continuously boosting taxpayer satisfaction and a sense of gain.
The Shanxi Provincial Tax Service Bureau has innovated its data‑exchange mechanisms, reducing intermediate transmission steps and shifting from passive delivery to proactive receipt. This enables real-time interconnection among multi‑platform databases across departments, cutting the time required for each data transfer per taxpayer to just five minutes. As a result, taxpayers can now complete their transactions in real time rather than on the same day, effectively addressing the longstanding issues of slow data transmission and low efficiency in the social security fee information system.
To enhance convenience for taxpayers and payers, the Shanxi Provincial Tax Service Bureau has expanded its data‑driven application framework, replacing manual in-person visits with data‑based verification. It has established a social security‑related data‑matching mechanism based on bank transaction records and tax collection data, shifting from front‑office manual review to back‑office data comparison. This has significantly reduced the number of trips taxpayers must make between agencies, enabling those handling special‑case payments to move from the previous “at most one visit” requirement to “no visits required at all,” benefiting 25,000 taxpayer entities across the province.
Small, medium, and micro enterprises are pivotal to the vitality and long-term momentum of economic development. How can we ensure that a single initiative sets in motion the broader strategy of fostering their growth?
In Dandong City, Liaoning Province, the tax authorities have leveraged cutting-edge technologies such as 5G and big data to develop the “Yunshuitong” smart service platform, helping small, medium, and micro enterprises overcome challenges, bottlenecks, and pain points in tax filing and payment, thereby delivering a new experience for taxpayers and payers.
According to reports, the “Yunshuitong” smart service platform offers one-click access, instant processing, and intelligent notifications. With registered users covering more than 90% of the city’s small, medium, and micro enterprises, 96% of tax and fee-related services can now be handled remotely. Taxpayers can complete tax procedures with a single click—without any in-person interaction—via mobile or desktop devices. Meanwhile, a team of tax experts provides real-time online consultations, enabling taxpayers to handle all tax and payment matters entirely online, without ever having to visit a tax office in person.
“Yunshuitong” bridges the “last mile” in serving businesses. Tailored to the specific needs of small, medium, and micro enterprises, the platform adopts a “one‑enterprise‑one‑policy” approach. By extracting and analyzing these companies’ filing data, it precisely assesses their working‑capital requirements, providing customized data support to accelerate the conversion of tax credit into tangible financial resources. According to available data, since 2020, through this platform, the tax authorities have served a total of 396 small, medium, and micro enterprises across the city, as well as taxpayers in four sectors particularly hard hit by the pandemic, helping them secure RMB 2.387 billion in credit financing and effectively alleviating their financing challenges.

Phased tax payment deferral measures provide “precision‑targeted support” to small and medium‑sized manufacturing enterprises.
Manufacturing is the foundation of the real economy, and small, medium, and micro enterprises, along with individual business households, constitute an essential part of the market landscape. Since the beginning of this year, rising commodity prices have increased production costs for manufacturing offices, placing significant pressure on their development—particularly for small, medium, and micro enterprises, which generally possess relatively weaker risk‑management capabilities.
To ease the cash-flow pressures faced by enterprises and help them overcome difficulties, thereby stabilizing employment and the economy, the State Council Executive Meeting held recently announced a package of temporary tax‑payment deferral measures for small, medium and micro manufacturing offices. The tax deferrals will take effect on November 1 this year and remain in place through the end of the January filing period next year, with an estimated total relief of approximately RMB 200 billion for these enterprises.
As the tax‑deferral policy is progressively implemented, numerous market entities across the country have reaped tangible fiscal benefits. Experts told People’s Daily Online that deferring tax payments helps alleviate the financial burdens faced by enterprises during their transformation, thereby supporting them in overcoming difficulties.
Policy benefits are “precisely” targeted at small and medium-sized manufacturing enterprises.
On the evening of October 29, the State Taxation Administration and the Ministry of Finance jointly issued the “Announcement on Matters Relating to the Deferral of Payment of Certain Taxes and Fees for Small, Medium, and Micro Enterprises in the Manufacturing Sector for the Fourth Quarter of 2021” (hereinafter referred to as the “Announcement”), which clarifies the scope, criteria, and other policy details of the tax deferral measures.
According to the announcement, small and medium-sized manufacturing enterprises with annual sales of less than RMB 400 million will be granted a deferral of five taxes and two fees for the fourth quarter. Specifically, those with annual sales between RMB 20 million and RMB 400 million will have half of their taxes and fees deferred, while those with annual sales below RMB 20 million will receive a full deferral.
Specifically, the deferral of five taxes and two fees covers corporate income tax, individual income tax (excluding withholding and remittance), domestic value-added tax, domestic consumption tax, as well as the associated urban maintenance and construction tax, education surcharge, and local education surcharge—essentially encompassing the major taxes and levies paid by enterprises.
The State Council estimates that this measure will enable small and medium-sized manufacturing enterprises to defer tax and fee payments totaling more than 200 billion yuan. Recently, Wang Daoshu, Deputy Director of the State Taxation Administration, stated at the State Council’s regular policy briefing that, as of November 4, a total of 6.21 billion yuan in deferred taxes had been processed for eligible enterprises, effectively easing their financial pressures and operational challenges.
The reporter learned that, in addition to implementing a temporary tax deferral policy for small and medium-sized manufacturing enterprises, the tax authorities are providing monthly full refunds of the incremental input VAT credit to advanced manufacturing offices, while refunding 60% of the incremental input VAT credit to other manufacturing enterprises.
Data show that in the first three quarters of this year, tax authorities processed additional tax credit refunds totaling RMB 91.7 billion for 22,400 manufacturing enterprises, including RMB 42 billion in refunds for 11,600 advanced manufacturing offices, thereby further bolstering the development of the manufacturing sector.
Phased tax deferral measures are giving market entities a much-needed boost.
“For small and micro manufacturing enterprises like ours, with annual sales revenue below RMB 20 million, we can defer payment of most taxes for the fourth quarter—effectively gaining a short-term, interest-free loan that helps us address some of our funding challenges,” said Chen Jingui, legal representative of Weishiken (Xiamen) Intelligent Technology Co., Ltd. According to reports, the newly introduced temporary tax deferral measures for small and micro manufacturing enterprises are expected to benefit 41,000 such businesses across Xiamen, including more than 38,000 small and micro enterprises.
In Guangdong, Zhongshan Kaiwo Energy HVAC Co., Ltd. is a medium-sized high-tech manufacturing enterprise with annual sales of approximately RMB 48 million. Affected by rising raw material prices and other factors, the company’s operating costs have increased, posing significant challenges to its development.
“This year, the state has introduced a series of tax‑benefit policies one after another. We only filed for the enhanced deduction of R&D expenses for the first three quarters in October, and now, in the fourth quarter, tax and fee payments have been halved and deferred, with an estimated deferral of 900,000 yuan in taxes.” According to the company’s head, these tax‑deferral measures not only help ease the office’s cash‑flow pressures but also enable it to reinvest those funds into R&D for household heating equipment, opening up new markets.
In Hebei Province, Qinhuangdao Hecheng Nickel Industry Co., Ltd. is a medium-sized manufacturing enterprise with 93 employees and annual sales exceeding RMB 87 million. “Affected by the pandemic, the prices of raw materials such as iron, nickel, and copper have risen by 300% to 400%, while labor and processing costs have increased by 20% to 30%. In 2020, the company’s profit was only RMB 720,000, and manufacturing offices across the board are grappling with severe cash-flow constraints. At the same time, driven by carbon‑neutrality goals, market demands for environmentally friendly product quality have become more stringent, placing significant pressure on companies to upgrade their offerings.” According to the company’s chief financial officer, under the new policy, the office will be eligible for tax deferrals totaling approximately RMB 270,000 in the fourth quarter, helping to ease its year‑end cash‑flow squeeze. The company plans to use these funds to pre‑purchase a new boiler system that enhances environmental performance and energy efficiency, thereby further improving product quality.
Li Xuhong, Director of the Institute for Fiscal and Taxation Policy and Application at the National Accounting Institute in Beijing, told a People’s Daily reporter that this broad tax‑deferral policy, which covers small and micro enterprises as well as medium-sized offices, will, on the one hand, help ease liquidity pressures and enable small, medium, and micro businesses to weather the current challenges; on the other hand, it will contribute to stabilizing market expectations. By sending positive signals to the market, the policy—akin to a short‑term interest‑free loan—encourages business development and boosts corporate innovation.
 
China has achieved remarkable results in optimizing its tax-related business environment.
According to the State Taxation Administration, the Secretariat of the Belt and Road Tax Administration Cooperation Mechanism recently released the “Research Report on the Reform and Development of China’s Tax Business Environment (2016–2020)” (hereinafter referred to as the “Report”). The Report focuses on the reform and development of China’s tax business environment, comprehensively and systematically outlining China’s measures and achievements in optimizing the tax business environment across five key areas: tax rule of law, streamlining administration and facilitating taxpayers, tax and fee reductions, service improvement, and openness and data sharing.
In recent years, China’s tax authorities have fully implemented the decisions and arrangements for optimizing the business environment. From 2016 to 2020, the nationwide cumulative scale of tax and fee reductions exceeded RMB 7.6 trillion, with the benefits of these policies continuing to be realized.
The Report notes that China has been advancing the integrated development of a law-based state, a law-based government, and a law-based society, with tax legislation entering a “fast track.” From 2016 to 2020, eight tax-related regulations were revised and elevated to the status of laws. Upholding the principle of tax legality, China’s tax authorities have continuously refined the legal framework for taxation, strengthened its institutional foundations, and enhanced the standardization of tax enforcement, thereby providing robust safeguards for fostering a law-based business environment in the tax sector.
The report shows that China’s tax authorities, through a series of measures to streamline administration and improve convenience—such as abolishing tax‑approval requirements, simplifying the submission of tax‑related documents, and strengthening inter‑agency coordination—have maximized market vitality. From 2016 to 2020, tax‑administrative approval items were reduced by 93%, taxpayer reporting requirements were cut by 50%, annual tax compliance time was shortened by more than 57.5%, and the processing time for export tax refunds was compressed to within eight working days, leading to steadily increasing satisfaction and a stronger sense of gain among market entities.
The Report notes that China’s tax authorities have engaged deeply in global tax governance, continuously enhancing international tax cooperation by establishing mechanisms such as the Belt and Road Tax Administration Cooperation Mechanism and the BRICS Tax Cooperation Mechanism. They have also actively participated in international tax information exchange frameworks, thereby fostering an internationally aligned tax business environment. From 2016 to 2020, China’s tax authorities conducted 500 bilateral consultations with the tax authorities of relevant countries and regions, helping cross-border enterprises avoid double taxation totaling RMB 15.2 billion.
The Report states that, in accordance with the “Opinions on Further Deepening Tax Collection and Administration Reform” issued by the Chinese government in March this year, China’s tax authorities will continue to refine enforcement approaches, leverage digital tools to enhance tax governance, harness intelligent technologies to improve taxpayer services, and establish collaborative mechanisms to shape a new development paradigm, thereby contributing more Chinese experience to optimizing the tax-related business environment.
A relevant official from the Secretariat of the Belt and Road Tax Administration Cooperation Mechanism stated that the mechanism will continue to facilitate and showcase the exchange of views and the sharing of experiences among Council members, observers, and other stakeholders, thereby providing valuable reference for other countries and regions in improving their tax environments.

Expanding the Scope of Tax Credit Remediation, Effective January 1, 2022
The State Taxation Administration has issued the “Announcement on Matters Relating to Tax Credit Evaluation and Remediation” (hereinafter referred to as the “Announcement”), expanding the scope of tax credit remediation and providing support for enterprises undergoing bankruptcy reorganization to restore their tax credit standing.
The Notice clarifies that taxpayers who meet any of the following conditions may apply to the competent tax authority for tax credit restoration:
First, where the bankrupt enterprise or its administrator has, in the course of reorganization or conciliation proceedings, duly paid all taxes, late payment penalties, and fines, and has rectified any related breaches of tax credit integrity.
Second, taxpayers who have been designated as major tax law-violating and untrustworthy entities and whose tax credit rating has been directly assigned Grade D, and whose untrustworthy entity information has, in accordance with relevant regulations of the State Taxation Administration, either not been made public or has ceased to be published, and who have no new records of tax‑credit‑related untrustworthiness for the continuous 12 months preceding the application.
Third, taxpayers whose tax credit rating is Class D and who are registered or managed by the directly responsible personnel of a Class D taxpayer, and whose associated tax credit assessment is also Class D, must have no new records of tax‑credit‑related breaches for the six consecutive months immediately preceding the application.
Fourth, taxpayers whose tax credit rating has been directly assigned to Grade D due to other acts of untrustworthiness may apply for reclassification if they have rectified the relevant untrustworthy behavior, fulfilled their tax-related legal obligations, and have no new records of tax‑credit‑related untrustworthiness in the 12 consecutive months immediately preceding the application.
Fifth, taxpayers whose tax credit rating was directly assigned Grade D in the previous year and who continue to be rated Grade D this year—provided that they have rectified their tax‑credit‑related breaches, fulfilled their tax‑law obligations, or that information on the untrustworthy entity has been withheld or ceased to be disclosed in accordance with relevant regulations of the State Taxation Administration—and who have no new records of tax‑credit‑related breaches for the 12 consecutive months immediately preceding the application.
The reporter learned that, to help taxpayers better build up their tax credit, the State Taxation Administration issued as early as 2019 the “Announcement on Matters Relating to Tax Credit Restoration” (State Taxation Administration Announcement No. 37 of 2019, hereinafter referred to as the “Restoration Announcement”), which encourages and guides taxpayers to strengthen their awareness of lawful and honest tax compliance, proactively rectify behaviors that undermine tax integrity, and promptly mitigate any loss of credit. Building on this framework, the latest announcement further expands the scope of tax‑credit restoration, increases support for restoring the tax credit of enterprises undergoing bankruptcy reorganization, and effectively aligns tax‑credit evaluation with the “no penalty for first-time violations” policy, thereby helping to more effectively invigorate market entities.
It is worth noting that the tax credit restoration referred to in the Announcement pertains to the rectification of tax credit evaluation indicators and levels. Previously, the Restoration Announcement had already specified the corresponding conditions and standards for restoring tax credit for 19 types of misconduct that occur frequently but are minor in nature or have not caused serious social repercussions. Taxpayers at all credit levels who meet these criteria may submit an application for tax credit restoration, thereby promptly mitigating any damage to their credit standing.
On this basis, the Notice introduces new provisions for tax credit restoration applicable to entities with serious breaches of trust and those undergoing bankruptcy reorganization. Enterprises that meet any of the five circumstances set forth in the Notice—having rectified their tax‑credit‑related breaches, fulfilled their tax‑related legal obligations, or having had information on them as major tax law violators either not disclosed or no longer disclosed—and maintaining, for a period of six or twelve months, a record‑free status in the tax administration system with respect to any newly incurred tax‑credit‑related breaches may apply to the competent tax authority for tax‑credit restoration. Notably, the period during which no new tax‑credit‑related breaches have been recorded begins from the date the enterprise’s tax credit is directly assigned Grade D; should additional breaches subsequently arise after such an assignment, that period must be recalculated from the date of the new breach. For taxpayers who satisfy the conditions stipulated in the Restoration Notice, the restoration of their tax‑credit rating and the removal of their breaches shall continue to be governed by the relevant provisions.
It is reported that the Announcement shall take effect as of January 1, 2022. Article 6, item (10) of the “Announcement of the State Taxation Administration on Clarifying Certain Operational Guidelines for Taxpayer Credit Management” (No. 85 of 2015, as amended by No. 31 of 2018), together with the “Application Form for Taxpayer Credit Restoration” and the “Scope and Standards for Taxpayer Credit Restoration” attached to the “Announcement of the State Taxation Administration on Matters Relating to Taxpayer Credit Restoration” (No. 37 of 2019), are hereby repealed simultaneously.
 
Litigation & Arbitration
The Supreme People’s Procuratorate has issued 21 measures to support and safeguard the development of the Hainan Free Trade Port.
The Supreme People’s Procuratorate recently issued the “Opinions of the Supreme People’s Procuratorate on Providing Services and Guarantees for the Development of the Hainan Free Trade Port” (hereinafter referred to as the “Opinions”), which set forth 21 specific measures to fully leverage the procuratorial functions and provide high-quality legal services and robust judicial safeguards for building a high-standard free trade port with Chinese characteristics.
The Opinions emphasize the need to deeply appreciate the profound significance of building the Hainan Free Trade Port within the framework of a new, higher‑level open economy; to integrate it fully into major national strategies such as building China into a maritime power, advancing the Belt and Road Initiative, and promoting military‑civilian integration; to adhere to the overarching principle of seeking progress while maintaining stability; to uphold the new development philosophy; to pursue high‑quality development; and to liberate our minds, boldly innovate, take proactive action, and perform our duties in accordance with the law. It further calls for consciously aligning procuratorial work with the “two overarching contexts,” actively supporting the implementation of major national strategies, and providing robust legal safeguards for the construction of the Hainan Free Trade Port.
The Opinions stipulate that it is essential to clearly delineate the boundary between lawful financial innovation and financial crimes, and to impose legal penalties on all emerging forms of financial criminal activity that illegally exploit Hainan Free Trade Port’s financial policies—such as cross-border direct investment transactions, cross-border financing, and cross-border securities investment and financing. Furthermore, efforts to combat money laundering must be strengthened to ensure the effective implementation of policies promoting investment freedom and convenience in Hainan.
The Opinions emphasize the need to strengthen judicial protection of intellectual property, fully implement the practice of informing rights holders of their litigation rights and obligations in criminal cases involving IP infringement, and enhance the transparency of case handling. They also call for intensifying judicial protection of intellectual property in key industrial sectors—particularly those related to major national strategic needs, significant research projects, and critical core technologies—such as next-generation information technology, high-end manufacturing, intelligent manufacturing, the internet, biopharmaceuticals, marine science and technology, new energy, and new materials.
The “Opinions” stipulate that priority should be given to pressing public‑interest issues, and the scope of public‑interest litigation cases should be proactively yet prudently expanded. In response to salient problems in the fields of ecological environment and resource protection, specialized prosecutorial oversight campaigns on public‑interest litigation will be launched to foster innovation in the institutional mechanisms for ecological civilization and to support the development of the National Ecological Civilization Pilot Zone (Hainan). Efforts will also be made to establish an ecological cooperation mechanism among the procuratorial organs of Hainan, Guangdong, and Guangxi, working together to safeguard the ecological environment of the Qiongzhou Strait.
The Opinions emphasize the need to support Hainan’s procuratorial organs in advancing institutional and mechanism reforms that align with the principles of the judicial system and the specific requirements of procuratorial work, thereby fostering the development of the Hainan Free Trade Port. These reforms should be integrated, innovative, and coordinated for maximum efficiency. Systems and mechanisms for the management of procuratorial personnel, case administration, and the implementation of legal supervision—tailored to both judicial norms and the developmental imperatives of the Hainan Free Trade Port—should be established. Furthermore, proactive measures should be taken to build a national-level high‑caliber training center for procuratorial organs and a platform for international exchanges and advanced studies for prosecutors, while instituting a talent‑mobility and -development framework that ensures seamless vertical alignment and horizontal connectivity.
Going forward, the Supreme People’s Procuratorate will strengthen its overall oversight, coordination, and strategic guidance of procuratorial organs’ efforts to support and safeguard the development of the Hainan Free Trade Port. It will also bolster the capacity of Hainan’s procuratorial organs to deliver more targeted and effective services, ensuring that high‑quality supervision and case handling contribute to the port’s steady, sound, and sustainable economic and social development, thereby helping to forge a new pattern of reform and opening-up at a higher level.

Multiple departments held a seminar on the application of blockchain in the judicial field, along with a forum on the cutting edge of information technology and the rule of law, at the Supreme People’s Court.
On the afternoon of November 25, the “Seminar on the Application of Blockchain in the Judicial Field and the Forum on the Frontiers of Science and Technology in Information Technology and the Rule of Law,” jointly hosted by the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Science and Technology, the Ministry of Justice, the Chinese Academy of Sciences, and the Chinese Academy of Engineering, was held at the Supreme People’s Court. Zhou Qiang, Secretary of the Party Group and President of the Supreme People’s Court, attended the forum and delivered a speech. He stated that it is essential to adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guiding principle, thoroughly implement Xi Jinping Thought on the Rule of Law and General Secretary Xi Jinping’s important ideas on building a cyber power, earnestly carry out the spirit of the Sixth Plenary Session of the 19th CPC Central Committee, comprehensively deepen the development of smart courts, promote the integrated development of information technology and the rule of law, advance the building of a country under the rule of law and a science-and‑technology‑strong nation, and make new and greater contributions to the all‑round construction of a modern socialist country.
Zhou Qiang pointed out that the Party Central Committee with Comrade Xi Jinping at its core attaches great importance to the application and development of blockchain technology, and is actively advancing the building of a Digital China and a smart society. This forum, themed “Blockchain Applications in the Judicial Field,” has facilitated in-depth exchanges and discussions, making a valuable contribution to further promoting the use of blockchain in the judiciary. The Supreme People’s Court has seized the major opportunities presented by the drive to build a Digital China and a smart society, fully leveraging the leading role of scientific and technological innovation. With strong support from relevant departments, during the 13th Five-Year Plan period, it completed the Informationization 3.0 version of the people’s courts, establishing smart courts that enable online handling of all judicial matters, ensure lawful transparency throughout the entire process, and provide comprehensive intelligent services. During the 14th Five-Year Plan period, the people’s courts will remain committed to technology-driven development, taking the judicial data mid‑platform, the smart court brain, and the construction of online courts as key pillars to vigorously advance the Informationization 4.0 initiative. This will promote the intelligent operation of all stages—trial and enforcement, litigation services, and judicial administration—and foster the mutual reinforcement and iterative development of blockchain technology and judicial‑execution applications. The people’s courts will conduct in-depth research into the legal issues arising from advances in information technology, strengthen intellectual property protection in this field, and crack down rigorously on cybercrime. They will also intensify studies on the definition, attribution, and protection of data rights, thereby effectively fulfilling the judiciary’s crucial role in safeguarding innovation and supporting the development of information technology and the digital economy. By fully exercising their adjudicative functions, the courts will provide robust judicial support for achieving a high level of scientific and technological self-reliance and strength. Upholding openness and cooperation, the courts will further deepen judicial transparency, enhance communication and collaboration with relevant departments and research institutions, strengthen information sharing and inter‑agency coordination, and pool wisdom and resources to jointly advance the building of a law-based China and a science-and‑technology powerhouse.
Yang Linping, a member of the Party Leadership Group and Vice President of the Supreme People’s Court, presided over the opening ceremony of the forum.

Supreme People’s Court: Zero Tolerance! Resolutely Prevent the Problem of Refusing to File Cases at Year-End
It is reported that, since 2015, the people’s courts have comprehensively implemented the reform of the case filing and registration system, requiring all courts nationwide to accept every lawsuit that should be heard in accordance with the law and to adjudicate every claim filed.
In particular, since 2019, courts nationwide, guided by the development of a one-stop, multi‑channel dispute resolution and litigation service system, have deepened reforms to enable parties to file cases “on the spot, through self‑service, online, or at the nearest court,” achieving full coverage of cross‑jurisdictional filing services across all four levels of courts. The average on-the-spot case‑filing rate has exceeded 95.7%, with some local courts—such as those in Tianjin, Shanghai, Zhejiang, Fujian, Chongqing, and Yunnan—reporting on-the-spot filing rates surpassing 98%.
“Some courts continue to exhibit the year-end practice of refusing to accept case filings, a phenomenon that has persisted since late November and early December, seriously undermining the judiciary’s public image and running counter to the objectives of the reform to implement the case-filing registration system,” said Qian Xiaochen, Chief Judge of the Case Filing Division and Director of the Litigation Service Center of the Supreme People’s Court.
To prevent a resurgence of the “difficulty in filing cases” problem, the Supreme People’s Court has, through conducting surveys, convening meetings, and issuing official documents, scientifically designed performance‑evaluation indicators, strengthened sector‑specific guidance, and institutionalized the submission of work reports, thereby providing organizational safeguards for bolstering case‑filing oversight and enhancing the sense of urgency, self‑awareness, and proactiveness in addressing the issue of failing to file cases at year‑end.
To comprehensively monitor the year-end case filing situation across courts nationwide, the Supreme People’s Court has established a Case Filing Deviation Early‑Warning System, which features three alert levels. Leveraging big data analytics, the system sets reasonable monthly, weekly, and daily baseline case‑filing targets, providing a holistic view of fluctuations in case filings across the country. Through weekly early‑warning reports in October and daily reports in November and December, the system flags courts exhibiting abnormal trends or significant deviations in case filings, thereby cascading pressure at every level.
Qian Xiaochen stated that the People’s Courts have fully activated the 12368 litigation service hotline’s function for handling complaints and reports regarding cases not being filed. Local courts have established work ledgers, clearly designating responsible persons, specifying rectification requirements, and setting completion deadlines, thereby ensuring that every complaint or report is duly addressed and every matter receives a response. With respect to lawsuits that should be accepted in accordance with the law, the principle of “every case must be filed, every complaint must be processed” is strictly enforced. For courts found, upon investigation, to have particularly serious problems of refusing to file cases at year-end, a “one‑vote veto” will be imposed, disqualifying them from consideration for performance awards and commendations. For those courts with persistent, significant issues that remain unrectified, their principal leaders will be summoned for talks, and such cases will be publicly reported as typical examples of “failure to implement orders and disregard for prohibitions.”

Supreme People’s Procuratorate: The acceptance rate of sentencing recommendations is nearly 95%, and the system of leniency for those who plead guilty and accept punishment is advancing steadily and sustainably.
Recently, Zhang Jun, Procurator-General of the Supreme People’s Procuratorate, presided over a meeting of the Supreme People’s Procuratorate’s Prosecutorial Committee to deliberate and discuss the “Guiding Opinions on the Submission of Sentencing Recommendations in Cases Involving Plea Bargaining and Guilty Pleas” (hereinafter referred to as the “Opinions”) and the “Regulations on Synchronous Audio-Video Recording of Hearings in Cases Involving Plea Bargaining and Guilty Pleas” (hereinafter referred to as the “Regulations”).
During a briefing, an official from the relevant department of the Supreme People’s Procuratorate stated that since 2020, the application rate of the plea‑bargaining system with leniency has exceeded 85%, the adoption rate of sentencing recommendations has approached 95%, and fixed‑term sentencing proposals account for 73.5% of all such recommendations submitted by the procuratorial organs. Moreover, courts have adopted 96.3% of these fixed‑term sentencing proposals, demonstrating a continuous improvement in prosecutors’ sentencing expertise. The accumulation of practical experience, along with certain issues it has revealed, urgently calls for institutional safeguards and adjustments. Leaders of the Supreme People’s Procuratorate have explicitly emphasized the need to refine the mechanisms for formulating sentencing recommendations, standardize the procedures for their submission, and ensure that such recommendations are more precise and better aligned with the factual circumstances of each case. Furthermore, the drafting of the “Opinions” has been designated as a key component of the education and rectification campaign aimed at strengthening the institutional framework of the procuratorial workforce.
It is understood that the formulation of these Opinions drew extensively on the experience and achievements accumulated in recent years in the application of sentencing recommendations under the plea‑bargaining system, with extensive consultations conducted through thematic seminars, grassroots field investigations, and joint training sessions. After multiple rounds of revisions to refine the draft, prosecutors from procuratorates at all four levels were convened to deliberate and revise it article by article. Following the preparation of a consultation draft, opinions were further sought from relevant departments, culminating in the final “review draft.”
During the deliberations, participants unanimously agreed that, building on three years of practical experience, the Opinions provide targeted regulations addressing issues that require further clarification in practice, thereby fully reflecting the original intent of the law. This is of great significance for the procuratorial organs to better implement and enforce the system of leniency for those who plead guilty and accept punishment, and to more effectively put into practice the policy of combining leniency with strictness. It will further promote the rehabilitation of offenders, resolve social conflicts, and safeguard social harmony and stability.
During the discussion, participants, guided by the overarching goal of ensuring the sound and stable functioning of the system, reached a consensus on the “three benefits”: it safeguards the voluntariness, authenticity, and legality of guilty plea and sentencing; strengthens self‑supervision and standardizes prosecutorial case handling; and facilitates the smoother implementation of the lenient treatment system for those who plead guilty and accept punishment, thereby upholding judicial authority and public trust. At the meeting, attendees thoroughly expressed their views on the Regulations and put forward suggestions for further revision and improvement.

The Women’s Federation’s Rights and Interests Department has issued guidelines on collecting evidence for victims of domestic violence.

According to an official WeChat post by the All-China Women’s Federation on the 25th, the Anti‑Domestic Violence Law of the People’s Republic of China officially came into effect on March 1, 2016. The law defines domestic violence as physical or psychological abuse perpetrated among family members through means such as beating, binding, maiming, restricting personal freedom, or frequent verbal insults and intimidation. Under the Anti‑Domestic Violence Law, evidence plays a crucial role in establishing the occurrence of domestic violence or the existence of an imminent danger. To help victims develop awareness of the importance of evidence and safeguard their legitimate rights and interests in accordance with the law, the Rights Protection Department of the All‑China Women’s Federation has compiled the “Guidelines for Collecting Evidence in Cases of Domestic Violence.” The following are key points regarding evidence collection for victims of domestic violence:
Evidence proving the occurrence of domestic violence
1. Records of police dispatch, warning letters, and injury assessment reports, including: interrogation records of the victim and statements of the perpetrator prepared by the public security authorities following a police response; warning letters issued by the public security authorities to both the perpetrator and the victim; copies of administrative penalty decisions on public order management served on the victim after such decisions have been lawfully made; and injury assessment reports issued by the public security authorities after conducting an injury examination of the victim.
2. Records of reception and intake, mediation, and other related documents maintained by village (residents’) committees, women’s federations, anti‑domestic violence organizations, and the employers of both parties. If the victim has previously filed a complaint with any of these entities, they may apply to access and obtain the detailed records, or petition the court to subpoena the complaint records.
3. Medical records and receipts for medical expenses. When seeking medical care due to domestic violence, be sure to retain your medical records, receipts for treatment, and other relevant documentation.
4. Audio and video recordings of the perpetrator’s domestic violence. Provided that personal safety is ensured, one may record the perpetrator’s acts of domestic violence as they occur.
5. Photographs and videos of physical injuries and the scene of vandalism. Take photographs and videos of any physical injuries resulting from domestic violence, as well as of the scene of vandalism.
6. Letters of guarantee, letters of commitment, and letters of repentance. If the perpetrator demonstrates remorse, you may request that they draft a letter of guarantee or similar document, signing it with their name and the date.
7. Witness testimony and testimony from minor children. Please have neighbors, colleagues, minor children, or others who witnessed or heard about the domestic violence provide sworn statements.
8. The victim’s statement: the victim’s own account of experiencing domestic violence.
Evidence demonstrating an imminent risk of domestic violence
Article 23 of the Anti-Domestic Violence Law stipulates that if a party, having suffered domestic violence or facing an imminent risk of domestic violence, applies to the people’s court for a personal safety protection order, the people’s court shall accept the application.
If the perpetrator uses telephone calls, text messages, WeChat, QQ chat logs, emails, or other means to threaten or intimidate the victim, the victim may record such communications or take screenshots to preserve this evidence. Where feasible, electronic evidence can also be obtained through a notary public.

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